A H U M A N
R E S P O N S E
T H E R E , T O G E T H E R
W H E N I T C O U N T S
Annual Report 2021
About this report
Welcome to our 2021 Annual Report – A Human
Response. This report offers a behind-the-scenes
look at the work we have done this year to
improve health and outcomes for patients all
over the world and the financial results we
achieved while doing so.
Our people, investors and customers also want
to know about our track record with regard to
non-financial matters, including environmental,
social and governance (ESG) topics. You will find
our ESG commitments and metrics in Section 4
of this report, called Operating Sustainably.
We have prepared this report to align with the
GRI Core reporting option. We have also
included data on our global carbon footprint
and governance, climate and sustainability risks
in line with the recommendations of the
Taskforce for Climate Related Financial
Disclosure (TCFD).
As always, we welcome your feedback and
suggestions for improvement. Please send any
questions, comments or suggestions to
investor@fphcare.co.nz.
Digital versions of this report, along
with our previous annual, interim and
sustainability reports, are available at
www.fphcare.com/investor-reports.
This report covers the financial year ended
31 March 2021 and is dated 26 May 2021.
The report has been approved by the Board and
is signed on behalf of Fisher & Paykel Healthcare
Corporation Limited by Scott St John, Board
Chair, and Lewis Gradon, Managing Director and
Chief Executive Officer.
SCOTT ST JOHN
BOARD CHAIR
LEWIS GRADON
MANAGING DIRECTOR
AND CHIEF EXECUTIVE OFFICER
Constant currency information contained within this report is
non-conforming financial information, as defined by the NZ FMA,
and has been provided to assist users of financial information to
better understand and assess the company’s financial performance
without the impacts of foreign currency fluctuations and hedging
results. It has been prepared on a consistent basis each financial
year. A reconciliation between reported results and constant
currency results is available on page 103. The company’s constant
currency framework can be found on our website at
www.fphcare.com/ccf.
W E L C O M E
2
01
02
03
A HUMAN RESPONSE
THE BUSINESS YEAR
THE COMPANY
Guided by our values
Life: Keeping people safe
Relationships: Sourcing materials
Commitment: Expanding capacity
Internationalism: Caring for customers
Originality: Changing clinical practice
6
8
10
12
14
16
Results at a glance
Business highlights
Report from the Board Chair and CEO
Hospital & Homecare performance
20
21
22
26
What we do
Where we operate
How our business works
How we deliver value
Our unique culture, values and beliefs
What matters most
Our Board
Our Executive Management team
30
31
32
33
34
35
38
40
Section 01 | A HUMAN RESPONSEFisher & Paykel Healthcare | ANNUAL REPORT 2021 3
04 05 06
OPERATING SUSTAINABLY
FINANCIALS
APPENDICES
People
Community
Environment
Risk management
Governance
Remuneration
44
56
60
66
74
92
Financial commentary
Financial statements
100
104
Five year summary
Glossary
GRI index
TCFD framework
Directory
138
141
142
144
145
Section 01 | A HUMAN RESPONSEFisher & Paykel Healthcare | ANNUAL REPORT 2021 4
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 01 | A HUMAN RESPONSE A HUMAN RESPONSE Behind the
scenes in every corner of our
business, our people were doing
their part to answer the global
call for life-sustaining products.
5
01
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 01 | A HUMAN RESPONSE 6
G U I D E D
B Y O U R
V A L U E S
LIFE • RELATIONSHIPS • COMMITMENT
INTERNATIONALISM • ORIGINALITY
BEHIND THE SCENES, all across our
business, our people were doing their
part to answer the global call for
life-sustaining products during a global
pandemic. Our values – life, relationships,
commitment, internationalism and
originality – guided our business
decisions at every turn.
In April 2020, a member of our US sales
team received an email from a customer
in Sioux City, Iowa. Already familiar
with our products, he anticipated the
impact of COVID-19 on our AirvoTM team.
It began:
“I would imagine that with the COVID-19
virus about to peak soon, your company
is ramping up production of items
like high flow oxygen systems and the
related supplies that go with them.
Everyone is currently focused on
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 01 | A HUMAN RESPONSE
7
ventilators, but the reality of the situation is that
far fewer patients will need a ventilator over
other therapies, notably the Airvo high flow
oxygen system and others like it.”
Indeed, at the start of the pandemic, healthcare
providers leaned toward early mechanical
ventilation for the most severe patients.
However, a few months in, evidence suggested
high mortality rates for COVID-19 patients on
mechanical ventilators. As our customer had
predicted, healthcare providers pivoted away
from invasive ventilation. One treatment in
particular emerged as a leading frontline
treatment – Fisher & Paykel Healthcare’s
OptiflowTM nasal high flow therapy.
With Optiflow, warm, humidified air and oxygen
is administered through the patient’s nostrils.
Patients can remain awake while receiving
Optiflow, so they can talk, eat and drink. They
also can be treated outside the intensive care
unit, which lightens the burden on healthcare
providers. For many patients, Optiflow is
sufficient to maintain oxygen levels that help
them to recover while avoiding the risks of
mechanical ventilation.
As clinicians reported positive results using
Optiflow, Fisher & Paykel Healthcare was
bombarded with requests for devices that
deliver the therapy – namely Airvos and our
MR850 and F&P950 respiratory humidification
systems. Increasing output on these critical
devices has required a massive effort. Behind the
scenes, our people have been there – together
– when it counts.
The email from that customer offered
encouragement our teams needed to keep
people safe, source supplies, boost production,
deliver for customers and change clinical practice.
“ We, in the
frontlines of
patient treatment,
recognise the
Airvo team as
major unsung
heroes in this
outbreak...
It concluded: “We, in the frontlines of patient
treatment, recognise the Airvo team as major
unsung heroes in this outbreak. Their
contribution to the pandemic will go unnoticed
by the general public, but certainly not by
respiratory practitioners all over the globe. Hats
off to you and your team for providing research,
product engineering and development along
with the compassion to pull it all together.”
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 01 | A HUMAN RESPONSE
8
L I F E
Keeping our people
safe and healthy was
top of mind.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 01 | A HUMAN RESPONSE Section 01 | A HUMAN RESPONSE
9
EARLY IN THE PANDEMIC, we formed a crisis
response team made of people across the
business. The goal – to protect everyone at
our facilities while outlining a plan to answer
the global call for products. As an essential
service, operations continued during COVID-19
lockdowns. Our health and safety approach
was – and remains – to meet or exceed local
government recommendations.
At our largest manufacturing site in
New Zealand, we have implemented
social distancing, extra cleaning protocols
and Bluetooth contact tracing cards.
Gowning areas, production lines, office areas,
and cafeterias have been rearranged, physical
barriers erected and desks moved to create
more space between people. Occupancy in
meeting rooms is limited. Masks are
mandatory, except when two-metre physical
distancing can be maintained. We have an
onsite clinic staffed by health professionals,
as well as a COVID-19 support team who
assist with contact tracing and answer
questions 24/7.
At our Mexico site, we took preventative
measures to protect our people before the
pandemic arrived in Tijuana. Our Mexico
leaders created a COVID-19 committee to
monitor the pandemic’s impact and implement
safety measures across the facility. This
included masks and goggles, sanitising mats
and cleaning kits. Capacity limits were set for
meeting rooms, and acrylic dividers were
added in manufacturing areas and cafeterias.
During the worst of the pandemic, employees
received essential groceries.
THE GOAL
To protect everyone at
our facilities while outlining
a plan to answer the
global call for products.
Special leave entitlements have helped to
ensure our people could take time off work
if they needed to self-isolate, and we have
provided discretionary COVID-19-related leave
so that workers could make the right decision
without fear of losing income. These changes
will remain in place until the threat of COVID-19
has diminished.
We recognise that COVID-19 has had an
impact on the wellbeing of our people. We are
continuing to promote counselling services
through the Employee Assistance Programme
and to focus on returning to sustainable
workloads.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021 10
R E L A T I O N S H I P S
Our ability to source
materials was a
testament to our
strong supplier
relationships.
MANY OF THE RAW MATERIALS and
components used in Fisher & Paykel
Healthcare products are imported.
Very quickly, the virus impacted
our suppliers around the world.
Thanks to strong supplier
relationships and creative sourcing,
production lines never stopped,
although some components
arrived only one day before they
were needed.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 01 | A HUMAN RESPONSE 11
Supply planning manager Jacquelene Bycroft
has watched Fisher & Paykel Healthcare grow
during her 20 years with the company. She said
she has never been in a situation like the
pandemic before.
“It’s about people’s lives,” she said. “Years ago
when I worked on the manufacturing line, that’s
the first thing I learned. COVID-19 has been
really, really stressful, but we had to do it.”
“ Failure was not
an option, so
we needed to
work with
sub-suppliers,
and in some
cases, sub-sub
suppliers to make
sure the whole
supply chain was
completely
integrated.”
EDDY PEREIRA
General Manager Transformation
and Optimisation
Senior research and development manager
Phil Edgeworth recalled some of the challenges
at the start of the pandemic.
“We had a problem obtaining enough power
circuit boards, and we had to work out an
alternative within three months.”
Edgeworth said that in 24 years of working for
the company, he has never seen so much help
and collaboration from suppliers. In fact, two
essential suppliers of custom mechanical and
electrical builds changed to a 24/7 shift pattern
just to supply Fisher & Paykel Healthcare.
The situation became even more difficult
when the United States prioritised supplies to
companies making ventilators. There are more
than 300 components in one Airvo device, and
Fisher & Paykel Healthcare was competing with
ventilator manufacturers for the same parts.
“The components come from multiple sources,
and you need every single one to make it,” said
Eddy Pereira, general manager transformation
and optimisation. “Failure was not an option, so
we needed to work with sub-suppliers, and in
some cases, sub-sub suppliers to make sure the
whole supply chain was completely integrated.”
“Freight became a nightmare,” said procurement
manager Sheleen Ellis. “We had congestion and
delays at ports as everyone was trying to move
things in a different manner.”
With most planes grounded and sea
freight too slow to be useful, the team had to
be creative and adaptable to import materials
and ship finished goods. At one point, a single
box of critical filter parts was on a Singapore
Airlines plane facing eight weeks on the ground
in Dubai. The box had to be extracted from the
airport, flown back to Europe, and then sent
on to New Zealand – and all of that activity was
arranged through multiple third parties.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 01 | A HUMAN RESPONSE 12
C O M M I T M E N T
Adding shifts
and people,
we expanded
our manufacturing
capacity in
record time.
INCREASING PRODUCTION this year
required more space and more people.
Working collaboratively, our teams
in Mexico and New Zealand relocated
existing manufacturing lines and
created new ones for essential
products. Worldwide, our human
resources team recruited several
thousand full-time and temporary
workers and managed their induction
and training.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 01 | A HUMAN RESPONSE 13
Mexico
New Zealand
MR290 chambers are a central part of
Fisher & Paykel Healthcare’s humidification
devices, and demand surged for these parts.
Our Mexico and New Zealand teams worked
together to tackle a major challenge: set up
a brand-new MR290 chambers production
line in our Tijuana, Mexico facility while working
within COVID-19 health guidelines.
Senior project engineer Karen Guerrero in
Mexico and senior process development
manager Ian Russell from New Zealand led the
project. It required installing and validating
128 pieces of equipment, creating operations
and processes, reviewing documents and
recruiting and training people. To ensure safety,
the core project team, which included specialists
from both Mexico and New Zealand, spent ten
days in isolation. They stayed at a nearby hotel
in Tijuana, away from family and friends, to avoid
any risk of infection.
In April 2020, the first chambers rolled off the
new line, ready to be shipped to help patients
in North America.
Diana Tenorio Sanchez was one of the new line’s
team leaders. “It was challenging to stay away
from family for almost a month,” she said, “but
we made the sacrifice because we knew our
products were helping to fight COVID-19.”
New Zealand’s first lockdown was announced
just as our fourth New Zealand manufacturing
facility, the Daniell Building, was completed.
Before the pandemic, the plan had been to
move office teams into the building first, then
fit-out the manufacturing areas the following
year. That plan was brought forward by the
need to increase production quickly on Airvos
and consumables.
It took intense planning to complete validations
for the new controlled work environment,
disassemble and reassemble equipment, and
relocate teams. Process development and
moulding engineers went into overdrive to build
tools, install machinery and wire equipment.
Within three months, the Daniell Building was
the new home for several new manufacturing
lines for OSA products and much-needed adult
breathing circuits. Experienced team members
were cross-trained, in the event a case of
COVID-19 on site breached a production bubble.
Manufacturing team leader Seta Vaka said
keeping people safe has been her priority as
new people have been added and trained.
“Even at break times we’re checking to make
sure people are keeping their distance while
they’re eating,” she said.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 01 | A HUMAN RESPONSE 14
I N T E R N AT I O N A L I S M
Our global sales
teams found new
ways to deliver for
our customers.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 01 | A HUMAN RESPONSE 15
WORKING IN MORE THAN 40 COUNTRIES,
our sales representatives had to navigate
lockdowns and personal challenges to get
products to the people helping patients.
Our humidification devices were delivered
to hospitals in large numbers, and dozens
were assembled at a time.
North America
“When COVID-19 hit, our two priorities were
keeping our employees safe and then keeping
our distribution channels open,” said Justin
Callaghan, president of North America
operations.
The US team devised an allocation process
to identify which hospitals needed products
the most. Citing publicly available statistics and
feedback from sales representatives, his team
persuaded customers to accept two weeks
of stock at a time when some wanted enough
for six months.
“We were one of the few companies
approaching it that way,” said Callaghan.
“But ultimately customers said it was fantastic.
We managed to stay true to our approach,
and it was successful.”
Northeast regional manager Michael Krumholz
said that when hospital supplies dwindled, he
and his team delivered every product they had.
At our distribution centre in Kentucky,
manager Nicholas Wade and his team worked
overtime and weekends to sort stock and
process orders. Everyone pitched in to support
their work.
“At 5:30AM on a Saturday morning, car after
car of warehouse and leadership team
members were pulling up to work,” said Wade.
“We had the stock processed and ready for
Monday morning to ship directly to hospitals
with patients in critical care.”
Europe
In June 2020, sales teams in Belgium and
Luxembourg noticed a disturbing trend.
While some hospitals had increased their use
of Optiflow, others had decreased their use.
They acted promptly to alert key opinion
leaders, who influenced hospitals about the
benefits of using nasal high flow therapy to
treat patients with COVID-19.
When a second wave arrived in October,
the Belgian government asked hospitals
to urgently create 300 beds outside the
ICU with access to Optiflow. As a result, in
November we provided a large number of
devices to local hospitals. The small team
had to manage the ordering, follow up on
deliveries and train users.
“Our amazing people, from the production
lines, through to logistics, warehouse, sales and
customer services teams – all played a major
role in helping our clinical teams at the front
line,” said business manager Benoit Collet.
“ At 5:30AM on a
Saturday morning,
car after car of
warehouse and
leadership team
members were
pulling up to work.
We had the stock
processed and
ready for Monday
morning to ship
directly to hospitals
with patients in
critical care.”
NICHOLAS WADE
Manager, Distribution Centre
Kentucky USA
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 01 | A HUMAN RESPONSE 16
O R I G I N A L I T Y
We relied on new
approaches to inform
healthcare providers
and influence
clinical practice.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 01 | A HUMAN RESPONSE 17
Nurse Karin
Kuperus at Nij
Smellinghe
Hospital in The
Netherlands sets
up an Airvo.
Photo: Annemarie Boonstra
understood the benefits of nasal high flow
therapy and were powerful speakers – and
featured them in a series of webinars. Our sales
representatives were able to access these new
resources and recommend them to customers.
As clinicians learned more about COVID-19 and
how it spread, they pivoted toward using nasal
high flow therapy as the first line of treatment.
In March 2021, the European Respiratory
Society released best-practice guidelines for
treating hospitalised COVID-19 patients. These
recommended that, wherever possible, doctors
use alternatives to ventilators, such as nasal
high flow oxygen or tight-fitting face masks.
IT CAN TAKE YEARS TO CREATE A NEW PRODUCT
and decades more to help change clinical
practice in the medical community. Sam Frame,
marketing manager for the Airvo product
team, said that many clinicians were already
familiar with nasal high flow therapy, but
many were hesitant to try it for treating
COVID-19 patients. In part, this was because
of misinformation circulating about how the
virus spread.
“In some countries, health services wrote into
policy that all patients with COVID-19 would be
intubated, meaning placed on a mechanical
ventilator,” said Frame. “That’s what some
patients needed, but in many cases, it’s not a
good idea when you can give them noninvasive
respiratory support.”
Unlike mechanical ventilation, nasal high flow
therapy delivers respiratory support through a
nasal interface. For all but the sickest patients,
it is more comfortable and less traumatic than
intubation using a ventilator, which is an
aggressive solution that requires sedation.
Lisa Henderson, sales and customer education
manager, said the speed of the pandemic
left clinicians with little time for researching
patient treatments.
“Clinicians generally say that they practice
evidence-based medicine, but during COVID-19
that term was thrown out the door a bit,” she
said. “Some treatments were in use because of
perception, not data. Perception can only
change through data and education.”
Henderson and her team moved quickly to
revamp the online education hub on the
company website, adding links to research
studies, courses and training videos. They
identified key opinion leaders – who
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 01 | A HUMAN RESPONSE 1818
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 02 | THE BUSINESS YEARFisher & Paykel Healthcare | ANNUAL REPORT 2021 THE BUSINESS YEAR Our business
was positioned at the right place
at the right time to respond to a
global pandemic, resulting in a
year like no other.
1919
02
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 02 | THE BUSINESS YEARFisher & Paykel Healthcare | ANNUAL REPORT 2021 2020
Results at a glance
OPERATING REVENUE
NET PROFIT AFTER TAX
$1.97b
▲ 56% | 2020 $1.26B
$524.2m
▲ 82% | 2020 $287.3M
GROSS MARGIN
63.2%
295 BASIS POINTS DECREASE
TOTAL DIVIDEND FOR YEAR
FULLY IMPUTED
SPEND ON R&D
38.0cps
▲ 38% | 2020 27.5CPS
$136.7m
7% OF OPERATING REVENUE
HOSPITAL REVENUE
$1.5b
▲ 87% | 2020 $801.3M
HOSPITAL HARDWARE
REVENUE GROWTH
337%
( CONSTANT CURRENCY)
NEW APPLICATIONS CONSUMABLES
REVENUE GROWTH
49%
( CONSTANT CURRENCY)
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 02 | THE BUSINESS YEARFisher & Paykel Healthcare | ANNUAL REPORT 2021 OPERATING REVENUE
NZ$ MILLIONS
NET PROFIT AFTER TAX
NZ$ MILLIONS
2
.
1
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9
,
1
.
2
4
2
5
.
7
3
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.
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17
18
19
20
21
17
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19
20
21
BUSINESS HIGHLIGHTS
IMPACTE D the lives of
approximately 20 million
patients around the world,
including millions treated for
COVID-19.
LAUN CHED myAirvo 2 in
China, along with Optiflow+
interfaces and AirSpiral tubes
for home use.
RELEAS ED F&P 950 in
Canada and South Africa.
RECOGNITION
2121
COM MITTED $20 million
to establish the Fisher & Paykel
Healthcare Foundation.
PLACED sales representatives
in a further five countries.
INCREASED manufacturing
output by more than six times
for some of our key hospital
products.
REVENUE BY PRODUCT GROUP
12 MONTHS TO 31 MARCH 2021
REVENUE BY REGION
12 MONTHS TO 31 MARCH 2021
American Association of
Respiratory Care
Designers Institute of NZ
Best Awards
<1%
24 %
76%
8 %
%
18
120+
COUNTRIES
4
2
%
%
2
3
ZENITH AWARD
TWO GOLD PINS
American Chamber of Commerce
DHL Express
SUCCESS & RESILIENCE AWARD
INFINZ
MARKET LEADERS BEST INVESTOR
RELATIONS AWARD 2020
Auckland Transport
TRAVELWISE CHOICES AWARD
Dow Jones Sustainability Index
for 2020
Deloitte New Zealand
FTSE4 Good Index 2020
Hospital
Homecare
Distributed & Other
North America
Other
Europe
Asia Pacific
2020 COMPANY OF THE YEAR
Deloitte New Zealand
2020 CEO OF THE YEAR
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 02 | THE BUSINESS YEARFisher & Paykel Healthcare | ANNUAL REPORT 2021 2222
Report from the
Chair and CEO
We have been amazed by healthcare
professionals around the world, who
have responded with such incredible
care and courage to the COVID-19
pandemic. Our thoughts are with
them, the patients under their care,
and the families of those who are
impacted at this challenging time.
We would also like to express our thanks
and admiration for the energy and dedication
shown by our people during this tough year.
Behind the scenes in every corner of our
business, our people were doing their part
to answer the global call for life-sustaining
products.
For most of us, this meant juggling work, home
and family responsibilities through upheavals
and uncertainty. For some, it meant stepping
into completely new roles, volunteering to get
things done, and working day and night to
meet the needs of our customers. Operating
during a pandemic tested our resilience, but it
also proved we can adapt to change.
RESPONSE TO COVID-19
Early in the pandemic, we formed a crisis
response team drawn from all areas of the
business. The goal – to protect everyone at our
facilities and outline a plan to meet the global
demand for products. We developed a strategy
founded on three principles: keeping our
people and workplace safe, keeping operations
stable, and keeping processes sustainable.
Our health and safety approach was – and
remains – more conservative than local
government recommendations. The strategy
has served us well, and manufacturing
operations in New Zealand and Mexico have
continued with few disruptions.
As we mentioned in November, demand for
some of our products increased by four or
five times during COVID-19 surges. Increasing
output on essential devices required a massive
effort. We had to fast-track new facilities, work
with new suppliers, qualify new parts and
materials, add people and shifts, and connect
with customers in new ways.
SCOTT ST JOHN
Board Chair
LEWIS GRADON
Managing Director
and Chief Executive Officer
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 02 | THE BUSINESS YEARFisher & Paykel Healthcare | ANNUAL REPORT 2021 2323
STRONG RESULT FOR FY21
Working under the most challenging
conditions, our people maintained their focus
on improving care and outcomes for patients.
It was a year like no other – and Fisher & Paykel
Healthcare achieved an extraordinary result.
Operating revenue for the 2021 financial year
was $1.97 billion, 56 per cent higher than the
previous financial year, or 61 per cent in
constant currency. Net profit after tax was
$524.2 million, 82 per cent higher than the
previous financial year, or 94 per cent in
constant currency.
The unprecedented result was largely driven
by the Hospital product group. This includes
products for invasive ventilation, noninvasive
ventilation and surgery, as well as the
hardware and consumables used to deliver
Optiflow nasal high flow therapy. Revenue
for the Hospital product group was $1.5 billion,
an increase of 87 per cent over the previous
financial year, or 94 per cent in constant
currency.
Although COVID-19 restrictions shut down
sleep clinics and impacted OSA diagnosis
rates, revenue for the Homecare product
group increased by 2 per cent over the
previous financial year, or 4 per cent in
constant currency. Revenue for the full financial
year was $465.6 million, assisted by continued
strong growth in our products used for nasal
high flow therapy in the home.
As expected, COVID-19 impacted our costs
for the full financial year. Gross margin
decreased by 295 basis points for the year to
63% or a 165 basis points decline in constant
currency. This includes increased freight costs
and high air freight utilisation which adversely
impacted constant currency gross margin by
approximately 230 basis points. Freight and
additional COVID-19 related costs were offset by
overhead efficiencies due to volume increases
outpacing overhead cost growth during the year.
STRATEGIC PROGRESS
For the most part, COVID-19 was kept out of
the community in New Zealand. This was a
significant advantage for our business, because
it meant our more than 650 engineers and
clinical scientists could continue their everyday
work at our Auckland campus. We were
unwavering in our commitment to research and
development during the 2021 financial year and
invested $136.7 million for that purpose.
Our marketing and sales teams, many of whom
were working remotely, continued to support
the release of products into new markets.
During the second half of the year, we
introduced myAirvo 2 in China, along with
the consumables required to deliver Optiflow
therapy at home. We also expanded the release
of our Evora compact nasal mask for OSA into
Brazil and Spain.
To extend our global reach, we placed our own
sales representatives in a further five countries.
A direct sales presence in these countries will
help us focus on changing clinical practice
through strong relationships with customers.
The pandemic strengthened our relationships
with key opinion leaders, and many of them
have spoken publicly about their success using
nasal high flow therapy to treat COVID-19
patients. The increased focus on nasal high
flow therapy has accelerated the adoption of
Optiflow in a way we could not have predicted.
In November 2020, the Intensive Care Medicine
journal published a clinical practice guideline
with a strong recommendation for using nasal
high flow in cases of hypoxemic respiratory
failure compared to conventional oxygen
therapy.* We expect the body of evidence to
multiply as retrospective studies are completed
and patient data is analysed.
* Rochwerg B, et al. Intensive Care Medicine. 2020.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 02 | THE BUSINESS YEARFisher & Paykel Healthcare | ANNUAL REPORT 2021 2424
We have always taken a
long-term view. COVID-19
may have changed the way
we live, work and connect
with each other, but it did not
change our strategy. Our
fundamental objective is to
grow our business in a
sustainable, profitable way by
creating better products,
extending our global reach
and changing clinical practice.
LOOKING AHEAD
We have always taken a long-term view.
COVID-19 may have changed the way we live,
work and connect with each other, but it did
not change our strategy. Our fundamental
objective is to grow our business in a
sustainable, profitable way by creating better
products, extending our global reach and
changing clinical practice.
Our business was positioned at the right place,
at the right time, to respond to a global
pandemic, and this was not down to chance.
The work to research, develop and prove the
benefits of our products and therapies started
more than fifty years ago. It continues today,
so that we will be ready to meet the needs of
patients ten years and more from now.
Looking ahead, we remain confident about
our long-term future. Hospitals worldwide
have purchased Fisher & Paykel Healthcare
hardware and consumable products, and their
staff are now trained to administer nasal high
flow therapy. While our hardware sales are
unlikely to be repeated in the 2022 financial
year, a change in clinical practice may have
been accelerated.
Importantly, nasal high flow therapy is not
only for treating COVID-19 patients – it has
applications across a broad range of patients
requiring respiratory support. Educating
clinicians on its benefits for patients in
hospitals and homes will be a key area of
focus during the next few years.
The additional revenue generated in the
2021 financial year allows us to continue
growing our investment in R&D and our sales
teams as we bring forward some of our longer
term projects and support the growing
installed base of nasal high flow systems.
We also remain confident in our innovative
product portfolio for treating patients with
obstructive sleep apnea. When sleep clinics
fully reopen and customers can see our new
OSA masks in person, we expect these
products to continue to perform well.
COMMUNITY
One of the hallmarks of a successful business
is looking after the wider community. Through
a combination of financial and in-kind support,
we facilitate and sponsor various community
programmes each year – from funding clinical
research to supporting science, technology
engineering and mathematics (STEM)
programmes for young people.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 02 | THE BUSINESS YEARFisher & Paykel Healthcare | ANNUAL REPORT 2021 2525
As always, we are grateful to our shareholders
for believing in our purpose, our strategy and
our team.
SCOTT ST JOHN
Board Chair
LEWIS GRADON
Managing Director and Chief Executive Officer
In the 2021 financial year, we committed
$20 million to establish the new Fisher & Paykel
Healthcare Foundation. This charitable
organisation has been established to enable
a more sustainable model for funding of
community and charitable activities. The
Foundation’s purposes include supporting
and funding health research, programmes that
improve access to healthcare, environmental
protection initiatives and promoting awareness
of opportunities in STEM.
BOARD UPDATE
During the year, Scott St John was appointed
to chair the Board following Tony Carter’s
retirement and Neville Mitchell was appointed
chair of the Audit & Risk Committee. We are
progressing well in the process to find a
replacement director with the necessary skills
and experience to complement other members
of the Board, and expect to provide an update
later this year.
DIVIDEND
Our consistent practice has been to pay a
dividend to shareholders. In light of this year’s
financial performance, the Board has approved
a final dividend of 22 cents per share. This
takes the total dividend for the full financial
year to 38 cents per share. This is a 38 per cent
increase on the total dividend for FY20 and
enables us to continue making our accelerated
investments in manufacturing capacity and
buildings. The final dividend will be paid out
on 7 July 2021.
THANK YOU
In closing, we want to thank our customers
and clinical partners for giving their all to
care for patients, often under the most
gruelling conditions.
We also want to acknowledge the more
than 6,000 people of Fisher & Paykel
Healthcare, as well as their partners and
families, because they all made this
extraordinary year possible. Because of their
efforts, our products were used to treat an
estimated 20 million patients during the 2021
financial year. To recognise their contribution,
the Board has approved for this year a
profit-sharing bonus totalling $29 million for
everyone who has worked with us for a
qualifying period.
We appreciate our suppliers for providing
the raw materials and components we so
desperately needed to make our products,
and the government officials who intervened
when borders were closed and freight
options limited.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 02 | THE BUSINESS YEARFisher & Paykel Healthcare | ANNUAL REPORT 2021 2626
Hospital
76%
OF OPERATING REVENUE
Invasive ventilation
Our products for invasive ventilation provide
warm, humidified air to patients with bypassed
airways. This can help maintain the natural
balance of heat and moisture in the airways.
Noninvasive ventilation
Noninvasive ventilation is a therapy which
provides airway support for patients through
a face mask. Heated and humidified gas flows
can improve patient comfort and compliance,
reduce airway drying and improve secretion
clearance.
Optiflow nasal high flow therapy
Nasal high flow is a respiratory care therapy
delivering high flows of air and oxygen through
a unique F&P Optiflow™ nasal cannula. This
allows comfortable, effective delivery of up to
100% oxygen for patients in mild to moderate
respiratory distress.
Surgical technologies
Our surgical products provide warm,
humidified CO2 during surgery, which may
protect patients from hypothermia and
post-operative pain and reduce the risk of
surgical site infections, adhesions and cancer
metastasis.
OPERATING REVENUE
$1.5B
CONSTANT CURRENCY REVENUE FROM
NEW APPLICATIONS CONSUMABLES
87%
49%
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 02 | THE BUSINESS YEARFisher & Paykel Healthcare | ANNUAL REPORT 2021 2727
CPAP therapy
Our range of CPAP machines and masks
support patients with obstructive sleep
apnea. Our masks have become well
known for their comfort, simplicity and
ease of use, which is a key factor in patient
compliance. Our patient management
and support tools complete a seamless
experience to help patients succeed in
embracing therapy.
Home respiratory support
We have taken our expertise in nasal high
flow therapy and noninvasive ventilation
from the hospital to offer respiratory
support in the home and in long-term care
settings, with the intention of improving
patients’ quality of life and reducing
hospital admissions. The F&P myAirvo™
device provides flows of humidified air,
which can contain supplemental oxygen
if necessary through an Optiflow nasal
cannula or tracheostomy connector, and is
used for patients with chronic respiratory
conditions such as COPD or bronchiectasis.
Homecare
24%
OF OPERATING REVENUE
OPERATING REVENUE
$465.6M
CONSTANT CURRENCY
REVENUE
2%
4%
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 02 | THE BUSINESS YEARFisher & Paykel Healthcare | ANNUAL REPORT 2021 28
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 03 | THE COMPANY 29
THE COMPANY For many years, our
strategy has been consistent, centred
on our purpose of improving care
and outcomes through inspired and
world-leading healthcare solutions.
03
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 03 | THE COMPANY 30
What we do
Fisher & Paykel Healthcare is a leading
designer, manufacturer and marketer
of products and systems for use in
acute and chronic respiratory care,
surgery and the treatment of
obstructive sleep apnea.
Our medical devices and technologies help
clinicians deliver the best possible patient
care. They enable patients to transition into
less-acute care settings, recover more quickly
and avoid more serious conditions.
Because of our products and therapies,
many patients can be treated in the comfort
of their own homes instead of in the hospital.
Not only does this make life better for the
patient, it reduces costs for the world’s
healthcare systems.
Product innovation has been the cornerstone
of our success since 1969, when the first
prototype respiratory humidifier was
developed. Today, we are still striving to lead
the way in the development of medical devices
and technologies by continuously improving
our products, pioneering new therapies, and
changing clinical practice.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 03 | THE COMPANY Germany
Norway
Denmark
Netherlands
Belgium
Sweden
Poland
Finland
Russia
Turkey
Canada
England
Scotland
Northern Ireland
Ireland
Wales
France
Portugal
Spain
Mexico
USA
India
Switzerland
Italy
Austria
Brazil
31
Direct sales offices
Distribution centres
Manufacturing facilities
South Korea
Japan
Hong Kong
Taiwan
China
Australia
New Zealand
45
Countries with
F&P people
2,191
People in North America,
including Mexico
350
People in Europe
3,932
People in New Zealand
424
People in the
rest of the world
Note: people numbers are represented as full-time equivalents.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 03 | THE COMPANY 32
How our business works
RESEARCH & DEVELOPMENT
Our R&D is based in New Zealand. The
team works extensively in hospitals, and
with patients and clinicians, in order to
develop better technology that enhances
patient care.
PATIENTS
Each year millions of patients are treated
with our products in over 120 countries.
Seeking to understand our patients’
needs is what drives our R&D programme.
CUSTOMERS
We work with thousands of healthcare
professionals, including doctors, clinicians
and nurses, providing them the products
and tools to deliver the best possible
care. Our largest markets by revenue are
North America, Europe and Asia Pacific.
The needs of our customers and their patients drive
everything we do. We call this Care by Design.
THERAPIES
The majority of our operating revenue
is from products and systems used in
hospitals in invasive ventilation, noninvasive
ventilation, nasal high flow therapy and
surgery. The remainder is from products
used in home environments to treat patients
suffering from obstructive sleep apnea and
those in need of respiratory support.
MANUFACTURING
We manufacture the majority of our
products in New Zealand and the balance
in Mexico. The co-location of engineering,
quality, manufacturing, marketing and
clinical teams facilitates collaboration and
an awareness of the medical device process
from concept and design right through to
how our products are used by patients.
SUPPLY CHAIN
We have distribution centres located around
the world and a network of distributors.
We use air, sea, road and rail freight, with
a focus on sustainable and cost-effective
methods of transportation. We source
materials from all over the world and look
for socially responsible partners to support
our growth.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 03 | THE COMPANY How we deliver value
SUSTAINABLE, PROFITABLE GROWTH
We aim to grow our business in a way that is sustainable over the long term.
OUR INPUTS
Our
6,000+
people
50+ years
of trusted
relationships
Excellence
in R&D
Global
supply
networks
Trusted
brand
OUR PURPOSE:
Improving care and
outcomes through inspired
and world-leading
healthcare solutions.
Ageing population | Technology advancement | Healthcare costs increasing | Other external factors
MARKET CONTEXT
33
OUR OUTPUTS
Improved
care and
outcomes for
patients
Increased
efficiency
of care
Increased
shareholder
value
Benefits to
our people
Doubling
our constant
currency
revenue every
5-6 years
Utilise our expertise to develop new therapiesCHANGE CLINICAL PRACTICE GLOBAL REACHBETTER PRODUCTSContinuously strive to improve our productsIncrease our presence around the worldand reduce costs to healthcare systemsFisher & Paykel Healthcare | ANNUAL REPORT 2021Section 03 | THE COMPANY 34
Our unique culture,
values and beliefs
We have a unique culture of
Care by Design, which is a simple
way of expressing the care and
intentionality we put into everything
we do — our relationships, our
decisions and our daily interactions
with customers. We believe that if
we focus on delivering what is
best for the patient, we will
be successful.
OUR VALUES
OUR BELIEFS
Life
We relentlessly focus on
improving patients’ lives and
strive to provide a high quality
of life for our employees.
Relationships
We care for our patients,
customers, suppliers, shareholders,
the environment and each other.
Internationalism
We are global in people, in thinking
and in behaviours.
Commitment
We value people who are
self-motivated and have a desire
to make a real contribution.
Originality
We encourage original thinking
which leads to the innovative
solutions required to create better
products, processes and practices.
We believe in doing what is
best for the patient.
We believe the commitment to
doing the right thing is what our
customers will find compelling.
We believe that empathy,
effectiveness and efficiency
are essential to our success.
We believe our people
are our strength.
We believe lessons learned
are the cornerstones
of innovation.
We believe in the need to be
relentless in the pursuit of
healthcare innovation.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 03 | THE COMPANY What matters most
35
In the 2021 financial year, we
conducted a materiality assessment
to identify what is most important to
our business and our stakeholders.
Investors and other stakeholders are
increasingly using nonfinancial information
on other material topics to make decisions.
Those include trends and risks that could
affect a company’s long-term value, such as
climate change, as well as the economic and
social impacts of doing business.
This year, we worked with an independent
consultant, thinkstep, to obtain feedback
from multiple stakeholders. The result is an
updated materiality assessment informed
by the principles of the GRI Sustainability
Reporting Standards. Within this framework,
‘materiality’ differs from financial and audit
interpretations and NZX/ASX definitions of
material information.
As we identified material issues, we also
considered our unique business risks, the
United Nations Sustainable Development
Goals, and feedback we receive through
regular interactions with customers,
clinicians, suppliers and investors.
OUR STAKEHOLDERS
E M P L OY E E S
C U S T O M E R S
I N V E S T O R S
C L I N I C I A N S
S U P P L I E R S
C O M M U N I T I E S
UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS
Fisher & Paykel Healthcare supports the
United Nations Sustainable Development
Goals. We have identified three goals where
we believe we can make a positive difference
in order to achieve a better and more
sustainable future for all.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 03 | THE COMPANY 36
OUR PROCESS
01
02
03
04
INTERVIEWED a range of
internal and external
stakeholders to discuss
emerging trends, concerns
and themes.
ENGAGED executive
management team to
validate and prioritise new
trends and themes.
CONDUCTED online survey of a
broader group of internal
and external stakeholders to
rank topics.
ANALYSED ranking survey
results to create materiality
matrix reflecting new
stakeholder priorities.
RESULTS OF
MATERIALITY ASSESSMENT
Patient safety, product quality
and the health, safety and
wellbeing of our people are
the top three topics of interest
to our stakeholders, as shown
in our materiality matrix on
the following page. We have
grouped these and the
remaining top eight material
matters into four areas of focus.
HEALTHCARE
OUTCOMES
STRATEGY
AND GROWTH
PEOPLE
AND CULTURE
BUSINESS
OPERATIONS
• Patient safety
• Innovation
• Product quality
• Customer experience
• Intellectual property
• Market access
• Health, safety
and wellbeing
• Employee attraction,
development and
retention
• Sustainable financial
performance
• Resilient and ethical
supply chain
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 03 | THE COMPANY 37
W. Scaled FY21
Employee attraction,
development & retention
Sustainable financial performance
Product quality
Patient safety
Health, Safety & Wellbeing
Innovation
Nurturing our culture
Resilient & ethical supply chain
Intellectual Property
Market access
Customer experience
Labour practices
Improving public health
Legal compliance
Corporate governance
Disruptive technologies
Cyber security & data protection
Ethical research
Anti-bribery & corruption
Carbon & energy
Local employment
Diversity & inclusion
Healthcare demographics
Community
Resource efficiency
Healthcare waste management
Business continuity planning
MATERIALITY MATRIX
T
C
A
P
M
I
S
S
E
N
I
S
U
B
)
S
R
E
D
L
O
H
E
K
A
T
S
L
A
N
R
E
T
N
I
Y
B
D
E
K
N
A
R
S
A
(
10.0
9.5
9.0
8.5
8.0
7.5
7.0
6.5
6.0
5.5
5.0
0
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
STAKEHOLDER CONCERN
(AS RANKED BY ALL STAKEHOLDERS)
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 03 | THE COMPANY
38
Our Board
Scott St John
Chair and non-executive director
TERM OF OFFICE:
Appointed October 2015, last re-elected
23 August 2018. Appointed Chair on
21 August 2020.
Scott was Chief Executive Officer of
First NZ Capital from 2002 to 2017. He
is a member of Chartered Accountants
Australia and New Zealand and a fellow
of the Institute of Finance Professionals
of New Zealand. Scott is Chancellor
of the University of Auckland and a
director of Mercury Limited, the NEXT
Foundation and Fonterra Cooperative
Group Limited.
Bachelor of Commerce, Diploma in
Business
COMMITTEE RESPONSIBILITIES:
Member Audit & Risk Committee.
Member People & Remuneration
Committee.
Member Quality, Safety & Regulatory
Committee.
Lewis Gradon
Managing Director and
Chief Executive Officer
TERM OF OFFICE:
Appointed 1 April 2016, re-elected
28 August 2019.
Lewis became Managing Director & Chief
Executive Officer in April 2016. Prior to
that, he spent 15 years as Senior Vice
President – Products & Technology, and
six years as General Manager – Research
and Development. During his 37-year
tenure with Fisher & Paykel Healthcare
he has held various engineering positions
overseeing the development of our range
of products as well the development of
our manufacturing, quality, intellectual
property, supply chain and clinical
research functions.
Bachelor of Science – Physics
Michael Daniell
Non-executive director
Pip Greenwood
Non-executive director
TERM OF OFFICE:
Appointed November 2001,
last re-elected 23 August 2018.
Mike was Managing Director and Chief
Executive Officer of Fisher & Paykel
Healthcare from November 2001 to
March 2016. He was General Manager
of Fisher & Paykel’s medical division
from 1990 to 2001 and previously
held various technical management
and product design roles within the
company. Mike is a member of the
Council of the University of Auckland,
a director of Cochlear Limited, Tait
Limited and the Medical Research
Commercialisation Fund, and Chair
of the Medical Technologies Centre
of Research Excellence.
Bachelor of Engineering (Hons)
COMMITTEE RESPONSIBILITIES:
Member Audit & Risk Committee.
TERM OF OFFICE:
Appointed June 2017, last re-elected
21 August 2020.
Pip was a partner at Russell McVeagh
between 2001 and 2019 and previously
served as the firm’s Board Chair. She
has advised on many market-leading
transactions. She is a director of Spark
New Zealand Limited, Westpac New
Zealand Limited and a2 Milk Company
Limited, a current trustee of the
Auckland Writers Festival and served as
a member of the New Zealand Takeovers
Panel from 2007 to 2011.
Bachelor of Laws
COMMITTEE RESPONSIBILITIES:
Chair People & Remuneration Committee.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 03 | THE COMPANY 39
Geraldine McBride
Non-executive director
Neville Mitchell
Non-executive director
Donal O’Dwyer
Non-executive director
TERM OF OFFICE:
Appointed August 2013, last re-elected
21 August 2020.
TERM OF OFFICE:
Appointed November 2018, elected 28
August 2019.
TERM OF OFFICE:
Appointed December 2012, last
re-elected 28 August 2019.
Geraldine has been involved in
the technology industry for more
than 30 years and has a wealth of
global experience. She has held senior
executive roles at SAP AG and Dell
Inc, and is a former President of SAP
North America. She is a director
of Sky Network Television Ltd, and
the founder and CEO of MyWave.
Bachelor of Science – Zoology
Neville was Chief Financial Officer
and Company Secretary of Cochlear
Limited between 1995 and 2017. He
is non-executive director of Sonic
Healthcare, Osprey Medical and Q’Biotics
Group, a member of the Australian Board
of Taxation, and a director of the South
East Sydney Local Health District Board.
Bachelor of Commerce
COMMITTEE RESPONSIBILITIES:
Chair Audit & Risk Committee.
Member Quality, Safety & Regulatory
Committee.
From 1996 to 2003, Donal was with
Cordis Cardiology, initially as its president
(Europe) and from 2000 to 2003 as its
worldwide president. Prior to joining
Cordis, he worked for 12 years with
Baxter Healthcare, rising from plant
manager in Ireland to president of the
Cardiovascular Group, Europe, now
Edwards Lifesciences. Donal is a director
of Cordis Asset Management, Mesoblast
Limited and nib Holdings Limited.
Previously he served on the board of
Cochlear Limited.
Bachelor of Engineering, Master of
Business Administration
COMMITTEE RESPONSIBILITIES:
Chair Quality, Safety & Regulatory
Committee.
Member People & Remuneration
Committee.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 03 | THE COMPANY 40
Our Executive Management Team
Lewis Gradon
Managing Director &
Chief Executive Officer
Lewis was appointed Managing
Director & Chief Executive
Officer in April 2016. He
previously served as Senior
Vice President – Products
& Technology and General
Manager – Research and
Development. He has held
various engineering positions
within Fisher & Paykel’s
healthcare business, overseeing
the development of our range
of products. He received his
Bachelor of Science degree
in physics from the University of
Auckland.
Lyndal York
Chief Financial Officer
Lyndal was appointed Chief
Financial Officer in March
2019. Before joining Fisher &
Paykel Healthcare, Lyndal was
CFO at Asaleo Care and prior
to this held Head of Group
Finance and Group Financial
Controller roles at Cochlear
in Australia over an 11-year
period. She has also spent time
in the US, as VP Corporate
Accounting and Reporting at
Edwards Lifesciences. Lyndal
is a member of Chartered
Accountants Australia and
New Zealand, a graduate
of the Australian Institute
of Company Directors, and
received her Bachelor of
Economics from Macquarie
University and Masters in
Business Administration from
Pepperdine University.
Paul Shearer
Senior Vice President
– Sales & Marketing
Andrew Somervell
Vice President
– Products & Technology
Winston Fong
Vice President
– Surgical Technologies
Paul was appointed Senior Vice
President – Sales & Marketing
in 2001. Paul previously served
as the General Manager – Sales
and Marketing of Fisher &
Paykel’s healthcare business
from 1996. From 1990 to 1998,
Paul held several roles in the
business and established our
sales operations in the UK
and US. He has held various
positions with Computercorp
Ltd, a computer systems
integrator, and ICL Ltd., a
multinational computer systems
company. Paul received his
Bachelor of Commerce degree
in marketing from the University
of Canterbury.
Andrew was appointed
Vice President – Products
& Technology in April 2016.
Since joining Fisher & Paykel
Healthcare in 2006, he has held
various product development
and operations management
roles, and most recently was
General Manager - Product
Groups. He has overseen the
development of the OSA
product range and managed
research and development,
marketing, clinical,
manufacturing, and aspects of
the supply chain. Before joining
Fisher & Paykel Healthcare,
Andrew was a Research Fellow
at the University of Auckland
and holds a doctorate in physics
from the same university.
Winston was appointed
Vice President – Surgical
Technologies in February 2017.
Winston previously served as
Vice President - Information &
Communication Technology
from 2010 and has held various
IT management, product
and software development,
and systems engineering
roles in the business since
1999. Winston received his
Bachelor of Engineering degree
with honours in Electronics
& Computer Engineering
from Manukau Institute of
Technology and Master of
Business Administration from
the University of Auckland.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 03 | THE COMPANY 41
Brian Schultz
Vice President
– Quality & Regulatory Affairs
Nicholas Fourie
Vice President – Information &
Communication Technology
Jonti Rhodes
General Manager – Supply Chain,
Facilities & Sustainability
Brian was appointed Vice
President Quality & Regulatory
Affairs in 2015. Brian previously
served as Quality Manager for
New Zealand Manufacturing
since joining the company in
2011. Prior to joining Fisher &
Paykel Healthcare, Brian held
quality management positions
within the medical device and
pharmaceutical industries in
Australia, Switzerland, United
Kingdom and the United States.
He received his Bachelor of
Science degree from Grand
Valley State University,
Michigan.
Nicholas was appointed Vice
President – Information &
Communication Technology
in February 2017. Nicholas
has been with Fisher & Paykel
Healthcare since 2007, and
in that time has held various
systems engineering and IT
management roles, including
his most recent position as
ICT Manager - Development
& Engineering. Prior to joining
Fisher & Paykel Healthcare,
he worked for the South
African division of BHP Billiton.
Nicholas holds a Diploma in
Computer Engineering from
Damelin School of Information
Technology in South Africa.
Jonti was appointed General
Manager – Supply Chain in
2015. Jonti joined Fisher &
Paykel Healthcare in 2007 as
a product design engineer,
and since that time has held
several roles, both in New
Zealand and the United
States, in quality, regulatory,
and most recently as Group
Logistics Manager. Jonti has
overseen the implementation
of the New Zealand and US
distribution hubs and played
a key role in the development
of our product surveillance
system. He holds a Bachelor
of Engineering (Mechanical)
from Auckland University of
Technology and a Master of
Business Administration from
the University of Auckland.
Marcus Driller
Vice President – Corporate
Marcus was appointed Vice
President Corporate in February
2019. Marcus joined Fisher &
Paykel Healthcare in 2009 as
an in-house lawyer and since
that time has held several roles
in legal, investor relations and
communications and most
recently as General Manager
– Corporate. Prior to joining
the company, he worked for
New Zealand law firm, Russell
McVeagh where he specialised
in corporate and commercial
law. Marcus received his
Bachelor of Commerce and
Bachelor of Laws from the
University of Auckland.
Nicola Talbot
Vice President
– Human Resources
Nicola was appointed VP
Human Resources in October
2020. She has more than
20 years of experience with
Fisher & Paykel Healthcare. She
worked with our International
Sales team for 14 years and was
appointed to the role of General
Manager – Human Resources
(International Sales) in 2017.
Nicola has been involved
in the set-up, recruitment,
development and support of
our people in more than 40
countries. She holds a Bachelor
of Management Studies with
Honours in Human Resources
and Marketing from the
University of Waikato.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 03 | THE COMPANY 42
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 43
OPERATING SUSTAINABLY By looking
after our people, local communities
and the environment, we can be
more innovative and successful in
the long term.
04
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 44
People
Our people are energised by our
core purpose, supported by our
culture, guided by our values and
strengthened by our trust.
Our people are our strength, as they have
demonstrated on countless occasions during
the 2021 financial year. Our global teams have
united in the fight against COVID-19, and their
efforts have been truly exceptional.
Our approach is to employ good people
who contribute the most they can over the
long term. In exchange, we support them with
a positive, inclusive culture based on teamwork
and great relationships, and a safe, healthy
and enjoyable workplace.
The challenges of COVID-19 gave us
opportunities to introduce new ways to recruit,
train and develop our people at pace, to
connect and collaborate in new ways, and to
continue to create a place of belonging. We
offered job security and a flexible environment
so our people could contribute their best
within their own unique circumstances.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 45
Sharing stories from hospitals, patients and the
media, including images of recovering patients,
gave those who were working tirelessly a boost
when they needed it. We have continued this
campaign by collecting stories of the immense
strength, bravery, creativity and commitment
by our people in an employee yearbook called
Pulse to commemorate this extraordinary year.
Communicating clearly and regularly helped
provide reassurance to our people and their
families, and we implemented a wide range of
support measures to provide job security
despite global economic uncertainty. This
included details on leave, pay and travel,
support for vulnerable workers, on-site clinics,
counselling, wellbeing support, groceries and
meals, essential worker letters and much more.
SUPPORTING OUR PEOPLE
DURING COVID-19
Keeping our people safe, both physically
and mentally, was top of mind in every location.
Some of our people worked from home, and
some continued to support customers in
hospitals as they were able. Others worked
in the office, warehouse or production line.
Our human resources teams and leadership
teams worked together to support each
location.
Our teams shared advice and solutions
globally that could be adapted locally for their
conditions. At our global locations, we adopted
safety measures such as split shifts, wearing
personal protective equipment and social
distancing and developed guidance for our
people to work safely in hospitals.
At our two largest facilities, in New Zealand
and Mexico, our on-site clinics provided health
care and advice and medically cleared people
to return to work. We also implemented an
in-house COVID-19 24/7 support call centre
and Bluetooth contact tracing ‘CareCard’ in
New Zealand.
We took a proactive approach to helping
our people stay positive and motivated.
Through an internal communications and
social media campaign called Unite in the Fight,
we reminded our people of the vital role their
work was playing in the treatment of COVID-19
patients and the other patients who relied on
our devices in the hospital and home. The
campaign was extended to engage our people
in Mexico under the banner Unidos en la Lucha.
NEW ZEALAND
Bluetooth contact tracing
‘CareCard’ and an in-house
COVID-19 24/7 support
call centre
ON SITE CLINICS
On-site clinics in
New Zealand and Mexico
providing advice
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 46
People – Continued
ATTRACTING AND RETAINING
NEW PEOPLE
Recruiting during the 2021 financial year was
radically different to the previous year. The
accelerated growth in demand for our products
required rapid growth in the numbers of
people, particularly on key manufacturing lines,
which moved to 24 hours a day, seven days a
week operations. These challenges, combined
with border closures and routine turnover,
meant we had to use new ways to find people.
To recruit waged people in New Zealand, we
created assessment centres to evaluate a larger
number of candidates each week. Each centre
ran interviews, fine motor skills assessments
and mock assembly line tests while maintaining
social distancing throughout the process. Once
recruited, new employees were inducted and
onboarded in larger numbers. We also used
recruitment partners to assist with temporary
resources during peak production periods.
To recruit salaried people in New Zealand,
we moved to a virtual end-to-end recruitment
process. We utilised digital resourcing
channels and added a human touch where
possible. In the process, we brought more
clarity to our talent data, reshaped our
employer brand and fine-tuned our virtual
hiring process. Candidate applications
increased due to pandemic-related
redundancies in the New Zealand market.
In Tijuana, Mexico, our focus was on
maintaining a flow of candidates to sustain
production, particularly to cover tasks when
employees were unable to attend work due to
COVID-19. Key sources of attraction were
recruitment websites, internal references and
promotions, and virtual job fairs. Again, the
team tried to ensure a human touch where
possible despite moving interviews online.
In our global sales offices, our recruiting efforts
focussed on adding people to provide our
customers with education and technical
support and to process and deliver higher
volumes of products.
DIGITAL RESOURCING
Increased use of recruitment
agencies and a virtual
end-to-end recruitment
process. Improved talent data,
employer brand and
virtual hiring process.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 47
DIVERSITY AND INCLUSION
We believe diverse teams deliver better
results. Diversity of thought is the
foundation of our culture, and it is
essential for innovation. It is important to
ensure that our culture is inclusive, so that
diversity, in all spectrums of human
difference, can thrive. This leads to better
outcomes for our people, patients and
communities. We use both quantitative
and qualitative measures to review our
diversity and inclusion performance and
focus on continuous improvement. If we
identify issues, we drill down to root cause
and take corrective and preventative
actions to address the root cause.
The Board is responsible for establishing
measurable objectives for achieving a
diverse and inclusive workforce. Our
complete Diversity & Inclusion policy is
available on our website.
Progress on FY21 diversity and inclusion objectives
We made good progress across some of our FY21 diversity and inclusion goals as shown in
the table below. Two of our objectives were deprioritised due to the global impact of COVID-19.
These activities will resume in the 2022 financial year.
FY21 objective
Progress
Understand and improve female
representation in the R&D function.
Completed Phase 1 of project to research how gender
impacts the experiences of our engineers and how this
might contribute to our low female representation in R&D.
Pilot unconscious bias workshops in New Zealand.
Completed.
Extend gender diagnostic activities to global offices.
Not completed.
Complete ethnicity diagnostic.
Not completed.
FY22 diversity and inclusion objectives
Our diversity and inclusion priorities for the 2022 financial year are:
• Complete the gender representation
• Identify and commence implementation of
diagnostic in our sales regions and Mexico
manufacturing plant.
two initiatives to improve female
representation in the R&D function.
• Identify initiatives to improve gender
• Increase our focus on diversity beyond
representation in our global locations where
required.
gender by completing an investigation into
the impact of culture on New Zealand waged
employees’ career progression.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY
48
People – Continued
IDEA Council initiatives
Our IDEA Council (Inclusion, Diversity, Equality and Awareness Council) is made up of five
employees to champion diversity and inclusion, act as spokespeople to the executive
leadership team and Board and ensure sustainable outcomes from diversity and inclusion
initiatives. Below are the current areas of focus for the IDEA Council.
R&Dversity Project
Cultural Values Project
Trusted Advisor Workshops
Project to research how
gender impacts the
experiences of our engineers
and how this might
contribute to our low female
representation in R&D.
Project to investigate the
impact of culture/ethnicity
on waged employee’s
career goals and whether
this contributes to under-
representation of some
ethnicities in technically
skilled or higher paid roles.
Workshops in which IDEA
Council members can
provide their feedback on
a range of diversity and
inclusion initiatives, including
indigenous leadership
development, unconscious
bias workshops, intern and
graduate diversity, diversity
in our marketing materials,
and guidance on inclusive
language.
Spectra
During the 2020 financial year, we welcomed the
formation of a new employee-led group called
Spectra. Spectra was established to enable the
Rainbow (queer and gender diverse) community
to be their full, authentic self at work.
Spectra now has a core committee made up of
10 members, supported by a wider group of 34
Rainbow employees and allies. Spectra’s three
strategic focus areas are increasing visibility of
the Rainbow community, enhancing a
welcoming and inclusive work environment and
strengthening connections.
Spectra used Pride Week in February 2021 to
provide education and visibility of the group.
Their key achievements this year included
rolling out an LGBTQIA+ learning session,
advising on plans for gender-inclusive facilities
and proving Rainbow health and wellbeing
resources.
Spectra used Pride Week in February 2021 as a way to
provide education and visibility of the group.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 49
LEARNING AND DEVELOPMENT
The pandemic gave our people
opportunities to step up, learn new skills,
meet new people and develop in areas
that were completely different to their
usual roles. This ranged from salespeople
switching to warehouse duties; engineers
designing new ‘distanced’ desk layouts,
writing return-to-work procedures and
helping source raw materials; and lawyers
writing media statements. Some of our
people took up secondments, which then
evolved into new permanent positions in
different departments, while others grew
their understanding of and connections
within the business.
Pitching in with new roles
and responsibilities
ANNABELLE CURTIS
Territory Manager, UK Surgical
Annabelle completed an
intensive course in AIRVO
training to help educate
UK clinicians.
“ After my one-day training, I
was running a COVID-19 ward
training session for six hours!
A day I will never forget.”
JAKE HOCKING
Senior Product Development Engineer,
OSA
STEPHANIE HAZARD
Project Manager, Supply Chain
Jake led an army of company
volunteers and took on 36
completely new tasks,
including pitching isolation
tents and distributing food
boxes to our people so they
could avoid supermarkets.
“If we can’t keep our people
safe on site and continue to
make products, then it’s bad
news for patients worldwide.
I have learned so much
and met people I wouldn’t
normally interact with. It was
a privilege to help.”
Stephanie moved out of her
role as an engineer to
become a supply chain
project manager, initially
placing purchase orders for
parts and managing parts
shortages.
“ The urgency and feedback
is immediate. If we don’t get
the parts, the production line
stops. While I miss the hands-
on nature of engineering,
there is much more exposure
and interaction with business
groups I had previously
little to do with.”
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 50
People – Continued
Manaaki Indigenous Leadership Programme
In partnership with New Zealand’s
Indigenous Growth Limited and Te Puni Kokiri
(Ministry of Māori Development), we launched
a pilot culturally-focussed programme to offer
indigenous employees a unique learning
opportunity to build their leadership skills
to benefit themselves, their whānau (family),
workplace and communities. This is one of
the ways that Fisher & Paykel Healthcare
supports Māori employees and local Māori
communities, as part of our acknowledgement
of Te Tiriti O Waitangi (the Treaty of Waitangi).
Manaaki
Called ‘Manaaki’, the programme provides a
structure for participants to bring their cultural
self and values to work, for their team and
organisation to benefit. Manaaki literally
translates to ‘care’, originating from ‘mana’,
meaning ‘strength’, and ‘aki’, meaning ‘to urge’.
Sixteen employees with New Zealand
Māori heritage from waged and salaried areas
took part in the successful six-month pilot
programme, motivated by the range of
opportunities to connect and learn different
pathways to success. This group is now
working on projects to resolve challenges
identified within the business. We will look
to further develop this style of learning in the
year ahead.
“ Manaaki is about connecting
us to our culture and
providing us with education
to understand some of the
barriers we’ve had as Māori
in terms of progressing to
leadership roles but also
providing us with the tools
and confidence to help us
overcome those barriers.”
KIRI HENARE
General Manager – Human Resources,
New Zealand Operations
“ Some parts of Manaaki are
challenging because you’re
going deep within yourself
and you may not have done
that. Overall it’s a great
experience.”
SAM BRACEY
Setter, OSA Moulding
“ After two years of trying to
connect with other Māori
here, I’ve finally found them!
It’s been an emotional
journey, but I can’t wait to
share what we’ve learned to
help others.”
VERONICA MATHESON
Senior Communications Specialist
Accelerate
Accelerate, our digital learning programme for
new salespeople, has been used by our US
team since August 2019. It has been a vital tool
for onboarding new people virtually, and 133
people have now completed the programme.
Its 120 e-learning modules focus on clinical
education, sales strategy and fundamentals.
Accelerate is now in use in New Zealand,
Australia, Canada, the UK and India, and it is
being translated into nine languages for Fisher
& Paykel Healthcare distributors.
Intern and graduate programmes
We welcomed 101 interns and graduates across
engineering, supply chain, marketing, ICT,
intellectual property and finance this year. We
focused on enhancing their experience right
from induction, including a range of learning
and experiential opportunities and ways to
meet new people and build their community.
Our graduates completed a Karts for Hearts team-building activity to help
them discover their strengths. They “earned” equipment and resources to build
a billy cart, and once the cart was completed, they created a sales pitch to
show why their cart was best. The carts were all presented to children and
parents of a local heart charity.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 51
Mexico education and development
Our team in our Mexican manufacturing
facilities actively supports the education
and development of employees by
providing student scholarships and a grand
graduation event every year. Due to
COVID-19, this year’s graduation ceremony
took a completely different ‘route’. Instead
of in an auditorium, it was celebrated
caravan-style outside the building, and our
30 graduates drove up in their cars to
receive their diplomas.
Education is very important
to continue achieving my
goals. Although the road isn’t
easy, it’s worth the effort to
get where I want to be.
JOSE CHAVEZ
Graduate
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 52
People by the numbers
TOTAL PEOPLE
The tables below show our total numbers of people by headcount as at
31 March 2021. We have recently added new gender categories to the
data we collect upon hiring. Information gathered in previous years did
not include these categories.
By region
Region
New Zealand
Mexico
Rest of World
Total
By gender
Gender
Women
Men
Non-binary/third gender
Not specified/
Prefer not to say
Total
2020
2021
2020
2021
Full-time and part-time*
Permanent
Temporary
Permanent
Temporary
2,443
1,294
1,014
4,751
293
28
17
338
2,963
1,774
1,096
5,833
971
97
15
1,083
2020
2021
Permanent
Temporary
Permanent
Temporary
2,386
2,365
–
–
239
94
–
5
2,967
2,863
1
2
680
396
2
5
4,751
338
5,833
1,083
Gender
Women
Men
Non-binary/third gender
Not specified/
Prefer not to say
Total2
Full-time
Part-time
Full-time
Part-time
2,356
2,354
–
–
4,710
30
11
–
–
41
2,934
2,850
1
2
5,788
33
13
–
–
45
* Does not included New Zealand temporary employees (casual, fixed term, temporary, temporary part time and
contract temporary) due to the changing nature of their hours.
GENDER PAY RATIO
The table below shows our gender pay ratio, calculated within salary
bands and functions using the average pay ratio between females and
males as at 31 March 2021. The gender pay ratio, both in New Zealand
and globally, remained relatively stable this year with no statistical
difference in employees’ pay for like-for-like roles based on gender.
New Zealand (salaried and waged)
Outside of New Zealand (salaried only)
Total
2020
99.4%
98.0%
98.9%
2021
100%
96.5%
98.8%
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 53
LEADERSHIP BY GENDER
The table below shows the ratio of women to men among our Board members, senior executives,
management and all employees as at 31 March 2021. This chart does not include our new gender
categories, as this data has been collected only for new employees. It has not been collected in
retrospect.
2020
2021
Women
Men
Women %
Men %
Women
Men
Women %
Men %
Board
Senior executives1
Senior management2
2
2
14
6
8
36
All employees3
2,386
2,365
25%
20%
28%
50%
75%
80%
72%
50%
2
2
16
5
8
40
2,967
2,863
29%
20%
29%
51%
71%
80%
71%
49%
1 The term “senior executive” refers to the Chief Executive Officer and executives reporting directly to the Chief Executive Officer.
2 The term "senior management" refers to the Chief Executive Officer, Senior executives and employees reporting directly to Senior executives.
3 Temporary staff are not included in these numbers.
LEADERSHIP BY AGE
The table below shows the age ranges of our people among our Board members, senior executives
and all employees as at 31 March 2021.
2020
2021
Board
Senior executives1 All employees2
Board
Senior executives1 All employees2
Under 30 years old
30 – 50 years old
Over 50 years old
% Under 30 years old
% 30 – 50 years old
–
–
8
–
–
% Over 50 years old
100%
–
8
2
–
80%
20%
1,269
2,694
788
27%
57%
16%
0
0
7
–
–
100%
0
8
2
–
80%
20%
1,711
3,223
899
30%
55%
15%
1 The term “senior executive” refers to the Chief Executive Officer and executives reporting directly to the Chief Executive Officer.
2 Temporary staff are not included in these numbers.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 54
People – Continued
HIRE RATES
The tables below show our hire rates for the financial year ended
31 March 2021. Hire rate is the number of permanent employees hired
divided by headcount in each region or category.
By region
By age group
Region
New employees
Hire rate
New employees
Hire rate
Age group
New employees
Hire rate
New employees
Hire rate
2020
2021
2020
2021
New Zealand
Mexico
Rest of World
Total
By gender
Gender
Women
Men
Non-binary/third gender
Not specified/
Prefer not to say
Total
404
401
192
997
16%
31%
19%
21%
644
647
194
1,485
21%
36%
18%
25%
Under 30 years old
30 – 50 years old
Over 50 years old
Total
521
430
46
997
41%
16%
6%
21%
780
648
57
1,485
45%
20%
6%
25%
2020
2021
New employees
Hire rate
New employees
Hire rate
625
372
–
–
997
26%
16%
–
–
812
670
1
2
27%
23%
–
–
21%
1,485
25%
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 55
EMPLOYEE RETENTION
The tables below show employee turnover rates for the financial year
ended 31 March 2021. This data does not include the new gender
categories, because information gathered from employees in previous
years did not include these categories.
By region
Region
New Zealand
Mexico
Rest of World
Total
By gender
Gender
Female
Male
Total
2020
2021
2020
2021
Number of
leavers
Turnover
rate
Number of
leavers
Turnover
rate
Age group
Number of
leavers
Turnover
rate
Number of
leavers
Turnover
rate
By age group
193
273
138
604
8%
21%
14%
13%
127
398
104
629
4%
22%
9%
11%
Under 30 years old
30 – 50 years old
Over 50 years old
Total
262
288
54
604
2020
2021
Number of
leavers
Turnover
rate
Number of
leavers
Turnover
rate
338
266
604
14%
11%
13%
336
293
629
11%
10%
11%
COLLECTIVE BARGAINING
AGREEMENTS
Of all permanent employees globally,
22% were covered by collective
bargaining agreements in the 2021
financial year.
293
284
52
629
17%
9%
6%
11%
2
2
%
20%
11%
7%
13%
%
8
7
Collective bargaining agreement
No collective bargaining agreement
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 56
Community
We seek to build brighter and
healthier communities through care
and collaboration. We partner with
like-minded organisations to identify
and facilitate opportunities to create
shared value.
Through a combination of financial and in-kind
support, we facilitate and sponsor various
community programmes each year. We focus
primarily on funding clinical research,
improving access to healthcare, promoting
science education and supporting local
environmental initiatives. This year, COVID-19
restricted some of our business-as-usual
activities, and our efforts shifted to responding
to immediate community needs in light of the
pandemic.
Mexico was more severely impacted by the
coronavirus than New Zealand. As COVID-19
testing was limited in the public health system
in Mexico, we provided our Tijuana employees
with access to private healthcare for testing
and treatment. Some of our people have tested
positive for COVID-19 and have been
hospitalised. To meet their needs and support
the local healthcare community at large, we
donated 40 F&P Airvo 2 systems, along with
20 850 humidifiers and associated
consumables to hospitals in Tijuana.
URGENT HELP DURING THE
COVID-19 PANDEMIC
During the COVID-19 pandemic, we acted
quickly to help our local communities.
Because the majority of our employees
work at our facilities in Auckland, New Zealand
and Tijuana, Mexico, those locations were the
focus of our response.
At the beginning of the pandemic, there
were global concerns about a possible
shortage of ventilators for treating COVID-19
patients. Fisher & Paykel Healthcare does
not produce ventilators; however, through
our supplier relationships we were able to
purchase 79 ventilators and donate them
to the New Zealand Ministry of Health.
This donation was valued at $5 million.
There was also concern about the availability
of personal protective equipment (PPE),
including masks, for healthcare workers. We
mobilised a team of engineers to design an
alternative mask that could be manufactured at
our site in Auckland if needed. We produced
and donated a small supply to the Ministry of
Health. Fortunately, this risk did not materialise,
and New Zealand has been able to meet the
demand for personal protective equipment.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY ABSORBING
INCREASED AIRFREIGHT
AND SUPPLY CHAIN COSTS
Because of challenges with global
supply chains, we relied heavily on
airfreight to bring in raw materials
quickly and deliver product to
customers. The cost of airfreight and
expediting the supply of raw
materials was significant; however,
we have opted to absorb these cost
increases instead of passing them on
to our customers in the form of
increased pricing.
57
FISHER & PAYKEL HEALTHCARE
FOUNDATION
One of the hallmarks of a successful
business is looking after the wider
community.
At the end of the 2021 financial year, Fisher &
Paykel Healthcare committed $20 million to
establish the new Fisher & Paykel Healthcare
Foundation. This charitable organisation has
been established to enable a more sustainable
model for funding of community and charitable
activities. The Foundation's purposes include
supporting and funding health research,
programmes that improve access to healthcare,
environmental protection initiatives and
promoting awareness of opportunities in STEM.
A board, consisting of independent trustees and
representatives from Fisher & Paykel Healthcare,
will provide oversight and make funding
decisions. We look forward to reporting on the
foundation’s activities next year.
$20m
TO ESTABLISH THE NEW
FISHER & PAYKEL HEALTHCARE FOUNDATION
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 58
Community – Continued
SOUTHSCI
This year our New Zealand team continued to
support SouthSci, an organisation that helps
enable education opportunities for kids in
STEM (science, technology, engineering and
maths). An initiative of COMET Auckland,
SouthSci aims to spark students’ interest in
science-related fields and to build relationships
between local businesses, researchers, schools
and youth.
During the months when Auckland was not
subject to COVID-19 lockdowns, our volunteers
participated in five SouthSci initiatives:
• The Gardens School – Minimising Carbon
Footprint
• East Tamaki School – Guava Moth Traps
• Pasifika Early Learning – Le Malelega a le
To'elau (Waste Minimisation),
• Pasifika Early Learning – Puna o le Atamai
(Energy Production, Use and Sustainability)
• Southern Cross Campus – Weather Station
Rollercoaster.
We also trialled mentor ‘coaches’ where a
mentor from a previous year provides guidance
for new mentors. Schools experienced
challenges with lockdowns and variable
student attendance due to COVID-19, and
many project leaders expressed appreciation
for our mentors’ time and interest.
Photo: Courtesy of SouthSci 2020
I know how important STEM is for women
and people of colour in New Zealand. They
are not well represented in STEM careers
and it starts when they are very little.
NIQI OGLETREE
Mentor and Process Development Engineer, Infant Care
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 59
COVID-19 CRITICAL CARE CONSORTIUM
Early on, as the COVID-19 pandemic spread
from country to country, emergency room and
ICU clinicians relied on disparate sources of
treatment information, from spreadsheets to
medical journals to online resources and
conversations with colleagues.
In a fast-paced ICU environment, they did not
have time to find specific information required
for each patient case. Because of the novelty of
COVID-19, treatment databases were often
incomplete, and many were set up for academics
working on a research schedule, not clinicians
responding to the urgent needs of the ICU floor.
Professor John Fraser of the University of
Queensland founded the COVID-19 Critical Care
Consortium, a global alliance of healthcare
professionals and researchers, to solve this
problem. Led by a team based at Brisbane’s
Prince Charles Hospital, the consortium – also
known as COVID Critical – sought to create an
online registry of de-identified patients.
Working in partnership with IBM, they designed
a web-based app to facilitate the registry.
Clinicians in more than 400 hospitals around
the world are now using the app to input data
into the COVID Critical registry. They can
compare their own patients in the ICU with
patients around the world to see which
treatments were successful with which patients.
The registry is the largest repository of
COVID-19 ICU patient information in the world
and it is now powering statistical analyses for
researchers at Queensland University of
Technology. Endorsed by the World Health
Organization and the US Centers for Disease
Control and Prevention, it already contains
more than 3,600 de-identified patient cases.
The registry and app will potentially provide
doctors with the evidence and information
they need to save lives in the future,
particularly in middle-income countries with
limited resources and support.
Fisher & Paykel Healthcare supported the
project by providing $250,000 in funding to
the COVID-19 Critical Care Consortium. These
funds will cover the cost of hiring people to
input de-identified patient data into the
registry in Brazil, South Africa and Indonesia.
CLINICAL RESEARCH FOR COUNTIES
MANUKAU HEALTH AND MIDDLEMORE
HOSPITAL
We continued our ten-year, $1.5 million
partnership agreement with Counties Manukau
Health this year, donating $150,000 to fund
clinical research. Middlemore Hospital will use
the funds for research projects that benefit
local communities in South Auckland. The
partnership helps Counties Manukau Health
attract and retain top clinicians and enables
Middlemore Hospital to extend its research
agenda. This is one of the ways that Fisher &
Paykel Healthcare supports our local South
Auckland community.
GLOBAL INITIATIVES
While a lot of our community giving is
focussed on New Zealand and Mexico, teams at
our global offices also select and sponsor
community initiatives at their discretion which
often link with employee engagement and our
purpose. For example, in North America, the
UK and Australia, our people participated in
charity fundraising activities to support
organisations that may have seen a decline in
donations. This included raising money for
cancer, sleep health and chronic obstructive
pulmonary disease charities.
SUSTAINABLE TAX STRATEGY
Collecting and paying tax is an important
contribution to the communities in which we
operate. In support of our overall business
strategy and objectives, we pursue a tax
strategy that is principled, transparent and
sustainable in the long term.
Our Group’s tax contribution includes paying
corporate income taxes, employment-related
taxes and other taxes that we pay or collect on
behalf of governments. We support the OECD
Business and Industry Advisory Committee
(BIAC) Statement of Tax Principles for
International Business and have endorsed
these principles in our published Group Tax
Strategy, which was reviewed and approved by
our Board in November 2020.
Our tax strategy sets out our approach to tax
governance and tax management and is aligned
to our conservative approach towards tax risk.
Its primary purpose is to ensure that we comply
with all of our tax obligations, undertake all
transactions with a business purpose considering
all of our stakeholders, and have an open and
transparent relationship with tax authorities.
Our business model is centred in New Zealand,
and the majority of our taxes are paid in New
Zealand. Most of our manufacturing activities
and tangible assets are located in Auckland.
All of our R&D is performed in New Zealand,
and the associated intellectual property is
owned in New Zealand as well.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 60
Environment
Our environment refers to the
natural resources required to
design, produce, ship and use
products and therapies.
We recognise we have a responsibility to
care for the natural environment while we
pursue our business goals. Climate change
is a growing concern among our customers,
investors, and our own people. Furthermore,
environmental legislation is emerging in
countries where we manufacture and sell
our products, so it is important that we strive
for continuous improvement in this area.
Our approach is to operate our business
efficiently and responsibly while improving
care and outcomes for patients. We measure
key environmental metrics, including waste
management, recycling and water usage,
and publicly report on these metrics. As
part of our eco-efficiency strategy, we have
established collaborative teams to work
on a range of topics, including sustainable
packaging, bioplastics and 3D printing
recycling. We believe that by investing in
these initiatives, we can be more innovative
and more successful in the long term.
CDP SCORES
Each year we participate in CDP and our scores have shown continuous improvement. We began
disclosing on Water and Supplier Engagement in 2020 and on Forests in 2021. Below are our CDP
scores for the past three financial years.
Topic
Climate
Supplier Engagement
Water
Forests
FY19
FY20
FY21
B
–
–
–
B
B-
C
–
A-
A-
B
C
KEY ENVIRONMENTAL METRICS
Below is a summary of our performance metrics for the past three years. As we signalled in
last year’s annual report, this year Scope 3 data includes carbon emissions from our supply chain.
This helps us identify and prioritise areas for strategic carbon reduction.
Topic
Scope 1 emissions (tonnes Co2e)
Scope 2 emissions (tonnes Co2e)
Scope 3 supplier emissions (tonnes Co2e)
Water usage (cubic litres)
Landfill waste diverted (cubic metres)
Recycling efficiency (percentage waste recycled)
* Estimate/forecast only.
FY19
2,021
9,094
21,931
106,373
–
69%
FY20
1,914
8,814
650,000*
98,772
1,032
66%
FY21
1,465
11,050
718,991
134,900
1,630
62%
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 61
CARBON COMMITMENTS
In New Zealand, we have been measuring our carbon footprint since 2012, and each year we
engage Toitū Envirocare to conduct third-party carbon footprint audits. In 2019, we set science-
based targets for Scope 1 and 2 carbon emissions, which are within our operational control, along
with a Scope 3 supplier engagement target. Those targets were approved by the Science Based
Targets Initiative as consistent with levels required to meet the goals of the Paris Agreement. Our
target is to reduce our Scope 1 and 2 emissions by 4.2 per cent annually using the 2019 financial
year as a baseline. During the 2021 financial year, we confirmed that 20 suppliers have also set
Science Based Targets or equivalent targets for carbon reduction.
Scope 1 and 2 carbon targets in tonnes of CO2
2024 Target
2029 Target
2034 Target
Direct emissions – fuels, refrigerants, electricity and heat.
8,846
6,494
4,143
CARBON EMISSIONS
As we signalled last year, FY21 is the first year
that our carbon audit included Scope 3
emissions, which include freight and extend
across our supply chain. Our carbon audit for
the 2021 financial year shows a carbon
footprint of 731,500 tonnes of CO2e. This is in
line with previous forecasts that take into
account revenue growth.
Scope 1 and 2
During the COVID-19 pandemic, demand for
some of our key products increased by four
and five times during the 2021 financial year.
We moved to 24/7 shifts in New Zealand and
Mexico. The increase in operational activity
resulted in higher electricity use and other
direct emissions. In the long term, we remain
committed to decoupling carbon emissions
from production levels, as the impact of
COVID-19 diminishes. We will be piloting an
internal carbon price during FY22 so that the
carbon impact can be factored into our
business decisions.
Scope 3
The use of airfreight is one of our most
significant sources of carbon emissions, and
whenever possible, we ship our products by
sea freight. During the COVID-19 pandemic, we
had to rely more heavily on airfreight to import
raw materials and ship finished goods. As a
result, we reported a significant increase in
Scope 3 emissions. We expect airfreight to
return to normal levels over time as the impact
of COVID-19 diminishes.
We remain committed to educating our
suppliers about their responsibility to reduce
carbon emissions and to set their own Science
Based Targets. We have committed that 87 per
cent of our upstream suppliers (by spend) will
have set targets in line with the Science Based
Targets Initiative by 2024. During the 2021
financial year, we began this education process
and will continue those efforts during the next
financial year.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 62
Environment – Continued
WATER USAGE
TRAVELWISE CHOICES AWARD
MEMBERSHIPS
We have established an absolute water
reduction target of 2 per cent per year. During
the 2020 financial year, we exceeded that
target, reducing water usage by 7 per cent. In
the 2021 financial year, we significantly
increased production on key products for
hospitals treating patients with COVID-19. As a
result, water usage increased over the prior
financial year.
GREEN TEAM
Our volunteer-led Green Team now
includes more than 400 people promoting
environmental sustainability on our Auckland
campus and in the community. A highlight was
the annual Sustainability Week in November.
This included a presentation about internal
carbon pricing, a tour of our newly opened
Environmental Innovation Centre and a briefing
on international climate negotiations from the
New Zealand Ministry for Foreign Affairs &
Trade. The week finished with a sustainable
transport showcase featuring the latest electric
vehicles, bikes, e-bikes, e-scooters, carpooling
and public transport to encourage employees
to move to alternative forms of commuting as
a way of reducing greenhouse gas emissions
and local air pollution.
Fisher & Paykel Healthcare was selected the
winner in Auckland Transport’s Travelwise
Choices Awards in the category Excellence in
Travel Choices, which recognise the
commitment of businesses, individuals and
community organisations to encourage staff,
students, customers and volunteers to make
fewer car journeys. Judges said Fisher & Paykel
Healthcare “displays a strong commitment to
sustainability, including promoting sustainable
transport modes to staff as part of a wider
initiative to reduce local air pollution and
greenhouse gas emissions”.
Fisher & Paykel Healthcare is a member of the
Climate Leaders Coalition (CLC) a group of
leading New Zealand companies who are
committed to taking voluntary action on
climate change. This includes measuring and
publicly reporting emissions, setting a public
emissions reduction target, and working with
suppliers to reduce their emissions.
Fisher & Paykel Healthcare is also a voluntary
member of the Sustainable Business Council
(SBC), which aims to mainstream sustainability
within the New Zealand business community.
SBC members make a commitment to address
greenhouse gas emissions, build sustainability
into their purchasing decisions, and introduce
annual reporting practices.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY CASE STU DY
“Fern” and our recycling revolution
Fisher & Paykel Healthcare’s
Environmental Innovation Centre has
been busier than usual, thanks to
our first environmentally tasked
robot.
Our Robotic Disassembly System for the
Recycling of Humidification Chambers, or
‘Fern’ as it was named in a company
competition, is hard at work disassembling
unusable chambers into four pieces, so
they can bypass the landfill and get
recycled instead.
The robot project, which took about 14
months to complete and cost around
$400,000, was conceived at an Ecodesign
meeting and inspired a manual prototype
crafted (in his spare time) by systems
specialist Stewart Nankivell. Industrial
robotic experts at Facteon then brought
the concept to life.
Head of Sustainability and Environmental
Innovation Nic Bishop explained that Fisher
& Paykel Healthcare’s humidification
chambers are highly designed products,
and it takes cutting-edge technology to
dismantle them for recycling.
Fern therefore has three stations that
perform four disassembly jobs, separating
the chamber base and gasket, port cap,
dome and float valve from each other and
placing them in separate bins.
The robot is proving to be up to the job. Fern
can dismantle 90 chambers at a time, which
works out at about one every 19 seconds – or
1,000 in six hours. The environmental team
estimates the robot has already recycled
around 100,000 chambers. This equates to
330m3 of landfill waste diverted.
“These chambers generate a large amount of
waste or are incinerated, which results in air
pollution that directly impacts on respiratory
health, so recycling them directly aligns with
what we do,” said Bishop.
The team hope that future miniaturised
versions of the robot will someday enable
environmentally minded hospitals worldwide to
recycle their own Fisher & Paykel Healthcare
chambers.
63
RECYCLING
Fern can dismantle 90 chambers
at a time, which works out at
about one every 19 seconds –
or 1,000 in six hours. The
environmental team estimates
the robot has already recycled
around 100,000 chambers.
This equates to 330m3 of
landfill waste diverted.
“Feedback from our international sales
teams and others talking directly with
customers is that they are concerned
about plastics and sustainability of use.
We know it’s what they want, and there
is a desire for recycling,” said Bishop.
In the meantime, he and the
Sustainability team are looking to deploy
another ‘Fern’ to Mexico and are
investigating ways to create a robot that
will help recycle our breathing circuits.
“It comes down to doing the right thing,”
said Bishop.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 64
Environment – Continued
INTERVIEW
ELLA MEISEL
ENVIRONMENTAL SPECIALIST
– ECODESIGN
Ella Meisel is a product
development engineer
and environmental
specialist who works in our
Sustainability team leading
Ecodesign initiatives. We
spoke with Ella about our
Ecodesign programme.
What is the purpose of the
Ecodesign programme?
Our company’s core purpose is improving
care and outcomes for patients. It’s important
to point out that the products and therapies
we make already help patients to recover
more quickly, saving on the high energy,
water and medical gas consumption often
needed to treat a patient in hospital. Our
Ecodesign programme aims to innovate for
improved outcomes for both patients and the
environment.
Recently, our customers have been
requesting information about the renewable
content, packaging materials and recyclability
of our products. Tenders and requests for
information now regularly include questions
about environmental issues and waste,
often driven by commitments made by
healthcare providers.
Two notable examples are the US
Environmentally Preferable Purchasing
policy and the UK National Health Services’
target to reduce all carbon emissions that they
can influence to net-zero by 2045.
Governments and industry are making
commitments to reduce emissions from the
healthcare sector, and this has highlighted the
importance of our internal efforts to decouple
carbon from growth.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 65
How are you making your products
more sustainable?
How do you reduce the impact
of product packaging?
Sustainability challenges are opportunities
to innovate. We think about sustainability
right from the start when we are designing a
new product, because early design decisions
can have a big impact over a product’s lifetime.
We have more than 50 product development
engineers across the company working on a
range of Ecodesign projects, including
sustainable packaging, bio-based plastic
technology and sustainable procurement.
One of the key tools we use is environmental
lifecycle assessment software. This helps us
better understand the sources of carbon
emissions based on evidence, as the results
are sometimes surprising.
For example, the main source of carbon
emissions related to our products is the
electricity used to power a device when it is in
use, and this varies country by country. The
total carbon footprint of a device used in the
US over its lifetime is double that of a device
used in New Zealand. This is because New
Zealand has a renewable energy supply, while
the grid mix in the US is far more carbon-
intensive. The carbon emissions associated
with the disposal of devices and consumables
at the end of life are far smaller as a
percentage of the total carbon footprint.
We apply circular-economy principles and use
recyclable materials, such as cardboard and
PET. For example, the clamshell packaging for
our cannulas is made from recyclable PET, and
we mainly use recyclable cardboard for our
outer packaging. Instead of expanded
polystyrene, we use cardboard structures to
protect our devices during transport.
We also look for ways to reduce the weight
and volume of our packaging and create
space-efficient configurations. Often this is
best achieved by using soft plastic bags. One
of the challenges with soft plastic is recycling it
in hospitals – soft plastic recycling is available
in some markets, but not in others.
For plastics, we are actively exploring the use
of bio-based plastic made from renewable
sources. Using bio-based plastic could allow us
to design products that utilise the technical
benefits of plastic in healthcare applications
while also lowering the carbon footprint
associated with its production. This is rapidly
progressing technology, and we are working
with industry partners to trial new materials as
they are developed.
We have more than 50 product
development engineers across
the company working on a range
of Ecodesign projects, including
sustainable packaging,
bio-based plastic technology
and sustainable procurement.
ELLA MEISEL
Environmental Specialist – Ecodesign
Image: F&P Optiflow Junior 2 cannula
packaging is made from recyclable PET.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 66
Risk management
RISK MANAGEMENT FRAMEWORK
Our framework for managing risk is based on
five steps:
5.
MONITOR
& REVIEW
1.
ESTABLISH
THE CONTEXT
PURPOSE
Inform decision
making regarding
risks to the business
to create and
protect value
2.
IDENTIFY &
EVALUATE
THE RISK
4.
COMMUNICATE
AND CONSULT
3.
DEVELOP &
IMPLEMENT
THE RESPONSE
This framework helps to ensure we resolve
internally-identified risks in compliance with
laws and regulations; plan, make decisions and
prioritise opportunities and threats to strategic
objectives and new product introductions; and
respond in a prompt, efficient and effective
manner to future events that create
uncertainty or pose a significant risk.
INTERNATIONAL STANDARDS
The chart below identifies the
international standards that guide us in
three key areas.
Risk type
ISO Standard
Business risks
Product risks
31000 – Risk Management
Principles and Guidelines,
with enhancements
to focus on our key
strategic objectives.
14971 – Medical Devices
Application of Risk
Management, specific to
medical device design and
manufacturing.
Health and safety
risks
45001 – Health and Safety,
with greater emphasis on
managing Critical Risks.
Our approach to risk management
is to identify and manage risks
within acceptable levels. While no
risk management system can ever
be infallible, we seek to improve
the quality of our business
decisions by applying a best-
practice framework and aligning
with international standards.
GOVERNANCE OF RISK
Our Board is committed to its role of ensuring
quality, safety, compliance and effective risk
management. The Board provides oversight of
senior leadership’s management of risk. The
Board meets regularly with key risk
management functional leaders and receives
regular reports from senior representatives on
material risk and mitigation strategies.
The Audit & Risk Committee reports to and
assists the Board by reviewing and ensuring
our risk management processes (excluding any
risks related to quality, safety and regulatory
functions) can provide reliable information to
the Board on the status of major risks that
could impact our business.
The Quality, Safety & Regulatory Committee
reports to and assists the Board by reviewing
our quality, health and safety and regulatory
risk management approach. The Committee
ensures effective mechanisms and internal
controls are in place to identify and manage
areas of material risk and maintain compliance
with applicable regulations.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY MATERIAL BUSINESS RISKS AND
STRATEGIES TO MITIGATE
After completing our risk management
processes, as well as the materiality
assessment described in the Company
section of this report, we have identified
key areas of risk for our business and
strategies to mitigate them.
67
Area
Risk
Strategies to mitigate
Health and
safety
Work-related injuries
or illnesses
Our global health, safety and wellbeing standards are aligned with ISO 45001,
with greater emphasis on managing critical risks.
We design and implement preventative and recovery risk controls for critical
health and safety risks across our global business.
We report our health and safety progress regularly to the Board of Directors
and to the Quality, Safety & Regulatory Committee three times a year.
Product
quality and
patient safety
Patients are harmed
as a result of using
our products
We operate a worldwide quality management system related to the design,
testing and manufacture of our products. Furthermore, we foster an
organisational attitude of product safety and continuous improvement.
Market access Maintaining
regulatory
compliance is
required to market
and sell our products
in certain countries
We have a regulatory affairs process that enables us to obtain and maintain
product licenses, as well as a quality management system that ensures
compliance with applicable regulatory requirements.
We have monitoring steps in place to evaluate the effectiveness of our
programmes, and our executive management team conducts regular
management reviews.
Intellectual
property
Third parties
asserting IP rights
against us
We have a comprehensive patent portfolio across our technologies and
we actively and robustly manage IP litigation risk. As part of our product
development phase, we conduct freedom-to-operate searches during product
design. We monitor competitor patent filings and take action as required.
Sustainable
profitable
growth
Foreign exchange
losses
Business
continuity
Continuity and
quality of supply
Currency risk is hedged in accordance with the Board-approved hedging
policy. The hedging policy aims to reduce the impact of short-term currency
fluctuations on our cash flow. We use derivative financial instruments to hedge
exposures in the current and future years. A diversity of currency exposures
also provides some natural hedge.
We actively monitor our end-to-end processes and systems through an
internal risk management process and implement actions to prevent
disruption. We use a business impact analysis to identify, understand and
quantify the impact of a material disruption to a key facility, location, supplier
or business process. This approach enables us to prioritise the most significant
potential exposures to the business. It is also aligned with our crisis planning
framework, which has been important during our response to COVID-19.
Cyber security
and data
protection
Cyber security
attack resulting
in disruption to
operations and data
breach
To manage our risk and protect the data entrusted to us, we are constantly
reviewing and honing our control mechanisms to ensure our protections
can proactively respond to developing cyber threats. We continue to use
independent reviews to test and identify potential risks to ensure we focus on
the right cyber risks.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 68
Risk management – Continued
conditions, inform executives and make
decisions. We used this framework to
respond to the COVID-19 pandemic at our
facility in Mexico as well.
As we managed through the pandemic
during the 2021 financial year, we kept detailed
records of lessons learned and further
developed our business continuity plans.
The experience of managing through a
pandemic developed our people’s ‘muscle
memory’ and strengthened our ability to
respond in a crisis. It created opportunities
to identify subject-matter experts across the
business, built relationships between people
previously unconnected, and strengthened key
relationships with our suppliers and customers,
as well as leaders in government, trade and
foreign affairs. Our executive management
team is confident that the business is more
resilient now than before the crisis began.
PRODUCT QUALITY AND PATIENT SAFETY
Patient safety remains our highest priority, so
our products have to meet the highest quality
standards. We manage this risk through
processes that drive continuous improvement
in quality throughout the lifecycle of our
products. These include:
• Proactive quality control mechanisms within
our manufacturing operations
• Collecting and using data and statistical
analysis to make improvements
• Interventions to correct a process before
product quality is compromised.
These processes help to ensure that our
customers and patients receive high-quality
products that are safe and effective.
BUSINESS CONTINUITY PLANNING
Over the past several years, we have increased
our focus on business continuity planning.
Our goal is to anticipate and plan for potential
crises that may cause a significant disruption
to our business and subsequently impact
customers, products and shareholders. We
review our business continuity framework
regularly to adapt to new and evolving threats,
such as climate-related events, cybersecurity
incidents, changes due to business growth, and
increased customer demand for products. We
also conduct simulations regularly to provide
confidence that our framework is tested,
embedded and continuously improved.
Before the COVID-19 pandemic emerged,
we had already created a framework for crisis
management and identified processes to drive
the framework. We also had designed visual
management and communication tools to
support the framework.
The COVID-19 pandemic tested, and in many
ways strengthened, our business continuity
plans. Although it brought some unanticipated
disruptions to our business, our risk framework,
crisis simulations and previous experience
managing other events served us well.
Early in the pandemic, we formed a crisis
response team with people from across
the business. Initially, the team was formed
to handle some of the early challenges of
acquiring raw materials, increasing capacity
and managing hundreds of inquiries from
the media, government officials, investors
and hospitals.
Within weeks, the team had identified 13
different workstreams to focus on a crisis
response within four broad categories.
• People, health and safety
• Manufacturing, distribution and capacity
• Social responsibility
• Communications
Each of these workstream teams had a
designated leader empowered to make
decisions. The teams met several times
a day in order to evaluate rapidly changing
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY HEALTH AND SAFETY
At Fisher & Paykel Healthcare, we are
committed to ensuring the health, safety,
and wellbeing of our people. During the
2021 financial year, keeping our people and
products safe during the pandemic was one
of our key priorities.
As an essential service, our operations
have continued during COVID-19 lockdowns.
Our health and safety approach was – and
remains – to meet or exceed local government
recommendations.
At our largest manufacturing facility in
New Zealand, we implemented mandatory
masks, social distancing, extra cleaning
protocols and Bluetooth contact tracing cards.
Gowning areas, production lines, and cafeterias
were rearranged, physical barriers erected and
desks moved to create more space between
people. Occupancy in meeting rooms and work
areas is limited. We have health professionals
on site, along with a COVID-19 support team
who assist with contact tracing efforts and
answer questions 24/7.
At our Mexico site, we took preventative
measures to protect our people before the
pandemic arrived in Tijuana. Our Mexico
leaders created a COVID-19 committee to
monitor the pandemic’s impact and implement
safety measures across the facility. This
included masks and goggles, sanitising mats
and cleaning kits. Capacity limits were set for
meeting rooms, and acrylic dividers were
added in manufacturing areas and cafeterias.
During the worst of the pandemic, employees
received essential groceries.
Special leave entitlements have helped to
ensure our people could take time off work
if they needed to self-isolate, and we have
provided discretionary COVID-19-related leave
so that workers can make the right decision
without fear of losing income. These changes
will remain in place until vaccination
programmes have been rolled out globally,
and the threat of COVID-19 has diminished.
COVID-19-related health and safety measures
will continue to be a priority during the 2022
financial year. In addition, we will continue our
focus on aligning our operations with ISO
45001 and on managing Critical Risks across
our global operations.
69
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Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY
70
Risk management – Continued
HEALTH AND SAFETY DATA
Injury rates by year
Injury rates
TRIFR
LTIFR
2019
2.33
0.47
2020
2.29
1.09
Injury rates (per million hours worked) and severity
TRIFR
LTIFR
Fatality
Serious injury
Lost time injury
Medical treatment injury
Restricted work injury
First aid injury
Pain and discomfort
New Zealand
Mexico
Rest of world
2020
2.83
0.65
0
0
0
4
6
163
41
2021
1.58
0.95
0
0
7
0
5
223
116
2020
0.39
0.39
0
0
2
0
0
32
22
2021
0.25
0.25
0
1
0
0
0
3
6
2020
3.46
2.97
0
2
4
1
0
7
13
2021
1.12
0.64
2021
1.37
0.46
0
0
2
1
1
11
13
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 71
MENTAL HEALTH AND WELLBEING
The stress of the pandemic has impacted our
people in different ways. Although COVID-19
was largely kept out of New Zealand, several of
our people in other locations contracted the
virus in their communities, and many lost a
loved one to it. We have been promoting
counselling services available through the
Employee Assistance Programme (EAP), and
the number of phone calls to these services
has doubled. Through one-on-one wellbeing
conversations, we learned some of our
New Zealand people wanted counselling
services but were not comfortable reaching
out to EAP. As a solution, we arranged for a
qualified counsellor to be available on site.
At the height of the pandemic, we formed a
working group to research the impact of
COVID-19 on our waged people’s wellbeing.
Based on their findings, we released training on
wellbeing and fatigue management for all team
leaders of waged people in New Zealand.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 72
Risk management – Continued
CLIMATE-RELATED RISKS
Our processes for identifying and managing
climate-related risks
We identify and assess climate-related risks as
part of our overall sustainability strategy, which
our Board and executive management review
annually.
Our process includes identifying direct and
indirect climate-related risks, as well as
considering short, medium and long-term risk
horizons. We also rely on input obtained from
external stakeholders through our materiality
assessment described in the Company section
of this report.
We assess climate-related risks along a
six-year-or more time horizon that considers
severity, likelihood, geographical location, and
local impact versus enterprise-wide impact.
We define substantive financial impacts as
those greater than $5 million.
How our processes for identifying,
assessing and managing climate-related
risks are integrated into our overall risk
management
We integrate our processes for identifying,
assessing and managing climate-related
risks by:
• Documenting, scoring and managing
climate-related risks through our ISO14001
Environmental Management System process.
• Embedding climate-related risks into
our group-wide risk management process,
where they are reviewed by our risk
management team.
• Reporting climate-related risks to
the Board through the Audit & Risk
Committee for consideration as part of
our broader risk management framework.
The two most significant climate-related
risks important to our stakeholders are carbon
emissions and healthcare waste.
Metrics we use to assess climate-related
risks and opportunities
We have adopted parts of the Sustainability
Accounting Standards Board (SASB)
standard for the Medical Equipment &
Supplies industry related to climate-related
disclosure. This includes integrating
accounting metrics HC-MS-410a.1 and
HC-MS-410a.2 into our reporting on our
environmental management system.
We report environmental impacts following
the Climate Disclosure Standards Board
(CDSB) principles and ‘REQ-04 Sources of
environmental impacts’. Environmental impact
reporting can be found in the Environment
section of this report.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 73
Resilience of our strategy
Analysing the potential impacts of climate
change on our operations is important to
us. To assess risk, we have considered
a range of climate-related scenarios.
This includes a business-as-usual approach
to decarbonisation (with global temperatures
increasing by more than 3 degrees Celsius)
and a rapid decarbonisation approach
(with global temperatures increasing by less
than 1.5 degrees Celsius).
Our analysis takes into account the following:
• The impact of changing weather patterns.
• Increasing average temperatures, coupled
with the by-products of these environmental
system changes such as sea-level rise,
large-scale population displacement, and
impacts on the global healthcare system.
• Supply chain disruption risk.
• Natural resource scarcity.
• The impact of regulatory controls
related to climate-related issues.
Our strategy takes into account current
and likely future climate-related risks.
We acknowledge that the carbon and
climate risk area will be an ever-changing
environment, and our teams will continue
to adapt our sustainability program and
guidance to reflect this.
Potential climate-related risks and opportunities – and their impact on our business,
strategy and financial planning
The chart below identifies the following climate-related risks with the potential to have a
substantive financial or strategic impact on our business.
Type
Climate-related
Risk
Potential impact
Strategies to mitigate through business
and financial planning
Increased
pricing
of carbon
Higher operating costs
• Fuel
• Freight
• Electricity
• Insurance
• Raw materials
Higher compliance costs
Estimated risk $600,000 to
$1.5 million per year.
k
s
i
r
n
o
i
t
i
s
n
a
r
T
Changes to
climate-related
international
regulations
Impact on market access
Higher operating costs
k Water scarcity
s
i
r
Direct impact on our operations in
Mexico due to the requirement to
have water-cooling capacity
Estimated risk is $100,000 to
$1,000,000 per year.
Committed to reduce Scope 1 & 2 carbon
emissions by 67% by 2034 from a 2019 baseline.
Use internal carbon prices to guide
business decisions.
Implement Ecodesign initiatives to assist
in reducing our carbon footprint.
Use renewable energy certificates to
mitigate potential higher carbon costs for
non-renewable energy in New Zealand.
Install solar array options to provide power
for Mexico operations.
Monitor regulatory developments to assess risk
of increased carbon costs to global operations.
Develop capacity to use environmental
lifecycle assessment and disclose product
carbon-footprint data.
Prioritise water conservation at Mexico facility.
Construction on facilities in Mexico takes
into account the inclusion of water-efficient
cooling equipment.
Disclose water usage via CDP and verify water
use as part of our sustainability programme.
Supply chain
weather
disruption
Reduced revenue from decreased
production capacity
Monitor changes in the physical climate to
assess the impact on our business.
Supply chain interruptions may impact our
ability to deliver on time to global customers
Reduced availability of insurance on
assets in “high-risk” locations
Estimated annual risk $100,000 to
$1,000,000 per year.
Source from multiple raw material suppliers
so that supply risk is not concentrated with
one company or location.
Update forecasts of sea-level rise and impacts
on strategic supply chain locations each year.
m
r
e
t
-
t
r
o
h
S
k
s
i
r
m
r
e
t
-
i
m
u
d
e
M
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY
74
Governance
We are committed to ensuring
that the company maintains a high
standard of corporate governance
and ethical conduct.
CORPORATE GOVERNANCE STATEMENT
The Board and management of Fisher & Paykel
Healthcare are committed to ensuring that the
company maintains a high standard of
corporate governance and ethical conduct.
The Board regularly reviews and assesses
the company’s governance policies, practices
and procedures against national and
international standards.
The company is listed on both the NZX
and the ASX (Foreign Exempt Listing
category). Corporate governance principles
and guidelines apply in both countries. As at
the date of this report, the company complies
with all of the recommendations of the NZX
Corporate Governance Code. In addition,
although the company is not required to
comply with the ASX Corporate Governance
Council’s Corporate Governance Principles and
Recommendations (ASX Principles) given its
Foreign Exempt Listing on the ASX, the
company considers its corporate governance
practices and procedures substantially reflect
the ASX Principles. The full content of the
company’s corporate governance policies,
practices and procedures can be found in the
corporate governance section of the
company’s website – www.fphcare.com/
corporategovernance.
ETHICAL BEHAVIOUR
CODES OF CONDUCT
As a business we are committed to doing the
right thing. It is important to us and is what our
customers, employees, and shareholders find
compelling. We ensure we comply with our
legal and ethical obligations throughout our
business operations, from the way we source
materials, design and manufacture our
products, through to selling our products
across the world.
We have policies and procedures in place to
ensure we conduct our business in a legally,
ethically and socially responsible manner.
These policies are available on our website, and
summary information with respect to a number
of our policies can also be found throughout
this section.
SECURITIES TRADING POLICY
AND GUIDELINES
We are committed to ensuring our people
are aware of their obligations when trading
in or intending to trade in company financial
products. Our Securities Trading Policy and
Guidelines detail our policy on, and rules for,
all directors, officers, contractors or employees
who intend to trade in company financial
products. The policy explains insider trading
laws and the legal and reputational risks of
failing to comply with such laws. A copy of
the policy is available on our website.
We expect our employees and directors to
maintain high ethical standards. A Code of
Conduct for the company and a separate Code
of Conduct for Directors set out these
standards.
The Codes cover a range of areas relevant to
legal and ethical behaviour, including competing
fairly, health and safety, data protection and
privacy, working with customers and suppliers,
sanctions compliance, responsible marketing,
financial records and reporting, continuous
disclosure and insider trading, combatting
bribery and corruption and interactions with
healthcare professionals. It also covers matters
such as confidentiality, conflicts of interest,
receipt of gifts, and corporate opportunities.
The Codes explain how an employee or
director can report an actual or suspected
breach of the Code. This is also detailed in our
Speak Up (or whistle-blowing/protected
disclosures) policy, which ensures employees
know how to report potentially unethical or
illegal behaviour or breaches of our Code of
Conduct, without fear of retaliation or
harassment.
Training on our Code of Conduct is undertaken
by employees globally, and is part of our
induction process for new employees. The Code
of Conduct is available on our internal intranet
and our external website. New directors are
provided a copy of the Director’s Code of
Conduct during their induction training.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 75
Within our upstream supply chain, our
active risk mitigation means we continuously
monitor and partner with socially responsible
organisations that believe in doing the right
thing. We aim to dual source directly from
manufacturers, service providers and third
parties all over the world within our key
risk areas.
While materials are procured from all over
the globe, a large portion of the externally
procured materials originate from suppliers
in Asia and North America. To support our
suppliers and ensure transparency, we have
local teams that enable us to personally
interact and be present within our suppliers’
operations on a regular basis.
We have an in-house legal team that provides
advice and assistance to the business globally
on how to comply with our various legal
obligations and engage external legal counsel
to assist us as and when required.
We maintain a schedule for regularly reviewing
and updating corporate governance policies
and charters. The Code of Conduct was last
reviewed in March 2020.
SUPPLIER CODE OF CONDUCT
We are committed to building a supply
chain structure that supports our approach
to corporate social responsibility and
sustainability. To ensure that our supply chain
is transparent and coordinated across our
wider supply chain network, an integrated
enterprise resource planning system in
conjunction with our strong quality
management system is utilised. Our Supplier
Code of Conduct reflects our values and our
expectations for the conduct of all suppliers,
contractors and consultants, and their affiliates,
who provide goods or services to our group of
companies. We find business relationships are
more productive and effective when they are
built on trust, mutual respect and common
values.
As such, we seek relationships with suppliers
who share a common commitment to:
1. Incorporate quality business processes
within their day-to-day operation.
2. Conduct their business ethically and with
integrity.
3. Comply with all laws and regulations.
4. Respect human and employee rights.
5. Promote and maintain a health and safety
culture within their organisation.
6. Design for sustainability.
7. Monitor and minimise any negative impacts
on the environment.
8. Have systems in place to ensure business
continuity, continuous improvement and
protection of intellectual property.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 76
Governance – Continued
SUSTAINABLE PROCUREMENT
ANTI-BRIBERY AND CORRUPTION
In the course of our business we interact with a
wide range of government officials and private
sector individuals or businesses, including
government regulators, inspection authorities
and healthcare professionals.
We do not tolerate bribery, corruption,
kickbacks or other types of improper benefits,
whether committed by our own people or by
anyone we deal with.
Most of the countries in which we operate
have strict anti-bribery and corruption laws that
apply to our interactions with public officials.
Failing to comply with these laws could have
serious consequences for us, both as individuals
and as an organisation. In some cases, these
consequences could include criminal charges.
We have processes in place for assessing
anti-bribery and corruption risk and implement
measures to mitigate these risks.
We aspire to impact society in a positive way
and to develop, manufacture and distribute
our products in accordance with principles of
sustainable development. The raw materials
and components we use to manufacture our
products come from a network of suppliers
around the globe. Achieving our vision
depends not only on what we do, but on the
activities of our supply chain. For that reason,
we seek to purchase goods and services from
suppliers that minimise negative impacts and
increase positive outcomes through sustainable
and ethical business practices.
As mentioned on the previous page, our
Supplier Code of Conduct outlines our
minimum expectations in the principal areas
of human rights, labour practices, the
environment and anti-corruption. We seek
to engage suppliers that share our vision and
continually strive to develop in these areas
to deliver more environmental, social, and
economic benefits. We are committed to
working with our suppliers to increase
transparency and promote responsible business
practices, often beyond simple compliance.
We collaborate with them to implement
frameworks to identify and mitigate risks and
create stronger, sustainable supply chains.
Where these principles or remediation plans
cannot be agreed, Fisher & Paykel Healthcare
may decline to enter or may conclude business
relationships with those parties.
Our Code of Conduct sets out our expectations
for all employees in combatting bribery and
corruption. We never offer or accept (or ask a
third party to offer or accept) bribes, illegal
facilitation payments, secret commissions or
kickbacks to or from any person. These rules
apply to all our business activities, including
any interactions we may have with government
officials or with any private person or business,
either locally or overseas. In addition to the
Code of Conduct, the company also has a
policy that it does not make corporate level
political donations.
The Code requires that where we suspect
bribery or corruption, either by our own people
or by any of our suppliers, customers or other
business partners, we report it immediately.
The Speak Up policy ensures that all
employees know how to make such a report
and can be confident that concerns will be
taken seriously and investigated and will not
result in retaliation or other harassment.
During the year ended 31 March 2021 the
company is not aware of any instances of
corruption or of incidents in which employees
were dismissed or disciplined for corruption.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 77
INTERACTIONS WITH
HEALTHCARE PROFESSIONALS
As we are a medical device business,
we must comply with laws and regulations
on interacting with healthcare professionals
in various countries around the world. It is
critical that our activities do not improperly
influence the medical decisions of healthcare
professionals or the purchasing decisions of
entities that buy our products.
Our Policy on Interactions with Healthcare
Professionals ensures that we act ethically
and legally in our interactions with healthcare
professionals, comply with all applicable
laws, and do not provide improper benefits
or inducements to healthcare professionals.
We provide training to employees on this policy.
ETHICAL RESEARCH AND CLINICAL TRIALS
ANIMAL TESTING
We have formal procedures in place to ensure
that we adhere to the International Conference
on Harmonisation Good Clinical Practice (GCP)
standards during all clinical investigations we
carry out. GCP standards cover the design,
conduct, recruitment, recording and reporting
of clinical investigations that involve the
participation of human subjects.
Our procedures have also been compiled
based on the ISO 14155:2011 standard for:
Clinical investigation of medical devices for
human subjects – Good clinical practice and
the EU Medical Devices Directive.
These procedures are designed to ensure that
the data and reported results of all clinical trials
are credible and accurate and that the rights,
integrity and confidentiality of trial participants
are protected.
We sometimes participate in or observe testing
to assess biocompatibility and obtain
worldwide regulatory clearances. This includes
animal testing on rabbits, pigs, guinea pigs and
mice. We conduct this testing to according to
International Standards 10993 and 18562.
Our external test labs maintain accreditation to
the Association for Assessment and
Accreditation of Laboratory Animal Care
(AAALAC), and all applicable portions of study
protocols are conducted as per regulations and
guidelines regarding animal care and welfare.
Wherever possible, we look for alternatives
such as in vitro or analytical chemistry testing,
which do not require the use of laboratory
animals. We take great care to ensure there is
no duplicate testing of our products.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 78
Governance – Continued
THE BOARD
The Board plays a vital role in setting and
overseeing our strategic direction and driving
the business forward. Strong governance from
a diverse and experienced Board ensures we
can achieve our aims of improving patient care
and outcomes through inspired and world
leading healthcare solutions, thereby
sustainably increasing shareholder value.
The biography of each Board member,
including each director’s skills, experience,
expertise and term of office, is set out in the
“Our Board” section of this report.
Role of the Board
The Board is ultimately responsible for our
strategic direction. The specific roles and
responsibilities of the Board, and the Board’s
procedures, are set out in detail in our Board
Charter, available on our website. In summary,
the Board is elected by our shareholders to:
• approve the company’s business strategies
and objectives.
• oversee management in its implementation
of the company’s strategic objectives,
instilling of the company’s values and
performance generally.
• identify and manage risks.
• review and approve budgets and business
plans.
• adopt our remuneration policy and other
policies governing the way we operate our
business.
• provide governance of internal decision-
making and management.
The Board delegates management of
the day-to-day affairs and responsibilities
of the company to the CEO and executive
management to deliver the strategic direction
and goals approved by the Board. The specific
responsibilities delegated to executive
management are recorded in the Board
Charter and the Delegation Policy. A summary
of the Delegation Policy is also available on
our website.
The Board regularly reviews and assesses
our governance structures, policies, and
procedures to ensure these are in line with
international best practice and legal
requirements. The Board Charter was last
updated on 24 November 2020.
Nomination and appointment of directors
The number of directors is determined by
the Board, in accordance with the company’s
constitution. The constitution requires that
there are at least four directors, and no more
than nine directors, and governs the process
for the appointment and removal of directors.
A director is appointed by ordinary resolution
of the shareholders, although the Board may
fill a casual vacancy.
Under the NZX Listing Rules, a director must
not hold office (without re-election) past the
third annual meeting following the director’s
appointment or three years, whichever is
longer. A director appointed by the Board must
not hold office (without re-election) past the
next annual meeting following the director’s
appointment.
When searching for and nominating candidates
to act as a director, the People & Remuneration
Committee takes into account such factors as
it deems appropriate, including diversity of
gender, background, experience, and
qualifications of the candidate, independence
and the Board skills matrix. It may use external
search firms to assist with locating possible
candidates and gathering relevant information.
When considering the re-election of an existing
director, the People & Remuneration
Committee will also consider the length of
service of the director, and the director’s
performance on the Board to date. It is the
Board’s general expectation that a non-
executive director will hold office for an
aggregate period of approximately nine years
(including re-elections).
We undertake a number of checks before
appointing a director and putting forward to
shareholders a candidate for election as a
director, and ensure we provide shareholders
with all relevant information to inform their
decision on whether to elect or re-elect a
director.
At the annual shareholder meeting (ASM) on
21 August 2020, Pip Greenwood and Geraldine
McBride retired by rotation and, being eligible,
offered themselves for re-election and were
re-elected to the Board.
Scott St John succeeded Tony Carter as
Chairman with effect from the conclusion of
the 2020 ASM.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 79
Other procedures relating to the nomination
and appointment of directors are outlined in
the Appointment and Selection of New
Directors Policy available on our website.
Board diversity and skills matrix
At Board level, diversity allows the company to
benefit from a range of different perspectives,
which leads to healthier debate and decision-
making. As we operate in specialised
international markets, the Board believes that it
is important to have a Board consisting of
members with diverse backgrounds,
experience and skills. The Board also believes
that the tenure of each of its members is
important as it seeks to balance independent,
institutional knowledge gained through length
of service and the importance of fresh
perspectives in decision-making.
The table at right summarises the current key
skills, experience and tenure of the Board.
Skills and experience
Scott
St John
Lewis
Gradon
Michael
Daniell
Pip
Greenwood
Geraldine
McBride
Neville
Mitchell
Donal
O’Dwyer
Financial acumen
Sales/Marketing
Engineering/
Science/Technology/
Manufacturing
Medicine/Medical
Device
Legal/Regulatory
Governance
International
Business Experience
Tenure (years)
✓
✓
✓
✓
✓
5.5
✓
✓
✓
✓
✓
✓
✓
5
✓
✓
✓
✓
✓
✓
✓
19.5*
✓
✓
✓
✓
✓
4
✓
✓
✓
✓
✓
7.5
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
2.5
8.5
* Michael Daniell was appointed as a non-executive director on 1 April 2016 following his retirement as Managing Director and Chief Executive Officer.
While some directors have greater expertise in certain areas than others, the Board has determined
the table above on the basis of directors who have at least the minimum required level of skill and
experience in each area.
Written agreements with directors
Upon appointment, non-executive directors are issued a letter setting out the terms and conditions
of their appointment. This includes information about their role and duties, time commitments, term
of appointment, remuneration and insurance, access to information, and disclosure and compliance
obligations. A copy of the standard form of this letter is available on our website. The Chief
Executive Officer has an employment agreement setting out his roles and conditions of
employment. Further information about the remuneration of directors is set out in the
Remuneration section of this report.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 80
Governance – Continued
Directors’ and officers’ insurance
and indemnity
The Group has arranged, as provided for under
the company’s constitution, policies of
directors’ and officers’ liability insurance which,
with a Deed of Indemnity entered into with all
directors, ensure that generally directors will
incur no monetary loss as a result of actions
undertaken by them as directors. Certain
actions are specifically excluded, for example,
the incurring of penalties and fines which may
be imposed in respect of breaches of the law.
Independence of directors
We are committed to ensuring that a majority
of directors are independent of the company,
and do not have any interests, positions,
associations or relationships which might
interfere, or might be seen to interfere, with
their ability to bring independent judgement
to the issues before the Board.
The Board has regard to the factors described
in the NZX Corporate Governance Code when
assessing the independence of directors. After
consideration of these factors, the company is
of the view that:
1. Lewis Gradon is a director who is currently
employed in an executive role by the
company;
2. Michael Daniell is a director who was
employed in an executive role by the
company until 31 March 2016 and there was
not a period of at least three years between
ceasing such employment and serving on
the Board;
3. No director currently holds, nor has held
within the last 12 months, a senior role in a
provider of material professional services to
the company or any of its subsidiaries;
4. No director currently has, nor has had within
the last three years, a material business
relationship (such as a supplier or customer)
with the company or any of its subsidiaries;
5. No director is a substantial shareholder of
the company, nor a senior manager of, nor
otherwise associated with, a substantial
shareholder of the company;
6. No director has a material contractual
relationship with the company or another
group member other than as a director of
the company;
7. No director has close family ties with anyone
in the categories listed above; and
8. Other than Michael Daniell, no director has
held the position of director of the company
for a length of time that may compromise
independence.
Based on these assessments, the Board
considers that as at 31 March 2021 a majority
(five) of the directors are independent, namely
Scott St John (Chairman), Pip Greenwood,
Geraldine McBride, Neville Mitchell and Donal
O’Dwyer, and that Michael Daniell and Lewis
Gradon are not independent.
Induction and continuing development
of directors
A formal induction programme is available
to new directors to ensure that they have a
working knowledge of our business. The
programme includes one-on-one meetings
with management and a tour of our R&D and
manufacturing facilities. All directors are
regularly updated on relevant industry and
company issues. From time to time the Board
may also undertake educational trips to receive
briefings from customers and visit operations
of the company outside of New Zealand. There
is an on-going programme of presentations to
the Board by all business units.
All directors are members of the Institute of
Directors (or overseas equivalent), and attend
training sessions to remain current on their
duties as directors. The company also arranges
training for directors and management on
specific issues as the need arises.
Board performance
We have a Performance Evaluation Policy in
place relating to the performance of the Board,
the Board committees and individual directors.
The Performance Evaluation Policy is available
on our website. The Policy, in accordance with
the Board Charter, requires the Board to
undertake a two-yearly performance evaluation
of itself that:
• compares the performance of the Board
with the requirements of its Charter;
• reviews the performance of the Board
Committees;
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 81
• sets forth the goals and objectives of the
company for the upcoming year; and
• effects any improvements to the Board
Charter deemed necessary or appropriate.
During 2020, an external consulting company
facilitated the Board’s performance evaluation.
Our Executive Management are also subject to
regular performance reviews. The performance
of senior executives is reviewed by the CEO,
who meets with each senior executive to
discuss their performance.
• Quality, Safety & Regulatory Committee
Members: Donal O’Dwyer (Chair),
Scott St John and Neville Mitchell
All members are independent non-
executive directors.
Each Committee has a charter setting out its
objectives, procedures, composition and
responsibilities. A summary is set out below,
and copies of these charters are available on
our website. The Board may from time-to-time
establish other committees for specific purposes.
Board committees
Audit & Risk Committee
The Board has three permanent committees
which support the Board by working with
management on relevant issues at a suitably
detailed level and then reporting back to the
Board. These Committees and their members
as at 31 March 2021 are:
• Audit & Risk Committee
Members: Neville Mitchell (Chair),
Scott St John and Michael Daniell
All members are non-executive directors,
and two of the three (including the Chair)
are independent.
• People & Remuneration Committee
Members: Pip Greenwood (Chair),
Scott St John and Donal O’Dwyer
All members are independent non-executive
directors.
The primary function of the Audit & Risk
Committee is to assist the Board in fulfilling its
responsibilities relating to the company’s risk
management and internal control framework,
the integrity of its financial reporting, and the
company’s internal and external auditing
processes and activities. The Committee also
assists the Board in monitoring and reporting
the company's strategies, activities and
performance regarding sustainability, corporate
social responsibility and the environment. The
Committee has an annual work plan and reports
to the Board which enables it to properly and
regularly inform the Board on significant
financial matters relating to the company.
Employees and external auditors are invited
to attend meetings when it is considered
appropriate by the Committee. The Committee,
at least once per year, meets with the auditors
without any representatives of management
present and is encouraged to seek advice from
external consultants or specialists where the
Committee considers that necessary or desirable.
The Audit & Risk Committee closely monitors
financial reporting risks in relation to the
preparation of the financial statements. The
Committee, with the assistance of
management, works to ensure that the
financial statements are founded on a sound
system of risk management and internal
control and that the system is operating
effectively in all material respects in relation to
financial reporting risks. As part of this process,
before the company’s financial statements are
approved, the CEO and CFO are required to
state in writing to the Board that, to the best of
their knowledge, the company’s financial
reports present a true and fair view of the
company’s financial condition and operational
results and are in accordance with the relevant
accounting standards and those reports are
founded on a sound system of risk
management and internal control which is
operating effectively.
People & Remuneration Committee
The People & Remuneration Committee’s role
is to oversee and regulate remuneration and
organisation matters of the company, including
recommending the company’s human
resources strategy for directors and senior
executives, reviewing remuneration and
benefits policies, monitoring company
performance against the Diversity & Inclusion
Policy, and reviewing performance objectives
and remuneration of the company’s Chief
Executive Officer and senior executives. It also
seeks advice on and recommends director
remuneration structure and recommends
director appointments to the Board.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 82
Governance – Continued
Quality, Safety & Regulatory Committee
The Quality, Safety & Regulatory Committee
addresses characteristics specific to the
company’s business. The objective and
purpose of the Quality, Safety & Regulatory
Committee is to assist the Board in fulfilling its
responsibilities relating to the oversight of the
company’s quality management system and
health and safety risk management system. As
part of the company’s internal audit function,
regular quality system specific internal audit
reports are received by the Committee.
Board and committee meetings
Normally, the Board holds eight formal
meetings a year. One of those meetings is
typically focused on reviewing the company’s
annual business plan and budget, and at a
separate meeting the long-term strategic plan
is considered. The Board also meets with senior
executives to consider matters of strategic
importance. At the company’s virtual ASM held
on 21 August 2020, all the then-serving
directors attended the meeting by video link.
Committees generally meet three or four times
per year, or as required to carry out their
responsibilities, and report to the Board
following each meeting. Details of attendance
at Board and Committee meetings during the
year ended 31 March 2021 are set out at right:
Committees
Board
Audit & Risk Committee
People & Remuneration
Committee
Quality, Safety &
Regulatory Committee
Eligible to
attend**
Attended
Eligible to
attend
Attended
Eligible to
attend
Attended
Eligible to
attend
Attended
Scott St John
Lewis Gradon
Tony Carter*
Michael Daniell
Pip Greenwood
Geraldine McBride
Neville Mitchell
Donal O’Dwyer
8
8
3
8
8
8
8
8
8
8
3
8
8
8
8
8
4
2
4
2
4
1
4
2
4
2
4
4
4
2
4
4
2
1
3
3
2
0
3
3
* Tony Carter retired on 21 August 2020
** The number of Board meetings listed above does not include unscheduled Board conference calls which were held throughout the year.
Takeover Protocol
The Board has adopted a Takeover Protocol to assist the directors and management with the
response to unexpected takeover activity. The Protocol summarises key aspects of takeover
preparation, and sets out governance, conflict and communications protocols for takeover
response. This Protocol provides that in the event of a takeover offer, the Board would establish an
Independent Takeover Response Committee to manage its takeover response obligations.
Company Secretary
The Company Secretary is Marcus Driller, VP Corporate. The Company Secretary is responsible for
supporting the proper functioning of the Board and ensuring the appropriate policies and
procedures are followed. The Company Secretary reports directly to the Board, through the Chair,
on all governance matters as outlined in the Board Charter.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 83
Disclosure of interests by directors
Share dealings by directors
Directors’ certificates to cover entries in the company’s interests
register in respect of remuneration, insurance, indemnities, dealing in
the company’s shares, and other interests have been disclosed as
required by the Companies Act 1993.
Directors’ shareholdings
Directors held interests in the following ordinary shares in the
Company as at 31 March 2021:
In accordance with the Companies Act 1993 and the Financial Markets
Conduct Act 2013, the Board has received disclosures from the directors
named below of acquisitions or dispositions of relevant interests (as
defined in the Financial Markets Conduct Act 2013) in the company
between 1 April 2020 and 31 March 2021, and details of those dealings
were entered in the company’s interests register.
Name
Transaction
Number of
shares
Price per
share
Date
Ordinary Shares
Scott St John
Share purchases
1,500
$34.8867
1 July 2020
Name
Scott St John
Lewis Gradon1
Michael Daniell
Pip Greenwood
Geraldine McBride
Neville Mitchell
Donal O’Dwyer
Ownership
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
1 Lewis Gradon also had a beneficial interest in 309,071 options issued under the company's share option plans and a
beneficial interest in 98,492 performance share rights under the PSR Plan.
21,000
556,776
900,168
3,800
1,262
7,200
68,569
Lewis Gradon
Share issue for
cancellation of
115,000 Options
1,500
$32.4700
27 November 2020
500
$28.0500
04 March 2021
86,147
$35.2803
2 July 2020
Sale of Shares
136,000
$34.3071
2 July 2020
Granted 69,931
Options
Granted 22,178 PSRs
Share issue for
cancellation of
111,364 Options
–
–
–
–
4 September 2020
4 September 2020
73,529
$33.8000
8 September 2020
Exercise of PSRs
64,598
$33.5685
10 September 2020
Sale of Shares
135,000
$33.8217 8-10 September 2020
Michael Daniell Sale of Shares
90,000
$34.2690
Share issue for
cancellation of
20,000 Options
15,901
$35.2811
1 July 2020
2 July 2020
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 84
Governance – Continued
General disclosure of interests by directors
In accordance with Section 140(2) of the Companies Act 1993, the directors named below have made a general disclosure of interest by a general notice
disclosed to the Board and entered in the company’s interests register. General notices given by directors which remain current as at 31 March 2021 are
as follows:
Name
Entity
Relationship
Name
Entity
Scott St John
Fonterra Cooperative Group Limited
Director
Neville Mitchell
Osprey Medical
Q’Biotics Limited
Sonic Healthcare Limited
Board of Taxation
South East Sydney Local Health District
Relationship
Director
Board Member
Donal O’Dwyer
Cordis Asset Management Pty Limited
Director
Mesoblast Limited
NIB Holdings Limited
Mercury NZ Limited
NEXT Foundation
Council of the University of Auckland
Chancellor
Lewis Gradon
Butland Medical Foundation
Fisher & Paykel Healthcare Employee Share
Purchase Trustee Limited
Other Group entities listed in the ‘Subsidiary
Company Directors’ section of this Report
Michael Daniell
Medical Technologies Centre of
Research Excellence
Cochlear Limited
MRCF IIF GP Pty Limited
MRCF Pty Limited
Tait International Limited
Tait Limited
Council of the University of Auckland
Pip Greenwood
The a2 Milk Company Limited
Spark New Zealand Limited
Vulcan Steel Limited
Westpac New Zealand Limited
Auckland Writers Festival Trust
Geraldine McBride MyWave Holdings Limited
Sky Network Television Limited
Trustee
Director
Chair
Director
Member
Director
Trustee
Director
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 85
REPORTING AND DISCLOSURE
Company policies
Other reporting
Fisher & Paykel Healthcare is committed to
transparent reporting of non-financial
objectives, such as environmental, social, and
governance (ESG) factors, as well as risk,
health and safety, and business strategy. Our
annual report references the guidelines and
principles set out by the Global Reporting
Initiative (GRI) and includes a GRI referenced
content index. This report also integrates
content recommended by the Task Force for
Climate-related Financial Disclosures (TCFD)
content, and a TCFD content index can be
found at the end of this report.
We are committed to the promotion of investor
confidence by ensuring that the trading of our
shares takes place in an efficient, competitive
and informed market. We believe that evenly
balanced disclosure is fundamental to building
shareholder value and earning the trust of
employees, customers, suppliers, communities
and shareholders.
Continuous disclosure
Our Market Disclosure Policy establishes our
disclosure policies for meeting our continuous
disclosure obligations. The Market Disclosure
Policy is available on our website. This explains
the respective roles of directors, officers and
employees in complying with continuous
disclosure obligations, confidentiality of
information, external communications with
analysts and shareholders, and responding to
rumours and market speculation.
The Disclosure Committee, comprising the
CEO, CFO and VP Corporate, and the
Disclosure Officer, the VP Corporate or
alternatively the General Counsel New Zealand,
are responsible for administering compliance
with our Market Disclosure Policy, including
continuous disclosure obligations. Market
disclosure requires the approval of either the
Board or the Disclosure Committee, depending
on the circumstances. The Market Disclosure
Policy was last updated on 29 March 2019.
We have policies and procedures in place to
ensure we conduct our business with integrity,
and in a legally, ethically, and socially
responsible manner. Key governance
documents including our Codes of Conduct,
Securities Trading Policy and Guidelines, Board
and Committee Charters, Diversity Policy,
Remuneration Policy, and Market Disclosure
Policy are all available on our website.
Financial reporting
We are committed to reporting our financial
information in an objective, balanced, and clear
manner. Financial results are reported in this
annual report in accordance with the New
Zealand equivalent of International Financial
Reporting Standards. This annual report
includes detailed financial commentary and
notes to the financial statements which explain
any changes to financial reporting.
This annual report also includes comments
from the Chair and CEO on strategic progress,
performance during the year and progress
towards our strategic objectives. It explains
how we deliver value for shareholders and key
performance indicators such as revenue, profit,
constancy currency information, dividend
growth and gearing, are used to link results to
our strategy.
We ensure that financial information reported
in investor presentations, company overviews,
and other documents is portrayed in an
accurate, fair, and understandable format.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 86
Governance – Continued
GOVERNANCE OF
CLIMATE-RELATED ISSUES
Role of the Board
The Board has delegated to the CEO and
executive management matters relating to
environmental sustainability, with oversight of
these matters sitting with the Audit & Risk
Committee. The Committee meets four times
per year and reports directly to and advises the
Board on such matters.
During the last financial year, management has
briefed the Board on environmental
sustainability, including climate-related issues.
Briefings have included reviews of internal
compliance with both internally established
and externally applicable sustainability codes
and principles across the company’s global
operations.
For our most significant risk – carbon
emissions – we have modelled a range of
climate-related scenarios. This includes a
business-as-usual approach to decarbonisation
(with global temperatures increasing by more
than 3 degrees Celsius) and a rapid
decarbonisation approach (with global
temperatures increasing by less than 1.5
degrees Celsius). We will conduct further
scenario analyses in the 2022 financial year.
Environmental sustainability risks are
presented to the Board for their review and
consideration. The company’s largest
environmental sustainability risk is our carbon
footprint, while healthcare waste, ethical
sourcing and sustainability data integrity are
also potentially material risk areas.
included developing a plan for an internal
carbon price and securing agreement to roll out
large-scale solar arrays at our Mexico facilities.
The Board and executive management have set
Science Based Targets and these targets were
submitted and approved in April 2020. In the
2021 financial year, we verified that 20 of our
suppliers had also set Science Based Targets or
equivalent targets for carbon reduction.
Fisher & Paykel Healthcare is a member of the
Climate Leaders Coalition and we continue to
participate in the New Zealand Sustainable
Business Council. Our involvement in these two
organisations allows for proactive visibility of
climate-related risks and opportunities
experienced by other member organisations,
as well as the opportunity for collaboration to
manage and mitigate such risks. This has
included executive training on carbon issues
and climate-risk.
Executive management responsibilities
for environmental sustainability sit with
the CEO and the General Manager Supply
Chain, Facilities & Sustainability. Our
Sustainability team is responsible for our
environmental sustainability strategy, policy
development, long-term planning and the
performance of our global environmental
management system.
ECODESIGN ADVISORY BOARD MEMBERS
Role of management
Environmental sustainability (which includes
climate-related risks) is integrated into our
environmental management system, which is
externally audited each year to the ISO14001
international standard. We follow formal
environmental management processes to
review and monitor environmental
sustainability issues and risks, and these are
embedded into our enterprise risk
management systems.
We have identified carbon as our most
significant risk. With involvement from
executive management, we began to develop
a long-term carbon reduction plan during the
2020 financial year, including a number of
carbon reduction initiatives across a number
of time horizons stretching to 2034. During the
2021 financial year, significant initiatives have
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 87
Our Ecodesign Advisory Board
DAVID TRUBRIDGE
Globally renowned
Ecodesign practitioner
DR ELSPETH MACRAE
Leading global bio-economy
expert
DR ANN SMITH
Leading global
carbon expert
DR DAVID GALLER
Leading sustainability
medical practitioner
To further support good
environmental sustainability
governance, we have appointed
an external Ecodesign Advisory
Board made up of four
independent subject matter
experts. The Ecodesign Advisory
Board provides external
guidance and support of
environmental sustainability and
our Ecodesign initiatives. During
the 2021 financial year, the
Ecodesign Advisory Board
provided guidance on our
long-term carbon reduction plan
and mentored key team
members.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 88
Governance – Continued
SHAREHOLDER AND COMPANY INFORMATION
The company has in place an investor relations programme to facilitate effective two-way
communication with investors. We aim to build strong relationships with our shareholders
and investors based on integrity, transparency and trust. Our intention is to provide
shareholders with all relevant information about the company to enable them to actively
engage with us and exercise their rights as shareholders in an informed manner.
Shareholder communications
Our Shareholder Communication Policy facilitates communication with shareholders
through written and electronic means, and by facilitating shareholder access to directors,
executive management and our auditors. A copy of our Shareholder Communication Policy
is available on our website.
We communicate with shareholders through the following channels:
investor section of our website;
annual report;
interim report;
annual shareholder meeting (ASM);
•
•
•
•
• webcasts;
•
• disclosure of presentations provided to analysts and investors during regular briefings,
regular disclosures on company performance and news; and
meetings and roadshows.
Our Website
Our website is frequently the first port of call for shareholders and is therefore a core
component of our Shareholder Communication Policy. We include on our website a
range of information relevant to shareholders and others concerning the operation of
the company.
We make available a webcast of our ASM and management presentations of financial
results. Webcast details will be published on the NZX and ASX before the event so that
shareholders and other interested parties may participate.
We encourage shareholders to receive their shareholder communications electronically
to help reduce our environmental footprint and costs.
Direct communication
Shareholders may, at any time, direct questions or requests for information to directors
or management by contacting Marcus Driller, VP Corporate and Company Secretary,
at marcus.driller@fphcare.co.nz or +64 27 578 9663.
We have a modern communication framework in place so shareholders can receive
communications in a manner that best suits them. We provide shareholders with the option
to receive communications from, and send communications to, us and our share registrar
electronically. We offer shareholders the ability to attend our ASM digitally, ask questions
through a virtual tool, and to vote electronically or using an app.
ASM and shareholder voting
Our next ASM will be held online at www.virtualmeeting.co.nz/FPH21 and in person at the
Guineas Ballroom, Ellerslie Event Centre, Auckland, New Zealand on Wednesday, 18 August
2021 commencing at 2.00pm (NZST).
The company is closely monitoring the situation in New Zealand with regard to COVID-19. In
the event of any significant developments, the company may, in its sole discretion, elect to
hold the Annual Shareholders’ Meeting as an online only meeting if it considers there are
potential risks to the health of meeting attendees or if an in-person meeting is prohibited by
law. In such circumstances, the company will provide shareholders with as much notice as is
reasonably practicable by way of an announcement to the NZX and ASX and on our website
at www.fphcare.com/asm.
Notice of the ASM will be released to the NZX and ASX and posted on our website, along
with instructions for attending the virtual meeting, at least 20 working days prior to the
meeting. We encourage active participation by shareholders at the ASM, and shareholders
may present questions to engage with the Board and executive management.
Shareholders have the right to vote on major decisions which may change the nature of
the company. Each shareholder has one vote per ordinary share they own in the company,
equally with other shareholders, and may vote at a meeting in person, or by proxy,
representative or attorney. We offer an electronic voting facility to allow shareholders
to vote ahead of the meeting without having to attend or appoint a proxy.
Share information
Stock exchange listing requirements
The company’s shares were listed on the NZX Main Board on 14 November 2001 and on the
ASX on 21 November 2001. On 20 June 2016 the company changed its admission category
to an ASX Foreign Exempt Listing. As part of this change, the company is still required to
comply with the NZX Listing Rules but is not required to comply with many of the ASX
listing rules. For the purposes of ASX Listing Rule 1.15.3, the company confirms that it has
complied with the NZX listing rules during the year ended 31 March 2021.
Neither the NZX nor the ASX has taken any disciplinary action against the company during
the year ended 31 March 2021. In particular, there was no exercise of powers by the NZX
under NZX Listing Rule 9.9.3.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 89
Current on-market share buy-back
There is no current on-market buy-back of the company’s ordinary shares. During the year
ended 31 March 2021 none of the company’s ordinary shares were purchased on-market
under or for the purposes of an employee incentive scheme or to satisfy the entitlements
of holders of options or other rights to acquire ordinary shares granted under an employee
incentive scheme. The company does not have any restricted securities or securities subject
to voluntary escrow on issue.
Incorporation and limitations on the acquisition of shares
The company is incorporated in New Zealand and is not subject to Chapters 6, 6A, 6B
and 6C of the Australian Corporations Act 2001. In general, securities in the company
are freely transferable and the only significant restrictions or limitations in relation to
the acquisition of securities are those imposed by the New Zealand Takeovers Code,
the Overseas Investment Act 2005 (NZ), and the Commerce Act 1986 (NZ). The company
does not impose additional ownership restrictions.
Credit rating
The company does not currently have an external credit rating status.
Distribution of shareholders and holdings
The company only has one class of shares on issue, ordinary shares, each conferring to
the registered holder the right to one vote on any resolution, and these shares are listed on the
NZX and ASX. There are no other classes of equity security currently on issue. The total
number of ordinary shares on issue as at 31 March 2021 was 576,412,532 shares. The total
number of ordinary shares of the company on issue at 27 April 2021 was 576,434,609 shares.
The distribution of shareholdings as at 27 April 2021 was as shown in the table below:
Size of shareholding
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 50,000
50,001 to 100,000
100,001 and over
Number
of holders
Number of
ordinary shares
%
15,263
8,994
1,950
1,180
79
92
55.38
32.64
7.08
4.28
0.29
0.33
5,421,010
21,213,768
13,913,320
21,901,644
5,395,548
508,589,319
Total
27,558
100.00
576,434,609
%
0.94
3.68
2.41
3.80
0.94
88.23
100.00
The employee share options, rights and PSRs on issue to employees are disclosed in Note 18
of the Financial Statements. There are no voting rights attaching to share options, rights,
or PSRs.
Substantial product holders
According to company records and notices given under the Financial Markets Conduct Act
2013 the substantial product holders in ordinary shares (being the only class of quoted
voting products) of the company as at 31 March 2021, were as follows:
Number of
ordinary shares
held as at date
Holding as a %
of total ordinary
shares on issue as
Substantial Product Holder
Date of notice
of notice
at 31 March
BlackRock, Inc and related
bodies corporate
The Vanguard Group, Inc
21-Mar-19
28,725,458
18-Dec-18
30,145,141
4.98%
5.23%
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 90
Governance – Continued
Principal shareholders
The names and holdings of the 20 largest registered shareholders in the company as at
27 April 2021 were:
Investor Name
HSBC Nominees (New Zealand) Limited
HSBC Nominees (New Zealand) Limited
JPMorgan Chase Bank
Citibank Nominees (NZ) Ltd
HSBC Custody Nominees (Australia) Limited
JPMorgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
Tea Custodians Limited
Total Units
84,735,040
66,978,951
58,909,933
41,810,783
39,770,963
21,751,016
18,666,433
15,191,575
New Zealand Superannuation Fund Nominees Limited
12,416,669
National Nominees New Zealand Limited
Accident Compensation Corporation
BNP Paribas Nominees NZ Limited Bpss40
Cogent Nominees Limited
Custodial Services Limited
BNP Paribas Noms Pty Ltd
National Nominees Limited
Premier Nominees Limited
FNZ Custodians Limited
Custodial Services Limited
JBWere (NZ) Nominees Limited
11,789,542
9,617,415
9,391,635
8,845,907
7,542,681
6,724,163
6,379,451
6,339,895
6,193,852
5,953,253
4,596,927
% Issued
Capital
14.70%
11.62%
10.22%
7.25%
6.90%
3.77%
3.24%
2.64%
2.15%
2.05%
1.67%
1.63%
1.53%
1.31%
1.17%
1.11%
1.10%
1.07%
1.03%
0.80%
Other Group information
Principal activities
The company is a world-leading designer, manufacturer and marketer of products and
systems for use in acute and chronic respiratory care, surgery and the treatment of
obstructive sleep apnea. There were no significant changes to the state of affairs of the
company or to the nature of the company’s (or its subsidiaries’) principal activities during
the year ended 31 March 2021.
Use of company information
We did not receive any notices from directors requesting to use company information
received in their capacity as directors which would not otherwise have been available
to them.
Donations
Please refer to Note 5 of the Financial Statements for the Group’s donations in the
financial year to 31 March 2021.
Entries recorded in the interests register
Except for disclosures made elsewhere in this report, there have been no entries in the
Company’s interests register made during the year ended 31 March 2021.
Other subsidiary company information
No entries were made in the interests register of any subsidiary during the year ended
31 March 2021.
No employee of the Group who is appointed as a director of a Group entity receives or
retains any remuneration or other benefits in his or her capacity as a director. The
remuneration and other benefits of Group employees and former employees totalling
$100,000 or more during the year ended 31 March 2021 are included in the relevant
bandings for remuneration disclosed in the ‘Remuneration’ section of this report.
During the year ended 31 March 2021, all directors of subsidiaries were full-time employees
of the Group, with the exception of:
(1) Scott St John who is a director of Fisher & Paykel Healthcare Employee Share Purchase
Trustee Limited.
(2) Lawrence Gibbons who is a director of Fisher & Paykel Healthcare S.A. de C.V. (Mexico).
(3) Stuart Herbert who is a director of Highbrook Insurance Company Pte. Limited
(Singapore).
Scott St John and Lawrence Gibbons do not receive any remuneration or other benefits for
their roles as directors of the above subsidiaries. Stuart Herbert also does not receive any
remuneration personally for his role as director as described above; however, a management
fee is paid to his employer (Marsh Singapore Ltd).
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 91
Group structure
All subsidiary companies in the Group are ultimately 100% owned by the Company.
The Group structure and the persons who held office as directors of subsidiary companies
at 31 March 2021 are detailed below.
Entities
Directors
Fisher & Paykel Healthcare Corporation Limited* owns:
Fisher & Paykel Healthcare Limited (NZ)*
Lewis Gradon, Paul Shearer, Andrew Somervell
Fisher & Paykel Healthcare Treasury Limited (NZ)* Lewis Gradon, Paul Shearer, Andrew Somervell
Fisher & Paykel Healthcare Employee Share
Purchase Trustee Limited (NZ)
Scott St John, Lewis Gradon
Fisher & Paykel Asia Limited (NZ)
Lewis Gradon, Paul Shearer, Andrew Somervell
Fisher & Paykel Healthcare Americas
Investments Limited (NZ)
Lewis Gradon, Paul Shearer, Andrew Somervell
Fisher & Paykel Healthcare Pty Limited
(Australia)
Lewis Gradon, Paul Shearer, David Boyle,
Graham Gourd
Entities
Directors
Fisher & Paykel Healthcare Asia Investments Limited (NZ) owns:
Fisher & Paykel Healthcare India
Private Limited (India)
Lewis Gradon, Paul Shearer, David Boyle,
Prashant Kate
Fisher & Paykel Healthcare K.K. (Japan)
Lewis Gradon, Paul Shearer, Hideo Goto
Fisher & Paykel Healthcare Limited
(Hong Kong)
Lewis Gradon, Paul Shearer, David Boyle,
Zhiping Hou
Fisher & Paykel Healthcare Supply Chain
Limited (Hong Kong)
Jonathan Rhodes
Fisher & Paykel Healthcare Colombo
(Private) Limited
Fisher & Paykel Healthcare Americas Investments Limited (NZ) owns:
Fisher & Paykel Healthcare S.A. de C.V. (Mexico) Lewis Gradon, Andrew Somervell,
Lewis Gradon, Paul Shearer, David Boyle
Lawrence Gibbons
Fisher & Paykel Healthcare Colombia S.A.S
(Colombia)
Legal Representatives: Bryan Peterson,
James Tuck
Fisher & Paykel Healthcare Limited (UK)
Lewis Gradon, Paul Shearer, Nicholas Connolly,
Patrick McSweeny
Fisher & Paykel Healthcare Mexico S.A. de C.V.
(Mexico)
Lewis Gradon, Paul Shearer, Bryan Peterson
Fisher & Paykel Holdings Inc. (USA)
Lewis Gradon, Paul Shearer, Andrew Somervell
Fisher & Paykel do Brasil Ltda (Brazil)
Brazilian law does not require directors.
Decision making authority lies with the
directors of its shareholders
Fisher & Paykel Healthcare (Guangzhou)
Limited (China)
Lewis Gradon, Paul Shearer, David Boyle,
Zhiping Hou
Fisher & Paykel Healthcare Limited (Canada)
Lewis Gradon, Paul Shearer, Justin Callahan
Highbrook Insurance Company Pte. Limited
(Singapore)
Lyndal York, Grant Gillingham, Stuart Herbert
Fisher & Paykel Healthcare Properties
S.A. de C.V. (Mexico)
Lewis Gradon, Andrew Somervell,
Jonathan Rhodes
Fisher & Paykel Healthcare Chile SpA (Chile)
No directors. Bryan Peterson and James
Tuck are delegates for the shareholder of the
Company (with the power to act individually).
Fisher & Paykel Healthcare Bangladesh Limited Lewis Gradon, Paul Shearer, David Boyle
Fisher & Paykel Healthcare Limited (UK) owns:
Fisher & Paykel Healthcare SAS (France)
Lewis Gradon, Paul Shearer, Patrick McSweeny,
Ian Hopkinson
Fisher & Paykel Healthcare MEA Limited (NZ)
Lewis Gradon, Paul Shearer, Andrew Somervell
Fisher & Paykel Holdings GmbH (Germany)
Ian Hopkinson, Patrick McSweeny, Kerstin Bille
Fisher & Paykel Healthcare Limited* (NZ) owns:
Fisher & Paykel Healthcare Properties
Limited (NZ)*
Lewis Gradon, Paul Shearer, Andrew Somervell
Fisher & Paykel Healthcare Asia Limited (NZ) owns:
Fisher & Paykel Healthcare Asia Investments
Limited (NZ)
Fisher & Paykel Healthcare Malaysia Sdn. Bhd.
Lewis Gradon, Paul Shearer, Andrew Somervell
Lewis Gradon, Paul Shearer, Bryan Peterson,
Basyirah Anuar
*Companies operating under a Negative Pledge Deed
Fisher & Paykel Healthcare AB (Sweden)
Fisher Paykel Sağlık Ürünleri Ticaret Limited
Şirketi (Turkey)
Limited Liability Company Fisher & Paykel
Healthcare (Russia)
Fisher & Paykel Holdings Inc. (US) owns:
Fisher & Paykel Healthcare Inc. (USA)
Lewis Gradon, Paul Shearer, Patrick McSweeny,
Ian Hopkinson
Lewis Gradon, Paul Shearer, Patrick McSweeny
Lewis Gradon, Paul Shearer, Bryan Peterson,
Anatoly Filippov
Lewis Gradon, Paul Shearer, Justin Callahan
Fisher & Paykel Healthcare Distribution Inc. (USA) Lewis Gradon
Fisher & Paykel Healthcare MEA Limited (NZ) owns:
Fisher & Paykel Healthcare MEA Investments
Limited (NZ)
Lewis Gradon, Paul Shearer,
Andrew Somervell
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 92
Remuneration
Our approach is to attract, reward
and retain high-quality employees
who will help us to achieve our short
and long-term strategic objectives.
This depends in large part upon the
remuneration packages we offer.
EMPLOYEE REMUNERATION
It is our intention to pay our people fairly
taking into account such factors as company
performance, general economic conditions,
marketplace remuneration trends and
individual performance. We operate in a large
number of countries and our remuneration
practices reflect our culture, values and local
market conditions.
Our employee remuneration programme
consists of a base wage or salary; a
discretionary component providing the
potential for an annual bonus based on
relevant company performance; and
superannuation, life insurance and the
opportunity to purchase shares and/or receive
long term variable remuneration in the form of
share options, performance share rights or
employee share rights (in certain countries).
Employees receive base remuneration
packages that are generally benchmarked
against similar positions in companies of
comparable size and complexity. We use
industry remuneration surveys conducted by
outside consultants to determine remuneration
levels. In general, remuneration is reviewed
annually, and our process supports our
intention to pay our people fairly.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 93
Employee remuneration over $100,000
The tables opposite show the remuneration
(inclusive of the value of other benefits)
totalling NZ$100,000 or more received by
employees or former employees in financial
year 2021. This does not include the CEO, who
is a director of the company. Offshore
remuneration amounts have been converted
into New Zealand dollars.
The tables include salary and wages,
profit-sharing bonus and discretionary annual
variable remuneration (DAVR) paid during the
2021 financial year. They also include the fair
value of long term variable remuneration
(LTVR) as expensed in the period.
Remuneration
$
100,000 – 110,000
110,001 – 120,000
120,001 – 130,000
130,001 – 140,000
140,001 – 150,000
150,001 – 160,000
160,001 – 170,000
170,001 – 180,000
180,001 – 190,000
190,001 – 200,000
200,001 – 210,000
210,001 – 220,000
220,001 – 230,000
230,001 – 240,000
240,001 – 250,000
250,001 – 260,000
260,001 – 270,000
270,001 – 280,000
280,001 – 290,000
290,001 – 300,000
300,001 – 310,000
310,001 – 320,000
320,001 – 330,000
330,001 – 340,000
340,001 – 350,000
350,001 – 360,000
360,001 – 370,000
370,001 – 380,000
Number of
employees
Remuneration
$
Number of
employees
251
187
145
132
111
93
72
56
45
47
31
26
29
23
16
22
16
9
15
4
8
7
3
2
2
1
4
3
380,001 – 390,000
390,001 – 400,000
400,001 – 410,000
410,001 – 420,000
420,001 – 430,000
430,001 – 440,000
440,001 – 450,000
460,001 – 470,000
470,001 – 480,000
480,001 – 490,000
490,001 – 500,000
500,001 – 510,000
510,001 – 520,000
530,001 – 540,000
620,001 – 630,000
680,001 – 690,000
700,001 – 710,000
710,001 – 720,000
720,001 – 730,000
730,001 – 740,000
750,001 – 760,000
830,001 – 840,000
900,001 – 910,000
920,001 – 930,000
1,090,001 – 1,100,000
1,180,001 – 1,190,000
1,330,001 – 1,340,000
2,080,001 – 2,090,000
2
2
1
2
1
2
1
1
2
2
1
1
1
2
1
1
1
1
1
1
1
1
1
2
1
1
1
1
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 94
Remuneration – Continued
EXECUTIVE MANAGEMENT
REMUNERATION
The People & Remuneration Committee is
responsible for reviewing the remuneration of
executive management in consultation with the
CEO. Executive management remuneration
packages consist of a combination of a fixed
remuneration package, a discretionary annual
variable remuneration (DAVR) component, a
long-term variable remuneration (LTVR)
component, and the company-wide profit
sharing bonus, as described further below. The
total remuneration earned by executive
management is set out in Note 18 of the
financial statements.
Fixed remuneration
All members of executive management receive
a fixed remuneration component based on the
scale and complexity of the role, market
relativities and experience, and performance.
This also includes any KiwiSaver or other
superannuation contribution.
Variable remuneration
Executive management receive variable
remuneration linked to performance each
financial year. The table at right shows how
variable remuneration is calculated.
Plan
Measures
Discretionary Annual Variable
Remuneration (DAVR)
The DAVR component is designed to remunerate executive management relative to
the company’s annual financial performance and non-financial objectives.
Meeting both the financial and non-financial targets results in a payment of 100% of the
DAVR amount. The DAVR payment amount is adjusted pro-rata, with each 1% above or
below financial targets resulting in a 2% increase or decrease in payment. The maximum
payment is 132% of the DAVR amount at 20% over achievement. Should the financial
measures in aggregate be underachieved by more than 10%, no DAVR is payable.
The relative weighting of DAVR measures and the target achieved in 2021 is set out
below.
Measures
Weighting
% of Target Achieved
Constant currency operating profit
Constant currency revenue
Constant currency pre-tax operating
cash flow
Non-financial measures
45%
25%
10%
20%
120%
120%
120%
100%
Long Term Variable
Remuneration (LTVR)
LTVR components are designed to align executive management with shareholder
interests over the longer term and provide a longer term employee retention benefit.
The LTVR plans available to executive management are described below. Further
information on these and other LTVR plans can be found in the “Long Term Variable
Remuneration” section of our website.
Share Option Plan – Options vest if at the third, fourth, or fifth anniversary of the
grant date the company’s share price on the NZX has exceeded the “escalated price”.
The escalated price is determined by a representative amount representing the
company’s cost of capital.
Performance Share Rights Plan – PSRs fully vest if the company’s gross total
shareholder return (TSR) exceeds the performance of the Dow Jones US Select
Medical Equipment Total Return Index (DJSMDQT) by 10% or more at any of the third,
fourth or fifth anniversary of the grant date of the PSRs. PSRs partially vest on the
fifth anniversary if the company’s TSR exceeds the DJSMDQT by less than 10%.
Employee Share Purchase Plan – Executive management can choose to participate
in this Plan up to the value of $2,000 with a discount of up to $500, with no
interest charged on the loans. The qualifying period between grant and vesting date
is three years.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 95
Participants in the company’s equity-based
remuneration schemes are not permitted to
enter into transactions (whether through the
use of derivatives or otherwise) which limit the
economic risk of their unvested entitlements.
For the avoidance of doubt, this does not
prevent participants entering into financial
arrangements for them to be able to exercise
vested entitlements under any company
equity-based remuneration scheme.
Profit sharing bonus
All our employees, including executive
management, who have worked with us for
more than six months are eligible to receive a
profit-sharing bonus twice per year.
Five-year summary of TSR performance
The chart below shows our total shareholder return
(TSR) compared with the performance of DJSMDQT
and the S&P NZX50 index over the previous five
years. From 5 September 2017 to 5 September
2020, our TSR performance exceeded that of the
DJSMDQT, and PSRs on issue 100% vested.
450
400
350
300
250
200
150
100
50
Fisher & Paykel Healthcare
Dow Jones U.S. Select
Medical Equipment Index
S&P/NZX 50 Index
Mar 16
Mar 17
Mar 18
Mar 19
Mar 20
Mar 21
1 To enable better comparability of the relative shareholder return performance, the Dow Jones U.S. Select Medical Equipment
Index closing prices have been converted to NZD at the daily closing rate quoted by the Reserve Bank of New Zealand.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 96
Remuneration – Continued
CEO REMUNERATION
CEO remuneration summary
Remuneration structure
The CEO remuneration structure is consistent
with the executive management remuneration
structure described previously. The CEO
remuneration target and maximum total
remuneration mix for the 2021 financial year
is set out below.
Salary
Other1
$
$
Fixed
remuneration
subtotal
$
DAVR2
LTVR
awarded3
Total
remuneration
$
$
$
2021
2020
1,676,071
121,928
1,797,999
1,195,408
1,000,010
3,993,417
1,340,971
109,327
1,450,298
865,581
885,723
3,201,602
% DAVR
against
maximum
$
100%
83%
1 Other includes employee superannuation contribution and life insurance.
2 DAVR represents what was earned for the financial year. DAVR value includes the company-wide profit sharing bonus.
3 LTVR includes options and PSRs awarded during the financial year. In the 2021 financial year, Lewis Gradon was granted 22,178 PSRs and 69,931 share options
(2020: 43,848 PSRs and 138,827 share options). Share options and PSRs granted in the 2020 and 2021 financial years will vest if the performance criteria are
met in the 2023 to 2024 financial years respectively. Details of the plans and valuation methodology are set out in Note 18 to the financial statements.
27%
23%
25%
30%
DAVR achieved in 2021
LTVR
DAVR
FIXED REMUNERATION
The DAVR financial targets achieved are set out in the Executive Management section on the
previous page. During the 2021 financial year, the CEO achieved 100 per cent of his non-financial
measures. The DAVR earned in the 2021 financial year is 66 per cent of the fixed remuneration.
100%
50%
45%
LTVR vested in 2021
The following long-term share option incentives vested in the 2021 financial year.
Millions
$3.5
$3.0
$2.5
$2.0
$1.5
$1.0
$0.5
$0.0
Grant year
Securities
Financial year
2017
Financial year
2018
Financial year
2018
PSR
Share
Options
PSR
Performance
period
Sep 2016 to
Sep 2020
Sep 2017 to
Sep 2020
Sep 2017 to
Sep 2020
Performance
measure
Vesting
outcome
Shares
vested
Value on
vesting1
Absolute TSR
Cost of capital
escalated
share price
Absolute TSR
100%
vested
100%
vested
100%
vested
24,000
$823,200
111,364
$2,504,576
40,598
$1,392,511
1 Represents the difference between the exercise price and the NZX closing price of FPH ordinary shares on the vesting date, multiplied by the number of
share options vested.
Fix e d
R e m u n eratio n
T arg et T otal
R e m u n eratio n
M axi m u m T otal
R e m u n eratio n
LTVR
DAVR
FIXED REMUNERATION
Millions
$3.5
$3.0
$2.5
$2.0
$1.5
$1.0
$0.5
$0.0
27%
23%
25%
30%
100%
50%
45%
Fix e d
R e m u n eratio n
T arg et T otal
R e m u n eratio n
M axi m u m T otal
R e m u n eratio n
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 97
Approved director remuneration for the 2021 financial year
The total directors’ fees received by non-executive directors in 2021, including a breakdown of
Board fees and Committee fees, is set out below. The fees payable are determined based on the
time commitment and responsibilities of each role.
Fees per annum
Board of Directors
People & Remuneration Committee
Quality, Safety & Regulatory Committee
Audit & Risk Committee
Director remuneration received in the 2021 financial year
Chair
$
Member
$
267,500
127,500
25,000
23,460
32,500
17,608
17,608
17,608
People &
Remuneration
Committee
$
Quality, Safety
& Regulatory
Committee
$
Audit & Risk
Committee
$
Overseas
Director
Allowance1
$
Director
Tony Carter2
Scott St John3
Michael Daniell
Pip Greenwood
Board Fees
$
91,994
202,274
117,417
117,417
Geraldine McBride
117,417
Neville Mitchell4
Donal O'Dwyer4
117,356
117,417
881,292
–
6,899
–
24,358^
–
–
17,608
48,865
–
11,5073
17,608
–
–
Total
$
91,994
220,680
135,025
141,775
117,417
17,608
19,681^^
22,154
176,799
23,460^
–
22,154
180,639
41,068
48,796
44,308
1,064,329
^ Designates Chair of Committee.
^^ Neville Mitchell took over as Chair of the Audit & Risk Committee from 22 August 2020.
1 Directors based outside New Zealand are paid an allowance associated with attendance at Board and Committee meetings in a different country or time zone
and to reflect local pecuniary practices.
2 Tony Carter was the Board Chair to 21 August 2020. No additional fees are paid to the Board Chair for Committee roles.
3 Scott St John was appointed as the Board Chair from 22 August 2020. Prior to this he was the Chair of the Audit & Risk Committee. No additional fees are paid
to the Board Chair for Committee roles.
4 Neville Mitchell’s and Donal O’Dwyer’s remuneration are set in NZD but paid in AUD at the prevailing exchange rate at the date of payment.
NON-EXECUTIVE DIRECTORS’
REMUNERATION
Remuneration strategy
The People & Remuneration Committee is
responsible for establishing and monitoring
remuneration policies and guidelines for
directors. This enables us to attract and retain
directors who contribute to the successful
governing of the business and create value for
shareholders.
We also take advice from independent
consultants and take into account fees paid to
directors of comparable companies in New
Zealand and Australia as part of our assessment
of the appropriate level of remuneration of
directors. A summary of our independent
consultants’ remuneration report is available on
our website.
The maximum total monetary sum payable by
the company by way of directors’ fees is
$1,455,000 per annum as approved by
shareholders at the 2020 Annual Shareholders'
Meeting. Executive directors are not entitled to
receive any remuneration solely in their
capacity as directors of the company.
Non-executive directors do not take a portion
of their remuneration under an equity security
plan; however, directors may hold shares in the
company. Details are set out on page 83 of this
report. It is our policy to encourage directors to
acquire shares on-market.
No non-executive director is entitled to receive
a retirement payment.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 04 | OPERATING SUSTAINABLY 98
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021 FINANCIALS
99
05
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021 100
FINANCIAL COMMENTARY
INCOME STATEMENTS
Year ended 31 March
Operating revenue
Gross profit
Gross margin
SG&A expenses
R&D expenses
Total operating expenses
Operating profit
Operating margin
Net financing (expense) income
Profit before tax
Taxation
Profit after tax
2020
NZ$M
1,263.7
835.8
66.1%
(338.0)
(118.5)
(456.5)
379.3
30.0%
(8.8)
370.5
(83.2)
287.3
2021
NZ$M
1,971.2
1,245.6
Change
Reported
%
+56
+49
Change
CC (1)
%
+61
+57
63.2%
-295 bps
-165 bps
(396.6)
(136.7)
(533.3)
712.3
36.1%
5.9
718.2
(194.0)
524.2
+17
+15
+17
+88
+20
+15
+19
+104
612 bps
782 bps
+94
+133
+82
+104
+137
+94
1 Constant currency (CC) removes the impact of exchange rate movements. This approach is used to assess the Group’s
underlying comparative financial performance without any impact from changes in foreign exchange rates. See further
details on page 103.
Total profit after tax for the year was up 82% to $524.2 million (94% in constant currency).
Revenue
Operating revenue was $1,971.2 million, which is 56% above last year or 61% in constant
currency. Hospital revenue grew 94% in constant currency largely driven by demand
for products used to treat COVID-19 patients. Homecare revenue grew 4% in constant
currency.
Gross margin
Gross margin decreased by 295 basis points for the year to 63% or a 165 basis points
decline in constant currency. This includes increased freight costs and high air freight
utilisation which adversely impacted constant currency gross margin by approximately
230 basis points. Freight and additional COVID-19 related costs were offset by overhead
efficiencies due to volume increases outpacing overhead cost growth during the year.
Operating expenses
Operating expenses increased 17% (19% in constant currency) to $533.3 million.
Excluding the donation of $20 million to the Fisher & Paykel Healthcare Foundation,
operating expense growth was 12% (15% in constant currency), reflecting ongoing
expenditure to support global sales growth and development of our product pipeline.
R&D spend of $136.7 million grew 15% reflecting underlying growth and development
of our product pipeline. Over the long term we plan for R&D spend to grow in line with
constant currency revenue growth.
Financing expenses
Net financing income for the year was $5.9 million (2020: net financing expenses
of $8.8 million). The change was driven by the gain on foreign currency interest-bearing
liabilities, including lease liabilities. Excluding the impact of foreign currency movements,
net financing expense increased by $1.8 million.
Tax
Our effective tax rate for the year was 27.0% up from 22.5% in the prior year. The
prior year’s rate included the reintroduction of commercial building depreciation for
tax purposes of $5.3 million. The R&D tax credit reported this year of $13.2 million
(2020: $13.4 million) represents the estimated eligible R&D expenditure incurred
during the period. Excluding the benefit from the reintroduction of commercial
building depreciation and the R&D tax credit, the effective tax rate was 28.8% for
the year (2020: 27.5%).
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021
FINANCIAL COMMENTARY CONTINUED
FOREIGN CURRENCY IMPACTS
The Group is exposed to movements in foreign exchange rates, with approximately 99% of
operating revenue generated in currencies other than NZD as shown below.
US dollars
Euros
Australian dollars
Japanese yen
British pounds
Chinese yuan
Canadian dollars
New Zealand dollars
52%
19%
4%
4%
4%
3%
3%
1%
Other currencies
10%
Approximately 60% of COGS and over 50% of operating expenses are in currencies other
than NZD.
During the 2021 financial year, the NZD strengthened against all major currencies
and reported net profit after tax has been unfavourably impacted by currency. The
effect of balance sheet translations for the year resulted in a decrease in operating
revenue of $21.3 million (2020: $14.7 million increase) and a decrease in profit after tax
of $9.4 million (2020: $3.1 million increase). The hedging programme contributed a
pre tax gain of $21.2 million in the current year (2020: $7.7 million loss).
The average daily spot rate and the average conversion exchange rate (i.e. the accounting
rate, incorporating the benefit of forward exchange contracts in respect of the relevant
financial year) of the main foreign currency exposures for the reported periods are set
out in the table below.
Average daily spot rate
Average conversion exchange rate
Year ended 31 March
USD
EUR
2020
0.6477
0.5828
2021
0.6714
0.5749
2020
0.6671
0.5760
2021
0.6692
0.5624
Net profit after tax was reduced by $38 million compared to the prior year due to a higher
volume of foreign currency being dealt at spot rates where the NZD was strengthening.
See further details on page 103.
101
Foreign exchange hedging position
In line with our hedging programme, additional hedges have been added for future years,
in particular, USD for 2022 to 2023. The hedging position for our main currency exposures
as at 12 May 2021 is:
Others
Year to 31 March
2022
2023
2024
2025
2026-27
USD % cover of expected exposure
NZD
85%
55%
30%
30%
USD average rate of cover
CAD
EUR % cover of expected exposure
0.664
0.655
0.631
0.624
85%
50%
35%
30%
5%
EUR average rate of cover
CNY
0.551
0.523
0.513
0.502
0.470
Hedging cover has been rounded to the nearest 5%.
GBP
JPY
CASH FLOWS
The full statement of cash flows is provided on page 107.
AUD
EUR
Year ended 31 March
Operating profit before financing costs
USD
Plus depreciation and amortisation (including
leased assets)
Change in working capital and other
Net interest paid (including lease interest)
Net income tax paid
Operating cash flows
Lease repayments+
Purchase of land and buildings
Purchase of plant and equipment
Purchase of intangible assets
Free cash flows
Dividends paid
2020
NZ$M
379.3
61.0
(23.0)
(2.7)
(93.2)
321.4
(9.7)
(81.8)
(63.5)
(25.4)
141.0
(146.4)
2021
NZ$M
712.3
85.0
(37.1)
(3.4)
(131.5)
625.3
(10.2)
(37.2)
(123.0)
(24.5)
430.4
(181.3)
Change
NZ$M
333.0
24.0
(14.1)
(0.7)
(38.3)
303.9
(0.5)
44.6
(59.5)
0.9
289.4
(34.9)
+ Free cash flows includes lease liability repayments following the adoption of NZ IFRS 16.
Operating cash flows
Cash flows from operations for the year increased 95% to $625.3 million. Working capital
was impacted by a significant increase in inventory relating to building raw materials and
replenishing finished goods to be able to meet potential surge demand.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021 102
FINANCIAL COMMENTARY CONTINUED
Capital expenditure
Property, plant and equipment purchases for the year were $160.2 million, an increase of
$14.9 million from the prior year. The expenditure primarily related to production capacity
increases and the completion of the Daniell building in NZ.
assets of $222.5 million, partially offset by the associated deferred tax movements of
$62.2 million. The NZD appreciated significantly from 31 March 2020 to 31 March 2021. This
resulted in the majority of currency derivatives being in a liability position as at 31 March
2020 to now be in an asset position at 31 March 2021. All currency derivatives continued
to be effective hedges.
Dividends
Dividends paid of $181.3 million were 24% higher than prior year representing the payment
of the final FY20 dividend and the interim FY21 dividend.
Funding and short-term investment
BALANCE SHEET
As at 31 March
Trade receivables
Inventories
2020
NZ$M
192.9
146.5
2021
NZ$M
191.7
270.6
Less trade and other payables+
(108.5)
(145.8)
Working capital
Property, plant and equipment++
Intangible assets
Lease liabilities
Other net assets (liabilities)
Net cash
Net assets
230.9
735.3
73.9
(33.6)
(74.9)
42.2
973.8
316.5
882.1
80.0
(43.7)
(16.9)
302.9
1,520.9
Change
NZ$M
(1.2)
124.1
(37.3)
85.6
146.8
6.1
(10.1)
58.0
260.7
547.1
Loans and borrowings
– Current
– Non-current
Bank overdrafts
Total interest-bearing liabilities+
Cash and cash equivalents
Short-term investments
Total cash and investments
Net cash
Gearing
Undrawn term debt facilities
+ Excluding lease liabilities
2020
NZ$M
2021
NZ$M
Change
NZ$M
(49.9)
(22.0)
(30.7)
(102.6)
67.1
77.7
144.8
42.2
-4.3%
148.0
–
(62.8)
(11.9)
(74.7)
97.3
280.3
377.6
302.9
-27.2%
167.2
49.9
(40.8)
18.8
27.9
30.2
202.6
232.8
(260.7)
+ Trade and other payables excludes all non-current payables and all employee entitlements and provisions
++ Property, plant and equipment includes lease assets recognised
Trade receivables at 31 March 2021 reflected the strong sales in response to COVID-19 and
strong collections, offset by unfavourable currency translation movements. Our debtor
days were within the normal range at 43 days (2020: 45 days). Higher inventories reflect
inventory build in raw materials with increased production capacity to meet potential surge
demand and increased finished goods following lower levels in March 2020. Trade and
other payables increase reflected the accrual of $20 million for the donation to the Fisher &
Paykel Healthcare Foundation which will be paid in FY22 and employee benefit accruals.
The increase in property, plant and equipment included capital additions of $193.9 million,
the majority of which related to production tooling and equipment additions and the
finalisation of building projects in New Zealand. The increase included a $34.5 million
revaluation of land in New Zealand and Mexico. These increases were offset by $68.4
million of depreciation.
Intangible assets increased by $6.1 million net, including patent acquisition costs and ERP
implementation costs. The global SAP rollout will continue over the next two to three years.
Other net assets/liabilities movements included an increase in tax payable of $114.2 million
as the final tax payments related to the current year are scheduled to be paid in FY22.
This increase was offset by the significant increase in net derivative financial instrument
The average maturity of loans and borrowings of $62.8 million was 1.9 years and the
currency split was 91% USD; 6% Australian dollars; and 3% Canadian dollars (with no
NZD denominated debt). Interest-bearing debt decreased by $27.9 million, including
the impact of favourable currency revaluations.
On 1 November 2020, a US$30 million facility expired and has been replaced with two
new NZ$30 million multi-currency facilities that commenced on 14 October 2020 and
will expire 30 September 2025.
Cash balances and short-term investments, mainly in NZD, were $377.6 million at 31 March
2021. This balance, and operating cash generated in 2022, will fund the payment of the
final dividend, provisional tax and ongoing capital expenditure including manufacturing
capacity expansion and building projects in Mexico and Auckland.
Gearing1
At 31 March 2021 the group had net cash of $302.9 million and gearing of -27.2%. Gearing
was outside the target range of -5% to +5%.
1 Net interest-bearing debt (debt less cash and cash equivalents and short-term investments) to net interest-bearing
debt and equity (less hedging reserves). Net interest-bearing debt excludes lease liabilities.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021 103
FINANCIAL COMMENTARY CONTINUED
NOTES – CONSTANT CURRENCY
Constant currency analysis is non–Generally Accepted Accounting Practice (GAAP)
financial information, that is not prepared in accordance with New Zealand Equivalents
to International Financial Reporting Standards (NZ IFRS). Constant currency information
has been provided to assist users of financial information to better understand and assess
the Group’s financial performance without the impacts of foreign currency fluctuations,
including hedging results.
Constant currency financial information is prepared each month to enable the Board
and management to monitor and assess the Group’s underlying comparative financial
performance without any distortion from changes in foreign exchange rates. Constant
currency information is prepared on a consistent basis for reported periods restated into
NZD based on “constant” exchange rates, typically the budgeted exchange rates for the
current year. This information excludes the impact of movements in foreign exchange
rates, hedging results and balance sheet translations.
The Group’s constant currency framework can be found on the company’s website
at www.fphcare.com/ccf. PwC perform assurance procedures over the constant
currency information.
RECONCILIATION OF CONSTANT CURRENCY TO REPORTED PROFIT AFTER TAX
Year ended 31 March
Profit after tax (constant currency)
Spot exchange rate effect
Foreign exchange hedging result
Balance sheet revaluation
Profit after tax (reported)
2020
NZ$M
293.0
(3.2)
(5.6)
3.1
287.3
2021
NZ$M
568.2
(49.8)
15.2
(9.4)
524.2
Change
NZ$M
275.2
(46.6)
20.8
(12.5)
236.9
The significant exchange rates used in the constant currency analysis, being the budget
exchange rates for the year ended 31 March 2021, are USD 0.64, EUR 0.57, AUD 0.96,
GBP 0.49, CAD 0.84, JPY 69 and MXN 12.30.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021 104
FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2021
Operating revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Research and development expenses
Total operating expenses
Operating profit
Financing income
Financing expense
Exchange (loss) gain on foreign currency
interest-bearing liabilities
Net financing (expense) income
Profit before tax
Tax expense
Profit after tax
Basic earnings per share
Diluted earnings per share
Notes
2020
NZ$M
2021
NZ$M
4
1,263.7
1,971.2
Profit after tax
Notes
2020
NZ$M
287.3
2021
NZ$M
524.2
(427.9)
(725.6)
Other comprehensive income
835.8
1,245.6
Items that may be reclassified to profit or loss
(338.0)
(118.5)
(456.5)
379.3
2.2
(3.9)
(7.1)
(8.8)
370.5
(83.2)
287.3
(396.6)
(136.7)
(533.3)
712.3
1.5
(5.0)
9.4
5.9
718.2
(194.0)
524.2
Foreign currency translation reserve
Exchange differences on translation
of foreign operations
Hedging reserves
Changes in fair value in hedging reserves
Transfers to profit before tax from cash
flow hedge reserve
Tax on above reserve movements
Items that will not be reclassified to profit or loss
Revaluation of land
Other comprehensive income, net of tax
Total comprehensive income
50.0 cps
91.1 cps
49.6 cps
90.4 cps
5
11
16
16
2.8
(5.8)
(147.0)
7.7
241.2
(20.1)
39.0
(61.9)
–
(97.5)
189.8
34.5
187.9
712.1
11
9
The accompanying Notes form an integral part of the Financial Statements.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2021
Balance at 31 March 2019
Adjustment on adoption of NZ IFRS 16 (net of tax)
Balance at 1 April 2020
Total comprehensive income
Dividends paid
Issue of share capital under employee share plans
Movement in share based payments reserve
Movement in treasury shares
Balance at 31 March 2020
Total comprehensive income
Dividends paid
Issue of share capital under employee share plans
Movement in share based payments reserve
Movement in treasury shares
Balance at 31 March 2021
The accompanying Notes form an integral part of the Financial Statements.
105
Notes
17
15
17
15
17
15
17
15
Share
capital
NZ$M
219.2
–
219.2
–
–
8.0
–
(1.8)
225.4
–
–
22.3
–
1.4
Retained
earnings
NZ$M
549.2
(3.8)
545.4
287.3
(146.4)
–
–
–
686.3
524.2
(181.3)
–
–
–
Reserves
NZ$M
144.8
–
144.8
(97.5)
–
–
14.8
–
62.1
187.9
–
–
(7.4)
–
Total
equity
NZ$M
913.2
(3.8)
909.4
189.8
(146.4)
8.0
14.8
(1.8)
973.8
712.1
(181.3)
22.3
(7.4)
1.4
249.1
1,029.2
242.6
1,520.9
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021 106
CONSOLIDATED BALANCE SHEET
As at 31 March 2021
ASSETS
Current assets
Cash and cash equivalents
Short-term investments
Trade and other receivables
Inventories
Derivative financial instruments
Tax receivable
Total current assets
Non-current assets
Derivative financial instruments
Other receivables
Property, plant and equipment
Intangible assets
Deferred tax assets
Total assets
LIABILITIES
Current liabilities
Borrowings
Lease liabilities
Trade and other payables
Provisions
Tax payable
Derivative financial instruments
Total current liabilities
Notes
2020
NZ$M
2021
NZ$M
Notes
2020
NZ$M
2021
NZ$M
LIABILITIES
Non-current liabilities
97.3
Borrowings
280.3
222.5
270.6
42.9
6.4
Lease liabilities
Provisions
Other payables
Derivative financial instruments
Total liabilities
67.1
77.7
222.7
146.5
4.1
0.6
518.7
920.0
EQUITY
14.1
2.3
735.3
73.9
90.7
Share capital
104.0
Retained earnings
7.6
Reserves
882.1
Total equity
Total liabilities and equity
80.0
81.3
12
12
14
13
6
15
17
22.0
22.0
1.5
19.8
61.3
62.8
29.0
10.5
22.8
1.5
461.2
554.1
225.4
686.3
62.1
973.8
1,435.0
249.1
1,029.2
242.6
1,520.9
2,075.0
1,435.0
2,075.0
The accompanying Notes form an integral part of the Financial Statements.
80.6
11.6
165.6
5.0
35.4
36.4
334.6
11.9
14.7
233.3
15.6
149.6
2.4
427.5
On behalf of the Board
26 May 2021
Scott St John
Chairman
Lewis Gradon
Managing Director and
Chief Executive Officer
12
7
8
6
6
9
10
11
12
12
13
14
6
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2021
107
CASH FLOWS FROM OPERATING ACTIVITIES
CASH FLOW RECONCILIATION
2020
NZ$M
2021
NZ$M
2020
NZ$M
2021
NZ$M
1,200.9
1,965.3
Profit after tax
287.3
524.2
Receipts from customers
Grants received
Interest received
1.6
2.5
–
Add (deduct) non-cash items:
1.5
Depreciation – right-of-use assets
Payments to suppliers and employees
(785.2)
(1,205.1)
Depreciation and amortisation – other assets
Tax paid
Interest paid
Lease interest paid
(93.2)
(131.5)
Share based payments
(3.4)
(1.8)
(3.3)
(1.6)
Movement in provisions
Movement in deferred tax assets / liabilities
Net cash flows from operating activities
321.4
625.3
Movement in net tax payables
10.1
50.9
6.1
(0.6)
(24.0)
14.0
7.9
(2.0)
62.4
(64.8)
(10.4)
46.9
(28.3)
321.4
11.5
73.5
7.7
19.6
(59.0)
120.8
(7.7)
(1.8)
164.6
(5.1)
(124.1)
65.7
(63.5)
625.3
Foreign currency translation
Other non-cash items
Net working capital movements:
Trade and other receivables
Inventories
Trade and other payables
Net cash flows from operating activities
The accompanying Notes form an integral part of the Financial Statements.
CASH FLOWS FROM INVESTING ACTIVITIES
Net short-term investments
Purchases of property, plant and equipment
Purchases of intangible assets
Net cash flows from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of share capital under employee share plans
New borrowings
Repayment of borrowings
Lease liability payments
Dividends paid
Net cash flows from financing activities
Net increase in cash
Opening cash
Effect of foreign exchange rates
Closing cash
RECONCILIATION OF CLOSING CASH
Cash and cash equivalents
Bank overdrafts
Closing cash
15.0
(145.3)
(25.4)
(155.7)
2.3
15.0
(20.2)
(9.7)
(146.4)
(159.0)
6.7
30.9
(1.2)
36.4
67.1
(30.7)
36.4
(202.6)
(160.2)
(24.5)
(387.3)
3.5
45.3
(45.3)
(10.2)
(181.3)
(188.0)
50.0
36.4
(1.0)
85.4
97.3
(11.9)
85.4
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021 Foreign currency transactions and balances
Foreign currency transactions are translated into the relevant functional currency at
the exchange rates at the dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at period
end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in the income statement, except when deferred in other comprehensive
income as qualifying cash flow hedges.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with NZ IFRS requires the use
of certain critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group’s accounting policies. The Directors
regularly review all accounting policies and areas of judgement in presenting the financial
statements. Significant estimates are disclosed in each of the applicable notes to the
financial statements and are designated with an
symbol.
Significant accounting policies
Accounting policies are disclosed in each of the applicable notes to the financial
statements and are designated with an
symbol.
Basis of consolidation
The consolidated financial statements incorporate the assets and liabilities of all
subsidiaries of the Group as at balance date and the results of all subsidiaries for the year
then ended. All subsidiaries are 100% owned within the Group.
Intercompany transactions, balances and unrealised gains on transactions between
subsidiary companies are eliminated. Unrealised losses are also eliminated unless the
transaction provides evidence of the impairment of the asset transferred.
108
1. REPORTING ENTITY
Fisher & Paykel Healthcare Corporation Limited (the “Company” or “Parent”) together
with its subsidiaries (the “Group”) is a leading designer, manufacturer and marketer of
medical device products and systems for use in both hospital and homecare settings.
Products are sold in over 120 countries worldwide. The Company is a limited liability
company incorporated and domiciled in New Zealand. The address of its registered office
is 15 Maurice Paykel Place, East Tamaki, Auckland. These consolidated financial statements
were approved for issue by the Board of Directors on 26 May 2021.
2. BASIS OF PREPARATION AND PRINCIPLES OF CONSOLIDATION
Statement of compliance
The Company is registered under the Companies Act 1993 and is an FMC reporting entity
under Part 7 of the Financial Markets Conduct Act 2013. The Company is also listed on
the NZX and the ASX. The consolidated financial statements have been prepared in
accordance with the requirements of Part 7 of the Financial Markets Conduct Act 2013.
These consolidated financial statements for the year ended 31 March 2021 have been
prepared in accordance with New Zealand Generally Accepted Accounting Principles (NZ
GAAP). They comply with New Zealand Equivalents to International Financial Reporting
Standards (NZ IFRS), other New Zealand accounting standards and authoritative notices
that are applicable to entities that apply NZ IFRS. The consolidated financial statements
also comply with International Financial Reporting Standards (IFRS). The Group is a for-
profit entity for the purposes of complying with NZ GAAP.
Basis of measurement
These consolidated financial statements have been prepared under the historical cost
convention, as modified by the revaluation of financial assets and liabilities (including
derivative instruments) at fair value through profit or loss and/or other comprehensive
income, and the revaluation of land.
Functional and presentation currency
The consolidated financial statements are presented in New Zealand dollars (NZD), which
is the Company's functional currency to the nearest hundred thousand dollars unless
otherwise stated. Items included in the financial statements of each of the subsidiaries are
measured using the currency of the primary economic environment in which the entity
operates (the “functional currency”).
The Group operates as one integrated business, and the functional currency of all material
global operations is NZD, with the exception of Fisher & Paykel Healthcare Mexico
Properties S.A. de C.V. (“Mexico Properties”). Mexico Properties was established for the
purpose of holding the Group's property in Mexico, and its functional currency is United
States dollars (USD).
The results and financial position of entities that have a different functional currency
are translated to NZD as follows: assets and liabilities are translated at the exchange
rate at balance date and income statement items are translated at rates approximating
the foreign exchange rates ruling at the dates of transactions. Exchange differences are
recognised in other comprehensive income as a currency translation reserve movement.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
3. SIGNIFICANT TRANSACTIONS AND EVENTS IN THE FINANCIAL YEAR
4. OPERATING REVENUE AND SEGMENTAL INFORMATION
109
2020
NZ$M
2021
NZ$M
1,273.4
1,948.2
(9.7)
23.0
1,263.7
1,971.2
801.3
457.3
1,498.1
465.6
1,258.6
1,963.7
5.1
7.5
1,263.7
1,971.2
571.2
365.4
273.3
53.8
825.7
633.8
348.4
163.3
Sales revenue
Foreign exchange gain (loss) on hedged sales
Total operating revenue
Revenue by product group
Hospital products
Homecare products
Distributed and other products
Total operating revenue
Revenue after hedging by geographical location of
customer:
North America
Europe
Asia Pacific
Other1
Total operating revenue
1,263.7
1,971.2
1 Other includes New Zealand, Latin America (including Mexico), Africa and the Middle East.
COVID-19
In March 2020, the World Health Organisation declared the outbreak of COVID-19
as a pandemic. Since the outbreak of COVID-19, the Company’s focus has been on
manufacturing and supplying products that are directly involved in treating patients
with COVID-19, while also ensuring continuing supply of its other products.
Management have assessed the impact of COVID-19 on all aspects of the balance sheet.
Specifically, the carrying value of receivables, inventory and warranty exposure were
considered, with provisioning reflecting management's best estimate of the impact based
on information available at the time of preparing these financial statements. There has
been no material impact on the balance sheet.
As a result of currency volatility during this period, the Group’s portfolio of derivatives has
changed from being a net liability at 31 March 2020 to a net asset, with the corresponding
offset in the cash flow hedge reserve.
COVID-19 impact on inventory counts – opening balances
As a result of COVID-19 and the prioritisation of operational distribution of products that
are essential to patients, annual finished products inventory counts in the prior financial
year were not performed in Japan, Australia and Europe (including UK, Germany, France
and Sweden).
The Group operated strong inventory management processes including the performance
of periodic counting procedures across the Group. Based on these, and counts performed
after year end, management are comfortable that no adjustment to inventory balances
was required at 31 March 2020.
The Company’s auditors, PwC, were unable to attend certain 31 March 2020 annual
inventory counts and cycle counts in March 2020 as they had planned due to those
specific counts not being performed, as reflected in the prior year’s audit opinion. The
current year’s audit opinion is also qualified in relation to this matter because of the
impact on opening inventory balances and consequently also the current year’s result.
In the current year full and/or cycle count procedures were performed in these locations
with no significant inventory adjustments.
Capital expenditure
In March 2021, building construction contracts were signed for a third building on our
Tijuana, Mexico campus. Capital commitments at 31 March include $26.5 million related to
this project. To date, spending on this project totals $14.4 million. The building is expected
to be operational in 2023.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
110
4. OPERATING REVENUE AND SEGMENTAL INFORMATION (CONTINUED)
5. EXPENSES
Segmental reporting
The Group operates in one segment - being the design, manufacture, marketing and
sale of medical devices and systems globally. These products and systems are for use in
respiratory care, acute care, surgery and the treatment of OSA in the home and hospital.
Resource allocation decisions are made to optimise the Group’s financial operating profit.
This is consistent with the internal management reports the chief operating decision-
maker (CODM)1 reviews.
Revenue is recognised at the point in time performance obligations are satisfied
by transferring control of goods to the customer at the transaction price specified
in the contract. Control typically transfers to the customer at the same time as the
legal title passes to the customer, typically on delivery. The transaction price includes
all amounts which the Group expects to be entitled to net of sales taxes and other
indirect taxes, expected rebates and discounts. Where applicable, rebates and/or
discounts are included within the consideration using an estimation typically based
on the most likely method, and are only recognised to the extent that it is highly
probable that a significant reversal will not occur.
Profit before tax is after charging the following specific expenses:
Donations
Inventory written down (net)
2020
NZ$M
0.1
9.1
2021
NZ$M
25.6
20.7
In March 2021, the Group committed to donate $20 million to the Fisher & Paykel
Healthcare Foundation.
Fees paid to auditors
Statutory audit and half year review (i)
Other assurance and audit related services (ii)
Total audit, other assurance services and audit-related services
Other services (iii)
2020
NZ$'000
2021
NZ$'000
953
39
992
163
1,155
1,203
37
1,240
40
1,280
There are no significant financing components in the Group's revenue arrangements.
Total fees paid to auditors
Other fees paid to auditors
(i) Statutory audit and half year review includes $433,400 (2020: $361,900) paid to
other PwC network firms.
(ii) Other assurance and audit related services of $37,100 (2020: $38,700) include
assurance procedures in relation to compliance with the constant currency framework.
In 2020, other assurance and audit related services included this item as well as
scrutineering the counting of votes at the Annual Shareholders' Meeting (ASM).
(iii) Other services in 2021 includes treasury related financial markets risk analysis and
commentary, regulatory tax compliance procedures in Mexico and providing market
survey data relating to executive remuneration levels. In 2020, other services included
the treasury services, Mexico tax compliance, as well as remuneration benchmarking.
PwC was also engaged after balance date to provide further market data relating to
executive remuneration levels in 2022.
The fee paid to PwC for the audit and review of the Group's financial statements is split
across the jurisdictions where there are subsidiary entities that require an audit or are a
significant component of the Group.
1 The CODM comprises the Board of Directors (which includes the Chief Executive Officer), Vice-President - Products
and Technology, Senior Vice-President - Sales and Marketing and the Chief Financial Officer.
PwC New Zealand
PwC Overseas offices
2020
NZ$'000
2021
NZ$'000
793
362
1,155
847
433
1,280
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
6. DERIVATIVE FINANCIAL INSTRUMENTS
CURRENT
Foreign currency forward exchange contracts – cash flow hedges
Foreign currency forward exchange contracts – not hedge accounted
Foreign currency option contracts – cash flow hedges
Foreign currency option contracts – time value
Interest rate swaps & options – cash flow hedges
NON-CURRENT
Foreign currency forward exchange contracts – cash flow hedges
Foreign currency option contracts – cash flow hedges
Foreign currency option contracts – time value
Interest rate swaps & options – cash flow hedges
111
2020
2021
Assets
NZ$M
Liabilities
NZ$M
Assets
NZ$M
Liabilities
NZ$M
33.8
42.0
1.9
2.5
–
1.6
–
–
4.1
12.7
1.4
–
–
1.4
0.5
–
0.7
0.1
0.7
0.1
–
36.4
42.9
56.5
102.6
3.2
–
1.6
1.1
0.3
–
14.1
61.3
104.0
–
–
–
0.5
2.4
0.6
–
–
0.9
1.5
Derivatives are initially recognised at fair value on the date a derivative contract is
entered into, and are subsequently re-measured to their fair value. The method of
recognising the resulting gain or loss depends on whether the derivative is designated
as a hedging instrument and, if so, the nature of the item being hedged. The Group
generally applies hedge accounting to all derivative financial instruments.
The Group designates certain derivatives as hedges of highly probable forecast
transactions (cash flow hedges). At the inception of the transaction the Group
documents the relationship between hedging instruments and hedged items, as
well as the risk management objective and strategy for undertaking various hedge
transactions.
The Group also documents their assessment, both at hedge inception and on an
ongoing basis, of whether the derivatives that are used in hedging transactions have
been and will continue to be highly effective in offsetting changes in cash flows
of hedged items. Any ineffective portion is recognised immediately in the income
statement. Derivatives that are designated as hedges will be classified as non-current if
they have maturities greater than 12 months after the balance sheet date.
Some components of hedge accounted derivatives are excluded from the designated
risk. Cash flow hedges include only the intrinsic value of options. Time value on
options is excluded from the hedge designation and is marked to market through
other comprehensive income and accumulated within a separate component of equity
('the costs of hedging reserve' within 'hedging reserves') until such time as the related
hedge accounted cash flows affect profit or loss. At this stage the cumulative amount is
reclassified to profit or loss.
Master netting arrangements
The Group enters into derivative transactions under the International Swaps and Derivatives Association (ISDA) master agreements. The ISDA agreements do not meet the criteria for
offsetting derivatives in the balance sheet. Netting arrangements are only enforceable upon early termination, for example, on occurrence of a credit default.
Refer to Note 21 for information on the calculation of fair values and maturity of undiscounted cash flows for these financial instruments.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
112
6. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
Contractual amounts of derivative financial instruments were as follows:
Undiscounted foreign currency contractual amounts for outstanding hedges were as
follows:
Foreign currency forward contracts and options
Sale commitments forward exchange contracts
1,873.2
1,743.5
2020
NZ$M
2021
NZ$M
Purchase commitments forward exchange contracts
Foreign currency borrowing forward exchange contracts
NZD call option contracts purchased
Collar option contracts – NZD call options purchased (i)
Collar option contracts – NZD put options sold (i)
Interest rate derivatives
Interest rate swaps
Interest rate options
86.8
16.9
38.0
70.9
76.6
52.1
12.5
83.2
36.1
–
31.9
34.0
29.0
10.7
(i) Foreign currency contractual amounts of put and call options are equal.
Sale commitments
United States dollars
European Union euros
Japanese yen
Purchase commitments
Mexican pesos
Foreign Currency
2020
M
2021
M
US$659.3
US$627.5
€322.3
€280.7
¥11,075.0
¥8,485.0
MXN$1,285.5 MXN$1,314.5
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
7. TRADE AND OTHER RECEIVABLES
8. INVENTORIES
CURRENT
Trade receivables
Loss allowance for doubtful trade receivables
Other receivables
2020
NZ$M
2021
NZ$M
195.9
(3.0)
192.9
29.8
222.7
Materials
197.0
Finished products
(5.3)
Provision for inventory write downs
191.7
30.8
222.5
113
2020
NZ$M
50.3
111.4
(15.2)
146.5
2021
NZ$M
97.7
205.5
(32.6)
270.6
Inventories are stated at the lower of cost or net realisable value. Cost is determined
using the first-in, first-out (FIFO) method and includes expenditure incurred in
acquiring the inventories and bringing them to their existing location and condition.
The cost of finished products comprises materials, direct labour, other direct costs
and related production overheads (based on normal operating capacity). Net
realisable value is the estimated selling price in the ordinary course of business, less
applicable variable selling expenses.
Trade receivables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less loss allowance for doubtful
trade receivables. Estimates are used in determining the level of receivables that
may not be collected. The Group has applied the simplified approach to calculating
expected credit losses on trade receivables and recognises a doubtful debt based on
the lifetime expected credit loss at each reporting date.
Bad debts are written off when they are considered to have become uncollectable.
Trade receivables credit risk
As at balance date 79% of trade receivables were current (2020: 88%) with less than
3% (2020: 1%) more than 90 days past due. The total loss allowance for doubtful trade
receivables represents an estimate of the expected credit losses in respect of trade
receivables and covers the majority of these more than 90 days past due balances. The
expected credit losses are assessed by reference to historical collection trends and are
adjusted to reflect current and forward-looking information on macroeconomic factors
affecting the ability of the customers to settle the receivables.
Customer and receivable concentration
Five largest customers' proportion of the Group's:
Operating revenue
Trade receivables
2020
2021
17.7%
16.6%
17.5%
15.4%
There is no history of default in relation to these customers. Further information about the
credit quality and the Group's exposure to credit risk can be found in Note 21.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
114
9. PROPERTY, PLANT AND EQUIPMENT
Reconciliation of carrying amounts at the beginning and end of the year
Cost and revaluation
Balance at 31 March 2019
Adjustment on adoption of NZ IFRS 16
Balance at 1 April 2019
Additions
Transfers
Disposals
Foreign exchange differences
Balance at 31 March 2020
Revaluation recognised in asset revaluation reserve
Additions
Transfers
Disposals
Foreign exchange differences
Balance at 31 March 2021
Depreciation and impairment losses
Balance at 31 March 2019
Adjustment on adoption of NZ IFRS 16
Depreciation charge for the year
Disposals
Foreign exchange differences
Balance at 31 March 2020
Depreciation charge for the year
Disposals
Foreign exchange differences
Balance at 31 March 2021
Carrying amounts
At 31 March 2019
At 1 April 2019 on adoption of NZ IFRS 16
At 31 March 2020
At 31 March 2021
Land
Fair Value
NZ$M
Structure (i)
NZ$M
Buildings
Fit out
and other
NZ$M
180.0
116.9
141.4
Plant & equipment
Capital projects
Total
Leased
assets
NZ$M
Purchased
NZ$M
Leased
assets
NZ$M
Buildings (i)
NZ$M
Other
NZ$M
230.9
47.1
432.6
–
180.0
–
0.7
–
3.0
183.7
34.5
0.3
1.7
–
(3.7)
216.5
–
–
–
–
–
–
–
–
–
–
180.0
180.0
183.7
216.5
–
116.9
0.5
–
–
3.8
121.2
–
3.8
55.4
–
(4.7)
175.7
20.1
–
2.7
(0.1)
(0.1)
22.6
4.1
–
(0.1)
26.6
96.8
96.8
98.6
–
141.4
1.8
0.4
(0.1)
0.9
144.4
–
9.8
78.7
(0.6)
(1.4)
70.5
–
6.6
(0.2)
(0.1)
76.8
9.5
(0.3)
–
86.0
70.9
70.9
67.6
149.1
144.9
–
24.9
24.9
1.1
–
–
–
26.0
–
24.0
–
(2.9)
318.8
(0.9)
317.9
22.7
26.6
(3.7)
(0.1)
363.4
–
35.9
39.3
(6.0)
–
–
–
6.8
–
–
6.8
7.8
(0.1)
–
14.5
–
24.9
19.2
32.6
182.5
(0.4)
28.9
(1.2)
(0.1)
209.7
43.3
(5.7)
–
247.3
136.3
135.8
153.7
185.3
62.6
–
62.6
74.6
(0.9)
–
–
136.3
–
23.5
54.8
–
54.8
42.7
(26.8)
–
–
70.7
–
92.9
(134.9)
(40.2)
–
–
–
–
NZ$M
874.5
29.4
903.9
147.2
–
(3.9)
7.6
1,054.8
34.5
193.9
–
(10.5)
(9.8)
24.9
123.4
1,262.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
62.6
62.6
136.3
24.9
54.8
54.8
70.7
123.4
273.1
–
48.3
(1.6)
(0.3)
319.5
68.4
(7.0)
(0.1)
380.8
601.4
630.8
735.3
882.1
–
5.4
5.4
3.8
–
(0.1)
–
9.1
–
3.7
–
(1.0)
–
11.8
–
0.4
3.3
(0.1)
–
3.6
3.7
(0.9)
–
6.4
–
5.0
5.5
5.4
(i) No finance costs were capitalised during the year in relation to building additions (2020: $2.1 million, with an effective interest rate of 3.0%).
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
115
9. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Land is measured at fair value, based on periodic but at least triennial valuations by
external independent valuers less any impairment losses recognised after the date of
the revaluation. Valuations are performed with sufficient regularity to ensure that the
fair value does not differ materially from its carrying amount.
All other property, plant and equipment is stated at historical cost less depreciation
and impairment. Historical cost includes expenditure that is directly attributable to
the acquisition of the items. This cost includes labour attributable to bringing the
assets to the location and working condition for its intended use.
Depreciation is generally calculated using the straight line method and is expensed
over the estimated useful lives. Depreciation methods, residual values and useful lives
are reassessed at each reporting date. Estimated useful lives are as follows:
Buildings – structure
Buildings – fit-out and other
Plant and equipment
25 – 50 years
3 – 50 years
3 – 15 years
An asset’s carrying amount is written down immediately to its estimated recoverable
amount if the asset’s carrying amount is greater than its estimated recoverable
amount.
Leased assets
The Group's leases predominantly relate to property or equipment outside
New Zealand. All leases are included within property, plant and equipment. Lease
contracts are typically made for fixed periods between 3-12 years but may have
extension options. Lease terms are negotiated on an individual basis and contain
a wide range of different terms and conditions. The right-of-use (leased) asset is
depreciated over the shorter of the asset's useful life and the expected lease term on
a straight-line basis.
Revaluations of land
Any revaluation increment is credited to the asset revaluation reserve included in
equity, except to the extent that it reverses a revaluation decrement for the same
asset previously recognised in the income statement, in which case the increment is
recognised in the income statement.
Land revaluation
As described in Note 21, land in Mexico and New Zealand is considered to be a level
3 asset within the fair value hierarchy for valuation purposes. There are certain
estimates associated with determining fair value, with the significant input being
comparable land sales information per square metre ('psm') for similar properties
adjusted to reflect relevant physical and locational characteristics. Valuation of land
is performed in accordance with the provisions of NZ IAS 16 'Property, Plant and
Equipment' and NZ IFRS 13 ‘Fair Value Measurement’.
New Zealand
The New Zealand land holding was valued by Jones Lang LaSalle (JLL NZ), with an
effective date of 31 March 2021 in accordance with the Australia and New Zealand
Property Institute Valuation Standards. The valuation of land ranged from $480 psm
for land with improvements to $365 psm for development land.
Mexico
The Mexico land holding was valued by Jones Lang LaSalle (JLL Mexico) as at
31 March 2021 in accordance with the International Valuation standards. The land was
valued at US$18.3 million (NZ$25.7 million) representing US$116 psm (NZ$166 psm).
Property, plant and equipment (including leased assets) and intangible assets by
geographical location:
Carrying amounts of land if measured at historical cost
33.4
138.0
37.6
170.4
2020
NZ$M
2021
NZ$M
New Zealand
Mexico
Other
At historical cost
At fair value
New Zealand
Mexico
2020
NZ$M
71.6
157.7
2021
NZ$M
72.2
191.0
2020
US$M
14.9
15.7
2021
US$M
16.3
18.3
637.8
754.1
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
116
10. INTANGIBLE ASSETS
Cost
Balance at 31 March 2019
Additions
Transfers
Disposals
Foreign exchange differences
Balance at 31 March 2020
Additions
Transfers
Disposals
Foreign exchange differences
Balance at 31 March 2021
Amortisation and impairment losses
Balance at 31 March 2019
Amortisation for the year
Disposals
Balance at 31 March 2020
Amortisation for the year
Disposals
Balance at 31 March 2021
Carrying amounts
At 31 March 2019
At 31 March 2020
At 31 March 2021
Patents,
trademarks &
applications
NZ$M
Software
NZ$M
Capital
projects
in progress
NZ$M
Other
NZ$M
54.3
6.0
4.0
(0.2)
–
64.1
2.5
1.2
(0.8)
–
67.0
23.4
4.6
(0.1)
27.9
4.5
(0.7)
31.7
30.9
36.2
35.3
51.2
13.3
–
(0.5)
–
64.0
16.5
–
(1.0)
–
79.5
27.0
8.1
(0.3)
34.8
12.1
(0.5)
46.4
24.2
29.2
33.1
5.0
–
–
(0.8)
–
4.2
–
–
–
–
4.2
3.6
–
(0.8)
2.8
–
–
2.8
1.4
1.4
1.4
5.0
5.8
(4.0)
–
0.3
7.1
4.9
(1.2)
–
(0.6)
10.2
–
–
–
–
–
–
–
5.0
7.1
10.2
Total
NZ$M
115.5
25.1
–
(1.5)
0.3
139.4
23.9
–
(1.8)
(0.6)
160.9
54.0
12.7
(1.2)
65.5
16.6
(1.2)
80.9
61.5
73.9
80.0
Software: Software development
costs that are directly attributable to
the design and testing of identifiable
and unique software products
and acquired computer software
licences controlled by the Group
are recognised as intangible assets
and are initially capitalised at cost.
Directly attributable costs that are
capitalised as part of the software
include employee costs. Software
costs are amortised over the useful
economic life of 3 to 15 years.
Project costs are transferred from
Capital projects in progress to
Software, as each stage is completed.
Patents and trademarks: Patents
and trademarks have a finite useful
life and are carried at cost less
accumulated amortisation and
impairment losses. Amortisation is
calculated using the straight line
method to allocate the cost of patents
and trademarks over their anticipated
useful lives of 5 to 15 years. In the
event of a patent being superseded
or a trademark registration is
not continued or renewed, the
unamortised costs are expensed
immediately.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
117
11. INCOME TAX
INCOME TAX EXPENSE
Profit before tax
Tax expense at the New Zealand rate of 28%
Adjustments to tax:
Non-assessable income
Non-deductible expenses
Foreign rates other than 28%
Effect of foreign currency translations
R&D tax credit
Re-introduction of building depreciation
Prior period over provision
Tax expense
This is represented by:
Current tax
Deferred tax
Tax expense
Effective tax rate
Effective tax rate excluding R&D tax credit and
re-introduction of building depreciation
2020
NZ$M
370.5
103.7
(0.1)
2.4
0.5
(4.5)
(13.4)
(5.3)
(0.1)
83.2
107.0
(23.8)
83.2
2021
NZ$M
718.2
201.0
(1.7)
2.6
(1.2)
6.6
(13.2)
–
(0.1)
194.0
252.9
(58.9)
194.0
Tax expense comprises current and deferred tax. Tax expense is recognised in the
income statement except to the extent that it relates to items recognised outside of
the income statement, in which case it is recognised in other comprehensive income
or directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using
tax rates enacted or substantively enacted at the balance date. It also includes any
adjustment to tax payable for previous financial years.
Deferred tax arises due to temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and those for tax purposes.
Deferred tax is determined using tax rates (and laws) that have been enacted or
substantively enacted by balance date and are expected to apply when the related
deferred tax asset is realised or the deferred tax liability is settled.
The R&D tax credit is estimated based on the eligible R&D expenditure incurred
during the period and is recognised as a deduction to current tax expense and
offset in current tax payable. The R&D tax credit is only recognised when there is
reasonable certainty the Group will comply with the conditions of the tax incentive.
IMPUTATION CREDITS
2020
M
2021
M
22.5%
27.0%
27.5%
28.8%
New Zealand imputation credits available for use in
subsequent reporting periods
NZ$143.0
NZ$310.4
Australian franking credits available for use in subsequent
reporting periods
A$10.3
A$12.8
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
118
11. INCOME TAX (CONTINUED)
DEFERRED TAX ASSETS/(LIABILITIES)
Balance at 31 March 2019
Adjustment on adoption of NZ IFRS 16
Balance at 1 April 2019
Amounts recognised in:
Other comprehensive income
Directly in equity
In the Income Statement
In the Income Statement - re-introduction of building depreciation
Balance at 31 March 2020
Amounts recognised in:
Other comprehensive income
Directly in equity
In the Income Statement
Balance at 31 March 2021
Provisions
and accruals
NZ$M
Notes
50.8
–
50.8
–
–
16.6
–
67.4
–
–
58.0
125.4
Property,
plant and
equipment and
intangibles
NZ$M
Financial
instruments
NZ$M
Employee
share based
payments
NZ$M
(23.0)
(16.6)
–
–
(23.0)
(16.6)
Leases
NZ$M
–
1.5
1.5
–
–
–
–
–
–
0.1
5.3
1.5
(17.6)
–
–
(0.1)
1.4
–
–
1.5
(16.1)
39.0
–
(0.3)
–
22.1
(61.9)
–
(0.3)
(40.1)
Other
NZ$M
0.8
–
0.8
–
–
1.5
–
2.3
–
–
(1.2)
1.1
Total
NZ$M
15.6
1.5
17.1
39.0
10.8
18.5
5.3
90.7
(61.9)
(6.4)
58.9
81.3
3.6
–
3.6
–
10.8
0.6
–
15.0
–
(6.4)
1.0
9.6
Deferred tax assets and liabilities are offset within the balance sheet where they relate to income taxes levied by the same taxation authority.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
12. INTEREST-BEARING LIABILITIES
CURRENT
Bank overdrafts
Borrowings
Lease liabilities
NON-CURRENT
Borrowings expiring
Between one and two years
Between two and three years
Between three and four years
Between four and five years
Lease liabilities
2020
2021
Borrowings
NZ$M
Leases
NZ$M
Borrowings
NZ$M
Leases
NZ$M
30.7
49.9
–
80.6
–
16.6
5.4
–
–
22.0
–
–
11.6
11.6
–
–
–
–
22.0
22.0
11.9
–
–
11.9
25.1
37.7
–
–
–
62.8
–
–
14.7
14.7
–
–
–
–
29.0
29.0
119
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred.
Subsequent to initial recognition, borrowings are measured at amortised cost,
applying the effective interest rate method. Financing expenses directly attributable
to the acquisition, construction or production of a qualifying asset are capitalised as
part of the cost of that asset.
Borrowings are classified as current liabilities unless the Group has an unconditional
right to defer settlement of the liability for at least 12 months after the reporting date.
Lease liabilities
The lease agreements do not impose any covenants, and leased assets may not be
used as security for borrowing purposes.
Lease liabilities have been measured at the present value of the remaining lease
payments, discounted using a discount rate derived from the incremental borrowing
rate for each relevant territory on 1 April 2019 when the interest rate implicit in the lease
was not readily available. Incremental borrowing rates applied to lease liabilities range
between 1% – 25%, with a weighted average rate of 4.1%. Leases that commenced after
1 April 2019 use an incremental borrowing rate that was applicable on commencement
date.
Extension and termination options
Some property leases contain an extension option exercisable by the Group. At the
commencement of a lease, the Group assesses whether it is reasonably certain an
extension option will be exercised. The assessment is reviewed if a significant event
or a significant change in circumstances occurs which affects this assessment and
that is within the control of the Group. The extension options are only exercisable
by the Group and not by the lessor. Where it is reasonably certain the extension will
be exercised, that extension period and related costs are recognised on the balance
sheet.
Short-term and low-value leases
Payments associated with short-term leases and leases of low-value assets are
recognised on a straight-line basis as an expense in the Income Statement. Short-
term leases are leases with a lease term of 12 months or less. Low-value leases
predominantly relate to computer equipment.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
120
Borrowing Facilities
Borrowings have been aged in accordance with the expiry dates of the facilities as there
are no required principal payments before the expiry of each facility. At year end the
weighted average interest rate is 1.7% (2020: 2.6%).
Key lenders to the Group are Debt Certificate Holders under the Negative Pledge Deed.
In April 2017, an amended Negative Pledge Deed was executed. The negative pledge
includes the covenant that security can be given only in limited circumstances.
The companies in the Group providing the undertakings under the amended Negative
Pledge Deed are:
Fisher & Paykel Healthcare Corporation Limited
Fisher & Paykel Healthcare Limited
Fisher & Paykel Healthcare Treasury Limited
Fisher & Paykel Healthcare Properties Limited
The principle covenants of the negative pledge are that:
(i) the interest cover ratio for the Group shall not be less than 3 times earnings before
interest, tax, depreciation and amortisation (EBITDA);
(ii) the net tangible assets of the Group shall not be less than $200 million; and
(iii) the total tangible assets of the Guaranteeing Group shall constitute at least 80% of
the total tangible assets of the Group.
There have been no breaches of debt covenants for the current or prior period.
The Company had total available committed debt funding of $230 million as at 31 March
2021, of which approximately $167 million was undrawn. As at 31 March 2021, the weighted
average maturity of committed borrowing facilities was 2.5 years.
Unused lines of credit
Bank overdraft facilities
Borrowing facilities
2020
NZ$M
2021
NZ$M
19.1
148.0
167.1
33.9
167.2
201.1
Short-term investments
As at 31 March 2021, the Group has invested available cash on hand of $280.3 million in
short-term investments. These investments have maturities between 96 and 277 days with
banking institutions that have a long term credit rating of Standard & Poors’ A and above
and are invested at average interest rates of 0.7%.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
13. TRADE AND OTHER PAYABLES
14. PROVISIONS
CURRENT
Trade payables
Employee entitlements
Other payables and accruals
NON-CURRENT
Employee entitlements
Other payables and accruals
2020
NZ$M
69.3
57.1
39.2
2021
NZ$M
56.7
87.5
89.1
Warranty provision
CURRENT
Balance at beginning of the year
Current year provision
165.6
233.3
Warranty expenses incurred
16.6
3.2
19.8
20.6
2.2
22.8
Balance at end of the year
NON-CURRENT
Balance at beginning of the year
Current year provision
Balance at end of the year
121
2020
NZ$M
2021
NZ$M
4.9
6.3
(6.2)
5.0
2.2
(0.7)
1.5
5.0
15.9
(5.3)
15.6
1.5
9.0
10.5
Trade and other payables represent liabilities for goods and services provided to the
Group prior to the end of the financial period which are unpaid. The amounts are
unsecured and are usually paid within 60 days of recognition. Trade payables are
recognised initially at fair value and subsequently measured at amortised cost using
the effective interest method.
Refer to Note 18 for further details of employee entitlements and benefits.
Provisions are recognised where the Group has a present legal or constructive
obligation as a result of past events and it is more likely than not that an outflow of
resources will be required to settle the obligation, and the amount can be reliably
estimated.
Warranty
Provision for warranty covers the obligations for the unexpired warranty periods for
products, based on recent historical costs incurred on warranty exposure. Typical
warranty terms are 1 to 2 years for parts and/or labour.
The actual future warranty claims experienced by the Group may be different to that
of the past. Factors that could impact future warranty claims include the success of
the Group’s quality system, as well as future parts and labour costs. Where the Group
is aware of specific product warranty issues these are included in the provision.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
122
15. SHARE CAPITAL
16. EARNINGS PER SHARE
Share capital at beginning of the year
Issue of share capital under employee share plans
Share capital at end of the year
Less treasury shares (i)
2020
NZ$M
221.0
8.0
229.0
(3.6)
225.4
2021
NZ$M
229.0
Profit after tax
2020
NZ$M
287.3
2021
NZ$M
524.2
22.3
Weighted average number of ordinary shares
574,192,388
575,650,376
251.3
Adjustment for share options, PSRs and ESRs
4,857,255
3,937,886
(2.2)
249.1
Weighted average number of ordinary shares for
diluted earnings per share
579,049,643
579,588,262
Number of issued shares
Number of shares on issue at beginning of the year
573,708,739
574,570,603
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
50.0 cps
49.6 cps
91.1 cps
90.4 cps
Basic earnings per share is calculated by dividing the profit after tax by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings per share is calculated by adjusting the weighted average number
of ordinary shares outstanding to assume conversion of all dilutive potential ordinary
shares. Options, Performance Share Rights (PSRs) and Employee Share Rights (ESRs)
are convertible into the Company’s shares, and are therefore considered dilutive
securities for diluted earnings per share.
Shares issued:
Employee share purchase schemes
Employee share based payments plans
167,316
79,889
694,548
1,762,040
Number of shares on issue at end of the year
574,570,603
576,412,532
Less treasury shares (i)
(290,103)
(137,720)
574,280,500
576,274,812
Incremental costs directly attributable to the issue of new shares, rights or options
are shown in equity as a deduction, net of taxation, from the proceeds.
When shares are acquired by a member of the Group, the amount of consideration
paid is recognised directly in equity. These shares are classified as treasury shares
and presented as a deduction from share capital until the ownership transfers to a
holder outside the Group. When treasury shares are subsequently reissued under
employee share plans the cost of treasury shares is reversed and the realised gain or
loss on sale or reissue, net of any directly attributable incremental transaction costs,
is recognised within share capital.
All shares are fully paid. All ordinary shares rank equally with one vote attached to each
fully paid ordinary share.
(i) Treasury shares are shares held and controlled by Fisher & Paykel Healthcare
Employee Share Purchase Trustee Limited.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
123
Dividends
All dividends are recognised as distributions to shareholders.
During the year, supplementary dividends of $20.1 million were paid to non-resident
shareholders (2020: $16.0 million), for which the Group received an equivalent foreign
investor tax credit entitlement. The foreign investor tax credit entitlement is included in
income taxes paid within the statement of cash flows.
Dividends
2019 final
2020 interim
31 March 2020
2020 final
2021 interim
31 March 2021
Cents per
share
13.50
12.00
25.50
15.50
16.00
31.50
NZ$M
77.5
68.9
146.4
89.1
92.2
181.3
Subsequent event – dividend declared
On 26 May 2021 the directors approved the payment of a fully imputed 2021
final dividend of $126.8 million (22.0 cents per share) to be paid on 7 July 2021.
A supplementary dividend of 3.8824 cents per share was also approved for eligible
non-resident shareholders.
17. RESERVES AND DIVIDENDS
Hedging reserve
Asset revaluation reserve
Employee share based payment reserve
Foreign currency translation reserve
Total reserves
Nature and purpose of reserves
2020
NZ$M
(56.2)
87.6
27.7
3.0
62.1
2021
NZ$M
103.0
122.1
20.3
(2.8)
242.6
Hedging reserve
This reserve is used to record unrealised gains or losses on hedging instruments that are
recognised directly in equity and the cumulative net change in the time value on currency
options which are excluded from hedge designations of foreign currency risk.
Amounts are recycled to the income statement when the associated hedged transactions
affect the income statement.
Asset revaluation reserve
The asset revaluation reserve relates to the revaluation of land. For details refer to Note 9.
Share based payment reserve
This reserve is used to recognise the fair value of shares, options, PSRs and ESRs granted
but not exercised or lapsed. Tax deductions in excess of the cumulative share based
payment expense are recognised in equity.
Amounts are transferred to share capital (including income tax benefits) when the vested
shares, options, PSRs or ESRs are exercised or lapse.
Foreign currency translation reserve
The foreign currency translation reserve contains foreign exchange differences arising on
consolidation of assets and liabilities of overseas entities with a functional currency other
than NZD.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021 124
18. EMPLOYEE EXPENSES
Employee expenses total $574.9 million (2020: $429.5 million).
6.1
7.7
a) Key management and director compensation
Salary and other short-term benefits
Share based benefits
Directors fees
Wages and
salaries
Share based
benefits
2020
NZ$'000
7,887
1,674
1,046
2021
NZ$'000
10,053
2,154
1,061
10,607
13,268
Key management personnel includes the Chief Executive Officer and senior executives
reporting directly to the Chief Executive Officer.
The table excludes any dividends received on the Company’s shares held by the Directors
or key management personnel.
2020
NZ$M
2021
NZ$M
423.4
567.2
Wages and salaries
Wages and salaries includes non-monetary benefits, annual leave, long service leave
and contributions to superannuation plans.
Liabilities for wages and salaries, including non-monetary benefits, annual leave,
long service leave and accumulating sick leave are recognised within employee
entitlements in trade and other payables. These are measured at the amounts
expected to be paid when the liabilities are settled in respect of employees’ services
up to the reporting date.
For the liabilities for long service leave, consideration is given to expected future
wage and salary levels, experience of employee departures and periods of service.
Expected future payments are discounted using market yields at the reporting date
on national government bonds with terms to maturity and currency that match, as
closely as possible, the estimated future cash outflows.
Liabilities for non-accumulating sick leave are recognised when the leave is taken and
measured at the rates paid or payable.
Equity settled share based payments
The fair value (at grant date) of shares, options, PSRs and ESRs granted to
employees is recognised as an employee expense in the income statement over the
vesting period with a corresponding increase in the employee share based payment
reserve. When shares, options, PSRs or ESRs are exercised, the amount in the share
based payment reserve relating to those instruments, together with the option
exercise price paid by the employee, is transferred to share capital. When any vested
shares, options, PSRs or ESRs lapse, the amount in the share based payment reserve
relating to those shares, options, PSRs or ESRs is also transferred to share capital.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
125
(iii) Employee share rights plan
Employee Share Rights (ESR) Plan entitles certain New Zealand and Australian employees
to be issued ordinary shares in the Company. ESRs automatically vest on the third
anniversary of their grant date at no cost to the employee. For each ESR that vests, one
ordinary share will be issued.
(iv) Other Employee share and stock purchase plans
Employee Share Purchase Plan: New Zealand and Australian full time employees are
eligible, after a qualifying period, to participate in this plan. Shares are issued up to the
value of $2,000, with a discount of up to $500 per employee. Loans are provided to
employees for the purchase and repaid over the vesting period. No interest is charged on
the loans. The qualifying period between grant and vesting date is 3 years. At 31 March
2021 the total receivable owing from employees was $1.2 million (2020: $2.1 million).
Employee Stock Purchase Plan: North American employees working more than 20 hours
per week, in accordance with section 423 of the US Internal Revenue Code as amended,
are eligible to participate in this plan. Shares under this Plan are issued at a discount of
15%, are allocated to employees at the time of issue and vest immediately. Shares issued
under this plan in 2021 totalled 79,889 shares (2020: 82,636).
Measurement
The fair value of share options or PSRs is independently determined using a Monte Carlo
simulation valuation methodology. The fair value of ESRs is independently determined
using a discounted dividend approach. The key inputs and assumptions are included on
the following page.
18. EMPLOYEE EXPENSES (CONTINUED)
b) Employee share based compensation
From 1 April 2019, the Company grants options and PSRs to certain employees under
the 2019 Share Option Plan and the 2019 Performance Share Rights Plan. Prior to April
2019, the Company granted options and PSRs to certain employees under the 2003 Share
Option Plan and Employee Performance Share Rights Plan.
Vesting of all schemes is subject to the employee still being in service at date of vesting.
No amounts are payable for the grant of any options or share rights. Options, PSRs and
ESRs granted to employees have no voting rights until they have been exercised and
ordinary shares issued.
(i) Share option plan
Under the 2019 Share Option Plan, one option gives the employee the right to acquire one
ordinary share in the Company. Options vest on either the third, fourth or fifth anniversary
date of the grant as long as the FPH share price on the NZX on that date has exceeded
the “escalated price”. The escalated price is determined as at each anniversary of the
grant date and is calculated by:
•
•
increasing the last calculated escalated price (which as at the grant date will be the
exercise price of the option) by a percentage amount determined by the Board to
represent the Company’s cost of capital; and
reducing the resulting figure by the amount of any dividend paid by the Company in
respect of a share in the 12 month period immediately preceding that anniversary.
Under the 2003 Share Option Plan, options vest at any time between the third and the
fifth anniversary of the grant date, as long as FPH’s share price on the NZX has, at any
time on or after the third anniversary, exceeded the escalated price. The escalated price is
escalated for a period of three years only.
(ii) Performance share rights plan
Under the 2019 Performance Share Rights Plan, one share right gives the employee
the potential to exercise a share right for an ordinary share in the Company at no cost.
PSRs will only become exercisable if the Company’s gross total shareholder return (TSR)
performance exceeds the performance of the Dow Jones US Select Medical Equipment
Total Return Index (DJSMDQT) in NZD over the same period.
The plan is a 5 year scheme, with the potential for rights to fully vest on the third and
fourth anniversary of the grant date if the Company’s TSR performance exceeds that of
the DJSMDQT by 10 percentage points or more.
Under the previous Employee Performance Share Rights Plan partial vesting of PSRs was
possible at the third and fourth anniversary.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021 126
18. EMPLOYEE EXPENSES (CONTINUED)
Movements in the number of options, PSRs and ESRs outstanding and their exercise prices are as follows:
Number outstanding
As at beginning of the year
Granted during the year
Exercised during the year
Lapsed during the year
As at end of the year
Exercisable at year end
Number of employees holding employee share options, PSRs and ESRs
Weighted average exercise price
Weighted average remaining contractual life (months)
Fair value of share options or rights granted during the year (NZ$M)
2020
2021
Options
Performance
Share Rights
Employee
Share Rights
Options
Performance
Share Rights
Employee
Share Rights
3,808,428
972,230
122,355
3,381,887
1,202,771
244,656
815,732
257,701
127,713
412,417
130,857
62,227
(1,177,459)
–
–
(1,389,674)
(736,000)
–
(64,814)
(27,160)
(5,412)
(8,505)
(3,596)
(3,553)
3,381,887
1,202,771
244,656
2,396,125
594,032
303,330
870,744
353,603
–
532,446
426
$12.98
33
2.6
459
–
33
2.6
261
–
23
2.0
315
$18.54
33
2.9
–
192
–
39
3.0
–
301
–
15
2.2
Fair value of share options or rights granted during the year ($ per share)
$3.19
$10.11
$15.82
$7.15
$22.55
$35.53
Key inputs and assumptions used in fair value of grants during the year
Share price at grant date
Contractual life (years)
Exercise price
Expected volatility (i)
Expected dividend yield
Cost of equity
5 year NZD risk free rate
5 year USD risk free rate
NZD/USD exchange rate of grant date
Expected NZD/USD volatility
Expected DJSMDQT index volatility
$16.90
$16.90
$16.90
$36.91
$36.91
$36.91
5
$17.21
25.5%
1.63%
7.6%
1.24%
n/a
n/a
n/a
n/a
5
Nil
25.5%
1.63%
n/a
1.24%
1.83%
0.6400
10.30%
16.40%
3
Nil
n/a
1.63%
7.6%
n/a
n/a
n/a
n/a
n/a
5
$36.54
27.3%
1.10%
7.7%
0.24%
n/a
n/a
n/a
n/a
5
Nil
27.3%
1.10%
n/a
0.28%
0.28%
0.6700
11.00%
19.00%
3
Nil
n/a
1.10%
7.7%
n/a
n/a
n/a
n/a
n/a
(i) The expected share price volatility is derived by analysing the historical volatility over the most recent historical period corresponding to the term of the option or PSR.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
19. CONTINGENT LIABILITIES
Contingent liabilities are subject to uncertainty or cannot be reliably measured and
are not provided for. Disclosures as to the nature of any contingent liabilities are
set out below. Judgements and estimates are applied to determine the probability
that an outflow of resources will be required to settle an obligation. These are made
based on a review of the facts and circumstances surrounding the event and advice
from both internal and external parties.
Periodically the Group is party to litigation including product liability and patent claims.
The Directors are unaware of the existence of any claim or contingencies that would have
a material impact on the operations of the Group.
20. COMMITMENTS
Capital expenditure commitments contracted for but not
recognised as at the reporting date:
Within one year
Between one and two years
Between two and five years
2020
NZ$M
2021
NZ$M
31.2
0.3
–
31.5
45.9
9.2
–
55.1
127
21. FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risk (including
currency risk and interest rate risk), credit risk and liquidity risk.
The Board has approved policies and guidelines for the Group that identify and evaluate
risks and authorise various financial instruments to manage financial risks. These policies
and guidelines are reviewed regularly.
a. Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates,
interest rates and prices will affect the Group's profit or the value of financial instruments.
The objective of market risk management is to manage and control market risk exposures
through the use of various financial instruments in accordance with the Group's treasury
management policy.
(i) Foreign exchange risk
Foreign exchange risk arises when future transactions and recognised assets and liabilities
are denominated in a currency that is not the entity’s functional currency.
The Group operates internationally and is exposed to foreign exchange risk arising from
various currency exposures, primarily US dollar (USD), Euro (EUR), Japanese yen (JPY)
and Mexican peso (MXN).
Foreign exchange risk is hedged in accordance with the treasury management policy.
The Group enters into foreign currency option contracts and forward foreign currency
contracts within policy parameters to hedge the foreign exchange risk associated with
anticipated sales or costs. The terms of the foreign currency option contracts and the
forward foreign currency contracts generally do not exceed 5 years, but may have terms
of up to 10 years with Board approval.
Foreign exchange contracts and options in relation to sales are designated at the
Group level as hedges of foreign exchange risk on specific forecast foreign currency
denominated sales.
Balance sheet foreign exchange risk arising from net assets held by the Group may be
hedged either by debt in the relevant currency, foreign currency swaps or by foreign
currency option contracts and forward foreign currency contracts.
(ii) Interest rate risk
The Group’s main interest rate risk arises from floating rate borrowings drawn under
bank debt facilities. When deemed appropriate, the Group manages floating interest rate
risk by using floating-to-fixed interest rate swaps and interest rate options within policy
parameters. Interest rate swaps and options are accounted for as cash flow hedges.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
128
21. FINANCIAL RISK MANAGEMENT (CONTINUED)
The carrying amounts of significant non-derivative financial assets and liabilities are denominated in the following foreign currencies:
2020
Cash
Short-term investments
Trade receivables
Trade and other payables
Bank overdraft
Lease liabilities
Borrowings
2021
Cash
Short-term investments
Trade receivables
Trade and other payables
Bank overdraft
Lease liabilities
Borrowings
NZD
NZ$M
USD
NZ$M
EUR
NZ$M
JPY
NZ$M
AUD
NZ$M
CAD
NZ$M
GBP
NZ$M
MXN
NZ$M
Other
NZ$M
Total
NZ$M
35.8
77.7
2.4
(41.2)
–
(0.2)
–
74.5
60.0
280.3
1.5
(84.4)
–
(9.1)
–
248.3
12.3
–
82.9
(24.1)
(10.5)
(8.6)
(66.5)
(14.5)
10.0
–
83.5
(28.9)
–
(15.8)
(57.3)
(8.5)
3.4
–
51.2
(10.7)
(4.9)
(5.8)
–
33.2
5.5
–
55.7
(13.3)
(0.2)
(5.1)
–
42.6
–
–
20.1
(1.6)
(11.3)
(1.0)
–
6.2
–
–
18.5
(1.5)
(6.7)
(1.5)
–
8.8
2.2
–
8.0
(3.5)
–
(4.6)
(3.4)
(1.3)
1.2
–
4.5
(4.8)
(0.1)
(2.6)
(3.6)
(5.4)
0.4
–
8.7
(0.9)
(0.1)
(0.8)
(2.0)
5.3
2.2
–
7.2
(0.5)
–
(0.7)
(1.9)
6.3
–
–
8.6
(4.9)
(2.4)
(0.5)
–
0.8
2.9
–
5.7
(4.7)
(1.7)
(3.3)
–
(1.1)
4.9
–
0.9
(7.0)
–
(7.5)
–
(8.7)
5.1
–
3.2
(4.0)
–
(0.2)
–
4.1
8.1
–
13.1
(17.8)
(1.5)
(4.6)
–
(2.7)
10.4
–
17.2
(5.9)
(3.2)
(5.4)
–
13.1
67.1
77.7
195.9
(111.7)
(30.7)
(33.6)
(71.9)
92.8
97.3
280.3
197.0
(148.0)
(11.9)
(43.7)
(62.8)
308.2
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
129
21. FINANCIAL RISK MANAGEMENT (CONTINUED)
a. Market risk (continued)
Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’s financial assets and financial
liabilities to interest rate risk and foreign exchange risk.
Fair value estimation
NZ IFRS 13 for financial assets and liabilities measured at fair value requires disclosure of
the fair value measurements by level from the following fair value hierarchy:
A sensitivity of +/-10% for foreign exchange risk has been selected (2020: +/-10%). The
Group believes that an overall sensitivity of +/-10% is reasonably possible given the
exchange rate volatility observed on a historical basis. A sensitivity of +/-1% has been
selected for interest rate risk (2020: +/-1%). This sensitivity is based on reasonably
possible changes over a financial year using the observed range of historical data.
All variables other than the applicable interest rates and exchange rates are held constant.
Interest rate change
Impact on profit after tax
Impact on hedging reserves
(within equity)
Foreign exchange rate change
Impact on profit after tax
Impact on hedging reserves
(within equity)
2020
2021
NZ$M
NZ$M
NZ$M
NZ$M
-1%
+ 1%
-1%
+ 1%
(0.3)
(1.6)
(1.9)
-10%
(0.2)
(152.5)
0.4
1.5
1.9
+ 10%
0.1
124.7
(2.4)
(1.0)
(3.4)
-10%
8.9
(121.5)
2.4
1.0
3.4
+ 10%
(8.2)
100.5
(152.7)
124.8
(112.6)
92.3
•
•
•
Level 1 – Quoted price (unadjusted) in active markets for identical assets and
liabilities;
Level 2 – Inputs, other than quoted price included within level 1, that are observable
for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived
from prices);
Level 3 – Inputs for assets and liabilities that are not based on observable market data
(that is, unobservable inputs).
Financial Instruments
All the Group's financial instruments held at fair value have been measured at the fair
value measurement hierarchy of level 2 (2020: level 2).
The fair value of derivative instruments designated in a hedging relationship is determined
using the following valuation techniques:
• Foreign currency forward exchange contracts have been fair valued using quoted
forward exchange rates and discounted using yield curves from quoted interest rates
that match the maturity dates of the contracts.
• Foreign currency option contracts have been fair valued using observable option
•
volatilities, and quoted forward exchange and interest rates that match the maturity
dates of the contracts.
Interest rate swaps are fair valued by discounting the future interest and principal
cash flows using current market interest rates that match the maturity dates of the
contracts.
These valuation techniques maximise the use of observable market data where it is
available and rely as little as possible on entity-specific estimates.
Land
Refer to Note 9 for further information about land that is measured at fair value including
a summary of the valuation techniques used.
Other
All financial assets other than derivatives are measured at amortised cost including short-
term investments. All financial liabilities other than derivatives are classified as measured
at amortised cost. Financial liabilities measured at amortised cost are fair valued using the
contractual cash flows. The carrying value of financial assets and liabilities approximates
their fair value. In considering the fair value of interest-bearing assets and liabilities
the estimated future interest rates approximate the discount rates used in a fair value
assessment.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
130
21. FINANCIAL RISK MANAGEMENT (CONTINUED)
b. Liquidity risk
Management monitors rolling forecasts of the Group’s liquidity position on the basis of expected cash flows. The table below sets out the contractual, undiscounted cash flows for non-
derivative financial liabilities and derivative financial instruments.
2020
Bank overdrafts
Trade and other payables
Borrowings
Lease liabilities
Total non-derivative financial liabilities
Foreign currency forward exchange contracts
Foreign currency option contracts
Interest rate derivative instruments net inflows (outflows) (i)
Total derivative financial instruments – (liabilities)
2021
Bank overdrafts
Trade and other payables
Borrowings
Lease liabilities
Total non-derivative financial liabilities
Foreign currency forward exchange contracts
Foreign currency option contracts
Interest rate derivative instruments net inflows (outflows) (i)
Total derivative financial instruments – assets
< 1 year
NZ$M
1-2 years
NZ$M
2-5 years
NZ$M
5+ years
NZ$M
Contractual
cash flows
NZ$M
Consolidated
balance sheet
NZ$M
30.7
111.7
51.2
11.9
205.5
–
–
0.6
9.0
9.6
–
–
22.5
6.6
29.1
(32.9)
(21.0)
(24.7)
–
(0.5)
(33.4)
11.9
148.0
1.1
15.6
176.6
40.3
–
(0.5)
39.8
–
(0.4)
(21.4)
–
–
26.1
10.8
36.9
35.0
–
(0.5)
34.5
–
(1.2)
(25.9)
–
–
37.8
13.1
50.9
67.6
–
(0.4)
67.2
–
–
–
1.8
1.8
1.3
–
(0.2)
1.1
–
–
–
6.2
6.2
1.1
–
–
30.7
111.7
74.3
29.3
246.0
(77.3)
–
(2.3)
(79.6)
11.9
148.0
65.0
45.7
270.6
144.0
–
(1.4)
30.7
111.7
71.9
33.6
247.9
(76.5)
(0.7)
(2.3)
(79.5)
11.9
148.0
62.8
43.7
266.4
142.2
2.2
(1.4)
1.1
142.6
143.0
(i) Interest rate swaps derivative cash flows are estimated using forward interest rates at reporting date.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
21. FINANCIAL RISK MANAGEMENT (CONTINUED)
c. Credit risk
The Group is exposed to credit risk in respect of trade receivables, financial instruments,
cash and cash equivalents and short-term investments in the normal course of business.
The maximum exposure to credit risk is represented by the carrying value of these
financial assets. Credit risk is managed on a Group basis with no significant concentration
of credit risk.
The Group has policies in place to ensure that sales of products and services are
made to customers with an appropriate credit history. There are no significant trade
receivable balances relating to customers who have previously defaulted on amounts due
to the Group.
Derivative counterparties, cash transactions, cash at banks, and short-term investments
are limited to high credit quality financial institutions. Over 96% of cash and short-term
investments (2020: 93%) is held with counterparties with credit rating of Standard and
Poors’ A- and above.
The Group's exposure to credit risk from derivative financial instruments is limited because
it does not expect non-performance of the obligation contained therein due to the credit
rating of the financial institutions concerned.
22. SIGNIFICANT EVENTS AFTER BALANCE DATE
Other than the dividends disclosed in Note 17, there are no other significant events after
balance date.
23. OTHER ACCOUNTING POLICIES
a. Changes to accounting policies
There have been no changes in accounting policies.
b. Impairment of non-financial assets
Assets that have an indefinite useful life or are under development are not subject
to amortisation and are tested annually for impairment. Assets that are subject
to depreciation or amortisation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable.
The recoverable amount is the higher of an asset’s fair value less costs of disposal,
and value in use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable cash flows (cash
generating units).
c. Goods and Services Tax (GST)
The income statement has been prepared so that all components are stated exclusive
of GST. All items in the balance sheet are stated net of GST, with the exception of
trade receivables and payables, which include GST invoiced.
131
d. Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial
institutions, other short-term highly liquid investments with maturities of three
months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value, and bank overdrafts.
e. Short-term investments
Short-term investments includes all other current investments that do not meet
the definition of cash and cash equivalents. The balance represents deposits with
financial institutions with maturities at the date of acquisition less than 12 months.
f. Research and development
Research expenditure is expensed as incurred.
Development costs that are directly attributable to the design and testing of
identifiable and unique products controlled by the Group are recognised as intangible
assets only when all the following criteria are met:
•
it is technically feasible to complete the product so that it will be available for
use or sale;
• management intends to complete the product and use or sell it;
•
•
•
there is an ability to use or sell the product;
it can be demonstrated that the product will generate future economic benefits;
adequate technical, financial and other resources to complete the development
and to use or sell the product are available and;
the expenditure attributable to the product during its development can be
reliably measured and is material.
•
Directly attributable costs capitalised as part of the product would include employee
costs and an appropriate portion of relevant overheads. Other development
expenditures that do not meet these criteria are recognised as an expense as
incurred. Development costs previously recognised as an expense are not recognised
as an asset in a subsequent period. Development costs recognised as an asset are
amortised over their estimated useful lives.
g. Financial guarantee contracts
A financial guarantee contract is a contract that requires a company within the Group
to make specified payments to reimburse the holder for a loss it incurs because a
specified debtor fails to make payment when due. Financial guarantee contracts are
initially recognised at fair value. Financial guarantees are subsequently measured at
the greater of the initial recognition amount less amounts recognised as income or
the estimated amount expected to have to be paid to a holder for a loss incurred.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2021
132
Since opening inventories enter into the determination of the financial performance for
the current year, our opinion on the current year’s consolidated financial statements is
also modified as we were unable to determine whether adjustments might have been
necessary in respect of the profit for the year ended 31 March 2021 reported in the
consolidated income statement and consolidated statement of comprehensive income,
and the possible effect of this matter on the comparability of the current period’s figures
and the corresponding figures.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our qualified opinion.
Independence
We are independent of the Group in accordance with Professional and Ethical Standard
1 International Code of Ethics for Assurance Practitioners (including International
Independence Standards) (New Zealand) (PES 1) issued by the New Zealand Auditing
and Assurance Standards Board and the International Code of Ethics for Professional
Accountants (including International Independence Standards) issued by the International
Ethics Standards Board for Accountants (IESBA Code), and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
Our firm carries out other services for the Group in the areas of treasury related financial
markets risk analysis and commentary, regulatory tax compliance procedures in Mexico,
providing market survey data relating to executive remuneration levels and other
assurance services in relation to constant currency disclosures. Our firm was also engaged
after the balance date to provide further market data relating to executive remuneration
levels. The provision of these other services has not impaired our independence as auditor
of the Group.
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Fisher & Paykel Healthcare Corporation Limited
QUALIFIED OPINION
In our opinion, except for the possible effect of the matter described in the Basis
for qualified opinion section of our report, the accompanying consolidated financial
statements of Fisher & Paykel Healthcare Corporation Limited (the Company), including
its subsidiaries (the Group), present fairly, in all material respects, the financial position
of the Group as at 31 March 2021, its financial performance and its cash flows for the
year then ended in accordance with New Zealand Equivalents to International Financial
Reporting Standards (NZ IFRS) and International Financial Reporting Standards (IFRS).
What we have audited
The Group's consolidated financial statements comprise:
•
•
•
•
•
•
the consolidated balance sheet as at 31 March 2021;
the consolidated income statement for the year then ended;
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 statement of cash flows for the year then ended; and
the notes to the consolidated financial statements, which include significant
accounting policies and other explanatory information.
BASIS FOR QUALIFIED OPINION
We conducted our audit in accordance with International Standards on Auditing
(New Zealand) (ISAs (NZ)) and International Standards on Auditing (ISAs).
Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the consolidated financial statements section of our report.
Due to the COVID-19 pandemic, certain of the Group’s annual finished products inventory
counts and materials cycle counts planned to be held on or close to 31 March 2020 did
not occur. As a result, we did not observe the counting of certain physical inventories at
31 March 2020 and were unable to satisfy ourselves sufficiently by alternative means as to
the quantities and condition of inventory held at that date. Consequently, we were unable
to determine whether any adjustments to the materials balance and finished products
balance at 31 March 2020 and to the results of operations for the year then ended were
necessary. Our audit opinion on the consolidated financial statements for the year ended
31 March 2020 was modified accordingly.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021
133
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current year. These matters
were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. In addition to the matter described in the Basis for qualified opinion section, we have determined that we have one key audit matter, revenue recognition, to be communicated
in our report.
Description of the key audit matter
How our audit addressed the key audit matter
Revenue recognition
The Group’s revenue primarily consists of the sale of products which totalled
$1,971.2 million in the year ended 31 March 2021 as outlined in Note 4.
In determining the appropriate recognition of revenue, management has considered
the following characteristics of the sale of products:
• products are sold to customers in multiple territories with varying sales contract
•
•
terms and conditions;
in certain markets sales are made to distributors and include rebate arrangements;
and
the manual intervention required in some cases to allow for the time between
despatch of products and the transfer of control to customers.
Management has concluded that:
•
•
revenue is primarily derived from the satisfaction of a single performance
obligation for each contract which is the sale of products; and
control of product transfers to the customer/distributor at the same time as legal
title passes.
Given the above and the higher sales throughout the year compared to prior year
as a result of COVID-19, we have given significant audit focus and attention to the
recognition of revenue.
On a sample basis for each major operating subsidiary:
• we examined contracts with customers to validate that management’s conclusion in
•
relation to when control transfers was appropriate; and
validated that the rebate, payment and pricing arrangements supported the
recognition of a sale on transfer of control to the distributor.
We completed detailed audit procedures over revenue including:
• obtaining an understanding of systems, processes and controls and evaluating and
•
•
•
testing key controls in place over the recording of revenue;
utilising data assurance techniques, for a targeted operating subsidiary to match cash
received during the year and amounts receivable at balance date to invoices issued
to customers and obtaining supporting evidence for any significant transactions that
were not matched to cash or receivables;
for a sample of revenue transactions in the other major operating subsidiaries
we examined invoices issued to customers, shipping documentation and cash
remittances, where paid;
for a sample of transactions within accounts receivable at balance date we obtained
either confirmation of the amount owing from the customer, or evidence of the
amount owing from alternative procedures including testing of subsequent receipts
or shipping documentation; and
• defining the time period where we determined there was a heightened risk of error in
relation to the timing of recognition of sales transactions. This involved determining
the potential time difference between when revenue is recognised in the accounting
system and when legal title passes. For a sample of transactions recognised within
the defined time period we confirmed that the date on which revenue was recognised
by management was appropriate by examining the associated invoice, the terms of
the sales contract, and the relevant product delivery documentation.
We believe that the procedures performed responded to the heightened risk and no
material exceptions were identified.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021 134
INDEPENDENT AUDITOR’S REPORT
OUR AUDIT APPROACH
Overview
Materiality
Group scoping
Key audit
matters
Overall group materiality: $35.9 million, which represents
5% of profit before tax.
We chose profit before tax as the benchmark because,
in our view, it is the benchmark against which the
performance of the Group is most commonly measured
by users and is a generally accepted benchmark.
Our Group audit scoping focussed on the major operating
subsidiaries which were selected based on their contribution
to the Group’s revenue or profit before tax. We performed
analytical procedures over the other subsidiaries.
As reported above, we have one key audit matter, being
revenue recognition.
As part of designing our audit, we determined materiality and assessed the risks
of material misstatement in the consolidated financial statements. In particular, we
considered where management made subjective judgements; for example, in respect of
significant accounting estimates that involved making assumptions and considering future
events that are inherently uncertain. As in all of our audits, we also addressed the risk of
management override of internal controls, including among other matters, consideration
of whether there was evidence of bias that represented a risk of material misstatement
due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is
designed to obtain reasonable assurance about whether the consolidated financial
statements are 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
consolidated financial statements.
Based on our professional judgement, we determined certain quantitative
thresholds for materiality, including the overall Group materiality for the consolidated
financial statements as a whole as set out above. These, together with qualitative
considerations, helped us to determine the scope of our audit, the nature, timing
and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate, on the consolidated financial statements as a whole.
How we tailored our group audit scope
We designed our audit by assessing the risks of material misstatement in the
consolidated financial statements and our application of materiality. As in all of our audits,
we also addressed the risk of management override of internal controls including among
other matters, consideration of whether there was evidence of bias that represented a risk
of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to
provide an opinion on the consolidated financial statements as a whole, taking into
account the structure of the Group, the accounting processes and controls, and the
industry in which the Group operates.
Our Group audit focussed on the major operating subsidiaries which were selected
based on their contribution to the Group’s revenue or profit before tax. In aggregate,
the subsidiaries selected for full scope audit procedures contributed 86% of the Group’s
revenue and 89% of the Group’s profit before tax. We performed analytical procedures
over the other subsidiaries.
Audits of the selected subsidiaries are performed at a materiality level determined by
reference to a proportion of Group materiality appropriate to the relative scale of the
business concerned.
OTHER INFORMATION
The Directors are responsible for the other information. The other information comprises
the information included in the Annual Report but does not include the consolidated
financial statements and our auditor's report thereon.
Our opinion on the consolidated financial statements does not cover the other information
and we do not express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our
responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the consolidated financial statements
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.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021 INDEPENDENT AUDITOR’S REPORT
135
The engagement partner on the audit resulting in this independent auditor’s
report is Keren Blakey.
For and on behalf of:
Chartered Accountants
26 May 2021
Auckland
RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED
FINANCIAL STATEMENTS
The Directors are responsible, on behalf of the Company, for the preparation
and fair presentation of the consolidated financial statements in accordance with NZ
IFRS and IFRS, and for such internal control as the Directors determine is necessary to
enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for
assessing the Group’s ability 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.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements, as a whole, are 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 ISAs
(NZ) and ISAs 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 these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial
statements is located at the External Reporting Board’s website at: https://www.xrb.govt.
nz/assurance-standards/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
WHO WE REPORT TO
This report is made solely to the Company’s Shareholders, as a body. Our audit work has
been undertaken so that we might state those matters which we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the Company and the
Company’s Shareholders, as a body, for our audit work, for this report or for the opinions
we have formed.
Section 05 | FINANCIALSFisher & Paykel Healthcare | ANNUAL REPORT 2021 136
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 06 | APPENDICES
APPENDICES
137
06
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 06 | APPENDICES FIVE YEAR SUMMARY
138
FIvE YEAr SummArY
For the years ended 31 March
All figures in NZ$M (except as otherwise stated)
FINANCIAL
PERFORMANCE
Sales revenue
Foreign exchange gain (loss) on hedged sales
Total operating revenue
Gross profit
Gross margin
Other income
SG&A expenses
R&D expenses
Total operating expenses
Operating profit
Operating margin
Net financing expense
Tax expense
Profit after tax
REVENUE North America
By Region and
Product Group
Europe
Asia Pacific
Other
Hospital products
Homecare products
Core products subtotal
Distributed and other products
Total operating revenue
Growth Rates
Reported
Revenue
Gross profit
R&D expenses
Profit before tax
Profit after tax
Revenue
Gross profit
R&D expenses
Profit before tax
Growth Rates
in Constant
Currency (1)
2017
869.5
24.9
894.4
590.4
66.0%
5.0
(269.3)
(86.0)
(355.3)
240.1
26.8%
(1.6)
(69.3)
169.2
433.0
272.0
154.8
34.6
500.4
381.5
881.9
12.5
894.4
9.7%
13.2%
17.3%
18.8%
18.0%
14.0%
17.0%
17.0%
21.0%
2018
964.5
16.3
980.8
650.4
66.3%
5.0
(290.9)
(94.7)
(385.6)
269.8
27.5%
(2.0)
(77.6)
190.2
458.5
297.6
181.0
43.7
572.1
398.1
970.2
10.6
980.8
9.7%
10.2%
10.1%
12.3%
12.4%
9.0%
9.0%
10.0%
12.0%
2019
2020
1,072.1
1,273.4
(1.7)
(9.7)
1,070.4
1,263.7
715.8
66.9%
5.0
(327.8)
(100.4)
(428.2)
292.6
27.3%
(1.4)
(82.0)
209.2
501.5
314.6
208.1
46.2
642.3
421.4
835.8
66.1%
–
(338.0)
(118.5)
(456.5)
379.3
30.0%
(8.8)
(83.2)
287.3
571.2
365.4
273.3
53.8
801.3
457.3
1,063.7
1,258.6
6.7
5.1
1,070.4
1,263.7
9.1%
10.1%
6.0%
8.7%
10.0%
8.0%
9.0%
6.0%
9.0%
18.1%
16.8%
18.0%
27.2%
37.3%
13.8%
11.3%
18.0%
20.3%
2021
1,948.2
23.0
1,971.2
1,245.6
63.2%
–
(396.6)
(136.7)
(533.3)
712.3
36.1%
5.9
(194.0)
524.2
825.7
633.8
348.4
163.3
1,498.1
465.6
1,963.7
7.5
1,971.2
56.0%
49.0%
15.4%
93.8%
82.5%
61.4%
57.4%
15.4%
103.6%
(1) Constant Currency (CC) removes the impact of exchange rate movements. This approach is used to assess the company’s underlying comparative financial performance without any distortion from changes in foreign exchange rates. A full
reconciliation for the most recent 2 years and basis of preparation is set out on page 103.
The 2017, 2018 and 2019 growth rates in constant currency have been sourced from the 2018 and 2019 annual reports respectively.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 06 | APPENDICES FIVE YEAR SUMMARY CONTINUED
For the years ended 31 March
All figures in NZ$M (except as otherwise stated)
FINANCIAL
POSITION
Property, plant and equipment
Total assets
Total liabilities
Shareholders' equity
Return on assets (%)
Return on equity (%)
Net debt / (cash) (including short-term investments)
Gearing Ratio(1)
139
2017
425.2
878.2
(216.6)
661.6
29.0%
39.6%
(0.2)
0.0%
2018
476.4
2019
601.4
2020
735.3
1,025.1
1,206.7
1,435.0
(263.8)
761.3
28.1%
37.6%
(49.9)
-7.3%
(293.5)
913.2
26.1%
34.8%
(54.4)
-6.7%
(461.2)
973.8
28.1%
39.3%
(42.2)
-4.3%
2021
882.1
2,075.0
(554.1)
1,520.9
40.9%
57.6%
(302.9)
-27.2%
Basic shares outstanding at 31 March
567,686,436
571,230,264
573,708,739
574,570,603
576,412,532
DIVIDENDS AND
EARNINGS PER
SHARE (CENTS
PER SHARE)
Dividends declared
Interim
Final(2)
Total ordinary dividends
Basic earnings per share
Diluted earnings per share
CASH FLOWS Net cash flow from operating activities
CAPITAL
EXPENDITURE
Free cash flow(3)
Dividends paid
Plant and equipment
Land and buildings
Intangible assets
Total
Plant & equipment capex: depreciation ratio(4)
8.25
11.25
19.50
29.9
29.5
193.6
130.6
(89.4)
44.1
3.8
15.1
63.0
1.5
8.75
12.50
21.25
33.4
33.0
247.8
149.3
(102.5)
41.8
41.4
15.5
98.7
1.3
9.75
13.50
23.25
36.5
36.2
253.2
119.9
(114.6)
41.4
74.0
17.9
133.3
1.3
12.00
15.50
27.50
50.0
49.6
321.4
141.0
(146.4)
63.5
81.8
25.4
170.7
2.2
16.00
22.00
38.00
91.1
90.4
625.3
430.4
(181.3)
123.0
37.2
24.5
184.7
2.8
(1) Net interest-bearing debt (debt less cash and cash equivalents and short-term investments) to net interest bearing debt and equity (less hedging reserves). Net interest-bearing debt excludes lease liabilities recognised on the adoption
of NZ IFRS 16 – Leases.
(2) Final dividend is paid in the following financial year.
(3) Free cash flow represents net cash flows from operating activities less capital expenditure - including lease liability repayments following the adoption of NZ IFRS 16 - Leases.
(4) Depreciation excludes leased asset depreciation.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 06 | APPENDICES 140
FIVE YEAR SUMMARY CONTINUED
For the years ended 31 March
All figures in NZ$M (except as otherwise stated)
PATENT
PORTFOLIO
NUMBERS
US patents
US patent applications (includes PCTs) (1)
Non-US patents
Non-US patent applications (excludes PCTs) (1)
PEOPLE
NUMBERS
People numbers (2)
By function:
Research and development
Manufacturing and operations
Sales, marketing and distribution
Management and administration
By region:
New Zealand
North America
Europe
Rest of World
EXCHANGE RATES
NZ$ 1 =
AVERAGE DAILY SPOT RATES
AVERAGE CONVERSION RATES (3)
2017
161
357
714
732
2018
186
385
870
912
4,112
4,174
563
2,405
948
196
2,307
1,231
271
303
0.7090
0.6957
0.5935
0.4812
0.9143
0.8787
69.67
12.09
572
2,386
994
222
2,258
1,314
294
308
0.7148
0.6823
0.5999
0.5018
0.9246
0.9218
72.34
12.62
2019
222
427
988
1,080
4,547
581
2,680
1,047
239
2,416
1,493
303
335
0.6811
0.6804
0.6039
0.5105
0.9163
0.8973
73.21
13.24
2020
302
430
1,236
1,228
5,081
597
3,098
1,132
254
2,738
1,645
333
365
0.6477
0.6671
0.5760
0.4921
0.9235
0.8748
72.44
13.47
2021
381
454
1,508
1,345
6,897
684
4,685
1,230
298
3,932
2,191
350
424
0.6714
0.6692
0.5624
0.5096
0.9318
0.8730
69.70
13.79
USD
USD
EUR
GBP
AUD
CAD
JPY
MXN
(1) PCTs (Patent Cooperation Treaty) are unified patent applications across a number of jurisdictions.
(2) People numbers are represented as full time equivalents.
(3) Actual exchange rates achieved in delivering or purchasing net foreign currency in relation to the Group's exposures. The average rate includes hedged, spot and close-out transactions in each year.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 06 | APPENDICES GLOSSARY
GloSSArY
ASM
ASX
AUD
CEO
CFO
CODM
Company
Constant
Currency
CPS
CSR
DAVR
DJSMDQT
EBITDA
ERP
ESG
ESR
Annual Shareholders’ Meeting
Australian Stock Exchange
Australian Dollar
Chief Executive Officer
Chief Financial Officer
Chief Operating Decision Maker
means Fisher & Paykel Healthcare
Corporation Limited
is our way to measure performance
of the company without any distortion
from changes in foreign exchange
rates
cents per share
Corporate Social Responsibility
Discretionary Annual Variable
Remuneration
Dow Jones US Select Medical
Equipment Total Return Index
Earnings before interest, tax,
depreciation and amortisation
Enterprise Resource Planning
which is software used to track
information across all departments
and business functions
Environmental, Social and Governance
Employee Share Right
Executive
Management
the Executive Management team
as set out on pages 30 and 31
FDA
FMA
FTE
United States Food & Drug
Administration
Financial Markets Authority
Full Time Equivalent
FY
GHG
GRI
Group
GST
IFRS
IP
LTIFR
LTVR
MSCI
Net Debt
Financial Year
Greenhouse gas
Global Reporting Initiative
means Fisher & Paykel Healthcare
Corporation Limited together with
its subsidiaries
Goods and Services Tax
International Financial Reporting
Standards
Intellectual Property
Lost Time Injury Frequency Rate
Long Term Variable Remuneration
Morgan Stanley Capital International
Debt less cash and cash equivalents
and short-term investments
New Applications
Consumables
Hospital applications outside of
traditional invasive ventilation
NZ GAAP
NZ IAS
NZ IFRS
NZD
NZX
OECD
PCT
PSR
QSR
R&D
New Zealand Generally Accepted
Accounting Practice
New Zealand International
Accounting Standards
New Zealand Equivalents to
International Financial Reporting
Standards
New Zealand Dollar
New Zealand Stock Exchange
Organisation for Economic
Cooperation and Development
Patent Cooperation Treaty
Performance Share Right
Quality, Safety & Regulatory
Research and Development
141
SBTi
SDG
SG&A
STEM
TCFD
TRIFR
TSR
UN
USD
VP
Science Based Targets initiative
Sustainable Development Goal
Sales, General and Administrative
Science, Technology, Engineering
and Mathematics
Task Force on Climate-related
Financial Disclosures
Total Recordable Injury
Frequency Rate
Total Shareholder Return
United Nations
United States Dollar
Vice President
Key medical terms used throughout this Report
COPD
CPAP
GCP
ICU
NICU
OSA
Chronic Obstructive Pulmonary
Disease
Continuous Positive Airway Pressure
Good Clinical Practice
Intensive Care Unit
Neonatal Intensive Care Unit
Obstructive Sleep Apnea
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 06 | APPENDICES GRI CONTENT INDEX
142
GrI CoNtENt INDEx
Disclosure
Description
Location/Response
Disclosure
Description
Location/Response
GRI 102 General Disclosures
102-1
102-2
102-3
102-4
102-5
102-6
102-7
102-8
102-9
102-10
102-11
Name of the
organisation
Activities, brands,
products, and
services
Location of
headquarters
Location of
operations
Cover
Annual Report: pp. 26-27 and 30-33
Inside back cover
Annual Report: p. 31
Ownership and legal
form
Annual Report: pp. 108 and 88-91
Markets served
Annual Report: p. 31
Scale of the
organisation
Information on
employees and other
workers
Annual Report: pp. 22-25 and 138-140
Annual Report: pp. 44-55
Supply chain
Annual Report: pp. 75-76
Significant changes
to the organisation
and its supply chain
None
Precautionary
principle or
approach
We support a precautionary approach towards
environmental management. While we see little
apparent risk for our own operations, we do see an
opportunity to help our customers manage this risk
through effective product lifecycle management
and sustainable design.
102-12
External initiatives
• Business and Industry Advisory Committee
(BIAC) Statement of Tax Principles for
International Business UN Declaration on Human
Rights
• ILO Declaration on Fundamental Principles and
Rights at Work
102-13
Membership of
associations
• American Association of Homecare
• American Association of Respiratory Care
• American Chamber of Commerce
• Association for Anaesthetic and Respiratory
Device Suppliers
• Australasian Investor Relations Association
• Australasian Sleep Association
• Australian College of Critical Care Nurses
• Business New Zealand
• Colorectal Society of Australia and New Zealand
• Diversity Works
• Employers and Manufacturers Association
• Guangdong Investment Promotion Association
in China
• International Electrotechnical Commission /
Technical Committee 62
• International Organisation for Standardisation /
Technical Committee 121
• Japan Association of Health Industry Distributors
• Japan Association of Medical Devices Industries
• Latin America New Zealand Business Council
• Medical Technology Association New Zealand
• National Association for Medical Direction of
Respiratory Care
• Sleep Health Foundation
• Sustainable Business Council
• Taipei Medical Instruments Commercial
Association
• The Japan Fair Trade Council of the Medical
Devices Industry
Strategy
102-14
Statement from
senior decision
maker
Annual Report: pp. 22-25
Ethics and integrity
102-16
Governance
Values, principles,
standards, and
norms of behaviour
Code of Conduct available online at
www.fphcare.co.nz/corporategovernance
102-18
Governance structure Annual Report: pp. 78-84
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 06 | APPENDICES GRI CONTENT INDEX CONTINUED
Disclosure
Description
Location/Response
Stakeholder engagement
List of stakeholder
groups
Collective bargaining
agreements
Annual Report: p. 35
Annual Report: p. 55
Identifying
and selecting
stakeholders
Approach to
stakeholder
engagement
Key topics and
concerns raised
Annual Report: p. 35
Annual Report: p. 35
Annual Report: pp. 35-37
Annual Report: p. 91
102-40
102-41
102-42
102-43
102-44
Reporting practice
102-45
102-46
102-47
102-48
Entities included in
the consolidated
financial statements
Defining report
content and topic
boundaries
List of material
topics
Re-statements of
information
143
SPECIFIC STANDARD DISCLOSURES
Disclosure
Description
Location/Response
GRI 200 Economic standard series
GRI 103
Management approach 2021
Annual Report: pp. 22-25
GRI 201: Economic performance
201-1
Direct economic value
generated and distributed
Annual Report: pp. 99-136
GRI 205: Anti-corruption
GRI 103
205-3
Management approach 2021
Annual Report: p. 76
Confirmed incidents of
corruption and actions taken
Annual Report: p. 76
GRI 400 Social standard series
GRI 401: Employment
GRI 103
401-1
Management approach 2021
Annual Report: pp. 44-45
New employee hires and
employee turnover
Annual Report: pp. 54-55
Annual Report: pp. 35-37
GRI 403: Occupational health and safety
Annual Report: pp. 36-37
No restatements
GRI 103
403-2
Management approach 2021
Annual Report: pp. 69
Types of injury and rates of
injury, occupational diseases,
lost days, and absenteeism,
and number of work-related
fatalities
Annual Report: p. 70
102-49
Changes in reporting No significant changes from previous reporting
GRI 404: Training and education
102-50
102-51
102-52
102-53
102-54
102-55
102-56
periods
Reporting period
Cover
Date of most
recent report
Inside cover
Reporting cycle
Annual reporting cycle
Contact point for
questions regarding
the report
Claims of reporting
in accordance with
the GRI standards
investor@fphcare.co.nz
Inside cover
GRI content index
Annual Report: pp. 142-143
External assurance
No external assurance for non-financial disclosures
External assurance for financial statements
(See Annual Report: pp. 132-135)
GRI 103
404-1
Management approach 2021
Annual Report: p. 49
Average hours of training
per year per employee
Did not report due to COVID-19
disruptions
GRI 416: Customer Health and Safety
GRI 103
416-2
Management approach 2021
Annual Report: p. 68
Incidents of non-compliance
concerning the health and
safety impacts of products
and services
No instances of non-
compliance with regulations
resulting in a fine, penalty or
warning.
GRI 418: Customer Privacy
GRI 103
418-1
Management approach 2021
www.fphcare.com/privacy
Substantiated complaints
concerning breaches of
customer privacy and losses
of customer data
No substantiated complaints
received concerning breaches
of customer privacy.
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 06 | APPENDICES TCFD INDEX
144
TCFD InDex
The Task Force on Climate-related Financial Disclosures (TCFD) seeks to develop recommendations for voluntary climate-related financial disclosures that are consistent,
comparable, reliable, clear, and efficient, and provide decision-useful information to lenders, insurers, and investors. Fisher & Paykel Healthcare is integrating the
recommendations of the TCFD, and we have included commentary in the governance, risk management and environment sections of this report, along with disclosures
addressing our global carbon footprint. Below is an index for locating these disclosures.
Governance
Strategy
Risk Management
Metrics & Targets
Disclose the organisation’s governance
around climate-related risks and
opportunities.
a) Describe the Board’s oversight of
climate-related risks and opportunities.
pp. 72-73
Disclose the actual and potential impacts
of climate-related risks and opportunities
on the organisation’s businesses, strategy,
and financial planning where such
information is material.
a) Describe the climate-related risks and
opportunities the organisation has
identified over the short, medium,
and long term. pp. 72-73
Disclose how the organisation identifies,
assesses, and manages climate-related risks.
a) Describe the organisation’s processes for
identifying and assessing climate-related
risks. pp. 72-73
b) Describe management’s role in assessing
and managing climate-related risks and
opportunities. pp. 72-73
b) Describe the impact of climate-
related risks and opportunities on the
organisation’s businesses, strategy,
and financial planning. pp. 72-73
b) Describe the organisation’s processes
for managing climate-related risks. pp.
72-73
Disclose the metrics and targets used to
assess and manage relevant climate-
related risks and opportunities where
such information is material.
a) Disclose the metrics used by the
organisation to assess climate-
related risks and opportunities
in line with its strategy and risk
management process. p. 73
b) Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse
gas (GHG) emissions, and the related
risks. pp. 60-61
c) Describe the resilience of the
c) Describe how processes for identifying,
organisation’s strategy, taking into
consideration different climate-related
scenarios, including a 2°C or lower
scenario. p. 73
assessing, and managing climate-
related risks are integrated into the
organisation’s overall risk management.
pp. 72-73
c) Describe the targets used by the
organisation to manage climate-
related risks and opportunities
and performance against targets.
pp. 60-61
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 06 | APPENDICES DIRECTORY
DIrECtorY
DIRECTORY
In New Zealand:
The details of the company’s principal administrative and registered office are:
145
SHARE REGISTER
In New Zealand:
Link Market Services Limited
Physical address: 15 Maurice Paykel Place, East Tamaki,
Auckland 2013, New Zealand
Physical address: Level 30, PwC Commercial Bay,
15 Customs Street West, Auckland 1010, New Zealand
Telephone: +64 9 574 0100
Facsimile: +64 9 574 0158
Postal address: PO Box 14348, Panmure,
Auckland 1741, New Zealand
Internet address: www.fphcare.com
Email: investor@fphcare.co.nz
In Australia:
The details of the company’s registered office are:
Physical address: 19-31 King Street, Nunawading,
Melbourne, Victoria 3131, Australia
Telephone: +61 3 9871 4900
Postal address: PO Box 159, Mitcham,
Victoria 3132, Australia
Postal address: PO Box 91976,
Auckland 1142, New Zealand
Facsimile: +64 9 375 5990
Investor enquiries: +64 9 375 5998
Internet address: www.linkmarketservices.co.nz
Email: enquiries@linkmarketservices.co.nz
In Australia:
Link Market Services Limited
Physical address: Level 12, 680 George Street,
Sydney, NSW 2000, Australia
Postal address: Locked Bag A14,
Sydney South, NSW 1235, Australia
Facsimile: +61 2 9287 0303
Investor enquiries: +61 2 8280 7111
Internet address: www.linkmarketservices.com.au
Email: registrars@linkmarketservices.com.au
Fisher & Paykel Healthcare | ANNUAL REPORT 2021Section 06 | APPENDICES www.fphcare.com
© 2021 Fisher & Paykel
Healthcare Corporation Limited