L O O K I N G F O R W A R D
Annual Report 2022
FORWARD
As the pandemic enters its third year, the extraordinary resilience of healthcare providers
and clinicians remains on display—their continued efforts to treat patients deserve our
gratitude. This kind of resilience can be found here in our business as well. Our people
acted decisively at the outset of the pandemic to respond and have not let up since.
Every day, F&P teams across the globe get to work to deliver for our customers, ensuring
they have what they need to treat patients.
TOGETHER
All the while, we haven’t let the extraordinary events of the past two years divert us
from our long-term course. We remain focused on sustainable, profitable growth, and
our resolve to improve patient care and outcomes has only been strengthened. We’re
energised for what’s ahead, and we’re determined to continue innovating and building
upon our relationships. TOGETHER, we are LOOKING FORWARD.
ABOUT THIS REPORT
Welcome to our 2022 Annual Report
– Looking Forward. This report highlights the
work we have done this year to help to improve
patient care and outcomes across the globe and the
financial results we achieved while doing so.
Our people, investors and customers can also read
about our track record with regard to non-financial
matters, including environment, social and
governance (ESG) topics. Our ESG commitments
and metrics are contained in Section 3 of this report,
called ‘Operating Sustainably’.
This report aligns 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).
We welcome your feedback and suggestions
for improvement. Please send any questions
or comments to investor@fphcare.co.nz. A digital
version of this report, along with all previous annual
and interim reports are available at
www.fphcare.com/investor-reports.
This report covers the financial year ended 31 March
2022 and is dated 24 May 2022. 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 spot financial currency fluctuations and hedging results, and
has been prepared on a consistent basis each financial year. A
reconciliation between reported results and constant currency results is
available on page 101 of this report. The company’s constant currency
framework can be found on our website at www.fphcare.com/ccf.
01
02
The Business Year
The Company
Results at a glance
Report from the Chair
Report from the Managing Director & Chief
Executive Officer
Hospital & Homecare performance overview
New products
06
08
10
14
16
Who we are
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
20
21
22
23
24
25
28
30
03 04 05
Operating sustainably
Financials
Appendices
People
Community
Environment
Suppliers
Sustainable Development Goals
Risk management
Governance
Remuneration
34
46
50
54
58
62
70
88
Financial commentary
Financial statements
Notes to financial statements
Auditor’s report
98
102
106
130
Five year summary
Glossary
GRI index
TCFD index
Directory
136
139
140
142
143
04
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Section 01 | THE BUSINESS YEAR Fisher & Paykel Healthcare
ANNUAL REPORT 2022
05
THE BUSINESS YEAR Together, we
continued to respond to strong global
demand amid the pandemic while
maintaining a view on the long term.
01
Section 01 | THE BUSINESS YEAR 06
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
RESULTS AT A GLANCE
OPERATING REVENUE
NET PROFIT AFTER TAX
$1.68b
▼ 15% | 2021 $1.97B
$376.9m
▼ 28% | 2021 $524.2M
GROSS MARGIN
62.6%
59 BASIS POINTS DECREASE
TOTAL DIVIDEND FOR YEAR
FULLY IMPUTED
SPEND ON R&D
39.5cps
▲ 4% | 2021 38.0 CPS
$154.0m
9% OF OPERATING REVENUE
HOSPITAL REVENUE
HOMECARE REVENUE
$1.2b
▼ 19% | 2021 $1.5B
$469.5m
▲ 1% | 2021 $465.6M
Section 01 | THE BUSINESS YEAR
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
07
B US IN E SS H IG H LIG HTS
OPERATING REVENUE
NZ$ MILLIONS
NET PROFIT AFTER TAX
NZ$ MILLIONS
I M PAC T E D the lives of approximately 20 million
patients around the world.
2
.
1
7
9
,
1
7
.
1
8
6
,
1
.
7
3
6
2
,
1
.
4
0
7
0
,
1
.
8
0
8
9
.
2
4
2
5
.
9
6
7
3
.
3
7
8
2
.
2
9
0
2
.
2
0
9
1
18
19
20
21
22
18
19
20
21
22
REVENUE BY PRODUCT GROUP
12 MONTHS TO 31 MARCH 2022
REVENUE BY REGION
12 MONTHS TO 31 MARCH 2022
<1%
28 %
72%
Hospital
Homecare
Distributed & Other
7 %
%
6
2
120+
COUNTRIES
3
9
%
28%
North America
Other
Europe
Asia Pacific
U N V E I L E D the Airvo™ 3, our new high-flow device
set to build upon the success of the Airvo 2.
L A U N C H E D the Optiflow Switch™ and
Optiflow Trace™ interfaces for use in anesthesia.
S E C U R E D regulatory clearance in the
United States for our new Evora™ Full OSA mask.
P R O G R E S S E D the construction of our
third manufacturing facility in Tijuana and
fifth R&D and manufacturing facility in Auckland.
C O N T I N U E D to expand our global reach
by placing sales representatives into
additional countries.
Section 01 | THE BUSINESS YEAR
08
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Report from the Chair
In 2019, Fisher & Paykel Healthcare
celebrated its 50th anniversary as a
business. Little did we know that right
around the corner lay a pandemic
that would significantly impact clinical
practice and accelerate our path to
growth. We had no way of knowing
that ‘nasal high flow therapy’ – a
treatment our sales teams were
working so hard to promote – would
become part of clinicians’ everyday
vocabulary and a phrase that
journalists used daily in their stories
about COVID-19.
For a long time into the future, we will
remember ‘the COVID years’. No doubt,
they have been transformative. In addition
to F&P products helping millions of patients,
the adaptations required to meet surges
in demand have moved us closer to our
long-term growth aspirations. That
transformation is accelerated by the boost
in our installed base of hospital hardware
that we achieved.
To put revenue in perspective, full-year
operating revenue for the 2019 financial year
was just over $1 billion – for the first time ever.
For the 2020 financial year, it was over
$1.2 billion and increased to nearly $2 billion for
the 2021 financial year. Now, it appears the need
for hospital respiratory support for COVID-19
may have peaked in many parts of the world
for the time being. For the 2022 financial year,
full-year operating revenue was $1.68 billion.
We had been planning for growth long before
COVID-19. The unanticipated increases in
earnings opened up some remarkable strategic
opportunities – to bring forward new product
development opportunities, build facilities
faster, invest more in clinical research, and
expand into new markets sooner than we
expected. We are looking forward to these
opportunities with excitement.
STRATEGIC PROGRESS
As a Board, we maintained a focus on reviewing
and validating the company’s strategy for
delivering sustainable profitable growth over the
long term and ensuring that we are investing
appropriately to achieve our objectives.
Research and development work carried on
throughout the pandemic at our Auckland
campus. As a result, the company has
announced a number of game-changing new
products: the Airvo 3 device for delivering
respiratory therapies, as well as Optiflow Switch
and Optiflow Trace, two new products designed
to facilitate the expanded use of Optiflow for
patients undergoing anesthetic procedures.
We continue to invest heavily into research
and development. In the 2022 financial year,
we spent $154 million, which was 9% of our
operating revenue.
SCOTT ST JOHN
Board Chair
Section 01 | THE BUSINESS YEAR The company is also continuing to develop
innovative products for obstructive sleep
apnea, launching the F&P Evora Full compact
full-face mask earlier in the financial year.
The mask recently received 510(k) regulatory
clearance from the FDA, and it is now being
marketed in the United States.
Consistent with our strategy to expand into
international markets, we now have sales
representatives located in 53 countries.
We are investing in hiring additional sales
representatives in new and existing markets
to ensure clinicians are educated about the
benefits of nasal high flow therapy for all types
of respiratory distress – beyond COVID-19.
We have made progress on adding facilities
that are important to our plans for growth.
Construction of our third building in Tijuana,
Mexico is almost complete, and earthworks
have started on the fifth building on our
Auckland campus. These buildings will further
expand our manufacturing space. Work is
progressing well on identifying and acquiring
a second campus in New Zealand, as well as a
new offshore manufacturing location. We will
announce those locations as soon as we can.
BOARD UPDATE
As we announced previously, Lisa McIntyre
joined the Board in October 2021 as an
independent director, adding a wealth
of experience in health and technology.
Succession planning remains one of our
priorities, and we are well advanced in our
process to appoint a further independent
director with the necessary skills and
experience to complement other members
of our Board. We expect to provide an update
on an appointment in the coming weeks. Fisher
& Paykel Healthcare continues to support the
Institute of Directors’ New Zealand Future
Directors’ programme, with Toni Moyes
completing her tenure in October 2021, and
we look forward to appointing another
participant in this programme.
DIVIDEND
PROFIT SHARE
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
09
On behalf of the Board, I want to thank the
employees of Fisher & Paykel Healthcare for
their adaptability and commitment. During
the 2022 financial year, they continued to
overcome difficult supply chain issues,
challenging operational schedules, and spikes
in absenteeism related to COVID-19. Despite
all this, they demonstrated to customers
that Fisher & Paykel Healthcare is a company
they can count on. To recognise their efforts,
the Board has approved for this year a
discretionary profit-sharing payment of
$19 million for employees who have worked
for the company for a qualifying period.
LOOKING AHEAD
While COVID-19 cases remain high in some
parts of the world, global hospitalisations
requiring respiratory support are currently
declining, and this is welcome and hopeful
news. It means sales representatives and
product teams can get back into hospitals
to meet with customers, and patients can get
back into sleep clinics. Surgical procedures
can proceed, and clinical trials can move ahead.
It means Fisher & Paykel Healthcare’s suppliers
and employees can get back to more normal
routines and a sustainable work-life balance.
We look forward to what’s in store for the
years ahead.
Scott St John
Board Chair
Our consistent practice has been to pay
a dividend to shareholders. In light of our
continued strong performance, the Board has
approved an increased final dividend of 22.5
cents per share. This takes the total dividend
for the 2022 financial year to 39.5 cents per
share, an increase of 4 per cent from 2021.
The dividend will be paid on 6 July 2022.
ENVIRONMENTAL & SOCIAL
RESPONSIBILITY
We recognise the responsibility we have
to a broad set of stakeholders – not only
to the patients that use our products every
day, but also to our shareholders, employees,
customers, suppliers, and communities.
To that end, I’m pleased to report progress
on a range of environmental and social
responsibility initiatives in the past year.
We have articulated our intention in a new
Environmental & Social Responsibility policy
and formed a governance group with
representatives from across the business.
This group will help provide long-term
strategic direction on how we continue to
make progress on our most material areas
as identified on page 25 of this annual report.
We are taking a broad view to assess not
only our own practices but also those of our
suppliers – the new ‘Suppliers’ section on page
54 of this report details the work underway
in this area. We continue to make progress
towards our science-based targets for climate
impact and have again achieved inclusion in
the Dow Jones Sustainability Indices for Asia
Pacific and Australia.
With respect to our local communities,
the work of the Fisher & Paykel Healthcare
Foundation is picking up pace, having
contributed to a range of initiatives during
its first year. For more details on all of
these efforts, please refer to the ‘Operating
Sustainably’ section on page 33 of this report.
Section 01 | THE BUSINESS YEAR 10
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Report from the Managing
Director & Chief Executive Officer
The world appears to be in a much
different place to where we were
12 months ago and it has been
encouraging to see our people begin
to reconnect with each other, our
customers, and our partners in recent
months. We hope that conditions
continue to improve from here.
Getting to this point has not been
straightforward. For Fisher & Paykel Healthcare,
the past year was again marked by challenges
which tested us. We continued to respond to
waves of demand across the globe for our
life-preserving products, managed through
operational disruption caused by lockdowns
and Omicron-related absenteeism, and
navigated a host of global supply chain issues.
This required our people to plan and adapt,
and my sincere thanks go to our employees
across all our locations for their commitment to
get the job done under trying circumstances.
We again witnessed the resolve of our
customers, clinical partners and suppliers
who have been relentless in their efforts to
respond to COVID-19. As a company, we feel
enormous gratitude for this response – it has
played a major part in helping to reconnect
the world and restore some sense of normality
in many countries.
OUR NEAR-TERM OPPORTUNITY
We’ve now marked more than two years since
we first saw the initial demand signals out of
Wuhan for our respiratory products. With the
most acute phase of the pandemic behind us,
there are two key observations. First, we have
a unique opportunity to reach more patients
as we continue to demonstrate the broad
utility of our products in the hospital setting.
The pandemic resulted in a significant increase
in our installed base of Airvos and humidifiers
in hospitals across the globe – we effectively
sold 10 years’ worth of hospital hardware in
two. Many of these products were sold to new
users and we have welcomed the opportunity
to form relationships with new customers
and clinicians.
To achieve our long-term growth aspirations,
our focus for the near term is to build on our
enlarged footprint by educating users on the
wide-ranging benefits of Optiflow nasal high
flow therapy and our respiratory products.
We firmly believe that our products have
a clear role to play in improving care and
outcomes as we look beyond the pandemic.
Our track record before the onset of COVID-19,
and the growing body of clinical evidence that
supports the use of nasal high flow and our
other respiratory therapies, underline this.
LEWIS GRADON
Managing Director and Chief Executive Officer
Section 01 | THE BUSINESS YEAR Fisher & Paykel Healthcare
ANNUAL REPORT 2022
11
Building close relationships – something that
has always been at the core of our business
– is vital to this process. To that end, we are
continuing to grow our sales footprint in both
new and existing markets, and it’s great to see
more of our teams out in the market as travel
restrictions ease.
OUR LONG-TERM RUNWAY
The second observation is that we did not
let this once-in-a-generation event divert us
from our long-term course. Our teams have
remained focused on the long view and have
continued to innovate across our product
groups. The new devices and applications
that we are bringing to market, detailed below
and in the coming pages, demonstrate this.
We have launched two new products to
facilitate the use of Optiflow in anesthesia
applications – Optiflow Switch and Optiflow
Trace. These applications expand the market
opportunity within our hospital respiratory
support segment. Based on the existing
clinical evidence and our experience to date,
we estimate that the number of patients
annually that could benefit from Optiflow
nasal high flow during anesthesia is similar
to the annual number of general respiratory
patients that could benefit from Optiflow.
We are excited to announce the Airvo 3
following more than five years of research
and development. This is a revolutionary new
product which builds on the market-leading
Airvo 2 with even more advanced technology.
The Airvo 3 incorporates our OptiO2™ closed
loop system for targeted oxygen delivery and
an integrated battery to enable therapy while
a patient moves through different areas of the
hospital. It is now available in New Zealand and
will be launched more widely as we receive the
relevant regulatory clearances.
We are continuing to expand our obstructive
sleep apnea (OSA) offering with the Evora
Full mask, having recently secured 510(k)
regulatory clearance. This clears the way for
its sale in the United States after having earlier
been launched into New Zealand, Australia,
Europe and Canada. Our team worked hard
to optimise for both comfort and performance
on this mask and we look forward to getting
it into the hands of patients in the U.S.
Taken together, these developments
demonstrate our focus on the future and our
determination to keep innovating for patients.
Our team is excited about the long-term
runway that these provide us. For more detail
on these new products and others, please refer
to pages 16 and 17 of this report.
We are excited to
announce the Airvo 3
following more than
five years of research
and development. This
is a revolutionary new
product which builds
on the market-leading
Airvo 2 with even more
advanced technology.
Section 01 | THE BUSINESS YEAR 12
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
I’m pleased to report another
strong performance, one that
was significantly stronger
than pre-pandemic levels.
2022 FINANCIAL RESULT
Coming into the 2022 financial year, we knew
that we were lapping a truly unique year in
2021, making for a challenging comparison.
However, I’m pleased to report another strong
performance, one that was significantly
stronger than pre-pandemic levels.
Operating revenue for the 2022 financial year
was $1.68 billion, 15 per cent lower than the
previous financial year, or 14 per cent lower in
constant currency. This marks a 57 per cent
increase compared to the 2019 financial year
(before the pandemic).
Net profit after tax was $376.9 million,
28 per cent lower than the previous year,
or 30 per cent lower in constant currency.
Compared with the 2019 financial year, it
was up 80 per cent.
Our Hospital product group remained the
major driver – this segment includes products
for invasive ventilation, noninvasive ventilation
and surgery, in addition to the hardware and
consumables used for Optiflow nasal high flow.
Revenue for the Hospital product group was
$1.20 billion, a 19 per cent decrease compared
to the previous year and also 19 per cent lower
in constant currency. Compared with the 2019
financial year, it was up 88 per cent. Hospital
hardware sales were down 41 per cent constant
currency compared to the 2021 financial year,
and hospital consumables sales declined
5 per cent.
Our Homecare product group generated
revenue of $469.5 million, 1 per cent higher
than the previous year, and 2 per cent higher
in constant currency. Despite diagnosis rates
continuing to be hampered by COVID-19
during the year, and patient treatment still
being constrained by the supply of OSA
flow generators, our OSA mask revenue
increased 4 per cent for the year in constant
currency terms.
Gross margin for the year was 62.6 per cent,
or a 147 basis point decrease in constant
currency. High airfreight utilisation and
elevated freight rates continued to weigh
overall, impacting constant currency gross
margin by approximately 240 basis points
compared to pre-pandemic levels.
Section 01 | THE BUSINESS YEAR Fisher & Paykel Healthcare
ANNUAL REPORT 2022
13
LOOKING FORWARD
Our experience over the last two years has
reinforced the importance of investing for the
future and having the ability to scale up on
short notice. The fact that we had recently
finished construction of our fourth building
on our Auckland campus at the outset of the
pandemic contributed to our ability to respond
as orders began flooding in. This approach
to future-proofing our business is continuing.
If we are to deliver the runway of growth and
opportunity mentioned earlier, we can’t afford
to stand still.
Over the last two financial years we have
sold $880 million of hospital hardware, the
equivalent of approximately 10 years’ hardware
sales prior to COVID-19. Our role now is to help
our customers change their clinical practice so
that this hardware will be used on an increasing
proportion of respiratory-compromised
patients throughout the hospital. We are not
yet able to forecast the pace of this change,
although the increasing body of clinical
evidence and clinical practice guidelines
developed independently of COVID-19 will
be very beneficial. We expect that increasing
utilisation of this hospital hardware over a
number of years will be one driver of strong
growth for the company in the future.
To ensure we are well-positioned to meet
demand for the ongoing use of this installed
base of hardware and accommodate our
strong new product pipeline, we are continuing
to invest in our infrastructure to ensure it
supports our long-term growth.
We will be investing $700 million in land and
buildings over approximately five years. This
includes the fifth building which will complete
our Auckland campus, a second New Zealand
site, and a new offshore manufacturing facility.
Earthworks are progressing steadily for the
fifth building – the plans are coming to life
and we look forward to seeing structures go
into place over time. For both the second
New Zealand site and the new offshore
manufacturing location, our work to identify
and acquire new sites is progressing well, and
we will provide market updates on each
development as soon as we are able.
THANK YOU
The last two years have been remarkable
for our company. What’s certain is that this
journey has made us more attuned to our
purpose of improving care and outcomes. It
was an important reminder of the responsibility
we have to ensure we’re doing all we can as a
company to create the best-possible products
for patients. We carry that responsibility with
us now as we move forward, and we are as
determined and as energised as ever to
keep delivering.
I want to again thank our customers, suppliers
and clinical partners for their support. And to
our shareholders: thank you, as always, for
your support. We are looking forward to all
that’s ahead, and we’re glad you are on
board with us.
Lewis Gradon
Managing Director and
Chief Executive Officer
Section 01 | THE BUSINESS YEAR 14
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Hospital
Our Hospital product group
includes products used in
invasive ventilation, noninvasive
ventilation, nasal high flow
therapy, and laparoscopic and
open surgery. Not only do
these products help healthcare
providers improve patient
outcomes, they often deliver
economic benefits as well, by
reducing the need to escalate
care and shortening patient
stays in hospital.
72%
OF OPERATING REVENUE
OPERATING REVENUE
▼ 19%
CONSTANT CURRENCY REVENUE FROM
NEW APPLICATIONS CONSUMABLES
$1.2B
3%
Section 01 | THE BUSINESS YEAR Fisher & Paykel Healthcare
ANNUAL REPORT 2022
15
Homecare
The Homecare product group
includes devices and systems
used to treat obstructive sleep
apnea (OSA) and provide
respiratory support in the
home. These include our CPAP
therapy masks as well as flow
generators, interfaces, and data
management technologies.
28%
OF OPERATING REVENUE
OPERATING REVENUE
▲ 1%
$469.5M
OSA MASKS CONSTANT
CURRENCY REVENUE
4%
Section 01 | THE BUSINESS YEAR 16
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
New products
F&P AIRVO™ 3
We have maintained our
long-term focus despite the
pressures of the pandemic, and
our teams continued to innovate.
We have brought a number of
new products to the market,
including the Airvo 3, Optiflow
Switch and Optiflow Trace for
use in anesthesia applications,
our Evora Full mask for OSA, our
surgical diffuser for open surgery,
the AirSpiral™ heated breathing
tube with nebulizer port, and
AirSpiral NIV and NHF circuit kit
for the F&P 850.
We are excited to release the Airvo™ 3
following several years of research
and development. It is now available
in New Zealand and Australia, with
additional markets to follow once we
receive regulatory clearance.
“Airvo 3 is designed to more easily
allow treatment of more patients in
more parts of the hospital. This is a
revolutionary new product which
builds on the market-leading Airvo 2
with even more advanced technology.”
LEWIS GRADON
Managing Director and Chief Executive Officer
Key features of the Airvo 3:
• OptiO2™ closed loop system for
targeted oxygen delivery
• Flow range extension
(2 – 70 litres per minute)
• Expanded use for pediatric and
neonatal patients
• Large touchscreen interface to input
and view settings/data
• Integrated battery
• Protocol suggested therapy settings
Section 01 | THE BUSINESS YEAR OPTIFLOW™ ANESTHESIA
– SWITCH & TRACE
OTHER NEW RELEASES
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
17
We have launched two products developed
specifically for use in anesthesia applications.
These applications expand the market
opportunity for Optiflow nasal high
flow within our hospital respiratory
support segment.
“With these new products, we are able to
offer solutions to anesthesiologists right
across the anesthesia care continuum.
We have received positive feedback from
medical professionals and we look forward
to placing them in more markets.”
WINSTON FONG
VP – Surgical Technologies
Key features of Optiflow Switch:
Key features of Optiflow Trace:
• Enables delivery of humidified oxygen
• Sampling of exhaled gas from either
in peri-anesthesia environment
nose or mouth
• User can switch between bag mask
ventilation and THRIVE without
needing to remove the interface
• Reduces the number of steps
required≈to bag mask ventilate
a patient vs. standard Optiflow
nasal high flow interfaces
• Secure connection with standard CO2
sampling lines
• Continuous sampling of exhaled CO2
while using Optiflow nasal high flow
for oxygenation
Launch of the SI400
Humidified Gas Diffuser
We have launched the SI400 gas diffuser,
which is designed to deliver warm and
humidified CO2 into the surgical cavity
during open surgery. This complements
our HumiGard(TM) offering, and works
with the SH870 Humidifier and ST320
Humidified Installation Kit. The product
is now available in New Zealand, Australia
and the United Kingdom.
510(k) clearance
for the Evora™ Full
Our latest compact
full-face mask for
obstructive sleep apnea
(OSA) treatment
has received FDA 510(k)
clearance. This paves
the way for its sale into
the United States following
its launch in Australia,
New Zealand, Europe
and Canada.
Section 01 | THE BUSINESS YEAR
18
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Section 02 | THE COMPANY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
19
THE COMPANY Together, we work to
improve care and outcomes through inspired
and world-leading healthcare solutions.
02
Section 02 | THE COMPANY 20
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Who we are
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.
Section 02 | THE COMPANY Where we operate
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
21
Direct sales offices
Distribution centres
Manufacturing facilities
53
Countries with
F&P people
2,608
People in North America,
including Mexico
380
People in Europe
3,927
People in New Zealand
460
People in the
rest of the world
Note: people numbers are represented as full-time equivalents.
Section 02 | THE COMPANY 22
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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, nurses and
other clinicians, providing them the products
and tools to deliver the best possible care.
Our largest markets by revenue are North
America, Europe and Asia Pacific.
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.
The needs of our customers and their patients drive
everything we do. We call this Care by Design.
Section 02 | THE COMPANY How we deliver value
SUSTAINABLE, PROFITABLE GROWTH
We aim to grow our business in a way that is sustainable and profitable over the long term.
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
23
OUR INPUTS
Our
7,000+
people
50+ years
of trusted
relationships
Excellence
in R&D
Global
supply
networks
Trusted
brand
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
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
Section 02 | THE COMPANY 24
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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.
Section 02 | THE COMPANY What matters most
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
25
Investors and other stakeholders
are increasingly using non financial
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.
We worked with an independent
consultant, to obtain feedback from multiple
stakeholders. The result is a 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.
For more information on the Sustainable
Development Goals that we contribute
towards, please refer to Section 3 of this
report, Operating Sustainably.
OUR STAKEHOLDERS
E M P LOY E E S
C U STO M E R S
I N V E STO R S
C L I N I C I A N S
S U P P L I E R S
CO M M U N I T I E S
Section 02 | THE COMPANY 26
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
OUR PROCESS
1
3
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
stakeholder priorities.
2
4
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
Section 02 | THE COMPANY MATERIALITY MATRIX: OUR PROCESS
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
27
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
Employee attraction,
development & retention
Sustainable financial performance
Nurturing our culture
Product quality
Patient safety
Health, safety & wellbeing
Innovation
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
W. Scaled FY21
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)
Section 02 | THE COMPANY
28
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Our Board
Scott St John
Chair and non-executive director
TERM OF OFFICE:
Appointed October 2015, last re-elected
18 August 2021. Appointed Chair on
21 August 2020.
Scott is director of ANZ New Zealand
Bank Limited, Mercury Limited, the NEXT
Foundation and Fonterra Cooperative
Group Limited. Scott was Chief Executive
Officer of First NZ Capital from 2002
to 2017. Scott previously served as the
Chancellor of the University of Auckland,
Chairman of the Securities Industries
Association and was a member of
the Financial Markets Authority
Establishment Board.
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 38-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.
Michael Daniell
Non-executive director
Pip Greenwood
Non-executive director
TERM OF OFFICE:
Appointed November 2001, last
re-elected 18 August 2021.
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 director of Cochlear Limited,
Tait Limited, the Medical Research
Commercialisation Fund, and Chair of
Te Tītoki Mataora – MedTech Research
Translator. Michael was named a Knight
Companion of the New Zealand Order
of Merit in June 2021.
TERM OF OFFICE:
Appointed June 2017, last re-elected
21 August 2020.
Pip is chair of Westpac New Zealand
Limited, a director of a2 Milk Company
Limited and Vulcan Steel Limited,
a current trustee of the Auckland
Writers Festival and served as a member
of the New Zealand Takeovers Panel
from 2007 to 2011. Pip was a partner
at Russell McVeagh between 2001
and 2019 and served as the firm’s
Board Chair. She has advised on many
high-profile corporate transactions.
Bachelor of Laws
COMMITTEE RESPONSIBILITIES:
Chair People & Remuneration Committee.
Bachelor of Science – Physics
Bachelor of Engineering (Hons)
COMMITTEE RESPONSIBILITIES:
Member Audit & Risk Committee.
Section 02 | THE COMPANY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
29
Geraldine McBride
Non-executive director
TERM OF OFFICE:
Appointed August 2013, last re-elected
21 August 2020.
Geraldine has been involved in the
technology industry for 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
Lisa McIntyre
Non-executive director
TERM OF OFFICE:
Appointed October 2021.
Lisa is a director of HCF Group, The
University of Sydney, Studiosity, and
Nanosonics. In addition to her current
directorships, Lisa has previously been
a director of a range of health entities,
including those in healthcare insurance,
clinical service delivery and medical
research and innovation. Lisa spent
20 years as a senior strategy partner
with LEK Consulting providing advice
to companies in North America, Asia
and Australia.
PhD Physical Chemistry, Bachelor of
Science – Biochemistry and Pure Maths
COMMITTEE RESPONSIBILITIES:
Member Quality, Safety &
Regulatory Committee.
Neville Mitchell
Non-executive director
Donal O’Dwyer
Non-executive director
TERM OF OFFICE:
Appointed November 2018, elected
28 August 2019.
TERM OF OFFICE:
Appointed December 2012, last
re-elected 28 August 2019.
Neville was Chief Financial Officer and
Company Secretary of Cochlear Limited
between 1995 and 2017. He is a non-
executive director of Sonic Healthcare
and Q’Biotics Group and a former
director of The Board of Tax, South East
Sydney Local Health District, Osprey
Medical and Sirtex Limited. Previously,
he served on the New South Wales
Medical Devices Fund, was Chairman
of the Group of 100, and Chairman,
Standing Committee (Accounting and
Auditing), for the Australian Securities
and Investments Commission.
Bachelor of Commerce
COMMITTEE RESPONSIBILITIES:
Chair Audit & Risk Committee.
Member Quality, Safety &
Regulatory Committee.
Donal is a director of nib Holdings
Limited. From 1996 to 2003, he was
with Cordis Cardiology (a division of
Johnson & Johnson), initially as its
president (Europe) and from 2000
to 2003 as its worldwide president.
Prior to joining Cordis, Donal worked
for 12 years with Baxter Healthcare,
rising from plant manager in Ireland to
president of the Cardiovascular Group,
Europe, now Edwards Lifesciences.
Previously he served on the boards
of Cochlear Limited, Cordis Asset
Management and Mesoblast Limited.
Bachelor of Engineering, Master of
Business Administration
COMMITTEE RESPONSIBILITIES:
Chair Quality, Safety &
Regulatory Committee.
Member People &
Remuneration Committee.
Section 02 | THE COMPANY 30
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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, New Zealand.
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 Accounts
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, New Zealand.
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,
New Zealand, 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,
New Zealand.
Section 02 | THE COMPANY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
31
Brian Schultz
Vice President
– Quality & Regulatory Affairs
Nicholas Fourie
Vice President – Information &
Communication Technology
Jonti Rhodes
Vice President – 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, United States.
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 Vice
President – Supply Chain,
Facilities & Sustainability
in 2022, having served on
the Executive Management
Team since 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. 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 Vice
President - 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. She holds a
Bachelor of Management
Studies with Honours in Human
Resources and Marketing from
the University of Waikato.
Section 02 | THE COMPANY 32
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
33
OPERATING SUSTAINABLY
Together, we are working to create a positive
lasting impact on society and the environment.
03
Section 03 | OPERATING SUSTAINABLY 34
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
People
Creating an environment where our
people feel a connection with our
business is something we strongly
believe in. Our intention is to have
good people who contribute the
most they can over the long term
and to create a positive lasting
impact on society.
DIVERSITY, EQUITY AND INCLUSION
Our company culture guides us to do the
right thing, and we know our words and
actions today will impact future generations.
We focus on nurturing a positive and inclusive
culture based on trust and respect, that
encourages our people to speak openly and
is free from bias, discrimination, harassment
or bullying. We strive to provide a high quality
of life for our employees and support our
suppliers to do the same for their people. We
use data and insight to identify bias, drill down
to the root cause and take action to address it.
Harnessing the diverse skills of our people
and the unique lens that each person brings,
combined with strong support from managers
and leaders, is a powerful union that we believe
provides the pathway to belonging, and
connection to our business and each other.
A strong example of this is in the growth and
empowerment of our employee groups, formed
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
35
around shared identities and experiences.
They form a central part of our diversity
ecosystem and one of the ways we find
insight into equity and inclusion issues
affecting our people. This year, we enabled
the Spectra, Manaaki and Women in
Engineering groups to be part of key
business projects to incorporate inclusive
design solutions in our diversity
infrastructure and built environment.
These groups and individuals across
the business also worked to support
our cultural intelligence with significant
contributions to our pandemic response,
Māori cultural awareness and the
preservation of te reo and tikanga Māori,
and learning opportunities for women
in technical roles.
In March 2022, we appointed a Diversity
and Inclusion Manager, a newly created role
demonstrating our continuing commitment
to diversity, equity and inclusion.
RACHEL MILLER (SHE/THEY)
Our new Diversity and Inclusion Manager.
IDEA Council (Inclusion, Diversity, Equity and Awareness Council)
The IDEA Council is made up of seven
volunteers who champion diversity and
inclusion, act as trusted advisors to the
executive management team and Board and
help ensure sustainable, equitable outcomes
from diversity and inclusion initiatives.
The council grew to include more people and
created an online community to encourage
others to share their history and experiences
and discuss diversity and inclusion topics.
It also continued to build on focus areas
around gender and ethnicity – see the
table below.
While the demands of the pandemic
restricted the capacity for employees in
our manufacturing and operations teams
to participate in council projects, work has
begun to restructure and develop further
governance around the council to enable
them to participate. More opportunities to
meet and work alongside employee groups
has strengthened the council’s connections
in this area of the business.
In partnership with Diversity Works
New Zealand, the council has begun to
develop a long-term, global approach
to diversity and inclusion which will be
completed in the 2023 financial year.
Focus areas – 2022 Financial Year
R&Dversity Project
Cultural Values Project
Unconscious Bias Training
Volunteers began work to identify
solutions to address issues
engineers experienced based
on their gender and improve low
female representation in R&D at
senior levels. Priority areas are
making meetings and model shops
more inclusive and improving
visibility and accessibility of
female role models.
The root causes of under-
representation of some ethnicities
in technical or higher paid
roles were identified this year.
Recommendations to improve
recruitment and learning and
development practices are key
objectives for the 2023 financial
year. These include improving
the visibility of job opportunities
and available courses, seeing our
products in action and addressing
bias in recruitment.
A three-part series of unconscious
bias workshops was rolled out to
senior leaders, HR practitioners
and diversity champions. This
programme will be incorporated
into the learning and development
catalogue for all people managers to
undertake. An awareness campaign
on bias and inclusion to support
the learning featured in these
workshops will begin in the 2023
financial year.
Section 03 | OPERATING SUSTAINABLY 36
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Progress on FY22 diversity and inclusion objectives
The pandemic continued to impede progress on some of our global diversity and inclusion
initiatives, with some of these being carried over into the 2023 financial year.
FY22 Objective
Complete the gender representation diagnostic in our sales regions and
Mexico manufacturing plant.
Progress
Not complete.
Identify initiatives to improve gender representation in our global locations
where required.
Not complete.
Identify and commence implementation of two initiatives to improve
female representation in the R&D function.
Increase our focus on diversity beyond gender by completing an
investigation into the impact of culture on New Zealand waged
employees’ career progression.
Complete.
Complete.
FY23 diversity and inclusion objectives
Our diversity and inclusion priorities for the 2023 financial year are:
• Complete the gender representation
diagnostic in our sales regions and
Mexico manufacturing plant (carried
over from FY22).
• Identify initiatives to improve gender
representation in our global locations
where required (carried over from FY22).
• Complete implementation of two initiatives
to improve female representation in the
R&D function.
• Identify and commence implementation
of two initiatives to improve waged
employee progression.
The Spectra panel featuring members of the executive
management team.
Spectra
Creating a welcoming and inclusive
workplace was at the centre of Spectra’s
activities this year.
The group, who celebrate and enable the
queer and gender-diverse community, worked
on gender-inclusive data collection, developed
gender-affirmation guidelines and ensured
more gender-neutral facilities were adopted in
the design of our fifth building in New Zealand.
Spectra adapted gender identity data fields
in the new HR system to ensure users were
provided with two options: either selection
from a wide range of choices, or to describe
their identity in their own words. The system
also allows for changes to gender identity
at any time, recognising that this can change
over time.
People – ContinuedSection 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
37
Our Manaaki group presenting to members of the wider team.
ONLINE PANEL DISCUSSION
Enabling everyone to be
authentically themselves
Pride Month gave Spectra an opportunity
to fulfil their goals to increase visibility of
the Rainbow community and strengthen
connections. ‘Authenticity’ was the theme
of this year’s events. This included a morning
tea, a visit from drag star Kita Mean
demonstrating courage, fun and authenticity,
an ice cream fundraiser securing $2,000 for
Outline Aotearoa (a support and counselling
hotline), and a Rainbow trivia quiz.
The most impactful event was an online
panel discussion entitled ‘Enabling everyone
to be authentically themselves’. It featured
our CEO and two other members of the
executive team. The discussion sparked
meaningful conversation and reminded
people that everyone has a voice.
Manaaki
Manaaki, our indigenous leadership group,
continues to grow and support our people
with Māori heritage to develop their leadership
skills and connection to their Māoritanga
(culture and traditions). Manaaki also played
a significant role to improve our cultural
awareness with language courses and
kapa haka, event celebrations and business
engagement throughout the year.
A collaboration with indigenous coaches,
Rise2025, provided members with a further
opportunity to expand their skill set through
the creation of a committee governance
structure, purpose, values, strategy and
objectives, which can be transferred to
new employee groups as they form.
In 2021, Manaaki launched ‘Kimiora’, a
six-month learning and communications
programme aimed at helping our people
improve their wellbeing. Kimi means “to seek”,
and ora means “life or wellbeing”. Based on the
Te Whare Tapa Wha model of health, Kimiora
Section 03 | OPERATING SUSTAINABLY 38
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
showcased key messages around mental,
physical, spiritual and social health through
our digital communication channels. This was
reinforced with events including yoga classes,
a panel discussion with sleep experts, financial
wellbeing courses and a comedy event for
friends and whānau to enjoy together in
their own homes.
‘Creating a workplace where it is wonderful
to be Māori’ is the group’s vision, and signature
events for Matariki (recently designated a
national holiday in New Zealand) and Te Wiki
o Te Reo Māori (Māori language week) are
planned. Developing partnerships with iwi and
assisting with the design of a multidimensional
cultural hub on our New Zealand site will be
key projects moving forward.
Since the first Manaaki group graduated in
March 2021, many have moved into roles or
taken up opportunities to put their new skills
and confidence into practice.
KIT MCARTHUR
Product Development Engineer
(Ngāti Kahungunu, American)
“ The indigenous leadership course gave
me confidence not only in my identity as
Māori, but also in my work as a product
development engineer. Shortly after, I was
made permanent in my team. The principles
I learned enabled me to communicate
more effectively with my co-workers,
managers, and project stakeholders. I learned
frameworks that have helped me to foster my
relationships and daily mindset. The course
has had an incredibly significant effect on
me, and I’m grateful that more individuals
in the company will be able to experience
that for themselves.”
Women in Engineering
Providing a community and a platform for
women in technical roles at F&P to support
each other and provide the necessary tools
to enable their professional and personal
growth is the purpose of our Women in
Engineering group.
The group has developed a vision where
every woman in a technical role at F&P
feels empowered and is enabled to fulfil
their professional and personal potential
and succeed in their roles.
During 2021, the group ran workshops on
the Imposter Syndrome, Growth Mindset and
Mentorships. They have also developed an
active and supportive online community.
Our ‘Breaking the Bias’ workshop held on our New Zealand campus in
March 2022.
People – ContinuedSection 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
39
We welcomed fresh cohorts of graduates and interns into our team over
the course of the year.
For International Women’s Day in March
2022, Women in Engineering hosted a
‘Breaking the Bias’ workshop for over
40 people from across the business.
Objectives for 2023 include increasing
technical confidence, reaching more
people and strengthening the community.
This will be achieved through facilitating
workshops, developing communications,
continuing to develop support forums and
hosting social events. The group are also
actively involved in R&Dversity, our project
focused on improving female
representation in R&D roles.
ATTRACTING TALENT
Continuing to meet global demand for our
product, and ensuring we have enough people
in the right roles to deliver on this, required
substantial efforts from our recruitment team
in the 2022 financial year. This process was
once more disrupted by COVID-19-related
containment measures and border closures.
We continued with initiatives implemented
in the 2021 financial year, using an end-to-end
virtual recruitment process for New Zealand
salaried workers when lockdown measures
prohibited on-site visitors. In both New Zealand
and Mexico, we used recruitment partners to
assist with temporary and permanent
resources during peak production periods,
particularly in the early months of 2022
when Omicron-related absenteeism created
staffing pressures.
Adding people to our global sales offices in
order to provide our customers with the
necessary education and technical support
continued to be a major focus for the year and
will remain so during the 2023 financial year.
Section 03 | OPERATING SUSTAINABLY 40
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
LIVING AND WORKING WITH COVID-19
To ensure we could continue to keep our
people safe while fulfilling our global
responsibility to provide our products, we
introduced a range of safety initiatives on our
large manufacturing sites in New Zealand and
Mexico. This included encouraging as many of
our people as possible to get vaccinated, as
research showed it is the best way to protect
ourselves and others.
We are proud of our people who attended
learning sessions, got vaccinated, tested for
COVID-19, organised and volunteered for clinics
and events, supported their teammates and
colleagues through their fears, and spoke to
and for their families and communities so we
could understand each other better.
Members of our Mexico team who supported our vaccination efforts.
Our New Zealand team set up a drive-through vaccination centre on our
site in September 2021 for employees and their family members.
Mexico
New Zealand
T-shirts with “I got vaccinated!” printed on
them were a highlight in Mexico, where buses
were arranged to take people to local
vaccination points.
A wide range of other measures to protect
our people in Mexico was implemented, some
mirroring the medical, HR and communication
support available in New Zealand, while others
were unique to the Mexico team.
These included drinking water with vitamin C,
outdoor hand basins, footwear sanitation mats,
temperature-monitoring cameras at entries and
exits and daily desk sanitising.
Vaccine booths and leaflets in multiple
languages kick-started the new wave of safety
measures in New Zealand. This was followed by
on-site saliva testing, vaccination clinics and a
vaccine drive-through for family and friends.
Later in the year, we stepped up our education
campaign through Talanoa+ and ‘Experts Live’,
two events designed to help our people
understand the benefits of being vaccinated
and to dispel myths and disinformation.
Vaccinations on-site
Over 1,400 people were vaccinated on site
within seven days during a strict regional
lockdown through our clinics and “home
bubble” drive-through. Twenty health
professionals took an average of four minutes
to vaccinate our people and their families.
Those who took part enjoyed tunes from
our own radio station, and ice creams while
in observation.
People – ContinuedSection 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
41
Talanoa+
There are many people with Pasifika heritage
at our New Zealand site and there was
particular concern about the virus and
disinformation spreading amongst the South
Auckland, Pasifika and Māori communities.
To support our people from these communities,
we developed Talanoa+ sessions. Talanoa is
a form of dialogue from the Pacific Islands,
and ours were designed to share information
about COVID-19 that was personable, relevant,
and culturally appropriate. Six sessions
featured guest speakers including a COVID-19
survivor, a doctor, and spokespeople from
the travel industry who could talk about the
reality of travelling during the pandemic.
The response was hugely positive and, at
times, deeply emotional.
“ I wasn’t expecting to see Pacific
people facilitating this Talanoa+
but when I walked in and saw
them dressed in their Pacific
attire and speaking my language,
I was instantly connected and
very excited.”
“ I think the information delivered
was very good. The speakers were
very encouraging, and it felt like
a safe place to share and gather
information. The opportunity to
be here was great.”
Re-establishing connections in the U.S.
COVID-19’s impact in the U.S. and its effect
on people and the workplace has been
well-documented throughout the pandemic.
Following public health guidance and our own
safety precautions, the California-based U.S.
team worked remotely from March 2020
through March 2022.
In April 2022, the team moved into a new office
and service centre after several delays caused
by new COVID-19 variants.
Mirroring the style of the New Zealand campus,
it offers ergonomic furniture, quiet zones and
collaboration space, and amenities to support
wellbeing. This will also serve to attract new
people as we grow.
Experts Live
The ‘Experts Live’ educational session
featured a well-respected, independent panel
(in-person and online) to share their insights
and experience on all things COVID-19, the
vaccine and managing well-being. More than
600 people attended.
Our Talanoa+ sessions created space for discussion around the vaccine.
Our new office in Irvine, California.
Section 03 | OPERATING SUSTAINABLY 42
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
People by the numbers
TOTAL PEOPLE
The tables below show our total numbers of people by headcount as at
31 March 2022. We have recently added new gender categories.
By region
Region
New Zealand
Mexico
Rest of World
Total
By gender
Gender
Women
Men
Gender diverse*
Not specified /
Prefer not to say
Total
FY2021
FY2022
FY2021
FY2022
Permanent
Temporary
Permanent
Temporary
Gender
Full-time
Part-time
Full-time
Part-time
Full-time and part-time*
Women
Men
Gender diverse
Not specified /
Prefer not to say
Total
2,935
2,850
1
1
5,787
33
13
0
0
45
3,552
3,204
4
9
6,769
26
11
0
1
38
* Does not include New Zealand temporary employees (casual, fixed term, temporary, temporary part time and
contract temporary) due to the changing nature of their hours.
2,963
1,774
1,096
5,833
971
97
15
1,083
3,444
2,190
1,173
6,807
633
88
11
732
FY2021
FY2022
Permanent
Temporary
Permanent
Temporary
2,967
2,863
1
2
680
396
2
5
3,578
3,215
4
10
550
181
0
1
5,833
1,083
6,807
732
*Gender diverse is an umbrella term for a range of gender identities beyond the binary framework.
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
43
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 2022. This chart does not include our new
gender categories.
COLLECTIVE BARGAINING
AGREEMENTS
Of all permanent employees globally,
24% were covered by collective
bargaining agreements in the 2022
financial year.
FY2021
FY2022
Women
Men
Women %
Men %
Women
Men
Women %
Men %
Board
Senior executives1
Senior management2
2
2
16
5
8
40
All employees3
2,967
2,863
29%
20%
29%
51%
71%
80%
71%
49%
3
3
20
5
8
47
3,578
3,215
38%
27%
30%
53%
62%
73%
70%
47%
%
6
7
1 The term “senior executive” refers to the Chief Executive Officer, executives reporting directly to the Chief Executive Officer and the General Counsel and
Company Secretary who reports directly to the Board.
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
2
4
%
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 2022.
Collective bargaining agreement
No collective bargaining agreement
FY2021
FY2022
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
0
0
7
–
–
% Over 50 years old
100%
0
8
2
–
80%
20%
1,711
3,223
899
30%
55%
15%
0
0
8
–
–
100%
0
8
3
–
73%
27%
2,026
3,735
1,046
30%
55%
15%
1 The term “senior executive” refers to the Chief Executive Officer, executives reporting directly to the Chief Executive Officer and the General Counsel and
Company Secretary who reports directly to the Board.
2 Temporary staff are not included in the above numbers.
Section 03 | OPERATING SUSTAINABLY 44
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
HIRE RATES
The tables below show our hire rates for the financial year ended
31 March 2022. Hire rate is the number of permanent employees
hired divided by headcount in each region or category.
By region
Region
New Zealand
Mexico
Rest of World
Total
By gender
Gender
Women
Men
Gender diverse
Not specified/
Prefer not to say
Total
By age group
FY2021
FY2022
FY2021
FY2022
New employees
Hire rate
New employees
Hire rate
Age group
New employees
Hire rate
New employees
Hire rate
644
647
194
1,485
21%
36%
18%
25%
837
717
81
1,635
39%
19%
8%
24%
Under 30 years old
30 – 50 years old
Over 50 years old
Total
780
648
57
1,485
45%
20%
6%
25%
653
735
247
1,635
19%
34%
21%
24%
FY2021
FY2022
New employees
Hire rate
New employees
Hire rate
812
670
1
2
27%
23%
–
–
939
689
1
6
26%
21%
1,485
25%
1,485
24%
People – ContinuedSection 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
45
EMPLOYEE TURNOVER
The tables below show employee turnover rates for the financial year
ended 31 March 2022.
By region
Region
New Zealand
Mexico
Rest of World
Total
By gender
Gender
Women
Men
Gender diverse
Not specified /
Prefer not to say
Total
By age group
FY2021
FY2022
FY2021
FY2022
Number of
leavers
Turnover
rate
Number of
leavers
Turnover
rate
Age group
Number of
leavers
Turnover
rate
Number of
leavers
Turnover
rate
127
398
104
629
4%
22%
9%
11%
346
617
178
1,141
10%
28%
15%
17%
Under 30 years old
30 – 50 years old
Over 50 years old
Total
293
284
52
629
17%
9%
6%
11%
532
526
83
1,141
25%
14%
8%
17%
FY2021
FY2022
Number of
leavers
Turnover
rate
Number of
leavers
Turnover
rate
The table below shows our gender pay ratio, calculated within salary
bands and functions using the average pay ratio between women and
men as at 31 March 2022.
GENDER PAY RATIO
336
293
–
–
629
11%
10%
–
–
595
545
–
1
16%
17%
–
–
11%
1,141
17%
New Zealand (salaried and waged)
Outside of New Zealand (salaried only)
Total
FY2021
FY2022
100%
96.5%
98.8%
99.7%
96.0%
98.5%
Section 03 | OPERATING SUSTAINABLY 46
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Community
One of the hallmarks of a successful
business is looking after the wider
community. We partner with like-
minded organisations to identify
and facilitate opportunities to
create shared value.
FISHER & PAYKEL HEALTHCARE
FOUNDATION
On 22 March 2021, the Fisher & Paykel
Healthcare Foundation was officially
registered as a charitable entity, with the
company committing $20 million as part of
its establishment. The Foundation’s purpose
is supporting healthier communities with a
focus on three key areas: health, education
and environment, partnering with individuals
and organisations that help those who are
underserved and underrepresented. Neerali
Parbhu was appointed to the role of
Foundation Lead in September 2021.
Supporting initiatives
The Foundation’s community initiatives
during the past year included:
An eight-year commitment to
Middlemore Clinical Trials,
donating $150,000 per year.
This funding supports research targeted at
addressing inequities in healthcare for Māori
and Pasifika children and summer studentships
for Māori medical students.
Support for the
‘Lungs4Life’ campaign.
A new model of care that has been established
in the four Northern District Hospital Boards in
New Zealand for children less than two years of
age with repeated hospital admissions for lower
respiratory tract infections.
A $30,000 contribution to Kiwibots.
Helping build awareness of robotics for
children across New Zealand with outreach
work targeting remote areas and young
women across New Zealand through
workshops and competitions.
Neerali Parbhu, Foundation Lead
Neerali has spent seven years at Fisher &
Paykel Healthcare, working in research and
development as a Senior Product Development
Engineer, followed by a year in international
sales as an OEM Product Manager before
accepting her current role. Neerali sits on the
board of trustees for Kiwibots and the
management committee for Camp Quality
Auckland/Northland. She has spent years
volunteering for non-profit organisations
in New Zealand and overseas. She holds a
Bachelor of Art and Design, Product Design
(Honours) and a Masters of Philosophy.
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
47
The establishment of an agreement
with First Foundation to support
four students with scholarships
valued at $22,000 each.
First Foundation provides scholarships
to students recognised as high achievers
though lack the resources to attend
tertiary education. Scholarships cover
tuition fees, mentors and university supplies
required over their four years of study.
The Foundation is gearing up
to launch a funding round in the
2023 financial year to build further
partnerships in the community to
support healthier communities.
Meet the Foundation Trustees
LINDSAY GILLANDERS
Independent Chair
DR DAVID GALLER
Independent Trustee
TONI MOYES
Independent Trustee
MARCUS DRILLER
VP Corporate,
Fisher & Paykel Healthcare
KIRI HENARE
GM HR NZ,
Fisher & Paykel Healthcare
KEVIN PEARSON
GM Product Group Operations,
Fisher & Paykel Healthcare
JAMES TUCK
GM International Sales Operations,
Fisher & Paykel Healthcare
Section 03 | OPERATING SUSTAINABLY
48
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Community – Continued
CONSULTING MANA WHENUA ON TE MĀRA
PĀTENGI O TE WAI O URU
Shortly after the Daniell Building opening in
July 2020, we began to plan our fifth building
to support our continued growth. Building 5
will house research and development,
manufacturing and distribution facilities to
support over 1,000 additional employees.
One of the key lessons from the Daniell
Building construction process was the
importance of inviting and considering the
voices of mana whenua from the outset,
particularly after the discovery of an ancient
shell midden area on that building’s site. Mana
whenua means the indigenous people (Māori)
who have historic and territorial rights over
the land and a special cultural and spiritual
relationship with the environment – a matter
of national importance under New Zealand’s
Resource Management Act.
In preparation for Building 5 groundworks, we
engaged three iwi who declared an interest in
the site: Ngāi Tai Ki Tāmaki, Ngāti Whanaunga
and Te Ākitai Waiohua, as well as
archaeologists. Key to the success of the
project moving forward was to prioritise iwi
protocols and consultations and develop
cultural monitoring methods. The site was
named Te Māra Pātengi o Te Wai o Uru by
mana whenua. Enabling works to prepare the
ground for Building 5 began in October 2021.
The building’s theme, ‘New Zealand Grown’,
is inspired by the area’s rich cultural history.
The theme will inform the colour palette and
interior design themes throughout the
building. It is currently expected to be
completed in 2025.
BBM Christmas Appeal
Fundamental to the Foundation’s activities
is to connect Fisher & Paykel Healthcare
employees with work that the Foundation
is supporting in the community.
An organisation close to our people’s hearts
is Dave Letele’s Brown Buttabean Motivation
(BBM) which has worked throughout the
pandemic to support South Auckland families.
During the 2022 financial year Fisher & Paykel
Healthcare employees raised around $7,000
and the Foundation contributed an additional
$25,000 towards BBM’s Drive-Thru Christmas
Appeal. This money went towards the purchase
of around 800 presents, gift-wrapped and
delivered by our volunteers, and BBM’s
ongoing operations. We were pleased to
see Dave be presented with the Kiwibank
New Zealand Local Hero of the Year award
in late March, recognising the impact of his
efforts in the Auckland community.
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
49
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 2021.
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.
A cultural history of the site
Archaeological work being performed on the Building 5 site
before the commencement of earthworks.
Archaeological surveys of the Building 5
site indicated large-scale gardening by
Māori around the 18th century. Seventeen
rua (storage pits) of various sizes and with
complex drainage channels were found. A
shell midden site also indicated where people
were likely to have lived next to the rua, used
to store kūmara (sweet potato) crops.
Fisher & Paykel Healthcare’s full site is believed
to have had many successive occupations and
uses over the centuries including a small fishing
camp, gardens and a papakainga (village)
outside the Daniell building footprint. After
the Land Wars, the area was used by a
European landowner for grazing. His farmstead
was erected on top of the former papakainga
and its well is still visible today.
GLOBAL INITIATIVES
In addition to the Fisher & Paykel Healthcare
Foundation-led initiatives in New Zealand,
our teams across our global sites select
and sponsor community initiatives which
connect to our purpose. In North America,
the UK and Australia, our people have
again participated in a range of fundraising
activities and donations to support
charitable organisations. This included
raising money for sleep health and chronic
obstructive pulmonary disease charities.
Section 03 | OPERATING SUSTAINABLY 50
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Environment
Our environment refers to the
natural resources required to design,
produce, ship and use products and
therapies. Our intention is to create
a positive lasting impact on society
and the environment.
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 ecodesign,
sustainable packaging, biobased and circular
materials, and environmental life cycle
assessment. We believe that by investing in
these initiatives, we can be more innovative
and successful in the long term.
CDP SCORES
Topic
Climate
Supplier engagement
Water
Forests
KEY ENVIRONMENTAL METRICS
Topic
Scope 1 emissions (tonnes CO2e)
Scope 2 emissions (tonnes CO2e)
Scope 3 emissions (tonnes CO2e)
Total emissions (tonnes CO2e)
Water usage (cubic metres)
Landfill waste diverted (cubic metres)
NZ recycling efficiency (percentage of waste diverted
from landfill)
Global recycling efficiency (percentage of waste diverted
from landfill)
FY20
FY21
FY22
B
B-
C
-
FY20
1,914
8,814
650,000
660,728
98,772
1,032
66%
A-
A-
B
C
FY21
1,465
11,050
718,991
734,452
134,900
1,630
62%
B
A
B
C
FY22
1,777
10,309
457,112
469,198
184,171
2,035
68%
58%
29%
52%
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
51
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.
Scope 1 and 2 carbon targets in tonnes of CO2 equivalent
FY2024 Target
FY2029 Target
FY2034 Target
Direct emissions – fuels, refrigerants, electricity and heat.
8,846
6,494
4,143
CARBON EMISSIONS
Our carbon audit for the 2022 financial year
shows a carbon footprint of 469,198 tonnes
of CO2e, representing a reduction from
previous years as the proportion of
airfreight was reduced.
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, and this increase in operational activity
resulted in higher electricity use and other
direct emissions. In the 2022 financial year, we
saw Scope 2 emissions decrease, while Scope 1
emissions were elevated compared to 2021
levels amid a heavier travel footprint for our
sales teams with COVID-19 travel restrictions
easing in major offshore markets. In the long
term, we remain committed to decoupling
carbon emissions from production levels, as
the impact of COVID-19 diminishes. We have
been piloting an internal carbon price during
FY22 to factor carbon impact 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 during the FY20 and
FY21 periods. We have since seen a reduction
of airfreight throughout FY22.
We remain committed to educating and
encouraging our suppliers to reduce their
carbon emissions and 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. We confirmed during
the 2022 financial year that 20 suppliers have
also set Science Based Targets or equivalent
targets for carbon reduction.
Section 03 | OPERATING SUSTAINABLY 52
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Environment – Continued
WATER USAGE
ISCC PLUS CERTIFICATION
In October 2021, Fisher & Paykel Healthcare
New Zealand became International
Sustainability and Carbon Certification (ISCC)
PLUS certified for the first time. ISCC’s goals
are to provide certification solutions for fully
traceable and environmentally, socially and
economically sustainable supply chains. ISCC
PLUS is a voluntary sustainability certification
which has allowed our company to source and
trial a range of sustainable materials that are
ISCC PLUS certified using a mass balancing
approach. This is an important step towards
reducing the carbon embodied in the materials
that our products are made from and reducing
our Scope 3 emissions.
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
hospital treating patients with COVID-19. In
the 2021 financial year, water usage increased
as we boosted production on key products for
hospital treating patients with COVID-19. Water
usage remained elevated during the 2022
financial year amid construction projects
and as staff returned to office spaces.
GREEN TEAM
Our volunteer-led Green Team now includes
more than 450 people promoting
environmental sustainability on our Auckland
campus and in the community. A highlight was
our annual Sustainability Week in November,
which took place across multiple global
locations. In New Zealand, this included onsite
recycling centre tours, a sustainable transport
showcase with our cycling and electric vehicle
communities, and a quiz covering a range of
topics from our carbon footprint to the UN
Sustainable Development Goals. Our UK team
held a sustainable healthcare discussion,
a clean-up event and made environment
pledges for the coming year, while our
events in Mexico covered a range of themes
including water conservation, fast fashion,
and sustainable living.
Section 03 | OPERATING SUSTAINABLY MEXICO SOLAR ARRAY
The first phase of our solar installation project
at our Tijuana, Mexico site is now on the roof
of our second building, with an array of 1,300
solar panels installed and commissioned on
the roof of our third building. This is the first
of three phases that will see solar panels
cover the roof space on our second and third
manufacturing buildings on the site. Once the
entire array is operational, we expect that it will
fulfil 40 per cent of the overall site’s electricity
requirements. This array complements our
existing solar installation on the roof of our
Stewart Building in New Zealand, comprised of
270 panels installed and commissioned in 2017.
TOTAL PANELS
1,300
INSTALLED ON BUILDING TWO
FULLY OPERATIONAL – WILL FULFIL
40%
OF THE SITE’S ELECTRICITY REQUIREMENTS
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
53
MEMBERSHIPS
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 Network,
which is New Zealand’s largest and longest-
standing sustainable business organisation.
The network describes itself as a social
enterprise, a community and a movement,
designed to enable change in the areas of
climate, waste and nature.
Our Board Chair Scott St John is a member
of the steering committee for Chapter Zero
New Zealand, a newly formed climate
governance group hosted by the Institute
of Directors. This is a chapter of the global
Climate Governance Initiative (CGI) which was
established to support the World Economic
Forum’s Climate Governance Principles for
boards of directors. The intent is to provide
directors with climate awareness and skills,
and bring climate considerations to the fore
in boards’ decision-making processes.
Section 03 | OPERATING SUSTAINABLY 54
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Suppliers
MESSAGE FROM OUR MANAGING DIRECTOR
AND CHIEF EXECUTIVE OFFICER,
LEWIS GRADON
Our firm belief in doing the right
thing and creating a lasting
positive impact goes beyond our
commitment to patients – it also
applies to our supply chain.
SUSTAINABLE PROCUREMENT:
FY22 HIGHLIGHTS
• ARTICULATED a new Environmental
& Social Responsibility Policy.
• ESTABLISHED a focused sustainable
procurement team, with clear roles
and responsibilities.
• COMMENCED supplier engagement on
modern slavery (covering ~35% of our
overall supplier spend).
• HOSTED and attended
knowledge-sharing workshops.
• INITIATED modern slavery
observations as part of supplier
site visits.
We are focused on building trusted long-
term relationships with our suppliers across
the globe to maximise opportunities for
companies and communities to thrive, all
while promoting safe working environments
and sustainable outcomes.
As part of our efforts to source responsibly
and uphold human rights in our supply chain,
we select and collaborate with suppliers that
align with our values, and provide education
and support on relevant standards. This is all
anchored in our view that corporate social
responsibility and sustainability are inextricably
linked to the way we do business.
The past two years have been enormously
difficult for global supply chains, and as
we write this, we are still managing through
logistical challenges caused by ongoing
lockdowns and the shock of a major conflict
in Ukraine. Despite this, we are determined
not to lose sight of the responsibility we have
to do the right thing and to keep the focus
on long-term outcomes.
Our intention with this new ‘Suppliers’ section
in our annual report is to begin disclosing
more of our efforts in the area of sustainable
procurement. We acknowledge that there is
much work to be done, but we want to ensure
that as we scale, we do so sustainably.
LEWIS GRADON
MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER
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55
RESPONSIBLE SOURCING OF MINERALS
ERADICATING MODERN SLAVERY
FOCUS AREAS FOR FY23 AND FY24
We are committed to the responsible sourcing
of minerals, ensuring that our procurement
is undertaken in an ethical and sustainable
manner that safeguards the human rights of
everyone in our global supply chain, preserves
the environment and mitigates other risks.
‘Conflict minerals’ is a term used to define
minerals mined in conditions where armed
conflict and human rights abuses may occur,
in locations identified as Conflict-Affected and
High-Risk Areas (CAHRAs) under Regulation
(EU) 2017/821. Of particular concern are tin,
tantalum, tungsten, and gold (minerals
commonly referred to as “3TG”). We recognise
the importance of actively mitigating human
rights abuses and other risks related to the
extraction of 3TG and other minerals.
To ensure Fisher & Paykel Healthcare is aware
of the indirect raw material sources within our
supply chain, specific questions related to the
use of conflict minerals are included within our
selection process. For existing suppliers, we
actively review, assess and mitigate any risks,
which includes assessing annually updated
information from the Responsible Minerals
Assurance Process (RMAP), an approach
created by the Responsible Minerals Initiative
(RMI) to help companies make better decisions
about mineral sourcing.
As part of our commitment to do the right
thing, we recognise that we have a role to play
in guarding against and eradicating modern
slavery. We have processes in place that
identify and address modern slavery risks
within our supply chain and aid our
procurement decisions.
These processes include our Code of
Conduct and our Supplier Code of Conduct
(outlined above), and we have evolved our
procedures over the 2022 financial year to
include specific modern slavery observations
in our supplier site visits. We have begun
surveying suppliers to understand their risk
profile, have commenced the hiring process
for a sustainable procurement specialist to
be based in Asia and are in the process of
contracting a third party to assist with a
deep-dive assessment on certain aspects
of our supply chain.
We fully support the principles in the United
Nations Universal Declaration of Human
Rights and the International Labour
Organisation Declaration on Fundamental
Principles and Rights at Work, including
non-discrimination, freedom of association
and collective bargaining, and freedom from
forced and child labour.
• LAUNCH our new Sustainable
Procurement Framework to suppliers
• COMPLETE recruitment of sustainable
procurement specialist to cover the
Asia region
• SELECT third-party specialist for
deep dive of high-risk areas of
our supply chain
• IMPROVE internal and external
reporting and disclosure
• CONTINUE DEVELOPING and
measuring key performance
indicators to monitor effectiveness
of our initiatives
• CONTINUE TO EDUCATE suppliers
on our sustainability goals
(i.e. Science Based Targets)
• EXTEND our Ecodesign programme
to suppliers
Section 03 | OPERATING SUSTAINABLY 56
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Suppliers – Continued
SUPPLIER CODE OF CONDUCT
We are committed to building a supply chain
aligned with our approach to corporate social
responsibility and sustainability. We use an
integrated enterprise resource planning system
and a strong quality management system
to ensure that our supply chain is transparent
and coordinated across our wider supply
chain network.
Our Supplier Code of Conduct reflects our
values and expectations for all suppliers,
contractors and consultants who provide
goods or services to our group of companies,
as well as their affiliates.
We will continue to verify and validate our
environmental, social and ethical performance
and that of our suppliers, and work to
continuously improve this performance.
We seek relationships with suppliers who
share a common commitment to:
1. Incorporate quality business processes
within their day-to-day operations.
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.
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, our local
teams personally interact with and visit our
suppliers’ operations on a regular basis.
SUSTAINABLE PROCUREMENT
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. Our practices
are based on and aligned with ISO20400 for
Sustainable Procurement.
SUPPLY CHAIN GOVERNANCE
Fisher & Paykel Healthcare Board
The Fisher & Paykel Healthcare Board of Directors is
responsible for providing overall governance and
oversight of the company’s environmental and
social responsibility practices, including supply
chain and sustainable procurement.
Audit & Risk Committee
The Audit & Risk Committee assists the Board
in fulfilling its responsibilities relating to risk
management, financial reporting and auditing
activity. Risks within our supply chain falls within
this remit.
Executive Management Team
The Executive Management Team is answerable
to the Audit & Risk Committee and the wider
Board for progress on Environmental & Social
Responsibility initiatives, and three executives
act as sponsors for the Environmental & Social
Responsibility Governance Group: Jonti Rhodes –
VP Supply Chain, Facilities & Sustainability, Marcus
Driller – VP Corporate, and Nicola Talbot – VP
Human Resources.
Environmental & Social Responsibility
Governance Group
The newly formed Environmental & Social
Responsibility Governance group, comprised of
stakeholders from across the business, is tasked
with overseeing a range of related workstreams and
initiatives, including those related to supply chain
and sustainable procurement.
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57
OVERVIEW OF OUR SUPPLY CHAIN
Canada
USA
United Kingdom
Switzerland
Sweden
Germany
Austria
Italy
Turkey
Mexico
Dominican Republic
Costa Rica
China
Japan
India
Hong Kong
Taiwan
Thailand
Malaysia
Singapore
Australia
New Zealand
Tier 1 : A direct supplier to
Fisher & Paykel Healthcare
Tier 2 : A supplier to one or
our suppliers (sub-supplier)
Tier 3 : A sub-sub supplier
1
2
3
2,000+
Tier 1 suppliers to
New Zealand and Mexico
manufacturing sites
Based in
20+
countries 4 continents
Section 03 | OPERATING SUSTAINABLY 58
Fisher & Paykel Healthcare
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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
more sustainable future for all.
The goals we are most closely
aligned with are Goal 3, Goal 8 and
Goal 12, and our contributions are
outlined on the following pages.
UNITED NATIONS SUSTAINABLE
DEVELOPMENT GOALS: F&P FOCUS
AREAS
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59
GOAL 3:
Ensure healthy lives and promote wellbeing for all at all ages
UN SDG target
UN key indicators
Our contribution
3.4
By 2030, reduce by one third premature
mortality from non-communicable diseases
through prevention and treatment and
promote mental health and wellbeing.
Mortality rate attributed to cardiovascular
disease, cancer, diabetes or chronic
respiratory disease.
Our Optiflow™ nasal high flow therapy is a first-line
treatment for patients suffering for respiratory disease,
used both pre-intubation and post-extubation. An
estimated seven million patients were treated with
our Optiflow therapy over the past year.
3.6
By 2020*, halve the number of global deaths
and injuries from road traffic accidents.
Death rate due to
road traffic injuries.
Hundreds of millions of people suffer from obstructive
sleep apnea (OSA) globally, and the associated daytime
fatigue creates significant risk for drivers—there are
clinically proven links between these conditions and
traffic accidents. Our range of CPAP machines and
masks are used by millions of patients around the
world for a better night’s sleep.
3.8
Achieve universal health coverage, including
financial risk protection, access to quality
essential healthcare services and access to
safe, effective, quality and affordable
essential medicines and vaccines for all.
Coverage of essential health services (defined
as the average coverage of essential services
based on tracer interventions that include
reproductive, maternal, newborn and
child health, infectious diseases, non-
communicable diseases and service capacity
and access, among the general and the most
disadvantaged population).
The use of our Optiflow™ nasal high-flow therapy has
been shown to reduce the escalation of patient care,
resulting in not only better outcomes for the patient
but also reducing cost and capacity constraints for
healthcare providers.
* This target has not yet been extended by the United Nations.
Section 03 | OPERATING SUSTAINABLY 60
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Sustainable Development Goals – Continued
GOAL 8:
Promote sustained, inclusive and sustainable economic growth,
full and productive employment and decent work for all
UN SDG target
UN key indicators:
Our contribution:
8.2
Achieve higher levels of economic
productivity through diversification,
technological upgrading and innovation,
including through a focus on high-value
added and labour-intensive sectors.
8.3
Promote development-oriented policies that
support productive activities, decent job
creation, entrepreneurship, creativity and
innovation, and encourage the formalization
and growth of micro-, small- and medium-
sized enterprises, including through access
to financial services.
Annual growth rate of real GDP
per employer person.
Proportion of informal employment in
non-agriculture employment, by sex.
We are a major proponent of research and
development and invested 9% of revenue into R&D
during the 2022 financial year. We have more than
700 people engaged in clinical research and product
and process development—they are primarily
engineers, scientists and physiologists.
We are a significant non-agricultural employer, with
a team of 6,807 permanent and 732 temporary
employees as at 31 March 2022. We are an equal
opportunity employer that values workplace
diversity. Of our full-time permanent employees,
53% are women and 47% are men, and our total
gender pay ratio is 98.5%.
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61
GOAL 12:
Ensure sustainable consumption and production patterns
UN SDG target
UN key indicators:
Our contribution:
12.2
By 2030, achieve the sustainable
management and efficient use of
natural resources.
Material footprint, material footprint per
capita, and material footprint per GDP.
Domestic material consumption, domestic
material consumption per capita, and
domestic material consumption per GDP.
12.5
By 2030, substantially reduce waste
generation through prevention,
reduction, recycling and reuse.
National recycling rate, tons of
material recycled.
We are committed to reducing our carbon footprint
in line with the 2015 Paris Agreement (1.5 degrees
celsius) science-based reduction targets. We aim
to reduce carbon emissions within our operational
control by 4.2 per cent annually (using the 2019
financial year as a base), and we are working with
our suppliers to set their own targets. We have also
established an absolute water reduction target of
2 per cent per year.
We actively reduce waste and recycle materials.
In the 2022 financial year, we diverted 2,035 cubic
metres of waste from landfill, up 24.8% on the prior
year. Our recycling efficiency rate in New Zealand
was 68%. We also have more than 50 product
development engineers across the company working
on our Ecodesign initiative, which is focused on
sustainable packaging, bio-based plastic technology
and sustainable procurement.
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Risk management
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 business risk
management framework aligned
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 business 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.
BUSINESS RISK MANAGEMENT FRAMEWORK
We have made significant progress in aligning
our risk management approach to the latest
updates to the ISO3100 Risk Management
standard. Our approach to integrating
quantitative risk analysis into day-to-day
management and business operations
continues to be developed. 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.
RISK ANALYSIS
We carry out risk analysis to support
material business decisions. The relevant
stakeholders are involved in such evaluations,
and findings are communicated to key
decision-makers and management. When
making a decision, carrying out a business
activity or approving an initiative, we apply
a range of quantitative risk management
techniques to measure uncertainty.
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.
The experience of managing through the
COVID-19 pandemic has 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 COVID-19 pandemic began.
INTERNATIONAL STANDARDS
The chart below identifies the
international standards that guide us
in three key areas.
Risk type
ISO standard
Business risks
31000 - Risk Management
Principles and Guidelines.
Product risks
Health and
safety risks
14971 - Medical Devices
Application of Risk
Management, specific to
medical device design
and manufacturing.
45001 - Health and Safety,
with greater emphasis on
managing Critical Risks.
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63
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.
Area
Risk
Strategies to mitigate
Product quality and
patient safety
Patients are harmed as a result of
using our products. This may result
in product recalls and potentially
product liability litigation.
Health and safety
Work-related injuries or illnesses
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.
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.
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 procedure. The hedging procedure
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.
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.
Section 03 | OPERATING SUSTAINABLY 64
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Risk management – Continued
PRODUCT QUALITY AND PATIENT SAFETY
HEALTH AND 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 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.
At Fisher & Paykel Healthcare, we are
committed to ensuring the health, safety,
and wellbeing of our people. As is the case
each year, keeping our people and products
safe has been our highest priority.
Operating safely during a COVID-19
environment was again a major feature
during the financial year. In New Zealand, the
Auckland region was placed into lockdown
in August 2021 and then an Omicron surge
began to take hold in the early stages of 2022.
As an essential service, our site was able to
continue operating throughout this period.
We continued with our safety approach
introduced in the 2021 financial year, including
mandatory masks, social distancing, extra
cleaning protocols and Bluetooth contact
tracing cards.
We also ran an on-site vaccination program
for employees and their families, provided
on-site testing, and continued our special
leave entitlements to ensure people could take
time off work if they needed to self-isolate
without having to worry about losing income.
At our Mexico site, we continued the
preventative measures introduced during
the prior year. These included the wearing
of masks and goggles, and the use of
sanitising mats and cleaning kits. Capacity
limits were set for meeting rooms, and acrylic
dividers were added in manufacturing areas
and cafeterias.
Another major theme for the year was the
future-proofing of our New Zealand and
Mexico sites and ensuring the ongoing
expansion work underway across the
business was being performed in the
safest-possible manner.
Our New Zealand health, safety and wellbeing
team supported the ongoing construction of
our fifth building site, have overseen a raft
of safety improvements around the wider
site including a new heavy-vehicle ring road,
pick-up and drop-off zones and other
pedestrian safety measures.
In order to maximise our site capacity amid
growing demand for our products, we also
assisted with the safe relocation of a major
raw materials inwards goods facility on our
New Zealand site to a new space to allow
for more manufacturing floor space.
In Mexico, our health, safety and wellbeing
team has been closely involved in the
construction of our third building on our
Tijuana site, providing services such as safety
analysis, training and traffic management
all while working to mitigate the spread
of COVID-19.
Looking ahead to the 2023 financial year, our
priority will be continuing our efforts to align
with ISO 45001 and supporting the business’s
ongoing expansion.
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65
MENTAL HEALTH AND WELLBEING
The pandemic has continued to impact our
people in different ways. With Auckland in
lockdown for several months in 2021, and
the Omicron outbreak causing widespread
disruption and uncertainty in the early part
of 2022, we promoted counselling through
the Employee Assistance Programme (EAP)
and continued to make a qualified counsellor
available to our people on site.
Manaaki, our indigenous leadership group,
launched ‘Kimiora’, a six-month learning and
communications programme to highlight the
importance of wellbeing. A range of events
were held throughout the year, including
yoga sessions, an expert panel on sleep and
rest, and financial wellbeing courses.
HEALTH AND SAFETY DATA
Injury rates by year
Injury rates
TRIFR1
LTIFR2
1 TRIFR: Total recordable injury frequency rate
2 LTIFR: Lost time injury frequency rate
Injury rates (per million hours worked)
2020
2.29
1.09
2021
1.20
0.72
2022
1.40
0.70
TRIFR
LTIFR
Injury count
Fatality
Serious injury
Lost time injury
Medical treatment injury
Restricted work injury
First aid injury
Pain and discomfort
New Zealand
Mexico
Rest of world
2021
1.58
0.95
2022
2.47
1.08
2021
0.50
0.50
2022
0
0
2021
1.37
0.46
2022
0.86
0.86
New Zealand
Mexico
Rest of world
2021
2022
2021
2022
2021
2022
0
0
7
0
5
223
116
0
0
8
4
5
181
106
0
1
1
1
0
14
11
0
0
0
0
0
12
1
0
0
2
1
1
11
13
0
0
2
0
0
7
19
Section 03 | OPERATING SUSTAINABLY 66
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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
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.
risk horizons. We also rely on input obtained
from external stakeholders through our
materiality assessment described in the
‘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.
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.
• Developing climate-related scenarios
relevant to Fisher & Paykel Healthcare as
part of our TCFD climate-related due
diligence and disclosures.
Section 03 | OPERATING SUSTAINABLY Potential climate-related risks and
opportunities – and their impact
on our business, strategy and
financial planning
The table on the right identifies the
climate-related risks with the potential
to have a substantive financial or strategic
impact on our business. Our risk analysis
includes analyses of climate-related risk
for the next six years. Future analyses
will be refined as additional information
becomes available.
Type
Climate-related
risk
Potential impact
Increased
pricing of
carbon
Higher operating costs:
• Fuel
• Freight
• Electricity
• Insurance
• Raw materials
• Higher compliance costs
Financial impacts are unlikely over the next
six years as implementation and enforcement
of country/region-level legislation is considered
an important pre-requisite.
If this implementation and enforcement occurs
faster than expected, there is a 50% probability
that the financial impact could amount to $4.5
million per year, and a 5% probability that the
impact could amount to $26.5 million per year.
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
67
Strategies to mitigate through business and
financial planning
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.
k
s
i
r
n
o
i
t
i
s
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r
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k
s
i
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m
r
e
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-
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r
o
h
S
k
s
i
r
m
r
e
t
-
i
m
u
d
e
M
Changes to
climate-related
international
regulations
regarding
disclosure and
reporting
Water scarcity
Supply chain
weather
disruption
Impact on market access.
Higher operating costs.
There is a 50% probability that the financial
impact could amount to $78,000 per year,
and a 5% probability that the impact could
amount to $651,000 per year.
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.
Direct impact on our operations in
Mexico due to the requirement to have
water-cooling capacity.
There is a 99% probability that there will be no
financial impact and a 1% probability that the
impact could amount to $126,000 per year.
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.
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.
Climate-related risk assessments are based on
the Representative Climate Pathways. The time
horizons for this span decades. Our supplier
risk analysis is currently focused on assessing
our suppliers’ vulnerability to nearer term
weather disruptions.
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.
Section 03 | OPERATING SUSTAINABLY
68
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Resilience of our strategy
Our analysis takes into account the following:
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).
We have started to develop our own climate
scenarios as part of our TCFD climate-related
due diligence and disclosures. We have
selected four Intergovernmental Panel on
Climate Change (IPCC) Representative
Concentration Pathway (RCP) scenarios (8.5,
6.0, 2.6 and 1.9) along with two International
Energy Agency (IEA) transition scenarios (the
Stated Policies Scenario (STEPS) and Net Zero
Emissions by 2050 (NZE) scenario as inputs to
our Global Enabling Sustainability Initiative-
CDP climate modelling approach. Climate-
related impact to global healthcare systems
is being considered as part of each scenario.
• 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. We also note the significant amount of
uncertainty that comes with climate change
and have taken an approach that identifies
vulnerability and raises awareness of
worst-case scenarios to aid in planning
and development of contingencies.
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
69
Section 03 | OPERATING SUSTAINABLY 70
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Governance
Our Board and management 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 and
procedures to ensure that they provide the
direction and controls which enable us to
achieve sustainable, profitable growth and
the trust of our customers, shareholders,
regulators, suppliers and communities.
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. While the
company has Foreign Exempt Listing on the
ASX and is not required to comply with the
ASX Corporate Governance Council’s
Corporate Governance Principles and
Recommendations (ASX Principles), 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.
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. Our Speak Up Policy was
launched globally in October 2021.
Training on our Code of Conduct is undertaken
by employees globally, and is part of our
induction process for new employees. It has
been translated into a number of different
languages for our local offices. 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.
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 2022. The Code of Conduct
for Directors was last reviewed in August 2020.
ETHICAL BEHAVIOUR
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 and procedures are available
on our website, and summary information
with respect to a number of our policies and
procedures can also be found throughout
this section.
CODES OF CONDUCT
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.
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
71
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.
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 2022 the company is
not aware of any instances of corruption or of
incidents in which employees were dismissed
or disciplined for corruption.
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 Procedure on Interacting 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 procedure.
ETHICAL RESEARCH AND CLINICAL TRIALS
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.
ANIMAL TESTING
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. This testing is conducted 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.
Section 03 | OPERATING SUSTAINABLY 72
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Governance – Continued
THE BOARD
The Board plays a vital role in overseeing our
strategic direction. 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 section, “Our Board”.
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.
• approve our Remuneration Procedure
and other procedures 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 meet all legal
requirements and ensure we maintain the
trust of our customers, suppliers and
communities. 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. The committee
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. We ensure shareholders are
provided with all relevant information to
inform their decision on whether to elect
or re-elect a director.
At the annual shareholder meeting (ASM)
on 18 August 2021, Scott St John and Michael
Daniell retired by rotation and, being eligible,
offered themselves for re-election and were
re-elected to the Board.
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.
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
73
Board diversity and skills matrix
The table below summarises the current key skills, experience and tenure of the Board.
A diverse Board 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.
Skills and experience
Scott
St John
Lewis
Gradon
Michael
Daniell
Pip
Greenwood
Geraldine
McBride
Lisa
McIntyre
Neville
Mitchell
Donal
O’Dwyer
Financial acumen
Sales/Marketing
Engineering/
Science/Technology/
Manufacturing
Medicine/Medical
Device
Legal/Regulatory
Governance
International
Business Experience
✓
✓
✓
✓
✓
Tenure (years)
6.5
✓
✓
✓
✓
✓
✓
✓
6
✓
✓
✓
✓
✓
✓
✓
20.5*
✓
✓
✓
✓
✓
5
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
8.5
0.5
3.5
9.5
* 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.
Section 03 | OPERATING SUSTAINABLY 74
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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 2022 a majority
(six) of the directors are independent, namely
Scott St John (Board Chair), Pip Greenwood,
Geraldine McBride, Lisa McIntyre, 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. Due to COVID-19
travel restrictions, the induction for Australia-
based director Lisa McIntyre was conducted
virtually and included a virtual site tour of our
New Zealand facility. The company plans to
host her on site in New Zealand when travel
restrictions ease. 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.
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ANNUAL REPORT 2022
75
Board performance
Audit & Risk Committee
We have a Performance Evaluation Policy
which relates 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;
• 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.
An external consulting company facilitated the
Board’s performance evaluation in 2020 and
the 2022 performance evaluation is currently
in progress.
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.
Board committees
The Board has three permanent committees
which support the Board by working with
management on relevant issues at a suitably
detailed level and then report back to the
Board. These Committees and their members
as at 31 March 2022 are:
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.
Quality, Safety & Regulatory Committee
Members: Donal O’Dwyer (Chair), Scott
St John, Lisa McIntyre 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.
Audit & Risk Committee
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. At least once
per year, the Committee 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.
Section 03 | OPERATING SUSTAINABLY 76
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Governance – Continued
People & Remuneration Committee
Board and committee meetings
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 procedures, 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.
Quality, Safety & Regulatory Committee
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.
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 18 August 2021, 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 2022 are set out as follows:
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
Michael Daniell
Pip Greenwood
Geraldine McBride
Lisa McIntyre*
Neville Mitchell
Donal O’Dwyer
8
8
8
8
8
4
8
8
8
8
8
8
8
4
8
8
4
4
4
4
4
4
5
5
5
5
5
5
3
2
3
3
3
2
3
3
*Lisa McIntyre joined the Board partway through the financial year in October 2021.
**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 a 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.
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
77
Company Secretary
SHARE DEALINGS BY DIRECTORS
The Company Secretary is Raelene Leonard, General Counsel. 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.
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 2021 and 31 March 2022, and details of those dealings
were entered in the company’s interests register.
Disclosure of interests 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 2022:
Name
Scott St John
Lewis Gradon1
Michael Daniell
Pip Greenwood
Geraldine McBride
Lisa McIntyre
Neville Mitchell
Donal O’Dwyer
Ownership
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
Ordinary Shares
21,000
562,351
900,168
3,800
1,262
4,400
7,200
68,569
1 Lewis Gradon also had a beneficial interest in 282,391 options issued under the 2019 Share Option Plan and a
beneficial interest in 91,787 performance share rights under the PSR Plan.
Name
Transaction
Number of
shares
Price per
share
Date
Lewis Gradon
Granted 73,633
options
Granted 25,761 PSRs
–
–
–
–
1 September 2021
1 September 2021
Sale of shares
80,000
$31.2149
16 September 2021
Share issue for
cancellation of
100,313 options
53,038
$31.6384
16 September 2021
Exercise of PSRs
32,466
$31.9768
16 September 2021
Employee share
scheme offer
71
$21.0693
28 February 2022
Lisa McIntyre
Purchase of shares
4,400
$32.4523
6 December 2021
Section 03 | OPERATING SUSTAINABLY 78
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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 2022 are
as follows:
Name
Entity
Relationship
Name
Entity
Scott St John
Lewis Gradon
ANZ Bank New Zealand Limited
Captain Cook Nominees Limited
Fisher & Paykel Healthcare Employee Share
Purchase Trustee Limited
Fonterra Cooperative Group Limited
Hutton Wilson Nominees Limited
Mercury NZ Limited
NEXT Foundation
Fisher & Paykel Healthcare Employee Share
Purchase Trustee Limited
Other Group entities listed in the ‘Subsidiary
Company Directors’ section of this Report
Director
Geraldine McBride MyWave Holdings Limited
Sky Network Television Limited
Lisa McIntyre
LEK Consulting ANZ Advisory Board
Director
Neville Mitchell
HCF Group
Insurance and Care NSW
Nanosonics
Studiosity
University of Sydney
Osprey Medical
Q’Biotics Limited
Sonic Healthcare Limited
Michael Daniell
Te Tītoki Mataora – MedTech Research
Translator
Chair
Donal O’Dwyer
Cordis Asset Management Pty Limited
nib Holdings Limited
Relationship
Director
Chair
Director
Director
Director
Cochlear Limited
MRCF IIF GP Pty Limited
MRCF Pty Limited
Tait International Limited
Tait Limited
Pip Greenwood
Westpac New Zealand Limited
a2 Milk Company Limited
Vulcan Steel Limited
Auckland Writers Festival Trust
Director
Chair
Director
Trustee
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
79
REPORTING AND DISCLOSURE
Financial reporting
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 Procedure establishes our disclosure procedures
for meeting our continuous disclosure obligations. The Market Disclosure
Procedure 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, VP Corporate,
and General Counsel) and the Disclosure Officer (being the VP Corporate
or alternatively the General Counsel) are responsible for administering
compliance with our Market Disclosure Procedure, including continuous
disclosure obligations. Market disclosure requires the approval of either
the Board or the Disclosure Committee, depending on the circumstances.
The Market Disclosure Procedure was last updated on 29 March 2022.
Company policies
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 Corporate Governance
Policy, Codes of Conduct, Securities Trading Procedure, Board and
Committee Charters, Diversity & Inclusion Policy, Remuneration Procedure,
and Market Disclosure Procedure are all available on our website.
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.
Other reporting
We are 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.
Section 03 | OPERATING SUSTAINABLY 80
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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
and sustainable procurement. 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 have started to develop our own climate
scenarios as part of our TCFD climate-related
due diligence and disclosures. We have
selected four Intergovernmental Panel
on Climate Change (IPCC) Representative
Concentration Pathway (RCP) scenarios (8.5,
6.0, 2.6 and 1.9) along with two International
Energy Agency (IEA) transition scenarios
(the Stated Policies Scenario (STEPS) and
Net Zero Emissions by 2050 (NZE) scenario
as inputs to our GeSI-CDP climate modelling
approach. Climate-related impact to global
healthcare systems is being considered as part
of each scenario.
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.
Executive management responsibilities for
environmental sustainability sit with the CEO
and the Vice President - 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.
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
81
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
2022 financial year, significant initiatives have
included trialling an internal carbon price and
beginning the installation of large-scale solar
arrays at our Mexico site.
The Board and executive management have
set Science Based Targets and these targets
were submitted and approved in April 2020.
In the 2022 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 Sustainable Business
Network. 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.
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 2022
financial year, the Ecodesign
Advisory Board provided
guidance on our long-term
Ecodesign plan, met with our
internal carbon committee and
mentored key team members.
Section 03 | OPERATING SUSTAINABLY 82
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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 Procedure 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 Procedure
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;
• regular disclosures on company performance and news; and
• disclosure of presentations provided to analysts and investors
during regular briefings, 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
Procedure. 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 through our website or
by contacting the relevant officer in charge of investor relations.
These contact details are available on our website.
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/FPH22
and in person at the Guineas Ballroom, Ellerslie Event Centre, Auckland,
New Zealand on Wednesday, 24 August 2022 commencing at
2.00pm (NZST).
In the event of increased COVID-19 protection measures, 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.
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
83
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 continues to comply with the NZX listing rules.
Neither the NZX nor the ASX has taken any disciplinary action against
the company during the year ended 31 March 2022. In particular, there
was no exercise of powers by the NZX under NZX Listing Rule 9.9.3.
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 2022 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.
Current NZX waivers
During the 12 months to 31 March 2022, the company relied upon a
waiver from NZX Main Board Listing Rule 3.13.1 granted on 7 August 2019,
allowing the company to aggregate issues of company shares under the
company’s employee share plans over a 10 business day period for the
purposes of market notifications. The company relies on this waiver in
respect of the issue of company shares under its share option plans, its
performance share rights (PSR) plans, its employee share rights (ESR)
plan and its share purchase plans.
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 2022 was 576,412,532 shares.
The distribution of shareholdings as at 31 March 2022 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
Total
Number
of holders
Number of
ordinary shares
%
15,814
8,996
1,898
1,116
65
87
56.53%
32.15%
6.78%
3.99%
0.23%
0.31%
5,652,366
21,256,137
13,609,452
20,597,729
4,481,301
511,808,893
27,976
100.00
577,405,878
%
0.98%
3.68%
2.36%
3.57%
0.78%
88.64%
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.
Section 03 | OPERATING SUSTAINABLY 84
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Governance – Continued
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 2022, were as follows:
Principal shareholders
The names and holdings of the 20 largest registered shareholders in the
company as at 31 March 2022 were:
Investor Name
Substantial Product Holder
Date of notice
of notice
at 31 March
JPMorgan Chase Bank
Number of
ordinary shares
held as at date
Holding as a %
of total ordinary
shares on issue as
HSBC Nominees (New Zealand) Limited
HSBC Nominees (New Zealand) Limited
Mitsubishi UFJ Financial Group,
Inc. and related bodies corporate
BlackRock, Inc. and related
bodies corporate
27-Sep-21
35,213,089
13-Jul-21
37,908,016
6.1%
6.6%
HSBC Custody Nominees (Australia) Limited
Citibank Nominees (NZ) Ltd
Citicorp Nominees Pty Limited
JPMorgan Nominees Australia Pty Limited
Custodial Services Limited
BNP Paribas Nominees NZ Limited Bpss40
Tea Custodians Limited
Total Units
86,829,223
62,962,474
45,632,917
35,903,950
35,592,530
30,979,653
22,113,072
21,711,197
16,388,355
15,304,488
% Issued
Capital
15.04%
10.90%
7.90%
6.22%
6.16%
5.37%
3.83%
3.76%
2.84%
2.65%
2.35%
1.78%
1.72%
1.33%
1.30%
1.28%
1.16%
1.15%
0.89%
0.86%
New Zealand Superannuation Fund Nominees Limited
13,554,912
Accident Compensation Corporation
10,290,860
National Nominees New Zealand Limited
BNP Paribas Noms Pty Ltd
Premier Nominees Limited
BNP Paribas Nominees NZ Limited
National Nominees Limited
FNZ Custodians Limited
JBWere (NZ) Nominees Limited
New Zealand Depository Nominee
9,933,255
7,657,125
7,502,780
7,381,347
6,681,350
6,668,772
5,124,038
4,958,781
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
85
During the year ended 31 March 2022, 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).
4. Basyirah Anuar who is a director of Fisher & Paykel Healthcare
Malaysia Sdn. Bhd. (Malaysia).
5. Muhammad Irawan who is a director of PT Fisher and Paykel
Healthcare Indonesia (Indonesia).
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, Basyirah Anuar and Muhammad Irawan also do not
receive any remuneration personally for their respective roles as
directors as described above; however, a management fee is paid
to their respective employers (Marsh Singapore Ltd, Zico Corporate
Services Sdn. Bhd and PT TMF Indonesia).
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 2022.
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 2022.
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 2022.
Other subsidiary company information
No entries were made in the interests register of any subsidiary during
the year ended 31 March 2022.
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 2022 are included in the relevant bandings for
remuneration disclosed in the ‘Remuneration’ section of this report.
Section 03 | OPERATING SUSTAINABLY 86
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Governance – Continued
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 2022 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
Entities
Directors
Fisher & Paykel Healthcare Asia Investments Limited (NZ) owns:
Fisher & Paykel Healthcare India Private Limited
(India)
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)
Fisher & Paykel Healthcare Colombo (Private)
Limited (Sri Lanka)
Jonathan Rhodes
Lewis Gradon, Paul Shearer, David Boyle
Fisher & Paykel Asia Limited (NZ)
Lewis Gradon, Paul Shearer, Andrew Somervell
Fisher & Paykel Healthcare Bangladesh Limited Lewis Gradon, Paul Shearer, David Boyle
Fisher & Paykel Healthcare Americas
Investments Limited (NZ)
Lewis Gradon, Paul Shearer, Andrew Somervell
PT Fisher and Paykel Healthcare Indonesia
Lewis Gradon, Paul Shearer, Bryan Peterson,
Muhammad Irawan
Fisher & Paykel Healthcare Pty. Limited
(Australia)
Lewis Gradon, Paul Shearer, David Boyle,
Graham Gourd
Fisher & Paykel Healthcare Americas Investments Limited (NZ) owns:
Fisher & Paykel Healthcare S.A. de C.V. (Mexico) Lewis Gradon, Andrew Somervell, Lawrence
Fisher & Paykel Healthcare Limited (UK)
Lewis Gradon, Paul Shearer, Nicholas Connolly,
Patrick McSweeny
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. Ltd.
(Singapore)
Lyndal York, Grant Gillingham, Stuart Herbert
Fisher & Paykel Healthcare MEA Limited (NZ)
Lewis Gradon, Paul Shearer, Andrew Somervell
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)
Lewis Gradon, Paul Shearer, Andrew Somervell
Fisher & Paykel Healthcare Malaysia Sdn. Bhd. Lewis Gradon, Paul Shearer, Bryan Peterson,
Basyirah Anuar
*Companies operating under a Negative Pledge Deed
Gibbons
Fisher & Paykel Healthcare Colombia S.A.S.
Legal Representatives: Bryan Peterson, James
Tuck
Fisher & Paykel Healthcare Mexico S.A. de C.V. Lewis Gradon, Paul Shearer, Bryan Peterson
Fisher & Paykel Healthcare Properties S.A. de
C.V. (Mexico)
Lewis Gradon, Andrew Somervell, Jonathan
Rhodes
Fisher & Paykel Healthcare Chile SpA
No directors. Bryan Peterson and James
Tuck are delegates for the shareholder of the
Company (with the power to act individually).
Fisher & Paykel Healthcare Peru S.A.C.
Lewis Gradon, Paul Shearer, Bryan Peterson
Lewis Gradon, Paul Shearer, Bryan Peterson
Fisher & Paykel Healthcare Costa Rica, S.R.L.
Fisher & Paykel Healthcare Limited (UK) owns:
Fisher & Paykel Healthcare SAS (France)
Lewis Gradon, Paul Shearer, Patrick McSweeny,
Philippe Berardi
Fisher & Paykel Holdings GmbH (Germany)
Philippe Berardi, Patrick McSweeny, Kerstin Bille
Fisher & Paykel Healthcare AB (Sweden)
Fisher Paykel Sağlık Ürünleri Ticaret Limited
Şirketi (Turkey)
Lewis Gradon, Paul Shearer, Patrick McSweeny,
Philippe Berardi
Lewis Gradon, Paul Shearer, Patrick McSweeny
Limited Liability Company Fisher & Paykel
Healthcare (Russia)
Lewis Gradon, Paul Shearer, Bryan Peterson,
Anatoly Filippov
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
87
Entities
Directors
Fisher & Paykel Holdings, Inc. (USA) owns:
Fisher & Paykel Healthcare, Inc. (USA)
Lewis Gradon, Paul Shearer, Justin Callahan
Fisher & Paykel Healthcare Distribution Inc. (USA) Lewis Gradon
Fisher & Paykel Healthcare SAS (France) owns:
Fisher & Paykel Healthcare Romania S.R.L.
Lewis Gradon, Paul Shearer, Patrick McSweeny,
Bryan Peterson
Fisher & Paykel Holdings GmbH (Germany) owns:
Fisher & Paykel Healthcare (Czech Republic) s.r.o. Lewis Gradon, Paul Shearer, Bryan Peterson
Lewis Gradon, Paul Shearer, Bryan Peterson
Fisher & Paykel Heathcare Poland spółka z
ograniczoną odpowiedzialnością
Fisher & Paykel Healthcare MEA Limited (NZ) owns:
Fisher & Paykel Healthcare MEA Investments
Limited (NZ)
Fisher & Paykel Healthcare MEA Investments Limited (NZ) owns:
Fisher and Paykel Healthcare Tunisia SARL
Lewis Gradon, Paul Shearer, Andrew Somervell
Lewis Gradon, Paul Shearer, Bryan Peterson
Section 03 | OPERATING SUSTAINABLY 88
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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 factors such 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 profit sharing payment
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.
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
89
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 2022. 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 payment and discretionary
annual variable remuneration (DAVR) paid
during the 2022 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
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
450,001 – 460,000
460,001 – 470,000
470,001 – 480,000
550,001 – 560,000
560,001 – 570,000
580,001 – 590,000
590,001 – 600,000
600,001 – 610,000
680,001 – 690,000
800,001 – 810,000
830,001 – 840,000
850,001 – 860,000
860,001 – 870,000
940,001 – 950,000
990,001 – 1,000,000
1,120,001 – 1,130,000
1,440,001 – 1,450,000
268
202
179
126
117
94
84
66
42
41
38
42
23
20
26
19
13
12
15
16
9
10
6
9
6
2
2
2
1
2
4
3
3
1
1
2
1
2
1
1
4
2
1
1
1
1
1
1
1
1
1
1
Section 03 | OPERATING SUSTAINABLY 90
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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 payment, 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 financial and strategic
performance each financial year. The table below
shows how variable remuneration is calculated.
Discretionary Annual Variable
Remuneration (DAVR)
Discretionary annual variable remuneration
(DAVR) is designed to remunerate executive
management relative to the company’s financial
performance and non-financial measures which
are the annual implementation of our long-term
plan for sustainable profitable growth. Details
of our plan are shown on the right.
Performance period
Paid annually and aligned with financial year (1 April 2021 to 31 March 2022)
Measures
Financial (80%)
Constant currency operating profit
Constant currency revenue
Constant currency pre-tax operating cash flow
Weighting
45%
25%
10%
Non-financial (20%)
Measures relating to the strategic direction of the company and environmental
and social responsibility initiatives. Non-financial measures are shared across all
members of the executive management team as the measures involve collaboration
and commitment.
Payment calculation method Meeting 100% of both the financial and non-financial measures results in payment
of 100% of the DAVR amount.
Performance hurdle
Target payments
Maximum payment
Approval process
Termination of employment
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.
Should the financial measures in aggregate be underachieved by more than 10%,
no DAVR is payable.
Up to 50% of fixed annual remuneration for the CEO/Managing Director.
The maximum achievable DAVR which may be awarded is 132% of the target DAVR
at 20% or more over achievement of the financial measures and achievement of all
non-financial measures.
The Board (administered through the People & Remuneration Committee) has the
discretion to alter, amend, replace or withdraw the DAVR scheme at any time without
notice (including during a financial year).
The Board also retains the ultimate discretion in assessing and determining any
payments under the scheme. As part of that, the Board has the right to exercise
its discretion not to make any payments or to pay a reduced amount, regardless
of whether the measures have been met.
Participants will not be entitled to be considered for a DAVR payment if they
cease to be employed by the Company prior to the end of the DAVR year and/or
in circumstances where they are under notice of termination of employment when
the DAVR award is under consideration or paid.
Should a participant leave the company (i.e. due to death, permanent disability,
redundancy or on medical grounds) before they are due to be considered for a
DAVR award, the Board will have discretion as to whether to pay any DAVR award.
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
91
The relative weighting of DAVR measures and the target achieved in 2022 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
Total
45%
25%
10%
20%
Minimum
90%
Target
100%
Maximum
120%
Achieved 129% ($449.7m)
Minimum
90%
Target
100%
Maximum
120%
Achieved 111% ($1.61b)
Minimum
90%
Target
100%
Maximum
120%
Achieved 159% ($522.1m)
Measure
Health and safety (x1)
Quality (x1)
Long-term sales strategies (x5)
Environmental (x2)
Diversity and inclusion (x1)
Minimum
90%
Target
100%
Maximum
120%
Achieved 128%
Section 03 | OPERATING SUSTAINABLY
92
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Remuneration – Continued
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.
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
All our employees, including executive management, who have worked
with us for more than six months are eligible to receive a profit-sharing
payment twice per year.
Section 03 | OPERATING SUSTAINABLY 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.
450
400
350
300
250
200
150
100
50
Mar 17
Fisher & Paykel Healthcare
Dow Jones U.S. Select
Medical Equipment Index
S&P/NZX 50 Index
Mar 18
Mar 19
Mar 20
Mar 21
Mar 22
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.
From 13 September 2018 to 13 September 2021 our TSR performance exceeded
that of the DJSMDQT, and PSRs on issue 100% vested.
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
93
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 2022 financial year
is set out below.
Millions
$4.5
$4.0
$3.5
$3.0
$2.5
$2.0
$1.5
$1.0
$0.5
$0.0
26%
31%
29%
24%
100%
47%
43%
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
Section 03 | OPERATING SUSTAINABLY 94
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Remuneration – Continued
CEO remuneration summary
Salary
Other1
$
$
Fixed
Remuneration
subtotal
$
DAVR2
LTVR
awarded3
Total
remuneration
$
$
$
2022
20214
1,612,462
132,693
1,745,155
1,203,320
1,050,012
3,998,488
1,515,410
121,928
1,637,338
1,195,408
1,000,010
3,832,756
% DAVR
against
maximum
$
96%
100%
1 Other includes superannuation contribution and life insurance.
2 DAVR represents what was earned for the financial year. DAVR value includes the company-wide profit-sharing payment.
3 LTVR includes options and PSRs awarded during the financial year. In 2022, Lewis Gradon was granted 25,761 PSRs and 73,633 share options (2021: 22,178 PSRs
and 69,931 share options). Share options and PSRs granted in the 2021 and 2022 financial years will vest if the performance criteria are met in the 2024 and
2025 financial years respectively. Details of the plans and valuation methodology are set out in Note 18 to the financial statements.
4 The CEO’s salary and fixed remuneration subtotal for the 2021 financial year was overstated in last year’s annual report by $160,661, due to an inadvertent
duplication of the employee superannuation contribution. The correct remuneration for the 2021 financial year is outlined in the table above.
DAVR achieved in 2022
The DAVR financial targets achieved are set out in the ‘Executive Management’ section on page 91.
During the 2022 financial year, the CEO achieved 100% of his non-financial measures. The DAVR
earned in the 2022 financial year is 69% of the fixed remuneration.
LTVR vested in 2022
The following long-term share option incentives vested in the 2022 financial year.
Grant Year
Securities
Performance
period
Performance
measure
Financial year
2019
Share
Options
September 2018 to
September 2021
Financial year
2019
PSR
September 2018 to
September 2021
Cost of capital
escalated share
price
Absolute TSR
Vesting
outcome
100%
vested
100%
vested
Shares
vested
Value on
vesting
100,313
1,783,5651
32,466
1,061,314
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 exercised.
Section 03 | OPERATING SUSTAINABLY Fisher & Paykel Healthcare
ANNUAL REPORT 2022
95
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.
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 77 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.
Approved director remuneration
The current non-executive directors’ fees and the fees received by non-executive directors in the
2022 financial year, including a breakdown of Board fees and Committee fees, are set out in the
tables 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
Chair
$
Member
$
280,875
133,875
26,250
18,488
24,633
18,488
34,125
18,488
Director remuneration received in the 2022 financial year
Director
Scott St John
Michael Daniell
Pip Greenwood1
Lisa Mclntyre3 & 4
Geraldine McBride
Neville Mitchell1 & 4
Donal O’Dwyer1 & 4
Board Fees
$
275,302
131,219
131,219
66,938
131,219
131,219
131,219
998,335
People and
Remuneration
Committee
$
–
Quality, Safety
and Regulatory
Committee
$
–
25,729
18,121
43,850
12,317
18,121
24,144
54,582
Audit and Risk
Committee
$
–
18,121
–
33,448
Overseas
Director
Allowance2
$
–
11,631
22,800
22,800
Total
Remuneration
$
275,302
149,340
156,948
90,886
131,219
205,588
196,284
51,569
57,231
1,205,567
1 Designates Chair of Committee.
2 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.
3 Lisa McIntyre was appointed with effect from 1 October 2021 and replaced Tony Carter who retired in August 2020.
4 Remuneration for Neville Mitchell, Donal O’Dwyer and Lisa Mclyntyre is set in NZD but paid in AUD at the prevailing exchange rate at the date of payment.
Section 03 | OPERATING SUSTAINABLY
96
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Section 04 | FINANCIALS Fisher & Paykel Healthcare
ANNUAL REPORT 2022
97
FINANCIALS
04
Section 04 | FINANCIALS 98
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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
Financing income/(expenses) net
Profit before tax
Taxation
Profit after tax
2021
NZ$M
2022
NZ$M
1,971.2
1,681.7
1,245.6
1,052.7
Change
Reported
%
-15
-15
Change
CC (1)
%
-14
-16
62.6%
-59 bps
-147 bps
63.2%
(396.6)
(136.7)
(533.3)
712.3
36.1%
5.9
718.2
(393.1)
(154.0)
(547.1)
505.6
30.1%
(1.4)
504.2
-1
+13
+3
-29
+1
+13
+4
-31
-607 bps
-719 bps
-30
-34
-28
-31
-35
-30
(194.0)
(127.3)
524.2
376.9
Operating expenses
Operating expenses increased 3% (4% in constant currency) to $547.1 million. Excluding
donations in 2021 of $25.6 million, operating expense growth was 8% (9% in constant
currency), with ongoing expenditure to support global sales growth and development
of our product pipeline.
R&D spend of $154.0 million grew 13% reflecting underlying growth and acceleration
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
Total net financing expense increase reflected the gain on foreign exchange revaluations
on foreign currency interest-bearing liabilities in the prior year not repeating this year.
Excluding the impact of foreign currency movements, net financing expense reduced
by $1.0 million, with increased net cash on hand during the year.
Tax
Our effective tax rate for the year was 25.2%, down from 27.0% in the prior year. The R&D
tax credit this year of $15.1 million (2021: $13.2 million) represents the estimated eligible
R&D expenditure incurred during the period. Excluding the R&D tax credit, the effective
tax rate was 28.2% for the year (2021: 28.8%).
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 101.
Total profit after tax for the year was down 28% to $376.9 million (30% in constant currency).
Revenue
Operating revenue was $1,681.7 million, which is 15% below last year or 14% in constant
currency. The previous financial year was a period of extraordinary demand during
the initial surges of the COVID-19 pandemic and the current year’s financial results
continued to be strong. Total hospital revenue declined 19% in constant currency this
year as we lapped the extraordinary demand in the initial COVID-19 surges. Compared
with the 2019 financial year, it was up 88%. The decline against last year is primarily due
to hospital hardware declining 41% in constant currency. Homecare revenue grew 2% in
constant currency.
Gross margin
Gross margin was 62.6% and decreased by 147 basis points in constant currency.
The proportion of airfreight and the cost of freight remained elevated compared to
pre-COVID-19 levels, impacting the constant currency gross margin by approximately
240 basis points.
Section 04 | FINANCIALS
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
49%
18%
4%
6%
3%
3%
3%
1%
Other currencies
13%
Approximately 60% of COGS and 50% of operating expenses are in currencies other
than NZD.
During the 2022 financial year, the NZD strengthened against most 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 $5.3 million (2021: $21.3 million decrease) and a decrease in profit after tax of
$2.1 million (2021: $9.4 million decrease). The hedging programme contributed a pre-tax
gain of $41.5 million in the current year (2021: $21.2 million gain).
The average daily spot rate and the average conversion exchange rate (i.e. the accounting
rate, incorporating the benefit of forward exchange contracts in respect of the relevant
financial year) of the main foreign currency exposures for the reported periods are set out
in the table below.
Average daily spot rate
Average conversion exchange rate
Year ended 31 March
USD
EUR
2021
0.671
0.575
2022
0.697
0.600
2021
0.669
0.562
2022
0.673
0.557
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
99
Foreign exchange hedging position
In line with our hedging programme, additional hedges have been added for future years,
in particular USD for financial years 2023 to 2024. The hedging position for our main
currency exposures as at 17 May 2022 is:
Others
Year to 31 March
2023
2024
2025
2026
2027
2028
USD % cover of expected exposure
NZD
90%
75%
50%
40%
35%
5%
USD average rate of cover
CAD
EUR % cover of expected exposure
0.667
0.658
0.628
0.611
0.598
0.593
75%
55%
40%
30%
20%
5%
EUR average rate of cover
CNY
0.540
0.532
0.511
0.526
0.513
0.519
Hedging cover has been rounded to the nearest 5%.
GBP
CASH FLOWS
JPY
The full statement of cash flows is provided on page 105.
AUD
EUR
Year ended 31 March
Operating profit before financing costs
USD
Plus depreciation and amortisation (including
leased assets)
Change in working capital and other
Net interest paid (including lease interest)
Net income tax paid
Operating cash flows
Lease repayments+
Purchase of land and buildings
Purchase of plant and equipment
Purchase of intangible assets
Free cash flows
Dividends paid
2021
NZ$M
712.3
85.0
(37.1)
(3.4)
2022
NZ$M
505.6
96.0
(24.9)
(2.7)
(131.5)
(249.7)
625.3
(10.2)
(37.2)
(123.0)
(24.5)
430.4
(181.3)
324.3
(14.0)
(41.0)
(97.4)
(31.4)
140.5
(224.9)
Change
NZ$M
(206.7)
11.0
12.2
0.7
(118.2)
(301.0)
(3.8)
(3.8)
25.6
(6.9)
(289.9)
43.6
+ Free cash flows includes lease liability repayments following the adoption of NZ IFRS 16.
Operating cash flows
Cash flows from operations for the year decreased 48% to $324.3 million. Working capital
was impacted by a significant increase in inventory of raw materials and finished goods
to be able to meet potential surge demand and supply chain disruption.
Section 04 | FINANCIALS 100
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
FINANCIAL COMMENTARY CONTINUED
Capital expenditure
Property, plant and equipment purchases for the year were $138.4 million, a decrease of
$21.8 million from the prior year. The expenditure primarily related to production capacity
increases, a third building in Tijuana, Mexico and the start of earthworks for a fifth building
to complete our Auckland campus.
Other net assets/liabilities movements included a decrease in tax payable of $117.7 million
as the final FY21 tax payments were paid in the current year.
As at 31 March 2022, net currency derivative assets were $140.7 million (2021: $143 million).
All currency derivatives continued to be effective hedges.
Dividends
Dividends paid of $224.9 million were 24% higher than prior year representing the
payment of the final FY21 dividend and the interim FY22 dividend.
BALANCE SHEET
As at 31 March
Trade receivables
Inventories
2021
NZ$M
191.7
270.6
2022
NZ$M
142.8
358.9
Less trade and other payables+
(145.8)
(132.4)
Working capital
Property, plant and equipment++
Intangible assets
Lease liabilities
Other net assets (liabilities)
Net cash
Net assets
316.5
882.1
80.0
(43.7)
(16.9)
302.9
369.3
957.8
86.8
(36.0)
80.2
221.6
1,520.9
1,679.7
Change
NZ$M
(48.9)
88.3
13.4
52.8
75.7
6.8
7.7
97.1
(81.3)
158.8
+ 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 2022 reflected strong collection and the level of sales in the
second half of the year compared to the prior year COVID-19 surge demand. Our debtor
days were within the normal range at 41 days (2021: 43 days). Higher inventories reflect
increased raw materials and finished goods to enable the supply of products in the event
of any surges in demand and supply chain disruption. The decrease in trade and other
payables reflected the payment of the $20 million for the donation to the Fisher & Paykel
Healthcare Foundation during 2022.
The increase in property, plant and equipment included capital expenditure of
$138.4 million, the majority of which related to production tooling and equipment additions
and the substantial completion of the second purpose-built manufacturing property at
our Tijuana campus. We also commenced earthworks for our fifth manufacturing building
in New Zealand on our East Tamaki campus. These increases were offset by $71 million
of depreciation.
Intangible assets increased by $6.8 million net, including patent acquisition costs and ERP
implementation costs. The global SAP rollout will continue over the next two to three years.
Funding and short-term investment
Loans and borrowings
– Current
– Non-current
Bank overdrafts
Total interest-bearing liabilities+
Cash and cash equivalents
Short-term investments
Total cash and investments
Net cash
Gearing
Undrawn term debt facilities
+ Excluding lease liabilities
2021
NZ$M
2022
NZ$M
Change
NZ$M
–
(62.8)
(11.9)
(74.7)
97.3
280.3
377.6
302.9
-27.2%
167.2
–
(63.0)
(5.3)
(68.3)
89.9
200.0
289.9
221.6
-16.3%
184.5
–
(0.2)
6.6
6.4
(7.4)
(80.3)
(87.7)
(81.3)
The average maturity of loans and borrowings of $63.0 million was 2.5 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 $6.5 million, including
the impact of favourable currency revaluations.
On 30 September 2021, a NZ$40 million facility expired and has been replaced with
a new US$40 million facility that commenced on 22 September 2021 and will expire
31 October 2024.
Cash balances and short-term investments, mainly in NZD, were $289.9 million at
31 March 2022. This balance, and operating cash generated in 2022, will help to fund
the payment of the final dividend, provisional tax and ongoing operational capital
expenditure including building projects in Mexico and Auckland.
Gearing1
At 31 March 2022 the group had net cash of $221.6 million and gearing of -16.3%. Gearing
was outside the target range of -5% to +5%. Following the significant investment in land
and buildings which will take place over the next five years, this is expected to track
above +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 04 | FINANCIALS Fisher & Paykel Healthcare
ANNUAL REPORT 2022
101
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)
2021
NZ$M
482.3
36.1
15.2
(9.4)
524.2
2022
NZ$M
337.1
12.0
29.9
(2.1)
376.9
Change
NZ$M
(145.2)
(24.1)
14.7
7.3
(147.3)
The significant exchange rates used in the constant currency analysis, being the budget
exchange rates used during the year ended 31 March 2022, are USD 0.72, EUR 0.60,
AUD 0.93, GBP 0.52, CAD 0.92, JPY 78 and MXN 15.20.
Section 04 | FINANCIALS 102
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2022
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 gain (loss) on foreign currency
interest-bearing liabilities
Net financing income (expense)
Profit before tax
Tax expense
Profit after tax
Basic earnings per share
Diluted earnings per share
Notes
2021
NZ$M
2022
NZ$M
4
1,971.2
1,681.7
Profit after tax
Notes
2021
NZ$M
524.2
2022
NZ$M
376.9
(725.6)
(629.0)
Other comprehensive income
1,245.6
1,052.7
Items that may be reclassified to profit or loss
(396.6)
(136.7)
(533.3)
712.3
1.5
(5.0)
9.4
5.9
718.2
(194.0)
524.2
(393.1)
(154.0)
(547.1)
505.6
2.6
(4.9)
0.9
(1.4)
504.2
(127.3)
376.9
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
91.1 cps
65.3 cps
90.4 cps
65.0 cps
5
11
16
16
(5.8)
0.1
241.2
(20.1)
37.7
(41.0)
(61.9)
0.9
34.5
187.9
712.1
–
(2.3)
374.6
11
9
The accompanying notes form an integral part of the financial statements.
Section 04 | FINANCIALS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2022
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
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 2022
The accompanying notes form an integral part of the financial statements.
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
103
Notes
17
15
17
15
17
15
17
15
Share
capital
NZ$M
225.4
–
–
22.3
–
1.4
Retained
earnings
NZ$M
686.3
524.2
(181.3)
–
–
–
Reserves
NZ$M
62.1
187.9
–
–
(7.4)
–
Total
equity
NZ$M
973.8
712.1
(181.3)
22.3
(7.4)
1.4
249.1
1,029.2
242.6
1,520.9
–
–
15.0
–
(2.9)
376.9
(224.9)
–
–
–
(2.3)
–
–
(3.0)
–
374.6
(224.9)
15.0
(3.0)
(2.9)
261.2
1,181.2
237.3
1,679.7
Section 04 | FINANCIALS 104
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
CONSOLIDATED BALANCE SHEET
As at 31 March 2022
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
2021
NZ$M
2022
NZ$M
Notes
2021
NZ$M
2022
NZ$M
LIABILITIES
Non-current liabilities
89.9
Borrowings
200.0
174.4
358.9
56.4
8.3
Lease liabilities
Provisions
Other payables
Derivative financial instruments
Total liabilities
887.9
EQUITY
Share capital
Retained earnings
Reserves
87.7
3.2
957.8
Total equity
Total liabilities and equity
86.8
83.6
97.3
280.3
222.5
270.6
42.9
6.4
920.0
104.0
7.6
882.1
80.0
81.3
12
12
14
13
6
15
17
62.8
29.0
10.5
22.8
1.5
63.0
24.3
11.1
24.1
0.9
554.1
427.3
249.1
261.2
1,029.2
1,181.2
242.6
1,520.9
2,075.0
237.3
1,679.7
2,107.0
2,075.0
2,107.0
The accompanying notes form an integral part of the financial statements.
11.9
14.7
233.3
15.6
149.6
2.4
427.5
5.3
11.7
226.2
26.3
31.9
2.5
303.9
On behalf of the Board
24 May 2022
Scott St John
Board Chair
Lewis Gradon
Managing Director and
Chief Executive Officer
12
7
8
6
6
9
10
11
12
12
13
14
6
Section 04 | FINANCIALS
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2022
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
105
CASH FLOWS FROM OPERATING ACTIVITIES
CASH FLOW RECONCILIATION
Receipts from customers
Interest received
1,965.3
1,732.4
Profit after tax
524.2
376.9
1.5
2.1
Add (deduct) non-cash items:
2021
NZ$M
2022
NZ$M
2021
NZ$M
2022
NZ$M
Payments to suppliers and employees
(1,205.1)
(1,155.7)
Depreciation - right-of-use assets
Tax paid
Interest paid
Lease interest paid
(131.5)
(249.7)
Depreciation and amortisation - other assets
(3.3)
(1.6)
(3.2)
(1.6)
Share based payments
Movement in provisions
Net cash flows from operating activities
625.3
324.3
Movement in deferred tax assets / liabilities
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
13.8
82.2
8.1
11.3
(6.8)
(116.3)
(1.3)
(2.1)
(11.1)
52.5
(88.3)
(5.7)
(41.5)
324.3
Movement in net tax payables
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 (decrease) in cash
Opening cash
Effect of foreign exchange rates
Closing cash
RECONCILIATION OF CLOSING CASH
Cash and cash equivalents
Bank overdrafts
Closing cash
(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
80.3
(138.4)
(31.4)
(89.5)
3.2
7.5
(7.6)
(14.0)
(224.9)
(235.8)
(1.0)
85.4
0.2
84.6
89.9
(5.3)
84.6
Section 04 | FINANCIALS 106
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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 24 May 2022.
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 2022 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.
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.
In April 2021 the International Financial Reporting Interpretations Committee (“IFRIC”)
issued an agenda decision on Configuration or Customisation Costs in a Cloud Computing
Arrangement (IAS 38). This interpretation clarifies the accounting treatment in respect of
the cost of configuring or customising a supplier’s application software in a Software as a
Service (“SaaS”) arrangement. While such costs may be able to continue to be capitalised
in limited circumstances, in many cases the costs are now recognised as an operating
expense. The clarification has not had a material impact on the financial statements.
There have been no other changes in accounting policies.
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.
Section 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022 Fisher & Paykel Healthcare
ANNUAL REPORT 2022
107
3. SIGNIFICANT TRANSACTIONS AND EVENTS IN THE FINANCIAL YEAR
4. OPERATING REVENUE AND SEGMENTAL INFORMATION
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.
Sales revenue
Foreign exchange gain on hedged sales
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.
Total operating revenue
Revenue by product group
Hospital products
Homecare products
Capital expenditure
During the year, the construction of the third manufacturing facility on our Tijuana, Mexico
campus has substantially completed. To date, spending on this project totals $32.4 million.
The building is expected to be operational in 2023.
Distributed and other products
Total operating revenue
Earthworks preparation has also commenced for the construction of a fifth building in
New Zealand.
Revenue after hedging by geographical location
of customer:
North America
Europe
Asia Pacific
Other1
2021
NZ$M
2022
NZ$M
1,948.2
1,642.4
23.0
39.3
1,971.2
1,681.7
1,498.1
1,207.1
465.6
469.5
1,963.7
1,676.6
7.5
5.1
1,971.2
1,681.7
825.7
633.8
348.4
163.3
665.1
468.1
438.8
109.7
Total operating revenue
1,971.2
1,681.7
1 Other includes Latin America (including Mexico), Africa and the Middle East.
Section 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
108
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
4. OPERATING REVENUE AND SEGMENTAL INFORMATION (CONTINUED)
5. EXPENSES
Segmental reporting
The Group operates in one segment – being the design, manufacture, marketing and
sale of medical devices and systems globally. These products and systems are for use in
respiratory care, acute care, surgery and the treatment of OSA in the home and hospital.
Resource allocation decisions are made to optimise the Group’s financial operating profit.
This is consistent with the internal management reports the chief operating decision-
maker (CODM)1 reviews.
Revenue is recognised at the point in time performance obligations are satisfied
by transferring control of goods to the customer at the transaction price specified
in the contract. Control typically transfers to the customer at the same time as the
legal title passes to the customer, typically on delivery. The transaction price includes
all amounts which the Group expects to be entitled to net of sales taxes and other
indirect taxes, expected rebates and discounts. Where applicable, rebates and/or
discounts are included within the consideration using an estimation typically based
on the most likely method, and are only recognised to the extent that it is highly
probable that a significant reversal will not occur.
Profit before tax is after charging the following specific expenses:
Donations
Inventory written down (net)
2021
NZ$M
25.6
20.7
2022
NZ$M
0.7
11.5
Donations in 2021 include $20 million committed to the Fisher & Paykel Healthcare
Foundation. This was paid during 2022.
Fees paid to auditors
Statutory audit and half year review (i)
Other assurance and audit related services (ii)
Total audit, other assurance services and audit-related services
Other services (iii)
2021
NZ$'000
2022
NZ$'000
1,203
37
1,240
40
1,280
1,290
39
1,329
58
1,387
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 $442,013 (2021: $433,400) paid to other
PwC network firms.
(ii) Other assurance and audit related services of $39,100 (2021: $37,100) include
assurance procedures in relation to compliance with the constant currency framework.
(iii) Other services in 2022 include executive remuneration benchmarking, providing
market survey data relating to executive remuneration levels and regulatory tax
compliance procedures in Mexico. In 2021, other service included treasury related
financial markets risk analysis and commentary, regulatory tax compliance procedures
in Mexico and providing market survey data relating to executive remuneration levels.
The fees paid to PwC for the audit and review of the Group’s financial statements and
other services are split across the jurisdictions where there are subsidiary entities that
require an audit or are a significant component of the Group.
PwC New Zealand
PwC Overseas offices
2021
NZ$'000
2022
NZ$'000
847
433
945
442
1,280
1,387
1 The CODM comprises the Board of Directors (which includes the Chief Executive Officer), Vice-President – Products
and Technology, Senior Vice-President – Sales and Marketing and the Chief Financial Officer.
Section 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
6. DERIVATIVE FINANCIAL INSTRUMENTS
CURRENT
Foreign currency forward exchange contracts – cash flow hedges
Foreign currency forward exchange contracts – not hedge accounted
Foreign currency option contracts – cash flow hedges
Foreign currency option contracts – time value
Interest rate swaps & options – cash flow hedges
NON-CURRENT
Foreign currency forward exchange contracts – cash flow hedges
Foreign currency option contracts – cash flow hedges
Foreign currency option contracts – time value
Interest rate swaps & options – cash flow hedges
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
109
2021
2022
Assets
NZ$M
Liabilities
NZ$M
Assets
NZ$M
Liabilities
NZ$M
42.0
1.9
54.0
0.1
0.7
0.1
–
42.9
102.6
1.1
0.3
–
104.0
–
–
–
0.5
2.4
0.6
–
–
0.9
1.5
1.1
1.1
0.1
0.1
2.4
0.1
–
–
–
56.4
2.5
87.6
0.9
–
–
0.1
87.7
–
–
–
0.9
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 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
110
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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
1,743.5
1,860.5
2021
NZ$M
2022
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
83.2
36.1
–
31.9
34.0
29.0
10.7
97.5
49.7
5.9
18.2
19.4
32.7
–
(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
2021
M
2022
M
US$627.5
US$663.3
€280.7
€318.2
¥8,485.0
¥9,945.0
MX$1,314.5 MX$1,577.0
Section 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
111
7. TRADE AND OTHER RECEIVABLES
8. INVENTORIES
CURRENT
Trade receivables
Loss allowance for doubtful trade receivables
Other receivables
2021
NZ$M
2022
NZ$M
197.0
(5.3)
191.7
30.8
222.5
Materials
147.8
Finished products
(5.0)
Provision for inventory write downs
142.8
31.6
174.4
2021
NZ$M
97.7
205.5
(32.6)
270.6
2022
NZ$M
121.1
278.1
(40.3)
358.9
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 provision
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 91% of trade receivables were current (2021: 79%) with less than
3% (2021: 3%) 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
2021
2022
17.5%
15.4%
19.7%
21.6%
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 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
112
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
9. PROPERTY, PLANT AND EQUIPMENT
Reconciliation of carrying amounts at the beginning and end of the year
Cost and revaluation
Balance at 31 March 2020
Revaluation recognised in asset revaluation reserve
Additions
Transfers
Disposals
Foreign exchange differences
Balance at 31 March 2021
Additions
Transfers
Disposals
Foreign exchange differences
Balance at 31 March 2022
Depreciation and impairment losses
Balance at 31 March 2020
Depreciation charge for the year
Disposals
Foreign exchange differences
Balance at 31 March 2021
Depreciation charge for the year
Disposals
Foreign exchange differences
Balance at 31 March 2022
Carrying amounts
At 31 March 2020
At 31 March 2021
At 31 March 2022
Land
Fair Value
NZ$M
Structure (i)
NZ$M
Buildings
Fit out
and other
NZ$M
Plant & equipment
Capital projects
Total
Leased
assets
NZ$M
Purchased
NZ$M
Leased
assets
NZ$M
Buildings (i)
NZ$M
Other
NZ$M
NZ$M
183.7
34.5
0.3
1.7
–
(3.7)
216.5
3.1
–
–
0.1
121.2
144.4
–
3.8
55.4
–
(4.7)
–
9.8
78.7
(0.6)
(1.4)
175.7
230.9
0.3
4.4
–
0.1
3.5
4.7
(0.3)
–
219.7
180.5
238.8
–
–
–
–
–
–
–
–
–
22.6
4.1
–
(0.1)
26.6
4.4
–
0.1
76.8
9.5
(0.3)
–
86.0
10.8
–
–
31.1
96.8
183.7
216.5
219.7
98.6
149.1
149.4
67.6
144.9
142.0
26.0
–
24.0
–
(2.9)
–
47.1
5.9
–
(2.4)
–
50.6
6.8
7.8
(0.1)
–
14.5
10.0
(1.7)
–
22.8
19.2
32.6
27.8
363.4
–
35.9
39.3
(6.0)
–
432.6
18.7
44.9
(15.0)
–
481.2
209.7
43.3
(5.7)
–
247.3
42.2
(14.4)
–
275.1
153.7
185.3
206.1
9.1
–
3.7
–
(1.0)
–
11.8
2.3
–
(2.9)
–
11.2
3.6
3.7
(0.9)
–
6.4
3.6
(2.8)
–
7.2
5.5
5.4
4.0
136.3
–
23.5
(134.9)
–
–
24.9
35.1
(9.4)
–
0.1
70.7
1,054.8
–
92.9
(40.2)
–
–
34.5
193.9
–
(10.5)
(9.8)
123.4
1,262.9
79.3
(44.6)
–
–
148.2
–
(20.6)
0.3
50.7
158.1
1,390.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
136.3
24.9
50.7
70.7
123.4
158.1
319.5
68.4
(7.0)
(0.1)
380.8
71.0
(18.9)
0.1
433.0
735.3
882.1
957.8
(i) $0.4M of finance costs were capitalised during the year in relation to building additions (2021: nil).
Section 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022 Fisher & Paykel Healthcare
ANNUAL REPORT 2022
113
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$166 psm).
The Directors consider the carrying value of land at 31 March 2022 remains an
appropriate fair value.
Property, plant and equipment (including leased assets) and intangible assets by
geographical location:
Carrying amounts of land if measured at historical cost
37.6
170.4
33.9
202.5
2021
NZ$M
2022
NZ$M
New Zealand
Mexico
Other
At historical cost
At fair value
754.1
808.2
New Zealand
Mexico
2021
NZ$M
72.2
191.0
2022
NZ$M
75.3
194.1
2021
US$M
16.3
18.3
2022
US$M
16.3
18.3
Section 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
114
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
10. INTANGIBLE ASSETS
Cost
Balance at 31 March 2020
Additions
Transfers
Disposals
Foreign exchange differences
Balance at 31 March 2021
Additions
Transfers
Disposals
Foreign exchange differences
Balance at 31 March 2022
Amortisation and impairment losses
Balance at 31 March 2020
Amortisation for the year
Disposals
Balance at 31 March 2021
Amortisation for the year
Disposals
Foreign exchange differences
Balance at 31 March 2022
Carrying amounts
At 31 March 2020
At 31 March 2021
At 31 March 2022
Patents,
trademarks &
applications
NZ$M
Software
NZ$M
Capital
projects
in progress
NZ$M
Other
NZ$M
64.1
2.5
1.2
(0.8)
–
67.0
1.5
2.0
(8.1)
–
62.4
27.9
4.5
(0.7)
31.7
9.3
(8.0)
–
33.0
36.2
35.3
29.4
64.0
16.5
–
(1.0)
–
79.5
27.1
–
(1.3)
–
105.3
34.8
12.1
(0.5)
46.4
15.5
(1.3)
–
60.6
29.2
33.1
44.7
4.2
–
–
–
–
4.2
0.1
3.4
–
0.1
7.8
2.8
–
–
2.8
0.2
–
–
3.0
1.4
1.4
4.8
7.1
4.9
(1.2)
–
(0.6)
10.2
2.9
(5.4)
–
0.2
7.9
–
–
–
–
–
–
–
–
7.1
10.2
7.9
Total
NZ$M
139.4
23.9
–
(1.8)
(0.6)
160.9
31.6
–
(9.4)
0.3
183.4
65.5
16.6
(1.2)
80.9
25.0
(9.3)
–
96.6
73.9
80.0
86.8
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.
The project costs (including the ERP
implementation) are transferred
from Capital projects in progress to
Software, as each stage is completed.
These software costs are amortised
over their useful economic life of
3 to 15 years.
The costs of configuring or
customising, and the ongoing fees
to obtain access to an application
software in a cloud computing
Software-as-a-Service agreement
are recognised as expenses when
the services are received.
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 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
115
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
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
2021
NZ$M
718.2
201.0
(1.7)
2.6
(1.2)
6.6
(13.2)
(0.1)
194.0
252.9
(58.9)
194.0
27.0%
28.8%
2022
NZ$M
504.2
141.2
(0.7)
4.9
(1.0)
2.0
(15.1)
(4.0)
127.3
133.8
(6.5)
127.3
25.2%
28.2%
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
2021
M
2022
M
New Zealand imputation credits available for use in
subsequent reporting periods
NZ$310.4
NZ$322.7
Australian franking credits available for use in subsequent
reporting periods
A$12.8
A$14.7
Section 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
116
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
11. INCOME TAX (CONTINUED)
DEFERRED TAX ASSETS/(LIABILITIES)
Balance at 31 March 2020
Amounts recognised in:
Other comprehensive income
Directly in equity
In the Income Statement
Balance at 31 March 2021
Amounts recognised in:
Other comprehensive income
Directly in equity
In the Income Statement
Balance at 31 March 2022
Provisions
and accruals
NZ$M
67.4
–
–
58.0
125.4
–
–
6.2
131.6
Leases
NZ$M
1.5
–
–
(0.1)
1.4
–
–
(0.2)
1.2
Property,
plant and
equipment and
intangibles
NZ$M
Financial
instruments
NZ$M
Employee
Share based
payments
NZ$M
(17.6)
22.1
15.0
–
–
1.5
(16.1)
–
–
1.6
(61.9)
–
(0.3)
(40.1)
0.9
–
–
(14.5)
(39.2)
–
(6.4)
1.0
9.6
–
(5.1)
(0.4)
4.1
Other
NZ$M
2.3
–
–
(1.2)
1.1
–
–
(0.7)
0.4
Total
NZ$M
90.7
(61.9)
(6.4)
58.9
81.3
0.9
(5.1)
6.5
83.6
Deferred tax assets and liabilities are offset within the balance sheet where they relate to income taxes levied by the same taxation authority.
Section 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
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
2021
2022
Borrowings
NZ$M
Leases
NZ$M
Borrowings
NZ$M
Leases
NZ$M
11.9
–
–
11.9
25.1
37.7
–
–
–
62.8
–
–
14.7
14.7
–
–
–
–
29.0
29.0
5.3
–
–
5.3
5.5
57.5
–
–
–
63.0
–
–
11.7
11.7
–
–
–
–
24.3
24.3
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
117
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 5.3%. 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 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
118
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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 for borrowings is 1.8% (2021: 1.7%).
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 $247.5 million as at
31 March 2022, of which approximately $184.5 million was undrawn. As at 31 March 2022,
the weighted average maturity of committed borrowing facilities was 2.1 years.
Unused lines of credit
Bank overdraft facilities
Borrowing facilities
2021
NZ$M
2022
NZ$M
33.9
167.2
201.1
38.3
184.5
222.8
Short-term investments
As at 31 March 2022, the Group has invested available cash on hand of $200 million in
short-term investments. These investments have maturities between 91 and 182 days with
banking institutions that have a long term credit rating of Standard & Poors’ A and above
and are invested at average interest rates of 1.7%.
Section 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
119
13. TRADE AND OTHER PAYABLES
14. PROVISIONS
CURRENT
Trade payables
Employee entitlements
Other payables and accruals
NON-CURRENT
Employee entitlements
Other payables and accruals
2021
NZ$M
56.7
87.5
89.1
2022
NZ$M
53.8
93.8
78.6
Warranty provision
CURRENT
Balance at beginning of the year
Current year provision
233.3
226.2
Warranty expenses incurred
20.6
2.2
22.8
20.7
3.4
24.1
Balance at end of the year
NON-CURRENT
Balance at beginning of the year
Current year provision
Balance at end of the year
2021
NZ$M
2022
NZ$M
5.0
15.9
(5.3)
15.6
1.5
9.0
10.5
15.6
14.9
(4.2)
26.3
10.5
0.6
11.1
Trade and other payables represent liabilities for goods and services provided to the
Group prior to the end of the financial period which are unpaid. The amounts are
unsecured and are usually paid within 60 days of recognition. Trade payables are
recognised initially at fair value and subsequently measured at amortised cost using
the effective interest method.
Refer to Note 18 for further details of employee entitlements and benefits.
Provisions are recognised where the Group has a present legal or constructive
obligation as a result of past events and it is more likely than not that an outflow
of resources will be required to settle the obligation, and the amount can be
reliably estimated.
Warranty
Provision for warranty covers the obligations for the unexpired warranty periods for
products, based on recent historical costs incurred on warranty exposure. Typical
warranty terms are 1 to 2 years for parts and/or labour.
The actual future warranty claims experienced by the Group may be different to that
of the past. Factors that could impact future warranty claims include the success of
the Group’s quality system, as well as future parts and labour costs. Where the Group
is aware of specific product warranty issues these are included in the provision.
Section 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
120
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
15. SHARE CAPITAL
16. EARNINGS PER SHARE
Share capital at beginning of the year
Issue of share capital under employee share plans
Share capital at end of the year
Less treasury shares (i)
2021
NZ$M
229.0
22.3
251.3
(2.2)
249.1
2022
NZ$M
251.3
Profit after tax
2021
NZ$M
524.2
2022
NZ$M
376.9
15.0
Weighted average number of ordinary shares
575,650,376
576,949,087
266.3
Adjustment for share options, PSRs and ESRs
3,937,886
3,043,534
(5.1)
261.2
Weighted average number of ordinary shares for
diluted earnings per share
579,588,262
579,992,621
Number of issued shares
Number of shares on issue at beginning of the year
574,570,603
576,412,532
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
91.1 cps
90.4 cps
65.3 cps
65.0 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
79,889
201,596
1,762,040
791,750
Number of shares on issue at end of the year
576,412,532
577,405,878
Less treasury shares (i)
(137,720)
(276,061)
576,274,812
577,129,817
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 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
121
Dividends
All dividends are recognised as distributions to shareholders.
During the year, supplementary dividends of $24.4 million were paid to non-resident
shareholders (2021: $20.1 million), for which the Group received an equivalent foreign
investor tax credit entitlement. The foreign investor tax credit entitlement is included
in income taxes paid within the statement of cash flows.
Dividends
2020 final
2021 interim
31 March 2021
2021 final
2022 interim
31 March 2022
Cents per
share
15.50
16.00
31.50
22.00
17.00
39.00
NZ$M
89.1
92.2
181.3
126.8
98.1
224.9
Subsequent event – dividend declared
On 24 May 2022 the directors approved the payment of a fully imputed 2022
final dividend of $129.9 million (22.5 cents per share) to be paid on 6 July 2022.
A supplementary dividend of 3.9706 cents per share was also approved for eligible
non-resident shareholders.
17. RESERVES AND DIVIDENDS
Hedging reserve
Asset revaluation reserve
Employee share based payment reserve
Foreign currency translation reserve
Total reserves
Nature and purpose of reserves
2021
NZ$M
103.0
122.1
20.3
(2.8)
242.6
2022
NZ$M
100.6
122.1
17.3
(2.7)
237.3
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 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022 122
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
18. EMPLOYEE EXPENSES
Employee expenses total $595.5 million (2021: $574.9 million).
7.7
8.1
a) Key management and director compensation
2021
NZ$M
2022
NZ$M
567.2
587.4
Salary and other short-term benefits
Share based benefits
Directors fees
Wages and
salaries
Share based
benefits
2021
NZ$'000
10,053
2,154
1,061
2022
NZ$'000
9,771
2,498
1,207
13,268
13,476
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.
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 liabilities, 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 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
123
(iii) Employee share rights plan
The 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
2022 the total receivable owing from employees was $3.5 million (2021: $1.2 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 2022 totalled 62,555 shares (2021: 79,889).
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 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022 124
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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)
2021
2022
Options
Performance
Share Rights
Employee
Share Rights
Options
Performance
Share Rights
Employee
Share Rights
3,381,887
1,202,771
244,656
2,396,125
594,032
303,330
412,417
130,857
62,227
462,365
161,819
81,398
(1,389,674)
(736,000)
–
(742,604)
(207,546)
(116,515)
(8,505)
(3,596)
(3,553)
(24,112)
(5,466)
(13,295)
2,396,125
594,032
303,330
2,091,774
542,839
254,918
532,446
315
$18.54
33
2.9
–
192
–
39
3.0
–
424,847
301
–
15
2.2
267
$23.61
33
3.3
–
205
–
39
3.3
–
344
–
15
2.6
Fair value of share options or rights granted during the year ($ per share)
$7.15
$22.55
$35.53
$7.13
$20.38
$31.88
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
$36.91
$36.91
$36.91
$32.81
$32.81
$32.81
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
5
$32.69
28.1%
1.19%
7.5%
1.35%
n/a
n/a
n/a
n/a
5
Nil
28.1%
1.19%
n/a
1.35%
0.84%
0.6900
11.20%
17.50%
3
Nil
n/a
1.19%
7.5%
n/a
n/a
n/a
n/a
n/a
(i) The expected share price volatility is derived by analysing the historical volatility over the most recent historical period corresponding to the term of the option or PSR.
Section 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
19. CONTINGENT LIABILITIES
Contingent liabilities are subject to uncertainty or cannot be reliably measured and
are not provided for. Disclosures as to the nature of any contingent liabilities are
set out below. Judgements and estimates are applied to determine the probability
that an outflow of resources will be required to settle an obligation. These are made
based on a review of the facts and circumstances surrounding the event and advice
from both internal and external parties.
Periodically the Group is party to litigation including product liability and patent claims.
The Directors are unaware of the existence of any claim or contingencies that would have
a material impact on the operations of the Group.
20. COMMITMENTS
Capital expenditure commitments contracted for but not
recognised as at the reporting date:
Within one year
Between one and two years
Between two and five years
2021
NZ$M
2022
NZ$M
45.9
9.2
–
55.1
56.9
6.1
–
63.0
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
125
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 procedures and guidelines that identify and evaluate risks and
authorise various financial instruments to manage financial risks. These procedures 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 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 procedures.
(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 procedures.
The Group enters into foreign currency option contracts and forward foreign currency
contracts within procedure 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, options and
forward 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 procedure
parameters. Interest rate swaps and options are accounted for as cash flow hedges.
Section 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
126
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
21. FINANCIAL RISK MANAGEMENT (CONTINUED)
The carrying amounts of significant non-derivative financial assets and liabilities are denominated in the following foreign currencies:
2021
Cash
Short-term investments
Trade receivables
Trade and other payables
Bank overdraft
Lease liabilities
Borrowings
2022
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$M
60.0
280.3
1.5
(84.4)
–
(9.1)
–
248.3
40.0
200.0
1.7
(67.7)
(0.4)
(7.1)
–
166.5
10.0
–
83.5
(28.9)
–
(15.8)
(57.3)
(8.5)
12.4
–
59.3
(34.4)
–
(12.0)
(57.4)
(32.1)
5.5
–
55.7
(13.3)
(0.2)
(5.1)
–
42.6
3.4
–
39.0
(11.6)
(2.5)
(7.2)
–
21.1
–
–
18.5
(1.5)
(6.7)
(1.5)
–
8.8
–
–
16.7
(2.1)
(1.2)
(0.7)
–
12.7
1.2
–
4.5
(4.8)
(0.1)
(2.6)
(3.6)
(5.4)
1.1
–
4.0
(3.1)
–
(3.1)
(3.6)
(4.7)
2.2
–
7.2
(0.5)
–
(0.7)
(1.9)
6.3
1.2
–
5.2
(0.8)
–
(0.7)
(2.0)
2.9
2.9
–
5.7
(4.7)
(1.7)
(3.3)
–
(1.1)
2.2
–
4.2
(3.0)
–
(2.4)
–
1.0
5.1
–
3.2
(4.0)
–
(0.2)
–
4.1
5.0
–
0.4
(4.7)
–
(0.2)
–
0.5
10.4
–
17.2
(5.9)
(3.2)
(5.4)
–
13.1
24.6
–
17.3
(8.4)
(1.2)
(2.6)
–
29.7
97.3
280.3
197.0
(148.0)
(11.9)
(43.7)
(62.8)
308.2
89.9
200.0
147.8
(135.8)
(5.3)
(36.0)
(63.0)
197.6
Section 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022 Fisher & Paykel Healthcare
ANNUAL REPORT 2022
127
21. FINANCIAL RISK MANAGEMENT (CONTINUED)
a. Market risk (continued)
Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’s financial assets and financial
liabilities to interest rate risk and foreign exchange risk.
Fair value estimation
NZ IFRS 13 for financial assets and liabilities measured at fair value requires disclosure
of the fair value measurements by level from the following fair value hierarchy:
A sensitivity of +/-10% for foreign exchange risk has been selected (2021: +/-10%).
The Group believes that an overall sensitivity of +/-10% is reasonably possible given
the exchange rate volatility observed on a historical basis. A sensitivity of +/-1% has
been selected for interest rate risk (2021: +/-1%). This sensitivity is based on reasonably
possible changes over a financial year using the observed range of historical data.
All variables other than the applicable interest rates and exchange rates are held constant.
2021
2022
NZ$M
NZ$M
NZ$M
NZ$M
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)
-1%
(2.4)
(1.0)
(3.4)
-10%
8.9
(121.5)
+ 1%
2.4
1.0
-1%
(1.7)
(0.7)
3.4
(2.4)
+ 10%
(8.2)
100.5
-10%
5.9
+1%
1.7
0.7
2.4
+10%
(5.6)
(126.1)
102.6
•
(112.6)
92.3
(120.2)
97.0
•
•
•
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 (2021: 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 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
128
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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.
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 – (liabilities)
2022
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
11.9
148.0
1.1
15.6
176.6
40.3
–
(0.5)
39.8
5.3
135.8
1.1
11.0
153.2
52.3
–
(0.1)
52.2
–
–
26.1
10.8
36.9
35.0
–
(0.5)
34.5
–
–
6.5
7.5
14.0
43.0
–
0.2
43.2
–
–
37.8
13.1
50.9
67.6
–
(0.4)
67.2
–
–
58.1
14.1
72.2
50.2
–
0.1
50.3
–
–
–
6.2
6.2
1.1
–
–
11.9
148.0
65.0
45.7
270.6
144.0
–
(1.4)
11.9
148.0
62.8
43.7
266.4
142.2
2.2
(1.4)
1.1
142.6
143.0
–
–
–
4.0
4.0
–
–
–
–
5.3
135.8
65.7
36.6
243.4
145.5
–
0.2
5.3
135.8
63.0
36.0
240.1
139.3
1.2
0.2
145.7
140.7
(i) Interest rate swaps derivative cash flows are estimated using forward interest rates at reporting date.
Section 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022 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 procedures 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 92% of cash and short-term
investments (2021: 96%) 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.
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
129
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 04 | FINANCIALSNOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 March 2022
130
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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 executive remuneration
benchmarking, providing market survey data relating to executive remuneration levels,
regulatory tax compliance procedures in Mexico, and other assurance services in relation
to constant currency disclosures. 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
OUR OPINION
In our opinion, 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
2022, 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 2022;
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 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.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Section 04 | FINANCIALS
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
131
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.
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. Operating revenue
totalled $1,681.7 million in the year ended 31 March 2022 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; and
in certain markets, sales are made to distributors and include rebate arrangement.
•
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, 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 the determination of performance obligations and 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 04 | FINANCIALS 132
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
INDEPENDENT AUDITOR’S REPORT
OUR AUDIT APPROACH
Overview
Materiality
Group scoping
Key audit
matters
Overall group materiality: $25.2 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 audit procedures contributed 87% of the Group’s revenue
and 92% 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 04 | FINANCIALS INDEPENDENT AUDITOR’S REPORT
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
133
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.
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.
The engagement partner on the audit resulting in this independent auditor’s report is
Keren Blakey.
For and on behalf of:
Chartered Accountants
24 May 2022
Auckland
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.
Section 04 | FINANCIALS 134
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
Section 05 | APPENDICES
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
135
APPENDICES
05
Section 05 | APPENDICES FIVE YEAR SUMMARY
136
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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) income
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)
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
2021
2022
1,072.1
1,273.4
1,948.2
1,642.4
(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
23.0
1,971.2
1,245.6
63.2%
–
(396.6)
(136.7)
(533.3)
712.3
36.1%
5.9
39.3
1,681.7
1,052.7
62.6%
–
(393.1)
(154.0)
(547.1)
505.6
30.1%
(1.4)
(194.0)
(127.3)
524.2
825.7
633.8
348.4
163.3
1,498.1
465.6
1,963.7
7.5
376.9
665.1
468.1
438.8
109.7
1,207.1
469.5
1,676.6
5.1
1,070.4
1,263.7
1,971.2
1,681.7
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%
56.0%
49.0%
15.4%
93.8%
82.5%
61.4%
57.4%
15.4%
103.6%
-14.7%
-15.5%
12.7%
-29.8%
-28.1%
-13.7%
-15.8%
12.7%
-31.4%
(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 101.
The 2018, 2019, 2020 and 2021 growth rates in constant currency have been sourced from the 2021 annual report.
Section 05 | 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)
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
137
2018
476.4
1,025.1
(263.8)
761.3
28.1%
37.6%
(49.9)
–7.3%
2019
601.4
2020
735.3
1,206.7
1,435.0
(293.5)
913.2
(461.2)
973.8
26.1%
34.8%
(54.4)
–6.7%
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%
2022
957.8
2,107.0
(427.3)
1,679.7
24.1%
31.5%
(221.6)
-16.3%
Basic shares outstanding at 31 March
571,230,264
573,708,739
574,570,603
576,412,532
577,405,878
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)
8.75
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
17.00
22.50
39.50
65.3
65.0
324.3
140.5
(224.9)
97.4
41.0
31.4
169.8
2.3
(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 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 IFRS 16 - Leases
(4) Depreciation excludes leased asset depreciation
Section 05 | APPENDICES 138
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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)
2018
186
385
870
912
4,174
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
2022
454
504
1,947
1,491
7,375
765
4,989
1,311
310
3,927
2,608
380
460
0.6969
0.6734
0.5571
0.4980
0.9255
0.8696
71.80
14.97
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.
Section 05 | APPENDICES GLOSSARY
GloSSArY
AAALAC
ASM
ASX
AUD
BIAC
CAHRAs
CDP
CEO
CFO
CGI
CLC
CODM
Company
Constant
Currency
CPS
DAVR
DJSMDQT
EAP
EBITDA
ERP
ESG
ESR
Association for Assessment and
Accreditation of Laboratory
Animal Care
Annual Shareholders’ Meeting
Australian Stock Exchange
Australian Dollar
The OECD’s Business and Industry
Advisory Committee
Conflict-Affected and High-Risk Areas
The name of the not-for-profit that
facilitates environmental disclosures.
Formerly known as the Carbon
Disclosure Project
Chief Executive Officer
Chief Financial Officer
Climate Governance Initiative
Climate Leaders Coalition
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
Discretionary Annual Variable
Remuneration
Dow Jones US Select Medical
Equipment Total Return Index
Employee Assistance Programme
Earnings before interest, tax,
depreciation and amortisation
Enterprise Resource Planning
Environmental, Social and Governance
Employee Share Right
Executive
Management
the Executive Management team
as set out on pages 30 and 31
FDA
United States Food & Drug
Administration
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
139
FIFO
FMA
FTE
FY
GeSI
GHG
GRI
Group
GST
IEA
IFRIC
IFRS
IP
IPCC
ISDA
ISO
first in/first out
Financial Markets Authority
Full Time Equivalent
Financial Year
Global Enabling Sustainability Initiative
Greenhouse gas
Global Reporting Initiative
means Fisher & Paykel Healthcare
Corporation Limited together with
its subsidiaries
Goods and Services Tax
International Energy Agency
International Financial Reporting
Interpretations Committee
International Financial
Reporting Standards
Intellectual Property
Intergovernmental Panel on
Climate Change
International Swaps and
Derivatives Association
International Organisation
for Standardisation
LTIFR
LTVR
Net Debt
Lost Time Injury Frequency Rate
Long Term Variable Remuneration
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
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
NZE
OECD
PCT
PSR
R&D
RCP
RMAP
SASB
SBTi
SDG
SG&A
STEM
STEPS
TCFD
TRIFR
TSR
UN
USD
VP
Net Zero Emissions by 2050
Organisation for Economic
Cooperation and Development
Patent Cooperation Treaty
Performance Share Right
Research and Development
Representative Concentration Pathway
Responsible Minerals Assurance Process
Sustainability Accounting
Standards Board
Science Based Targets initiative
Sustainable Development Goals
Sales, General and Administrative
Science, Technology, Engineering
and Mathematics
Stated Policies Scenario
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
NHF
NICU
NIV
OSA
Chronic Obstructive Pulmonary
Disease
Continuous Positive Airway Pressure
Good Clinical Practice
Intensive Care Unit
Nasal High Flow
Neonatal Intensive Care Unit
Noninvasive Ventilation
Obstructive Sleep Apnea
Section 05 | APPENDICES GRI CONTENT INDEX
140
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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. 14-15 and 20-23
Inside back cover
Annual Report: p. 21
Ownership and legal
form
Annual Report: pp. 106 and 82-87
Markets served
Annual Report: p. 21
Scale of the
organisation
Information on
employees and other
workers
Annual Report: pp. 8-13 and 138-140
Annual Report: pp. 34-45
Supply chain
Annual Report: pp. 54-57
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)
102-13
Membership of
associations
Statement of Tax Principles for International
Business UN Declaration on Human Rights
• ILO Declaration on Fundamental Principles and
Rights at Work
• American Association of Homecare
• American Association of Respiratory Care
• American Chamber of Commerce
• Association for Anaesthetic and Respiratory
Device Suppliers
• Association of Anaesthetists
102-13
Membership of
associations
• Association for Respiratory Technology
& Physiology
• Australasian Investor Relations Association
• Australasian Sleep Association
• Australian College of Critical Care Nurses
• Austrian Chamber of Commerce
• British Anaesthetic & Respiratory Equipment
Manufacturers Association
• British Thoracic Society
• Business New Zealand
• Colorectal Society of Australia and New Zealand
• Diversity Works
• Employers and Manufacturers Association
• German Chamber of Commerce
• 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. 8-13
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. 72-78
Section 05 | APPENDICES GRI CONTENT INDEX (CONTINUED)
Disclosure
Description
Location/Response
Stakeholder engagement
102-40
102-41
102-42
102-43
102-44
List of stakeholder
groups
Collective bargaining
agreements
Identifying
and selecting
stakeholders
Approach to
stakeholder
engagement
Key topics and
concerns raised
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
Annual Report: p. 25
Annual Report: p. 43
Annual Report: p. 25
Annual Report: p. 25
Annual Report: pp. 25-27
Annual Report: pp. 86-87
Annual Report: pp. 25-27
Annual Report: pp. 25-27
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
141
SPECIFIC STANDARD DISCLOSURES
Disclosure
Description
Location/Response
GRI 200 Economic standard series
GRI 103
Management approach 2022
Annual Report: pp. 8-13
GRI 201: Economic performance
201-1
Direct economic value generated
and distributed
Annual Report: pp. 97-133
GRI 205: Anti-corruption
GRI 103
205-3
Management approach 2022
Annual Report: p. 71
Confirmed incidents of
corruption and actions taken
Annual Report: p. 71
During the year ended 31 March
2022 the company is not aware
of any instances of corruption or
of incidents in which employees
were dismissed or disciplined
for corruption.
GRI 400 Social standard series
GRI 401: Employment
GRI 103
401-1
Management approach 2022
Annual Report: pp. 34-41
New employee hires and
employee turnover
Annual Report: pp. 44-45
GRI 403: Occupational health and safety
Annual Report: p. 94
The CEO’s salary and fixed remuneration subtotal
for the 2021 financial year was overstated in
last year’s annual report by $160,661, due to
an inadvertent duplication of the employee
superannuation contribution.
GRI 103
403-2
Management approach 2022
Annual Report: p. 64
Types of injury and rates of
injury, occupational diseases,
lost days, and absenteeism, and
number of work-related fatalities
Annual Report: p. 65
102-49
Changes in reporting No significant changes from previous
GRI 404: Training and education
102-50
102-51
102-52
102-53
102-54
102-55
102-56
reporting 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 103
Management approach 2022
Annual Report: p. 35
(Unconscious bias training)
Annual Report: p. 38
(Indigenous leadership course)
404-1
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 2022
Annual Report: p. 64
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 content index
Annual Report: pp. 140-141
GRI 418: Customer Privacy
External assurance
External assurance for environmental disclosures
(Toitu Envirocare; see Annual Report pp. 50-51
No external assurance for other non-financial
disclosures
External assurance for financial statements
(PwC; see Annual Report: pp. 130-133)
GRI 103
418-1
Management approach 2022
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.
Section 05 | APPENDICES TCFD INDEX
142
tCFD INDEx
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
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. 80-81
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. 66-68
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. 66-68
b) Describe management’s role in assessing
and managing climate-related risks and
opportunities. pp. 80-81
b) Describe the impact of climate-
related risks and opportunities on the
organisation’s businesses, strategy,
and financial planning. pp. 66-68
b) Describe the organisation’s processes
for managing climate-related risks.
pp. 66-68
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. 66
b) Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse
gas (GHG) emissions, and the related
risks. pp. 50-51
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. 68
assessing, and managing climate-
related risks are integrated into the
organisation’s overall risk management.
pp. 66-68
c) Describe the targets used by the
organisation to manage climate-
related risks and opportunities
and performance against targets.
pp. 50-51
Section 05 | APPENDICES DIRECTORY
DIrECtorY
DIRECTORY
In New Zealand:
The details of the company’s principal administrative and registered office are:
Fisher & Paykel Healthcare
ANNUAL REPORT 2022
143
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
Section 05 | APPENDICES www.fphcare.com
© 2022 Fisher & Paykel
Healthcare Corporation Limited