UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended 30 June 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission file number 0-15850
ANSELL LIMITED
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(Australian Company Number 004 085 330)
(Exact name of Registrant as specified in its charter)
ANSELL LIMITED
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(Translation of Registrant's name into English)
VICTORIA, AUSTRALIA
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(Jurisdiction of incorporation or organisation)
Level 3, 678 Victoria Street, Richmond, Victoria, 3121, Australia
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(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class Name of each exchange on which registered
None None
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Ordinary Shares
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American Depositary Shares*
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* Evidenced by American Depositary Receipts, each American Depositary Share
representing four (4) Ordinary Shares
Securities registered or to be registered pursuant to Section 15(d) of the Act.
None
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Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.
Ordinary Shares - 186,395,200 (at 30 June 2002)**
** This figure includes 825,276 shares represented by the 206,319 American
Depositary Shares outstanding on 30 June 2002.
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
Indicate by check mark which financial statement item the registrant has elected
to follow
[ ] Item 17 [X] Item 18
CONTENTS - BUSINESS DESCRIPTION AND FINANCIAL STATEMENTS
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SEC ITEM PAGE NO
PART I
ITEM 1: IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS..............................1
ITEM 2: OFFER STATISTICS AND EXPECTED TIMETABLE............................................2
ITEM 3: KEY INFORMATION....................................................................3
3A Selected Financial Data..........................................................3
3B Capitalisation and Indebtedness..................................................5
3C Reasons for the Offer and use of Proceeds........................................5
3D Risk Factors.....................................................................5
ITEM 4: INFORMATION ON THE COMPANY.........................................................8
4A History and Development of the Company...........................................8
4B Business Overview...............................................................10
4C Organisational Structure........................................................16
4D Property, Plant and Equipment...................................................16
ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS......................................17
5A Operating Results...............................................................17
5B Liquidity and Capital Resources.................................................24
5C Research and Development........................................................26
5D Trend Information...............................................................26
5E Critical Accounting Policies....................................................26
ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES........................................28
6A Directors and Senior Management.................................................28
6B Compensation....................................................................30
6C Board Practices.................................................................32
6D Employees.......................................................................36
6E Share Ownership.................................................................37
ITEM 7: MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.................................39
7A Major Shareholders..............................................................39
7B Related Party Transactions......................................................39
ITEM 8: FINANCIAL INFORMATION.............................................................40
8A Consolidated Statements and other Financial Information.........................40
8B Significant Changes.............................................................40
ITEM 9: THE OFFER AND LISTING.............................................................41
ITEM 10: ADDITIONAL INFORMATION...........................................................42
10A Share Capital...................................................................42
10B Constitution....................................................................42
10C Material Contracts..............................................................44
10D Exchange Controls...............................................................45
10E Australian Taxation.............................................................54
10F Dividends and Paying Agents.....................................................56
10G Statement by Experts............................................................56
10H Documents on Display............................................................56
ITEM 11: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.......................57
Derivative Financial Instruments.....................................................57
ITEM 12: DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES...........................63
PART II
ITEM 13: DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES..................................64
ITEM 14: MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS.........................65
CONTENTS - BUSINESS DESCRIPTION AND FINANCIAL STATEMENTS
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SEC ITEM PAGE NO
PART III
ITEMS 17 & 18: FINANCIAL STATEMENTS...................................................... 66
Statements of Financial Performance................................................. 66
Statements of Financial Position.................................................... 67
Industry Segments................................................................... 68
Statements of Cash Flows............................................................ 70
Notes to Financial Statements....................................................... 71
1. Summary of Significant Accounting Policies..................................... 71
2. Change in Accounting Policy.................................................... 78
3. Total Revenue.................................................................. 78
4. Profit/(Loss) from ordinary activities before income tax....................... 79
5. Contributed Equity............................................................. 80
6. (Accumulated Losses)/Retained Profits and Reserves............................. 82
7. Total Equity Reconciliation.................................................... 83
8. Income Tax..................................................................... 83
9. Dividends Paid and Declared.................................................... 84
10. Outside Equity Interests....................................................... 84
11. Cash........................................................................... 84
12. Receivables.................................................................... 85
13. Inventories.................................................................... 85
14. Investments.................................................................... 86
15. Property, Plant and Equipment.................................................. 87
16. Intangibles.................................................................... 89
17. Deferred Tax Assets............................................................ 89
18. Payables....................................................................... 90
19. Interest Bearing Liabilities................................................... 91
20. Provisions..................................................................... 93
21. Other Liabilities.............................................................. 94
22. Dissection of Liabilities...................................................... 94
23. Expenditure Commitments........................................................ 95
24. Superannuation................................................................. 96
25. Ownership-Based Remuneration Schemes........................................... 97
26. Contingent Liabilities......................................................... 99
27. Financial Instruments..........................................................101
28. Directors' and Executives' Remuneration........................................105
29. Service Agreements.............................................................107
30. Notes to the Business Segments Report..........................................107
31. Notes to the Statements of Cash Flows..........................................108
32. Acquisition of Controlled Entities and Material Businesses.....................110
33. Disposal of Controlled Entities and Material Businesses........................110
34. Related Party Disclosures......................................................110
35 Earnings per Share.............................................................114
36. Environmental Matters..........................................................115
37. Particulars Relating to Controlled Entities....................................116
38. Investments in Associates......................................................120
39. Major differences between Australian GAAP and US GAAP..........................121
40. Reconciliation to United States Generally Accepted Accounting
Principles (U.S. GAAP).........................................................127
DIRECTORS' DECLARATION...................................................................133
INDEPENDENT AUDIT REPORT.................................................................134
SIGNATURE................................................................................135
CONTENTS - BUSINESS DESCRIPTION AND FINANCIAL STATEMENTS
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SEC ITEM PAGE NO
PART III (continued)
CERTIFICATIONS...........................................................................136
SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002.........................140
Directors Report....................................................................140
Statement of Financial Performance..................................................144
Statement of Financial Position.....................................................145
Statement of Cash Flows.............................................................146
Notes to the Financial Statements...................................................147
Directors' Declaration..............................................................169
Independent audit report............................................................170
ITEM 19: EXHIBITS........................................................................171
Exhibit Index.......................................................................171
PART I
ITEM 1 : IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
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Not Applicable
1
PART I
ITEM 2 : OFFER STATISTICS AND EXPECTED TIMETABLE
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Not Applicable
2
PART I
ITEM 3 : KEY INFORMATION
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3A SELECTED FINANCIAL DATA
The following selected financial data for the five year period ended 30 June
2002 has been derived from Ansell Limited's audited consolidated financial
statements (the "Financial Statements") and should be read in conjunction with
and are qualified in their entirety by reference to those statements and
accompanying notes thereto. Such Financial Statements have been audited by KPMG,
independent accountants.
Except as set forth below, Ansell Limited's consolidated financial statements
are prepared in accordance with Australian GAAP, which varies in certain
material respects from U.S. GAAP. For discussion of the major differences and a
reconciliation of the material differences between Australian GAAP and US GAAP
as they relate to Ansell Limited, see Notes 39 and 40 to the Financial
Statements.
IN MILLIONS OF A$, EXCEPT PER SHARE FOR YEARS ENDED 30 JUNE
& PER ADS AMOUNTS 2002 2001 2000 1999 1998
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STATEMENT OF FINANCIAL PERFORMANCE DATA
AMOUNTS PREPARED IN ACCORDANCE WITH AUSTRALIAN GAAP :
Sales revenue (excluding South Pacific Tyres) 2,223 4,157 5,726 5,680 5,473
Depreciation and amortization 53 95 149 156 155
Net profit before minority interest, goodwill amortization, net
interest expense including borrowing costs and income tax expense from
continuing operations 135 115 100 125 106
Net profit/(loss) before minority interest, goodwill amortization, net
interest expense including borrowing costs and income tax expense from
non recurring activities (108) 79 (9) 276 260
Goodwill amortization 29 41 41 41 40
Net Interest expense including borrowing costs 55 99 103 106 103
Net profit/(loss) before income tax (57) 54 (53) 163 68
Income tax expense 56 190 30 51 44
Outside equity interest after tax (3) (3) (4) (6) 1
Net profit after income tax (116) (139) (87) 106 25
AMOUNTS PREPARED IN ACCORDANCE WITH US GAAP :
Sales revenue from continuing operations 1,414 1,412 1,173 1,185 1,078
Income/(loss) from continuing operations (75) (223) (31) 37 11
Net income/(loss) (184) (195) (42) 119 (118)
SHARE INFORMATION /(1)/
AMOUNTS PREPARED IN ACCORDANCE WITH AUSTRALIAN GAAP :
Number of shares on issue (millions) 188 188 209 206 206
Basic Earnings per share ($'s) (0.62) (0.72) (0.42) 0.51 0.12
Basic Earnings per ADS ($'s) (2.48) (2.88) (1.68) 2.04 0.48
Dividends provided for or paid - 47 103 144 144
Dividends per ordinary share ($'s) - 0.05 0.10 0.14 0.14
Dividends per ADS ($'s) - 0.20 0.40 0.56 0.56
Dividends per ADS - US$ /(2)/ - 0.10 0.23 0.35 0.35
AMOUNTS PREPARED IN ACCORDANCE WITH US GAAP : /(3)/
Basic Earnings per share - continuing operations/(4)/ ($'s) (0.40) (1.15) (0.15) 0.18 0.05
Basic Earnings per ADS - continuing operations ($'s) (1.60) (4.60) (0.60) 0.72 0.20
Basic Earnings per share - net income/(loss) ($'s) (0.98) (1.01) (0.20) 0.58 (0.57)
Basic Earnings per ADS - net income/(loss) ($'s) (3.92) (4.04) (0.80) 2.32 (2.28)
STATEMENT OF FINANCIAL POSITION DATA (AT YEAR END)
AMOUNTS PREPARED IN ACCORDANCE WITH AUSTRALIAN GAAP :
Current assets 822 1,803 3,344 3,071 3,056
Total assets 1,833 3,476 5,086 5,219 5,599
Current liabilities 389 1,450 2,863 2,581 2,780
Non-current liabilities 568 960 723 1,004 1,127
Shareholders' equity 876 1,066 1,500 1,634 1,692
AMOUNTS PREPARED IN ACCORDANCE WITH US GAAP /(2)/ :
Current assets 821 1,802 3,342 3,070 3,055
Total assets 1,847 3,561 5,193 5,321 5,680
Current liabilities 389 1,427 2,797 2,512 2,686
Long term debt (including leases) 517 862 628 783 850
Shareholders' equity 877 1,154 1,656 1,786 1,829
3
PART I
ITEM 3 : KEY INFORMATION
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3A SELECTED FINANCIAL DATA (continued)
(1) Effective 12 April 2002, Ansell Limited reduced the number of ordinary
shares and exercisable options on issue by means of a 1 for 5 share
consolidation, which received shareholder approval at an Extraordinary
General Meeting held on 12 April 2002. Where appropriate prior year
comparatives have been adjusted to take into account this share
consolidation.
(2) US$ amount of A$ dividends translated at the Noon Buying Rate on the
respective A$ dividend payment dates, which represents approximately the
actual US$ dividend paid to holders of American Depositary Shares (ADSs)
by the Depositary.
(3) The principle differences between Australian GAAP and US GAAP are
explained in Notes 39 and 40 to the Financial Statements.
(4) Diluted earnings per share have not been disclosed, as they are not
materially different from basic earnings per share.
EXCHANGE RATES
Ansell Limited publishes its consolidated financial statements in Australian
dollars (A$ or $). Unless specified or the context otherwise requires,
references to US$ or US dollars are to United States dollars and references to $
or A$ are to Australian dollars. For the convenience of the reader, this Annual
Report contains translations of certain Australian dollar amounts into US
dollars at specified exchange rates. These translations should not be construed
as representations that the Australian dollar amounts actually represent such US
dollar amounts or could be converted into US dollars at the rate indicated.
Unless otherwise stated, the translations of Australian dollars into US dollars
have been made at the noon buying rate in New York City for cable transfers in
Australian dollars as certified for customs purposes by the Federal Reserve Bank
of New York (the "noon buying rate") on specified dates.
The rate of exchange of A$1.00 to US$ based on the noon buying rate on 30
November 2002 was 0.5617
The following table sets forth, for the periods and dates indicated, information
concerning the rates of exchange of A$1.00 to US$ based on the noon buying rate.
For the last six months
US$ PER A$1.00 HIGH LOW
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November 2002 0.5663 0.5562
October 2002 0.5596 0.5405
September 2002 0.5535 0.5410
August 2002 0.5547 0.5225
July 2002 0.5710 0.5340
June 2002 0.5796 0.5554
For the last five fiscal years
US$ PER A$1.00 2002 2001 2000 1999 1998
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Average Rate /(1)/ 0.5221 0.5377 0.6280 0.6248 0.6820
/(1)/ The daily average of the noon buying rate on the last business day of
each calendar month during the period.
Fluctuations in the A$/US$ exchange rate will affect the US$ equivalent of the
A$ price of the ordinary shares on the Australian Stock Exchange Limited, and as
a result, are likely to affect the market price of Ansell Limited's ADSs in the
United States. Such fluctuations would also affect the US$ amounts received by
holders of ADSs on conversion by the Depositary of cash dividends paid in A$ on
the ordinary shares underlying the ADSs.
4
PART I
ITEM 3 : KEY INFORMATION
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3A SELECTED FINANCIAL DATA (continued)
Ansell's borrowings are significantly US dollar based, reflecting the major
currency of the foreign investments of the company and its subsidiaries. Ansell
does not have a program to hedge foreign assets, but aligns the currency of its
borrowings to the currency of its assets and underlying cash flows.
Ansell Limited purchases forward exchange contracts to cover exchange rate risks
on import/export transactions. The Company believes it has reduced substantially
its exposure to movements in exchange rates with respect to these transactions.
The Company remains exposed, however, to fluctuations in exchange rates to the
extent that the results of operations of its foreign subsidiaries are
denominated in currencies other than Australian dollars and are translated for
each relevant financial period into Australian dollars at the average exchange
rate for the period. To partially offset this exposure, the Company instigated
in April 2001 a six-month rolling hedge of 75% of Ansell's anticipated Euro
revenues against the US dollar, which is the principal functional currency of
Ansell. This program was suspended in June 2002 while management examined a
number of alternative approaches.
3B CAPITALISATION AND INDEBTEDNESS
Not Required
3C REASONS FOR THE OFFER AND USE OF PROCEEDS
Not Required
3D RISK FACTORS
The following list of risks and uncertainties may not be exhaustive. Additional
risks and uncertainties that we do not currently know about or that we currently
believe are immaterial may also harm Ansell's business, results of operations
and financial condition.
Since a substantial portion of Ansell's costs and net sales are incurred and
realised in currencies other than Australian dollars, fluctuations in currency
exchange rates could have a material effect on the results of operations.
Due to the worldwide locations of Ansell's manufacturing facilities, a
substantial portion of costs are incurred in currencies other than Australian
dollars, primarily the U.S. dollar and currencies of various Southeast Asian
countries. In fiscal years 2000, 2001 and 2002, all Ansell's manufacturing costs
were denominated in currencies other than Australian dollars.
Similarly, due to the worldwide presence of Ansell's customer base, a
substantial portion of net sales is realised in various currencies other than
Australian dollars, primarily U.S. dollars, euros and to a lesser extent British
pounds, Canadian dollars and several other currencies. For each of fiscal years
2000, 2001 and 2002, approximately 95% of net sales were denominated in
currencies other than Australian dollars. Net sales and costs are not aligned in
certain regions, which limits natural currency hedges.
We expect that a large part of Ansell's costs and sales will continue to be in
non-Australian currencies. As a result, fluctuations in currency exchange rates,
particularly of the U.S. dollar, various Southeast Asian currencies and the euro
relative to the Australian dollar could have a material positive or negative
effect on the results of operations.
Ansell's board of directors determines the currency and hedging strategies.
These strategies should reduce but not eliminate the risks of currency exchange
rate fluctuations and will result in transaction costs associated with hedging
transactions.
5
PART I
ITEM 3 : KEY INFORMATION
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3D RISK FACTORS (continued)
The public market for Ansell Limited's shares may fluctuate.
The market price of Ansell Limited's shares could fluctuate significantly in
response to various factors, including:
.. actual or anticipated variations in semi-annual operating results,
including currency translation,
.. announcements of technological innovations or new services or products
by Ansell or Ansell's competitors,
.. the operating and stock price performance of other comparable companies,
.. changes in financial estimates by securities analysts,
.. changes in Ansell's expected capital needs, and
.. announcements relating to strategic relationships, mergers or
consolidations by Ansell's competitors or us.
The stock markets have experienced extreme price and volume fluctuations that
have affected the market prices of equity securities. These fluctuations have
often been unrelated or disproportionate to operating performance. These broad
market factors may materially affect the trading price of Ansell Limited's
common stock. General economic, political and market conditions, like recessions
and interest rate fluctuations, may also have an adverse effect on the market
price of Ansell Limited's shares.
Ansell's manufacturing operations are based, and revenues originate, in many
different countries and are, therefore, subject to instability and fluctuation
in political, diplomatic and economic conditions, including changes in policies
regarding taxation.
In fiscal year 2002, approximately 68% of the Ansell's manufacturing operations,
measured in terms of cost of production, and approximately 52% of Ansell's net
sales were outside the United States. As a company with worldwide presence, we
are subject to economic, political and diplomatic factors in countries where we
have operations that could adversely affect the financial results, restrict
Ansell's ability to expand or limit the current operations.
Ansell's latex product factories and latex concentrate manufacturing and
processing plants outside the United States are located in Malaysia, Thailand,
Sri Lanka, India and Mexico, as are those of many of Ansell's competitors. As a
result, we are directly affected by the political and economic conditions, to
the extent that they affect on the export of product from manufacturing plants
that exist in those parts of the world. Any political or economic instability, a
significant increase in the rate of corporate taxation, a discontinuance or
reduction in export tax rebates or any other change in a country's policies
regarding foreign ownership of manufacturing facilities could adversely affect
the results of operations. We expect that non-U.S. production costs will
continue to represent the major portion of such costs.
We also expect that we will be subject to the risks of conducting business
internationally, including foreign currency exchange rate fluctuations,
unexpected changes in regulatory requirements, tariffs and other barriers. The
results of operations may be adversely affected by these factors.
Several of Ansell Limited's subsidiaries, and the Company in some instances, are
defendants in product liability lawsuits related to products manufactured and
sold by subsidiaries. Although we cannot quantify Ansell's exposure in these
cases, we are incurring and expect to incur additional expenses in defending
these. Some of those expenses, as well as judgements that could be entered
against us, may not be covered by insurance.
Ansell, and other companies in its industry, are currently defendants in
numerous product liability lawsuits alleging fault for allergic reactions to
natural rubber latex gloves experienced by some users. As of 30 June 2002,
Ansell was a defendant along with other manufacturers and distributors of latex
gloves in 367 lawsuits filed in the United States and 1 in Australia on behalf
of individuals alleging wrongful death, personal injuries and lost wages as a
result of their exposure to natural rubber latex gloves.
6
PART I
ITEM 3 : KEY INFORMATION
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3D RISK FACTORS (continued)
The lawsuits allege, among other things, that the defendants were negligent in
the design and manufacture of the gloves and failed to adequately warn users of
the possibility of allergic reactions to latex products. As of 30 June 2002, the
367 lawsuits pending against us in the United States represented approximately
50% of latex-related cases filed against all defendants in the United States.
In the United States, we had 332 and 379 latex allergy lawsuits pending against
us at 30 June 2000 and 30 June 2001, respectively. We are unable to anticipate
how many additional plaintiffs may file similar lawsuits or how many lawsuits
may be filed in other countries.
Ansell is subject to regulation by governments around the world, and if these
regulations are not complied with, existing and future operations may be
curtailed, and could be subject to liability.
The design, development, manufacturing, marketing and labelling of Ansell's
products are subject to regulation by governmental authorities in the United
States, Europe and other countries, including the Food and Drug Administration
and the European Committee for Standardisation, known as the FDA and CEN,
respectively. The regulatory process can result in required modification or
withdrawal of existing products and a substantial delay in the introduction of
new products. Also, it is possible that regulatory approval may not be obtained
for a new product.
Failure to comply with applicable regulatory requirements can result in actions
that could adversely affect Ansell's business and financial performance.
Ansell is heavily dependent upon the rubber crop and the availability of latex
concentrate, and a material disruption in the regular supply of rubber for latex
concentrate or increases in the price of latex concentrate could negatively
affect the results of operations.
Ansell accounted for approximately 6% of worldwide liquid natural latex
consumption in fiscal 2002.
Ansell's ability to produce natural latex products is heavily dependent upon the
regular availability of raw rubber harvested by independent growers in Southeast
Asia and processed into latex concentrate. A material disruption in the regular
supply of rubber for latex concentrate due to weather or other natural
phenomena, labour or transportation stoppages or shortages, political unrest or
otherwise, would cause adverse effects to Ansell's business, financial condition
and results of operations. In addition, rubber is a commodity traded on world
commodities exchanges and is subject to price fluctuations driven by changing
market conditions.
7
PART I
ITEM 4 : INFORMATION ON THE COMPANY
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OVERVIEW
The fiscal year of Ansell Limited ("Ansell Limited" or the "Company", which,
unless the context otherwise requires, includes Ansell Limited and its
consolidated subsidiaries) ends on 30 June. The fiscal year ended 30 June 2002
is referred to herein as "2001-2002" or "fiscal year 2002" and other fiscal
years are referred to in a similar manner.
This Annual Report contains forward looking statements (within the meaning of
the Securities Exchange Act of 1934, as amended) and information that is based
on management's beliefs as well as assumptions made by and information currently
available to management. When used in this Annual Report the words "anticipate,"
"estimate," "believe," "expect," "potential," "should" and similar expressions
are intended to identify forward looking statements. These forward looking
statements necessarily make numerous assumptions with respect to the Company's
operations, potential exposure, industry performance, general business, economic
and regulatory conditions, access to markets and materials and other matters,
all of which are inherently subject to significant uncertainties and
contingencies and many of which are beyond the Company's control. Should one or
more of these risks or uncertainties materialise or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, planned for, estimated, expected or projected. The Company believes
that a number of important factors could cause the Company's actual results to
differ from those that may have been or may be projected in forward looking
statements made by or on behalf of the Company from time to time. These factors
include the economic situation in those areas of the world where the Company has
substantial operations, customers or consumers, foreign currency exchange rates,
the success of the Company's business strategies including cost cutting and
consolidations, ability of the Company to take advantage of growth opportunities
through acquisitions, positioning of business segments, future production output
capacity, litigation, environmental risks, and risks of derivative instruments.
See also "Risk Factors" in Item 3 of this Annual Report. The forward looking
statements in this Annual Report are contained principally under Item 5 -
"Operating and Financial Review and Prospects."
4A HISTORY AND DEVELOPMENT OF THE COMPANY
Ansell Limited's business originated in 1893 as a branch of Dunlop of the United
Kingdom ("Dunlop UK") conducting an Australian bicycle tire business. The
Company was incorporated under the Corporations Act of Australia (the
"Corporations Act") on 16 August 1920 in Victoria, Australia under the name of
Dunlop Rubber Company of Australia Limited, at which time it acquired the rights
in Australia to the trademark and tradename Dunlop and the right to use certain
technology of Dunlop UK.
Until the 1960s the Company was engaged primarily in the manufacture of rubber
based products. During the 1960s and the 1970s, the Company undertook a
geographic and product diversification program, including the addition of
clothing and footwear businesses (which were the foundation for the Pacific
Brands Group) and the establishment of manufacturing facilities in Malaysia, New
Zealand and the Philippines.
In 1980, the Company merged with another Australian industrial company, Olympic
Consolidated Industries Limited ("Olympic"), which was engaged in the tire,
polyurethane foam, cable and polystyrene businesses. Both the Company and
Olympic had substantial tire manufacturing operations in an industry with over
capacity, and the merger led to significant consolidation. After the merger, the
Company operated under the name Dunlop Olympic Limited until 1986, when it
changed its name to Pacific Dunlop Limited.
In 1984, the Company acquired the New Zealand businesses of Canzac Cables Ltd
and Dunlop New Zealand Ltd. With their cables, tire manufacturing and retailing,
industrial products and sporting goods operations fitting in well with the
Company's operations in Australia.
During the course of the 1980s, the Company further expanded its operations in
Australia and internationally through acquisitions, increased international
marketing activity and the construction of new manufacturing facilities,
particularly in Asia and North America. The Company also completed a series of
joint ventures which complemented and strengthened its prior activities, the
most significant of which was the combination of its Australian and New Zealand
tire manufacturing and retailing activities with those of The Goodyear Tire and
Rubber Company in March 1987. See "Information on the Company - South Pacific
Tyres Group."
8
PART I
ITEM 4 : INFORMATION ON THE COMPANY
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4A HISTORY AND DEVELOPMENT OF THE COMPANY (continued)
In addition, during the 1980s, the Company significantly expanded its battery
operations through the acquisition of the battery operations of Chloride Group
Plc in the United States, Australia and New Zealand and the acquisition of GNB
Technologies Inc., a United States battery manufacturer.
During 1988 - 89, the Company acquired certain health and medical businesses,
which led to the creation of the Medical Group. The Company also acquired during
1988 - 89 the automotive parts distribution businesses of Repco Limited in
Australia. Shortly thereafter, the Company acquired the Edmont industrial glove
business ("Edmont") and in 1995 acquired the Perry medical gloves business.
These two acquisitions significantly increased the size of the Ansell Healthcare
business. Sales during 1995-1996 included adidas, a number of businesses in the
Industrial Foam and Fibre Group and the public float of Cochlear Ltd. In 1996 -
97 Loscam Ltd and the Telectronics business of the Medical Group were sold and
Ansell Healthcare acquired the Golden Needles Knitting business.
On 29 November 1996, the Telectronics implantable medical device business was
sold for US$135 million ($166 million net proceeds) to St Jude Medical, Inc. of
the United States. Responsibility for products manufactured prior to the sale of
the business (including the Accufix Pacing Leads Litigation) was not assumed by
the purchaser.
During the 1998 fiscal year the Olex Communications division of the Cables and
Engineered Products Group was sold for $23 million. GNB Environmental Services
Inc. (ESI), a subsidiary of GNB was also sold in that year.
The Australian, New Zealand and Sri Lankan cable businesses were sold on 2 June
1999. Proceeds from the sale, including certain property sales of the Cables
Group, amounted to $300 million. The sale generated a breakeven result after
providing for appropriate write-downs for the Chinese and Indonesian facilities,
which were sold during the 2000 fiscal year. During that year the Company also
purchased the Medical Glove business of Johnson & Johnson for US$86 million and
announced the intention to sell its Electrical Distribution business and GNB
Technologies Group.
The sales of the Electrical Distribution business and GNB Technologies Group
were finalised during the 2001 fiscal year for $343 million and US$333 million
respectively. Other key events that occurred during the 2001 fiscal year were:
.. resolution of the outstanding Accufix Pacing Leads class action
litigation in the United States within the previously provided
provisions,
.. the strengthening of Ansell Healthcare's global leadership and
competitiveness in barrier protection products by continuing the
integration of the Johnson & Johnson medical gloves business, fully
commissioning the new Thailand condom plant and commencing a major
manufacturing and marketing restructure,
.. the acquisition and integration by Pacific Brands of Clarks Shoes and
the Sara Lee Apparel business in Australasia and Fiji,
.. the closure of South Pacific Tyres heavy truck tire plant and the
realignment of the marketing function along consumer and commercial
lines,
.. effective 1 August 2000, the Novare joint venture between the Company
and Andersen Consulting (now Accenture) for the provision of business
support services and information technology solutions to companies
across the manufacturing, distribution and retail industries in
Australia and New Zealand formally commenced operation.
In addition to the above, the Company also released announcements concerning a
restructuring of its activities including the sale of the Pacific Automotive and
Pacific Brands businesses, the acquisition of Accenture's 50% interest in the
Novare joint venture and an agreement with the Goodyear Tire and Rubber Company
of the United States governing the restructure of the South Pacific Tyres Joint
Venture.
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4A HISTORY AND DEVELOPMENT OF THE COMPANY (continued)
During the 2002 fiscal year the sales of the Pacific Automotive and Pacific
Brands businesses were finalised for $251.5 million and $730 million
respectively. The agreement with the Goodyear Tire and Rubber Company of the
United States was also completed. This agreement included reducing manufacturing
facilities from five to two and franchising a number of company owned stores.
As part of the agreement, an option in favour of the Company was executed
(exercisable in four to five years) which enables the Company to put the
business to Goodyear. If the option is not exercised, Goodyear has a call option
exercisable in the following six months. Under these agreements the Company is
not required to contribute any further cash, its contribution being limited to
its current loans of $56.3 million.
Also effective 31 August 2001 the Company acquired Accenture's 50% interest in
the Novare joint venture for $19.3 million.
In April 2002 the Company changed its name from Pacific Dunlop Limited to Ansell
Limited and reduced the number of ordinary shares and exercisable options on
issue by means of a 1 for 5 share consolidation.
The Company's registered head office is located at 678 Victoria Street Richmond,
Victoria, Australia. Its telephone number is (61 3) 9270 -7270 and fax number is
(61 3) 9270-7300. Further information can be found by viewing the Company's
website www.ansell.com. However, such information is not part of this Annual
Report.
4B BUSINESS OVERVIEW
ORGANIZATION
Following the downsizing of the Company and the significant shift of operational
activity away from Australia, a number of the services formerly provided by the
Company's head office in Australia are now undertaken at the Ansell Healthcare
head office in Red Bank, New Jersey, USA. The Group's Chief Executive Officer is
based in New Jersey.
All financing and cash management for the Group is still arranged by the
Australian head office.
ANSELL HEALTHCARE
Ansell Healthcare is a leading global producer and marketer of gloves and
condoms and its products provide essential barrier protection for many millions
of people at work, in the home and in environments such as food preparation and
microelectronics.
The following table sets forth certain information with respect to Ansell
Healthcare for the periods and dates indicated.
FOR YEARS ENDED 30 JUNE
$ IN MILLIONS 2002 2001 2000
------------------------------------------------------------------------
Sales 1,414 1,412 1,173
Operating Profit 162 144 138
Gross Assets /(1)/ 921 1,130 1,086
Employees 12,118 12,076 13,477
/(1)/ Gross assets exclude cash, goodwill and brand names.
Ansell Healthcare is organised across three broad market segments and three
geographic regions, supported by a common Operations and Supply Chain team and
Science and Technology (S&T) group.
The market segments in which Ansell Healthcare operate are Occupational
Healthcare, which accounts for 45% of Ansell Healthcare's sales and covers the
market for protective gloves in industry; Professional Healthcare (39% of sales)
which supplies medical, surgical and examination gloves for hand barrier
protection and infection control; and Consumer Healthcare (16% of sales) which
covers the markets for condoms, household gloves and other personal products.
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4B BUSINESS OVERVIEW (continued)
ANSELL HEALTHCARE (continued)
Medical gloves are marketed principally under the umbrella brands of Ansell and
Ansell Perry and specific product brands include Gammex, Conform, Encore, Nutex,
MicrOptic, X-AM, Synsation, Dermaclean, Nitratouch, Allergard, Surgikos, Maxxus,
Neutralon, Ultralon, Dispos-a-Glove, Micro Touch Ultra and Micro Touch Plus.
Condom brands include Lifestyles, Mates, Mannix, Contempo, Primex, Checkmate and
Kama Sutra.
Ansell Healthcare believes it is the world's largest manufacturer and marketer
of synthetic dipped and sewn industrial gloves, which are principally branded
Ansell Edmont. Specific product brands include Ansell, Nitrilite, Solvex,
Hycron, Golden Needles and Hyflex.
With the exception of most types of industrial gloves and some medical gloves,
Ansell Healthcare's products are predominantly made of natural and synthetic
latex and, accordingly, share common manufacturing processes and polymer dipping
technology. Ansell Healthcare believes that the expertise it has developed in
proprietary latex process and engineering technology enables it to produce high
quality natural and synthetic latex gloves and condoms at low cost and that it
has a flexible supply and logistics infrastructure that allows it to switch
production between various products to take advantage of changes in market
demand.
Over 56% of Ansell Healthcare's $1.4 billion sales for the year ended 30 June
2002 were in the Americas region, with another 31% in the European region and
the balance in the Asia Pacific region. Over the last two years, management has
been actively consolidating and restructuring both the Americas and European
sales and marketing regions. This will result in fewer locations and greater
focus on customers and market channels, with shared functions supporting each
region.
The Operations and Supply Chain group support product flows to the markets
through 17 global production facilities located in Asia, North America and the
UK. Approximately 80% of the product sold is manufactured at these facilities
with the balance outsourced under strict quality and performance specifications.
Ansell Healthcare's commitment to continuing product cost competitiveness has
been illustrated over the last two years with the announcements of the closure
of a number of plants in North America.
Ansell faces competition with each of its products from a variety of sources,
including international and local producers. Major international competitors
include Seaton Scholl Limited, which competes with most of Ansell's latex
product range; Allegiance (a Division of Cardinal Healthcare), which
manufactures and distributes medical examination and surgical gloves; MAPA, (a
subsidiary of the French Elf Petroleum group) which produces household and light
industrial gloves and condoms; Kimberley Clark Corporation, a U.S. company that
manufactures and markets disposable latex and synthetic glove products;
Sempermed (a Division of Austria's Semperit), which produces disposable medical
gloves; and Church & Dwight, which is a major producer of condoms in the United
States.
Ansell Healthcare's operations are not impacted by seasonal factors.
SOUTH PACIFIC TYRES
South Pacific Tyres manufactures and distributes a range of passenger car,
recreational, truck and agricultural vehicle tires and imports to supplement its
requirements. South Pacific Tyres' marketing efforts are complemented by
offering retreading facilities for truck and aircraft tires.
The major product brand names used by the partnership are Dunlop, Goodyear and
Olympic. Access to those brand names is through license agreements with the
Company and Goodyear. The license agreement relating to the Goodyear brand name
grants South Pacific Tyres an exclusive right to sell tires or related services
under the Goodyear name in the area south of the equator from Australia east to
Tahiti. Similarly, under the license from the Company, South Pacific Tyres has
the exclusive right to sell tires or related services under the Dunlop or
Olympic names in the same area.
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4B BUSINESS OVERVIEW (continued)
SOUTH PACIFIC TYRES (continued)
South Pacific Tyres also sells tires to Goodyear on a wholesale basis for resale
outside this area. South Pacific Tyres operates a distribution network of 668
retail outlets in Australia and New Zealand. The retail outlets use a range of
trading names, including Beaurepaire for Tyres, Goodyear Auto Service Centres
and Frank Allens Stores.
During the year the Company and The Goodyear Tire & Rubber Company of the United
States, entered into a major restructuring agreement. This agreement included
reducing manufacturing facilities from five to two and franchising a number of
Goodyear Auto Service Centres and Beaurepaires for Tyres stores.
These changes are on target with the plan, with the three manufacturing
facilities now closed and a number of stores franchised.
As part of the agreement, an option in favour of Ansell Limited was executed
(exercisable in four to five years), which enables Ansell to put the business to
Goodyear. If the option is not exercised, Goodyear has a call option exercisable
in the following six months. Under these agreements, Ansell is not required to
contribute any further cash, its contribution being limited to its current
loans. As a result of this agreement, the Company, effective 1 July 2001,
discontinued its past practice of including 50% of the result of South Pacific
Tyres (after elimination of inter company items) in its statements of income.
The Company's interest in the South Pacific Tyres partnership is carried as an
investment.
DISCONTINUED OPERATIONS
Over the last three years the Company has pursued a policy of divesting major
businesses to enable greater focus on the Ansell Healthcare operations.
The following table sets forth certain information with respect to these
discontinued operations for the periods and dates indicated.
FOR YEARS ENDED 30 JUNE
$ IN MILLIONS 2002 2001 2000
------------------------------------------------------------------
Sales 809 2,745 4,553
Operating Profit 61 163 241
Gross Assets /(1)/ 46 1,160 1,969
Employees - 11,333 18,058
/(1)/ Gross assets exclude cash, goodwill and brand names.
The major business groups divested during the last three years are as follows:
PACIFIC BRANDS
The Pacific Brands business was sold in November 2001 for $730 million to an
investor consortium led by CVC Asia Pacific and co-led by Catalyst Investment
Managers Pty Ltd.
Pacific Brands was a large Australian consumer goods business marketing many
brands that are household names and was organised into four key operating
groups; Clothing, Household Products, Footwear and Sport, Leisure and Workwear.
PACIFIC AUTOMOTIVE
The Company sold its Australian and New Zealand automotive parts business
effective 31 August 2001 for $251.5 million to a company owned and funded by GS
Private Equity, Gresham Private Equity and Macquarie Direct Investment.
Pacific Automotive traded under the trade names of Repco Auto Parts, CarParts,
Autopro, Motospecs, Ashdown and Appco and was a supplier of general autoparts
selling to the trade, service stations and reseller markets.
12
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4B BUSINESS OVERVIEW (continued)
DISCONTINUED OPERATIONS (continued)
GNB TECHNOLOGIES GROUP
The Company completed the sale of the GNB Technologies Group to Exide
Corporation, a US corporation, effective 30 September 2000 for US$333 million
cash and 4 million Exide shares.
GNB Technologies manufactured industrial and automotive lead acid batteries. Its
batteries were used in the telecommunications, power control, automotive and
power markets. GNB Technologies consisted of two business units; Automotive and
Industrial. In addition, GNB Technologies was a recycler of lead.
THE ELECTRICAL GROUP
The company completed the sale of the Electrical Distribution business in
Australia and New Zealand to Hagemeyer Group effective 31 July 2000 for $343
million.
The Electrical Group comprised Australia's largest distributor of electrical
installation products. Lawrence & Hanson, Wattmaster, Auslec in Australia and
Corys Frasers in New Zealand had a combined total of more than 220 outlets. The
business supplied electrical contractors, mining, government and industrial
customers.
RAW MATERIALS
Raw materials are a significant manufacturing cost for many of Ansell
Healthcare's products, the most significant being latex. Latex prices can be
volatile and are dependent upon world supply and demand and currency movements.
Ansell Limited attempts to obtain raw materials from the most economical and
reliable sources wherever situated, with regard to world supply, prices and
commodity markets. The Company has multiple suppliers for its major raw
materials to minimise the risks associated with sole suppliers. No material
shortages are anticipated in any of Ansell Healthcare's operations. The Company
attempts to pass on to its customers raw material price fluctuations. Careful
monitoring and management of raw material costs is carried on throughout Ansell
Healthcare's business segments.
REGULATION AND ENVIRONMENTAL MATTERS
GOVERNMENT REGULATION
The products Ansell Limited manufactures are subject to regulations of varying
degrees in each of the countries in which the Company markets its products.
These regulations have been particularly advanced in the United States by the
Safe Medical Devices Act of 1990 and in Europe, with the completion of the work
required by the Single European Act of 1986 and its on-going implementation. In
addition, harmonisation of regulatory requirements on an international basis has
led to the adoption of an international quality management system standard,
which is being implemented progressively by various regulatory authorities
including the FDA and the Commission of the European Union.
Changes in existing requirements or adoption of new requirements could adversely
affect Ansell Healthcare's ability to comply with regulatory requirements.
Failure to comply with regulatory requirements could have a material adverse
effect on the business, financial condition and results of operations.
UNITED STATES
In the United States, products offered through Ansell's Professional Healthcare
and Personal Healthcare segments are regulated as medical devices under the
Federal Food, Drug and Cosmetic Act (the FDC Act) by the FDA. We believe that
all of the Company's products regulated by the FDC Act are in compliance in all
material respects with the relevant sections of the FDC Act and the advice and
guidance provided by the FDA. Medical device manufacturers are subject to
periodic inspection by the FDA for compliance with the FDA's current Quality
System Regulation, which specifies good manufacturing practices (known as
QSR/GMP requirements) for medical devices. The FDA has a number of compliance
and enforcement procedures when deviations from QSR/GMP requirements are
observed during such inspections. Which procedures are used depends upon the
seriousness of the observations as well as the compliance history of the
facility inspected and the company owning it.
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4B BUSINESS OVERVIEW (continued)
REGULATION AND ENVIRONMENTAL MATTERS (continued)
UNITED STATES (continued)
As a general matter, the FDA often seeks to resolve observed QSR/GMP
deficiencies on a voluntary basis without resorting to formal administrative
enforcement action. In many cases, the FDA and the affected company enter into
an agreement whereby the company retains one or more recognised, expert
consultants to assist the company in achieving substantial compliance with the
relevant QSR/GMP requirements and to certify that such efforts have been
successful. When observed QSR/GMP deficiencies cannot be resolved through
voluntary action, the FDA has the option of initiating further enforcement
action, including warning letters, import alerts, product bans, field
corrections, seizures, recalls, injunctions, civil penalties, fines based on the
equitable remedy of disgorgement, adverse publicity issued by the FDA and
criminal prosecutions.
Each manufacturing operation of Ansell Healthcare has a Quality
Assurance/Quality Control (QA/QC) department with its own budget. Also, we
operate in a total quality environment where all participants in the
manufacturing process are responsible for quality. It is the responsibility of
the QA/QC department along with manufacturing to maintain the quality systems
and records.
The FDA has periodically inspected most of Ansell Healthcare's manufacturing
facilities, including Ansell Healthcare's overseas manufacturing facilities and
has made observations on how manufacturing operations could be improved. In
upgrading manufacturing facilities to address the FDA's observations and
evolving technology and to otherwise comply with QSR/GMP requirements, we have
and will continue to expend time, monies and efforts in the areas of product and
quality control.
The FDA currently requires manufacturers intending to market a new medical
examination glove, surgical glove or condom or to modify significantly a
previously cleared medical examination glove, surgical glove or condom or the
labelling of one of these products to obtain prior clearance. Although we
typically have not experienced delays in obtaining clearance for new medical
examination glove, surgical glove or condom products, there can be no assurance
that we will not experience such delays for future products. An adverse
determination by the FDA or a request for additional data or information could
have the effect of delaying or precluding clearance and, at the same time, could
materially delay or block the commencement of marketing new medical examination
glove, surgical glove or condom products.
The FDA examines medical examination gloves, surgical gloves and condoms that
are imported into the United States by randomly testing some but not all
shipments for defects. If a shipment of any of these products is found to be
defective, the manufacturing facility that produced the defective product will
be subject to a Level 1 import alert. Under Level 1, no further shipments will
be cleared for import unless tested and shown not to be defective.
A facility will be removed from Level 1 if five consecutive shipments are tested
and shown not to be defective. The facility can then import shipments without
prior testing but subject to possible FDA testing on a random basis. If a second
shipment is found to be defective during testing while on Level 1 or in random
FDA testing during the 24 months after removal from Level 1, the manufacturing
facility will be placed on Level 2 import alert. On Level 2, no further
shipments will be cleared for import unless tested and shown not to be
defective.
A facility will be removed from Level 2 if ten consecutive shipments are tested
and shown not to be defective. The facility can then import shipments without
prior testing but subject to possible FDA testing on a random basis. If a second
shipment is found to be defective during testing while on Level 2 or in random
FDA testing during the 24 months after removal from Level 2, the manufacturing
facility may be placed on Level 3 import alert. A facility on Level 3 cannot
import further shipments even if they have been tested and shown not to be
defective.
A facility can be removed from Level 3 only by showing FDA that the facility
complies with QSR/GMP requirements based on an acceptable FDA inspection or a
certification by the facility based on an independent audit by a qualified third
party. After this, the facility will be placed on Level 1 detention and must
seek removal from that status as described above. Ansell facilities in
Bangalore, India and Surat Thani, Thailand are currently on Level 2 detention.
Thus, if any shipment from any of these facilities is found to be defective
during the 24-month period after removal from Level 2, the facility responsible
for the shipment may be placed on Level 3 import alert, resulting in a ban on
imports of additional shipments from that facility into the United States.
14
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ITEM 4 : INFORMATION ON THE COMPANY
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4B BUSINESS OVERVIEW (continued)
REGULATION AND ENVIRONMENTAL MATTERS (continued)
UNITED STATES (continued)
Labelling and promotional material for medical examination gloves, surgical
gloves, and condoms are regulated by the FDA under the FDC Act and violations
are subject to enforcement action as described above. Advertising for medical
examination gloves, surgical gloves, and condoms is regulated by the Federal
Trade Commission (FTC) under the Federal Trade Commission Act and violations are
subject to enforcement action by the FTC including orders prohibiting
objectionable claims, civil monetary penalties, monetary consumer redress, and
orders requiring corrective advertising. We believe that the labelling and
advertising of all Ansell products complies in all material respects with FDA
and FTC requirements.
EUROPE
Condoms and medical gloves are regulated by Directive 93/42/EEC of the European
Commission on medical devices that came into effect on 1 January 1995 and became
a mandatory requirement for sales in Europe in June 1998. This directive
regulates the sale of all medical devices throughout the European Union and the
European Economic Area (which comprises the fifteen states of the European Union
plus Iceland, Norway and Liechtenstein). Ansell Healthcare's condoms and medical
gloves are in compliance with the requirements of this directive and all
relevant standards (including rules for the affixing and use of CE conformity
marking set forth by Directive 93/465/EEC of the European Commission) allowing
these products to carry the CE mark and to be sold in all European countries
except, with respect to condoms, France, without further approval. Pursuant to
Article 8 of Directive 93/42/EEC, France requires testing of condoms in addition
to the requirement necessary to obtain a CE mark.
Occupational gloves are governed under the directive for personal protective
equipment, Directive 89/686/EEC. Ansell Healthcare's occupational gloves are in
compliance with the requirements of this directive and all relevant standards
(including rules for the affixing and use of CE conformity marking set forth by
Directive 93/465/EEC of the European Commission) allowing these products to
carry the CE mark and to be sold in all European countries without further
approval.
Ansell Healthcare is also required to comply with regulations governing
packaging waste, including Directive 94/62/EEC, which requires that certain
percentages of waste material must be reused or recycled in every European Union
country. The required percentage will increase over the next few years, and
Ansell Healthcare must show compliance with Directive 46/95/EEC, which regulates
the privacy of personal data on customers and individuals submitting complaints.
OTHER GOVERNMENT REGULATION
Whether or not the FDA clearance is obtained for a new product, approval or
clearance of a product by regulatory authorities in foreign countries may be
required prior to the commencement of sales of the product in such countries.
The requirements governing product approvals or clearances vary widely from
country to country, and the time required for approval may be longer or shorter
than that required for FDA approval. There are also several local country
quality marks that, although not required, are essential to sales in various
countries.
Additionally, Ansell Healthcare operates plants in the United Kingdom, Malaysia,
Sri Lanka, Thailand, Mexico and India. The occupational, health and safety laws
and regulations vary dramatically within these countries. Ansell Healthcare's
policy is to operate a more stringent Ansell-wide approach to occupational
health and safety regardless of these prescribed regulations and to ensure that
an internationally acceptable work environment is provided for employees. We
coordinate an international occupational health and safety program through
Ansell Healthcare's Global Safety, Health and Environment Director. All plants
are required to report on all occupational health and safety issues on a monthly
basis to senior management.
Details of other regulatory and environmental matters are referred to in Note 36
to the Financial Statements contained within Items 17 and 18.
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ITEM 4 : INFORMATION ON THE COMPANY
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4C ORGANISATIONAL STRUCTURE
Note 37 to the Financial Statements included in Items 17 and 18 contains a
listing of the Company's subsidiaries, their countries of incorporation and the
Company's proportion of ownership interest in each.
4D PROPERTY, PLANT AND EQUIPMENT
Set out below is a breakdown by geographic location of the Company's
manufacturing facilities (with distribution facilities attached to manufacturing
facilities not counted separately), as at 30 June 2002.
NO. OF MANUFACTURING
GEOGRAPHIC REGION FACILITIES
----------------------------------------------------------
United States 5
Malaysia 3
United Kingdom 1
Thailand 2
Mexico 2
Sri Lanka 1
India 3
----------------------------------------------------------
Total 17
==========================================================
The Company's material leased properties are as set forth below:
Country City Floor Space (Sq ft) Use
------- ---- ------------------- ---
Premises/Property:
Australia Glen Waverly 13,000 Marketing
Australia Richmond 28,000 Corporate
England Tamworth 26,000 Manufacturing, Warehousing
England Surbiton 9,000 Marketing
England Newark 12,000 Marketing
Germany Munich 7,000 Marketing
France Paris 27,000 Marketing
Belgium Brussels 22,000 Marketing
Belgium Aalst 56,000 Warehousing
USA Red Bank 21,000 Marketing, Corporate
Mexico Juarez 219,000 Manufacturing
Property only:
Sri Lanka Colombo 1,080,000 Manufacturing
All of the above-listed leased properties are fully utilized, except for the
Richmond, Australia facility, which is 25% utilized.
The Company believes that its facilities are suitable and adequate for its
present needs and are in good operating condition. Ansell Limited has in place
insurance covering casualty and certain other risks to which its worldwide
facilities and operations may be subject. Generally, the current insurance
policies do not cover political risks.
Pursuant to Company policy, the Company's principal capital intensive and
strategic manufacturing and distribution facilities are owned. Those facilities
that are not owned are generally leased by the Company for periods varying from
1 to 10 years, and comprise certain warehouse/distribution centres and sales and
administration office accommodation. The Company does not believe its business
is dependent on any single facility.
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5A OPERATING RESULTS
The following discussion and analysis is based upon or derived from the
Financial Statements included in this Annual Report, which are prepared in
accordance with Australian GAAP.
Notes 39 and 40 to the Financial Statements contain a discussion of the major
differences between Australian GAAP and U.S. GAAP and reconciliation to U.S.
GAAP.
The following tables set forth the contributions of each business group to sales
revenue and operating profit of the Company for the fiscal years ended 30 June
2000, 2001 and 2002:
OPERATING REVENUE BY BUSINESS GROUP /(1)/
(EXCLUDING UNALLOCATED & NON RECURRING ITEMS) FOR YEARS ENDED 30 JUNE
$ IN MILLIONS 2002 % 2001 % 2000
----------------------------------------------------------------------------------------------------------------
Occupational Healthcare/(2)/ 640 (1.7%) 651 15.2% 565
Professional Healthcare/(2)/ 547 0.4% 545 26.2% 432
Consumer Healthcare/(2)/ 227 5.0% 216 22.7% 176
Discontinued Businesses/(3)/ 809 (70.5%) 2,745 (39.7%) 4,553
----------------------------------------------------------------------------------------------------------------
Total Operating Revenue 2,223 (46.5%) 4,157 (27.4%) 5,726
================================================================================================================
/(1)/ The sales figures in this table exclude intergroup sales. There were no
significant intergroup sales during any of these three fiscal years.
/(2)/ In prior years the Ansell Healthcare Group was reported as a single
business segment. As a result of the downsizing of the Company the major
continuing business segments are Occupational Healthcare, Professional
Healthcare and Consumer Healthcare.
/(3)/ Discontinued Businesses have been restated to include the Pacific Brands
Group and the Pacific Automotive Group, both of which were sold during
the year.
OPERATING PROFIT BEFORE TAX /(1)/ FOR YEARS ENDED 30 JUNE
$ IN MILLIONS 2002 % 2001 % 2000
------------------------------------------------------------------------------------------------------
Occupational Healthcare/(2)/ 37 (15.9%) 44 (12.0%) 50
Professional Healthcare/(2)/ 93 30.9% 71 1.4% 70
Consumer Healthcare/(2)/ 33 13.8% 29 61.1% 18
South Pacific Tyres JV Share/(3)/ (30) (2)
Unallocated Items and Eliminations/(4)/ (57) (70) (79)
Non Recurring/Discontinued Businesses/(5)/ (108) 109 (7)
Net Interest, including borrowing costs/(6)/ (55) (99) (103)
----------------------------------------------------------------------------------------------------
Total Operating Profit Before Tax (57) 54 (53)
====================================================================================================
/(1)/ The operating profit figures in this table exclude unrealised operating
profit on inventory which has been purchased by one business group from
another.
/(2)/ In prior years the Ansell Healthcare Group was reported as a single
business segment. As a result of the downsizing of the Company, the
major continuing business segments are Occupational Healthcare,
Professional Healthcare and Consumer Healthcare.
/(3)/ Effective 1 July 2001 Ansell Limited discontinued including 50% of the
result of South Pacific Tyres in its statements of income (refer Note 2
to the Financial Statements contained within Items 17 and 18).
/(4)/ Prior year comparatives have been restated to include costs of Ansell
Healthcare's Corporate Head Office.
/(5)/ Discontinued Businesses have been restated to include the Pacific Brands
Group and the Pacific Automotive Group, both of which were sold during
the year.
/(6)/ Prior year comparatives have been restated to include Borrowing Costs
within Net Interest.
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ITEM 5 : OPERATING AND FINANCIAL REVIEW AND PROSPECTS
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5A OPERATING RESULTS (continued)
SALES REVENUE BY GEOGRAPHIC MARKET
The following table sets forth the Company's sales revenue from continuing
businesses by geographic market for the fiscal years ended 30 June 2000, 2001
and 2002. The revenue has been classified by location of the customer and
excludes intergroup sales.
FOR YEARS ENDED 30 JUNE
$ IN MILLIONS 2002 2001/(1)/ 2000/(1)/
--------------------------------------------------------------------------------
Australia, New Zealand and Southeast Asia 170 161 137
North, Central and South America 800 813 664
Europe 444 438 372
--------------------------------------------------------------------------------
Total 1,414 1,412 1,173
================================================================================
/(1)/ Prior year values have been restated to exclude the Sales Revenue of
businesses transferred to Discontinued Businesses during the year.
RESULTS OF OPERATIONS
CONSOLIDATED
Ansell Limited recorded a pretax profit of $195.6 million for the year ended 30
June 2002, compared to a $247.8 million pre-tax profit in the previous year.
After allowing for interest, borrowing costs, goodwill amortisation and
substantial one-off non-recurring items after tax of $184.6 million, the result
attributable to Ansell shareholders was a loss of A$115.8 million. The result
reflects the final stages of the transformation from a conglomerate to
essentially a single global business.
OPERATING REVENUE
Total revenue in 2001/2002 of $3,190.4 million included other revenue of $939.7
million, which related to proceeds from the sale of businesses. Sales revenue in
2001/2002 was $2,222.8 million compared with $4,156.8 million in 2000/2001 and
$5,725.8 million in 1999/2000. Sales revenue was lower as a result of the
divestiture of the Pacific Automotive business in August 2001 and Pacific Brands
business in November 2001.
Sales from continuing Ansell Healthcare operations (Occupational, Professional
and Consumer divisions) of $1,414.2 million increased marginally over the
previous year, with improvements in both the Professional and Consumer
divisions, offset by lower sales recorded in Occupational. Sales for the
2000/2001 year of $1,412.2 million represented an increase of 20% or $239.5
million over the 1999/2000 year due largely to a full year contribution from the
Johnson & Johnson medical business (4 months in 1999/2000).
On a geographic basis, sales in the Americas region for 2001/2002 were $799.5
million, a reduction of 1.7% over the 2000/2001 level of $813.0. This was
primarily due to the downturn in the manufacturing sector in the USA that
comprises a significant part of the Occupational Healthcare customer base.
Revenues in both Australia and S.E. Asia and Europe were ahead of the previous
year.
OPERATING PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE
Ansell Limited recorded an Operating Loss of $57.2 million for 2001/2002
compared to a profit of $54.1 million in 2000/2001 and a loss of $52.6 million
in 1999/2000. The Group continued its rationalisation and restructuring programs
with the closure of certain manufacturing plants predominantly in the USA and
the transfer of production to Malaysia and Mexico. The programs that commenced
in the previous year saw an additional element added, with the announced closure
of the manufacturing facility at Troy in the USA. This resulted in a $63.1
million write down.
A review of the carrying value of all assets resulted in the write down of all
amounts owing by and shares held in Exide Technologies of the USA. This company,
which had previously purchased the GNB Battery operations was placed in Chapter
11, the reorganisation chapter of the US Bankruptcy Code on 15 April 2002,
causing a $99.9 million write down.
The 2001/2002 result also includes a net gain of $25.7 million on the
divestiture of businesses.
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5A OPERATING RESULTS (continued)
RESULTS OF OPERATIONS (continued)
The 2000/2001 result included the gain on the sale of the Electrical
Distribution business of $145 million, the write down of the assets of the
Pacific automotive business of $97.7 million and rationalisation and
restructuring charges of $111.0 million.
The 1999/2000 result was impacted by the write down of the GNB assets of $160
million, a provision for the restructure of the Group's supply chain operations
of $54.1 million and a reduction in Ansell Healthcare's result of $35 million
primarily due to unfavourable currency movements.
INCOME TAX EXPENSE
Income tax expense for the year was $55.8 million compared with $189.9 million
for 2000/2001 and $29.8 million for 1999/2000. The current year tax expense
included the write off of tax balances attributable to the Australian operations
of $15.2 million compared to $158.5 million in 2000/2001.
A further major item in the difference between the prima facie tax benefit on
the operating loss of $17.2 million and the income tax expense of $55.8 million
for 2001/2002 was the tax attributable to the non-deductible write down of
assets of $48.9 million compared to $43.2 million in 2000/2001. The 2000/2001
balance also included non-deductible provisions for rationalisation and
restructuring costs of $19.6 million and tax attributable to a non-taxable gain
on the sale of the Electrical Distribution business of $49.3 million.
In 1999/2000 the difference between the prima facie tax benefit of $19 million
and the income tax expense was primarily due to the tax attributable to the
non-deductible write down of the assets of the GNB Technologies business of
$57.6 million, the impact of restating the Australian future income tax benefit
resulting from a change in Australian income tax rates of $18.8 million and
non-deductible goodwill amortisation of $6.8 million, partially offset by the
tax attributable to investment and export incentive allowances of $9.7 million.
ANSELL HEALTHCARE
YEAR ENDED JUNE 2002 V JUNE 2001
Ansell Healthcare's sales of $1,414.2 million were essentially flat with
2000/2001, while Operating Profit of $162.3 million was 12.5% higher.
Ansell Healthcare held or increased market share in most of its markets and
products in a difficult trading environment.
OCCUPATIONAL HEALTHCARE
Sales of $640.2 million were lower than the previous year by 1.7% while
Operating Profit of $37.0 million was lower by 16.5%. Operating Profit margin
decreased from 6.8% to 5.8%.
Ansell Healthcare's Occupational business is the recognised global leader for
Occupational Health and Safety gloves, holding over 20% of the market for the
non-cotton and leather categories. This segment accounts for approximately 45%
of Ansell Healthcare's total revenues and 23% of operating profit.
With significant resources and expertise in the field of Occupational Health and
Safety, the business offers consulting advisory services to industry, and
provides measurable reductions in the occurrence and severity of hand injuries
in the workplace, as well as increased hygiene for processed foods and other
"clean" products. The rollout of the Ford Global Distribution Alliance contract
in USA is a good example of leveraging of these advisory services. One of the
major Ford plants has reported a 50% reduction in the incidence of hand injuries
in the first six months following the implementation of the Company's product
and supply recommendations. Ansell Occupational Healthcare is the only supplier
able to capitalise on this procurement trend towards inclusion of savings in
workplace injuries in assessing total cost of the product.
The Hyflex TM family or ergonomic globes combines the polymer science and
dipping process know-how of Ansell Healthcare with the fibre and knitting
technology of Golden Needles (acquired in 1997). This family of products
provides for the manufacturing trend in developed economies towards lighter
assembly work, which requires a greater level of dexterity.
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5A OPERATING RESULTS (continued)
ANSELL HEALTHCARE (continued)
OCCUPATIONAL HEALTHCARE (continued)
Aside from replacement of existing usage of heavier style gloves, a large number
of workers have had to use bare hands to allow for dexterity. This family of
products now offers the necessary hand protection for these workers. Despite
difficult economic conditions during the period, sales in this product range
increased by 27%.
The economic recession that has affected most industrialised countries during
the period negatively impacted the Occupational Healthcare segment. A
significant part of this segment's customer base is in the manufacturing sector,
and this has been particularly hard hit, especially in the USA and Germany. In
the face of the economic downturn, Occupational Healthcare has increased its
share of the available market in all major categories.
This segment is presently undergoing a major restructuring which was announced
last year involving the transfer of most manufacturing activity from USA to
Mexico and Asia. The anticipated benefits to profit in the period from the move
of knitted products from Wilkesboro, USA to Juarez, Mexico were delayed and
manufacturing inefficiencies were incurred during the move and ramp up in both
the old and new plants. While profit was adversely impacted in the period, we
believe that benefits will begin to flow through the results in the New Year, in
addition to benefits from the other plants' restructuring, including the closure
of Troy.
PROFESSIONAL HEALTHCARE
Sales of $546.9 million were essentially flat with the prior period, while
Operating Profit of $92.7 million improved by 31.3%. Operating Profit margin
increased from 13.0% to 17.0%.
The Professional Healthcare segment supports healthcare providers with medical,
surgical and examination gloves for hand barrier protection and infection
control. It accounts for approximately 39% of Ansell Healthcare's revenue, and
57% of operating profit. Ansell Healthcare's Professional segment is the
undisputed world leader in market share of natural latex and synthetic surgeon's
gloves with more than 20% and ranks in the top three in the world examination
glove market with around 12% share.
Global marketing programs focused on the new powder-free and synthetic latex
ranges of both surgeons' and examination gloves continued to drive sales growth
in all regions. Conversion rates to powder free products range from above 60% in
Australia to 35% in USA and somewhat less in Europe. Improved profit margins
have been achieved in the period as a result of this marketing strategy.
Acceptance of the Company's flagship Encore TM surgeons' glove during hospital
evaluation trials in USA was strong, with Professional Healthcare winning over
65% of head to head trials against competitive gloves. Europe launched the new
Gammex PFTM (powder free) surgeons' glove in the period and market trials show
rapid user acceptance. In Australia, where the segment holds a clear leadership
position, the growth in powder free and synthetic latex surgeons' gloves
continued its positive momentum. During the period production of surgeons'
gloves ceased at the Massillon, USA facility and the volume was transferred to
the Shah Alam facility in Malaysia at 30% lower costs. This contributed to the
improved operating profit. New synthetic latex surgeons' gloves are also gaining
increasing acceptance in the fast growing and profitable but still relatively
small sector. Gains in the overall market share for surgeons' gloves occurred
during the period as sales of PF surgeons' gloves increased by 11%.
Professional Healthcare's focus in examination gloves continued to shift towards
higher margin powder free and synthetic latex products, and away from more
commoditised powdered gloves. With the exception of one site that produces a
high margin and unique product, all Professional Healthcare's examination glove
manufacturing facilities are now fully converted to powder free production.
However, world over supply remains a factor depressing prices in this segment
which supports its strategy of out sourcing powdered gloves and concentrating
production on the higher margin powder free synthetic products. Sales of
examination gloves were 5% lower in the period with only sales at attractive
margins being retained. As a result of this approach, examination gloves now
represent less than 16% of Ansell Healthcare's total sales revenue.
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5A OPERATING RESULTS (continued)
ANSELL HEALTHCARE (continued)
CONSUMER HEALTHCARE
Sales of $227.1 million improved by 5% over the prior year, while Operating
Profit of $32.6 million was higher by 10.9%. Operating profit margin increased
from 13.6% to 14.4%.
Consumer Healthcare covers the markets for condoms and other personal products,
and is approximately 16% of Ansell Healthcare's revenues and 20% of operating
profit. Consumer Healthcare ranks in the global top 3 in the condom segment,
with a 12% share of the world market, covering both retail and public sectors.
The segment also markets a range of housekeeping gloves through a small number
of selected partners in international markets. This range is now being reported
in the Consumer segment rather than Occupational.
Significant improvement in performance is being driven by steady gains in market
share in the growing world market for condoms, as well as the initial benefits
from the transfer of manufacturing to Asia, which was fully implemented in this
period.
Consumer Healthcare's marketing teams in USA, Europe and Australia have again
won a number of awards for innovative packaging and advertising, and the
division's leading brands include LifeStyles, CheckMate, Mates, Prime, Contempo,
Kama Sutra and Akuel. A United Nations Agency recently projected a significant
increase in the need for condoms supplied by Public Sector authorities in the
fight against HIV/AIDS in Asia and Africa over the next decade. Consumer
Healthcare's reputation for quality, competitive costs and recognised brands
ensure that it is well placed to participate in any new opportunities that arise
from this projection.
YEAR ENDED JUNE 2001 V JUNE 2000
Sales increased by 20% over the prior period largely due to a full year
contribution from the Johnson & Johnson medical business (4 months in prior
year) and the devaluation of the Australian dollar against the US dollar and
Euro. Operating Profit increased by 4.6% over the prior period. A majority of
product costs are denominated in US dollars or currencies linked to the US
dollar and the strength of the US dollar against the Euro significantly reduced
the profitability of European sales.
Sales for the Occupational Healthcare segment increased by 15%. Excellent volume
growth was achieved in new product ranges, which include the Hyflex ergonomic
glove range and disposable nitrile examination gloves. Improved volumes in core
products were also achieved. The economic slowdown in the USA adversely affected
sales in the second half of the year in that region however results were strong
in both Europe, excluding the effects of the Euro devaluation, and Australia and
South East Asia.
Sales for the Professional Healthcare segment increased by 26% assisted by an
additional 8 months reporting of results from the medical business acquired from
Johnson & Johnson. Organic volume growth of over 10% in both powder free
surgical and examination glove categories was achieved. While average prices for
powder free examination gloves reduced by a further 10% during the period,
prices stabilised in the second half of the year.
Sales for the Consumer Healthcare segment increased by 23%. Global volume growth
of 8% for condoms was driven by 18% gains in both the USA retail branded market
and the global tender business. Major profitability improvements were achieved
as the new condom plant in Thailand ramped up to full capacity during the year.
Over half of Ansell Healthcare's sales were in North America with another third
in Europe and the balance in the Australia and South East Asia region. Overall
performance was affected by the over-capacity and pricing competition,
particularly in the first half, in the US$1 billion world market for examination
gloves. Notwithstanding this Ansell Healthcare maintained full plant
utilisation.
In the US$600 million growing world market for surgical gloves, Ansell's
Professional Healthcare business maintained its market share with very strong
growth in the emerging powder-free segment.
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5A OPERATING RESULTS (continued)
ANSELL HEALTHCARE (continued)
YEAR ENDED JUNE 2000 V JUNE 1999
Sales were flat for the year compared to the prior year. Operating Profit
reduced by 19% to $138.0 million mainly due to the weakening of European
currencies and lower examination glove prices driven by a world oversupply
position.
Sales for the Occupational Healthcare Segment were adversely impacted by weak
European currencies and price pressure on synthetic examination gloves and
remained flat with the prior year. Strong sales growth was recorded in new
products in both North America and Europe, especially the "Hynit" polymer on
knit ergonomic glove, the new "Hyflex" light duty glove and the cut resistant
range of knitted products. The core products within the General Purpose/Chemical
resistance category also recorded an underlying 3% growth.
Sales for the Professional Healthcare segment were adversely impacted by lower
latex examination glove prices and weak European currencies; however, sales in
the powder free latex surgical glove segment grew by 35% in North America,
Europe and Australia. Consistent with this was Ansell's emphasis on surgical
gloves, which was further augmented by the acquisition of Johnson and Johnson's
medical glove business on 27 February 2000. Unit volume sales of latex
examination gloves remained in line with the prior year.
Sales for the Consumer Healthcare Segment were flat and were adversely impacted
by weak European currencies. Increased market share was achieved in several key
markets in Europe and in North America.
Operating profit was favourably impacted by the underlying sales growth and
lower product costs from manufacturing efficiency gains. Offsetting these gains
were the impact of weaker European currencies, lower examination glove prices
due to world oversupply and start up costs at newly commissioned lines in
Thailand and the USA.
DISCONTINUED BUSINESSES
PACIFIC BRANDS
YEAR ENDED JUNE 2002 V JUNE 2001
The Pacific Brands business was sold in November 2001. The results for the five
months that it was owned by the Company were ahead of the previous year,
assisted by the acquisition of the Sara Lee business in March 2001. Sales of
$662 million were up on the corresponding period of $595.5 million. Operating
profit for the period was $52.4 million, up 7.8% on the previous corresponding
period of $48.6 million.
YEAR ENDED JUNE 2001 V JUNE 2000
Whilst sales increased 6.5% to $1,359 million profit fell by 7.4% to $100
million.
The softer result in 2000/2001 was largely driven by a contraction in profit
margins in what was a difficult trading environment within the Australian retail
sector, exacerbated by a number of external factors, most notably the
depreciation of the Australian dollar, introduction of the Goods and Services
Tax (GST) and the impact of the Sydney Olympics. This was largely offset by the
contribution from acquisitions and strong performance of overseas businesses
together with Pacific Brands' ability to push through price increases.
One of the key features of the year was the successful integration and
rejuvenation of Sara Lee's Australian brands following their acquisition for
$59.8 million in March 2001 giving Pacific Brands leadership in the new markets
of hosiery and workwear and expanding its position in the clothing and intimate
apparel markets.
Clarks Shoes and its range of premium children's and adult footwear including
Hush Puppies, acquired in September 2000, benefited from its access to the
infrastructure of the Footwear Group and was returned to profitability.
The Sport Leisure & Workwear Group, the largest Australian-owned sporting
business, performed strongly. Growth continued in the Dunlop and Everlast
brands.
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5A OPERATING RESULTS (continued)
DISCONTINUED BUSINESSES (continued)
PACIFIC BRANDS (continued)
The downturn in the housing market led to a difficult year for the Household
Products Group. The bedding market remained subdued however the new Tontine
pillow plant in Melbourne operated at capacity.
Restructuring continued with the sale of Bonds spinning and the Vita Pacific
upholstered furniture business. The closure of four clothing plants in Australia
and New Zealand was also announced. Warehousing was further reorganised as part
of the supply chain improvement program.
YEAR ENDED JUNE 2000 V JUNE 1999
Sales increased by 8.2%* to $1,289* million while profit increased 11.4%* to
$104* million.
Australian retail demand was generally solid notwithstanding softness in some
apparel categories. Demand in the homewares market was strong throughout the
year leveraging from the significant upsurge in the housing sector in the lead
up to the introduction of the Goods and Services Tax.
There were good performances across most major product categories. The branded
outerwear business and household products had outstanding years. The Pierre
Fontaine, Grosby and relaunched Julius Marlow footwear brands performed
strongly. Socks, underwear and bras made market share gains with Berlei bras
increasing exports to the USA. Dunlop and Everlast sporting footwear and
clothing brands performed well.
The successful introduction of new branded products including the Bonds Hipster
and Berlei Touched Bra, the relaunching of the Julius Marlow footwear brand and
the acquisition of the Amco and Lightning Bolt clothing brands for the growing
surf and streetwear apparel market, were all initiatives undertaken and
implemented in the year.
* These values are as reported for fiscal year 2000 and do not reflect the
transfer of certain businesses to Discontinued Businesses in fiscal year
2001 or thereafter.
PACIFIC AUTOMOTIVE
YEAR ENDED JUNE 2002 V JUNE 2001
The Pacific Automotive business was sold effective 31 August 2001. Revenue for
the two months that Pacific Automotive was owned by the Company was $132
million, which compared with the $130 million in the corresponding period of the
previous year. Operating Profit was $7.5 million, compared with $4.5 million for
the previous corresponding period.
YEAR ENDED JUNE 2001 V JUNE 2000
Market conditions remained difficult during fiscal year 2001 with sales down 4%
to $762 million and operating profit down 13.3% to $39 million.
The results were after including restructuring and acquisition costs and the
impact on sales and margins of the introduction of the Goods and Services Tax in
Australia. Sales improved in the second half including a strong performance by
Repco New Zealand.
The year's main focus was consolidation of the Group's five operating businesses
into a stronger operational platform as the largest wholesale and retail
distributor of its kind in Australia and New Zealand. This included the
successful establishment of Motospecs as a specialty Australian importing and
kitting business and ongoing rationalisation of the distribution network which
included closure of a further five distribution centres.
During the year the rollout of the new style of Repco retail store continued
with nearly one-third of Repco's 301 Australian stores now operating in this
format. Repco also launched an innovative Team Repco customer loyalty program,
which attracted 13,000 members in the first nine months.
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5A OPERATING RESULTS (continued)
DISCONTINUED BUSINESSES (continued)
PACIFIC AUTOMOTIVE (continued)
YEAR ENDED JUNE 2000 V JUNE 1999
Despite market conditions being difficult sales increased by 3.5% to $794
million however operating profit was down 6.3% to $45 million.
The replacement Automotive Parts businesses remained relatively subdued during
the period 1999-2000. Increased warranty periods and continued growth of Fleet
Management utilising OEM parts continued to affect the after market parts
business. To help overcome this lack of increased demand in the more traditional
areas of the business, the rollout of new format stores together with the
establishment of a new retail focused store continued during the period. The
customer base target here is the "Do-It-Yourself" market and the more general
retail consumer. During the fiscal year 16 of these stores were commissioned.
The refining of the express parts centre concept (ie trade focused facilities
carrying a larger number of stock items offering fast and efficient delivery to
the trade customer) continued throughout the year. The cost of operation of
these individual centres was reduced and the rationalisation of the older, less
effective trade outlets continued.
An Automotive Joint Venture was established with another supplier to the
reseller market to better service this sector and bring about significant
product rationalisation and a reduced cost base.
5B LIQUIDITY AND CAPITAL RESOURCES
The Company operates internationally and in many different economic climates but
inflation has not had a material effect on the Company's results of operations.
The Company does not have material subsidiaries in any economies that have been
subject to hyperinflation.
The Company operates a Central Treasury from its office in Melbourne, Australia.
The Treasury manages Ansell's external debt, invests excess cash held centrally
and acts to hedge all foreign exchange exposures world wide. Treasury does take
minor foreign exchange positions for trading purposes for short periods. The
company has small bank borrowings outside Australia and cash is generated in
operating subsidiaries around the world in a number of currencies. Where
possible excess funds are accumulated at the Central Treasury.
Cash and deposits at 30 June 2002 were $276.9 million compared with $337.9
million at 30 June 2001 and $1,077.9 million at 30 June 2000. Cash and deposits
at 30 June 2002 included restricted deposits of $18.4 million ($27.0 million at
30 June 2001 and $26.3 million at 30 June 2000) which have been set aside to
cover the provisions established to address any remaining liability of members
of the Group to claims arising with respect to the Accufix Pacing Lead.
NET CASH FROM OPERATING ACTIVITIES
Net cash provided by operating activities for 2001/2002 was $113.1 million
compared to $226.6 million in 2000/2001 and $190.3 million in 1999/2000. This
included $82.7 million on non-recurring payments compared to $54.5 million in
the previous year and $20.3 million in 1999/2000. Payments in respect of Ansell
Healthcare's restructuring program of $38.6 million were a major component of
these non-recurring payments.
Payments in respect of the Accufix Pacing Leads litigation and settlement
totalled $10.7 million compared with $24.3 million in 2000/2001 and $11.7
million in 1999/2000.
NET CASH FROM INVESTING ACTIVITIES
Net cash provided by investing activities was $874.5 million compared to $628.7
million in 2000/2001 and a cash usage of $288.8 million 1999/2000. The current
year included $936.4 million of proceeds from the sale of the Pacific Automotive
and Pacific Brands businesses.
Capital expenditure for the year of $34.3 million was considerably lower than
the two prior years of $76.0 million and $156.8 million, due to the Group's
smaller size. There are no material commitments for capital expenditure at 30
June 2002. The following table presents a summary of capital expenditure by
Business Segment for the past three years:
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5B LIQUIDITY AND CAPITAL RESOURCES (continued)
FOR YEARS ENDED 30 JUNE
$ IN MILLIONS 2002 2001 2000
------------------------------------------------------------------
Occupational Healthcare 7 9 21
Professional Healthcare 13 8 10
Consumer Healthcare 2 5 14
Discontinued Businesses 12 39 105
Corporate Services - 15 7
------------------------------------------------------------------
Total 34 76 157
==================================================================
NET CASH FROM FINANCING ACTIVITIES
Net cash used in financing activities was $1,041.1 million compared to $1,585.9
million in 2000/2001 and cash provided of $75.9 million in 1999/2000. During the
year, the Company made net repayments of borrowings of $936.9 million the bulk
of which was Australian dollar denominated debt reflecting the sale of
Australian based assets. This compares to net repayments of $1,213.9 million in
2000/2001 and net proceeds from borrowings of $329.9 million in 1999/2000.
Net debt (ie borrowings including trade bills less cash) reduction was
significant in the current year falling from $1,299.8 million in 2000/2001 to
$365.6 million at the end of 2001/2002. This occurred as a result of business
sale proceeds of $936.4 million being applied to debt reduction. Debt reduction
was further assisted by the strong Australian dollar, which reduced borrowings
by $41.0 million, offset by the impact of dividend payments and net interest and
borrowing costs.
The reduced net debt improved balance sheet ratios for the Group with Net Debt
to Equity falling from 121.9% last year to 41.8%. Net Liabilities to Equity
decreased from 196.9% to 79.7%
The Company's long-term debt has been rated by the U.S. credit rating agencies
Standard & Poor's Rating Group and Moody's Investors Service Inc. since 1988-89.
The Company's ratings are as follows:
LONG TERM OUTLOOK SHORT TERM
--------- -------- ----------
Moody's Ba2 Negative Not Prime
Standard & Poor's BB+ Negative B
The current ratings from both rating organisations were announced in August 2001
and were reviewed subsequent to the half year profit announcement in February
2002.
In fiscal year 2001, the Company changed its hedge policy to more closely match
the currency of the Group's borrowings to the currency of the Group's assets and
underlying cash flows. As a result approximately two thirds of the borrowings at
30 June 2002 are denominated in US dollars.
The company's borrowing portfolio at 30 June 2002 had an average maturity of 949
days (previous year 829 days), was 83.4% fixed and 16.6% floating, with an
average duration of 711 days, compared to the previous years 110 days. The
average cost of debt for 2001/2002 was 5.63% down from the previous year's
levels of 6.76%.
Net interest expense and borrowing costs for the year were $54.7 million
compared to the previous years $99.4 million and $102.5 million in 1999/2000.
This fall was due to the reduction in net debt, lower interest rates and
stronger Australian dollar.
The Company completed a US$100 million three-year revolving credit facility with
four core banks in January 2002. This facility remains unused and the company
believes that working capital is sufficient for its present requirements.
CURRENCY RESTRICTIONS
The Company operates in a number of countries such as China, India, Sri Lanka
and Malaysia where Central Banks in those countries have imposed currency
restrictions and Malaysia has pegged its currency rate to the US dollar. These
restrictions do not affect the daily operations of the relevant subsidiaries and
to date have not restricted the flow of capital, interest or dividends. The
Company anticipates that these restrictions will not have a material adverse
affect on its operations.
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5C RESEARCH AND DEVELOPMENT
Ansell Healthcare spends about 1.25% of sales on research and development.
Product and process innovation is essential to continuing profitable growth, and
more than 15% of total sales currently come from products developed in the
previous three years. The Company's commitment to innovation and new product
development will be further enhanced with the establishment of Ansell
Healthcare's new world-class Science and Technology Centre in Shah Alam, outside
Kuala Lumpur, Malaysia. Ten PhDs, two MScs and 23 graduates staff the facility
in Malaysia, and a smaller fibre-technology centre at South Carolina State
University in the USA.
We have established relationships with several medical research institutions,
such as Georgetown University, Drexel University and Johns Hopkins University in
the USA, and we made annual contributions to scientific research programs at the
University of Tampere in Finland and the Medical College of Wisconsin, USA.
Ansell Healthcare's sponsored research includes the identification and isolation
of natural rubber latex proteins, which may contribute to latex allergies in
some people. We use the results of this research to improve the product quality,
and we encourage the researchers to publish their findings in the scientific
journals as part of the AnsellCares program.
The AnsellCares Scientific Advisory Board, established in 1992, is composed of
some of the leading latex allergy researchers worldwide. The Advisory Board's
charter is to direct research into critical hand barrier protection issues, such
as latex and chemical allergy, factors affecting glove barrier integrity and the
development of synthetic glove polymers. Research groups on three continents are
responsible for numerous scientific breakthroughs, and have presented their work
at many national and international allergy conferences. The output from Ansell
Healthcare's Advisory Board has paved the way for a greater understanding of
these complex issues and, through publication and dissemination, has allowed us
to reduce the allergen content of Ansell Healthcare's products. It has also
provided clinicians with guidelines on how to better manage latex-sensitive
healthcare workers and patients, and to reduce the risk of sensitisation for
future generations. The AnsellCares program includes accredited continuing
medical education programs, video presentations, technical bulletins,
newsletters, and periodic lectures and seminars.
While the Science and Technology group was devoted to implementing the
operational restructuring plan for much of the year, a number of new products
were brought to market or passed on to manufacturing for the new year. New
products that generate, or will generate, significant sales are surgeons'
gloves, Gammex PF and Dermaprene Ultra, and a number of line extensions for the
HyFlex family of ergonomic gloves.
5D TREND INFORMATION
Please refer to Item 4B - Business Overview.
5E CRITICAL ACCOUNTING POLICIES
The preparation of the company's financial statements requires our management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent liabilities at the date of the
financial statements and the reported turnover and costs during the reported
period. On an ongoing basis, our management evaluates its estimates and
judgements in relation to assets, liabilities, contingent liabilities, turnover
and costs. Management bases its estimates and judgements on historical
experience and on other various factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making judgements
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates
under different assumptions and conditions.
Our management has identified the following critical accounting policies under
Australian GAAP.
TURNOVER
Turnover from the sale of goods and disposal of other assets is recognised when
persuasive evidence, usually in the form of an executed sales agreement, of an
arrangement exists indicating there has been a transfer of title, risks and
rewards to the customer, no further work or processing is required by the Ansell
Group, the quantity and quality of the goods has been determined with reasonable
accuracy, the price is fixed or determinable, and collectibility is reasonably
assured.
In the majority of sales for most commodities, sales agreements specify that
title passes on the invoice date which is the date the commodity is generally
delivered. Revenue is recognised on the delivery date.
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5E CRITICAL ACCOUNTING POLICIES (continued)
TANGIBLE ASSETS - VALUATION
Fixed assets and goodwill are assessed to ensure carrying values do not exceed
estimated recoverable amounts.
The carrying value of each long-lived asset is reviewed annually to evaluate
whether the carrying amount is recoverable. Assets may be reviewed more
regularly if an event or change in circumstances indicates that the carrying
amount of an asset may not be recoverable. If the asset is determined to be
impaired, an impairment loss will be recorded, and the asset written down, based
upon the amount by which the asset carrying amount exceeds the higher of net
realisable value and value in use. Value in use is generally determined by
discounting expected future cash flows using a risk-adjusted discount rate.
Future cash flows are estimated based on production and sales plans, commodity
prices (considering current and historical prices, price tends and related
factors), operating costs, and planned capital costs. These estimates are
subject to risk and uncertainty, hence there is a possibility that changes in
circumstances will alter these projections, which may impact the recoverability
of these assets.
TAXATION
Full provision is made for deferred taxation on all timing differences which
have arisen but not reversed at the balance sheet date, except as follows:
.. tax payable on the future remittance of the past earnings of
subsidiaries, associates and joint ventures is provided only to the
extent that dividends have been accrued as receivable or a binding
agreement to distribute all past earnings exists;
.. deferred tax is not recognised on the difference between book values and
fair values of non-monetary assets arising on acquisitions or purchased
fixed assets which have subsequently been revalued unless there is a
binding agreement to sell such an asset and the gain or loss expected to
arise has been recognised; and
.. deferred tax assets are recognised only to the extent that it is more
likely than not that they will be recovered.
27
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ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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6A DIRECTORS AND SENIOR MANAGEMENT
The business of Ansell Limited is managed by a Board of Directors of such number
of not fewer than four and not more than eight as the Directors determine. At
present there are six Directors in office, of which Mr H. Boon is Chief
Executive Officer and Managing Director. There are no family relationships
(within the meaning of Item 6 of Form 20-F) between any director or executive
officer and any other director or executive officer.
As of 30 June 2002 the Directors of Ansell Limited were as follows:
YEAR OF INITIAL EXPIRATION OF
NAME AGE POSITION APPOINTMENT CURRENT TERM /(1)/
-----------------------------------------------------------------------------------------
Edward Tweddell 61 Chairman 2001 2004
Peter L Barnes 59 Director 2001 2004
Harry Boon 54 Chief Executive Officer 2002 -
Herbert J. Elliott 64 Director 2001 2004
Stanley P Gold 59 Director 2001 2004
S. Carolyn H. Kay 41 Director 2000 2003
/(1)/ Other than the Chief Executive Officer, the directors are subject to
re-election at the Annual General Meeting next following their
appointment and retirement by rotation every three years. At least one
third of the Company's Directors (those whom have served the longest
since last being re-elected) retire each year and may offer themselves
for re-election by the shareholders.
As of 30 June 2002 the Executive Officers (1) who were not Directors were:
COMMENCED
YEAR OF INITIAL EMPLOYMENT
NAME AGE POSITION APPOINTMENT WITH ANSELL LIMITED
---------------------------------------------------------------------------------------------------
William G Reilly 50 Senior Vice President & 2000 2000
General Counsel
Phil Corke 48 Senior Vice President, Human 1998 1998
Resources & Communications
/(1)/ Executive Officers serve at the discretion of the Board of Directors.
The following is a brief biography of each of the Directors and Executive
Officers of Ansell Limited as at 1 October 2002:
EDWARD TWEDDELL, BSC, MBBS (HONS.), FRACGP, FAICD
Chairman and Non-executive Director since October 2001. A Director of National
Australia Bank, Australia Post and CSIRO. He is also Chairman of the Nepenthe
Group Pty Ltd.
Resident Adelaide. Age 61
HARRY BOON, LLB (HONS), B.COM
Managing Director and Chief Executive Officer of Ansell Limited since April
2002. He has been with Ansell since 1976, and has been President, Chief
Executive Officer and Managing Director of Ansell Healthcare since February
1989.
Resident USA. Age 54
PETER L BARNES, B.COM, MBA MELB
Appointed Non-executive Director in October 2001. He is chairman of Samuel Smith
& Son Pty Limited and a Director of Metcash Trading Limited. He is also
President of the Winemakers Federation of Australia and a Member of the National
Food Industry Council.
Resident Sydney. Age 59
HERBERT J ELLIOTT, AC, MBE, MA CANTAB
Non-executive Director since February 2001. Chairman of the Telstra Foundation
Limited and Director of Sydney Olympic Parks Authority.
Resident Perth. Age 64
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ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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6A DIRECTORS AND SENIOR MANAGEMENT (continued)
STANLEY P GOLD, AB, JD
Non-executive Director since October 2001. President of Shamrock Holdings, Inc.,
and President and Managing Director of Shamrock Capital Advisors Inc., Director
of The Walt Disney Company and Chairman of Tadiran Communications Ltd.
Resident USA. Age 59
S CAROLYN H KAY, BA, LLB, MAICD
Non-executive Director since May 2000. She is an Advisor with Morgan Stanley, a
Director of Mayne Group and the Treasury Corporation of Victoria. She is also
Deputy Chair of the Art Foundation of the National Gallery of Victoria and the
Victorian Funds Management Corporation.
Resident Melbourne. Age 41
MICHAEL J MCCONNELL, (ALTERNATE TO MR STANLEY GOLD SINCE OCTOBER 2001)
Managing Director of Coolmain Capital Advisors LLC and Shamrock Capital
Advisors, Inc. He is also a Director of Newport Technology Fund, Nuplex
Industries and Port-Link International.
Resident USA. Age 36
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
WILLIAM G. REILLY
Senior Vice President and General Counsel
With Ansell since 2000 when he was appointed Vice President & General Counsel.
Prior to joining Ansell, Mr Reilly was Associate General Counsel of C.R. Bard
Inc. from 1990 to 2000. Prior to Bard, Mr Reilly held increasingly responsible
positions as senior counsel with The Hertz Corporation, McKesson Corporation,
Dresser Industries and GAF Corporation.
PHIL CORKE
Senior Vice President Human Resources and Communications
Phil Corke has been with Ansell since 1998 when he was appointed Senior Vice
President of Human Resources. Prior to joining Ansell, Mr Corke was Vice
President of Human Resources of Alpharma Inc (generic pharmaceuticals) from 1996
to 1997 and was Director of Training and International Compensation for Textran
Inc from 1994 until 1996. Mr Corke was hired by Bristol-Myers in the United
Kingdom in 1988 as Personnel Director and was transferred to the United States
in September 1990 as Human Resources Director, Europe for Bristol-Myers Squibb
Pharmaceutical Group.
ROBERT J BARTLETT
Company Secretary and General Manager - Corporate
Robert Bartlett was appointed Company Secretary and General Manager - Corporate
in 2001 and has had over 37 years experience with the Company. Robert has
previously held senior finance and administrative positions with the Corporate
Head Office, as well as with operating units, both in Australia and overseas.
DAVID M GRAHAM
General Manager, Finance & Accounting
David Graham joined the Company in 1982 after eight years in chartered
accounting with Ernst & Whinney (now Ernst & Young). David commenced as
Assistant Treasurer and in 1985 was appointed Group Treasurer, a position he
held until December 2001. David held the position of Acting Chief Financial
Officer from December 2001 until September 2002 and is currently General
Manager, Finance & Accounting and is based in Melbourne, Australia.
RUSTOM JILLA
Chief Financial Officer
Mr Jilla joined Ansell Limited on 23 September 2002. Mr Jilla has extensive
experience in financial roles with global companies and was most recently Vice
President Financial Operations of Perkin Elmer Inc. This followed a successful
international career with BOC Group Plc, both in the United States and New
Zealand.
29
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ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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6B COMPENSATION
The aggregate amount of remuneration paid or accrued by the Company on a
worldwide basis during 2001-2002 as compensation to its Directors and its
continuing executive officers named below as a group was $3,821,000.
In accordance with the provisions of Australian law, amounts notionally
attributed to pension and retirement benefits are deemed to be remuneration and
such amounts are included in the total amount set out in the preceding
paragraph.
The following table sets out the remuneration provided to the Directors and the
most highly remunerated officers of the Company and the Group (including those
based overseas) for the financial year.
FIXED SUPERANNUATION
REMUNERATION /(a)/ FEES /(b)/ INCENTIVES /(c)/ CONTRIBUTIONS /(d)/ TOTAL
A$ A$ A$ A$ A$
----------------------------------------------------------------------------------------------------------------------------
NON-EXECUTIVE DIRECTORS - CONTINUING
E D Tweddell /(e)/ /(f)/
Chairman 173,021 114,240 8,803 296,064
P L Barnes /(e)/ 44,976 3,598 48,574
H J Elliott 62,815 5,025 67,840
S P Gold /(e)/ /(g)/ 41,014 3,281 44,295
S C H Kay 67,536 5,403 72,939
NON EXECUTIVE DIRECTORS - FORMER
J T Ralph /(h)/ 86,990/(i)/ 6,007 92,997
A B Daniels /(j)/ /(k)/ 360,000 73,370 8,803 442,173
N A D'Aquino /(l)/ 16,565 1,325 17,890
R J McLean /(m)/ 4,993 399 5,392
I E Webber /(j)/ 46,690 3,735 50,425
MANAGING DIRECTOR AND OFFICERS/(t)/
OF THE COMPANY AND THE GROUP
H Boon /(n)/ /(u)/
Managing Director 1,190,483 142,782 292,326/(o)/ 1,625,591
P Corke /(p)/ /(u)/ 423,649 84,575 32,175/(o)/ 540,399
P R Gay /(q)/ 1,640,293 45,321 1,685,614
R P Hulstrom /(q)/ 523,693 21,055 544,748
P R Moore(R) 256,571 702,500/(s)/ 47,175 1,006,246
W G Reilly /(p)/ /(u)/ 404,489 78,523 33,516/(o)/ 516,528
I D Veal /(q)/ 1,537,196 28,193 1,565,389
/(a)/ Comprises the cost to the Company of cash salary, non-cash benefits such
as motor vehicles, housing loans and home office expenses, and
expatriate assignment costs.
/(b)/ Includes fees in connection with Board and Board Committee
responsibilities.
/(c)/ Performance-based payment.
/(d)/ Includes for Australian-based Directors and Officers, and one U.S. -
based Officer, an imputed notional contribution calculated at an
actuarial rate or to satisfy Superannuation Guarantee requirements. No
amounts were required to be paid to the Australian superannuation fund
in respect of the year ended 30 June 2002 upon advice of the Trustee.
The notional contribution amounts do not form part of the remuneration
of Directors and Executives set out in Note 28 to the Financial
Statements contained in Items 17 & 18.
/(e)/ Appointed 26 October 2001.
/(f)/ Includes remuneration for extra services related to the strategic review
of Ansell Healthcare and the resolution of matters carried over from the
Pacific Dunlop structure.
/(g)/ Mr M J McConnell was appointed alternate director for Mr Gold on 26
October 2001. In accordance with the Company's constitution, Mr
McConnell receives no separate emoluments from the Company for acting as
Mr Gold's alternate.
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ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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6B COMPENSATION (continued)
/(h)/ Retired 30 November 2001.
/(i)/ Includes provision of vehicle.
/(j)/ Retired 20 March 2002.
/(k)/ Includes remuneration paid for extra services as Acting Chief Executive
Officer for the period to 31 December 2001.
/(l)/ Retired 30 September 2001.
/(m)/ Retired 27 July 2001.
/(n)/ US-based Officer. Appointed Chief Executive Officer on 12 April 2002 and
Managing Director on 30 April 2002.
/(o)/ Includes contributions to US non-qualified pension or benefit plan.
/(p)/ US-based Officers.
/(q)/ Ceased employment during year. Payments include statutory and previously
negotiated contractual amounts due on termination of employment,
including accumulated annual leave and long service leave.
/(r)/ Ceased employment with the Group during the year upon the sale of the
Pacific Brands business.
/(s)/ Includes retention incentive relating to sale of business.
/(t)/ The officers included in this disclosure are those executives having,
during the year, the greatest authority for managing the Group. Other
executives who have not had such authority may have received
remuneration at a level in excess of that shown for the executives named
above.
/(u)/ US based Officers are paid in US$. The average exchange rate for the
period as set out in the financial statements is US$0.52214 = A$1.00.
The Company at 30 June 2002 had agreements with each of the Directors who are
not executive officers, which provide for benefits upon termination. The full
extent of the liabilities of the Company under these agreements has been
undertaken by a superannuation fund of which the Company is employer sponsor.
The Company has operated two share plans for employees and Directors.
.. the Pacific Dunlop Executive Share Plan ("Executive Plan"); and
.. the Pacific Dunlop Employee Share Plan ("Employee Plan").
No issue of shares has been made under either Plan since February 1994. The
Board determined during 1996 that no further issues of shares would be made
under the Executive Plan.
Shares issued under the Executive Plan to selected employees ("Executives") were
paid up to 5 cents and were subject to restrictions for a determined period (for
the 1993/94 issue - 8 1/4 years). While partly paid, the shares are not
transferable, carry no voting rights and no entitlement to dividends (but are
entitled to participate in bonus or rights issues as if fully paid). The price
payable for shares issued under the Executive Plan varies according to the event
giving rise to a call being made. Market price at the date of the call is
payable if an Executive ceases employment with the Company (other than for
death, retrenchment, retirement or upon the sale of a business) prior to
expiration of the restriction period. Once restrictions cease, the price payable
upon a call being made will be the lesser of $10.00 ($2.50 for issues prior to
13 September 1991) or the last sale price of the Company's ordinary shares on
the Australian Stock Exchange Limited. As of 30 June 2002, no offers to
Executives were outstanding and as noted above, no further issues will be made
under this Plan. The aggregate number of Executive Plan Shares on issue could
not exceed 5% of the total issued capital of the Company.
The number of Executive Plan Shares outstanding at 30 June 2002 was 1,174,600
and as of 30 September 2002 was 1,116,100 shares. At 30 September 2002, no
Executive Plan Shares outstanding were held by the Directors and executive
officers of Ansell Limited named above as a group. During the fiscal year, the
amounts outstanding on 307,100 existing Executive Plan Shares were fully paid.
From the end of the fiscal year through 30 September 2002, the amounts
outstanding on an additional 58,500 Executive Plan Shares were fully paid.
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ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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6B COMPENSATION (continued)
Under Australian law, the Company is not required to disclose and does not
otherwise disclose the number of Executive Plan Shares held by each executive
officer individually, unless such executive officer is also a Director. There
were no Executive Plan Shares held by Directors of Ansell Limited as of 30 June
2002.
In addition to the Executive Plan, the Company maintains an Employee Plan under
which 678,300 fully paid Ordinary Shares were held as of 30 June 2002 by
employees of the Company and 676,667 shares (including Ordinary Shares issued as
bonus shares) were held as of 30 September 2002. The Employee Plan permits
full-time and part-time employees, who have completed three or more years
continuous service with the Company and who do not participate in the Executive
Plan, to acquire 20 ordinary shares in the capital of the Company for each
completed year of service. The shares are issued at market value as of the date
of issue, payable as to 50 cents per share by the employee, the balance financed
by an interest free loan from the Company repayable, at latest, on cessation of
employment. Loans under this plan have been made, and any future loans under
this plan will be made, only if permitted under the relevant securities laws.
The shares are not transferable while a loan remains outstanding, but carry
voting rights and entitlement to dividends (although dividends are applied in
reduction of the loan). Invitations are made under the Employee Plan from time
to time. As of 30 June 2002, no offer to employees was outstanding. The
aggregate number of Employee Plan Shares on issue may not exceed 5% of the total
issued capital of the Company.
Issues of shares under the Employee Plan to date have been in 1986-1987 at
$23.60 per share, in 1987-1988 at $20.05 per share, in 1988-1989 at $20.65 per
share, in 1990-1991 at $22.10 per share, in 1991-1992 at $21.50 per share and in
1993-1994 at $25.00 per share. Holders of Employee Plan Shares at June 1987, May
1989 and October 1993 became entitled to bonus shares (stock dividends)
totalling 1,960,062 shares in respect of bonus issues (stock dividends) declared
in June 1987, May 1989 and October 1993.
(Note: These $ values have been amended from those reported in prior years to
take into account the one for five share consolidation that took place during
fiscal year 2002)
During the 2001-2002 fiscal year, the loan liability of members in respect of
77,866 fully paid ordinary shares of $2.50 each was discharged. From the end of
the fiscal year through 30 September 2002 the loan liability in respect of an
additional 1,633 fully paid shares was discharged. No new shares were issued
during 2001-2002 under the Employee Plan.
The Company's accounting policy in respect of the Employee Plan is to recognise
the paid-up capital and share premium upon allotment and the receivable created
by the loan to employees to acquire the shares. In respect of the Executive
Plan, no amount is recognised upon issue, apart from the capital paid-up on the
shares, as the amount of the call payable is not known at the time of issue.
Once a call has been made upon the shares and paid, the Company recognises the
increase in paid-up capital and share premium. A loss of $535,381 pre tax in
respect of the Employee Share Plan was recognised for the year 2001-2002,
compared to a loss of $206,567 after tax for the year 2000-2001 and in 1999-2000
a loss after tax of $219,712.
6C BOARD PRACTICES
The Board works under a set of well-established corporate governance policies
that reinforce the responsibilities of all Directors in accordance with the
requirements of the Corporations Act and the Australian Stock Exchange (ASX). In
addition, many of the governance elements are enshrined in the Company's
constitution. The Board regularly reviews and updates its corporate governance
policies, to ensure that the Company's policies remain in accordance with best
practice.
RESPONSIBILITIES
The Board's responsibilities and duties include the following:
.. review and determine strategic direction and policies, allocation of
resources, planning for the future and plan for succession;
.. to appoint a Chief Executive Officer for the ongoing management task of
developing and implementing suitable business strategies, consistent
with the Company's policies and strategic direction;
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6C BOARD PRACTICES (continued)
RESPONSIBILITIES (continued)
.. regularly evaluate the performance of the Chief Executive Officer and
senior management, and determine their remuneration;
.. monitor and oversee the Company's financial position, including the
audit process; and
.. ensure that the conduct of the Company and its officers are legally and
ethically of the highest order, and that work practices in all
operations give priority to safety.
Ansell places high priority on risk identification and management throughout all
its operations and has processes in place to review their adequacy. These
include:
.. a comprehensive risk control program that includes property protection
and health, safety and environmental audits using underwriters,
self-audits, engineering and professional advisers; and
.. a process to identify and measure business risk.
The Company has also developed procedures to ensure that employees are aware of
and discharge their obligations under relevant privacy laws in their handling of
information provided to the Group.
The Company has procedures in place to ensure that Directors, executives,
management and employees carry out their duties and responsibilities to the
highest ethical standards. These procedures and practices set high standards for
ethical behaviour and business practice beyond complying with the law, and are
based on the following key principles:
.. acting with fairness, honesty and integrity;
.. being aware of and abiding by laws and regulations;
.. individually and collectively contributing to the well-being of
shareholders, customers, the economy and the community;
.. maintaining the highest standards of professional behaviour;
.. avoiding or managing conflicts of interest; and
.. striving to be a good corporate citizen, and to achieve community
respect.
The Company's ethical practices and procedures are reviewed regularly, and
processes are in place to promote and communicate these policies within the
Company. In carrying out its duties, the Board meets formally over one or two
days at least six times a year, with additional meetings held as required to
address specific issues. Directors also participate in meetings of various Board
Committees that assist the full Board in examining particular areas or issues.
It is also the Company's practice that Directors visit a number of the Company's
facilities in each year.
BOARD COMPOSITION
The Board's policy is that there should be a majority of independent,
Non-executive Directors. This is a requirement embodied in the Company's
constitution, ensuring that all Board discussions or decisions have the benefit
of predominantly outside views and experience, and that the majority of
Directors are free from interests and influences that may create a conflict with
their duty to the Company. Maintaining a balance of experience and skills is an
important factor in Board composition.
The requirement under the constitution is for at least twice as many
Non-executive Directors as Executive Directors. As an additional safeguard in
preserving independence, an Executive Director cannot hold the office of
Chairman. Any Director can seek independent professional advice at the Company's
expense in the furtherance of his or her duties, subject to prior discussion
with the Chairman. If this occurs, the Chairman must notify the other Directors
of the approach, with any resulting advice received to be generally circulated
to all Directors.
BOARD AND ELECTION PROCESSES
The Ansell Board currently has six Directors. In addition, one alternate
Director has been appointed to represent an overseas-based Director. Of those,
five have been appointed as Non-executive Directors (including the Chairman) and
one is an Executive Director (the Chief Executive Officer who is also Managing
Director).
33
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ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
--------------------------------------------------------------------------------
6C BOARD PRACTICES (continued)
BOARD AND ELECTION PROCESSES (continued)
New Directors are nominated by the Board, as described below, and then must face
a vote of shareholders at the next Annual General Meeting in order to be
confirmed in office. All Directors other than the Managing Director are required
to seek re-election at least once in every three years on a rotating basis.
APPOINTMENT TERMS
In order to ensure that composition of the Board will change over time, the
Board has a general policy that Non-executive Directors should not serve for a
period exceeding 12 years, and that the Chairman should not serve in that role
for more than 10 years. The Board also has a general policy that Non-executive
Directors should retire from the Board at the age of 70, and that Executive
Directors should, in general, retire by the age of 60.
In order to ensure that Directors are able to fully discharge their duties to
the Company, all Directors must consult with the Chairman or the Board prior to
accepting a position as a Non-executive Director of another company.
REMUNERATION
Non-executive Directors are paid an annual fee within a fixed amount approved
for all Non-executive Directors by shareholders. The total annual amount
approved for Ansell is currently $750,000, which was set in 1989. This is a
maximum aggregate amount, and the Company does not, at this time, intend
distributing all of this amount by way of fees. In addition, reflecting the
assets divested and the refocussing of the Company, the normal annual fee
payable to each Director has not increased since 1994.
Directors receive an annual fee of $60,000 for Board duties, with the Chair
receiving $180,000. A fee of $5,000 per annum is paid to Directors appointed to
the Audit Committee with the Committee Chair receiving an additional $2,500. No
fees are currently payable for participation on other committees. The fees paid
to Directors take into account what is paid by comparable companies, and what is
necessary to attract high-calibre people. Retirement benefits based on period of
service are paid in accordance with the Corporations Act and a schedule
previously approved by shareholders. In line with general industry practice, the
Board reviews its remuneration strategies in relation to Non-executive Directors
from time to time.
Each Non-executive Director is required to reinvest a minimum 10% of his or her
annual gross fee in acquiring shares in the Company until their shareholding is
equal to at least one year's fees, pursuant to a Non-executive Directors' Share
Plan. At an Extraordinary General Meeting on 12 April 2002, shareholders
approved the issue to Non-executive Directors of shares in the Company, in
accordance with amended rules of the Plan that now enable Non-executive
Directors to elect to apply up to 100% of their fees in acquiring shares in the
Company. As members of management, Executive Directors, when appointed, do not
receive fees or Directors' retirement benefits. They are members of the
Company's Superannuation Fund and, as such, receive Company retirement benefits.
DEALINGS IN SHARES
Subject to the restriction that persons may not deal in any securities when they
are in possession of price-sensitive information, Directors and employees
generally may only buy or sell Ansell shares in the periods immediately
following any price-sensitive announcements, including the half-year and full
year results and Annual General Meeting. At other times, Directors dealing in
Ansell shares must obtain prior approval from the Chairman.
CONFLICT OF INTEREST
In order to ensure that any 'interests' of a Director in a particular matter to
be considered by the Board are known by each Director, the Company has developed
protocols, consistent with obligations imposed by the Corporations Act and the
ASX Listing Rules, to require each Director to disclose any contracts, offices
held, interests in transactions and other directorships held to signal any
potential conflict. Appropriate procedures have been adopted to ensure that,
where the possibility of a material conflict arises, information is not provided
to the Director, and the Director does not participate in, or vote at, the
meeting where the matter is considered.
BOARD COMMITTEES
As a result of the changing focus and the smaller size of the Company, the Board
has reorganised its committee arrangements such that the previous five
committees have been reduced to two, being the Audit Committee and a combined
Nominations, Remuneration and Evaluation Committee.
34
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ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
--------------------------------------------------------------------------------
6C BOARD PRACTICES (continued)
BOARD COMMITTEES (continued)
The reduced size of the Board has meant that it is now capable of dealing with a
range of committee issues in full session. Accordingly, the former Corporate
Conduct and Donations committees were discontinued during the year, and the
Board has assumed responsibility for their function. The two ongoing committees
are made up of Non-executive Directors only. The Board reviews the charter of
each committee periodically.
Senior executives attend Board and committee meetings by invitation, whenever
particular matters arise that require management presentations or participation.
AUDIT COMMITTEE
The Audit Committee reviews the financial statements, adequacy of financial
controls and the annual audit arrangement. It monitors the controls and
financial reporting systems, applicable Company policies, national and
international accounting standards and other regulatory or statutory
requirements.
The Committee also liaises with the Company's internal and external auditors,
reviews the scope of their activities, reviews the external auditors'
remuneration, and advises the Board on their remuneration and appointment.
The Committee reviews the processes in place for the identification, management
and reporting of business risk, and reviews the findings reported. The Chief
Executive Officer, General Manager - Finance & Treasury, Group Chief Accountant
and principal external audit partner participate at meetings by invitation.
The current members of the Audit Committee are Mr P.L. Barnes (Chair), Mr H.J.
Elliott and Mr L.D. Crandall (a newly appointed Director).
NOMINATIONS, REMUNERATION AND EVALUATION COMMITTEE
This Committee now combines the functions of the previously separate Nominations
Committee and Remuneration and Evaluation Committee. Because of the significant
number of changes that were occurring at both Board and senior management level
during the year, the functions of the Committee were handled at meetings of the
full Board. Responsibility for those duties will now be re-assumed by the
Committee, the composition of which is yet to be determined.
This Committee's charter provides for it to periodically review the structure of
the Board, and recommend changes when necessary. This includes identifying
suitable candidates for appointment as Non-executive Directors. In doing so, the
Committee establishes the policies and criteria for Non-executive Director
selection. The criteria include the candidate's personal qualities, professional
and business experience, and availability and time to commit to all aspects of
the Board's program. The Committee also considers matters including succession
and senior executive compensation policy, including short- and long-term
incentive plans, and advises the Board accordingly.
The Committee has available independent professional advisers in supporting
Ansell's policy of attracting high calibre people at all levels, and to ensure
that the terms and conditions offered by the Company are competitive with those
offered by comparable companies.
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6C BOARD PRACTICES (continued)
ATTENDANCE AT BOARD AND BOARD COMMITTEE MEETINGS DURING THE YEAR ENDED 30 JUNE
2002
BOARD AUDIT CORPORATE CONDUCT DONATIONS
HELD ATTD HELD ATTD HELD ATTD HELD ATTD
------------------------------------------------------------------------------
DIRECTORS - CONTINUING
E D Tweddell 6 6 1 1
P L Barnes 5 5 3 3
H Boon 1 1
H J Elliott 10 9 1 1
S P Gold 6 6
S C H Kay 10 9 5 4 1 1
DIRECTORS - FORMER
J T Ralph 6 6 2 2
A B Daniels 8 8 4 4 1 1 1 1
N A D'Aquino 3 3 2 2
R J McLean 1 1
I E Webber 8 8 1 1
Held - Indicates the number of meetings held while each Director was in office.
Attd - Indicates the number of meetings attended during the period that each
Director was in office. In the case of Mr R J Mclean to 27 July 2001, Mr N A
D'Aquino to 30 September 2001, Mr J T Ralph to 30 November 2001, and Messrs A B
Daniels and I E Webber to 20 March 2002.
For Dr E D Tweddell, Mr P L Barnes and Mr S P Gold from the date of their
appointments on 26 October 2001, and Mr H Boon from 30 April 2002. Mr S P Gold
attended one meeting in person, and was represented at each other meeting by his
alternate, Mr M J McConnell.
A meeting of a special Board Committee comprising Dr E D Tweddell and Mr P L
Barnes was convened on 26 April 2002 in relation to the one for five share
consolidation. A special Board Committee meeting comprising Dr E D Tweddell, Mr
P L Barnes and Mr H J Elliott was convened on 30 April in connection with the
appointment to the Board of Mr H Boon.
The Corporate Conduct and Donations Committees met on one occasion during the
year prior to being discontinued and their functions being assumed by the Board.
6D EMPLOYEES
As of 30 June 2002 Ansell Limited employed 12,160 full time equivalent
employees.
Of these employees, less than 1% were located in Australia following the sale of
the Pacific Automotive and Pacific Brands businesses.
Approximately 17% of the total workforce of Ansell, who are predominantly
located outside of Australia, belong to trade unions, while the length of the
union contracts is typically 3 years. Management believes it has good relations
with its unions.
36
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ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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6E SHARE OWNERSHIP
The relevant interests of each Director in the share capital of the Company as
at 3 September 2002, as notified to the Australian Stock Exchange Limited
pursuant to the provisions of section 235 of the Corporations Act, were:
1 2 3
----------------------------------------------------------------
E D Tweddell 27,979
P L Barnes 3,787
H Boon 10,340 120,000
H J Elliott 3,761
S P Gold 721 24,428,841
S C H Kay 3,248
(1) Beneficially held in own name, or in the name of a trust, nominee
company or private company.
(2) Beneficial, Executive Share Options. These were granted in 1997, had an
exercise price of $16.50, were subject to performance hurdles which had
not been satisfied and expired on 11 December 2002.
(3) Non-beneficial. Mr Gold has an indirect interest in these shares by
virtue of a 10% economic interest in the holding of Trefoil
International III, SPRL, of which he is also a Director. Trefoil
International III, SPRL is a related body corporate of Shamrock Holdings
of California Inc.
Each Director owns less than 1% of the shares outstanding except for Mr Gold's
non-beneficial shareholding which amounts to 13%.
Messrs Corke and Reilly (listed in Item 6B) do not own shares in the Company.
NON-EXECUTIVE DIRECTORS' SHARE PLAN
Shareholders approved the participation by Non-executive Directors in the plan
in October 2000 and April 2002 (on amended terms). Since receiving shareholder
approval, shares have been purchased on ASX under the Plan at the prevailing
market price on behalf of each of the then current Non-executive Directors.
Details of securities acquired on ASX on behalf of Non-executive Directors under
the Ansell Non-executive Directors' Share Plan during the financial year and
included in the Relevant Interest above, are as follows:
NUMBER OF SHARES DATE OF ACQUISITION PRICE
ACQUIRED ACQUISITION A$
--------------------------------------------------------------------------
2,535 17/12/2001 $ 0.95
Dr E D Tweddell 3,900 14/03/2002 $ 1.15
692 18/06/2002 $ 6.48
--------------------------------------------------------------------------
1,251 17/12/2001 $ 0.95
P L Barnes 1,408 14/03/2002 $ 1.15
255 18/06/2002 $ 6.48
--------------------------------------------------------------------------
2,294 14/09/2001 $ 0.72
1,704 17/12/2001 $ 0.95
H J Elliott 1,300 14/03/2002 $ 1.15
230 18/06/2002 $ 6.48
--------------------------------------------------------------------------
1,155 17/12/2001 $ 0.95
S P Gold 1,300 14/03/2002 $ 1.15
230 18/06/2002 $ 6.48
--------------------------------------------------------------------------
2,417 14/09/2001 $ 0.72
1,770 17/12/2001 $ 0.95
S C H Kay 1,462 14/03/2002 $ 1.15
254 18/06/2002 $ 6.48
--------------------------------------------------------------------------
Note: All acquisitions of shares after 12 April 2002 relate to shares in
Ansell Limited following the consolidation of the Company's share
capital, approved by shareholders at a General Meeting, on the basis
that five existing shares were consolidated into one new share.
37
PART I
ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
--------------------------------------------------------------------------------
6E SHARE OWNERSHIP (continued)
In addition, Messrs A B Daniels, J T Ralph and I E Webber participated in the
Plan prior to their respective retirements as Directors of the Company. Details
of the shares they acquired under the Plan are as follows:
.. on 14 September 2001, Mr J T Ralph 6,229 shares, Mr A B Daniels 2,458
shares and Mr I E Webber 2417 shares, each at $0.72 per share; and
.. on 17 December 2001, Mr A B Daniels 1,836 shares and Mr I E Webber 1,770
shares, each at $0.95 per share.
38
PART I
ITEM 7: MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
--------------------------------------------------------------------------------
7A MAJOR SHAREHOLDERS
To the best of its knowledge, Ansell Limited is not directly, or indirectly,
controlled by any corporation, or any foreign government. Ansell Limited does
not know of any arrangement, the operation of which may result in a change of
control of Ansell Limited.
The names of substantial shareholders in the Company and the number of fully
paid ordinary shares in which each has an interest are as follows:
NO. OF FULLY % OF ISSUED
PAID SHARES CAPITAL
Shamrock Holdings of California and its related bodies corporate 24,428,841 13.13%
Perpetual Trustees Australia Limited 20,542,631 10.98%
Maple-Brown Abbott Ltd. 19,139,772 10.23%
Harris Associates L.P. 9,358,209 5.00%
Voting rights as governed by the constitution of the Company provide that each
ordinary shareholder present in person or by proxy at a meeting shall have:
(a) on a show of hands, one vote only;
(b) on a poll, one vote for every fully paid ordinary share held.
On 30 June 2002, 206,319 ADSs (equivalent to 825,276 Ordinary Shares, which
represents approximately 0.4% of the Ordinary Shares then outstanding) were
outstanding and held by 131 registered holders with addresses in the United
States.
7B RELATED PARTY TRANSACTIONS
During the period from 30 June 1999 to 30 June 2002, the largest aggregate
amount of indebtedness owed by Directors or senior management to Ansell Limited
was $1,050,000. This indebtedness was outstanding under the Housing Loan Plan,
which has allowed certain individuals to borrow money to purchase a residence.
The rate of interest paid or charged on such indebtedness was 4.00%, 4.00% and
3.25% for fiscal years 2002, 2001 and 2000 respectively. As at the date of this
report, all amounts owing under the Plan have been repaid.
Refer to Note 34 to the Financial Statements included in Items 17 and 18 for
additional details of Related Party Transactions.
39
PART I
ITEM 8 : FINANCIAL INFORMATION
--------------------------------------------------------------------------------
8A CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
The Financial Statements are included herein as Items 17 and 18.
Refer to Note 26 to the Financial Statements for details of legal proceedings.
The Company has no fixed policy on dividend distribution. The payment of
dividends is at the discretion of the Board.
8B SIGNIFICANT CHANGES
There have been no significant events that have occurred subsequent to the end
of the financial year.
40
PART I
ITEM 9: THE OFFER AND LISTING
--------------------------------------------------------------------------------
The principal trading market for Ansell Limited's Ordinary Shares ("Ordinary
Shares"), is the Australian Stock Exchange Limited (ASX). The Ordinary Shares
are also listed on the London Stock Exchange and the Stock Exchange of New
Zealand. The Company's American Depositary Shares ("ADSs"), represented by
American Depositary Receipts ("ADR's") issued by Morgan Guaranty Trust Company
of New York, as Depositary (the "Depositary"), are traded in the United States
in the over-the-counter market and are quoted on the NASDAQ National Market
System.
The stock market operated by the ASX is the principal stock exchange in
Australia. The exchange operates by way of the Stock Exchange Automated Trading
System (SEATS) which is a fully computerised system.
Trading on SEATS takes place each business day between the hours of 10:00am and
4:00pm, Australian Eastern Standard Time or Australian Eastern Summer Time. At
4:05pm each day, the ASX subsequently matches any buy and sell orders in the
system, which are at the same price. The prices of all listed Shares are
continuously quoted while the market is open and the system prioritises the
orders first by price and second by placement in the system.
Exchange participants can cross stock between buying and selling orders, at the
buy or sell quote provided those quotes are no more than one marketable bid
apart and can cross outside this range in amounts of A$1 million or more.
Transactions on the ASX are settled on the third business day following the
trade date.
The following table sets out for the periods indicated ($A) the highest and
lowest market quotation for the Ordinary Shares reported on the Daily Official
List of The Australian Stock Exchange Limited and (US$) the highest and lowest
bid prices for ADSs quoted on the NASDAQ National Market System.
$A US$
ORDINARY SHARES PER ADS/(1)/
PERIOD HIGH/(2)/ LOW/(2)/ HIGH/(2)/ LOW/(2)/
----------------------------------------------------------------------------------------
LAST 5 FINANCIAL YEARS
Fiscal Year 2002 7.010 3.400 15.310 6.550
Fiscal Year 2001 8.400 4.000 19.375 8.205
Fiscal Year 2000 12.400 6.850 31.875 14.220
Fiscal Year 1999 16.250 10.800 38.750 28.125
Fiscal Year 1998 19.950 11.850 58.125 28.125
BY QUARTER 2002-2003
First Quarter 7.150 6.450 15.480 13.800
BY QUARTER 2001-2002
First Quarter 4.300 3.400 9.145 6.550
Second Quarter 5.200 3.550 10.750 7.402
Third Quarter 6.200 5.150 13.000 10.005
Fourth Quarter 7.010 6.000 15.310 12.650
BY QUARTER 2000-2001
First Quarter 8.400 7.000 19.375 15.155
Second Quarter 8.250 7.150 17.815 14.690
Third Quarter 7.550 5.950 17.815 12.190
Fourth Quarter 6.400 4.000 13.125 8.205
LAST 6 MONTHS
November 2002 7.690 7.030 17.200 15.600
October 2002 7.070 6.670 15.410 14.500
September 2002 7.150 6.710 15.260 14.410
August 2002 7.050 6.590 15.480 13.800
July 2002 6.770 6.450 15.000 13.900
June 2002 6.580 6.250 15.160 14.000
/(1)/ Each ADS represents four Ordinary Shares.
/(2)/ Previously reported prices have been adjusted to reflect the one for
five share consolidation that took place in fiscal 2002.
The total market capitalisation of Ansell Limited at 30 June 2002 was $1,171
million. The total market capitalisation of Ansell Limited at 30 November 2002,
was $1,393 million and the closing price for Ansell Limited ordinary shares on
the ASX on that date was $7.457.
41
PART I
ITEM 10: ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
10A SHARE CAPITAL
Not applicable.
10B CONSTITUTION
The Company replaced its memorandum and articles of association with a new
constitution on 12 April 2002. Recent changes to the Corporations Act 2001 (Cth)
("the Corporations Act") and the ASX Listing Rules reflected in the new
constitution include:
.. there is no longer a statement regarding the authorised capital of the
Company as the concept of authorised capital has been abolished for
Australian companies;
.. references to par value, share premium and share premium account have
been deleted and the "amount paid" on a share has been clarified
following the abolition of par value in Australia;
.. the non-marketable parcel sale provision has been amended to include a
power for the Company to divest holdings of less than one marketable
parcel where the relevant holding is created by a transfer of shares
registered after the adoption of the new constitution (this is
consistent with the ASX Listing Rules);
.. the provisions dealing with general meetings and proxies have been
amended to reflect the requirements of the Corporations Act;
.. the provisions dealing with access, indemnity and insurance have been
amended to reflect the changes to the Corporations Act; and
.. the dividend provisions have been expanded and clarified in light of
changes to the Corporations Act and confirms the power of the directors
to pay, rather than declare, interim and final dividends.
In addition, the maximum number of directors has been reduced from 15 to 8 and
the minimum number of directors has been reduced from 5 to 4.
Under Australian company law, a company is permitted, but not required, to have
an objects clause or statement of purposes in its constitution. The Company
deleted its previous objects clause from its constitution on 16 November 1992.
Pursuant to the provisions of the Corporations Act, the Company has the legal
capacity of an individual and all of the powers of a body corporate.
Rule 37(f) of the Company's constitution permits a director who has an interest
in a matter that is being considered at a meeting of directors to, despite that
interest, vote, be present and be counted in a quorum at the meeting, unless
prohibited by the Corporations Act. The Corporations Act prohibits a director of
the Company from being present at a meeting of directors during consideration
of, or voting upon, a matter in which that director has a material personal
interest. This does not apply to voting on directors compensation. However, the
total aggregate remuneration payable to the non-executive directors may not
exceed the maximum amount approved by shareholders in general meeting from time
to time pursuant to rule 35 of the Company's constitution.
Rule 38(b) of the Company's constitution permits the directors, to exercise all
the powers of the Company, at their discretion, including:
(a) to raise or borrow money;
(b) to charge any of the Company's property or business or any amount unpaid
on its shares; and
(c) to issue debentures or give any other security for a debt, liability or
obligation of the Company or of any other person.
These borrowing powers, as with any provision of the constitution, can be
amended by the Shareholders of the Company passing a special resolution at a
general meeting.
There is no age limit prescribed in the Company's constitution for directors.
However, the Corporations Act requires that any director of a public company who
has attained the age of 72 must submit him or herself for re-election at each
annual general meeting after attaining that age. Re-election requires the
passing of a special resolution (75% majority) of those present and voting at
the meeting.
42
PART I
ITEM 10: ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
10B CONSTITUTION (continued)
Rule 5 permits the Company to issue shares and grant options for shares on such
terms and with such rights and restrictions decided by the directors. The issue
and terms of issue, of preference shares must be approved by the Company's
shareholders in general meeting as required by the Corporations Act.
Rule 53 provides that, subject to any rights or restrictions attached to any
shares or class of shares, the profits of the Company are divisible amongst the
holders of ordinary shares (being the only class of shares currently on issue)
in proportion to the capital paid up, or credited as paid, upon the shares held
by them respectively.
Rule 30(a) provides, subject to any rights or restrictions attached to any
shares or class of shares, every shareholder present at a meeting has one vote
on a show of hands and each share, on a poll is:
(a) if fully paid - entitled to one vote;
(b) if partly paid - entitled to a fraction of one vote which the amount
paid (not credited) on the share bears to the total amounts paid and
payable (excluding amounts credited).
All directors of the Company, other than the Managing Director, are required to
seek re-election at least once in every three years on a rotating basis.
As previously indicated, rule 53 provides for each share to participate in those
of the Company's profits the Board determines to distribute in proportion to the
amount paid up on those shares, subject to any right or restriction attaching to
a share or class of shares. In the event of liquidation, rule 59 permits the
liquidator, with the sanction of a special resolution to divide among
shareholders the whole or any part of the Company's property and decide how the
division is to be carried out as between the members or different classes of
members.
Rule 58 provides that where the assets available upon a winding up are
insufficient to repay all of the capital paid on shares, the losses will be
borne by shareholders in proportion to the capital paid or that ought to have
been paid on the shares at the commencement of the winding up. If surplus assets
remain upon a winding up after having repaid the whole of the capital paid up,
the excess is to be distributed amongst shareholders in proportion to the
capital paid or that ought to have been paid on the shares at the commencement
of the winding up.
There are no redemption or sinking fund provisions in the constitution. However,
the Corporations Act requires the approval of shareholders to the issue of
preference shares with a right of redemption (or authorisation of the Board to
issue such shares). Any amount of the issue price of a share that remains unpaid
may, subject to any rights or restrictions attaching to a share, be called for
payment by the Board pursuant to rule 10. However, once the full amount of the
issue price of a share has been paid, a shareholder is not liable to contribute
any further capital to the Company in respect of that share. The Company's
constitution does not contain any provision discriminating against any existing
or prospective shareholder as a result of such shareholder owning a substantial
number of shares, nor does it contain any provisions pertaining to the changing
of the rights of shareholders.
The Company is required by the Corporations Act to hold an annual general
meeting at least once in each calender year. In addition, the Corporations Act
and rule 23 provide that the directors (including any single director) may at
any time convene a general meeting of shareholders and the directors must
convene a general meeting upon the requisition of at least 100 shareholders or
the holders of 5% of the votes that may be cast at the meeting. The constitution
does not impose any conditions upon the admission of shareholders to a general
meeting, however, rule 25(a) permits the chair of a general meeting to take any
action he or she considers appropriate for the safety of persons attending the
meeting and the orderly conduct of the meeting and may refuse a person admission
to, or require a person to leave and remain out of, the meeting if the person is
disruptive.
The constitution contains no limitations on the rights to own securities. In the
event of a partial or proportional takeover bid being made for shares in the
Company, rule 69 requires that a resolution to approve the takeover scheme be
passed at a general meeting of shareholders before any registration of a
transfer giving effect to the proportional takeover can be made. The
constitution contains no governing by-law provisions governing the ownership
threshold above which shareholder ownership must be disclosed.
43
PART I
ITEM 10: ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
10B CONSTITUTION (continued)
In addition to the information contained above, the Corporations Act:
(a) provides a code that regulates "takeovers" (changes in control) of
Australian companies that applies, in general, where a shareholder
becomes entitled to 20% or more of the issued shares of a company; and
(b) provides for disclosure of share ownership once a person and his or her
associates become entitled to 5% or more of the issued shares in a
company.
The Foreign Acquisition and Takeovers Act (Cth) regulates the acquisition of
interests in Australian companies by foreign nationals in excess of 15% of the
issued shares of a company. There are no conditions imposed under the
constitution governing changes in capital that are more stringent than required
by Australian company law.
10C MATERIAL CONTRACTS
The following is a summary of the material contracts entered into by the Company
over the last two years:
.. Sale of Business Agreement dated 30 November 2001 made between the
following Ansell Limited Group companies: Textile Industrial Design and
Engineering Pty Ltd, Union Knitting Mills Pty Ltd, Boydex International
Pty Ltd, Foamlite (Australia) Pty Ltd, Ativ Pac Pty Ltd, Pacific Dunlop
Holdings (NZ) Limited, Pacific Dunlop Holdings (Europe) Ltd, Pacific
Dunlop Holdings (USA) Inc, PD International Pty Limited, Pacific Dunlop
Holdings (Singapore) Pte Ltd, PD Holdings (Malaysia) Sdn Bhd, PD
Licensing Pty Ltd, Niblick Pty Ltd, Cliburn Investments Pty Ltd, PD
Shared Services Holdings Pty Ltd and Ansell Limited (as sellers) and PB
Holdings NV, Pacific Brands Holdings Pty Ltd, Pacific Brands Household
Products Pty Ltd, Pacific Brands Footwear Pty Ltd, Pacific Brands Sports
& Leisure Pty Ltd, Pacific Brands Clothing Pty Ltd and Pacific Brands
Holdings (NZ) Ltd (as buyers) in relation to the sale of the business of
manufacturing, marketing, selling and distribution of clothing and
related apparel, foam, bedding accessories and products, footwear and
sporting and leisure equipment carried on by the sellers and known as
"Pacific Brands."
The total consideration payable under the sale of business agreement and
under related documents for the sale of equivalent businesses in New
Zealand, Fiji, Indonesia, Hong Kong, Malaysia, USA, and the United
Kingdom was approximately A$730 million.
.. Australian Deed dated 19 October 2001 made between The Goodyear Tire &
Rubber Company, Goodyear Tyres Pty Ltd, Goodyear Australia Pty Ltd,
Ansell Limited, Pacific Dunlop Tyres Pty Ltd and Tyre Marketers
(Australia) Limited under which the parties agreed that the
restructuring of the South Pacific Tyres ("SPT") joint venture will not
require any further cash contribution from Ansell Limited. Under the
Australian Deed, Ansell Limited's future funding is limited to the loans
of A$56 million currently advanced to SPT. The Agreement contains a put
option in favour of Ansell Limited, exercisable in four to five years,
to sell Ansell Limited's interest in SPT at a price determined by the
profits achieved in the two year period prior to the exercise of the
option. If this put option is not exercised, Goodyear has a call option,
exercisable in the following six months, on the same pricing basis.
The put and call options are subject to certain conditions set out in a
Co-ordination Deed dated 19 October 2001 made between The Goodyear Tire
& Rubber Company, Goodyear Tyres Pty Ltd, Goodyear Australia Pty Ltd,
Ansell Limited, Pacific Dunlop Tyres Pty Ltd and Tyre Marketers
(Australia) Limited, Goodyear New Zealand Limited, Pacific Dunlop
Holdings (NZ) Limited and South Pacific Tyres NZ Limited.
.. Sale of Business Agreement dated 20 September 2001 made between the
following Ansell Limited Group companies: Ashdown Enterprise (Wholesale)
Pty Ltd, The Distribution Group Pty Limited, The Distribution Group
Holdings Pty Limited, PD Licensing Pty Limited, TDG Warehousing Pty Ltd
and Ansell Limited (as sellers) and Automotive Parts Group Limited and
Automotive Parts Group Holdings Limited (as buyers) in relation to the
sale of the business of sourcing, kitting, re-manufacturing,
reconditioning, selling, marketing and distributing automotive products
and materials carried on by the sellers in Australia and known as
"Pacific Automotive."
44
PART I
ITEM 10: ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
10C MATERIAL CONTRACTS (continued)
The total consideration payable under the sale of Business Agreement
and under related documents for the sale of the equivalent business in
New Zealand was approximately A$251.5 million.
.. Agreement for the Sale of Australian Business dated 26 February 2001
made between Sara Lee Apparel (Australasia) Pty Limited, Sara Lee
Corporation and Ansell Limited in relation to the acquisition by Ansell
Limited of the hosiery, intimate apparel, commercial workwear and casual
clothing business known as "Sara Lee Apparel." The total consideration
payable under this agreement and under related documents for the
purchase of the New Zealand & Fijian arms of the Sara Lee Apparel
business was approximately A$59.8 million.
.. Business Sale Agreement dated 8 August 2000 made between The
Distribution Group Limited and Ansell Limited (as sellers) and Hagemeyer
NV and Hagemeyer Electrical Distribution Group (as buyers) in relation
to the sale of the business of sourcing, manufacturing, developing,
selling, marketing and distributing electrical based products and
materials carried on by the sellers in Australia and known as the
"Pacific Dunlop Electrical Group." The total consideration payable under
the Business Sale Agreement and under related documents for the sale of
the equivalent business in New Zealand was approximately A$343 million.
10D EXCHANGE CONTROLS
Except for restrictions on foreign exchange transactions with Iraq, the National
Union for the Total Independence of Angola (UNITA) and the supporters of the
former Milosevic regime, the Reserve Bank of Australia ("RBA") does not inhibit
the import and export of funds, and no permission is required by Ansell Limited
for the movement of funds in and out of Australia. The Australian Minister of
Foreign Affairs has the express power under the Charter of the United Nationals
(Anti-terrorism Measures) Regulations 2001 (Cth) ("Regulations") to freeze funds
and other financial assets of, and prevent foreign exchange dealings between
persons or entities associated with terrorist acts. Accordingly, at the present
time, remittance of any dividends, interest or other payment by Ansell Limited
to non-resident holders of Ansell Limited's securities in the United States is
not restricted by exchange controls or other limitations, unless the
non-resident holder is a person or entity listed by the Minister under the
Regulations.
Ansell Limited has 186,395,200 Ordinary Shares (excluding Employee Plan Shares,
as defined in "Compensation of Directors and Executive Officers") on issue at 30
June 2002. Non-residents of Australia may freely hold and vote Ordinary Shares,
subject to compliance with the Foreign Acquisitions and Takeovers Act 1975 of
Australia (the "Foreign Takeovers Act"). Takeovers of Australian companies by
foreign interests are subject to review and approval by the Treasurer of the
Commonwealth of Australia under the Foreign Takeovers Act. Technically, the
statute applies to any acquisition of 15% or more of the outstanding shares of
an Australian company that has total assets valued $5 million or more ($3
million or more if greater than 50% of the assets of the company are in the form
of rural land) or any acquisition which results in one foreign person or group
of associated foreign persons controlling 15% or more of total voting power. In
addition, the statute applies to any acquisition by non-associated foreign
persons resulting in foreign persons controlling, in the aggregate, 40% or more
of total voting power or ownership.
Since the Australian government's Economic Statement of February 1992, the
policy of the body which reviews foreign investment (the Foreign Investment
Review Board) is that only acquisitions of shares in companies which have assets
in excess of $50 million will require approval. The Corporations Act also
regulates acquisitions giving rise to ownership of substantial amounts of a
company's shares.
The Corporations Act prohibits any person (including a corporation), whether
foreign or not, from acquiring voting shares if after the acquisition that
person's or any other person's entitlement would exceed 20% of the issued
ordinary shares of a company.
A person is considered to be entitled to a share under the Corporations Act if
the person or an associate (as defined in the Corporations Act) has, or is
deemed under the Corporations Act to have, power (whether direct or indirect and
whether legally enforceable or not and irrespective of certain restrictions and
restraints on such powers and other matters and things as specified in the
Corporations Act):
45
PART I
ITEM 10: ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
10D EXCHANGE CONTROLS (continued)
(1) to exercise, or to control the exercise of, the right to vote attached
to that share;
(2) to dispose of that share; and a person is considered to have acquired a
share when the person has acquired such power over such share.
This prohibition is subject to certain exceptions which must be strictly
complied with to be applicable. Some of the more significant exceptions are as
follows:
.. Section 616 of the Corporations Act permits a person who proposes to
become entitled to more than 20% of the voting shares of a company to
make a formal takeover offer, in registered form, to the shareholders of
the target company to acquire their shares. Separate takeover schemes
are required for each class of shares sought;
.. under Section 618 of the Corporations Act, a person who is already
entitled to not less than 20% of the voting shares is permitted to
acquire not more than 3% of the voting shares in any period of six
months; and
.. under Section 617 of the Corporations Act, a person who is already
entitled to not less than 30% of the voting shares can acquire in excess
of 20% of the company's issued capital by causing a takeover
announcement to be made on the person's behalf by his/her sharebroker on
the home exchange of the target company; a takeover announcement must
offer to acquire all the shares in the class which the person seeks to
acquire.
Dividends paid to holders of Ordinary Shares who are non-residents of Australia
are subject to certain Australian withholding tax requirements. See
"Taxation-Australian Taxation."
Dividends paid to United States Holders (as defined below) are also subject to
United States federal income tax requirements, although those paid to non-United
States Holders generally are not.
AMERICAN DEPOSITARY RECEIPTS
The following is a summary of all material provisions of the Second Amended and
Restated Deposit Agreement (including any exhibits thereto, the "Deposit
Agreement") dated as of 26 March 1999 among the Company, Morgan Guaranty Trust
Company of New York, as depositary (the "Depositary"), and the registered
Holders from time to time of the ADR's issued thereunder ("ADR's"). This summary
does not purport to be complete and is qualified in its entirety by reference to
the Deposit Agreement. Copies of the Deposit Agreement are available for
inspection at the principal office of the Depositary in New York, New York (the
"Principal New York Office"), which is presently located at 60 Wall Street, New
York, New York 10260. Terms used herein and not otherwise defined shall have the
respective meanings set forth in the Deposit Agreement.
ADR's evidencing ADSs ("ADSs") are issuable by the Depositary pursuant to the
terms of the Deposit Agreement. Each ADS represents, as of the date hereof, the
right to receive four Shares deposited under the Deposit Agreement (together
with any additional Shares deposited thereunder and all other securities,
property and cash received and held thereunder at any time in respect of or in
lieu of such deposited Shares, the "Deposited Securities") with the Custodian
under the Deposit Agreement (together with any successor or successors thereto,
the Custodian).
An ADR may evidence any number of ADSs. Only persons in whose names ADR's are
registered on the books of the Depositary will be treated by the Depositary and
the Company as Holders. As the context requires, the term ADR refers to
certificated receipts as well as to ADSs reflected on the direct registration
system maintained by the Depositary.
DEPOSIT, TRANSFER AND WITHDRAWAL
In connection with the deposit of Shares under the Deposit Agreement, the
Depositary or the Custodian may require the following in form satisfactory to
it:
46
PART I
ITEM 10: ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
10D EXCHANGE CONTROLS (continued)
DEPOSIT, TRANSFER AND WITHDRAWAL (continued)
(a) a written order directing the Depositary to issue to, or upon the
written order of, the person or persons designated in such order an ADR
or ADR's evidencing the number of ADSs representing such deposited
Shares (a "Delivery Order");
(b) proper endorsements or duly executed instruments of transfer in respect
of such deposited Shares;
(c) instruments assigning to the Custodian or its nominee any distribution
on or in respect of such deposited Shares or indemnity therefor; and,
(d) proxies entitling the Custodian to vote such deposited Shares until such
Shares are transferred and recorded on the register of shareholders of
the Company in the name of the Depositary or its nominee.
As soon as practicable after the Custodian receives Deposited Securities
pursuant to any such deposit or pursuant to the form of ADR, the Custodian shall
present such Deposited Securities for registration of transfer into the name of
the Depositary or its nominee, to the extent such registration is practicable,
at the cost and expense of the person making such deposit (or for whose benefit
such deposit is made) and shall obtain evidence satisfactory to it of such
registration. Deposited Securities shall be held by the Custodian for the
account and to the order of the Depositary at such place or places and in such
manner as the Depositary shall determine. Deposited Securities may be delivered
by the Custodian to any person only under the circumstances expressly
contemplated in the Deposit Agreement.
After any such deposit of Shares, the Custodian shall notify the Depositary of
such deposit and of the information contained in any related Delivery Order by
letter, first class airmail postage prepaid, or, at the request, risk and
expense of the person making the deposit, by cable, telex or facsimile
transmission. After receiving such notice from the Custodian, the Depositary,
subject to the terms and conditions of the Deposit Agreement, shall properly
issue at the Transfer Office, (the "Transfer Office") which is presently located
at the Principal New York Office, to or upon the order of any person named in
such notice, an ADR or ADR's registered as requested and evidencing the
aggregate ADSs to which such person is entitled.
Subject to the terms and conditions of the Deposit Agreement, the Depositary may
so issue ADR's for delivery at the Transfer Office only against deposit with the
Custodian of:
(a) Shares in form satisfactory to the Custodian;
(b) rights to receive Shares from the Company or any registrar, transfer
agent, clearing agent or other entity recording Share ownership or
transactions; or,
(c) other rights to receive Shares (until such Shares are actually deposited
pursuant to (a) or (b) above, "Pre-released ADR's") only if
(i) Pre-released ADR's are fully collateralised (marked to market
daily) with cash or U.S. government securities held by the
Depositary for the benefit of Holders (but such collateral shall
not constitute "Deposited Securities"),
(ii) each recipient of Pre-released ADR's agrees in writing with the
Depositary that such recipient (a) owns such Shares, (b) assigns
all beneficial right, title and interest therein to the
Depositary, (c) holds such Shares for the account of the
Depositary and (d) will deliver such Shares to the Custodian as
soon as practicable and promptly upon demand therefore; and
(iii) all Pre-released ADR's evidence not more than 30% of all ADSs
(excluding those evidenced by Pre-released ADR's), provided,
however, that the Depositary reserves the right to change or
disregard such limit from time to time as it deems appropriate.
The Depositary may retain for its own account any earnings on
collateral for Pre-released ADR's and its charges for issuance
thereof.
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10D EXCHANGE CONTROLS (continued)
DEPOSIT, TRANSFER AND WITHDRAWAL (continued)
At the request, risk and expense of the person depositing Shares, the Depositary
may accept deposits for forwarding to the Custodian and may deliver ADR's at a
place other than its office. Every person depositing Shares under the Deposit
Agreement is deemed to represent and warrant that such Shares are validly issued
and outstanding, fully paid, non-assessable and free of pre-emptive rights, that
the person making such deposit is duly authorised so to do and that such Shares
(A) are not "restricted securities" as such term is defined in rule 144 under
the Securities Act of 1933, as amended (the "Securities Act of 1933") unless at
the time of deposit they may be freely transferred in accordance with rule
144(k) and may otherwise be offered and sold freely in the United States or (B)
have been registered under the Securities Act of 1933. Such representations and
warranties shall survive the deposit of Shares and issuance of ADR's.
Subject to the terms and conditions of the Deposit Agreement, upon surrender of
an ADR in form satisfactory to the Depositary at the Transfer Office, the Holder
thereof is entitled to delivery at the Custodian's office of the Deposited
Securities at the time represented by the ADSs evidenced by such ADR. At the
request, risk and expense of the Holder thereof, the Depositary may deliver such
Deposited Securities at such other place as may have been requested by the
Holder. Notwithstanding any other provision of the Deposit Agreement or the
ADR's, the withdrawal of Deposited Securities may be restricted only for the
reasons set forth in General Instruction I.A. (1) of Form F-6 (as such
instructions may be amended from time to time) under the Securities Act of 1933.
DISTRIBUTIONS ON DEPOSITED SECURITIES
Subject to the terms and conditions of the Deposit Agreement, to the extent
practicable, the Depositary will distribute by mail to each Holder entitled
thereto on the record date set by the Depositary therefor at such Holder's
address shown on the ADR Register, in proportion to the number of Deposited
Securities (on which the following distributions on Deposited Securities are
received by the Custodian) represented by ADSs evidenced by such Holder's ADR's:
(a) Cash :
Any U.S. dollars available to the Depositary resulting from a cash
dividend or other cash distribution or the net proceeds of sales of any
other distribution or portion thereof authorised in the Deposit
Agreement ("Cash"), on an averaged or other practicable basis, subject
to:
(i) appropriate adjustments for taxes withheld,
(ii) such distribution being impermissible or impracticable with
respect to certain Holders, and
(iii) deduction of the Depositary's expenses in (1) converting any
foreign currency to U.S. dollars by sale or in such other manner
as the Depositary may determine to the extent that it determines
that such conversion may be made on a reasonable basis, (2)
transferring foreign currency or U.S. dollars to the United
States by such means as the Depositary may determine to the
extent that it determines that such transfer may be made on a
reasonable basis, (3) obtaining any approval or license of any
governmental authority required for such conversion or transfer,
which is obtainable at a reasonable cost and within a reasonable
time and (4) making any sale by public or private means in any
commercially reasonable manner.
(b) Shares:
(i) Additional ADR's evidencing whole ADSs representing any Shares
available to the Depositary resulting from a dividend or free
distribution on Deposited Securities consisting of Shares (a
"Share Distribution") and
(ii) U.S. dollars available to it resulting from the net proceeds of
sales of Shares received in a Share Distribution, which Shares
would give rise to fractional ADSs if additional ADR's were
issued therefor, as in the case of Cash.
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10D EXCHANGE CONTROLS (continued)
DISTRIBUTIONS ON DEPOSITED SECURITIES (continued)
(c) Rights:
(i) Warrants or other instruments in the discretion of the
Depositary representing rights to acquire additional ADR's in
respect of any rights to subscribe for additional Shares or
rights of any nature available to the Depositary as a result of
a distribution on Deposited Securities ("Rights"), to the extent
that the Company timely furnishes to the Depositary evidence
satisfactory to the Depositary that the Depositary may lawfully
distribute the same (the Company has no obligation to so furnish
such evidence), or
(ii) to the extent the Company does not so furnish such evidence and
sales of Rights are practicable, any U.S. dollars available to
the Depositary from the net proceeds of sales of Rights as in
the case of Cash, or
(iii) to the extent the Company does not so furnish such evidence and
such sales cannot practicably be accomplished by reason of the
non-transferability of the Rights, limited markets therefor,
their short duration or otherwise, nothing (and any Rights may
lapse). Subject to Australian law, the Company will, in
connection with any offer of such Rights, make such Rights
generally transferable or consent to the transfer thereof by
foreign investors not resident in Australia; and
(d) Other Distributions:
(i) Securities or property available to the Depositary resulting
from any distribution on Deposited Securities other than Cash,
Share Distributions and Rights ("Other Distributions"), by any
means that the Depositary may deem equitable and practicable, or
(ii) to the extent the Depositary deems distribution of such
securities or property not to be equitable and practicable, any
U.S. dollars available to the Depositary from the net proceeds
of sales of Other Distributions as in the case of Cash.
Such U.S. dollars available will be distributed by checks drawn on a bank in the
United States for whole dollars and cents (any fractional cents being withheld
without liability for interest and added to future Cash distributions). To the
extent that the Depositary determines in its discretion that any distribution is
not practicable with respect to any Holder, the Depositary may make such
distribution as it so determines is practicable, including the distribution of
foreign currency, securities or property (or appropriate documents evidencing
the right to receive foreign currency, securities or property) or the retention
thereof as Deposited Securities with respect to such Holder's ADR's (without
liability for interest thereon or the investment thereof). There can be no
assurance that the Depositary will be able to effect any currency conversion or
to sell or otherwise dispose of any distributed or offered property,
subscription or other rights, Shares or other securities in a timely manner or
at a specified rate or price, as the case may be.
DISCLOSURE OF INTERESTS
To the extent that the provisions of or governing any Deposited Securities may
require disclosure of or impose limits on beneficial or other ownership of
Deposited Securities, other Shares and other securities and may provide for
blocking transfer, voting or other rights to enforce such disclosure or limits,
Holders and all persons holding ADR's agree to comply with all such disclosure
requirements and ownership limitations and to cooperate with the Depositary in
the Depositary's compliance with any Company instructions in respect thereof,
and, in the Deposit Agreement, the Depositary has agreed to use reasonable
efforts to comply with such Company instructions.
RECORD DATES
The Depositary may, after consultation with the Company if practicable, fix a
record date (which shall be as near as practicable to any corresponding record
date set by the Company) for the determination of the Holders who shall be
entitled to receive any distribution on or in respect of Deposited Securities,
to give instructions for the exercise of any voting rights, to receive any
notice or to act in respect of other matters and only such Holders shall be so
entitled.
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10D EXCHANGE CONTROLS (continued)
VOTING OF DEPOSITED SECURITIES
As soon as practicable after receipt from the Company of notice of any meeting
or solicitation of consents or proxies of holders of Shares or other Deposited
Securities, the Depositary shall mail to Holders a notice stating:
(a) such information as is contained in such notice and any solicitation
materials,
(b) that each Holder on the record date set by the Depositary therefor will
be entitled to instruct the Depositary as to the exercise of the voting
rights, if any, pertaining to the Deposited Securities represented by
the ADSs evidenced by such Holder's ADR's; and
(c) the manner in which such instructions may be given, including
instructions to give a discretionary proxy to a person designated by the
Company. Upon receipt of instructions of a Holder on such record date in
the manner and on or before the date established by the Depositary for
such purpose, the Depositary shall endeavour in so far as practicable
and permitted under the provisions of or governing Deposited Securities
to vote or cause to be voted the Deposited Securities represented by the
ADSs evidenced by such Holder's ADR's in accordance with such
instructions. The Depositary will not itself exercise any voting
discretion in respect of any Deposited Securities.
INSPECTION OF TRANSFER BOOKS
The Deposit Agreement provides that the Depositary will keep books at its
Transfer Office for the registration, registration of transfer, combination and
split-up of ADR's, which at all reasonable times will be open for inspection by
the Holders and the Company for the purpose of communicating with Holders in the
interest of the business of the Company or a matter related to the Deposit
Agreement.
REPORTS AND OTHER COMMUNICATIONS
The Depositary shall make available for inspection by Holders at the Transfer
Office any reports and communications received from the Company which are both
(a) received by the Depositary as the holder of the Deposited Securities and
(b) made generally available to the holders of such Deposited Securities by
the Company. The Depositary shall also send to the Holders copies of
such reports when furnished by the Company. Any such reports and
communications furnished to the Depositary by the Company shall be
furnished in English.
On or before the first date on which the Company makes any communication
available to holders of Deposited Securities or any securities regulatory
authority or stock exchange, by publication or otherwise, the Company shall
transmit to the Depositary a copy thereof in English or with an English
translation or summary. The Company has delivered to the Depositary, the
Custodian and any Transfer Office, a copy of all provisions of or governing the
Shares and any other Deposited Securities issued by the Company or any affiliate
of the Company and, promptly upon any change thereto, the Company shall deliver
to the Depositary, the Custodian and any Transfer Office, a copy (in English or
with an English translation) of such provisions as so changed. The Depositary
and its agents may rely upon the Company's delivery thereof for all purposes of
the Deposit Agreement.
CHANGES AFFECTING DEPOSITED SECURITIES
Subject to the terms and conditions of the Deposit Agreement, the Depositary
may, in its discretion, amend the form of ADR or distribute additional or
amended ADR's (with or without calling the ADR's for exchange) or cash,
securities or property on the record date set by the Depositary therefor to
reflect any change in par value, split-up, consolidation, cancellation or other
reclassification of Deposited Securities, any Share Distribution or Other
Distribution not distributed to Holders or any cash, securities or property
available to the Depositary in respect of Deposited Securities from (and, in the
Deposit Agreement, the Depositary is authorised to surrender any Deposited
Securities to any person and to sell by public or private sale any property
received in connection with) any recapitalisation, reorganisation, merger,
consolidation, liquidation, receivership, bankruptcy or sale of all or
substantially all the assets of the Company, and to the extent the Depositary
does not so amend the ADR or make a distribution to Holders to reflect any of
the foregoing, or the net proceeds thereof, whatever cash, securities or
property results from any of the foregoing shall constitute Deposited Securities
and each ADS shall automatically represent its pro rata interest in the
Deposited Securities as then constituted.
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10D EXCHANGE CONTROLS (continued)
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The ADR's and the Deposit Agreement may be amended by the Company and the
Depositary, provided that any amendment that imposes or increases any fees or
charges (other than stock transfer or other taxes and other governmental
charges, transfer or registration fees, cable, telex or facsimile transmission
costs, delivery costs or other such expenses), or that shall otherwise prejudice
any substantial existing right of Holders, shall become effective 30 days after
notice of such amendment shall have been given to the Holders.
Every Holder of an ADR at the time any amendment to the Deposit Agreement so
becomes effective shall be deemed, by continuing to hold such ADR, to consent
and agree to such amendment and to be bound by the Deposit Agreement as amended
thereby. In no event shall any amendment impair the right of the Holder of any
ADR to surrender such ADR and receive the Deposited Securities represented
thereby, except in order to comply with mandatory provisions of applicable law.
Any amendments or supplements which:
(i) are reasonably necessary (as agreed by the Company and the Depositary)
in order for (a) the ADSs to be registered on Form F-6 under the
Securities Act of 1933 or (b) the ADSs or Shares to be traded solely in
electronic book-entry form; and
(ii) do not in either such case impose or increase any fees or charges to be
borne by Holders, shall be deemed not to prejudice any substantial
rights of Holders. Notwithstanding the foregoing, if any governmental
body should adopt new laws, rules or regulations which would require
amendment or supplement of the Deposit Agreement or the form of ADR to
ensure compliance therewith, the Company and the Depositary may amend or
supplement the Deposit Agreement and the ADR at any time in accordance
with such changed rules. Such amendment or supplement to the Deposit
Agreement in such circumstances may become effective before a notice of
such amendment or supplement is given to Holders or within any other
period of time as required for compliance.
The Depositary may, and shall at the written direction of the Company, terminate
the Deposit Agreement and the ADR's by mailing notice of such termination to the
Holders at least 30 days prior to the date fixed in such notice for such
termination. After the date so fixed for termination, the Depositary and its
agents will perform no further acts under the Deposit Agreement and the ADR's,
except to receive and hold (or sell) distributions on Deposited Securities and
deliver Deposited Securities being withdrawn.
As soon as practicable after the expiration of six months from the date so fixed
for termination, the Depositary shall sell the Deposited Securities and shall
thereafter (as long as it may lawfully do so) hold in a segregated account the
net proceeds of such sales, together with any other cash then held by it under
the Deposit Agreement, without liability for interest, in trust for the pro rata
benefit of the Holders not theretofore surrendered. After making such sale, the
Depositary shall be discharged from all obligations in respect of the Deposit
Agreement and the ADR's, except to advise Holders of such termination, account
for such net proceeds and other cash. After the date so fixed for termination,
the Company shall be discharged from all obligations under the Deposit Agreement
except for its obligations to the Depositary and its agents.
CHARGES OF DEPOSITARY
The Depositary may charge each person to whom ADR's are issued against deposits
of Shares including deposits in respect of Share Distributions, Rights and Other
Distributions and each person surrendering ADR's for withdrawal of Deposited
Securities, U.S. $5.00 for each 100 ADSs (or portion thereof) evidenced by the
ADR's delivered or surrendered. The Company will pay all other charges and
expenses of the Depositary and any agent of the Depositary (except the
Custodian) pursuant to agreements from time to time between the Company and the
Depositary, except:
(i) stock transfer or other taxes and other governmental charges (which are
payable by Holders or persons depositing Shares),
(ii) cable, telex and facsimile transmission and delivery charges incurred at
the request of persons depositing, or Holders delivering Shares, ADR's
or Deposited Securities (which are payable by such persons or Holders),
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10D EXCHANGE CONTROLS (continued)
CHARGES OF DEPOSITARY (continued)
(iii) transfer or registration fees for the registration of transfer of
Deposited Securities on any applicable register in connection with the
deposit or withdrawal of Deposited Securities (which are payable by
persons depositing Shares or Holders withdrawing Deposited Securities;
there are no such fees in respect of the Shares as of the date of the
Deposit Agreement) and
(iv) expenses of the Depositary in connection with the conversion of foreign
currency into U.S. dollars (which are paid out of such foreign
currency).
LIABILITY OF HOLDERS FOR TAXES
If any tax or other governmental charge shall become payable by or on behalf of
the Custodian or the Depositary with respect to the ADR's, any Deposited
Securities represented by the ADSs evidenced thereby or any distribution
thereon, such tax or other governmental charge shall be paid by the Holder
thereof to the Depositary. The Depositary may refuse to effect any registration,
registration of transfer, split-up or combination thereof or, subject to the
terms and conditions of the Deposit Agreement, any withdrawal of such Deposited
Securities until such payment is made.
The Depositary may also deduct from any distributions on or in respect of
Deposited Securities, or may sell by public or private sale for the account of
the Holder thereof any part or all of such Deposited Securities (after
attempting by reasonable means to notify the Holder thereof prior to such sale),
and may apply such deduction or the proceeds of any such sale in payment of such
tax or other governmental charge, the Holder thereof remaining liable for any
deficiency, and shall reduce the number of ADSs evidenced thereby to reflect any
such sales of Deposited Securities.
In connection with any distribution to Holders, the Company will remit to the
appropriate governmental authority or agency all amounts (if any) required to be
withheld and owing to such authority or agency by the Company; and the
Depositary and the Custodian will remit to the appropriate governmental
authority or agency all amounts (if any) required to be withheld and owing to
such authority or agency by the Depositary or the Custodian.
If the Depositary determines that any distribution in property other than cash
(including Shares or rights) on Deposited Securities is subject to any tax that
the Depositary or the Custodian is obligated to withhold, the Depositary may
dispose of all or a portion of such property in such amounts and in such manner
as the Depositary deems necessary and practicable to pay such taxes, by public
or private sale, and the Depositary shall distribute the net proceeds of any
such sale or the balance of any such property after deduction of such taxes to
the Holders entitled thereto.
GENERAL LIMITATIONS
The Depositary, the Company, their agents and each of them shall:
(a) incur no liability
(i) if law, regulation, the provisions of or governing any Deposited
Securities, act of God, war or other circumstance beyond its
control shall prevent, delay or subject to any civil or criminal
penalty any act which the Deposit Agreement or the form of ADR
provides shall be done or performed by it, or
(ii) by reason of any exercise or failure to exercise any discretion
given it in the Deposit Agreement or the form of ADR;
(b) assume no liability except to perform its obligations to the extent they
are specifically set forth in the ADR and the Deposit Agreement without
gross negligence or bad faith;
(c) in the case of the Depositary and its agents, be under no obligation to
appear in, prosecute or defend any action, suit or other proceeding in
respect of any Deposited Securities or the ADR;
(d) in the case of the Company and its agents under the Deposit Agreement be
under no obligation to appear in, prosecute or defend any action, suit
or other proceeding in respect of any Deposited Securities or the ADR's,
which in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all expense (including fees and
disbursements of counsel) and liability be furnished as often as many be
required; and
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10D EXCHANGE CONTROLS (continued)
GENERAL LIMITATIONS (continued)
(e) not be liable for any action or inaction by it in reliance upon the
advice of or information from legal counsel, accountants, any person
presenting Shares for deposit, any Holder, or any other person believed
by it to be competent to give such advice or information. The
Depositary, its agents and the Company may rely and shall be protected
in acting upon any written notice, request, direction or other document
believed by them to be genuine and to have been signed or presented by
the proper party or parties. The Depositary and its agents will not be
responsible for any failure to carry out any instructions to vote any of
the Deposited Securities (so long as any such inaction is in good
faith), for the manner in which any such vote is cast (so long as any
such action is in good faith) or for the effect of any such vote. The
Depositary and its agents may own and deal in any class of securities of
the Company and its affiliates and in ADR's.
The Company has agreed to indemnify the Depositary and its agents under certain
circumstances and the Depositary has agreed to indemnify the Company against
losses incurred by the Company to the extent such losses are due to the
negligence or bad faith of the Depositary. No disclaimer of liability under the
Securities Act of 1933 is intended by any provision hereof.
Prior to the issue, registration, registration of transfer, split-up or
combination of any ADR, the delivery of any distribution in respect thereof, or,
subject to the terms and conditions of the Deposit Agreement, the withdrawal of
any Deposited Securities, the Company, the Depositary or the Custodian may
require:
(a) payment with respect thereto of
(i) any stock transfer or other tax or other governmental charge,
(ii) any stock transfer or registration fees in effect for the
registration of transfers of Shares or other Deposited
Securities upon any applicable register, and
(iii) any applicable charges as provided in the form of ADR;
(b) the production of proof satisfactory to it of
(i) the identity and genuineness of any signature and
(ii) such other information, including without limitation,
information as to citizenship, residence, exchange control
approval, beneficial ownership of any securities, compliance
with applicable law (including, but not limited to evidence of
compliance with the Corporations Act, the Banking (Foreign
Exchange) Regulations or the Foreign Acquisitions and Takeovers
Act 1975 of Australia), regulations, provisions of or governing
Deposited Securities and terms of the Deposit Agreement and the
ADR's, as it may deem necessary or proper; and
(a) compliance with such regulations as the Depositary may establish
consistent with the Deposit Agreement. The issuance of ADR's, the
acceptance of deposits of Shares, the registration, registration of
transfer, split-up or combination of ADR's or, subject to the terms of
the Deposit Agreement, the withdrawal of Deposited Securities may be
suspended, generally or in particular instances, when the ADR Register
or any register for Deposited Securities is closed or when any such
action is deemed advisable by the Depositary or the Company.
GOVERNING LAW
The Deposit Agreement is governed by and shall be construed in accordance with
the laws of the State of New York.
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10E AUSTRALIAN TAXATION
The following discussion outlines certain Australian tax considerations relevant
to United States persons who are ADS holders or holders of Ordinary Shares.
However, the discussion is by no means exhaustive of all possible Australian tax
considerations.
The analysis regarding the Australian tax laws set forth below is based on laws
in force as of the date of this report and is subject to change in Australian
law, as well as any changes to the double taxation convention concluded between
the US and Australia, occurring after that date. The Australian Government has
progressively implemented, and is continuing to implement, a number of business
tax reform and integrity measures (the details of which are not yet finalised).
In this respect, certain aspects relating to investment into Australia have been
proposed regarding new arrangements for collecting withholding tax from
non-residents in respect of Australian source dividends and gains from the
disposal of assets. No legislation has been passed to give effect to these
changes, but is likely to form part of Australia's international tax review
process. This may impact on the tax analysis below (the taxation of company
dividends, and capital gains, may change as a result of the review). ADS holders
and/or holders of Ordinary Shares are advised to consult their own tax advisors
as to the Australian tax consequences of their ownership of the ADSs and/or
Ordinary Shares.
TAXATION OF DISTRIBUTIONS
Under the current double taxation convention concluded between Australia and the
United States, dividends paid to a shareholder of Ansell Limited who is a
resident of the United States within the meaning of the convention, including an
ADS holder who is beneficially entitled to the dividends, may be subject to
Australian withholding tax at a rate not exceeding 15% of the gross dividend. As
withholding tax is a final tax, no other Australian tax is payable on the
dividend. This withholding tax limitation does not apply to a shareholder whose
holding is effectively connected with a permanent establishment in Australia or
through which the shareholder carries on business in Australia, or in the case
of a shareholder who performs independent personal services in Australia, with a
"fixed base" situated in Australia.
Dividends paid to a non-resident of Australia will not be subject to Australian
dividend withholding tax to the extent that the dividends have been franked. The
concept of franking reflects that the underlying profits from which the
dividends have been sourced are subject to Australian corporate income tax. No
other Australian tax is payable on a dividend freed of withholding tax by
franking.
Any dividend withholding tax suffered on the unfranked amount of the dividend is
reduced to the extent that the dividend consists of a Foreign Dividend Account
amount (FDA amount).
A dividend will consist of an FDA amount to the extent to which it is declared
to consist of an FDA amount by the corporation paying the dividend. A
corporation is able to declare an FDA amount where it has a surplus in its
Foreign Dividend Account at the time of paying the dividend. The main component
of the Foreign Dividend Account will be tax exempt dividends received from
foreign companies in which the corporation has a voting interest amounting to at
least 10% of the voting power, as well as dividends received from 100% owned
Australian companies to the extent they are declared to consist of an FDA
amount.
Dividends received by a United States citizen who is resident in Australia, or a
United States corporation that is resident in Australia, will be treated as
assessable income for Australian income tax purposes. If the dividends are
wholly or partly franked, the additional amount representing the franking
credits is also included in assessable income, with a "tax offset" being
available equal to the franking credits. The tax offset acts to reduce the tax
liability on the dividend income. In order to be entitled to claim the tax
offset in relation to the franked dividend amount, the recipient of the dividend
must be a "qualified person." Broadly, to be a qualified person, two tests must
be satisfied namely the "holding period rule" and the "related payments rule."
Ansell Limited will provide all shareholders with a dividend notice which
specifies the franked and unfranked amount of each dividend, and the amount (if
any) of dividend withholding tax deducted.
As at the date of this report, the US and Australia have negotiated a Protocol
to the 1982 double tax convention. In Australia, the Protocol has been given the
force of the law pursuant to domestic legislation, but will only enter into
force upon the exchange of instruments of ratification by both countries which
has not yet occurred.
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10E AUSTRALIAN TAXATION (continued)
TAXATION OF DISTRIBUTIONS (continued)
The Protocol amends the existing convention in a number of ways and with respect
to dividends they continue to be taxable in both countries, but with changed
limits on the tax that the source country may charge residents of the other
country who are beneficially entitled to the income. The dates upon which
Protocol will have effect in Australia depend on the type of tax referred to and
when both countries have formally ratified it. However, the Protocol is likely
to be effective from 1 July 2003.
The dividend paid on 2 July 2001 was unfranked and comprised a nil FDA amount.
It is likely that in the foreseeable future Ansell Limited will pay dividends
which are less than fully franked due to the increase in profit contributed by
the overseas operations (only Australian tax paid creates franking credits) and
the recovery of tax losses in Australia.
TAXATION OF CAPITAL GAINS
A United States citizen who is resident in Australia, or a United States
corporation that is resident in Australia may be liable to pay Australian income
tax in respect of the profit or capital gain (if any) derived upon disposal of
the ADSs or Ordinary Shares.
No income or other tax is payable in Australia on any profit arising from the
disposal of the ADSs or Ordinary Shares held by persons not resident in
Australia except in the following circumstances.
First, Australian tax may arise if the ADSs or Ordinary Shares are trading stock
of the holder, or if an ordinary incident of the holder's business represents
the sale of securities for a profit, and, in either case, the profit is
attributable to sources in Australia.
Second, Australian tax may arise if the sale is subject to Australian capital
gains tax. Any gain arising upon disposal by a non-resident of the ADSs or
Ordinary Shares may be subject to Australian capital gains tax if the asset has
the necessary connection with Australia. The ADS or ordinary shares will be
taken to have the necessary connection with Australia if at any time during the
period of 5 years preceding the disposal (of ADSs or Ordinary Shares acquired
after 19 September 1985) the non-resident (together with associates, if any)
owns or owned 10% or more of the issued capital of Ansell Limited.
These two exceptions are subject to the operation of the double taxation
convention between Australia and the United States which may affect Australia's
right to tax non-residents of Australia who hold ADSs or Ordinary Shares. Owners
of ADSs and Ordinary Shares are advised to consult their own tax advisors as to
the tax consequences of the operation of the convention.
OTHER TAXES
No Australian State or Federal estate duty or other inheritance taxes will be
payable in respect of ADSs or Ordinary Shares upon the death of the holder
thereof, regardless of the holder's domicile. For capital gains purposes, the
death of the holder will not produce a deemed disposal, except if the ADSs or
ordinary shares are bequeathed to a tax exempt entity or to a beneficiary who is
not an Australian resident. In all other circumstances, the liability for tax on
any gain is effectively transferred to the deceased's legal representatives or
beneficiaries for payment following disposal of the ADSs or Ordinary Shares by
that person, subject to those matters referred to above. A deemed disposal or a
disposal subsequently by the beneficiary will have the consequences set out
above.
STAMP DUTY
No Australian stamp duty will be payable on the acquisition of ADSs or on any
subsequent transfer of an ADS, provided that the ADR evidencing such ADS remains
at all times outside Australia, that the instrument of transfer is not executed
in Australia and remains at all times outside Australia, and that the Depository
and the Custodian maintain no register of ADSs in Australia.
55
PART I
ITEM 10: ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
10E AUSTRALIAN TAXATION (continued)
STAMP DUTY (continued)
No stamp duty is payable on a transfer of Ordinary Shares, whilst the Ordinary
Shares are quoted on the Australian Stock Exchange (ASX) or a recognised stock
exchange. If the Ordinary Shares cease to be quoted on the ASX or a recognised
exchange, any transfer of Ordinary Shares will ordinarily be subject to stamp
duty at the rate of 0.6% of the consideration paid or the unencumbered value of
the shares at the time of such transfer. Such stamp duty will need to be paid
prior to the transfer of the Ordinary Shares being registered by Ansell Limited.
If the transfer of Ordinary Shares is effected by stockbrokers on the Australian
Stock Exchange, each of the transferor and the transferee will be required to
pay half of the stamp duty payable. If the transfer of the Ordinary Shares is
not effected by stockbrokers on the Australian Stock Exchange, the transferee of
the Ordinary Shares will generally be required to pay the stamp duty payable.
AUSTRALIAN TAX CREDIT SYSTEM
Australia has a dual foreign tax credit/exemption system for relief from double
taxation of dividends, whereby dividends received from foreign companies are
either fully taxable in Australia, (with a credit available for both the foreign
withholding tax paid and the income tax paid by the companies on their
underlying profits) or exempt (with no foreign tax credit). Further, the
taxation of the income of Ansell Limited's foreign subsidiaries may be affected
by the provisions of Australia's Controlled Foreign Companies (CFC) legislation.
Under the Australian CFC provisions, income earned by foreign subsidiaries in
certain specified countries, being "comparably taxed" countries generally would
be exempt from Australian tax. However, certain forms of income earned by
foreign subsidiaries in all other countries, could be "attributed" to Ansell
Limited or its Australian subsidiaries and be subject to Australian tax on an
accruals basis, with a foreign tax credit available for relief from double
taxation. This accruals-based system does, however, provide exemptions for
foreign subsidiaries which are engaged predominantly in an active business.
All dividends received from comparable tax countries, and certain other
countries on the limited exemption list, will be exempt from Australian tax.
Because these dividends are exempt, no credit is allowed for foreign taxes paid.
Dividends received from other countries will generally be taxed in Australia,
with a foreign tax credit available for relief from double taxation for foreign
taxes paid.
10F DIVIDENDS AND PAYING AGENTS
Not applicable
10G STATEMENT BY EXPERTS
Not applicable
10H DOCUMENTS ON DISPLAY
The documents referred to in this report can be inspected at the Company's Head
Office at 678 Victoria Street, Richmond, Victoria, Australia.
56
PART I
ITEM 11: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------------------
DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses derivative financial instruments, principally foreign exchange
and interest rate related, to reduce its exposure to movements in foreign
exchange rate and interest rate movements.
The Company has adopted certain principles in relation to derivative financial
instruments:
(i) it does not trade in a derivative that is not used in the hedging of an
underlying business exposure of the Company;
(ii) derivatives acquired must be able to be recorded on the Company's
treasury management systems, which contain extensive internal controls;
and
(iii) the Company does not deal with counter-parties rated lower than A- by
Standard and Poor's or A3 by Moody's Investors Service for any overnight
transactions.
The Company follows the same credit policies, legal processes, monitoring of
market and operational risks in the area of derivative financial instruments, as
they do in relation to financial assets and liabilities on the Statement of
Financial Position, where internal controls operate.
Derivative instruments are not recorded on the Statement of Financial Position.
The Company is involved in a range of derivative financial instruments, which
can be defined in the following broad categories:
(i) FORWARD / FUTURE CONTRACTS
These transactions enable the Company to buy or sell specific amounts of foreign
exchange, financial instruments or commodities at an agreed rate/price at a
specified future date. Maturities of these contracts are principally between six
months and two years.
(ii) OPTIONS
This is a contract between two parties, which gives the buyer of a put or call
option the right, but not the obligation, to transact at a specified interest
rate/exchange rate or commodity price at a future date, generally for a premium.
Maturities of these contracts are principally between three months and two
years.
(iii) SWAPS
These agreements enable parties to swap interest rate (from or to a fixed or
floating basis) or currency (from one currency to another currency) positions
for a defined period of time. Maturities of the contracts are principally
between two and five years.
DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR PURPOSES OTHER THAN TRADING
Gains and losses on derivatives used as hedges are accounted for on the same
basis as the underlying physical exposures they hedge. Accordingly, hedge gains
and losses are included in the Statement of Financial Performance when the gain
or loss arising on the related physical exposures are recognised in the
Statement of Financial Performance.
When hedging an underlying interest rate exposure, with a derivative financial
instrument, all gains and losses are accounted for on an accrual basis, thereby
adjusting the underlying physical cost to the hedged rate over the life of the
transaction. Gains or losses resulting from the termination of an interest rate
swap contract where the underlying borrowing remains, are deferred on the
Statement of Financial Position and then amortised over the life of the
borrowing. Where the transaction is a single event, such as a foreign exchange
exposure, the hedge gain or loss is taken to account on the actual exposure
date.
Gains and losses on derivative financial instruments which hedge anticipated
transactions are in the first instance deferred and later recognised in the
Statement of Financial Performance when the hedged transaction occurs. Such
deferrals only occur where the future transaction remains assured. Where an
actual or anticipated transaction is modified or extinguished any associated
derivative financial instrument is also modified or extinguished and any gain or
loss that no longer relates to an actual or anticipated exposure is immediately
taken to the Statement of Financial Performance.
57
PART I
ITEM 11 : QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------------------
DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR PURPOSES OTHER THAN TRADING
(continued)
Gains and losses that arise prior to and upon the maturity of transactions
entered into under rollover strategies are deferred and included in the
measurement of the hedge, if the transaction is still expected to continue. If
the transaction is no longer expected to continue, the gains and losses are
recognised immediately in the Statement of Financial Performance.
DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR TRADING PURPOSES
The Company also enters into a limited number of exchange rate related
derivative contracts for trading purposes. These transactions are undertaken
under strict guidelines, limits and internal controls and with appropriate stop
loss parameters. Trading activities include taking positions within authorised
and clearly defined limits to benefit from expected movements in prices. The
portfolio of derivative financial instruments held for trading purposes is
valued at market rates with all gains and losses being recognised in the
Statement of Financial Performance for the current period.
ANTICIPATED TRANSACTIONS
On a continuing basis, the Company monitors its anticipated future exposures and
on some occasions hedges all or part of these exposures. The transactions which
may be covered are future profits of overseas controlled entities and future
foreign exchange requirements.
These exposures are then monitored against continuing analysis of anticipated
positions and may be modified from time to time. These transactions
predominantly do not exceed 12 months duration and hedge transactions the
Company expects to occur in this time frame.
The following table shows the Company's deferred gains and (losses), both
realised and unrealised, that are currently held on the Statement of Financial
Position and the expected timing of recognition as revenue or expense:
INTEREST RATE FOREIGN EXCHANGE COMMODITY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000 2002 2001 2000
-------------------------------------------------------------------------------------------------------------
Anticipated Exposures
Less than 1 year - - - (0.5) 1.4 (1.7) - - -
Realized Swaps Deferred
Less than 1 year 0.1 (0.5) 0.5
1 to 2 years 0.7 0.2 (0.2)
2 to 5 years 2.2 (0.5) (1.0)
Greater than 5 years - 1.6 2.0
58
PART I
ITEM 11: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------------------
DERIVATIVE FINANCIAL INSTRUMENTS (continued)
INTEREST RATE RISK
The Company's exposure to interest rate risk and the effective weighted average
interest rate for classes of financial assets and financial liabilities is set
out below:
WEIGHTED INTEREST RATE
AVERAGE FIXED MATURITIES
EFFECTIVE NON
INTEREST 1 YEAR 1 TO 5 OVER 5 INTEREST
$ IN MILLIONS RATE FLOATING OR LESS YEARS/(1)/ YEARS BEARING TOTAL
------------------------------------------------------------------------------------------------------------------------------
NET FINANCIAL ASSETS/(LIABILITIES) 2002 %
FINANCIAL ASSETS
On-Balance Sheet
Cash on hand and at bank 1.1% 72.2 - - - - 72.2
Short-term deposits 3.3% 174.1 30.6 - - - 204.7
Receivables - trade N/A - - - - 232.5 232.5
Receivables - other 2.6% 32.9 25.0 - - 70.0 127.9
Investments (excl. associated companies) N/A - - - - 145.8 145.8
------------------------------------------------------------------------------------------------------------------------------
Total Financial Assets 2002 279.2 55.6 - - 448.3 783.1
------------------------------------------------------------------------------------------------------------------------------
FINANCIAL LIABILITIES
Recognised
Payables - trade N/A - - - - 166.6 166.6
Payables - other N/A - - - - 29.8 29.8
Bank overdraft 3.3% 14.6 - - - - 14.6
Bank and other loans 6.1% 466.0 20.8 122.7 - - 609.5
Provisions (including certain employee
entitlements) N/A - - - - 85.4 85.4
Unrecognised
Net interest rate swaps 5.1% (375.9) - 375.9 - - -
------------------------------------------------------------------------------------------------------------------------------
Total Financial Liabilities 2002 104.7 20.8 498.6 - 281.8 905.9
------------------------------------------------------------------------------------------------------------------------------
Net Financial Assets/(Liabilities) 2002 174.5 34.8 (498.6) - 166.5 (122.8)
==============================================================================================================================
NET FINANCIAL ASSETS/(LIABILITIES) 2001 %
FINANCIAL ASSETS
Recognised
Cash on hand and at bank 2.7% 116.3 - - - - 116.3
Short-term deposits 3.8% 102.5 119.1 - - - 221.6
Receivables - trade 6.1% 1.5 - - - 521.6 523.1
Receivables - other 6.5% 62.5 - - - 150.2 212.7
Investments (excl. associated companies) N/A - - - - 212.0 212.0
------------------------------------------------------------------------------------------------------------------------------
Total Financial Assets 2001 282.8 119.1 - - 883.8 1,285.7
------------------------------------------------------------------------------------------------------------------------------
FINANCIAL LIABILITIES
Recognised
Payables - trade N/A - - - - 363.5 363.5
Payables - other N/A - - - - 55.9 55.9
Payables - bills 9.7% 1.5 - - - 5.1 6.6
Bank overdraft 6.4% 9.5 - - - - 9.5
Bank and other loans 5.3% 696.6 785.6 119.0 - - 1,601.2
Provisions (including certain employee
entitlements) 3.0% - - - - 207.7 207.7
Amounts due under contractual arrangements N/A - - - - 17.8 17.8
Unrecognised
Net interest rate swaps 5.2% 144.1 (122.8) (21.3) - - -
------------------------------------------------------------------------------------------------------------------------------
Total Financial Liabilities 2001 851.7 662.8 97.7 - 650.0 2,262.2
------------------------------------------------------------------------------------------------------------------------------
Net Financial Assets/(Liabilities) 2001 (568.9) (543.7) (97.7) - 233.8 (976.5)
------------------------------------------------------------------------------------------------------------------------------
/(1)/ Analysis of Fixed Rate Maturities
1 to 5 years 1-2 yrs 2-3 yrs 3-4 yrs 4-5 yrs Total
---------------------------------------------------------
2002
Bank & Other Loans 17.7 105.0 - - 122.7
Net Interest Rate Swaps 189.9 154.1 - 31.9 375.9
---------------------------------------------------------
207.6 259.1 - 31.9 498.6
---------------------------------------------------------
2001
Bank & Other Loans - 19.8 99.2 - 119.0
Net Interest Rate Swaps 77.4 (98.7) - - (21.3)
---------------------------------------------------------
77.4 (78.9) 99.2 - 97.7
---------------------------------------------------------
59
PART I
ITEM 11: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------------------
DERIVATIVE FINANCIAL INSTRUMENTS (continued)
INTEREST RATE RISK (continued)
Provisions, including amounts contained within income tax, deferred income tax,
contingencies, rationalisation and restructure, Accufix Pacing Lead related
expenses and insurance claims amounting to $49.6 million (2001 - $144.2 million;
2000 - $114.6 million) are not included within the table above as it is
considered that they do not meet the definition of a financial instrument.
A separate analysis of debt by currency can be found at Note 19 to the Financial
Statements - Interest Bearing Liabilities.
CREDIT RISK AND NET FAIR VALUE
RECOGNISED FINANCIAL INSTRUMENTS
(i) CREDIT RISK
The credit risk on financial assets, excluding investments, of the Company which
have been recognised on the Statement of Financial Position, is the carrying
amount, net of any provision for doubtful debts. The Company minimises
concentrations of credit risk by undertaking transactions with a large number of
customers and counter parties in various countries.
The Company is not materially exposed to any individual overseas country or
individual customer.
(ii) NET FAIR VALUE
The Directors consider that the carrying amount of recognised financial assets
and financial liabilities approximates their net fair value.
Refer to Note 1 to the Financial Statements for accounting policies in respect
of the carrying values of financial assets and financial liabilities.
UNRECOGNISED FINANCIAL INSTRUMENTS
Credit risk on unrecognised derivative contracts is minimised, as counterparties
are recognised financial intermediaries with acceptable credit ratings
determined by a recognised rating agency. It is not felt that there is a
material exposure to any single counterparty or group of counterparties. The
Company's exposure is almost entirely (over 99%) to banks.
60
PART I
ITEM 11 : QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------------------
DERIVATIVE FINANCIAL INSTRUMENTS (continued)
CREDIT RISK AND NET FAIR VALUE (continued)
The following table displays:
(i) FACE VALUE:
This is the contract's value upon which a market rate is applied to produce a
gain or loss, which becomes the settlement value of the derivative financial
instrument.
(ii) CREDIT RISK:
This is the maximum exposure to the Company in the event that all counterparties
who have amounts outstanding to the Company under derivative financial
instruments, fail to honour their side of the contracts. The Company's exposure
is almost entirely to banks (see (v) below). Amounts owed by the Company under
derivative financial instruments are not included.
(iii) NET FAIR VALUE:
This is the amount at which the instrument could be extinguished between willing
parties in a normal market in other than a liquidation or forced sale
environment. The net amount owed by / (owing to) financial institutions under
all derivative financial instruments would have been ($23.8) million (2001 -
$5.9 million, 2000 - $47.3 million) if all contracts were closed out on 30 June
2002.
FACE VALUE CREDIT RISK NET FAIR VALUE
$ IN MILLIONS 2002 2001 2000 2002 2001 2000 2002 2001 2000
--------------------------------------------------------------------------------------------------------------
FOREIGN EXCHANGE CONTRACTS
Purchase/Sale Contracts:
-U.S. dollars 329.7 1,231.7 496.7 1.6 22.0 4.9 (7.3) 17.6 1.6
-Australian dollars 49.4 237.2 637.2 - - - - - -
-Other currencies 216.5 186.5 141.1 2.5 1.7 0.9 2.4 (1.5) (3.3)
Cross Currency Swaps:
-U.S. dollars 96.5 240.2 137.3 2.2 0.7 16.5 (1.5) (16.5) 16.5
-New Zealand dollars - - 95.0 - - - - - -
-Other currencies 16.5 35.2 98.6 - 5.8 25.3 (2.1) 5.8 24.4
INTEREST RATE CONTRACTS
Interest Rate Swaps:
-U.S. dollars 435.1 452.7 1,113.8 3.0 6.6 11.7 (14.5) 0.5 6.4
-Australian dollars 300.0 300.0 450.0 - 1.2 0.3 (0.8) 0.3 0.2
-New Zealand dollars - - 119.9 - - 1.1 - - 1.0
-Other currencies 17.5 16.7 47.6 - - 0.4 - (0.3) 0.4
Forward Rate Agreements:
-U.S. dollars - - 83.2 - - - - - -
COMMODITY CONTRACTS
Commodity Futures:
-U.S. dollars - - 15.9 - - 0.1 - - 0.1
--------------------------------------------------------------------------------------------------------------
Total 1,461.2 2,700.2 3,436.3 9.3 38.0 61.2 (23.8) 5.9 47.3
==============================================================================================================
From time to time in the ordinary course of business, the Company enters into
forward exchange contracts to hedge a proportion of anticipated purchase and
sale commitments denominated in foreign currencies (principally US dollars). The
amount of anticipated future purchases and sales is forecast in light of current
market conditions and commitments from customers. Hedge contracts are used to
cover the next available trading exposure until all contracts are fully
utilised. Hedge cover generally does not exceed 3 months.
(iv) MARKET/LIQUIDITY RISK:
The Company seeks to reduce the risk of:
(a) being forced to exit derivative financial instrument positions at below
their real worth; or
(b) finding it cannot exit the position at all, due to lack of liquidity in
the market;
by
(a) dealing only in liquid contracts dealt by many counterparties; and
(b) dealing only in large and highly liquid and stable international
markets.
61
PART I
ITEM 11 : QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------------------
DERIVATIVE FINANCIAL INSTRUMENTS (continued)
CREDIT RISK AND NET FAIR VALUE (continued)
(v) CREDIT RISK BY MATURITY:
The following table indicates the value of amounts owing by counterparties by
maturity. Based on the Group policy of not having overnight exposures to an
entity rated lower than A- by Standard & Poor's or A3 by Moody's Investors
Service, it is felt the risk to the Company of the counterparty default loss is
not material.
FOREIGN EXCHANGE INTEREST RATE COMMODITY
RELATED CONTRACTS CONTRACTS CONTRACTS TOTAL
$ IN MILLIONS 2002 2001 2000 2002 2001 2000 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
TERM
0 to 6 mths 4.1 27.0 31.8 - 1.2 0.7 - - 0.1 4.1 28.2 32.6
6 to 12 mths - 2.5 2.5 - - 0.2 - - - - 2.5 2.7
1 to 2 yrs - - 3.1 3.0 0.8 1.3 - - - 3.0 0.8 4.4
2 to 5 yrs 2.2 - 5.0 - 5.8 11.3 - - - 2.2 5.8 16.3
5 to 10 yrs - 0.7 5.2 - - - - - - - 0.7 5.2
----------------------------------------------------------------------------------------------------------------
Total 6.3 30.2 47.6 3.0 7.8 13.5 - - 0.1 9.3 38.0 61.2
==================================================================================================================
(vi) HISTORICAL RATE ROLLOVERS:
It is the Company's policy not to engage in historical rate rollovers except in
circumstances where the maturity date falls on a bank holiday. In these
instances, settlement occurs on the next trading day.
62
PART I
ITEM 12 : DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
--------------------------------------------------------------------------------
Not applicable
63
PART II
ITEM 13 : DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
--------------------------------------------------------------------------------
Not applicable
64
PART II
ITEM 14 : MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
--------------------------------------------------------------------------------
Not applicable
65
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
STATEMENTS OF FINANCIAL PERFORMANCE
of Ansell Limited and Controlled Entities for the year ended 30 June 2002
CONSOLIDATED THE COMPANY
2002 2001 2000 2002 2001 2000
NOTES $M $M $M $M $M $M
------------------------------------------------------------------------------------------------------------------
REVENUE
Total revenue 3 3,190.4 5,267.3 5,811.2 1,257.4 1,904.7 1,957.9
EXPENSES
Cost of goods sold 1,493.3 2,895.4 4,080.2 354.4 1,054.7 1,060.0
Selling, distribution and administrative 587.1 1,136.3 1,460.6 150.2 467.7 578.4
Write-down of assets 176.5 97.7 160.0 82.4 890.7 186.0
Net assets of businesses disposed 922.4 895.2 11.6 514.5 36.2 -
------------------------------------------------------------------------------------------------------------------
Total expenses, excluding borrowing costs 3,179.3 5,024.6 5,712.4 1,101.5 2,449.3 1,824.4
Borrowing costs 4 70.2 144.3 149.5 67.0 129.5 124.5
Share of net profit/(loss) of associates' and
joint venture entities 1.9 (44.3) (1.9) - - -
------------------------------------------------------------------------------------------------------------------
Profit/(loss) from ordinary activities before
income tax expense (57.2) 54.1 (52.6) 88.9 (674.1) 9.0
Income tax expense attributable to ordinary
activities 8 55.8 189.9 29.8 17.3 81.8 13.0
------------------------------------------------------------------------------------------------------------------
Net profit/(loss) from ordinary activities
after income tax expense (113.0) (135.8) (82.4) 71.6 (755.9) (4.0)
Outside equity interests in net profit/(loss)
after income tax 2.8 3.6 4.1 - - -
------------------------------------------------------------------------------------------------------------------
Net profit/(loss) after income tax
attributable to Ansell Limited shareholders (115.8) (139.4) (86.5) 71.6 (755.9) (4.0)
==================================================================================================================
Non-owner transaction changes in equity
Increase/(decrease) in asset revaluation
reserve - (14.1) 1.2 - - 0.2
Net exchange difference on translation of
financial statements of self-sustaining
foreign operations (69.6) (73.0) 61.3 - - -
------------------------------------------------------------------------------------------------------------------
Total valuation adjustments attributable to
Ansell Limited shareholders recognised
directly in equity (69.6) (87.1) 62.5 - - 0.2
------------------------------------------------------------------------------------------------------------------
Total changes in equity from non-owner related
transactions attributable to Ansell Limited
shareholders (185.4) (226.5) (24.0) 71.6 (755.9) (3.8)
==================================================================================================================
Earnings per share is based on net loss after income tax attributable to Ansell
Limited shareholders /(a)/
CENTS CENTS CENTS
Basic earnings per share 35 (61.9) (71.8) (41.9)
Diluted earnings per share 35 (61.7) (71.4) (41.6)
/(a)/ Effective 12 April 2002, Ansell Limited reduced the number of ordinary
shares and exercisable options on issue by means of a 1 for 5 share
consolidation, which received shareholder approval at an Extraordinary
General Meeting held on that date. Basic and diluted earnings per share
for the current year, and prior year comparatives, take into effect this
share consolidation.
The above statements of financial performance should be read in conjunction with
the accompanying notes.
66
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
STATEMENTS OF FINANCIAL POSITION
of Ansell Limited and Controlled Entities as at 30 June 2002
CONSOLIDATED THE COMPANY
2002 2001 2000 2002 2001 2000
NOTES $M $M $M $M $M $M
------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash 11 258.5 310.9 1,051.6 4.2 28.3 28.0
Cash - restricted deposits 11 18.4 27.0 26.3 - - -
Receivables 12 293.7 643.8 784.7 821.0 2,147.0 2,798.0
GNB assets held for sale - - 591.2 - - 18.8
Inventories 13 235.1 794.3 848.7 13.7 205.9 162.8
Prepayments 15.8 27.4 41.5 3.6 6.6 21.8
------------------------------------------------------------------------------------------------------------------
Total Current Assets 821.5 1,803.4 3,344.0 842.5 2,387.8 3,029.4
------------------------------------------------------------------------------------------------------------------
NON-CURRENT ASSETS
Receivables 12 66.7 92.0 39.2 33.4 84.1 29.7
Investments in associates and partnerships
(equity accounted) 14 13.3 14.6 2.3 0.2 0.2 0.2
Other financial assets 14 145.8 212.0 125.3 1,547.2 1,826.3 2,853.4
Property, plant and equipment 15 332.5 669.9 658.2 0.4 98.9 93.0
Intangibles 16 403.2 556.5 627.8 - 10.7 18.5
Deferred tax assets 17 49.7 106.8 272.0 - 32.2 145.3
Other - 21.0 16.9 0.2 13.5 16.4
------------------------------------------------------------------------------------------------------------------
Total Non-Current Assets 1,011.2 1,672.8 1,741.7 1,581.4 2,065.9 3,156.5
------------------------------------------------------------------------------------------------------------------
Total Assets 1,832.7 3,476.2 5,085.7 2,423.9 4,453.7 6,185.9
------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Payables 18 192.7 420.9 566.4 761.0 1,722.9 1,881.2
Interest bearing liabilities 19 107.6 748.8 1,889.4 66.7 715.7 1,485.7
Provisions 20 85.4 264.4 395.0 7.9 131.8 203.7
Current tax liabilities 20 1.9 10.5 8.9 - - 0.1
Other 21 1.2 5.2 3.3 - 1.8 1.4
------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 388.8 1,449.8 2,863.0 835.6 2,572.2 3,572.1
------------------------------------------------------------------------------------------------------------------
NON-CURRENT LIABILITIES
Payables 18 3.7 5.1 5.7 - 0.3 0.4
Interest bearing liabilities 19 516.5 861.9 627.7 516.3 861.5 626.0
Provisions 20 23.3 54.9 50.7 0.4 4.8 5.7
Deferred tax liabilities 20 24.4 22.1 21.1 - - -
Other 21 - 16.2 17.6 - 16.2 17.6
------------------------------------------------------------------------------------------------------------------
Total Non-Current Liabilities 567.9 960.2 722.8 516.7 882.8 649.7
------------------------------------------------------------------------------------------------------------------
Total Liabilities 956.7 2,410.0 3,585.8 1,352.3 3,455.0 4,221.8
------------------------------------------------------------------------------------------------------------------
Net Assets 876.0 1,066.2 1,499.9 1,071.6 998.7 1,964.1
==================================================================================================================
EQUITY
Contributed equity 5 1,455.5 1,454.3 1,617.2 1,455.5 1,454.3 1,617.2
Reserves 6 (176.2) (118.0) (31.2) 10.2 10.2 10.2
(Accumulated losses)/retained profits 6 (417.0) (289.9) (103.6) (394.1) (465.8) 336.7
------------------------------------------------------------------------------------------------------------------
TOTAL EQUITY ATTRIBUTABLE TO ANSELL LIMITED
SHAREHOLDERS 862.3 1,046.4 1,482.4 1,071.6 998.7 1,964.1
Outside equity interests 10 13.7 19.8 17.5 - - -
------------------------------------------------------------------------------------------------------------------
Total Equity 876.0 1,066.2 1,499.9 1,071.6 998.7 1,964.1
==================================================================================================================
The above statements of financial position should be read in conjunction with
the accompanying notes.
67
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
INDUSTRY SEGMENTS
of Ansell Limited and Controlled Entities for the year ended 30 June 2002
OPERATING OPERATING
REVENUE RESULT
2002 2001 2000 2002 2001 2000
NOTES $M $M $M $M $M $M
------------------------------------------------------------------------------------------------------------------
INDUSTRY
ANSELL HEALTHCARE
Occupational Healthcare 640.2 651.0 564.8 37.0 44.3 50.3
Professional Healthcare 546.9 544.9 432.1 92.7 70.6 69.6
Consumer Healthcare 227.1 216.3 175.8 32.6 29.4 18.1
-----------------------------------------------------------
Total Ansell Healthcare 1,414.2 1,412.2 1,172.7 162.3 144.3 138.0
Unallocated Items 30(b) 27.9 60.6 73.8 (27.7) (29.4) (37.6)
-----------------------------
134.6 114.9 100.4
AUTOMOTIVE
South Pacific Tyres JV Share /(a)/ (29.7) (2.1)
discontinued businesses
Trading 808.6 2,744.6 4,553.1 61.0 162.6 240.9
-----------------------------
OPERATING EBITA 195.6 247.8 339.2
NON RECURRING
Discontinued Businesses
Proceeds/Net gain/(loss) on sale of Controlled
Entities and Businesses 939.7 1,049.9 11.6 25.7 155.2 (4.6)
RATIONALISATION/RESTRUCTURING
Ansell Healthcare (11.6) (60.2)
Engineered Products (27.4)
Tyres (16.2)
Other (6.5) (7.2) (80.3)
WRITE-DOWN OF ASSETS
Ansell Healthcare (63.1)
Exide (99.9)
Other (13.5) (97.7) (160.0)
Y2K Compliance Costs (3.5)
-----------------------------
26.7 194.3 90.8
Goodwill amortisation (29.2) (40.8) (40.9)
-----------------------------
Earnings before Net Interest and Tax (EBIT) (2.5) 153.5 49.9
Net Interest, including Borrowing Costs (54.7) (99.4) (102.5)
-----------------------------
Operating Profit before Tax (57.2) 54.1 (52.6)
Income Tax Expense (55.8) (189.9) (29.8)
Outside Equity Interests 30(c) (2.8) (3.6) (4.1)
------------------------------------------------------------------------------------------------------------------
Total Consolidated 3,190.4 5,267.3 5,811.2 (115.8) (139.4) (86.5)
==================================================================================================================
REGIONS
Australia & S.E. Asia 170.7 160.5 136.9 32.9 30.7 28.3
America 799.5 813.0 664.0 99.1 98.7 77.4
Europe 444.0 438.7 371.8 30.3 14.9 32.3
------------------------------------------------------------------------------------------------------------------
1,414.2 1,412.2 1,172.7 162.3 144.3 138.0
==================================================================================================================
68
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
INDUSTRY SEGMENTS (continued)
ASSETS EMPLOYED LIABILITIES
2002 2001 2000 2002 2001 2000
NOTES $M $M $M $M $M $M
------------------------------------------------------------------------------------------------------------------
INDUSTRY
ANSELL HEALTHCARE
Occupational Healthcare 376.0 512.6 456.1 124.7 117.3 100.0
Professional Healthcare 404.3 457.8 477.8 114.3 96.9 89.9
Consumer Healthcare 140.8 160.0 152.5 54.6 57.5 42.9
-----------------------------------------------------------
Total Ansell Healthcare 921.1 1,130.4 1,086.4 293.6 271.7 232.8
Unallocated Items 49.0 157.5 209.3 622.2 1,716.8 2,705.8
AUTOMOTIVE
South Pacific Tyres Investment 136.5 134.2 115.6
Discontinued Businesses 46.0 1,159.7 1,968.7 40.9 421.5 647.2
Goodwill and Brand names 403.2 556.5 627.8
Cash 30(d) 276.9 337.9 1,077.9
------------------------------------------------------------------------------------------------------------------
Total Consolidated 1,832.7 3,476.2 5,085.7 956.7 2,410.0 3,585.8
==================================================================================================================
REGIONS
Australia & S.E. Asia 318.4 359.4 339.8 83.0 80.6 66.9
America 398.6 572.0 529.0 181.9 165.8 137.9
Europe 204.1 199.0 217.6 28.7 25.3 28.0
------------------------------------------------------------------------------------------------------------------
921.1 1,130.4 1,086.4 293.6 271.7 232.8
==================================================================================================================
Prior year comparatives have been adjusted for reclassification of former
Industry Segment businesses which have been sold or abandoned and hence
classified as Discontinued Businesses.
/(a)/ Effective 1 July 2001 Ansell Limited discontinued equity accounting for
the interest in the South Pacific Tyres operation. (Refer Note 2 -
Change in Accounting Policy)
The above industry segments report should be read in conjunction with the
accompanying notes.
69
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
of Ansell Limited and Controlled Entities for the year ended 30 June 2002
CONSOLIDATED THE COMPANY
2002 2001 2000 2002 2001 2000
NOTES $M $M $M $M $M $M
-------------------------------------------------------------------------------------------------------------------
CASH FLOWS RELATED TO OPERATING ACTIVITIES
Receipts from customers (excluding
non-recurring and Accufix Research Institute) 2,356.5 4,404.8 5,711.3 532.8 1,637.8 1,670.8
Payments to suppliers and employees (excluding
non-recurring and Accufix Research Institute) (2,124.8) (4,090.4) (5,460.9) (540.0) (1,725.0) (1,522.2)
-------------------------------------------------------------------------------------------------------------------
Net receipts from customers (excluding
non-recurring and Accufix Research Institute) 231.7 314.4 250.4 (7.2) (87.2) 148.6
Income taxes paid (25.5) (34.7) (28.2) - - (2.0)
Dividends received 0.3 0.1 0.1 196.8 26.2 169.7
-------------------------------------------------------------------------------------------------------------------
Net cash provided by/(used in) Operating
Activities (excluding non-recurring and
Accufix Research Institute) 206.5 279.8 222.3 189.6 (61.0) 316.3
Non-recurring payments to suppliers and
employees (82.7) (54.5) (20.3) (39.7) (44.9) (20.3)
Payments to suppliers and employees net of
customer receipts (Accufix Research Institute) (10.7) (24.3) (11.7) - (1.8) (1.2)
Amounts refunded from Accufix Settlement Funds
(United States) by the Court - 25.6 - - 7.6 -
-------------------------------------------------------------------------------------------------------------------
Net Cash Provided by/(Used in) Operating
Activities 31(c) 113.1 226.6 190.3 149.9 (100.1) 294.8
-------------------------------------------------------------------------------------------------------------------
CASH FLOWS RELATED TO INVESTING ACTIVITIES
Payments for businesses, net of cash acquired 31(a) (40.9) (94.3) (155.9) - (70.0) -
Payments for property, plant and equipment (34.3) (76.0) (156.8) (7.7) (16.4) (17.0)
Payments for brand names/trademarks - (0.5) (5.0) - - (5.0)
Proceeds from sale of businesses, net of cash
disposed* 31(a) 936.4 906.8 3.4 517.4 211.5 -
Proceeds from sale of plant and equipment in
the ordinary course of business 12.1 15.1 26.7 2.0 6.4 5.0
Loans (made)/repaid 1.2 (63.1) (7.1) - (63.1) (1.4)
Net loans to controlled entities 31(e) - - - 331.5 833.4 (460.8)
Proceeds from sale of other investments - 0.8 6.4 - 0.8 -
Payments for investments in controlled entities - - - - - (19.1)
Payments for other investments - (60.1) (0.5) - (2.2) -
-------------------------------------------------------------------------------------------------------------------
Net Cash Provided by/(Used in) Investing
Activities 874.5 628.7 (288.8) 843.2 900.4 (498.3)
-------------------------------------------------------------------------------------------------------------------
CASH FLOWS RELATED TO FINANCING ACTIVITIES
Proceeds from borrowings 737.0 10,093.6 5,541.4 738.9 8,135.4 5,279.5
Repayments of borrowings (1,673.9) (11,307.5) (5,211.5) (1,680.2) (8,667.1) (4,904.1)
-------------------------------------------------------------------------------------------------------------------
Net (repayments of)/ proceeds from borrowings (936.9) (1,213.9) 329.9 (941.3) (531.7) 375.4
Proceeds from issues of shares 1.2 2.5 1.3 1.2 2.5 1.3
Payments for share buy-back - (165.4) - - (165.4) -
Lease payments - (0.5) (2.3) - - (0.3)
Dividends paid (48.3) (108.5) (150.1) (46.5) (103.3) (144.4)
Interest received 13.1 44.6 47.4 36.5 130.3 91.3
Interest and borrowing costs paid (70.2) (144.7) (150.3) (67.0) (129.5) (124.5)
-------------------------------------------------------------------------------------------------------------------
Net Cash (Used in)/Provided by Financing
Activities (1,041.1) (1,585.9) 75.9 (1,017.1) (797.1) 198.8
-------------------------------------------------------------------------------------------------------------------
Net (Decrease)/Increase in Cash Held (53.5) (730.6) (22.6) (24.0) 3.2 (4.7)
Cash at the beginning of the financial year 328.4 1,019.8 1,021.3 27.3 24.1 28.8
Effects of exchange rate changes on the
balances of cash held in foreign currencies at
the beginning of the financial year (12.6) 39.2 21.1 - - -
-------------------------------------------------------------------------------------------------------------------
Cash at the End of the Financial Year 31(d) 262.3 328.4 1,019.8 3.3 27.3 24.1
===================================================================================================================
* The Company 2001 includes a distribution from the Distribution Trust
arising from the sale of the Electrical Distribution business (refer
Note 4(b)).
The above statements of cash flows should be read in conjunction with the
accompanying notes.
70
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
Ansell Limited is a multinational healthcare solutions provider of barrier
protection products against injury, infection and contamination. The Company's
principal line of business, determined and reported on the basis of differing
products and services, is the manufacture and supply of barrier protection
products into the Occupational, Professional and Consumer healthcare markets.
The Ansell Healthcare group manufactures industrial gloves, medical gloves and
consumer products including household gloves and condoms in the Asia Pacific
region and America, and markets these products globally.
The significant policies which have been adopted in the preparation of this
financial report are:
BASIS OF PREPARATION OF FINANCIAL REPORT
The financial report is a general purpose financial report which has been
prepared in accordance with Accounting Standards, Urgent Issues Group Consensus
Views, other authoritative pronouncements of the Australian Accounting Standards
Board and the Corporations Act 2001.
It has been prepared on the basis of historical costs and except where stated,
does not take into account changing money values or fair values of non-current
assets.
The accounting policies adopted in preparing the financial report have been
consistently applied by each entity in the consolidated entity and, except where
there is a change in accounting policy as set out in Note 2, are consistent with
those of the previous year.
Comparative information is reclassified where appropriate to enhance
comparability.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of the Ansell Limited Group ("the
consolidated entity") include the financial statements of Ansell Limited ("the
Company"), being the parent entity, and its controlled entities.
The consolidated financial statements incorporate the assets and liabilities of
all entities controlled by the Company as at balance date and the results of all
controlled entities for the year then ended. The effects of all transactions
between entities in the consolidated entity are eliminated in full. Outside
interests in the results and equity of controlled entities are shown separately
in the consolidated Statement of Financial Performance and Statement of
Financial Position respectively.
Where control of an entity is obtained during a financial year, its results are
included in the consolidated Statement of Financial Performance from the date on
which control commences. Where control of an entity ceases during a financial
year, its results are included for that part of the year during which control
exists.
RECLASSIFICATION OF FINANCIAL INFORMATION
INVESTMENTS IN PARTNERSHIPS
As a result of the change in the accounting treatment of the consolidated
entity's interest in the South Pacific Tyres partnership (refer Note 2 - 'Change
in Accounting Policy'), the investment in the South Pacific Tyres partnership
has been reclassified from Note 14(b) - 'Investments Accounted for Using the
Equity Method' to Note 14(a) - 'Share in Controlled Entities and Other Financial
Assets'.
INVESTMENTS IN ASSOCIATED ENTITIES
As a result of the change in the accounting treatment of the consolidated
entity's interest in South Pacific Tyres N.Z. Ltd (refer Note 2 - 'Change in
Accounting Policy'), the investment in South Pacific Tyres N.Z. Ltd has been
reclassified from Note 14(b) - 'Investments Accounted for Using the Equity
Method' and Note 38 - 'Investments in Associates' to Note 14(a) - 'Share in
Controlled Entities and Other Financial Assets'.
Refer to Note 38 for further details of the financial effect on investments in
associates.
71
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
REVENUE RECOGNITION
Revenues are recognised at fair value of the consideration received net of the
amount of goods and services tax (GST).
SALES REVENUE
Sales revenue comprises revenue earned (net of returns, discounts and
allowances) from the provision of products to entities outside the consolidated
entity. Sales revenue is recognised when the goods are shipped and title passes.
INTEREST INCOME
Interest income is recognised as it accrues.
ASSET SALES
The net proceeds of asset sales are included as revenue of the consolidated
entity. The profit or loss on disposal of assets is brought to account at the
date a contract of sale is signed.
The gain or loss on disposal is calculated as the difference between the
carrying amount of the asset at the time of the disposal and the net proceeds on
disposal.
Any related balance in the asset revaluation reserve is transferred to retained
profits/accumulated losses on disposal.
BORROWING COSTS
Borrowing costs include interest, amortisation of ancillary costs incurred in
connection with arrangement of borrowings and other related charges.
Ancillary costs incurred in connection with the arrangement of term borrowings
are capitalised and amortised over the life of the borrowings.
GOODS AND SERVICES TAX
Revenues, expenses and assets are recognised net of the amount of GST, except
where the amount of GST incurred is not recoverable from the Australian Tax
Office (ATO). In these circumstances the GST is recognised as part of the cost
of acquisition of the asset or as part of an item of the expense.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the ATO is included as a
current asset or liability in the Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis. The GST
components of cash flows arising from investing and financing activities which
are recoverable from, or payable to, the ATO are classified as operating cash
flows.
INCOME TAX
The consolidated entity adopts the income statement liability method of tax
effect accounting.
Income tax expense is calculated at current rates on the accounting profit
adjusted for permanent differences and income tax over/under provided in the
previous year. The estimated liability for income tax outstanding in respect of
the period's operations is included in the Statement of Financial Position as a
current liability.
Future income tax benefits and liabilities arising because some items are
included in accounting profit in a period different from that in which the items
are assessed for income tax, are included in the Statement of Financial Position
as a non-current asset and a non-current liability respectively. As provided for
in Accounting Standard AASB 1020, these deferred tax balances have been offset,
where applicable, in the financial statements of the individual entities. The
eventual recoverability of future income tax benefits and payment of the
non-current tax liability is contingent upon taxable income being earned in
future periods, continuation of the relevant taxation laws and each relevant
company continuing to comply with the appropriate legislation.
72
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
INCOME TAX (continued)
Future income tax benefits attributable to tax losses (including capital losses)
are only recorded where virtual certainty of recovery exists.
Provision is made for overseas taxes, which may arise in the event of retained
profits of foreign controlled entities being remitted to Australia, when the
dividend is declared. Provision is made for capital gains tax, which may arise
in the event of sale of revalued assets, only when such assets are sold.
RECEIVABLES
TRADE DEBTORS
Trade debtors are recognised as at the date goods are shipped and invoiced and
are principally on 30 day terms. A provision for doubtful debts is recognised
when collection of the full nominal amount is no longer probable.
OTHER AMOUNTS RECEIVABLE
Other amounts receivable comprise amounts due as a result of transactions
outside the normal course of trading.
INVENTORIES
STOCK ON HAND AND WORK IN PROGRESS
Stock on hand and work in progress are consistently valued on the basis of the
lower of cost and net realisable value. The methods generally adopted throughout
the consolidated entity in determining costs are:
RAW MATERIALS AND OTHER STOCK
Actual costs, determined on a first in, first out basis or standard costs
approximating actual costs.
FINISHED GOODS AND WORK IN PROGRESS
Standard costs approximating actual costs include an appropriate allocation of
overheads. Merchant lines are valued at actual cost into store, determined on a
first in, first out or average cost basis.
Obsolete and slow moving stocks are written down to net realisable value where
such value is below cost.
Net realisable value is determined on the basis of each inventory line's normal
selling pattern. Expenses of marketing, selling and distribution to customers
are estimated and are deducted to establish net realisable value.
INVESTMENTS
CONTROLLED ENTITIES
All investments are valued at the lower of cost and recoverable value. Dividends
and distributions are brought to account in the Statement of Financial
Performance when they are paid by the controlled entities.
ASSOCIATED COMPANIES
An associate is an entity, other than a partnership, over which the consolidated
entity exercises significant influence, where the investment in that entity is
material and has not been acquired with a view to disposal in the near future.
In the consolidated financial statements, investments in associates (with the
exception of South Pacific Tyres N.Z. Ltd - refer to Note 2 'Change in
Accounting Policy') are accounted for using equity accounting principles.
Investments in associates are carried at the lower of the equity accounted
amount and recoverable amount. The consolidated entity's share of the
associates' net profit after tax is recognised in the consolidated Statement of
Financial Performance after adjusting for: revisions in depreciation of
depreciable assets and amortisation of goodwill arising from adjustments made as
at the date of acquisition; dissimilar accounting policies; and the elimination
of unrealised profits and losses on transactions between the associate and any
entities in the consolidated entity, or another associate of the consolidated
entity. Other movements in reserves are recognised directly in consolidated
reserves.
Revenue from dividends from associates is recognised by the parent entity when
dividends are received. Refer to Change in Accounting Policy for accounting
treatment of South Pacific Tyres N.Z. Ltd.
73
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
INVESTMENTS (continued)
OTHER COMPANIES
Investments in other listed and unlisted companies are carried at cost less any
amount provided for diminution in value as determined by the Directors.
Dividends are recognised when they are received.
INTEREST IN PARTNERSHIP
Refer to Note 2 'Change in Accounting Policy'.
PROPERTY, PLANT AND EQUIPMENT
ACQUISITION
Items of property, plant and equipment are initially recorded at cost and
depreciated as set out below. The cost of property, plant and equipment
constructed by the consolidated entity includes the cost of materials and direct
labour and capitalised interest.
DEPRECIATION AND AMORTIZATION
Depreciation and amortisation is calculated on a straight line basis so as to
write off the net cost of each item of property, plant and equipment, excluding
land, over its estimated useful life.
The expected useful lives are as follows:
Freehold buildings of the Company and all Australian controlled entities - 40 years
Freehold buildings of overseas controlled entities - 20 to 40 years
Leasehold buildings - Life of lease
Owned and leased plant and equipment - 3 to 10 years
Depreciation and amortisation rates and methods are reviewed annually for
appropriateness.
LEASES
Finance leases are capitalised at the present value of the minimum lease
payments. A corresponding lease liability is also established and each lease
payment is allocated between the liability and finance charges.
Operating lease payments are expensed as incurred.
RECOVERABLE AMOUNT OF NON-CURRENT ASSETS VALUED ON COST BASIS
The carrying amounts of non-current assets valued on the cost basis are reviewed
to determine whether they are in excess of their recoverable amount at balance
date. If the carrying amount of a non-current asset exceeds its recoverable
amount, the asset is written down to the lower amount. The write-down is
recognised as an expense in the net profit or loss in the reporting period in
which it occurs.
In assessing recoverable amounts of non-current assets the relevant cash flows
have not been discounted to their present value, except where specifically
stated.
BRAND NAMES
Brand names acquired since 1 July 1987 are recorded in the financial statements
at cost. No amortisation is provided against the carrying value of these brand
names on the basis that the lives of these assets are considered unlimited at
this point in time.
Brand names have an unlimited legal life and the brand names recorded in the
financial statements are not currently associated with products which are likely
to become commercially or technically obsolete.
PAYABLES
TRADE AND OTHER CREDITORS
Trade and other creditors are recognised for amounts to be paid in the future
for goods and services received, whether or not billed to the Company or the
consolidated entity. Trade liabilities are normally settled on 60 day terms.
74
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
PAYABLES (continued)
BILLS PAYABLE
Bills payable are carried at the principal amount plus accrued interest.
INTEREST BEARING LIABILITIES
Bank and other loans are carried at their principal amount, subject to set-off
arrangements. Interest is charged as an expense as it accrues.
PROVISIONS
WAGES, SALARIES AND ANNUAL LEAVE
The provisions for employee entitlements to wages, salaries and annual leave
represent the amount which the consolidated entity has a present obligation to
pay resulting from employees' services provided up to the balance date. The
provisions have been calculated at nominal amounts based on current wage and
salary rates and include related on-costs.
LONG SERVICE LEAVE AND POST RETIREMENT HEALTH BENEFITS
The liability for employee entitlements to long service leave and post
retirement health benefits represents the present value of the estimated future
cash outflows to be made by the Company and the consolidated entity resulting
from employees' services provided up to the balance date.
The provision is calculated using estimated future increases in wage and salary
rates including related on-costs and expected settlement dates based on turnover
history and is discounted using rates attaching to national government
securities at balance date which most closely match the terms of maturity of the
related liabilities.
RATIONALISATION AND RESTRUCTURING
Provisions for rationalisation and restructuring are only recognised when a
detailed plan has been approved and the restructuring has either commenced or
been publicly announced. Costs related to ongoing activities are not provided
for.
CONTINGENCIES, ACCUFIX PACING LEAD RELATED EXPENSES AND INSURANCE CLAIMS
The consolidated entity provides for certain specifically identified or
obligated costs when these amounts are reasonably determinable.
OTHER LIABILITIES
AMOUNTS DUE UNDER CONTRACT
Amounts due under contract are carried at the outstanding consideration payable.
SUPERANNUATION CONTRIBUTIONS
The Company and other controlled entities contribute to various defined benefit
and accumulation superannuation funds as set out in Note 24. Employer
contributions to these funds are charged against the operating profit when due
and payable.
EMPLOYEE AND EXECUTIVE SHARE PLANS
The Company currently maintains two plans for employees of the consolidated
entity - the Pacific Dunlop Employee Share Plan and the Pacific Dunlop Executive
Share Option Plan. A further Plan, the Pacific Dunlop Executive Share Plan, was
discontinued in 1996. Further information on these plans is set out in Note 25.
ACCOUNTING FOR ACQUISITIONS (GOODWILL & BRAND NAMES)
Acquired businesses are accounted for on the basis of the cost method. Fair
values are assigned at date of acquisition to all the identifiable underlying
assets acquired and to the liabilities assumed. Specific assessment is
undertaken at the date of acquisition of any appropriate additional costs to be
incurred. A liability for restructuring costs is only recognised as at the date
of acquisition when there is a demonstrable commitment to restructuring together
with a detailed plan. Further, the liability is only recognised when there is
little or no discretion to avoid payment to other parties to settle such costs
and a reliable estimate of the amount of the liability can be made.
75
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ACCOUNTING FOR ACQUISITIONS (GOODWILL & BRAND NAMES) (continued)
Brand names acquired are recorded in the financial statements at cost. Goodwill
represents the excess of the purchase consideration plus incidental costs over
the fair value of the identifiable net assets acquired. Acquired goodwill is
capitalised and amortised to the Statement of Financial Performance on a
straight line basis over the future period of expected benefit.
The benefits from the goodwill acquired may exceed 20 years but the goodwill is
written off over periods not exceeding 20 years in compliance with Australian
Accounting Standards. The unamortised balance of goodwill is reviewed at least
at each reporting date and any material diminution in value is charged to the
Statement of Financial Performance.
FOREIGN CURRENCY TRANSLATIONS
Transactions in foreign currencies are recorded at the rate of exchange ruling
on the date of each transaction. At balance date, amounts payable and receivable
in foreign currencies are converted at the rates of exchange ruling at that
date. Where forward currency contracts have been arranged, the contract
settlement rate is used.
The financial statements of overseas controlled entities that are self
sustaining foreign operations are converted using the current rate method.
Variations occurring from year to year arising from this translation method are
transferred to the foreign currency translation reserve.
Exchange differences arising on foreign currency amounts payable and receivable
are brought to account in the Statement of Financial Performance. On
consolidation, exchange differences on long term foreign currency amounts
payable and receivable that hedge a net investment in an overseas controlled
entity are transferred to the foreign currency translation reserve.
DERIVATIVES
The Company and consolidated entity use derivative financial instruments,
principally foreign exchange and interest rate related, to reduce their exposure
to movements in foreign exchange rate and interest rate movements.
The consolidated entity has adopted certain principles in relation to derivative
financial instruments:
(i) it does not trade in a derivative that is not used in the hedging of an
underlying business exposure of the consolidated entity;
(ii) derivatives acquired must be able to be recorded on the consolidated
entity's treasury management systems, which contain extensive internal
controls; and
(iii) the consolidated entity does not deal with counter-parties rated lower
than A- by Standard and Poor's or A3 by Moody's Investors Service for
any overnight transactions.
The Company and consolidated entity follow the same credit policies, legal
processes, monitoring of market and operational risks in the area of derivative
financial instruments, as they do in relation to financial assets and
liabilities on the Statement of Financial Position, where internal controls
operate.
Derivative instruments are not recorded on the Statement of Financial Position.
DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR PURPOSES OTHER THAN TRADING
On a continuing basis, the consolidated entity monitors its anticipated future
exposures and on some occasions hedges all or part of these exposures. The
transactions which may be covered are future profits of overseas controlled
entities and future foreign exchange requirements.
These exposures are then monitored against continuing analysis of anticipated
positions and may be modified from time to time. These transactions
predominantly do not exceed 12 months duration and hedge transactions the
consolidated entity expects to occur in this time frame.
76
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR PURPOSES OTHER THAN TRADING
(continued)
Gains and losses on derivatives used as hedges are accounted for on the same
basis as the underlying physical exposures they hedge. Accordingly, hedge gains
and losses are included in the Statement of Financial Performance when the gain
or loss arising on the related physical exposures are recognised in the
Statement of Financial Performance.
When hedging an underlying interest rate exposure, with a derivative financial
instrument, all gains and losses are accounted for on an accrual basis, thereby
adjusting the underlying physical cost to the hedged rate over the life of the
transaction. Gains or losses resulting from the termination of an interest rate
swap contract where the underlying borrowing remains, are deferred on the
Statement of Financial Position and then amortised over the life of the
borrowing. Where the transaction is a single event, such as a foreign exchange
exposure, the hedge gain or loss is taken to account on the actual exposure
date.
Gains and losses on derivative financial instruments which hedge anticipated
transactions are in the first instance deferred and later recognised in the
Statement of Financial Performance when the hedged transaction occurs. Such
deferrals only occur where the future transaction remains assured. Where an
actual or anticipated transaction is modified or extinguished any associated
derivative financial instrument is also modified or extinguished and any gain or
loss that no longer relates to an actual or anticipated exposure is immediately
taken to the Statement of Financial Performance.
Gains and losses that arise prior to and upon the maturity of transactions
entered into under rollover strategies are deferred and included in the
measurement of the hedge, if the transaction is still expected to continue. If
the transaction is no longer expected to continue, the gains and losses are
recognised immediately in the Statement of Financial Performance.
DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR TRADING PURPOSES
The Company and the consolidated entity also enter into a limited number of
exchange rate related derivative contracts for trading purposes. These
transactions are undertaken under strict guidelines, limits and internal
controls and with appropriate stop loss parameters. Trading activities include
taking positions within authorised and clearly defined limits to benefit from
expected movements in prices. The portfolio of derivative financial instruments
held for trading purposes is valued at market rates with all gains and losses
being recognised in the Statement of Financial Performance for the current
period.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure on contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reported period. Actual results could differ from these estimates.
77
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
2. CHANGE IN ACCOUNTING POLICY
ACCOUNTING FOR INTEREST IN PARTNERSHIP
Effective 1 July 2001, the consolidated entity discontinued equity accounting
for its interest in the South Pacific Tyres partnership pursuant to an agreement
with Goodyear Tyres Pty Ltd which contains put and call options which provide
the consolidated entity with an actionable exit strategy in respect of the
investment in the South Pacific Tyres partnership. The consolidated entity's
interest in the South Pacific Tyres partnership is carried as an investment.
Prior to 1 July 2001, the equity method of accounting had been applied in
accounting for the interest in the South Pacific Tyres partnership.
ACCOUNTING FOR INTEREST IN ASSOCIATED COMPANIES
Effective 1 July 2001, the consolidated entity discontinued equity accounting
for its interest in South Pacific Tyres N.Z. Ltd pursuant to an agreement with
Goodyear New Zealand Ltd which contains put and call options which provide the
consolidated entity with an actionable exit strategy in respect of the
investment in South Pacific Tyres N.Z. Ltd. The consolidated entity's interest
in South Pacific Tyres N.Z. Ltd is carried as an investment.
Prior to 1 July 2001, the equity method of accounting had been applied in
accounting for the interest in South Pacific Tyres N.Z. Ltd.
3. TOTAL REVENUE
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
REVENUE FROM THE SALE OF GOODS 2,222.8 4,156.8 5,725.8 498.9 1,527.0 1,691.2
Revenues From Other Operating Activities
Dividend income
From shares in wholly owned controlled entities - - - 195.5 25.2 169.7
From shares in associated companies - - - 1.3 1.0 -
From shares in other companies 0.3 0.6 0.1 - - -
INTEREST RECEIVED OR DUE AND RECEIVABLE
From wholly owned controlled entities - - - 34.3 127.7 88.7
From related parties 2.5 0.8 0.3 2.0 0.8 0.1
From others 13.0 44.1 46.7 1.9 1.8 2.5
------------------------------------------------------------------------------------------------------------------
TOTAL REVENUE FROM OTHER OPERATING ACTIVITIES 15.8 45.5 47.1 235.0 156.5 261.0
------------------------------------------------------------------------------------------------------------------
Revenue from Outside Operating Activities
Proceeds from the Sale of Non-Current Assets 12.1 15.1 26.7 2.0 6.4 5.7
Proceeds Received from the Sale of Businesses and
Investments* 939.7 1,049.9 11.6 521.5 214.8 -
------------------------------------------------------------------------------------------------------------------
TOTAL REVENUE FROM OUTSIDE OPERATING ACTIVITIES 951.8 1,065.0 38.3 523.5 221.2 5.7
------------------------------------------------------------------------------------------------------------------
TOTAL REVENUE 3,190.4 5,267.3 5,811.2 1,257.4 1,904.7 1,957.9
==================================================================================================================
* The Company 2001 includes a distribution from The Distribution Trust
arising from the sale of the Electrical Distribution business (refer to
Note 4(b)).
78
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
4. PROFIT/(LOSS) FROM ORDINARY ACTIVITIES BEFORE INCOME TAX
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------------
(a) PROFIT/(LOSS) FROM ORDINARY ACTIVITIES BEFORE INCOME
TAX HAS BEEN ARRIVED AT AFTER CHARGING/(CREDITING) THE
FOLLOWING ITEMS:
Borrowing Costs
Interest Paid or Due and Payable:
To others 61.8 140.8 146.2 59.4 127.4 122.2
Finance Charges on Finance Leases - - 0.2 - - -
Other Borrowing Costs 8.4 3.5 3.1 7.6 2.1 2.3
------------------------------------------------------------------------------------------------------------------------
Total Borrowing Costs 70.2 144.3 149.5 67.0 129.5 124.5
Depreciation
Buildings 3.9 4.8 8.6 0.9 0.4 0.3
Plant & equipment 46.4 85.4 134.3 7.0 16.3 31.2
Amortization
Leasehold land and buildings 2.8 5.1 6.0 0.2 0.7 1.0
Leased plant and equipment - - 0.1 - - 0.1
Goodwill 29.2 40.8 40.9 0.3 1.4 1.0
Deferred costs - 3.7 3.3 - 3.7 3.3
Research and Development Costs Expensed as Incurred 17.0 23.9 38.8 0.4 0.3 0.5
Net Bad Debts Expense 0.8 1.9 1.3 0.4 0.9 1.2
Amounts Set Aside to Provision for:
Doubtful trade debts (2.9) 7.9 7.3 1.0 (0.1) 1.2
Employee entitlements 29.2 60.9 102.3 8.5 26.7 36.4
Contingencies 9.4 (4.6) (9.7) 3.5 (4.6) (0.4)
Rationalization and restructuring costs 10.9 65.6 62.5 (3.8) 3.3 57.0
Rebates, allowances and warranty claims 7.2 7.1 14.4 2.4 0.3 (2.8)
Environmental remediation - (3.7) - - - -
Net foreign exchange (gain)/loss (0.4) (2.4) 3.6 23.3 37.8 (32.7)
Profits Arising from the Sale of Property, Plant and )
Equipment (7.6) (1.1) (6.1) (6.7) (0.4) (1.2)
Losses Arising from Sale of Property, Plant and
Equipment/(1)/ 13.2 8.5 163.8 7.7 7.8 0.4
Operating Lease Rentals 37.5 79.2 110.4 9.5 44.2 59.2
Write down in value of inventories 3.0 3.7 (0.5) 1.3 (1.0) (0.3)
/(1)/ Includes non-recurring write down of certain GNB assets and other costs
in 2000.
------------------------------------------------------------------------------------------------------------------------
(b) INDIVIDUALLY SIGNIFICANT ITEMS INCLUDED IN
PROFIT/(LOSS) FROM ORDINARY ACTIVITIES BEFORE INCOME
TAX EXPENSE
Write-down of Exide receivable/investment (99.9) - - - - -
Write-down of Ansell Healthcare fixed assets (63.1) - - - - -
Net gain on sale of controlled entities and businesses 25.7/(3)/ 155.2 - 7.0 152.4/(2)/ -
Write-down of assets and write-down of investments
and intercompany balances in subsidiaries - (97.7) (160.0) (82.4) (890.7) (186.0)
Engineered Products restructure - (27.4) - - (27.4) -
Ansell Healthcare restructure - (60.2) - - - -
Supply Chain restructure - - (54.1) - - (54.1)
/(2)/ Represents the distribution from the Distribution Trust arising from the
sale of the Electrical Distribution business.
/(3)/ Includes additional gain on finalisation of the sale of Pacific Brands
in the second half of the year ended 30 June 2002.
79
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
4. PROFIT/(LOSS) FROM ORDINARY ACTIVITIES BEFORE INCOME TAX (continued)
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
----------------------------------------------------------------------------------------------------------------
(c) AUDITORS' REMUNERATION
Audit and review of the financial reports:
Auditors of Ansell Limited and Australian
entities - KPMG 1,653 2,986 2,353 1,391 2,250 1,829
Other member firms of KPMG 1,891 1,940 2,581 - - -
---------------------------------------------------------
3,544 4,926 4,934 1,391 2,250 1,829
---------------------------------------------------------
Other services:
Other audit and assurance services (including
disposals and acquisitions)
Auditors of Ansell Limited and Australian
entities - KPMG 4,944 2,997 2,552 4,746 2,222 2,059
Other member firms of KPMG 25 1,110 3,569 - - -
Taxation and other services
Auditors of Ansell Limited and Australian
entities - KPMG 439 847 314 331 725 223
Other member firms of KPMG 66 22 63 - - -
Systems Implementation/Design
Auditors of Ansell Limited and Australian
entities - KPMG - 364 - - 282 -
Other member firms of KPMG - - 97 - - -
---------------------------------------------------------
Total other services 5,474 5,340 6,595 5,077 3,229 2,282
----------------------------------------------------------------------------------------------------------------
Total auditors remuneration 9,018 10,266 11,529 6,468 5,479 4,111
----------------------------------------------------------------------------------------------------------------
5. CONTRIBUTED EQUITY
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
ISSUED AND PAID UP CAPITAL
187,073,500 (2001 - 186,757,900; 2000 - 206,614,434)
ordinary shares fully paid * 1,455.4 1,454.2 1,617.1 1,455.4 1,454.2 1,617.1
1,174,600 (2001 - 1,481,700; 2000 - 2,023,680)
ordinary plan shares paid to 5 cents 0.1 0.1 0.1 0.1 0.1 0.1
------------------------------------------------------------------------------------------------------------------
Total Issued and Paid up Capital 1,455.5 1,454.3 1,617.2 1,455.5 1,454.3 1,617.2
==================================================================================================================
* includes 678,300 (2001 - 747,666; 2000 - 820,389) shares issued in
accordance with the Employee Share Plan
------------------------------------------------------------------------------------------------------------------
ORDINARY SHARES RECONCILIATION
Balance at the beginning of the financial year 1,454.3 1,617.2 1,776.0 1,454.3 1,617.2 1,776.0
Increase in Contributed Equity:
Additional capital issued 1.2 2.5 1.2 1.2 2.5 1.2
Decrease in Contributed Equity:
Share buy-back - (165.4) - - (165.4) -
Capital reduction - - (160.0) - - (160.0)
------------------------------------------------------------------------------------------------------------------
Balance at the end of the financial year 1,455.5 1,454.3 1,617.2 1,455.5 1,454.3 1,617.2
==================================================================================================================
Holders of ordinary shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at shareholders' meetings.
In the event of winding up of the Company ordinary shareholders rank after all
other shareholders and creditors and are fully entitled to any proceeds of
liquidation. Note 25 provides details of shares subject to options granted under
the Pacific Dunlop Executive Share Option Plan.
SHARE CONSOLIDATION
Effective 12 April 2002, Ansell Limited reduced the number of ordinary shares
and exercisable options on issue by means of a 1 for 5 share consolidation,
which received shareholder approval at an Extraordinary General Meeting held on
that date.
The quantity of share capital on issue in prior periods has been adjusted for
the effect of the share consolidation.
80
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
5. CONTRIBUTED EQUITY (continued)
SHARE BUY-BACK
On 13 November 2000 pursuant to its off market equal access tender buy-back, the
Company bought back 101,992,570 shares at a buy-back price of $1.60 per share
(pre-share consolidation), approximating 10% of shares on issue at that date.
SHARE CAPITAL TRANSFER TO RETAINED PROFITS
As previously reported, effective 30 June 2000, in accordance with section 258F
of the Corporations Law, the Company's issued and paid up capital was reduced by
the amount of $160 million, representing an amount of capital lost by the
Company, and that reduction was effected by crediting the amount to the
Company's retained profits account.
EXECUTIVE SHARE PLAN
As previously reported, the Pacific Dunlop Executive Share Plan was closed to
new members effective 12 September 1996, and no further issues of Executive Plan
Shares will be made.
During the financial year, the amounts outstanding on 307,100 existing Executive
Plan Shares were fully paid. Since the end of the financial year, the amounts
outstanding on a further 52,100 Executive Plan Shares have been fully paid.
Shares allotted under the Pacific Dunlop Executive Share Plan have been paid to
5 cents per share. Refer to Note 25 'Ownership-Based Remuneration Schemes' for
details of price payable for shares issued under this plan.
EMPLOYEE SHARE PLAN
During the financial year, the loan liability of members in respect of 77,866
fully paid ordinary shares of $2.50 each was discharged. Since the end of the
financial year, the amounts outstanding on a further 1,380 Employee Plan Shares
have been fully paid. Under the Employee Share Plan, 50 cents was payable on
subscription for each Plan share allotted to eligible employees, the balance of
issue price being funded by way of interest free loans from the Company to the
member. No new shares were issued during the financial year or up to the date of
this Report under the Pacific Dunlop Employee Share Plan.
81
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
6. (ACCUMULATED LOSSES)/RETAINED PROFITS AND RESERVES
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
Asset revaluation reserve 14.7 6.2 20.2 10.2 10.2 10.2
General reserve 2.7 3.0 2.8 - - -
Foreign currency translation reserve (193.6) (127.2) (54.2) - - -
------------------------------------------------------------------------------------------------------------------
TOTAL RESERVES (176.2) (118.0) (31.2) 10.2 10.2 10.2
(Accumulated losses)/retained profits (417.0) (289.9) (103.6) (394.1) (465.8) 336.7
------------------------------------------------------------------------------------------------------------------
TOTAL (ACCUMULATED LOSSES)/RETAINED EARNINGS AND
RESERVES (593.2) (407.9) (134.8) (383.9) (455.6) 346.9
==================================================================================================================
MOVEMENTS DURING THE YEAR:
ASSET REVALUATION RESERVE
Balance at beginning of the financial year 6.2 20.2 8.6 10.2 10.2 10.0
Adjustment upon adoption of AASB 1041 - (14.1) - - - -
Transfer from/(to) retained profits 8.5 0.1 10.4 - - -
Transfer to GNB assets held for sale - - 1.2 - - 0.2
------------------------------------------------------------------------------------------------------------------
BALANCE AT THE END OF THE FINANCIAL YEAR 14.7 6.2 20.2 10.2 10.2 10.2
==================================================================================================================
GENERAL RESERVE
Balance at beginning of the financial year 3.0 2.8 4.8 - - -
Transfer from/(to) retained profits (0.3) 0.2 (2.0) - - -
------------------------------------------------------------------------------------------------------------------
BALANCE AT THE END OF THE FINANCIAL YEAR 2.7 3.0 2.8 - - -
==================================================================================================================
FOREIGN CURRENCY TRANSLATION RESERVE
Balance at the beginning of the financial year (127.2) (54.2) (115.5) - - -
Transfers to retained profits 3.2 - - - - -
Exchange fluctuations on assets and liabilities held
in foreign currencies
net gain/(loss) on translation of net assets (120.3) 279.1 154.2 - - -
net gain/(loss) on hedge borrowings 50.7 (352.1) (92.9) - - -
------------------------------------------------------------------------------------------------------------------
BALANCE AT THE END OF THE FINANCIAL YEAR (193.6) (127.2) (54.2) - - -
==================================================================================================================
(ACCUMULATED LOSSES)/RETAINED PROFITS
Balance at the beginning of the financial year (289.9) (103.6) (65.4) (465.8) 336.7 284.0
Transfer (to)/from reserves (11.4) (0.3) (8.4) - - -
Net profit/(loss) after income tax attributable to
Ansell Limited shareholders (115.8) (139.4) (86.5) 71.6 (755.9) (4.0)
Amount transferred from contributed equity - - 160.0 - - 160.0
Dividends provided for or paid * 0.1 (46.6) (103.3) 0.1 (46.6) (103.3)
------------------------------------------------------------------------------------------------------------------
Balance at the end of the financial year (417.0) (289.9) (103.6) (394.1) (465.8) 336.7
==================================================================================================================
* 2002 dividends represents an over provision in the prior year.
NATURE AND PURPOSE OF RESERVES
ASSET REVALUATION
The asset revaluation reserve includes the net revaluation increments and
decrements arising from the revaluation of non-current assets in accordance with
AASB 1041. The balance of $14.7 million (the Company: $10.2 million) is not
available for future asset write-downs as a result of using the deemed cost
election for land and buildings when adopting AASB 1041.
GENERAL
The amount standing to the credit of the general reserve resulted from prior
period allocations of retained profits for non-specific purposes and is
available for release to retained profits.
FOREIGN CURRENCY TRANSLATION
The foreign currency translation reserve records the foreign currency
differences arising from the translation of self-sustaining foreign operations,
the translation of transactions that hedge the Company's net investment in a
foreign operation or the translation of foreign currency monetary items forming
part of the net investment in a self-sustaining operation. Refer to Accounting
Policy Note 1.
82
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
7. TOTAL EQUITY RECONCILIATION
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
Total equity at the beginning of the financial year 1,066.2 1,499.9 1,634.3 998.7 1,964.1 2,070.0
Total changes in equity from non-owner related
transactions attributable to Ansell Limited
shareholders (185.4) (226.5) (24.0) 71.6 (755.9) (3.8)
Transactions with owners as owners:
Contributions of equity 1.2 2.5 1.2 1.2 2.5 1.2
Share buy-back - (165.4) - - (165.4) -
Dividends 0.1 (46.6) (103.3) 0.1 (46.6) (103.3)
Total changes in outside equity interest (6.1) 2.3 (8.3) - - -
------------------------------------------------------------------------------------------------------------------
Total equity at the end of the financial year 876.0 1,066.2 1,499.9 1,071.6 998.7 1,964.1
==================================================================================================================
8. INCOME TAX
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
Prima facie income tax expense/(benefit) calculated
at 30% (2001: 34%, 2000: 36%) on profit/(loss) from
ordinary activities (17.2) 18.4 (19.0) 26.7 (229.2) 3.2
Increased taxation arising from:
Write down of assets 48.9 43.2 57.6 - 7.8 67.0
Net restructuring costs 5.4 19.6 - - - -
Write down of intergroup investments and
intercompany balances - - - - 300.9 -
Goodwill amortisation 1.4 4.8 6.8 - 0.5 3.2
Foreign losses and costs not deductible - 0.2 1.4 - - -
Income tax under provided in prior years 0.2 1.6 - - 0.6 1.6
Net higher overseas tax rates 4.1 - - - - -
Reduced taxation arising from:
Net gain on sale of businesses (7.7) (49.3) - (2.1) (65.4) (8.2)
Tax rebate on dividends from investments - - - - - (33.3)
Tax exempt dividends from foreign companies - - - - (8.6) (2.8)
Income tax over provided in previous years - - (0.7) (2.3) - -
Investment and export incentive allowances (6.3) (8.9) (9.7) - - -
Net lower overseas tax rates - (0.9) (5.7) - - -
Other permanent differences * 12.4 3.8 (18.6) (22.3) (13.2) (33.3)
Share of associates' net profit (0.6) (1.1) (1.1) - - -
Income tax expense/(benefit) on profit from ordinary
activities before individually significant items and
effect of change in tax rate 40.6 31.4 11.0 - (6.6) (2.6)
Individually significant income tax items:
Write off of tax balances attributable to Australian
operations 15.2 158.5 - 17.3 88.4 -
Income tax expense/(benefit) on profit from ordinary
activities before effect of change in tax rate 55.8 189.9 11.0 17.3 81.8 (2.6)
Effect of tax rate change - - 18.8 - - 15.6
------------------------------------------------------------------------------------------------------------------
Income tax expense attributable to profit/(loss) from
ordinary activities 55.8 189.9 29.8 17.3 81.8 13.0
==================================================================================================================
Income tax expense/(benefit) attributable to operating
profit/(loss) is made up of:
Provision attributable to current year 8.0 20.5 (24.1) (12.6) (31.9) 2.3
(Over)/Under provision in respect of previous years 0.2 1.6 (0.7) (2.3) 0.6 1.6
Provision attributable to future years
Deferred income tax liability (2.0) 4.5 49.5 - - (0.1)
Future income tax benefit 49.6 163.3 5.1 32.2 113.1 9.2
------------------------------------------------------------------------------------------------------------------
55.8 189.9 29.8 17.3 81.8 13.0
==================================================================================================================
* Includes tax benefit on loss from Australian trading operations not brought
to account/recovery of tax losses not previously brought to account.
83
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
9. DIVIDENDS PAID AND DECLARED
THE COMPANY
$ IN MILLIONS 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
DIVIDENDS PAID OR DECLARED BY THE COMPANY ARE:
(a) no interim dividend (2001 - 5 cents, unfranked; 2000 - 7 cents, unfranked)
has been declared by the Directors - 46.6 72.3
(b) no final dividend (2001 - nil; 2000 - 3 cents, unfranked) has been
declared by the Directors - - 31.0
DIVIDEND FRANKING ACCOUNT
The balance of available franking credits in the franking account as at 30 June
2002 was Nil (2001 - Nil; 2000 - Nil.)
10. OUTSIDE EQUITY INTERESTS
CONSOLIDATED
$ IN MILLIONS 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
OUTSIDE EQUITY INTERESTS COMPRISE:
Contributed equity 4.5 11.6 11.6
Reserves 2.4 4.6 0.7
Retained profits at the beginning of the financial year 3.6 5.2 6.9
Profits/(losses) for the year 2.8 3.6 4.1
Dividends provided for during the year (1.8) (5.2) (5.7)
Outside equity interests (disposed)/acquired during the year 2.2 - (0.1)
Retained profits at the end of the financial year 6.8 3.6 5.2
------------------------------------------------------------------------------------------------------------------
Total Outside Equity Interests 13.7 19.8 17.5
==================================================================================================================
11. CASH
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
Cash on hand 0.2 0.6 1.2 - 0.1 0.1
Cash at bank 72.0 115.7 187.8 4.2 21.0 23.5
Short-term deposits 186.3 194.6 862.6 - 7.2 4.4
------------------------------------------------------------------------------------------------------------------
258.5 310.9 1,051.6 4.2 28.3 28.0
Restricted deposits 18.4 27.0 26.3 - - -
------------------------------------------------------------------------------------------------------------------
Total Cash 276.9 337.9 1,077.9 4.2 28.3 28.0
==================================================================================================================
Restricted deposits represent cash set aside to cover the provisions established
to address any remaining liability of members of the Group for claims arising
with respect to the Accufix Pacing Lead.
84
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
12. RECEIVABLES
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
CURRENT
Trade debtors 264.8 597.4 715.8 11.6 154.4 126.4
Less provision for doubtful debts 17.5 33.1 33.5 0.4 4.4 6.0
Less provision for rebates, allowances and warranty
claims 14.8 41.2 34.1 1.6 9.7 9.4
------------------------------------------------------------------------------------------------------------------
232.5 523.1 648.2 9.6 140.3 111.0
Amounts owing by South Pacific Tyres partnership - - 0.9 - - 0.6
Amounts owing by wholly owned controlled entities - - - 1,488.3 2,684.9 2,864.7
Less provision for doubtful debts - - - 691.4 707.9 196.4
Other amounts receivable 61.2 120.7 135.6 14.5 29.7 18.1
------------------------------------------------------------------------------------------------------------------
Total Current 293.7 643.8 784.7 821.0 2,147.0 2,798.0
==================================================================================================================
NON-CURRENT
Interest bearing amount owing by South Pacific Tyres
partnership 58.0 25.8 - 27.6 25.8 -
Interest bearing amount owing by external entities 2.5 33.7 - 1.3 33.7 -
Other amounts receivable 8.2 28.5 39.2 4.3 20.6 29.7
Amounts owing by other related parties 0.2 4.0 - 0.2 4.0 -
Less provision for doubtful debts 2.2 - - - - -
------------------------------------------------------------------------------------------------------------------
Total Non-Current 66.7 92.0 39.2 33.4 84.1 29.7
------------------------------------------------------------------------------------------------------------------
Total Receivables 360.4 735.8 823.9 854.4 2,231.1 2,827.7
==================================================================================================================
INCLUDED IN OTHER AMOUNTS RECEIVABLE ARE:
(i) Loans to employees in relation to the employee
share plan
- current 0.7 1.0 2.4 0.7 1.0 2.4
- non-current 3.6 7.6 7.5 3.6 7.6 7.5
(ii) Loans to Executive Directors of Ansell Limited and
Executives who are Directors of certain controlled
entities secured under the Pacific Dunlop Housing
Scheme repayable at a future date at concessional
interest rates
- non-current 0.2 0.4 0.6 0.2 0.4 0.6
Repayments received 0.2 0.2 0.5 0.2 0.2 0.5
THE RECONCILIATIONS OF PROVISION FOR DOUBTFUL
DEBTS - TRADE ARE PRESENTED BELOW:
Balance at the beginning of the financial year 33.1 33.5 40.2 4.4 6.0 9.5
Acquisitions/(disposals) of entities (8.2) (8.4) (5.9) (4.8) - -
Amounts charged/(released) to profit/(loss) from
operating activities (2.9) 7.9 7.3 1.0 (0.1) 1.2
Amounts utilised for intended purposes (4.0) (2.1) (9.1) (0.2) (1.5) (4.7)
Net foreign currency differences on translation of
self-sustaining operations (0.5) 2.2 1.0 - - -
------------------------------------------------------------------------------------------------------------------
Balance at the end of the financial year 17.5 33.1 33.5 0.4 4.4 6.0
==================================================================================================================
13. INVENTORIES
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
At Cost
Raw materials 31.9 78.8 69.3 0.9 32.6 34.9
Work in progress 17.0 32.9 38.9 - 9.7 11.9
Finished goods 181.1 592.7 594.8 12.8 128.2 95.8
Other stock 5.1 6.6 10.0 - 2.6 3.4
------------------------------------------------------------------------------------------------------------------
Total Inventory at Cost 235.1 711.0 713.0 13.7 173.1 146.0
------------------------------------------------------------------------------------------------------------------
Net Realizable Value (NRV)
Raw materials - 6.0 2.8 - 2.4 0.1
Work in progress - 1.6 0.3 - - -
Finished goods - 69.9 132.4 - 30.4 16.7
Other stock - 5.8 0.2 - - -
------------------------------------------------------------------------------------------------------------------
Total Inventory at Net Realizable Value - 83.3 135.7 - 32.8 16.8
------------------------------------------------------------------------------------------------------------------
Total Inventory: At lower of cost and NRV 235.1 794.3 848.7 13.7 205.9 162.8
==================================================================================================================
85
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
14. INVESTMENTS
CONSOLIDATED THE COMPANY
2002 2001 2000 2002 2001 2000
NOTES $M $M $M $M $M $M
------------------------------------------------------------------------------------------------------------------
(A) SHARES IN CONTROLLED ENTITIES AND OTHER
FINANCIAL ASSETS
Controlled entities
Not quoted on a prescribed stock exchange:
At cost /(1)/ - - - 2,246.7 2,442.8 3,098.5
Less Provision for diminution in value - - - 699.5 618.7 245.1
Other financial assets
Quoted on a prescribed stock exchange:
At cost 9.3 71.6 - - - -
Not quoted on a prescribed stock exchange:
At cost - 5.3 4.8 - 2.2 -
South Pacific Tyres N.Z. Ltd /(2)/ 20.1 18.7 16.7 - - -
Investment in Partnerships
South Pacific Tyres /(3)/ 116.4 116.4 103.8 - - -
-----------------------------------------------------------
Total 145.8 212.0 125.3 1,547.2 1,826.3 2,853.4
-----------------------------------------------------------
(B) INVESTMENTS ACCOUNTED FOR USING THE EQUITY
METHOD
Shares in Unlisted Associated Companies
Equity Accounted 38 13.3 14.6 2.3 - - -
Cost - - - 0.2 0.2 0.2
-----------------------------------------------------------
13.3 14.6 2.3 0.2 0.2 0.2
------------------------------------------------------------------------------------------------------------------
Total Investments 159.1 226.6 127.6 1,547.4 1,826.5 2,853.6
==================================================================================================================
/(1)/ The Directors have adopted the cost basis of valuation in accordance
with AASB 1041 'Revaluation of Non-Current Assets'
/(2)/ Refer to Note 2 - Change in Accounting Policy for accounting treatment
of investment in South Pacific Tyres N.Z. Ltd.
/(3)/ Refer to Note 2 - Change in Accounting Policy for accounting treatment
of investment in the South Pacific Tyres partnership
86
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
15. PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
(A) FREEHOLD LAND
Independent valuation 31/12/1997 - - 35.0 - - 4.1
Directors' valuation 31/12/1997 - - 0.4 - - 0.4
At cost 16.3 43.3 2.3 - 9.7 -
------------------------------------------------------------------------------------------------------------------
16.3 43.3 37.7 - 9.7 4.5
------------------------------------------------------------------------------------------------------------------
(B) FREEHOLD BUILDINGS
Independent valuation 31/12/1997 - - 60.6 - - 10.8
Directors' valuation 31/12/1997 - - 5.8 - - -
-----------------------------------------------------------
- - 66.4 - - 10.8
Less provision for depreciation - - 3.1 - - 0.7
-----------------------------------------------------------
- - 63.3 - - 10.1
At cost 45.6 114.4 31.4 - 20.0 1.0
Less provision for depreciation 7.6 16.7 9.2 - 1.2 0.2
-----------------------------------------------------------
38.0 97.7 22.2 - 18.8 0.8
------------------------------------------------------------------------------------------------------------------
38.0 97.7 85.5 - 18.8 10.9
------------------------------------------------------------------------------------------------------------------
(C) LEASEHOLD LAND AND BUILDINGS
Independent valuation 31/12/1997 - - 38.4 - - -
Less provision for amortization - - 3.3 - - -
-----------------------------------------------------------
- - 35.1 - - -
At cost 62.6 99.1 63.6 - 6.3 7.1
Less provision for amortization 12.1 25.9 26.6 - 3.2 3.0
-----------------------------------------------------------
50.5 73.2 37.0 - 3.1 4.1
------------------------------------------------------------------------------------------------------------------
50.5 73.2 72.1 - 3.1 4.1
------------------------------------------------------------------------------------------------------------------
(D) PLANT AND EQUIPMENT
At cost 502.5 979.2 992.1 2.4 179.1 201.4
Less provision for depreciation 286.7 555.3 559.2 2.0 115.8 130.4
------------------------------------------------------------------------------------------------------------------
215.8 423.9 432.9 0.4 63.3 71.0
------------------------------------------------------------------------------------------------------------------
(E) LEASED PLANT AND EQUIPMENT
At cost 0.1 0.5 0.5 - - -
Less provision for amortization 0.1 0.5 0.5 - - -
-----------------------------------------------------------
- - - - - -
-----------------------------------------------------------
(F) BUILDINGS AND PLANT UNDER CONSTRUCTION
At cost 11.9 31.8 30.0 - 4.0 2.5
------------------------------------------------------------------------------------------------------------------
Total property, plant and equipment 332.5 669.9 658.2 0.4 98.9 93.0
------------------------------------------------------------------------------------------------------------------
In accordance with the consolidated entity's policy of obtaining an independent
valuation of land and buildings every three years, an independent valuation was
carried out as at 31 December 2000 by CB Richard Ellis (Victoria) Pty Ltd. This
valuation was on the basis of Fair Value - Existing Use, subject to continued
occupation by the operating entity or, where this was not the case, Fair Value -
Alternative Use. With respect to land and buildings owned as at 30 June 2002,
this resulted in a valuation of land of $40,127,553 (the Company: Nil) and a
valuation of buildings of $85,605,413 (the Company: Nil).
As land and buildings are recorded at cost, the valuation has not been brought
to account.
87
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
15. PROPERTY, PLANT AND EQUIPMENT (continued)
RECONCILIATIONS
Reconciliations of the balances for each class of property, plant and equipment
are set out below:
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
FREEHOLD LAND
Balance at the beginning of the financial year 43.3 37.7 85.4 9.7 4.5 4.6
Additions - 1.0 5.3 - 1.0 -
Additions through entities acquired - 4.7 - - 4.7 -
Disposal of entities (20.8) - (40.9) (8.1) - (0.1)
Disposals/Write-downs (4.6) (0.5) (14.3) (1.6) (0.5) -
Transfers (to)/from related companies - - - - - -
Transfer from capital works in progress - - 0.9 - - -
Net foreign currency differences on translation of
self-sustaining operations (1.6) 0.4 1.3 - - -
-----------------------------------------------------------
Balance at the end of the financial year 16.3 43.3 37.7 - 9.7 4.5
FREEHOLD BUILDINGS
Balance at the beginning of the financial year 97.7 85.5 151.6 18.8 10.9 12.3
Additions 0.3 0.2 0.6 - - 0.2
Additions through entities acquired - 8.2 0.5 - 8.2 -
Disposal of entities (33.3) (0.1) (86.8) (14.9) - (0.9)
Disposals/Write-downs (19.4) (0.7) (3.2) (3.0) - (0.8)
Transfers (to)/from related companies - - - - 0.1 0.6
Transfer from capital works in progress - 2.9 11.4 - - -
Transfers to leased assets - - (0.2) - - (0.2)
Depreciation (3.9) (4.8) (8.6) (0.9) (0.4) (0.3)
Net foreign currency differences on translation of
self-sustaining operations (3.4) 6.5 20.2 - - -
-----------------------------------------------------------
Balance at the end of the financial year 38.0 97.7 85.5 - 18.8 10.9
LEASEHOLD LAND & BUILDINGS
Balance at the beginning of the financial year 73.2 72.1 65.2 3.1 4.1 3.6
Additions 1.1 1.6 2.9 0.1 0.2 0.7
Additions through entities acquired 1.9 0.2 13.0 - 0.2 -
Disposal of entities (14.8) (8.8) (12.7) (2.7) (0.3) -
Disposals/Write-downs (2.7) (0.4) (0.1) (1.6) (0.4) -
Transfers (to)/from related companies - - - - - 0.5
Transfers from capital works in progress 1.4 0.2 0.9 1.3 - 0.1
Transfers from fixed assets - - 0.2 - - 0.2
Amortization (2.8) (5.1) (6.0) (0.2) (0.7) (1.0)
Net foreign currency differences on translation of
self-sustaining operations (6.8) 13.4 8.7 - - -
-----------------------------------------------------------
Balance at the end of the financial year 50.5 73.2 72.1 - 3.1 4.1
PLANT & EQUIPMENT
Balance at the beginning of the financial year 423.9 432.9 646.4 63.3 71.0 94.2
Additions 11.4 37.6 46.1 4.6 8.9 10.9
Additions through entities acquired 3.4 11.1 30.6 - 9.6 -
Disposal of entities (104.4) (34.5) (345.9) (48.8) (3.3) (19.2)
Disposals/Write-downs (74.4) (20.3) (18.4) (13.1) (12.4) (4.2)
Transfers (to)/from related companies - - - - 1.5 12.3
Transfers from capital works in progress 30.5 36.6 155.0 1.4 4.3 8.1
Transfers from leased assets - - 0.1 - - 0.1
Depreciation (46.4) (85.4) (134.3) (7.0) (16.3) (31.2)
Net foreign currency differences on translation of
self-sustaining operations (28.2) 45.9 53.3 - - -
-----------------------------------------------------------
Balance at the end of the financial year 215.8 423.9 432.9 0.4 63.3 71.0
88
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
15. PROPERTY, PLANT AND EQUIPMENT (continued)
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
LEASED PLANT & EQUIPMENT
Balance at the beginning of the financial year - - 0.2 - - 0.2
Transfers to fixed assets - - (0.1) - - (0.1)
Amortization - - (0.1) - - (0.1)
-----------------------------------------------------------
Balance at the end of the financial year - - - - - -
BUILDINGS AND PLANT UNDER CONSTRUCTION
Balance at the beginning of the financial year 31.8 30.0 117.0 4.0 2.5 6.0
Additions 21.5 35.6 101.8 3.0 6.2 5.3
Additions through entities acquired - 0.4 0.1 - 0.4 -
Disposal of entities (7.0) (0.1) (38.1) (3.8) - (0.6)
Disposals/Write-downs (0.4) (0.5) - (0.5) (0.4) -
Transfers (to)/from related companies - - - - (0.4) 0.3
Transfers to the statement of financial performance - (0.3) (1.2) - - (0.2)
Transfers to property, plant & equipment (31.9) (39.7) (168.1) (2.7) (4.3) (8.3)
Net foreign currency differences on translation of
self-sustaining operations (2.1) 6.4 18.5 - - -
-----------------------------------------------------------
Balance at the end of the financial year 11.9 31.8 30.0 - 4.0 2.5
16. INTANGIBLES
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
BRAND NAMES
At cost 142.5 217.5 219.5 - 7.3 8.7
-----------------------------------------------------------
GOODWILL
Directors' valuation 30/06/1996 - 4.0 3.4 - - -
-----------------------------------------------------------
- 4.0 3.4 - - -
Less provision for amortization - 2.0 1.4 - - -
-----------------------------------------------------------
- 2.0 2.0 - - -
-----------------------------------------------------------
At cost 445.9 536.8 622.2 - 8.4 20.0
Less provision for amortization 185.2 199.8 215.9 - 5.0 10.2
-----------------------------------------------------------
260.7 337.0 406.3 - 3.4 9.8
-----------------------------------------------------------
Total Goodwill 260.7 339.0 408.3 - 3.4 9.8
-----------------------------------------------------------
Total Intangibles 403.2 556.5 627.8 - 10.7 18.5
===========================================================
17. DEFERRED TAX ASSETS
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
Future income tax benefit arising from:
Accumulated timing differences 32.2 75.4 147.9 - 32.2 145.3
Accumulated tax losses 17.5 31.4 124.1 - - -
-----------------------------------------------------------
49.7 106.8 272.0 - 32.2 145.3
===========================================================
The Group has unrecognised capital tax losses relating to controlled entities of
$331.3 million (2001 - $242.5 million; 2000 - $42.5 million). Future income tax
benefits of $455.1 million (2001 - $461.8 million; 2000 - $197.8 million)
relating to trading tax losses of controlled entities have not been recognised
in the financial statements.
The benefit of those trading losses will only be obtained if:
(a) the relevant company derives future assessable income of a nature and an
amount sufficient to enable the benefit to be realised, or the benefit
can be utilised by another company in the consolidated entity;
(b) the relevant company and/or the consolidated entity continues to comply
with the conditions for deductibility imposed by the law; and
(c) no changes in tax legislation adversely affect the relevant company
and/or consolidated entity in realising the benefit.
89
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
17. DEFERRED TAX ASSETS (continued)
The tax effect of temporary differences that give rise to significant portions
of the future income tax benefit are presented below:
CONSOLIDATED
$ IN MILLIONS 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
Trading stock tax adjustments 4.0 13.0 44.2
Depreciation on plant adjustments - 1.5 (2.4)
Provisions 21.4 82.2 39.4
Accruals 3.0 (1.0) -
Unrealized foreign exchange losses 0.5 0.2 49.8
Accumulated tax losses 17.5 31.4 124.1
Other 3.3 (20.5) 16.9
------------------------------------------------------------------------------------------------------------------
Total temporary differences 49.7 106.8 272.0
==================================================================================================================
18. PAYABLES
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
CURRENT
Amounts owing to wholly owned controlled entities - - - 739.1 1,623.3 1,620.8
Trade creditors 166.6 363.2 476.7 8.1 77.9 78.8
Bills payable - 6.6 1.5 - 1.5 -
Other creditors 26.1 51.1 88.2 13.8 20.2 181.6
------------------------------------------------------------------------------------------------------------------
Total Current 192.7 420.9 566.4 761.0 1,722.9 1,881.2
------------------------------------------------------------------------------------------------------------------
NON-CURRENT
Trade creditors - 0.3 0.2 - 0.1 0.1
Other creditors 3.7 4.8 5.5 - 0.2 0.3
------------------------------------------------------------------------------------------------------------------
Total Non-Current 3.7 5.1 5.7 - 0.3 0.4
------------------------------------------------------------------------------------------------------------------
Total Payables 196.4 426.0 572.1 761.0 1,723.2 1,881.6
------------------------------------------------------------------------------------------------------------------
90
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
19. INTEREST BEARING LIABILITIES
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
CURRENT
Bank overdrafts 14.6 9.5 58.1 0.9 1.0 3.9
Bank loans repayable in:
Belgian francs - - 27.5 - - -
Canadian dollars 5.8 6.5 4.5 - - -
Euro dollars 14.9 16.7 - - - -
Malaysian ringgits 5.8 - - - - -
U.S. dollars - - 0.5 - - -
Other currencies 0.7 1.6 7.0 - - -
Other loans repayable in:
Australian dollars - 578.1 71.2 - 578.3 71.2
Canadian dollars - - 16.8 - - 16.8
Euro dollars - 15.7 15.9 - 15.7 15.9
New Zealand dollars - - 87.2 - - 59.9
Sterling Pounds 16.2 - 43.7 16.2 - 43.7
U.S. dollars 49.6 120.7 1,551.6 49.6 120.7 1,268.9
Other currencies - - 5.4 - - 5.4
------------------------------------------------------------------------------------------------------------------
107.6 748.8 1,889.4 66.7 715.7 1,485.7
------------------------------------------------------------------------------------------------------------------
NON-CURRENT
Bank loans repayable in:
Other currencies 0.2 0.5 1.7 - - -
Other loans repayable in:
Australian dollars 116.0 346.8 64.2 116.0 346.9 64.2
Euro dollars 34.0 16.7 30.9 34.0 16.7 30.8
New Zealand dollars - - 35.1 - - 35.1
Sterling Pounds - 16.7 17.7 - 16.7 17.7
U.S. dollars 366.3 481.2 478.1 366.3 481.2 478.2
------------------------------------------------------------------------------------------------------------------
516.5 861.9 627.7 516.3 861.5 626.0
------------------------------------------------------------------------------------------------------------------
624.1 1,610.7 2,517.1 583.0 1,577.2 2,111.7
==================================================================================================================
The Group does not, as a rule, pledge assets as security for borrowings,
however, at 30 June 2002 bank overdraft and other loans totalling $8.2 million
(2001: $3.8 million, 2000: $5.2 million) were secured, principally against Group
property, plant and equipment items having carrying values slightly in excess of
the secured amounts payable. These security arrangements relate to acquired
controlled entities and were in place prior to the companies concerned becoming
part of the Ansell Limited Group.
The Group established a 3 year US$100 million revolving credit bank facility in
January 2002. This facility can be accessed by the parent company and certain
USA subsidiaries. This facility was not utilised at 30 June 2002.
91
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
19. INTEREST BEARING LIABILITIES (continued)
The following table sets out detail in respect of the major components of
Interest Bearing Liabilities at 30 June 2002.
AMOUNT INTEREST RATE
NATURE OF BORROWING $ MILLION % P.A. MATURITY DATE
-------------------------------------------------------------------------------
BANK OVERDRAFTS
Australian dollars 1.7 8.00 At call
Indian rupees 1.5 8.80 At call
Euro dollars 4.3 4.90 At call
Sterling pounds 2.8 5.50 At call
United States dollar 3.4 4.00 At call
Other currencies 0.9 Various At call
-------------------------------------------------------------------------------
Total Bank Overdrafts 14.6
===============================================================================
BANK LOANS
CURRENT
Canadian dollars 5.8 3.81 2003
Malaysian ringgits 5.8 3.00 2003
Euro dollars 14.9 4.07 2003
Other currencies 0.7 Various 2003
-------------------------------------------------------------------------------
27.2
-------------------------------------------------------------------------------
NON-CURRENT
Other currencies 0.2 Various 2004
-------------------------------------------------------------------------------
Total Bank Loans 27.4
===============================================================================
OTHER LOANS
CURRENT
Sterling pounds 16.2 4.60 2003
United States dollars 49.6 2.21 2003
-------------------------------------------------------------------------------
65.8
-------------------------------------------------------------------------------
NON-CURRENT
Australian dollars 50.0 5.68 2005
Australian dollars 50.0 5.95 2007
Australian dollars 16.0 6.87 2007
Euro dollars 34.0 4.40 2005
United States dollars 157.6 2.95 2004
United States dollars 125.5 5.74 2005
United States dollars 35.3 2.98 2006
United States dollars 32.0 2.33 2007
United States dollars 15.9 2.74 2010
-------------------------------------------------------------------------------
516.3
-------------------------------------------------------------------------------
Total Other Loans 582.1
-------------------------------------------------------------------------------
Total Interest Bearing Liabilities 624.1
===============================================================================
MATURITY SCHEDULE
-------------------------------------------------------------------------------
Term to maturity:
Within one year 107.6
One to two years 157.8
Two to three years 209.5
Three to four years 35.3
Four to five years 98.0
Greater than five years 15.9
-------------------------------------------------------------------------------
Total 624.1
===============================================================================
92
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
19. INTEREST BEARING LIABILITIES (continued)
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
NET INTEREST BEARING DEBT
Cash at bank and short-term deposits (net of
restricted deposits) 258.3 310.3 1,050.4 4.2 28.2 27.9
Current borrowings 107.6 748.8 1,889.4 66.7 715.7 1,485.7
Current bills payable - 6.6 1.5 - 1.5 -
Non-current borrowings 516.5 861.9 627.7 516.3 861.5 626.0
------------------------------------------------------------------------------------------------------------------
Net interest bearing debt 365.8 1,307.0 1,468.2 578.8 1,550.5 2,083.8
------------------------------------------------------------------------------------------------------------------
20. PROVISIONS
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
CURRENT
Provision for employee entitlements 25.2 80.3 88.3 3.4 31.4 33.5
Provision for contingencies 17.1 9.9 63.4 2.7 (0.4) 14.0
Provision for rationalization and restructuring costs 15.7 105.2 108.4 1.8 47.7 52.2
Provision for Accufix Pacing Lead related expenses 18.6 11.5 17.6 - 6.5 0.6
Provision for claims 8.8 10.9 14.0 - - 0.1
Provision for dividend - 46.6 103.3 - 46.6 103.3
------------------------------------------------------------------------------------------------------------------
85.4 264.4 395.0 7.9 131.8 203.7
Provision for income tax 1.9 10.5 8.9 - - 0.1
------------------------------------------------------------------------------------------------------------------
Total Current 87.3 274.9 403.9 7.9 131.8 203.8
------------------------------------------------------------------------------------------------------------------
NON-CURRENT
Provision for employee entitlements 23.3 37.1 46.4 0.4 4.8 5.7
Provision for Accufix Pacing Lead related expenses - 17.8 4.3 - - -
------------------------------------------------------------------------------------------------------------------
23.3 54.9 50.7 0.4 4.8 5.7
Provision for deferred income tax 24.4 22.1 21.1 - - -
------------------------------------------------------------------------------------------------------------------
Total Non-Current 47.7 77.0 71.8 0.4 4.8 5.7
------------------------------------------------------------------------------------------------------------------
Total Provisions 135.0 351.9 475.7 8.3 136.6 209.5
==================================================================================================================
The reconciliations of provision for rationalisation and restructuring costs are
set out below:
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
Balance at the beginning of the financial year 105.2 108.4 109.1 47.7 52.2 1.9
Acquisitions/(disposals) of entities (11.5) - (2.4) (11.5) - -
Amounts charged/(released) to profit/(loss) from
operating activities 10.9 65.6 62.5 (3.8) 3.3 57.0
Amounts utilised for intended purposes (86.2) (77.4) (63.5) (30.6) (7.8) (6.7)
Net foreign currency differences on translation of
self-sustaining operations (2.7) 8.6 2.7 - - -
------------------------------------------------------------------------------------------------------------------
Balance at the end of the financial year 15.7 105.2 108.4 1.8 47.7 52.2
------------------------------------------------------------------------------------------------------------------
The tax effect of temporary differences that give rise to significant portions
of the provision for deferred income tax are presented below:
CONSOLIDATED
$ IN MILLIONS 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
Trading Stock tax adjustments - 0.4 0.6
Depreciation on plant adjustments 4.1 1.4 2.1
Provisions - (1.4) (2.9)
Accruals - (1.1) (0.5)
Unrealized foreign exchange gains - 0.9 -
Other 20.3 21.9 21.8
------------------------------------------------------------------------------------------------------------------
Total 24.4 22.1 21.1
==================================================================================================================
93
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
20. PROVISIONS (continued)
The present values of employee entitlements not expected to be settled within
twelve months of balance date have been calculated using the following weighted
averages:
CONSOLIDATED THE COMPANY
EMPLOYEE ENTITLEMENTS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
Assumed rate of increase in wage and salary rates 4.0% 3.0% 3.0% 4.0% 3.0% 3.0%
Discount rate 2.3% 3.0% 3.0% 2.3% 3.0% 3.0%
Settlement term (years) 10-15 10-15 10-15 10-15 10-15 10-15
Number of employees at year end 12,160 23,482 32,485 42 4,222 4,289
21. OTHER LIABILITIES
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
CURRENT
Deferred income 1.2 3.6 1.8 - 0.4 -
Amounts due under contractual arrangements - 1.6 1.5 - 1.4 1.4
------------------------------------------------------------------------------------------------------------------
1.2 5.2 3.3 - 1.8 1.4
------------------------------------------------------------------------------------------------------------------
NON-CURRENT
Amounts due under contractual arrangements - 16.2 17.6 - 16.2 17.6
------------------------------------------------------------------------------------------------------------------
- 16.2 17.6 - 16.2 17.6
------------------------------------------------------------------------------------------------------------------
Total Other Liabilities 1.2 21.4 20.9 - 18.0 19.0
==================================================================================================================
22. DISSECTION OF LIABILITIES
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
SECURED
Bank overdrafts and other loans 1.5 2.2 2.2 - - -
Bank loans 6.7 1.6 3.0 - - -
UNSECURED
Amounts owing to wholly owned controlled entities - - - 739.1 1,623.3 1,620.8
Bank overdrafts 13.1 7.3 55.9 0.9 1.0 3.9
Bank loans 20.7 23.7 38.0 - - -
Other loans 582.1 1,575.9 2,418.0 582.1 1,576.2 2,107.8
Trade creditors 166.6 363.5 476.9 8.1 78.0 78.9
Bills payable - 6.6 1.5 - 1.5 -
Other creditors 29.8 55.9 93.7 13.8 20.4 181.9
Provisions (as per Note 20) 135.0 351.9 475.7 8.3 136.6 209.5
Other liabilities (as per Note 21) 1.2 21.4 20.9 - 18.0 19.0
------------------------------------------------------------------------------------------------------------------
Total Unsecured Liabilities 948.5 2,406.2 3,580.6 1,352.3 3,455.0 4,221.8
------------------------------------------------------------------------------------------------------------------
Total Liabilities 956.7 2,410.0 3,585.8 1,352.3 3,455.0 4,221.8
==================================================================================================================
94
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
23. EXPENDITURE COMMITMENTS
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
(a) CONTRACTS FOR CAPITAL EXPENDITURE FOR WHICH
NO AMOUNTS HAVE BEEN PROVIDED
Land and buildings - 0.1 0.5 - - -
Plant 0.2 2.6 4.7 - 0.4 1.1
------------------------------------------------------------
0.2 2.7 5.2 - 0.4 1.1
------------------------------------------------------------
Within one year 0.2 2.7 3.2 - 0.4 1.1
One year or later and no later than five years - - 2.0 - - -
------------------------------------------------------------------------------------------------------------------
0.2 2.7 5.2 - 0.4 1.1
------------------------------------------------------------------------------------------------------------------
(b) LEASE COMMITMENTS
OPERATING LEASES:
Expenditure contracted but not provided for
Within one year 11.0 38.0 61.5 5.5 16.2 16.3
One year or later and no later than two years 8.9 27.7 41.3 4.5 13.1 12.6
Two years or later and no later than three years 7.0 21.8 32.5 3.0 8.7 8.4
Three years or later and no later than four years 6.6 20.6 30.6 3.0 8.7 8.4
Four years or later and no later than five years 6.6 20.6 30.6 3.0 8.7 8.4
Later than five years 15.6 28.3 55.8 3.6 16.2 19.8
------------------------------------------------------------------------------------------------------------------
55.7 157.0 252.3 22.6 71.6 73.9
==================================================================================================================
The consolidated entity leases property under operating leases expiring from one
to twenty years. Leases generally provide the consolidated entity with a right
of renewal at which time all terms are renegotiated. Lease payments comprise a
base amount plus an incremental contingent rental. Contingent rentals are based
on either movements in the Consumer Price Index or operating criteria.
95
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
24. SUPERANNUATION
Ansell Limited and certain controlled entities contribute to certain defined
benefit and accumulation Superannuation Funds maintained to provide
superannuation benefits for employees. A total of 10 Superannuation Funds have
been established worldwide. The major defined benefit fund is listed below.
Where applicable, amounts shown have been proportionately determined and are
based on values extracted from the most recent financial report of the fund.
PACIFIC DUNLOP SUPERANNUATION
FUND
$ IN MILLIONS 2002 2001 2000
---------------------------------------------------------------------
CONSOLIDATED
Net assets 281.0/(3)/ 281.0/(3)/ 371.7/(2)/
Accrued benefits 295.3/(1)/ 295.3/(1)/ 295.3/(1)/
-----------------------------
Excess/(Deficiency) (14.3) (14.3) 76.4
-----------------------------
Vested benefits 256.0/(3)/ 256.0/(3)/ 316.2/(2)/
THE COMPANY
Net assets 151.5/(3)/ 151.5/(3)/ 184.4/(2)/
Accrued benefits 125.1/(1)/ 125.1/(1)/ 125.1/(1)/
-----------------------------
Excess 26.4 26.4 59.3
-----------------------------
Vested benefits 126.5/(3)/ 126.5/(3)/ 133.7/(2)/
Country Australia
Benefit type Defined Benefit/Accumulation
Basis of contribution Balance of Cost/Defined Contribution
Date of last actuarial valuation 1/07/1999
Actuary Mercer Human Resource Consulting Pty. Ltd
/(1)/ Amounts shown are values as at 30 June 1999
/(2)/ Amounts shown are values as at 30 June 2000
/(3)/ Amounts shown are values as at 30 June 2001
The assets and liabilities of the Pacific Dunlop Executive Superannuation Fund
were transferred into the Pacific Dunlop Superannuation Fund when the two
Australian Funds were merged effective from 6 October 2000. Members of the
Pacific Dunlop Superannuation Fund who have terminated employment with the
Company as a result of business sales, have transferred out of the fund and into
superannuation arrangements set up by the new owners of the businesses which
have been sold. Assets supporting the benefits of those members have been
transferred to the new superannuation arrangements. A majority of existing
members of the Pacific Dunlop Superannuation Fund are employees of South Pacific
Tyres.
The deficiencies shown above for years 2001 and 2002 are due to the last
actuarial review of the Fund having been carried out as at 30 June 1999 whilst
values shown for net assets are stated at 30 June 2001 which have been impacted
by the above noted transfers. A further review is under way as at 30 June 2002.
Preliminary estimates from the actuary indicate that as at 30 June 2002, the
assets of the Fund were sufficient to meet all benefits payable in the event of
the Fund's termination or the voluntary or compulsory termination of employment
of each employee in the Fund.
The Company and the controlled entities are obliged to contribute to the
Superannuation Funds as a consequence of legislation or Trust Deeds; legal
enforceability is dependent on the terms of the legislation or the Trust Deeds.
The directors, based on the advice of the trustees of the funds, are not aware
of any changes in circumstances since the date of the most recent financial
statements of the funds which would have a material impact on the overall
financial position of the funds.
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24. SUPERANNUATION (continued)
DEFINITIONS
Balance of cost The consolidated entity's contribution is assessed
by the actuary by taking into account the members'
contribution and the values of the assets.
Defined contribution The consolidated entity's contribution is set out in
the appropriate fund rules, usually as a fixed
percentage of salary.
Accrued benefits The present value of benefits which the fund is
presently obliged to transfer in the future to
members and beneficiaries as a result of membership of
the fund to the calculation date.
Vested benefits Benefits which are not conditional upon the continued
membership of the respective fund or any factor other
than resignation from the fund.
Details of contributions paid to the funds are as follows:
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
-------------------------------------------------------------------------------------------------------------------
Contributions made to defined benefit funds during the year 3.2 6.9 22.6 3.2 4.0 10.4
Contributions made to accumulation funds during the year 0.8 4.0 5.9 - 0.7 0.6
25. OWNERSHIP-BASED REMUNERATION SCHEMES
EXECUTIVE AND EMPLOYEE SHARE PLANS
The Company has operated two share plans for employees and Directors of the
consolidated entity:
.. the Pacific Dunlop Executive Share Plan ("Executive Plan"), and
.. the Pacific Dunlop Employee Share Plan ("Employee Plan").
No issue of shares has been made under either Plan since February 1994 and the
Board determined during 1996 that no further issues of shares would be made
under the Executive Plan.
The employee plan permits full time and part time employees, who have completed
three or more years continuous service within the consolidated entity and who do
not participate in the Executive Plan to acquire 20 ordinary shares in the
capital of the Company for each completed year of service. The shares are issued
at market value as at the date of issue, payable as to 50 cents per share by the
employee, the balance financed by an interest free loan from the Company
repayable, at latest, on cessation of employment. The shares are not
transferable while a loan remains outstanding, but carry a voting right and an
entitlement to dividends (although dividends are applied in reduction of the
loan). Invitations are made under the Employee Plan from time to time. As at
reporting date no offer to employees was outstanding. The aggregate number of
Employee Plan Shares on issue may not exceed 5% of the total issued capital of
the Company.
As stated above, the Executive Plan is no longer available for new issues.
Shares issued under that Plan to selected employees ("Executives") were paid up
to 5 cents and were subject to restrictions for a determined period (for the
1993/1994 issue- 8 1/4 years). While partly paid, the shares are not
transferable, carry no voting right and no entitlement to dividends (but are
entitled to participate in bonus or rights issues as if fully paid). The price
payable for shares issued under the Executive Plan varies according to the event
giving rise to a call being made. Market price at the date of the call is
payable if an Executive ceases employment within the consolidated entity (other
than for death, retrenchment or retirement) prior to expiration of the
restriction period. Once restrictions cease the price payable upon a call being
made will be the lesser of $10.00 ($2.50 for issues prior to 13 September 1991)
and the last sale price of the Company's ordinary shares on Australian Stock
Exchange Limited. The aggregate number of Executive Plan Shares on issue could
not exceed 5% of the total issued capital of the Company.
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25. OWNERSHIP-BASED REMUNERATION SCHEMES (continued)
The Company's accounting policy in respect of the Employee Plan is to recognise
the paid up capital upon allotment and the receivable created by the loan to
employees to acquire the shares. In respect of the Executive Plan, no amount was
recognised upon issue, apart from the capital paid up on the shares, as the
amount of the call payable was not quantifiable at the time of issue. Once a
call had been made upon the shares and paid, the Company recognised the increase
in paid up capital.
The number of Employee Share Plan Shares and the number of Executive Plan Shares
(ordinary plan shares paid to five cents) as at balance date are shown in Note
5. A loss of $535,381 pre-tax in respect of the Employee Share Plan was
recognised in the Company and the consolidated financial statements for 2002
(2001 - $206,567 loss after tax; 2000 - $219,712 loss after tax).
The market price of the Company's shares as at 30 June 2002 was $6.28.
OPTIONS - GENERALLY
At the date of this report 207,000 unissued ordinary shares in the Company
remain under option. During the year ended 30 June 2002, 315,000 options
expired.
EXECUTIVE SHARE OPTION PLAN
207,000 unissued ordinary shares are subject to options granted under the
Pacific Dunlop Executive Share Option Plan. The exercise price of each option,
which may be increased by the amount (if any) by which the increase in the
Consumer Price Index over the period of the options exceeds the dividend yield
upon the Company's shares, was $16.50. The options expire on 11 December 2002,
and are exercisable in three tranches of equal amount during a period
commencing, in the case of tranche 1 on 13 November 2000; in the case of tranche
2 on 13 November 2001; and in the case of tranche 3 on 13 November 2002, and in
each case ending on the expiry date, subject to satisfaction of a separate
performance hurdle attaching to each tranche. The condition or 'hurdle' that
must be satisfied before the options can be exercised is that the total return
to shareholders (i.e. growth in share price plus dividends reinvested) in
respect of Ansell Limited shares exceeds the simple average total return to
shareholders in a selected group of major listed companies over comparable
periods in respect of each tranche of options.
Upon exercise the options carry the right to any bonus share issued by the
Company during the life of the option, but do not carry any right to participate
in any other share issue of the Company or any other body corporate and no
options have been exercised at the date of this Report.
No determinable value has been ascribed to these options, nor included within
the disclosed Executive remuneration details set out in Note 28 to the Financial
Statements under Australian Generally Accepted Accounting Principles (GAAP).
Under United States GAAP the compensation fair value, at grant date, of all
options which are outstanding has been calculated at $0.7 million.
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--------------------------------------------------------------------------------
26. CONTINGENT LIABILITIES
INDEMNITIES AND GUARANTEES
The Company has entered into Deeds of Indemnity with each of the Directors of
the Company and has previously entered into Deeds of Indemnity with certain
officers of controlled entities, in relation to liabilities that they may incur
(other than to Group companies) as Directors of the Company and Directors of
certain controlled entities respectively, to the extent permitted by law and the
Company's constitution.
Ansell Limited has also guaranteed the performance of certain wholly owned
controlled entities which have negative shareholders' funds.
At this time, no liabilities the subject of any such indemnity have been
identified and, accordingly, it is not possible to quantify any financial
obligation of the consolidated entity under these indemnities and of the Company
pursuant to its guarantee.
ACCUFIX LITIGATION
Claims have been made against Accufix Research Institute, Inc. (formerly TPLC,
Inc.) ('ARI'), certain other wholly-owned controlled entities of Ansell Limited
and, in some instances, Ansell Limited (then Pacific Dunlop Limited) relating to
the Accufix Pacing leads manufactured by ARI which were withdrawn in late 1994
(the 'Accufix Pacing Leads').
All lawsuits in relation to the Accufix Pacing Leads had been resolved by 30
June 2002, save for:
.. two lawsuits in France: one involving the claims of 19 plaintiffs and the
16 subrogated insurers' claims and a second lawsuit recently initiated by
three individual claimants; and
.. any claims to be subsequently made by any of the 150 persons who opted out
of the class settlement in the United States mentioned below.
The US District Court approved the settlement of all previous claims relating to
the Accufix Pacing Leads in the US on 8 March 2001. That approval is now binding
on the Defendants and all persons entitled whom elected to participate in the
settlement (and their families). Now only the 150 persons who chose not to
participate in the settlement may bring lawsuits in the US in respect of the
Accufix Pacing Lead. As of 30 June 2002 none of the 150 persons had done so.
The settlement in the United States requiring payments totalling US$62.4 million
(consisting of a fund established for the benefit of persons entitled to the
settlement, and a fund for the benefit of persons who opted out of the
settlement), and the sums required for the earlier settlements in Australia and
elsewhere in the world, were fully covered by the provisions made in the
financial statements for the year ending 30 June 1998. The balance of these
provisions as at 30 June 2002 (approximately $18.6 million) represents the
balance of cash held by ARI and its related companies, and is considered
adequate to address any remaining liability of members of the Ansell Group to
claims made by individuals with respect to the manufacture of the Accufix Pacing
Lead.
ENCOR LEAD LITIGATION
In 1997, a putative class action lawsuit was filed in the United States District
Court for the Eastern District of California, against ARI and affiliates,
including Ansell Limited (then Pacific Dunlop Limited), on behalf of all United
States implantees of certain Encor bipolar Telectronics passive fixation atrial
'J' pacemaker leads manufactured by ARI ('Encor Pacing Leads'). The Court in
Sacramento denied the plaintiffs' application for class certification on 3 May
1999.
On 11 June 2002, the parties filed a stipulation of dismissal with prejudice for
this action and the plaintiffs' claim has been compromised and released. This
matter is now concluded.
99
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--------------------------------------------------------------------------------
26. CONTINGENT LIABILITIES (continued)
LATEX ALLERGY LITIGATION
Ansell Healthcare Products Inc., Ansell Protective Products Inc., Ansell Limited
(formerly Pacific Dunlop Limited) and other Group companies (collectively "the
Ansell Defendants") (along with a wide variety of manufacturers and distributors
of natural rubber latex gloves), are defendants in lawsuits filed in the United
States since 1996 on behalf of individuals alleging wrongful death, personal
injuries and lost wages as a result of their exposure to natural rubber latex
gloves. The lawsuits claim that the Ansell Defendants and other manufacturers of
natural rubber latex gloves, were negligent in the design and manufacture of the
gloves and failed to give adequate warnings of the possibility of allergic
reactions.
As of 30 June 2002, there were approximately 367 such cases pending against one
or more of the Ansell Defendants, representing some 50 percent of cases filed
against all defendants. Of these cases 271 have been consolidated for discovery
pursuant to the rules on multi-district litigation before the US District Court
for the Eastern District of Pennsylvania. The remaining 96 cases are spread
through state courts in 45 states, with the greatest concentration in New York
(20 cases).
The Company remains a defendant in one Australian case and one case in the
United States. Since the inception of this litigation in 1996, the Ansell
Defendants have been dismissed as defendants from approximately 112 cases in the
United States.
With this pattern of dismissal and with the complications, case by case, caused
by the multiplicity of defendants and the difficulties of determining whose
natural rubber latex gloves were utilised by particular plaintiffs, it is not
possible to predict which, if any, of the cases they currently face, the Ansell
Defendants will have to defend at trial. In those circumstances the liability of
the Ansell Defendants, if any, in relation to these claims cannot be quantified.
BUSINESS AND ASSET SALES
The Company and various Group companies have, as part of the Group's asset and
business sale program, provided warranties, indemnities and other undertakings
and, in some instances, the Company has guaranteed the warranties, indemnities
and other obligations of various Group companies, to the purchasers of Group
assets and businesses. At this time, it is not possible to quantify the
potential financial impact of those warranties, indemnities, undertakings or
guarantees upon the economic entity. In particular, a Group company has received
a notice from a purchaser of one of its businesses in relation to an indemnity
under a sale agreement. No formal proceedings have been initiated and,
accordingly, it is not possible at this time to quantify the potential financial
impact on the Group.
Simplot Australia Pty Ltd instituted proceedings against the Company and other
Group companies in the Supreme Court of Victoria in relation to the sale of the
Edgell-Birds' Eye and Herbert Adams Bakeries businesses. Simplot has claimed
$20.8 million in damages in relation to alleged breaches of warranty and sought
unspecified damages in respect of separate alleged breaches of the Trade
Practices Act. The matter remains at the preliminary stage and the substantive
issues of the claim are unlikely to proceed to trial this year. The Company
believes that it has good grounds for resisting these protracted claims.
100
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--------------------------------------------------------------------------------
27. FINANCIAL INSTRUMENTS
DERIVATIVE FINANCIAL INSTRUMENTS
The consolidated entity is involved in a range of derivative financial
instruments, which can be defined in the following broad categories:
(i) Forward / Future Contracts
These transactions enable the consolidated entity to buy or sell specific
amounts of foreign exchange, financial instruments or commodities at an agreed
rate/price at a specified future date. Maturities of these contracts are
principally between six months and two years.
(ii) Options
This is a contract between two parties, which gives the buyer of a put or call
option the right, but not the obligation, to transact at a specified interest
rate/exchange rate or commodity price at a future date, generally for a premium.
Maturities of these contracts are principally between three months and two
years.
(iii) Swaps
These agreements enable parties to swap interest rate (from or to a fixed or
floating basis) or currency (from one currency to another currency) positions
for a defined period of time. Maturities of the contracts are principally
between two and five years.
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--------------------------------------------------------------------------------
27. FINANCIAL INSTRUMENTS (continued)
INTEREST RATE RISK
The Company's exposure to interest rate risk and the effective weighted average
interest rate for classes of financial assets and financial liabilities is set
out below:
WEIGHTED INTEREST RATE
AVERAGE FIXED MATURITIES
EFFECTIVE NON
INTEREST 1 YEAR OR 1 TO 5 OVER 5 INTEREST
$ IN MILLIONS RATE FLOATING LESS YEARS YEARS BEARING TOTAL
------------------------------------------------------------------------------------------------------------------
NET FINANCIAL ASSETS/(LIABILITIES) 2002 %
FINANCIAL ASSETS
Recognised
Cash on hand and at bank 1.1% 72.2 - - - - 72.2
Short-term deposits 3.3% 174.1 30.6 - - - 204.7
Receivables - trade N/A - - - - 232.5 232.5
Receivables - other 2.6% 32.9 25.0 - - 70.0 127.9
Investments (excl. associated companies) N/A - - - - 145.8 145.8
------------------------------------------------------------------------------------------------------------------
Total Financial Assets 2002 279.2 55.6 - - 448.3 783.1
------------------------------------------------------------------------------------------------------------------
FINANCIAL LIABILITIES
Recognised
Payables - trade N/A - - - - 166.6 166.6
Payables - other N/A - - - - 29.8 29.8
Bank overdraft 3.3% 14.6 - - - - 14.6
Bank and other loans 6.1% 466.0 20.8 122.7 - - 609.5
Provisions (including certain employee
entitlements) N/A - - - - 85.4 85.4
Unrecognised
Net interest rate swaps 5.1% (375.9) - 375.9 - - -
------------------------------------------------------------------------------------------------------------------
Total Financial Liabilities 2002 104.7 20.8 498.6 - 281.8 905.9
------------------------------------------------------------------------------------------------------------------
Net Financial Assets/(Liabilities) 2002 174.5 34.8 (498.6) - 166.5 (122.8)
==================================================================================================================
NET FINANCIAL ASSETS/(LIABILITIES) 2001 %
FINANCIAL ASSETS
Recognised
Cash on hand and at bank 2.7% 116.3 - - - - 116.3
Short-term deposits 3.8% 102.5 119.1 - - - 221.6
Receivables - trade 6.1% 1.5 - - - 521.6 523.1
Receivables - other 6.5% 62.5 - - - 150.2 212.7
Investments (excl. associated companies) N/A - - - - 212.0 212.0
------------------------------------------------------------------------------------------------------------------
Total Financial Assets 2001 282.8 119.1 - - 883.8 1,285.7
------------------------------------------------------------------------------------------------------------------
FINANCIAL LIABILITIES
Recognised
Payables - trade N/A - - - - 363.5 363.5
Payables - other N/A - - - - 55.9 55.9
Payables - bills 9.7% 1.5 - - - 5.1 6.6
Bank overdraft 6.4% 9.5 - - - - 9.5
Bank and other loans 5.3% 696.6 785.6 119.0 - - 1,601.2
Provisions (including certain employee
entitlements) 3.0% - - - - 207.7 207.7
Amounts due under contractual arrangements N/A - - - - 17.8 17.8
Unrecognised
Net interest rate swaps 5.2% 144.1 (122.8) (21.3) - - -
------------------------------------------------------------------------------------------------------------------
Total Financial Liabilities 2001 851.7 662.8 97.7 - 650.0 2,262.2
------------------------------------------------------------------------------------------------------------------
Net Financial Assets/(Liabilities) 2001 (568.9) (543.7) (97.7) - 233.8 (976.5)
------------------------------------------------------------------------------------------------------------------
Provisions, including amounts contained within income tax, deferred income tax,
contingencies, rationalisation and restructure, Accufix Pacing Lead related
expenses and insurance claims amounting to $49.6 million (2001 - $144.2 million;
2000 - $114.6 million) are not included within the table above as it is
considered that they do not meet the definition of a financial instrument.
A separate analysis of debt by currency can be found at Note 19 - Interest
Bearing Liabilities.
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--------------------------------------------------------------------------------
27. FINANCIAL INSTRUMENTS (continued)
CREDIT RISK AND NET FAIR VALUE
RECOGNISED FINANCIAL INSTRUMENTS
(i) Credit Risk
The credit risk on financial assets, excluding investments, of the consolidated
entity which have been recognised on the Statement of Financial Position, is the
carrying amount, net of any provision for doubtful debts.
The consolidated entity minimises concentrations of credit risk by undertaking
transactions with a large number of customers and counter parties in various
countries.
The consolidated entity is not materially exposed to any individual overseas
country or individual customer.
(ii) Net Fair Value
The Directors consider that the carrying amount of recognised financial assets
and financial liabilities approximates their net fair value.
Refer to Note 1 for accounting policies in respect of the carrying values of
financial assets and financial liabilities.
UNRECOGNISED FINANCIAL INSTRUMENTS
Credit risk on unrecognised derivative contracts is minimised as counterparties
are recognised financial intermediaries with acceptable credit ratings
determined by a recognised rating agency. It is not felt that there is a
material exposure to any single counterparty or group of counterparties. The
consolidated entity's exposure is almost entirely (over 99%) to banks.
The following table displays:
(i) Face Value
This is the contract's value upon which a market rate is applied to produce a
gain or loss which becomes the settlement value of the derivative financial
instrument.
(ii) Credit Risk
This is the maximum exposure to the consolidated entity in the event that all
counterparties who have amounts outstanding to the consolidated entity under
derivative financial instruments, fail to honour their side of the contracts.
The consolidated entity's exposure is almost entirely to banks (see (v) below).
Amounts owed by the consolidated entity under derivative financial instruments
are not included.
(iii) Net Fair Value
This is the amount at which the instrument could be realised between willing
parties in a normal market in other than a liquidation or forced sale
environment. The net amount owed by / (owing to) financial institutions under
all derivative financial instruments would have been ($23.8) million (2001 -
$5.9 million; 2000 - $47.3 million), if all contracts were closed out on 30 June
2002.
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--------------------------------------------------------------------------------
27. FINANCIAL INSTRUMENTS (continued)
(iii) Net Fair Value (continued)
FACE VALUE CREDIT RISK NET FAIR VALUE
$ IN MILLIONS 2002 2001 2000 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
FOREIGN EXCHANGE CONTRACTS
Purchase/Sale Contracts:
-U.S. dollars 329.7 1,231.7 496.7 1.6 22.0 4.9 (7.3) 17.6 1.6
-Australian dollars 49.4 237.2 637.2 - - - - - -
-Other currencies 216.5 186.5 141.1 2.5 1.7 0.9 2.4 (1.5) (3.3)
Cross Currency Swaps:
-U.S. dollars 96.5 240.2 137.3 2.2 0.7 16.5 (1.5) (16.5) 16.5
-New Zealand dollars - - 95.0 - - - - - -
-Other currencies 16.5 35.2 98.6 - 5.8 25.3 (2.1) 5.8 24.4
INTEREST RATE CONTRACTS
Interest Rate Swaps:
-U.S. dollars 435.1 452.7 1,113.8 3.0 6.6 11.7 (14.5) 0.5 6.4
-Australian dollars 300.0 300.0 450.0 - 1.2 0.3 (0.8) 0.3 0.2
-New Zealand dollars - - 119.9 - - 1.1 - - 1.0
-Other currencies 17.5 16.7 47.6 - - 0.4 - (0.3) 0.4
Forward Rate Agreements:
-U.S. dollars - - 83.2 - - - - - -
COMMODITY CONTRACTS
Commodity Futures:
-U.S. dollars - - 15.9 - - 0.1 - - 0.1
------------------------------------------------------------------------------------------------------------------
Total 1,461.2 2,700.2 3,436.3 9.3 38.0 61.2 (23.8) 5.9 47.3
==================================================================================================================
From time to time in the ordinary course of business, the consolidated entity
enters into forward exchange contracts to hedge a proportion of anticipated
purchase and sale commitments denominated in foreign currencies (principally US
dollars). The amount of anticipated future purchases and sales is forecast in
light of current market conditions and commitments from customers. Hedge
contracts are used to cover the next available trading exposure until all
contracts are fully utilised. Hedge cover generally does not exceed 3 months.
(iv) Market/Liquidity Risk
The consolidated entity seeks to reduce the risk of:
(a) being forced to exit derivative financial instrument positions at
below their real worth; or
(b) finding it cannot exit the position at all, due to lack of liquidity
in the market; by
(a) dealing only in liquid contracts dealt by many counterparties; and
(b) dealing only in large and highly liquid and stable international
markets.
(v) Credit Risk by Maturity
The following table indicates the value of amounts owing by counterparties by
maturity. Based on the Group policy of not having overnight exposures to an
entity rated lower than A- by Standard & Poor's or A3 by Moody's Investors
Service, it is felt the risk to the consolidated entity of the counterparty
default loss is not material.
FOREIGN EXCHANGE INTEREST RATE COMMODITY
RELATED CONTRACTS CONTRACTS CONTRACTS TOTAL
$ IN MILLIONS 2002 2001 2000 2002 2001 2000 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
TERM
0 to 6 mths 4.1 27.0 31.8 - 1.2 0.7 - - 0.1 4.1 28.2 32.6
6 to 12 mths - 2.5 2.5 - - 0.2 - - - - 2.5 2.7
1 to 2 yrs - - 3.1 3.0 0.8 1.3 - - - 3.0 0.8 4.4
2 to 5 yrs 2.2 - 5.0 - 5.8 11.3 - - - 2.2 5.8 16.3
5 to 10 yrs - 0.7 5.2 - - - - - - - 0.7 5.2
------------------------------------------------------------------------------------------------------------------
Total 6.3 30.2 47.6 3.0 7.8 13.5 - - 0.1 9.3 38.0 61.2
==================================================================================================================
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--------------------------------------------------------------------------------
27. FINANCIAL INSTRUMENTS (continued)
(vi) Historical Rate Rollovers
It is the consolidated entity's policy not to engage in historical rate
rollovers except in circumstances where the maturity date falls on a bank
holiday. In these instances, settlement occurs on the next trading day.
HEDGES AND ANTICIPATED FUTURE TRANSACTIONS
The following table shows the consolidated entity's deferred gains and (losses),
both realised and unrealised, that are currently held on the Statement of
Financial Position and the expected timing of recognition as revenue or expense:
INTEREST RATE FOREIGN EXCHANGE COMMODITY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000 2002 2001 2000
-------------------------------------------------------------------------------------------------------------------
Anticipated Exposures
Less than 1 year - - - (0.5) 1.4 (1.7) - - -
Realized Swaps Deferred
Less than 1 year 0.1 (0.5) 0.5
1 to 2 years 0.7 0.2 (0.2)
2 to 5 years 2.2 (0.5) (1.0)
Greater than 5 years - 1.6 2.0
28. DIRECTORS' AND EXECUTIVES' REMUNERATION
THE COMPANY
$ IN THOUSANDS 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
DIRECTORS
Aggregate remuneration paid or payable to Directors: (a)(c)(d)
Directors' fees and salaries of Ansell Limited Executive Directors 1,225 1,313 1,715
Performance-based bonuses - 100 -
Other benefits (d) 111 2,791 1,606
------------------------------------------------------------------------------------------------------------------
Total remuneration of Directors of Ansell Limited 1,336 4,204 3,321
==================================================================================================================
Consolidated remuneration of directors of all Group
Companies
2002 $ 26,153,000
2001 $ 35,713,000
2000 $ 34,534,000
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
Executives
Aggregate remuneration of the thirteen Senior Executives:
(a)(b)(c)(d)(e)(f)
Salaries 3,788 4,322 5,417 1,688 3,253 4,043
Performance-based bonuses 2023 3,128 1,420 1,631 100 285
Other benefits (d) 3,871 4,411 4,202 3,232 3,871 2,951
------------------------------------------------------------------------------------------------------------------
Total remuneration of Executives 9,682 11,861 11,039 6,551 7,224 7,279
==================================================================================================================
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28. DIRECTORS' AND EXECUTIVES' REMUNERATION (continued)
The number of Directors and Senior Executives whose total remuneration fell
within the following bands (a)(b)(c)(d)(e)(f).
EXECUTIVES DIRECTORS
CONSOLIDATED THE COMPANY THE COMPANY
DOLLARS 2002 2001 2000 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
0 10,000 1 1
10,001 20,000 1
20,001 30,000 2
40,001 50,000 3
60,001 70,000 2 1 2
70,001 80,000 2 1
80,001 90,000 1 1 1
90,001 100,000 1
190,001 200,000 1 1
200,001 210,000 1 1 1
210,001 220,000 1
230,001 240,000 1 1
260,001 270,000 1
280,001 290,000 1
320,001 330,000 1 1
370,001 380,000 1 1
380,001 390,000 1 1
420,001 430,000 2 2
430,001 440,000(d) 1 2 1 2 1
440,001 450,000 1 1
460,001 470,000(d) 1 1 1 1
510,001 520,000 1
520,001 530,000(d) 1 1 1 1 1 1
540,001 550,000(d) 1
550,001 560,000 1
560,001 570,000 1 1
580,001 590,000 1 1
590,001 600,000 1 1
800,001 810,000 1 1 1
920,001 930,000(d) 1 1
950,001 960,000 1 1
1,130,001 1,140,000 1
1,300,001 1,310,000(d) 1 1
1,380,001 1,390,000 1
1,510,001 1,520,000(f) 1 1
1,530,001 1,540,000(d) 1 1
1,640,001 1,650,000(d) 1 1
1,910,001 1,920,000(d) 1 1 1
2,620,001 2,630,000 1
3,250,001 3,260,000 1
3,380,001 3,390,000(d) 1 1 1
------------------------------------------------------------------------------------------------------------------
Total no. of Dir & Execs 13 11 12 9 9 10 11 9 9
==================================================================================================================
(a) The above values for Directors and Executives include amounts actually
paid to superannuation funds in respect of their retirement.
(b) Includes Executive Directors of the Company disclosed within the
remuneration of Directors.
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28. DIRECTORS' AND EXECUTIVES' REMUNERATION (continued)
(c) Any benefit arising from the grant of options to the Managing Director
or other Executives, which may subsequently be derived, is not
quantified and accordingly, has not been included in remuneration
disclosed above. For details in relation to the options, refer Note
34(c).
(d) Includes retirement and/or statutory benefits paid to Directors and
Executives.
(e) Executives for this disclosure include only those persons who, during
the year, had the greatest authority for managing the group. These
executives numbered up to seven at any one time in 2002, eleven in 2001
and twelve in 2000. The disclosure includes four permanently
overseas-based Executives whose total remuneration in 2002 was $3.1
million (two in 2001 - $4.6 million, two in 2000 - $3.8 million).
(f) Executive was appointed a Director on 30 April 2002. Includes total
remuneration received for the full year.
29. SERVICE AGREEMENTS
PROVIDED FOR IN THE FINANCIAL STATEMENTS
The Company at 30 June 2002 had agreements with each of the Non-executive
Directors which provide for benefits upon termination. The full extent of the
liabilities of the Company under these agreements has been undertaken by a
superannuation fund of which the Company is employer sponsor.
30. NOTES TO THE BUSINESS SEGMENTS REPORT
(a) OPERATING REVENUE
The Operating Revenue of Discontinued Businesses represents the external sales
to the date of disposal and the cash received from the sale of such businesses
(net of disposal costs).
(b) UNALLOCATED REVENUE AND COSTS
Represents costs of Corporate Head Office, costs of Ansell Healthcare's
Corporate Head Office and non-sales revenue.
(c) TAX
Includes the write off of tax balances attributable to Australian operations of
$15.2 million and tax attributable to Discontinued Businesses.
(d) CASH
Represents Cash of Ansell Healthcare and Corporate.
(e) INTER-SEGMENT TRANSACTIONS
Operating revenue is shown net of inter-segment values. Accordingly, the
Operating revenues shown in each segment reflect only the external sales made by
that segment. The only significant inter-segment sales were made by Australia &
S.E. Asia - $304.9 million (2001 - $303.8 million: 2000 - $189.3 million) and
America - $188.3 million (2001 - $220.6 million: 2000 - $128.3 million).
(f) INDUSTRY SEGMENTS
The consolidated entity comprises the following main business segments:
Occupational Healthcare - manufacture and sale of occupation health and safety
gloves.
Professional Healthcare - manufacture and sale of medical, surgical and
examination gloves for hand barrier protection and infection control.
Consumer Healthcare - manufacture and sales of condoms, household gloves and
other personal products.
Discontinued Businesses - represents former Industry Segment businesses which
have been sold or abandoned.
(g) REGIONS
The allocations of Operating Revenue and Operating Results reflect the
geographical regions in which the products are sold to external customers.
Assets Employed are allocated to the geographical regions in which the assets
are located.
Australia & S.E. Asia - manufacturing facilities in 4 countries and sales
activities.
America - manufacturing facilities in USA and Mexico and significant sales
activities.
Europe - principally a sales region with one manufacturing facility in the UK.
107
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--------------------------------------------------------------------------------
30. NOTES TO THE BUSINESS SEGMENTS REPORT (continued)
$ IN MILLIONS 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
(h) SEGMENT CAPITAL EXPENDITURE (INCLUDING FINANCE LEASES)
Occupational Healthcare 6.7 9.0 20.5
Professional Healthcare 12.7 7.7 10.1
Consumer Healthcare 1.5 4.4 14.4
Discontinued Businesses 12.0 38.8 104.9
(i) REGION CAPITAL EXPENDITURE (INCLUDING FINANCE LEASES)
Australia & S.E. Asia 13.5 12.7 29.9
America 5.3 7.1 14.5
Europe 2.0 1.4 0.7
(j) SEGMENT DEPRECIATION (INCLUDING AMORTISATION OF FINANCE LEASES)
Occupational Healthcare 15.7 16.7 16.2
Professional Healthcare 18.8 18.9 17.6
Consumer Healthcare 5.6 5.7 5.8
Discontinued Businesses 11.1 52.1 100.3
(k) SEGMENT OTHER NON CASH EXPENSES (EXCLUDING PROVISION FOR
RATIONALISATION AND WRITE-DOWN OF ASSETS SEPARATELY DISCLOSED)
Occupational Healthcare 8.9 7.9 5.9
Professional Healthcare 1.9 6.4 2.4
Consumer Healthcare 5.1 1.9 4.5
Discontinued Businesses 14.8 49.7 91.7
31. NOTES TO THE STATEMENTS OF CASH FLOWS
(a) BUSINESSES ACQUIRED AND DISPOSED
During the year a number of controlled entities and businesses were acquired and
disposed. The details are as follows:
CONSOLIDATED THE COMPANY
$ IN MILLIONS ACQUISITIONS DISPOSALS ACQUISITIONS DISPOSALS
------------------------------------------------------------------------------------------------------------------
FAIR VALUE OF NET ASSETS ACQUIRED/(DISPOSED)
Property, plant and equipment 5.3 (180.3) - (79.7)
Investments - (2.8) - (188.9)
Future income tax benefit - (17.0) - (15.5)
Trade debtors and other amounts receivable 31.4 (403.2) - (199.4)
Inventories - (519.7) - (203.1)
Cash (net of bank overdraft) 3.7 (3.3) - (4.1)
Goodwill - (21.3) - (3.1)
Brand names - (40.5) - (7.3)
Other assets 0.3 (30.7) - (10.2)
Bank and other loans - 0.1 - 0.1
Creditors and other liabilities (11.9) 296.3 - 196.7
------------------------------------------------------------------------------------------------------------------
Goodwill on acquisition 28.8 (922.4) - (514.5)
Net gain/(a)/ 15.8 - -
- (17.3) - (7.0)
------------------------------------------------------------------------------------------------------------------
44.6 (939.7) - (521.5)
------------------------------------------------------------------------------------------------------------------
CONSIDERATION
Cash paid/(received) 44.6 (939.7) - (521.5)
------------------------------------------------------------------------------------------------------------------
44.6 (939.7) - (521.5)
------------------------------------------------------------------------------------------------------------------
OUTFLOW/(INFLOW) OF CASH
Cash consideration 44.6 (939.7) - (521.5)
Less: Cash balances (acquired)/disposed
(net of overdrafts) (3.7) 3.3 - 4.1
------------------------------------------------------------------------------------------------------------------
40.9 (936.4) - (517.4)
==================================================================================================================
/(a)/ Excludes gain on recognition in the consolidated entity of the
investment in Ambri Ltd of $8.4 million
108
PART III
ITEMS 17 & 18 : Financial Statements
--------------------------------------------------------------------------------
31. NOTES TO THE STATEMENTS OF CASH FLOWS (continued)
(b) FINANCING FACILITIES
Refer Note 19
(c) RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO NET
PROFIT/(LOSS) AFTER INCOME TAX
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
Net profit/(loss) after income tax (113.0) (135.8) (82.4) 71.6 (755.9) (4.0)
Add/(less) non-cash items:
Depreciation 50.3 90.2 142.9 7.9 16.7 31.5
Amortization 32.0 49.6 50.3 0.5 5.8 5.4
Goodwill written off - - - - 5.7 -
Provision for doubtful debts - trade (2.9) 7.9 7.3 1.0 0.1 1.2
Write off of FITB attributable to Australian tax
losses 15.2 158.5 - 17.3 88.4 -
Provision for doubtful debts - wholly owned
controlled entities - - - (16.3) 644.7 (8.3)
Write down of assets and investments in wholly
owned controlled entities 75.2 97.7 160.0 96.6 240.3 186.0
Write down of property, plant and equipment 69.3 - - 2.2 - -
Share of net loss/(gain) of associate and joint
venture entities (1.9) 44.3 1.9 - - -
Add/(less) items classified as
investing/financing activities:
Interest revenue (15.5) (44.9) (47.4) (38.2) (130.3) (91.3)
Borrowing costs 70.2 144.3 149.5 67.0 129.5 124.5
Loss/(gain) on sale of investments, properties,
plant and equipment 5.6 4.6 (2.3) 1.0 4.2 (23.5)
Loss/(gain) on sale of controlled entities and
businesses /(1)/ (25.7) (154.7) 4.5 (7.0) (178.6) -
-----------------------------------------------------------
Net cash provided by operating activities before
change in assets and liabilities 158.8 261.7 384.3 203.6 70.6 221.5
Change in assets and liabilities net of effect
from acquisitions and disposals of controlled
entities and businesses:
(Increase)/Decrease in debtors (0.3) (176.5) 215.7 (26.5) (20.3) 47.0
(Increase)/Decrease in inventories 39.4 (13.8) 129.2 (10.9) 16.9 13.0
Decrease/(Increase) in prepaid expenses (2.4) 19.2 17.3 4.5 16.1 6.5
(Increase)/Decrease in deferred expenses 4.3 (4.2) (16.8) 13.6 2.8 (16.3)
Increase/(Decrease) in creditors and bills 78.3 52.2 (118.6) 5.3 (2.5) (29.0)
payable
(Decrease)/Increase in provisions and other (203.1) (128.4) (167.5) (38.8) (230.7) 70.6
liabilities
Increase/(Decrease) in provision for deferred 2.3 1.0 (47.6) - - -
income tax
(Increase)/Decrease in future income tax benefit 24.7 (6.0) 8.4 (0.7) 27.1 9.4
(Decrease)/Increase in provision for income tax (8.5) 1.2 8.0 - - (2.2)
(Increase)/Decrease in GNB net operating assets
held for sale - 182.3 (182.3) - 20.7 (20.7)
Other non-cash items (including foreign currency
impact) 19.6 37.9 (39.8) (0.2) (0.8) (5.0)
------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 113.1 226.6 190.3 149.9 (100.1) 294.8
==================================================================================================================
(1) Refer to Note 4(b) for further details on the Company 2001.
109
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
31. NOTES TO THE STATEMENTS OF CASH FLOWS (continued)
(d) COMPONENTS OF CASH
For the purposes of the Statements of Cash Flows, cash includes cash on hand and
at banks and investments in money market instruments, net of outstanding bank
overdrafts. Cash, at the end of the financial year, as shown in the Statements
of Cash Flows, comprises:
CONSOLIDATED THE COMPANY
$ IN MILLIONS NOTES 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
Cash on hand 11 0.2 0.6 1.2 - 0.1 0.1
Cash at bank 11 72.0 115.7 187.8 4.2 21.0 23.5
Short-term deposits 11 186.3 194.6 862.6 - 7.2 4.4
Restricted deposits* 11 18.4 27.0 26.3 - - -
Bank overdrafts 19 (14.6) (9.5) (58.1) (0.9) (1.0) (3.9)
------------------------------------------------------------------------------------------------------------------
262.3 328.4 1,019.8 3.3 27.3 24.1
==================================================================================================================
* Refer to note 11 for further details on these amounts.
(e) NET LOANS TO CONTROLLED ENTITIES
In the Statements of Cash Flows of the Company, loan movements with controlled
entities are disclosed as a net movement due to such transactions being large in
number and rapid in turnover.
32. ACQUISITION OF CONTROLLED ENTITIES AND MATERIAL BUSINESSES
VOTING
SHARES COST OF NET TANGIBLE DESCRIPTION OF
DURING THE YEAR THE FOLLOWING DATE OF ACQUIRED ACQUISITION ASSETS ACQUIRED PURCHASE
BUSINESSES WERE ACQUIRED: ACQUISITION % $ MILLION $ MILLION CONSIDERATION
------------------------------------------------------------------------------------------------------------------
No material acquisitions were made
during the year
33. DISPOSAL OF CONTROLLED ENTITIES AND MATERIAL BUSINESSES
VOTING
SHARES CONSIDERATION NET TANGIBLE PROFIT /(LOSS)
DURING THE YEAR THE FOLLOWING MATERIAL DATE OF DISPOSED (CASH) ASSETS DISPOSED ON DISPOSAL
BUSINESSES WERE DISPOSED OF: DISPOSAL % $ MILLION $ MILLION $ MILLION
------------------------------------------------------------------------------------------------------------------
Pacific Automotive 31 Aug 01 100 238.7 247.9 (9.2)
Pacific Brands 30 Nov 01 100 701.0 674.5 26.5
34. RELATED PARTY DISCLOSURES
Ansell Limited is the parent entity of all those entities detailed in Note 37
and from time to time has dealings on normal commercial terms and conditions
with those related entities, the effects of which are eliminated in the
consolidated financial statements.
Disclosures in respect of certain transactions with controlled entities and
related parties and amounts paid to or received therefrom are as set out in the
details below. Other transactions with related entities, which are eliminated on
consolidation, include the lease of certain properties, the supply of materials
and labour and the provision of both short and long term finance in the form of
varying financial instruments, all of which are conducted on normal commercial
terms and conditions.
The Directors of the Company during the year were:
Edward D Tweddell Peter L Barnes Harry Boon
Herbert J Elliott Stanley P Gold S Carolyn H Kay
John T Ralph Anthony B Daniels Nuno A D'Aquino
Robert J McLean Ian E Webber
110
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
34. RELATED PARTY DISCLOSURES (continued)
Details of transactions with these Directors or other Directors of other related
entities (including entities deemed to be related to such Directors) and details
of other related party transactions and amounts are set out in:
Note 3 as to interest and dividends received from controlled
entities.
Note 4 as to interest paid to controlled entities.
Note 12 as to amounts receivable from controlled entities and
loans to Directors of entities in the consolidated entity.
Note 18 as to amounts payable to controlled entities.
Note 28 as to remuneration paid or payable to Directors of the
Company and the allocation of those amounts to individual
directors within the bands of $10,000.
Note 29 as to agreements with certain Non-Executive Directors.
(a) TRANSACTIONS WITH ASSOCIATED COMPANIES
The Company and the consolidated entity hold investments in associated companies
as set out in Note 38. During the course of the year, the Company and the
consolidated entity conducted financial transactions with these associated
companies on normal commercial terms and conditions. The nature and amounts of
these transactions are detailed as follows:
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
SALE OF GOODS AND SERVICES
Car Parts Distribution Pty Ltd 7.5 97.3 84.0 - - -
South Pacific Tyres N.Z. Ltd. - 0.5 1.6 - - -
-----------------------------------------------------------
7.5 97.8 85.6 - - -
-----------------------------------------------------------
ROYALTY REVENUE
-----------------------------------------------------------
South Pacific Tyres N.Z. Ltd. 0.4 1.9 1.8 - - -
-----------------------------------------------------------
DIVIDEND REVENUE
Pacific Marine Batteries Pty. Ltd. - - - 1.3 1.0 -
-----------------------------------------------------------
- - - 1.3 1.0 -
-----------------------------------------------------------
AGGREGATE CURRENT AMOUNTS RECEIVABLE/(1)/
Car Parts Distribution Pty Ltd - 5.4 10.9 - - -
South Pacific Tyres N.Z. Ltd. - - 0.2 - - -
-----------------------------------------------------------
- 5.4 11.1 - - -
-----------------------------------------------------------
/(1)/ Amounts included within Trade Debtors and Other Amounts Receivable (Note
12)
(b) TRANSACTIONS WITH PARTNERSHIPS
The consolidated entity carries on a partnership with Goodyear in Australia and
Papua New Guinea under the name of South Pacific Tyres. In addition the
consolidated entity carried on a partnership with Accenture in Australia and New
Zealand under the name Novare Asia Pacific until 31 August 2001, at which time
the consolidated entity acquired Accenture's share of Novare Asia Pacific.
During the course of the year (and to 31 August 2001 in respect of Novare Asia
Pacific), the Company and the consolidated entity conducted financial
transactions with these partnerships on normal commercial terms and conditions
being:
111
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
34. RELATED PARTY DISCLOSURES (continued)
(b) TRANSACTIONS WITH PARTNERSHIPS (continued)
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
SALE OF GOODS AND SERVICES
Novare Asia Pacific - 1.1 - - 1.1 -
South Pacific Tyres 1.3 6.6 18.8 - 6.6 8.4
-----------------------------------------------------------
1.3 7.7 18.8 - 7.7 8.4
-----------------------------------------------------------
PURCHASES OF GOODS AND SERVICES
Novare Asia Pacific 5.5 54.2 - 3.4 52.7 -
South Pacific Tyres - 1.1 1.4 - 0.9 1.4
-----------------------------------------------------------
5.5 55.3 1.4 3.4 53.6 1.4
-----------------------------------------------------------
OTHER REVENUE
South Pacific Tyres 2.5 0.8 0.3 2.0 0.8 0.1
-----------------------------------------------------------
OTHER EXPENSES
South Pacific Tyres - - 0.1 - - 0.1
-----------------------------------------------------------
AGGREGATE CURRENT AMOUNTS RECEIVABLE/(1)/
South Pacific Tyres. - - 0.9 - - 0.6
-----------------------------------------------------------
AGGREGATE NON-CURRENT AMOUNTS RECEIVABLE
Novare Asia Pacific - 3.0 - - 3.0 -
South Pacific Tyres 58.0 25.8 - 27.6 25.8 -
-----------------------------------------------------------
58.0 28.8 - 27.6 28.8 -
-----------------------------------------------------------
AGGREGATE CURRENT AMOUNTS PAYABLE/(2)/
Novare Asia Pacific - 4.7 - - 4.5 -
South Pacific Tyres - 0.4 0.1 - 0.4 0.1
-----------------------------------------------------------
- 5.1 0.1 - 4.9 0.1
-----------------------------------------------------------
/(1)/ Amount included within Other Amounts Receivable (Note 12)
/(2)/ Amount included within Other creditors (Note 18)
LOANS
On 20 December 2000, the Company agreed to make available to the South Pacific
Tyres partnership a loan for $56.3 million for a period of two years. The loan
was drawn down in two tranches, $31.3 million on 20 December 2000 and $25.0
million on 5 January 2001.
On 20 December 2000, the Company was assigned a South Pacific Tyres receivable
due from Goodyear of $31.3 million as partial settlement of the above loan.
During the year Goodyear repaid $30 million of its loan which was in turn on
lent to South Pacific Tyres by a controlled entity.
Under the terms of the agreement with Goodyear containing put and call options
providing the consolidated entity an actionable exit strategy in respect of its
investment in the South Pacific Tyres partnership, the terms of the loans were
extended for a period of four to five years.
Interest is charged at market rate and is payable quarterly in arrears. Interest
brought to account by the Company in relation to this loan during the year:
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2002
--------------------------------------------------------------------------------
Interest revenue 2.5 2.0
In addition, under the partnership agreement, South Pacific Tyres leases certain
properties on a basis of equitable rentals mutually agreed by the partners.
Lease payments of $0.2 million (2001 -$0.2 million; 2000 -$0.3 million) were
made by South Pacific Tyres to the consolidated entity. The Company, through its
corporate treasury operations, also provided on the basis of normal commercial
terms and conditions, forward exchange cover on behalf of the partnership.
112
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
34. RELATED PARTY DISCLOSURES (continued)
(c) TRANSACTIONS OF DIRECTORS AND DIRECTOR-RELATED ENTITIES CONCERNING
SHARES OR SHARE OPTIONS
The aggregate number of shares acquired(1) by Directors of the Company and their
director-related entities in entities in the consolidated entity during the year
ended 30 June 2002 was:
The Company -6,160 fully paid ordinary shares (2001 - 5,515; 2000 -
Nil).
The aggregate number of shares and share options disposed of by Directors of the
Company and their director-related entities in the Company was Nil (2001 - Nil;
2000 - Nil).
The aggregate number of shares and share options held directly, indirectly or
beneficially by the Directors of the Company and their director-related entities
in the Company as at balance date were:
24,478,677/(2)/ fully paid ordinary shares (2001 - 132,808; 2000 -
123,293) Nil ordinary plan shares paid to five cents (2001 - Nil; 2000 -
42,000) 120,000 share options (2001 - Nil; 2000 - 1,200,000).
(1) The above reflects the position in the financial statements of the
Company and upon consolidation of the controlled entities. It only
includes shares acquired from or disposed to an entity in the
consolidated entity.
(2) Includes 24,428,841 shares owned by Trefoil International III, SPRL. Mr
S Gold has a non-beneficial indirect interest in these shares as he has
a 10% economic interest in that entity, of which he is also a director.
As stated at Note 5 - Contributed Equity, a 1 for 5 share consolidation was
effected during the year. The quantity of shares and share options disclosed
above, for both the current year and prior years, are stated as post-share
consolidation quantities.
(d) OTHER TRANSACTIONS OF DIRECTORS AND DIRECTOR-RELATED ENTITIES
In addition to the transactions referred to above, the consolidated entity
entered into the following transactions with Directors and former Directors and
their director-related entities. All transactions were on normal commercial
terms and conditions except where otherwise stated:-
.. Pellen was a Director of PacDun (Singapore) Pte Ltd. and Pacific Dunlop
Holdings (Singapore) Pte. Ltd. A director-related entity of A. Pellen,
Richard Oliver International Pte. Ltd. provided management services to
PacDun (Singapore) Pte Ltd. and Pacific Dunlop Holdings (Singapore) Pte.
Ltd.;
.. H. Ng is a Director of PacDun (Singapore) Pte Ltd. and Pacific Dunlop
Holdings (Singapore) Pte. Ltd. A director-related entity of H. Ng,
Richard Oliver International Pte. Ltd. provided management services to
PacDun (Singapore) Pte Ltd. and Pacific Dunlop Holdings (Singapore) Pte.
Ltd.;
.. S. Bagaria is a Director of Ansell Kemwell Ltd. A director-related
entity of S. Bagaria, North East Gas (P) Ltd. leased premises to Ansell
Kemwell Ltd.;
.. J. Eady was a Director of Ambri Pty Ltd. A director-related entity of J.
Eady, Eady Family Discretionary Trust provided management services to
Ambri Pty. Ltd.
AGGREGATE AMOUNTS OF EACH OF THE ABOVE TYPES OF OTHER TRANSACTIONS WITH
DIRECTORS AND THEIR DIRECTOR-RELATED ENTITIES WERE AS FOLLOWS:
CONSOLIDATED THE COMPANY
$ IN MILLIONS 2002 2001 2000 2002 2001 2000
-----------------------------------------------------------------------------------------------------------------
TRANSACTION TYPE
Provision of management and consulting services 0.2 0.3 0.2 0.1 - -
Rent of premises received by Directors and their
director-related entities - - 0.4 - - -
Sales of goods to Directors and their
director-related entities - 0.2 1.0 - - -
Provision of legal services - 13.2 11.9 - 0.7 1.7
-----------------------------------------------------
Aggregate amounts payable to Directors and their
director-related entities/(1)/
Current - 2.1 1.9 - 0.2 0.1
-----------------------------------------------------
/(1)/ Amount included within Other Creditors (Note 18)
113
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
34. RELATED PARTY DISCLOSURES (continued)
(d) Other Transactions of Directors and Director-Related Entities (continued)
In addition to the transactions referred to above, transactions were entered
into during the year with Directors of the Company and its controlled entities
or with director-related entities which:
.. occurred within a normal employee customer or supplier relationship on
terms and conditions no more favorable than those which it is reasonable
to expect would have been adopted if dealing with the Director or
director-related entity at arm's length in the same circumstances;
.. do not have the potential to affect adversely decisions about the
allocation of scarce resources or the discharge of accountability of the
Directors; and are trivial or domestic in nature;
include:
.. provision of company services which have been fully reimbursed;
.. minor purchases of goods at discount rates which are also available to
other employees;
.. purchases of Company owned motor vehicles at a value or net return to
the Company or the consolidated entity of written down value;
.. contracts of employment with relatives of Directors on either full time,
casual or work experience basis on normal commercial terms and
conditions.
35 EARNINGS PER SHARE
Consolidated
$ in millions 2002 2001 2000
----------------------------------------------------------------------------------------------------------------
Earnings Reconciliation
Net loss (113.0) (135.8) (82.4)
Net loss attributable to outside equity interests 2.8 3.6 4.1
----------------------------
Basic earnings (115.8) (139.4) (86.5)
After tax effect of interest on convertible notes - - -
----------------------------
Diluted earnings (115.8) (139.4) (86.5)
----------------------------
Weighted average number of ordinary shares used as the denominator
Number for basic earnings per share
Ordinary shares 186.9 194.0 206.5
Effect of executive share options on issue 0.7 1.2 1.6
----------------------------
Number for diluted earnings per share 187.6 195.2 208.1
----------------------------
Partly paid Executive Shares have been classified as potential ordinary shares
issued for no consideration and have been included in diluted earnings per
share.
The following Executive Share Options have not been included in the calculation
of diluted EPS as they are not dilutive:
.. Issue date 11 December 1997: 207,000 options
CONVERSION, CALL, SUBSCRIPTION OR ISSUE AFTER 30 JUNE 2002
Refer to Note 5 for further information.
114
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
36. ENVIRONMENTAL MATTERS
In September 2000, the Company sold its worldwide GNB battery business to Exide
Corporation ("Exide"). This transaction was effected by way of a series of stock
and asset purchase agreements with various entities and divisions comprising the
GNB business.
Under the sale agreements, Pacific Dunlop Holdings (USA) Inc ("PDH(USA)") made
certain representations and gave certain warranties about the condition of the
GNB facilities and the existence or non-existence of environmental liabilities
in the GNB business and agreed to indemnify Exide against costs and expenses
incurred as a result of breaches of the representations and warranties or the
existence of environmental contamination at or around GNB facilities.
Liability for indemnities relating to warranties regarding the environmental
condition of the GNB properties sold are contractually limited to the purchase
price paid by Exide for GNB, while liabilities relating to unknown or
undisclosed conditions on GNB properties sold that may give rise to
environmental liabilities are contractually capped at US$40 million.
Although the representations and warranties were made by PDH(USA) and other
Ansell entities around the world, to avoid multiple and confusing actions under
the various agreements, it was agreed that Exide would have recourse for
indemnification only against PDH(USA) in the United States.
The Company and various Group Companies as the occupiers of property receive,
from time to time, notices from relevant authorities pursuant to various
environmental legislation. On receiving such notices, the Company evaluates
potential remediation options and the associated costs. At this time, the
Company does not believe that the potential financial impact of such remediation
upon the economic entity is material.
In the ordinary course of business, the consolidated entity has maintained
comprehensive general liability insurance policies covering its operations and
assets. Generally such policies exclude coverage for most environmental
liabilities.
115
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
37. PARTICULARS RELATING TO CONTROLLED ENTITIES
BENEFICIAL INTEREST
COUNTRY OF 2002 2001 2000
PARTICULARS RELATING TO CONTROLLED ENTITIES INCORPORATION % % %
--------------------------------------------------------------------------------------------------------------
Ansell Limited (formerly Pacific Dunlop Limited) Australia
Ansell GmbH *Germany 100 100 100
Ansell Healthcare Japan Co. Ltd. (formerly Pacific
Dunlop Japan K.K.) *Japan 100 100 100
Ativ Pac Pty. Ltd. (formerly Vita Pacific Pty. Ltd. ) Australia 100 100 100
BNG Battery Technologies Pty. Ltd. (formerly GNB Battery
Technologies Ltd.) Australia 100 100 100
Cliburn Investments Pty. Ltd. Australia 100 100 100
Dexboy International Pty. Ltd. (formerly Boydex International Pty.
Ltd.) Australia 100 100 100
Corrvas Insurance Pty. Ltd. Australia 100 100 100
Dunlop Olympic Manufacturing Pty. Ltd. Australia 100 100 100
Duratray Pty. Ltd. Australia 100 100 100
FGDP Pty. Ltd. Australia 100 100 100
H.C. Sleigh Services Pty. Ltd. Australia 100 100 100
N Harvesters Pty. Ltd. Australia 100 100 100
PSL Industries Pty. Ltd. Australia 100 100 100
International Better Brands Pty Ltd Australia 100 100 100
Licknib Pty. Ltd. (formerly Niblick Pty. Ltd.) Australia 100 100 100
Nucleus Ltd. Australia 100 100 100
Lifetec Project Pty. Ltd. (formerly AMBRI Project Pty. Ltd.) Australia 100 100 100
Medical TPLC Pty. Ltd. Australia 100 100 100
N&T Pty. Ltd. Australia 100 100 100
Nucleus Trading Pte. Ltd. *Singapore 100 100 100
THLD Ltd. Australia 100 100 100
TNC Holdings Pte. Ltd. *Singapore 100 100 100
TPLC Pty. Ltd. Australia 100 100 100
Societe de Management Financier S.A. *France 100 100 100
TPLC S.A. *France 100 100 100
Olympic General Products Pty. Ltd. Australia 100 100 100
Foamlite (Australia) Pty. Ltd. Australia 100 100 100
Pacific Distribution Properties Pty. Ltd. (formerly Pacific
Distribution Properties Ltd.) Australia 100 100 100
Pacific Dunlop Finance Pty. Ltd. Australia 100 100 100
Pacific Dunlop Holdings (China) Co. Ltd. *China 100 100 100
Pacific Dunlop Holdings (N.Z.) Ltd. *New Zealand 100 100 100
Pacific Dunlop Linings Pty. Ltd. Australia 100 100 100
Pacific Dunlop Tyres Pty. Ltd. Australia 100 100 100
Pacific Dunlop (U.K.) Ltd. *UK 100 100 100
P.D. Holdings Pty. Ltd. Australia 100 100 100
P.D. International Pty. Ltd. Australia 100 100 100
Ansell Belgium Holdings SPRL N.V. *Belgium 100 100 -
Ansell Canada Inc. *Canada 100 100 100
Llesna Healthcare Pty. Ltd. (formerly Ansell Healthcare Pty.
Ltd.) Australia 100 100 -
Ansell Italy Srl *Italy 100 100 -
Ansell Kemwell Ltd. (formerly Kemwell International Ltd.) *India 74.9 74.9 74.9
Ansell Lanka (Pvt.) Ltd. *Sri Lanka 100 100 100
Ansell S.A. *France 100 100 100
Ansell (Thailand) Ltd. *Thailand 100 100 100
Ansell Protective Products Europe N.V. *Belgium 100 100 100
Medical Telectronics N.V. *Netherlands Ant. 100 100 100
Medical Telectronics Holding & Finance (Holland) B.V. *Netherlands 100 100 100
Mt Waverley Estates Pty. Ltd. Australia 100 100 100
Pacific Dunlop (Hong Kong) Limited. *Hong Kong 100 - -
PacDun (Singapore) Pte. Ltd. (formerly Pacific Dunlop
Insurances Pte. Ltd.) *Singapore 100 100 100
Pacific Dunlop Investments (USA) Inc. *USA 100 100 100
Ansell Brazil LTDA *Brazil 100 100 -
Ansell Edmont Industrial de Mexico S.A. de C.V. *Mexico 100 100 100
Ansell Perry de Mexico S.A. de C.V. *Mexico 100 100 100
Commercializadora GNK S.A de C.V. *Mexico 100 100 100
116
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--------------------------------------------------------------------------------
37. PARTICULARS RELATING TO CONTROLLED ENTITIES (continued)
BENEFICIAL INTEREST
COUNTRY OF 2002 2001 2000
PARTICULARS RELATING TO CONTROLLED ENTITIES INCORPORATION % % %
----------------------------------------------------------------------------------------------------------------
Golden Needles de Mexico S.A de C.V. *Mexico 100 100 100
Pacific Dunlop Holdings (USA) Inc. *USA 100 100 100
Ansell Healthcare Products Inc. (formerly Ansell
Incorporated) *USA 100 100 100
Ansell Protective Products Inc. (formerly Ansell Edmont
Industrial Inc.) *USA 100 100 100
Ansell Services Inc. (formerly Olex Cables USA Inc.) *USA 100 100 100
Pacific Chloride Inc. *USA 100 100 100
Pacific Dunlop Holdings Inc. *USA 100 100 100
Pacific Dunlop USA Inc. *USA 100 100 100
TPLC Holdings Inc. *USA 100 100 100
Accufix Research Institute Inc. *USA 100 100 100
Cotac Corporation *USA 100 100 100
Pacific Dunlop Finance Company Inc. *USA 100 100 100
Pacific Dunlop Holdings (Europe) Ltd. (formerly Pacific Dunlop
(Holdings) Ltd.) *U.K. 100 100 100
Ansell Glove Company Ltd. *U.K. 100 100 100
Golden Needles Knitting & Glove Co. Ltd. *U.K. 100 100 100
Ansell UK Limited *U.K. 100 100 100
Mates Vending Ltd. *U.K. 100 100 100
Pacific Dunlop Holdings (Singapore) Pte. Ltd. *Singapore 100 100 100
JK Ansell Ltd. *India (a)50 (a)50 (a)50
P.D. Holdings (Malaysia) Sdn. Bhd. *Malaysia 100 100 100
Ansell Ambi Sdn. Bhd. *Malaysia 100 100 100
Ansell (Kedah) Sdn. Bhd. *Malaysia 100 100 100
Ansell (Kulim) Sdn. Bhd. *Malaysia 100 100 100
Ansell Malaysia Sdn. Bhd. *Malaysia 75 75 75
Ansell Medical Sdn. Bhd. *Malaysia 75 75 75
Ansell N.P. Sdn. Bhd. *Malaysia 75 75 75
Ansell Shah Alam Sdn. Bhd. *Malaysia 100 100 100
PDOCB Pty. Ltd. Australia 100 100 100
Ansell Medical Products Pvt. Ltd. *India 100 100 100
Suretex Ltd. *Thailand 100 100 100
Latex Investments Ltd. Mauritius 100 100 100
Suretex Prophylactics (India) Ltd. *India 100 100 100
STX Prophylactics S.A. (Pty.) Ltd. (formerly GP Prophylactics
S.A.) *Sth Africa 100 100 100
PD Licensing Pty. Ltd. (formerly PD Licensing Ltd.) Australia 100 100 100
PD Shared Services Pty. Ltd. Australia 100 100 100
PD Shared Services Holdings Pty. Ltd. Australia 100 - -
Siteprints Pty. Ltd. Australia 100 100 100
S.T.P. (Hong Kong) Ltd. *Hong Kong 100 100 100
Pacific Dunlop Holdings N.V. *Netherlands Ant 100 100 100
Pacific Dunlop (Netherlands) B.V. *Netherlands 100 100 100
Textile Industrial Design & Engineering Pty. Ltd. (formerly Textile
Industrial Design & Engineering Ltd) Australia 100 100 100
The Distribution Group Holdings Pty. Ltd. (formerly The Distribution
Group Holdings Ltd.) Australia 100 100 100
The Distribution Group Pty. Ltd. (formerly The Distribution Group
Ltd.) Australia (b)100 (b)100 (b)100
Nwodhsa Enterprises (Wholesale) Pty. Ltd. (formerly Ashdown
Enterprises (Wholesale) Pty. Ltd.) Australia 100 100 100
TDG Warehousing Pty. Ltd. Australia 100 100 100
The Distribution Trust Australia 100 100 100
Union Knitting Mills Pty. Ltd. Australia 100 100 100
Xelo Pty. Ltd. (formerly Olex Pty. Ltd.) Australia 100 100 100
Xelo Sacof Pty. Ltd.(formerly Olex FocasPty. Ltd.) Australia 100 100 100
117
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--------------------------------------------------------------------------------
37. PARTICULARS RELATING TO CONTROLLED ENTITIES (continued)
BENEFICIAL INTEREST
COUNTRY OF 2002 2001 2000
CONTROLLED ENTITIES SOLD IN YEAR ENDED 30 JUNE 2002 INCORPORATION % % %
--------------------------------------------------------------------------------------------------------------
AMBRI Pty. Ltd. Australia 100 100 100
Bonds Industries Pty. Ltd. (formerly Bonds Industries Ltd.) Australia 100 100 100
Carparts Distribution Pty. Ltd. Australia 100 50 -
Dream Crafts Sdn. Bhd. *Malaysia 50 50 50
Dream Products Sdn. Bhd. *Malaysia 50 50 50
Dreamland (Singapore) Pte. Ltd *Singapore 50 50 50
Dreamland Corporation (M) Sdn. Bhd. *Malaysia 50 50 50
Dreamland Spring Manufacturing Sdn. Bhd. *Malaysia 50 50 50
Eurocoir Products Sdn. Bhd. *Malaysia 50 50 50
Grosby (China) Ltd. *Hong Kong 100 100 100
P.T. Berlei Indonesia *Indonesia 100 100 100
PACBRANDS USA Inc. *USA 100 100 100
Pacific Brands (Fiji) Ltd. (formerly Luxafoam (Fiji) Ltd.) *Fiji 100 100 100
Pacific Brands (UK) Ltd. (formerly Nicks Sports & Leisure Footwear
Ltd.) *U.K. 100 100 100
Pacific Dunlop Brands (Asia) Ltd. (formerly Shoe Talk Ltd.) *Hong Kong 100 100 100
Pacific Dunlop Holdings (Hong Kong) Ltd. *Hong Kong 100 100 100
Pacific Dunlop Marketing (Hong Kong) Ltd. *Hong Kong 50 50 50
PD Shared Services LSM Pty. Ltd. Australia 100 - -
Pellias Pty. Ltd. Australia 100 100 100
Restonic (M) Sdn. Bhd. *Malaysia 50 50 50
Sleepmaker Sdn. Bhd. *Malaysia 50 50 50
CONTROLLED ENTITIES IN VOLUNTARY LIQUIDATION AT 30 JUNE 2002
--------------------------------------------------------------------------------------------------------------
BNG Sub Pty. Pty. (formerly Australian Battery Co. (Aust.) Pty. Ltd.) Australia 100 100 100
F.J.'s Auto Plus Pty. Ltd. (formerly F.J.'s Auto Plus Ltd.) Australia 100 100 100
Gardenland Frozen Food Pty. Ltd. Australia 100 100 100
General Jones Pty. Ltd. Australia 100 100 100
H.C. Sleigh Investments Pty. Ltd. Australia 100 100 100
Herbert Adams Holdings Pty. Ltd. Australia 100 100 100
Jetbase Pty. Ltd. Australia 100 100 100
Lifetec R&D Pty. Ltd. (formerly AMBRI R & D Pty. Ltd.) Australia 100 100 100
Maspas Pty. Ltd. (formerly Ausonics Pty. Ltd.) Australia 100 100 100
Novare Partnership Pty. Ltd. (formerly Ateb Pty. Ltd.) Australia 100 100 100
PA Furniture Pty. Ltd. (formerly Park Avenue Furniture Pty. Ltd.) Australia 100 100 100
Pacific Distribution Pty. Ltd. Australia 100 100 100
Pacific Dunlop Belting Pty. Ltd. Australia 100 100 100
Project (X92) Pty. Ltd. Australia 100 100 100
Project Array Pty. Ltd. Australia 100 100 100
Ocper Auto Parts Pty. Ltd. (formerly Repco Auto Parts Pty. Ltd.) Australia 100 100 100
Retsamttaw Ocla Pty. Ltd. (formerly Wattmaster Alco Pty. Ltd.) Australia 100 100 100
Robur Tea Company Pty. Ltd. Australia 100 100 100
Slumberland (Australia) Pty. Ltd. Australia 100 100 100
Softwood Towns Pty. Ltd. Australia 100 100 100
Sport Australia (Export) Pty. Ltd. Australia 100 100 100
Super Cycle Pty. Ltd. Australia 100 100 100
TPLC Ltd. *UK 100 100 100
TPLC Medizinprodukte GmbH. *Germany 100 100 100
Xdds Pty. Ltd. Australia 100 100 100
Kcilc Pty. Ltd. (formerly Click Pty. Ltd.) Australia 100 100 100
118
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--------------------------------------------------------------------------------
37. PARTICULARS RELATING TO CONTROLLED ENTITIES (continued)
BENEFICIAL INTEREST
COUNTRY OF 2002 2001 2000
CONTROLLED ENTITIES VOLUNTARILY LIQUIDATED DURING THE YEAR INCORPORATION % % %
--------------------------------------------------------------------------------------------------------------
ACN 000 757 924 Pty. Ltd. (formerly Domedica) Australia 100 100 100
Ansell Canada Holdings Inc. *Canada 100 100 -
Ansell France Holdings S.A. *France 100 100 -
Ansell Healthcare Holdings Sdn. Bhd. *Malaysia 100 100 -
Ansell Healthcare Inc. *USA 100 100 -
Ansell Holdings (BVJ) Inc. *USA 100 100 -
Ansell International Holdings Inc. *USA 100 100 -
Ansell LUX Holdings S.A. *Luxembourg 100 100 -
Ansell MAT Holdings B.V. *Netherlands 100 100 -
Ansell Overseas Inc. *USA 100 100 -
Ansell UK (Holdings) Ltd. *UK 100 100 -
Dunlop Shelter Hong Kong Ltd. *Hong Kong 100 100 100
New Enpak Inc. *USA 100 100 100
Pacific Dunlop Capital Inc. *USA 100 100 100
Pacific Dunlop Finance (Aust) Pty. Ltd. Australia 100 100 100
Pacific Dunlop Footwear Inc. *USA 100 100 100
Roberts Flooring (Malaysia) Sdn. Bhd. *Malaysia 100 100 100
Sleepmaker Europe S.A.R.L. *France 100 100 100
TPL Holdings Inc. *USA 100 100 100
TPLC (Canada) Pty. Ltd. *Canada 100 100 100
* Controlled Entities incorporated outside Australia carry on business in those
countries
(a) Ansell Healthcare has day to day management control of this entity
(b) The trustee of The Distribution Trust is The Distribution Group Pty Ltd.
The beneficiary of the trust is Ansell Limited
119
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--------------------------------------------------------------------------------
38. INVESTMENTS IN ASSOCIATES
CONSOLIDATED
$ IN MILLIONS 2002 2001 2000
--------------------------------------------------------------------------------------------------------------
RESULTS OF ASSOCIATES
Share of associates' profit from ordinary activities before income tax 2.7 5.0 4.7
Share of associates' income tax expense relating to profit from ordinary activities (0.8) (1.7) (1.7)
--------------------------------------------------------------------------------------------------------------
Share of associates' net profit - as disclosed by associates 1.9 3.3 3.0
SHARE OF POST ACQUISITION RETAINED PROFITS AND RESERVES ATTRIBUTABLE TO ASSOCIATES
RETAINED PROFITS
Share of associates' retained profits at the beginning of the financial year 8.5 6.2 5.0
Share of associates' net profit 1.9 3.3 3.0
Dividends from associates (1.3) (1.0) (1.8)
Retained profits of Associates disposed of during the financial year and entity
no longer equity accounted (9.2) - -
--------------------------------------------------------------------------------------------------------------
Share of associates' retained profits at the end of the financial year (0.1) 8.5 6.2
--------------------------------------------------------------------------------------------------------------
ASSET REVALUATION RESERVE
Share of associates' asset revaluation reserve at the beginning of the financial
year 0.9 0.9 0.9
Share of asset revaluation reserve of entity no longer equity accounted (0.9) - -
--------------------------------------------------------------------------------------------------------------
Share of associates' asset revaluation reserve at the end of the financial year - 0.9 0.9
--------------------------------------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION RESERVE
Share of associates' foreign currency translation reserve at the beginning of the
financial year 2.3 2.1 1.6
Share of foreign currency translation reserve of entity no longer equity accounted (2.3) - -
Share of exchange fluctuations on assets and liabilities held in foreign currencies - 0.2 0.5
--------------------------------------------------------------------------------------------------------------
Share of associates' foreign currency translation reserve at the end of the
financial year - 2.3 2.1
--------------------------------------------------------------------------------------------------------------
MOVEMENTS IN CARRYING VALUE OF INVESTMENTS
Carrying amount of investments in associates at the beginning of the financial year 33.3 19.0 17.3
Share of associates' net profit 1.9 3.3 3.0
Dividends received from associates (1.3) (1.0) (1.8)
--------------------------------------------------------------------------------------------------------------
33.9 21.3 18.5
--------------------------------------------------------------------------------------------------------------
Share of movement in associates' foreign currency translation reserve - 0.2 0.5
Add carrying value of investment in associate acquired during the year 11.8 -
Less carrying value of investment in associate disposed of during the financial
year (0.8) - -
Less write-down and carrying value of investment no longer equity accounted (19.8) - -
--------------------------------------------------------------------------------------------------------------
Carrying amount of investment in associates at the end of the financial year 13.3 33.3 19.0
--------------------------------------------------------------------------------------------------------------
COMMITMENTS
Share of associates' capital expenditure commitments contracted but not
provided for and payable:
Within one year - 1.8 -
--------------------------------------------------------------------------------------------------------------
- 1.8 -
--------------------------------------------------------------------------------------------------------------
SHARE OF ASSOCIATES' OPERATING LEASE COMMITMENTS PAYABLE:
Within one year 0.1 5.3 1.4
One year or later and no later than five years 0.1 8.8 3.2
Later than five years - 0.5 -
---------------------------------------------------------------------------------------------------------------
0.2 14.6 4.6
---------------------------------------------------------------------------------------------------------------
CONTINGENT LIABILITIES
There are no material contingent liabilities in respect of associates at 30 June
2002
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--------------------------------------------------------------------------------
38. INVESTMENTS IN ASSOCIATES (continued)
Details of investments in associates are as follows:
CONSOLIDATED CONSOLIDATED
OWNERSHIP INVESTMENT
INTEREST CARRYING AMOUNT
PRINCIPAL BALANCE 2002 2001 2000 2002 2001 2000
NAME ACTIVITIES DATE % % % $ MILLION $ MILLION $ MILLION
----------------------------------------------------------------------------------------------------------------------
South Pacific Tyres N.Z. Ltd./(1)/ Manufacturing 30 June 50 50 50 - 18.7 16.7
Pacific Marine Batteries Pty.
Ltd. Manufacturing 30 June 50 50 50 2.7 2.0 1.5
BT Equipment Pty Ltd Manufacturing 30 June 45 45 - 10.6 11.8 -
Car Parts Distribution Pty Ltd Manufacturing 30 June - 50 50 - 0.8 0.8
--------------------------------------------------------------------------------------------------------------------
13.3 33.3 19.0
====================================================================================================================
Dividends received from associates for the year ended 30 June 2002 by the
Company amounted to $1.3 million (2001 -$1.0 million; 2000 - Nil).
/(1)/ Effective 1 July 2001, Ansell Limited discontinued equity accounting for
its interest in South Pacific Tyres N.Z. Ltd. Refer to Note 2 - Change
in Accounting Policy.
SUMMARY OF PERFORMANCE AND FINANCIAL POSITION OF ASSOCIATES
CONSOLIDATED
$ IN MILLIONS 2002 2001 2000
---------------------------------------------------------------------------------------------------------------
THE CONSOLIDATED ENTITY'S SHARE OF AGGREGATE ASSETS,
LIABILITIES AND PROFITS OF ASSOCIATES ARE AS FOLLOWS:
Net profit -as reported by associates 1.9 3.3 3.0
Current assets 24.0 61.6 45.5
Non-current assets 4.7 22.8 21.8
------------------------------
Total assets 28.7 84.4 67.3
------------------------------
Current liabilities 15.2 42.3 34.5
Non-current liabilities 0.2 10.8 15.8
------------------------------
Total liabilities 15.4 53.1 50.3
------------------------------
Net assets -as reported by associates 13.3 31.3 17.0
------------------------------
Adjustments arising from equity accounting
Preference Share adjustment - 2.0 2.0
---------------------------------------------------------------------------------------------------------------
Net assets - equity adjusted 13.3 33.3 19.0
===============================================================================================================
39. MAJOR DIFFERENCES BETWEEN AUSTRALIAN GAAP AND US GAAP
Australian generally accepted accounting principles (AGAAP) vary in certain
significant respects from generally accepted accounting principles in the United
States (US GAAP). Application of US GAAP would have affected shareholders'
equity as at 30 June 2002, 2001, and 2000 and operating profit after income tax
expense attributable to the Ansell Limited shareholders for each of the years in
the three year period ended 30 June 2002, to the extent quantified below. A
description of the material differences between AGAAP, as followed by Ansell
Limited, and US GAAP are as follows:
(a) PROPERTY, PLANT AND EQUIPMENT
Certain property, plant and equipment has been revalued by Ansell Limited at
various times in prior financial periods. Revaluation increments have increased
the carrying value of the assets and accordingly the depreciation charges have
been increased above those which would be required on a historical cost basis.
These adjustments eliminate this effect.
The above policy also causes differences in reported gains and losses on the
sale of property, plant and equipment. Gains and losses for Australian GAAP are
based on consideration less revalued amounts net of accumulated depreciation and
amortisation. For US GAAP purposes gains and losses are determined having regard
to depreciated historical cost, and revaluation reserves applicable to assets
sold are reported as Income.
In March 1995, the United States Financial Accounting Standards Board issued
SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." SFAS 121 requires entities to perform separate
calculations for assets to be held and used to determine whether recognition of
an impairment loss is required, and if so, to measure the impairment.
121
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--------------------------------------------------------------------------------
39. MAJOR DIFFERENCES BETWEEN AUSTRALIAN GAAP AND US GAAP (continued)
(a) PROPERTY, PLANT AND EQUIPMENT (continued)
If the sum of expected future cash flows, undiscounted and without interest
charges, is less than an asset's carrying value, an impairment loss is
recognised; if the sum of the expected future cash flows is greater than an
asset's carrying value, an impairment loss cannot be recognised.
Measurement of an impairment loss is based on the fair value of the asset. SFAS
121 also generally requires long-lived assets and certain identifiable
intangibles to be disposed of, to be reported at the lower of the carrying value
or fair value less cost to sell. The Company adopted SFAS 121 for the Group's
1997 fiscal year end. An adjustment of $11.5 million was made at 30 June 1998
(following an assessment of the fair values of properties at 31 December 1997)
to reflect the total amount by which certain properties were revalued below
their depreciated historical cost. Subsequent to 30 June 1998, properties have
been sold which had previously been revalued below depreciated historical cost
by $7.4 million. Therefore, the adjustment has been reduced to $4.1 million as
at 30 June 2002 ($8.0 million as at 30 June 2000 and 30 June 2001).
(b) MINORITY INTERESTS
Minority interests are included as part of total Shareholders Equity under
AGAAP. The reconciliation to US GAAP in Note 40 has excluded these from
Shareholders' Equity consistent with US GAAP treatment.
(c) PROVISIONS
The term "provisions" is used in AGAAP to designate accrued expenses with no
definitive payment date. Classification between current and non-current is
generally based on management assessments, as subject to audit.
For AGAAP purposes dividends declared by the Company are provided for in the
financial statements at year end if declaration date is prior to financial
statements being signed. For US GAAP these amounts provided are added back to
shareholders' equity where declaration has not occurred within the financial
year.
Included within the result for AGAAP are amounts charged to income in respect of
future costs associated with rationalisation and restructuring within existing
business segments (provision for rationalisation and restructuring costs). Any
plans to reorganise or exit a business are approved by the Board of Directors.
Once committed to, accruals are made for the estimated costs associated with the
reorganisation or exit. The US GAAP criteria for accruing costs associated with
business restructure are fundamentally consistent with those of AGAAP but do
contain certain very specific qualifying criteria. Where these criteria are not
satisfied an adjustment to earnings is included in the reconciliation to US
GAAP.
(d) EXECUTIVE SHARE PLAN AND OPTIONS
Company executives participated in an executive share plan scheme which allowed
them to purchase allocated shares at $2.50 per share, or in respect of
approximately 35% of the shares, at $10.00 per share. Shares issued under the
plan are not listed, cannot be traded and do not rank for dividends until the
above amounts have been paid. The determined compensation expense in respect of
the partly paid shares had been fully amortised as at 30 June 1996, and no
further shares have been issued.
The Company has adopted, for financial years ending after 30 June 1997, the
provision of SFAS 123 to determine compensation cost in respect of options. No
options have actually been exercised.
Loans granted to employees in respect of the Employee Plan are classified as a
reduction of Shareholders' Equity for US GAAP purposes. Such loans are
classified as an asset for Australian GAAP.
(e) EARNINGS PER SHARE
Under Australian GAAP earnings per share is calculated by dividing operating
profit after tax, minority shareholders interest and any preference dividend by
the weighted average number of shares on issue for the year. Methods of
computing Earnings per Share in accordance with US GAAP are documented in SFAS
128. Earnings per Share computations recognise the effect of all bonus issues
(stock splits) and bonus elements of rights issues made up to 30 June 2002, and
also give effect to the stock consolidation (reverse split) approved by
shareholders in April 2002.
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--------------------------------------------------------------------------------
39. MAJOR DIFFERENCES BETWEEN AUSTRALIAN GAAP AND US GAAP (continued)
(f) PENSION PLANS
The Company and its controlled entities are party to 10 pension plans worldwide,
principally established by trust deed, covering substantially all of their
employees. Of the pension plans within the Group, only one plan, being the
Pacific Dunlop Superannuation Fund, has been considered material for the year
ended 30 June 2002. The Group sponsors contributory and non-contributory
accumulation and defined benefit pension plans covering substantially all
employees. The defined benefit plans generally provide benefits based on salary
in the period prior to retirement. All defined benefit plans are funded based on
actuarial advice on a regular basis.
Actuarial calculations have been carried out for the above funds and the
material fund aspects are as detailed in Note 24. The majority of assets of the
funds are invested in pooled superannuation trusts in the case of the Australian
funds and equity securities for other major funds.
A detailed level of reporting in respect of pension plans is not presently
required by AGAAP. Under AGAAP the contributions to the various pension plans
are recorded as an expense in the income statement. The disclosure requirements
of Statement of Financial Accounting Standards No. 87 and No. 132 (SFAS 87, SFAS
132) have been included in these financial statements. The Group reports pension
plans aggregated where allowed by SFAS 87. Additionally, an adjustment is made
to recognise the measurement principles of SFAS 87 in determining net income and
shareholders' equity under US GAAP.
(g) STATEMENT OF CASH FLOWS
Profit from operations determined under AGAAP differs in certain respects from
the amount determined in accordance with US GAAP. A reconciliation of US GAAP
profits to Cash Flows from operations is provided.
Under AGAAP, cash is defined as cash on hand and deposits repayable on demand,
less overdrafts repayable on demand. Under US GAAP, cash and cash equivalents
are defined as cash and investments with original maturities of three months or
less, and do not include bank overdrafts or restricted deposits.
(h) INCOME TAXES
Accounting under AGAAP is under the liability method, and is equivalent in all
material respects to Statement of Financial Accounting Standards No. 109 (SFAS
109). For each tax jurisdiction, after reclassification of deferred tax
liabilities (net of deferred tax assets arising from timing differences) the net
tax asset meets the criteria set out in SFAS 109. There have been no variations
in the application of the qualifying criteria under US GAAP and AGAAP.
Valuation allowances of approximately $455.1 million (2001 - $461.8 million;
2000 - $197.8 million) in respect of operating losses and $331.3 million of
capital losses (2001 - $242.5 million; 2000 - $42.5 million) have been recorded
against available deferred tax assets. Reversal of these valuation allowances
and the realisation of the unrecorded assets is dependent upon obtaining
qualifying assessable income in the relevant tax jurisdictions.
At 30 June 2002 the expiry dates of gross tax losses for which future tax
benefits (deferred tax assets) have been brought to account are as follows - in
respect of financial years ending on 30 June;
A$
YEAR MILLION
2005 33.6
2006 1.5
2007 1.8
2010 2.5
Additionally, certain deferred tax assets have been brought to account in
respect of losses which have no prescribed expiry date.
123
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--------------------------------------------------------------------------------
39. MAJOR DIFFERENCES BETWEEN AUSTRALIAN GAAP AND US GAAP (continued)
(i) ACCOUNTING FOR GOODWILL
Shares in controlled entities are valued on acquisition at the holding company's
cost. Any difference between the fair value of net assets and cost is recognised
as an asset. Under AGAAP, goodwill is amortised on a straight line basis over
varying periods not exceeding 20 years. Although the benefits from the goodwill
acquired may exceed 20 years the goodwill is written off over periods not
exceeding 20 years to comply with AGAAP.
In 1989 and prior years, for AGAAP, goodwill was written off in the year of
acquisition. For US GAAP purposes, such goodwill has been reinstated and is
being amortised. For US GAAP, where the useful life is considered to be 20 years
or longer, the Group has adopted the method of straight-line amortisation over a
maximum of 40 years. The unamortised balance of goodwill is reviewed
semi-annually and any material diminution in value is charged to the Statement
of Financial Performance. Goodwill attributable to sold businesses is brought to
account in determining the gain or loss on sale (refer to Note 39(p) for recent
changes under US GAAP).
(j) BRAND NAMES
Brand names acquired since 1 July 1990, are recorded in the accounts at cost
based on independent valuation. No amortisation has been charged on these assets
under Australian GAAP as no event has occurred to cause a reduction in the
values or limit their useful lives.
For US GAAP purposes and for purposes of this reconciliation, brand names are,
effective 1 July 1994 amortised over a period of 40 years using the straight
line method. Brand names attributable to sold businesses are brought to account
in determining the gain or loss on sale (refer to Note 39(p) for recent changes
under US GAAP).
(k) HEDGING OF ANTICIPATED TRANSACTIONS
Included within Note 27 is detail of amounts deferred related to hedging of
anticipated exposures. For US GAAP purposes certain of these transactions
(primarily related to forward exchange contracts) do not qualify as hedges as
they relate to anticipated transactions. These amounts are adjusted in
determining US GAAP income. The amount adjusted, by decreasing US GAAP net
income by $1.3 million (2001 - $1.1 million decrease; 2000 - $1.4 million
decrease), is in respect of forward contracts hedging future foreign currency
sales of product. The contracts are related to budgeted sales and are not in
relation to firm commitments.
(l) DISCONTINUED OPERATION
Under AGAAP a business or segment is included as discontinued upon completion of
the transaction, whereas US GAAP presentation as discontinued is determined in
accordance with APB 30 or subsequent to July 1 2002, in accordance with SFAS
144. These standards basically require presentation as discontinued at the
measurement date, which will generally pre-date completion.
Sales revenue under US GAAP as disclosed in Note 40 and in Item 3A - Selected
Financial Data represents the sales revenue for the periods shown of the
continuing Ansell Healthcare operations.
Certain retained liabilities relating to Accufix Pacing Lead related expenses
are reported in Note 20 to the financial statements as a current provision of
$18.6 million. As set out in Note 26 to the financial statements the expected
outcome of the material litigation actions outstanding in respect of the Medical
Products Group have been provided for.
Certain deferred tax assets previously reported in respect of the results of the
Medical Products Group were written off in 1996, and income tax benefits
attributable to the losses from operations and loss from sale have not been
brought to account as recovery is not, at this time, considered to be more
likely than not.
(m) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Financial Accounting Standards Board ("FASB") issued then subsequently
amended, Statement of Financial Accounting Standards ("SFAS") No. 133,
Accounting for Derivative Instruments and Hedging Activities, which became
effective for Ansell Limited on 1 July 2000. Under SFAS No. 133, as amended, all
derivative instruments are recognised in the balance sheet at their fair values
and changes in fair value are recognised immediately in earnings, unless the
derivatives qualify as hedges of future cash flows. For derivatives qualifying
as hedges of future cash flows, the effective portion of changes in fair value
is recorded temporarily in equity, then recognised in earnings along with the
related effects of the hedged items. Any ineffective portion of hedges is
reported in operating earnings as it occurs.
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--------------------------------------------------------------------------------
39. MAJOR DIFFERENCES BETWEEN AUSTRALIAN GAAP AND US GAAP (continued)
(m) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (continued)
The nature of Ansell Limited's business activities necessarily involves the
management of various financial and market risks, including those related to
changes in interest rates, currency exchange rates, and commodity prices. Ansell
Limited uses derivative financial instruments to mitigate or eliminate certain
of those risks. All derivatives are recognised on the balance sheet at their
fair value. On the date the derivative is entered into, Ansell Limited
designates the derivative as either a hedge of the fair value of a recognised
asset or liability or firm commitment (fair value hedge) or of the variability
of cash flows to be paid or received related to a recognised asset, liability or
forecasted transaction (cash flow hedge).
Hedges of future cash flows
The ineffective portion of the changes in cash flow values of hedge positions
reported in the current period amounts to nil (2001 - loss of $0.3 million
before income taxes). There is no portion of any derivative instruments excluded
from the assessment of hedge effectiveness.
Amounts classified in Other Comprehensive Income (OCI) during the period relate
to cash flow hedges and will be released to earnings as the hedged items mature.
During the period, no amount was reclassified from OCI and realised in earnings
due to the discontinuation of cash flow hedges. During the next 12 month period
ending 30 June 2003, no amounts will be reclassified to earnings as a result of
hedged items maturing.
At 30 June 2002, the maximum term of derivative instruments that hedge
forecasted transactions was 49 months.
Hedges of recognised assets, liabilities and firm commitments
All fair value hedges have been assessed for their effectiveness in accordance
with SFAS 133 guidelines. A gain of $1.8 million (2001 - loss of $2.7 million),
before income taxes, which was recognised in 'other expenses' related to the
change in fair value of fair value hedges and associated hedged item.
A reconciliation of current period changes in Other Comprehensive Income within
equity is as follows:
$ MILLIONS
Opening balance of accumulated net loss on cash flow hedges (2.5)
Net gain / (loss) on cash flow hedges (12.0)
Add reclassification adjustments to earnings 0.8
----------
Closing balance of accumulated net loss on cash flow hedges (13.7)
==========
(n) INVESTMENTS
For US GAAP purposes investments held in publicly listed companies have been
marked-to-market in accordance with SFAS No 115 "Accounting for Certain
Investments in Debt and Equity Securities" with the difference from cost
reflected in Comprehensive Income. Under A GAAP investments are carried at cost.
Accounting for the Investment in South Pacific Tyres (SPT)
The accounting for the investment in SPT under AGAAP is detailed in Note 2 to
the Financial Statements.
For US GAAP purposes the existing provisions contained within the amended
partnership agreement - notwithstanding the substance of the revised
arrangements and actual process in respect of the operational control of SPT,
which has ultimately determined the AGAAP treatment - continue to provide the
company with the legal ability to significantly influence the partnership.
Accordingly, equity accounting is applied for the purpose of reporting in
accordance with the requirements under US GAAP. There are no material
differences between AGAAP and US GAAP within the partnership's financial
statements.
(o) REVENUE RECOGNITION
Under AGAAP, interest revenue and proceeds from the sale of non current assets
are recorded as other revenues from ordinary activities and the basis of the
assets sold is included in expenses. Under US GAAP, interest revenue is
classified as other income and the difference between the sale proceeds and the
basis of the assets sold would be presented as a net gain or loss and included
in the determination of operating income.
125
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
39. MAJOR DIFFERENCES BETWEEN AUSTRALIAN GAAP AND US GAAP (continued)
(p) RECENT CHANGES IN US GAAP
In June 2001, the FASB issued Statement No. 141, Business Combinations, and
Statement No. 142, Goodwill and Intangible Assets. Statement 141 requires that
the purchase method of accounting be used for all business combinations
completed after 30 June 2002. Statement 141 also specifies the types of acquired
intangible assets that are required to be recognised and reported separately
from goodwill and those acquired intangible assets that are required to be
included in goodwill.
Statement 142 will require that goodwill no longer be amortised, but instead
tested for impairment at least annually. Statement 142 will also require
recognised intangible assets to be amortised over their respective estimated
useful lives and reviewed for impairment in accordance with Statement No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets.
Any recognised intangible assets determined to have an indefinite useful life
will not be amortised, but instead tested for impairment in accordance with the
Standard until its life is determined to no longer be indefinite. An estimate of
the expected impact on the adoption of SFAS No. 142 will approximate the current
year's US GAAP amortisation of :
$ MILLIONS
Goodwill 18.9
Brand names 4.5
----------
23.4
==========
Brand names of the Company have been determined to have indefinite useful lives.
Refer to Note 1 to the Financial Statements.
In June 2001, the FASB also issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs, and applies to legal
obligations associated with the retirement of long-lived assets and/or the
normal operation of a long-lived asset. Under SFAS No. 143, the fair value of a
liability for an asset retirement obligation is recognised in the period in
which it is incurred if a reasonable estimate of fair value can be made.
The associated asset retirement costs are capitalised as part of the carrying
amount of the long-lived asset. The liability is discounted and accretion
expense is recognised using the credit-adjusted risk-free interest rate in
effect when the liability was initially recognised. SFAS No. 143 will be
effective for the Group as of 1 July 2002.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 addresses financial accounting and
reporting for the impairment of long-lived assets, and will supersede (a) SFAS
No. 121 with respect to the accounting for the impairment or disposal of
long-lived assets and (b) Accounting Principles Board Opinion No. 30 for the
disposal of a segment of a business. SFAS No. 144 retains the requirements of
SFAS No. 121 to (a) recognise an impairment loss if the carrying amount of a
long-lived asset is not recoverable from its undiscounted cash flows and (b)
measure an impairment loss as the difference between the carrying amount and
fair value of the asset. SFAS No. 144 also requires that a long-lived asset to
be abandoned, exchanged for a similar productive asset, or distributed to owners
in a spin-off be considered held and used until the asset is disposed of,
exchanged or distributed.
SFAS No. 144 retains the basic provisions of Opinion 30 for the presentation of
discontinued operations in an income statement but broadens that presentation to
include a component of an entity (rather than a segment of a business). A
component of an entity comprises operations and cash flows that can be clearly
distinguished, operationally and for financial reporting purposes, from the rest
of the entity.
A component of an entity that is classified as held for sale or that has been
disposed of is presented as a discontinued operation if the operations and cash
flows of the component will be (or have been) eliminated from the ongoing
operations of the entity and the entity will not have any significant continuing
involvement in the operations of the component.
126
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
39. MAJOR DIFFERENCES BETWEEN AUSTRALIAN GAAP AND US GAAP (continued)
(p) RECENT CHANGES IN US GAAP (continued)
In addition, discontinued operations are no longer measured on a net realisable
value basis, and future operating losses are no longer recognised before they
occur. SFAS No. 144 will be effective for the Group as of 1 July 2002.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections." As
a result of the rescission of SFAS No. 4, a loss on extinguishment of debt will
no longer be presented as an extraordinary item upon the adoption of SFAS No.
145, which is effective for the Group in the fiscal year beginning 1 July 2002.
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 is based on the general
principle that a liability for a cost associated with an exit or disposal
activity should be recorded when it is incurred and initially measured at fair
value. SFAS No. 146 applies to costs associated with (1) an exit activity that
does not involve an entity newly acquired in a business combination or (2)
disposal activity within the scope of SFAS No. 144.
These costs include certain termination benefits, costs to terminate a contract
that is not a capital lease, and other associated costs to consolidate
facilities or relocate employees. Because the provisions of this statement are
to be applied prospectively to exit or disposal activities initiated after 31
December 2002, the effect of adopting this statement cannot be determined.
40. RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(U.S. GAAP)
CONSOLIDATED
$ IN MILLIONS 2002 2001 2000
-------------------------------------------------------------------------------------------------------------------------
PROFIT AND LOSS STATEMENT (FOR YEARS ENDED 30 JUNE)
Net loss of the consolidated entity per Australian GAAP (113.0) (135.8) (82.4)
Less interest of outside equity holders 2.8 3.6 4.1
-------------------------------------
Net loss attributable to members (115.8) (139.4) (86.5)
Adjustments required to accord with US GAAP:
add/(deduct): (67.8) (55.6) 44.7
-------------------------------------------------------------------------------------------------------------------------
Loss according to U.S. GAAP (183.6) (195.0) (41.8)
-------------------------------------------------------------------------------------------------------------------------
Weighted average number of shares per basic EPS calculations (millions) 186.9 194.0 206.5
Weighted average number of Executive shares (millions) 0.6 0.5 0.5
-------------------------------------
Weighted average number of shares per diluted EPS calculations (millions) 187.5 194.5 207.0
Continuing Operations
Loss from continuing operations
Before income tax (48.2) (75.8) (28.4)
Income tax expense (26.9) (147.2) (2.6)
Discontinued Operations
Income/loss from discontinued operations
Before income tax /(1)/ (89.0) 63.1 34.9
Income tax expense (19.5) (35.1) (45.7)
-------------------------------------
Net loss per US GAAP (183.6) (195.0) (41.8)
-------------------------------------
Earnings per share -basic and diluted (Australian Cents)
Continuing operations -basic (40)Cent (115)Cent (15)Cent
-diluted (40)Cent (115)Cent (15)Cent
Discontinued operations-basic (58)Cent 14Cent (5)Cent
-diluted (58)Cent 14Cent (5)Cent
CONDENSED US GAAP CONSOLIDATED STATEMENT OF INCOME DATA
EXCLUDING DISCONTINUED OPERATIONS
Sales Revenue 1,414.2 1,412.2 1,172.7
Total costs and expenses 1,407.7 1,388.6 1,098.6
Net interest expense 54.7 99.4 102.5
Tax expense 26.9 147.2 2.6
-------------------------------------------------------------------------------------------------------------------------
Loss from continuing operations (75.1) (223.0) (31.0)
/(1)/ Includes net gain on disposal of businesses and controlled entities 25.7 155.2 -
127
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
40. RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(U.S. GAAP) (continued)
CONSOLIDATED
$ IN MILLIONS 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES PER AUSTRALIAN GAAP
FINANCIAL STATEMENTS TO PROFIT AFTER TAX UNDER US GAAP
Net Cash Provided by Operating Activities 113.1 226.6 190.3
Write-down of non-current assets (144.5) - (160.0)
Depreciation (50.1) (89.9) (142.5)
Amortisation (24.3) (40.1) (45.6)
Provision for doubtful debts 2.9 (7.9) (7.3)
Write down of FITB (15.2) (158.5) -
Repco goodwill and brandnames written off - (97.7) -
Share of net (loss)/gain of associate and joint venture entities (60.1) (44.3) (1.9)
Items classified as financing activities:
Interest Received 15.5 44.9 47.4
Interest Paid (70.2) (144.3) (149.5)
Change in assets and liabilities net of effect from acquisition and disposals of
subsidiaries and businesses:
(Decrease)/Increase in trade debtors 0.3 176.5 (215.7)
(Decrease)/Increase in inventories (39.4) 13.8 (129.2)
(Decrease)/Increase in prepaid expenses 2.4 (19.2) (17.3)
(Decrease)/Increase in deferred expenditure (4.3) 4.2 16.8
(Increase)/Decrease in creditors and bills payable (78.3) (52.2) 118.6
Decrease in lease liabilities, provisions, and other liabilities 187.9 98.3 205.2
(Increase)/Decrease in provision for deferred income tax (2.3) (1.0) 47.6
Increase/(Decrease) in future income tax benefit (24.7) 6.0 (8.4)
(Increase)/Decrease in provision for income tax 8.5 (1.2) (8.0)
(Decrease)/Increase in GNB net operating assets held for sale - (182.3) 182.3
(Loss)/Gain on sale of investments, properties, plant and equipment (5.6) (4.6) 4.2
Gain/(loss) on sale of subsidiaries and businesses 27.2 154.7 (4.5)
Outside equity interest in loss/(profit) for the year (2.8) (3.6) (4.1)
Goodwill written off - (35.3) -
Other (19.6) (37.9) 39.8
------------------------------------------------------------------------------------------------------------------
Loss after tax (183.6) (195.0) (41.8)
------------------------------------------------------------------------------------------------------------------
128
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
40. RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(U.S. GAAP) (continued)
CONSOLIDATED
$ IN MILLIONS NOTE 2002 2001 2000
-----------------------------------------------------------------------------------------------------------------
ADJUSTMENTS TO REFLECT U.S. GAAP
Add/(Deduct): Reduced goodwill amortization charge as a result of
differences in useful lives 39(i) 12.7 18.5 14.1
Amortization of goodwill capitalised for US GAAP 39(i)
purposes only (2.4) (3.7) (4.1)
Amortization of brand names capitalized 39(j) (4.5) (5.3) (5.3)
Amortization of compensation component of executive 39(d)
share plan and options 1.9 - (0.8)
Pension Plans /(1)/ 39(f) 5.4 (12.3) 7.1
Income tax (expense)/benefit (1.9) 4.3 (2.5)
Depreciation of asset increment included in 39(a)
depreciation charge 0.2 0.3 0.4
Revaluation of asset increment realized on sale of
controlled entities and businesses 39(a) 20.5 - 1.9
Net hedge (losses)/gains (brought to account)/
deferred for Australian GAAP 39(k) (1.9) (1.7) (2.2)
Income tax benefit 0.6 0.6 0.8
Rationalization and restructuring provision 39(c) (30.0) (17.8) 51.2
Income tax (expense)/benefit 8.1 6.0 (18.4)
Goodwill capitalised for US GAAP purposes written off
on sale of controlled entities and businesses 39(i) (34.5) (41.7) -
Write back of US GAAP amortisation of brandnames on
sale of controlled entities and businesses 39(j) 15.5 6.4 -
Net change in fair value hedges, hedged items and cash
flow hedges 39(m) 2.6 (4.9) -
Income tax (expense)/benefit (0.8) 1.7 -
Equity accounted loss of South Pacific Tyres 39(n) (62.0) - -
Income tax benefit 14.6 - -
Valuation adjustment for above income tax
(benefit)/expense amounts (11.9) (6.0) 2.5
------------------------------
(67.8) (55.6) 44.7
------------------------------
Shareholders' Equity of the Group as at 30th June 876.0 1,066.2 1,499.9
Deduct: Outside equity interests 39(b) (13.7) (19.8) (17.5)
------------------------------------------------------------------------------------------------------------------
Shareholders' Equity attributable to Ansell Limited 862.3 1,046.4 1,482.4
------------------------------------------------------------------------------------------------------------------
ADJUSTMENTS REQUIRED TO ACCORD WITH U.S. GAAP:
Add/(Deduct): Goodwill not capitalized for Australian GAAP - net
of amortization and amortization adjustments on
Australian GAAP goodwill 39(h) 123.7 155.6 175.1
Amortization of brand names - cumulative 39(j) (26.1) (40.1) (39.5)
Pension Plans 39(f) 6.2 0.8 13.2
Dividends 39(c) - - 31.0
Hedging adjustments - after tax 39(k) (0.3) 1.0 2.0
Reserves attributable to Asset Revaluation 39(a) (20.2) (29.3) (43.4)
Rationalization and Restructuring provisions 39(c) - 21.9 32.8
Depreciation charged on Revaluation increments 39(a) 12.6 12.4 12.1
Loans outstanding under ownership based remuneration
scheme 39(d) (4.3) (8.6) (9.9)
Net change in fair value hedges, hedged items and cash
flow hedges 39(m) (2.3) (4.9) -
Net gains/(losses) on cash flow hedges residing in
Comprehensive Income 39(m) (13.7) (1.6) -
Gain on equity securities residing in comprehensive - -
income 39(n) 1.0
Equity accounted loss of South Pacific Tyres 39(n) (62.0) - -
------------------------------
Total Adjustments 14.6 107.2 173.4
------------------------------
Ansell Limited Shareholders' Equity according to U.S. GAAP (including
Comprehensive Income) 876.9 1,153.6 1,655.8
------------------------------------------------------------------------------------------------------------------
Note: All US GAAP adjustments are in respect of 100% owned operations
STATEMENT OF COMPREHENSIVE INCOME:
Net loss per U.S. GAAP (121.6) (195.0) (41.8)
Foreign Currency Translation Reserve:
Movement per A GAAP (69.6) (73.0) 61.3
Movement per U.S. GAAP (4.5) 5.2 1.6
Net loss on cash flow hedges (12.1) (1.6) -
Gain on equity securities 1.0 - -
------------------------------------------------------------------------------------------------------------------
Comprehensive Income (206.8) (264.4) 21.1
==================================================================================================================
/(1)/ Pension Plans - includes curtailment gains of $6.1 million, $3.3 million
and $4.4 million for 2002, 2001 and 2000 respectively, resulting from the
sale of businesses.
129
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
40. RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(U.S. GAAP) (continued)
2002 2001 2000
MAJOR MAJOR MAJOR
AUSTRALIAN AUSTRALIAN AUSTRALIAN
$ IN MILLIONS FUNDS FUNDS FUNDS GNB INC./(1)/
------------------------------------------------------------------------------------------------------------------
Pension Plan data supporting Note 39(f)
Plan's funded status at 30 June is summarised as follows:
Actuarial present value of accumulated obligations:
. Vested 222.5 458.1 520.0 180.0
. Non Vested 0.8 1.7 1.8 15.6
Total accumulated benefit obligation 223.3 459.8 521.8 195.6
Projected benefit obligation 225.1 464.1 525.6 207.9
Plan assets at fair value 237.6 506.0 604.9 227.6
Excess of assets over benefit obligations 12.5 41.9 79.3 19.7
Unrecognised net (gain) (4.1) (37.1) (56.6) (45.0)
Unrecognised prior service costs - - - 12.6
Unrecognised net transition obligation/(asset) and other
deferrals (2.3) (7.1) (9.5) 1.1
Net Pension (Liability)/Asset 6.1 (2.3) 13.2 (11.6)
NET PENSION COST
Defined Benefit Plans:
Service cost-benefits earned during the year 22.8 39.8 44.2 6.7
Interest cost on projected benefit obligation 26.0 35.4 31.5 15.5
Actual return on plan assets (35.4) (45.3) (88.1) (22.2)
Net amortisation and deferral (2.2) (5.7) 43.0 2.3
Net Pension Cost of Defined Benefit Plans 11.2 24.2 30.6 2.3
ASSUMPTIONS
Weighted average discount rate 6.0% 6.0% 6.0% 7.0%
Rate of increase in compensation level 3.5% 3.5% 3.5% 5.0%
Expected long term rate of return 7.0% 7.5% 7.5% 11.0%
CHANGE IN BENEFIT OBLIGATION
Projected Benefit Obligation at beginning of year 464.1 525.6 482.1 203.3
Service cost 22.8 39.8 44.2 6.7
Interest cost 26.0 36.6 55.7 15.5
Transfers from/(to) other funds 4.2 7.4 (0.3) -
Member contributions 5.4 8.2 12.5 -
Actuarial (gain)/loss (27.8) 16.9 5.4 (29.7)
Plan Amendments - - - 2.0
Benefits paid (266.4) (166.9) (67.3) (10.8)
Expenses and tax paid (3.2) (3.5) (6.7) -
Foreign currency exchange rate changes - - - 20.9
Projected Benefit Obligation at end of year 225.1 464.1 525.6 207.9
CHANGE IN PLAN ASSETS
Market value of assets at beginning of year 506.0 604.9 545.4 204.9
Adjustment to fair value at beginning of the year (10.6) - - -
Member/Employer Contributions 15.8 18.8 45.7 -
Transfers from other funds 4.3 7.4 (0.3) -
Benefits paid (266.4) (166.9) (67.3) (10.8)
Expenses and tax paid (3.2) (3.5) (6.7) -
Actual return on plan assets (8.3) 45.3 88.1 12.8
Foreign currency exchange rate changes - - - 20.7
Market value of assets at end of year 237.6 506.0 604.9 227.6
/(1)/ Amounts relating to the GNB Inc. pension plan were transferred to Exide
on the sale of GNB.
130
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
40. RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(U.S. GAAP) (continued)
INFORMATION FOR UNITED STATES INVESTORS
CONSOLIDATED
$ IN MILLIONS 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
PROCEEDS RECEIVED FROM THE SALE OF BUSINESSES AND INVESTMENTS PER NOTE 3
.. Pacific Automotive business 238.7
.. Pacific Brands business 701.0
.. GNB Battery business 692.0
.. Electrical Distribution business 341.6
.. Other minor businesses 16.3 11.6
------------------------------
939.7 1,049.9 11.6
------------------------------
MATERIAL WRITE-DOWN OF ASSETS PER INDUSTRY SEGMENTS
.. Exide Receivable/Investment /(i)/ (99.9)
As a result of Exide Inc filing for chapter 11 bankruptcy protection and
subsequent demise of Exide Inc's share price the company has fully written off
its investment in and all amounts receivable from Exide Inc.
.. Ansell Healthcare fixed assets /(ii)/ (63.1)
Following the announcement to close Ansell Healthcare's manufacturing facility
in Troy, Alabama the company has written down the value of plant and equipment
at the site to estimated recoverable value. In addition, certain other values
attributed to land & buildings within the USA have been written down to
independently appraised values.
.. Other(iii) (13.5)
Represents the write-down of various assets to recoverable amount as
determined by the company.
.. Automotive Distribution Business /(i)/ (97.7)
Following the announcement to sell the Automotive Distribution business the
assets were written down to the estimated sales proceeds.
.. GNB Battery Assets /(i)/ (160.0)
Additional write-down in respect of the GNB Battery assets was required in
order to achieve a contract outcome in respect of the sale of the GNB Battery
operations to Exide Inc.
(i) Included within Income/Loss from discontinued operations
(ii) Included within Loss from continuing operations
(iii) Of this amount $3.6m is included within loss from continuing operations
and $9.9m included within Income/Loss from discontinued operations.
US GAAP EQUITY ROLLFORWARD /(1)/
Opening Balance US GAAP equity 1,153.6 1,655.8 1,786.5
US GAAP Loss (121.6) (195.0) (41.8)
Proceeds from issue of shares 1.2 2.5 1.3
Dividends (77.6) (144.5)
Share buy back (165.4)
Movement in Aust GAAP FCTR (69.6) (73.0) 61.3
Net gain/(loss) on cashflow hedges in OCI (12.1) (1.6)
Movement in Loans outstanding under Employee Share Plan 4.3 1.3 2.6
Equity accounted loss of South Pacific Tyres (62.0) - -
Other (including FX on US GAAP adjustments) (16.9) 6.6 (9.6)
------------------------------
Closing balance US GAAP equity 876.9 1,153.6 1,655.8
------------------------------
/(1)/ Prior year comparatives have been adjusted for the inclusion of Loans
outstanding under the Employee Share Plan as a contra equity item for US GAAP
purposes.
131
PART III
ITEMS 17 & 18 : FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
40. RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(U.S. GAAP) (continued)
INFORMATION FOR UNITED STATES INVESTORS (continued)
CONSOLIDATED
$ IN MILLIONS 2002 2001 2000
------------------------------------------------------------------------------------------------------------------
GOODWILL
Australian GAAP goodwill - written down value 30 June 260.7 339.1 408.2
Add: Net Goodwill recognised for US GAAP only 38.3 75.2 105.2
Add: Adjustment for different amortization basis on Australian GAAP goodwill 85.4 80.4 69.9
------------------------------
US GAAP goodwill - written down value 30 June 384.4 494.7 583.3
------------------------------
US GAAP GOODWILL COMPRISES:
Gross Goodwill 516.7 666.2 793.0
Accumulated Amortization (132.3) (171.5) (209.7)
------------------------------
Written down value 384.4 494.7 583.3
------------------------------
BRAND NAMES
Australian GAAP Brand names - 30 June 142.5 217.7 219.7
(Deduct): US GAAP amortisation (26.1) (40.1) (39.5)
------------------------------
US GAAP Brand names - 30 June 116.4 177.6 180.2
------------------------------
PROPERTY, PLANT & EQUIPMENT
Property, plant & equipment at cost and valuation (net of accumulated depreciation) 332.5 669.9 658.2
(Deduct): Asset revaluation reserves applicable (20.2) (29.3) (43.4)
Add: Adjustment to add back depreciation charged on the revaluation increments
(cumulative) 12.6 12.4 12.1
------------------------------
Property, plant & equipment at cost (net of accumulated depreciation) 324.9 653.0 626.9
------------------------------
ANALYSIS OF LONG-LIVED ASSETS BY COUNTRY
.. Australia 72.5 385.7 490.7
.. USA 430.4 672.8 530.9
.. Malaysia 98.6 117.2 103.7
.. Thailand 80.2 89.1 89.8
.. Sri Lanka 61.0 71.4 62.8
.. Other Countries 85.2 116.8 135.6
------------------------------
827.9 1,453.0 1,413.5
------------------------------
EXECUTIVE SHARE OPTION DATA SUPPORTING NOTE 39 (d) AND NOTE 25
SFAS123 "Accounting for Stock Based Compensation" encourages the adoption of a
fair value based method of determining compensation costs. For US GAAP purposes,
the company has adopted the fair value provision of SFAS123.
The compensation fair value of all options which are outstanding has been
calculated at $0.7 million.
132
PART III
DIRECTORS' DECLARATION
--------------------------------------------------------------------------------
In the opinion of the directors of Ansell Limited:
(a) the financial statements and notes, set out on pages 66 to 132 are in
accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the financial position of the
Company and consolidated entity as at 30 June 2002 and of their
performance, as represented by the results of their operations and
their cash flows, for the year ended on that date; and
(ii) complying with Accounting Standards in Australia and the
Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to
pay its debts as and when they become due and payable.
Signed in accordance with a resolution of the directors:
/s/ Edward D Tweddell /s/ Harry Boon
--------------------- --------------
Edward D Tweddell Harry Boon
Director Director
Dated in Melbourne this 3rd day of September 2002
133
PART III
INDEPENDENT AUDIT REPORT
--------------------------------------------------------------------------------
The Board of Directors and Shareholders
Ansell Limited:
We have audited the accompanying consolidated statements of financial position
of Ansell Limited and its controlled entities (Ansell Limited) as of June 30,
2002, 2001 and 2000, and the related consolidated statements of financial
performance, cash flows, and changes in stockholders' equity for each of the
years in the three-year period ended June 30, 2002 as set out on pages 66
to 133. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in Australia and the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Ansell Limited as of
June 30, 2002 and 2001, and the results of its operations and its cash flows for
each of the years in the three-year period ended June 30, 2002, in conformity
with generally accepted accounting principles in Australia.
Accounting principles generally accepted in Australia vary in certain respects
from accounting principles generally accepted in the United States of America.
An explanation of the significant differences between the two sets of principles
as they relate to Ansell Limited is presented in Note 39 to the consolidated
financial statements. The application of accounting principles generally
accepted in the United States of America would have affected consolidated net
loss for each of the years in the three-year period ended June 30, 2002 and
shareholders' equity as of June 30, 2002, 2001 and 2000, to the extent
summarized in Note 40 to the consolidated financial statements.
/s/ KPMG
Dated in Melbourne this 3rd day of September 2002
134
PART III
SIGNATURE
--------------------------------------------------------------------------------
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this annual report to be signed on its behalf
by the undersigned, thereunto duly authorised.
Ansell Limited
Registrant
/s/ David M. Graham
David M. Graham
Chief Financial Officer
Dated: 23 December 2002
135
PART III
CERTIFICATIONS
--------------------------------------------------------------------------------
I Harry Boon certify that:
1. I have reviewed this annual report on Form 20-F of Ansell Limited;
2. Based on my knowledge, this annual report does not contain any untrue
statement of material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report.
Dated: 23 December 2002 /s/ Harry Boon
-------------------------------------
Name: Harry Boon
Title: Chief Executive Officer
136
PART III
CERTIFICATIONS
--------------------------------------------------------------------------------
I David M. Graham certify that:
1. I have reviewed this annual report on Form 20-F of Ansell Limited;
2. Based on my knowledge, this annual report does not contain any untrue
statement of material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report.
Dated: 23 December 2002 /s/ David M. Graham
-------------------------------------
Name: David M. Graham
Title: Chief Financial Officer
137
PART III
CERTIFICATIONS
--------------------------------------------------------------------------------
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF TITLE 18 UNITED STATES
CODE)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and
(b) of section 1350, chapter 63 of title 18, United States Code), the
undersigned officer of Ansell Limited, an Australian corporation (the
"Company"), hereby certifies, to such officer's knowledge, that:
The Annual Report of Form 20-F for the year ended June 30, 2002 (the "Report")
of the Company fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934 and information contained in the Report
fairly presents, in all material respects, the financial condition and results
of operations of the Company.
Dated: 23 December 2002 /s/ Harry Boon
------------------------------
Name: Harry Boon
Title: Chief Executive Officer
The foregoing certification is being furnished solely pursuant to section 906 of
the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter
63 of title 18, United States Code) and is not being filed as part of the Report
or as separate disclosure document.
138
PART III
CERTIFICATIONS
--------------------------------------------------------------------------------
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF TITLE 18 UNITED STATES
CODE)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and
(b) of section 1350, chapter 63 of title 18, United States Code), the
undersigned officer of Ansell Limited, an Australian corporation (the
"Company"), hereby certifies, to such officer's knowledge, that:
The Annual Report of Form 20-F for the year ended June 30, 2002 (the "Report")
of the Company fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934 and information contained in the Report
fairly presents, in all material respects, the financial condition and results
of operations of the Company.
Dated: 23 December 2002 /s/ David M. Graham
-------------------------------
Name: David M. Graham
Title: Chief Financial Officer
The foregoing certification is being furnished solely pursuant to section 906 of
the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter
63 of title 18, United States Code) and is not being filed as part of the Report
or as separate disclosure document.
139
PART III
SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002
--------------------------------------------------------------------------------
Statements filed in accordance with Rule 309 and Item 17.
DIRECTORS REPORT
The directors of South Pacific Tyres (a partnership between Pacific Dunlop Tyres
Pty. Ltd. and Goodyear Tyres Pty. Ltd.) present their report together with the
financial report of South Pacific Tyres ("the partnership") and the consolidated
financial report of the consolidated entity, being the partnership and its
controlled entities, for the year ended 30th June 2002 and the auditor's report
thereon.
(a) The names of the directors, appointed pursuant to the Partnership
Agreement dated 30th March 1987, at any time during or since the end of
the financial year are:
NAMES EXPERIENCE, SPECIAL RESPONSIBILITIES
Mr. Robert Bartlett Appointed as director December 14th 2001
Resigned April 30th 2002
Mr. Paul Devereux General Manager Business Development
B. Bus. 18 years service with the Company
Appointed as director December 14th 2001
Mr. Herbert J. Elliott Non Executive Director of Ansell Ltd.
MBE, MA. (Cantab.) Former President of Puma North America and
Chief Executive Officer of Puma Australia.
Appointed as director April 30th 2001
Mr. Phillip Gay Appointed as director 1996.
Resigned December 14th 2001.
Mr. Samir G. Gibara Chairman & Chief Executive Officer of The
Masters - International Bus & Finance - Goodyear Tire & Rubber Company.
Harvard 38 years service with the Company.
Appointed as director 1995
Mr. David Graham General Manager,
B. Bus., CA, FCPA. Finance & Treasury with Ansell Ltd.
20 years service with the company.
Appointed as director October 31st 2001.
Mr. Hugh D. Pace President Asia Region of The Goodyear Tire
Masters in International Management & Rubber Company.
27 years service with the Company.
Appointed as director December 1st 1998
Mr. John Rennie Appointed as director 1996.
Resigned December 14th 2001
Mr. Ernie J. Rodia Appointed as director 1999.
Resigned September 30th 2001.
Mr. Clark E. Sprang Senior Vice President for Business
Graduate Ohio State University Development & Integration of
The Goodyear Tire & Rubber Company.
36 years service with the Company.
Appointed as director October 1st 2001.
Mr. Robert W. Tieken Executive Vice President & Chief Financial
Graduate Illinois Wesleyan University Officer of The Goodyear Tire & Rubber Company
8 years service with the Company.
Appointed director 1995
Dr Edward Tweddell Executive Chairman of Ansell Ltd.
BSc., MBBS. (Hons), FRACGP, FAICD. 1 years service with the company.
25 years in the pharmaceutical and healthcare industries
Appointed director December 14th 2001
Mr. Ian Veal Appointed as director 1990
Resigned October 31st 2001
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SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002
--------------------------------------------------------------------------------
DIRECTORS REPORT (continued)
(b) The number of directors' meetings and number of meetings attended by
each director of the partnership during the financial year are:
DIRECTOR DIRECTORS MEETINGS
A B
Mr. R. Bartlett 1 1
Mr. P. Devereux 0 1
Mr. H. Elliott 0 0
Mr. P. Gay 2 2
Mr. S. Gibara 0 3
Mr. D. Graham 1 1
Mr. H. Pace 3 3
Mr. J. Rennie 1 2
Mr. E. Rodia 0 1
Mr. C. Sprang 1 2
Mr. R. Tieken 2 3
Dr. E. Tweddell 1 1
Mr. I. Veal 1 2
A = Number of meetings attended
B = Number of meetings held during the time the director held office
during the year.
(c) The principal activities of the consolidated entity during the period
were:
. Manufacture of tyres for vehicles
. Wholesaling and retailing of vehicle and aircraft tyres;
There were no significant changes in the nature of the principal
activities of the consolidated entity during the year.
(d) The net loss of the consolidated entity for the year after deducting
outside equity interests and after providing for income tax was
$130,027,170. The comparative figure for the previous year ended 30th
June 2001, was a net loss of $92,056,394. The contribution to profits by
each entity in the consolidated entity is set out in Note 28 to the
financial statements.
The directors have apportioned the loss to the partners in accordance
with the Partnership Agreement.
(e) For the year ended 30th June 2002, South Pacific Tyres paid nil (2001 :
$nil) to the partners by way of a distribution of profits.
(f) The directors' review of the operations of the consolidated entity
during the year, and the results of those operations is as follows:
With the initiatives, restructuring, plant consolidation and
modernisation plans announced over the past two years in effect, SPT is
now experiencing a return to more stable trading and market share
improvements.
The Footscray plant ceased production on schedule with product being
resourced from overseas suppliers. The Thomastown plant closure in July
2002 and the consolidation of passenger and light truck production at
Somerton (Australia) and Upper Hutt (New Zealand) are on schedule to
plan.
141
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SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002
--------------------------------------------------------------------------------
DIRECTORS REPORT (continued)
With the significant restructuring changes taking effect during this
financial year, SPT returned an operating loss before tax of
$143,606,153 compared with the previous year's operating loss of
$96,849,149.
All truck, farm, passenger, light truck and sport utility product ranges
have been revitalised to industry and market leading standards and
include the introduction of silica technology.
Significant new supply contracts for original equipment fitment have
been finalised with Ford, Toyota and Mitsubishi motor vehicle companies.
With the favourable operating cost structure resulting from plant
closures and the consolidation of the remaining manufacturing
facilities, South Pacific Tyres is on plan to return to sustained
trading profits in the July 2002 to June 2003 financial year.
(g) In the opinion of the directors, other than referred to in this report,
there were no significant changes in the state of affairs of the
consolidated entity that occurred during the year.
(h) There has not arisen in the interval between the end of the financial
year and the date of this report any item, transaction or event of a
material and unusual nature likely, in the opinion of the directors of
the partnership to affect significantly the operations of the
consolidated entity, the results of those operations, or the state of
affairs of the consolidated entity, in future financial years.
(i) The operations of the partnership are subject to various environmental
regulations under both Commonwealth and State legislation. The
partnership has an Environmental Specialist who monitors compliance with
environmental regulations. The directors are not aware of any breaches
of the legislation during the financial year which are material in
nature.
(j) Information about likely developments in the operations of the
consolidated entity and the expected results of those operations in
future financial years, has not been included in this report because
disclosure of the information would be likely to result in unreasonable
prejudice to the consolidated entity.
(k) No director of the partnership, since the end of the previous financial
year, has received or become entitled to receive a benefit (other than a
benefit included in the aggregate amount of remuneration received or due
and receivable by directors shown in the financial statements or the
fixed salary of a full time employee of the partnership or of a related
corporation) by reason of a contract made by the partnership or a
related corporation with the director or with a firm of which he is a
member, or with an entity in which the director has a financial
interest.
(l) This special purpose financial report has been drawn up in accordance
with Section 11 of the Partnership Agreement. As required by that
section, the financial report has been prepared as if the partnership
were a public company under the provisions of the Corporations Act 2001.
The financial report complies with the Corporations Act 2001, Urgent
Issues Group Consensus Views, other authoritative pronouncements of the
Australian Accounting Standards Board, and, except as stated below,
applicable Accounting Standards. The directors do not consider the
partnership to be a reporting entity and the matters required to be
disclosed by AASB 1017 - Related Party Disclosures, and AASB 1029 -
Accounting for Employee Entitlements ( disclosure requirements only ),
have not been included in the financial report, as the directors do not
consider those matters to be relevant.
(m) INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS
Since the end of the previous financial year, the partnership has not
indemnified or made a relevant agreement for indemnifying against a
liability any person who is or has been an officer or auditor of the
partnership.
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--------------------------------------------------------------------------------
DIRECTORS REPORT (continued)
During the financial year the partnership has paid premiums in respect
of directors' and officers' liability and legal expenses insurance
contracts for the year ended 30th June 2002. Such insurance contracts
insure against certain liability (subject to specific exclusions)
persons who are or have been directors or executive officers of the
partnership. The directors have not included details of the nature of
the liabilities covered or the amount of the premium paid in respect of
the directors' and officers' liability and legal expenses' insurance
contracts, as such disclosure is prohibited under the terms of the
contract.
Dated at Melbourne, this day of 2002
Signed in accordance with a resolution of the directors:
/s/
.............................................................
Director
/s/
.............................................................
Director
143
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SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002
--------------------------------------------------------------------------------
Statements filed in accordance with Rule 309 and Item 17.
STATEMENT OF FINANCIAL PERFORMANCE
For the year ended 30th June 2002
CONSOLIDATED PARTNERSHIP
NOTES 2002 2001 2000 2002 2001 2000
$ $ $ $ $ $
-----------------------------------------------------------------------------------------------------------------------------------
Revenue from sale of goods 3 769,790,943 774,668,166 871,392,335 489,234,884 483,486,879 501,900,862
Revenue from rendering
services 3 59,595,043 59,426,109 63,415,235 - - -
Other revenues from
ordinary activities 3 7,615,697 60,935,622 4,392,022 9,467,600 61,824,135 6,264,258
--------------------------------------------------------------------------------------------
Total revenue from ordinary
activities 837,001,683 895,029,897 939,199,592 498,702,484 545,311,014 508,165,120
Changes in inventories of
finished goods and work in
progress 7,833,830 (9,386,419) (15,897,755) 209,099 (5,306,693) (10,323,639)
Raw materials and
consumables used 124,780,654 145,679,698 176,882,512 108,531,527 129,514,359 157,188,607
Employee expenses 218,153,093 243,283,796 265,671,039 100,506,921 130,898,250 150,381,852
Depreciation and
amortisation expenses 4(b) 28,533,334 36,599,361 40,488,722 18,771,037 25,929,707 29,079,650
Borrowing costs 4(b) 13,660,548 16,340,214 15,848,050 12,811,968 15,381,376 15,018,729
Other expenses from
ordinary activities 587,646,377 559,362,396 467,752,875 354,668,727 326,295,632 186,272,310
Expenses from ordinary
activities 980,607,836 991,879,046 950,745,443 595,499,279 622,712,631 527,617,509
--------------------------------------------------------------------------------------------
Profit/(loss) from ordinary
activities before related
income tax expense (143,606,153) (96,849,149) (11,545,851) (96,796,795) (77,401,617) (19,452,389)
Income tax
expense/(benefit) relating
to ordinary activities 6(a) (13,579,453) (4,793,040) 4,055,314 - - -
--------------------------------------------------------------------------------------------
Profit/(loss) from ordinary
activities after related
income tax expense (130,026,700) (92,056,109) (15,601,165) (96,796,795) (77,401,617) (19,452,389)
Net profit/(loss)
attributable to outside
equity interests 21 (470) (285) (38,303) - - -
--------------------------------------------------------------------------------------------
Net profit/(loss) after
income tax attributable to
the partnership (130,027,170) (92,056,394) (15,639,468) (96,796,795) (77,401,617) (19,452,389)
============================================================================================
The statements of financial performance are to be read in conjunction with the
notes to the financial statements set out on pages 147 to 168
144
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SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002
--------------------------------------------------------------------------------
STATEMENT OF FINANCIAL POSITION
For the year ended 30th June 2002
NOTES CONSOLIDATED PARTNERSHIP
2002 2001 2002 2001
$ $ $ $
----------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash assets 7 37,100,672 19,031,203 29,798,257 9,507,000
Receivables 8 134,679,141 144,857,771 85,484,047 161,347,428
Inventories 9 160,741,965 167,246,533 130,215,751 129,392,966
Other 10 2,258,575 2,521,577 857,597 147,388
------------------------------------------------------------
TOTAL CURRENT ASSETS 334,780,353 333,657,084 246,355,652 300,394,782
------------------------------------------------------------
NON-CURRENT ASSETS
Receivables 8 30,384,952 29,091,771 97,765,964 56,622,712
Other financial assets 11 - - 21,496,245 21,496,245
Property, plant and equipment 12 202,827,093 232,748,495 164,649,685 188,444,967
Intangible assets 13 5,204,262 5,467,324 - -
Deferred tax assets 6(c) 22,441,327 8,897,006 - -
------------------------------------------------------------
TOTAL NON-CURRENT ASSETS 260,857,634 276,204,596 283,911,894 266,563,924
------------------------------------------------------------
TOTAL ASSETS 595,637,987 609,861,680 530,267,546 566,958,706
------------------------------------------------------------
CURRENT LIABILITIES
Payables 14 161,782,718 144,136,341 135,897,172 102,305,181
Interest bearing liabilities 15 142,395,212 150,693,198 60,285,370 137,252,397
Current tax liabilities 6(b) 58,887 167,096 - -
Provisions 16 95,859,342 50,702,253 78,054,372 36,397,096
------------------------------------------------------------
TOTAL CURRENT LIABILITIES 400,096,159 345,698,888 274,236,914 275,954,674
------------------------------------------------------------
NON-CURRENT LIABILITIES
Payables 14 28,491,815 26,807,256 28,062,524 26,413,382
Interest bearing liabilities 15 61,095,014 - 61,095,014 -
Provisions 16 7,978,203 8,561,903 4,025,842 4,946,604
------------------------------------------------------------
TOTAL NON-CURRENT LIABILITIES 97,565,032 35,369,159 93,183,380 31,359,986
------------------------------------------------------------
TOTAL LIABLITIES 497,661,191 381,068,047 367,420,294 307,314,660
------------------------------------------------------------
NET ASSETS 97,976,796 228,793,633 162,847,252 259,644,046
============================================================
PARTNERS' EQUITY
Contributed equity 18 317,675,138 317,675,137 317,675,138 317,675,137
Reserves 19 12,570,229 9,220,023 11,409,810 11,409,810
Retained profits/(accumulated losses) 20 (232,268,571) (98,587,215) (166,237,696) (69,440,901)
------------------------------------------------------------
TOTAL PARTNERS' EQUITY 97,976,796 228,307,945 162,847,252 259,644,046
Outside equity interest 21 - 485,688 - -
------------------------------------------------------------
TOTAL PARTNERS' EQUITY 97,976,796 228,793,633 162,847,252 259,644,046
============================================================
The statements of financial position are to be read in conjunction with the
notes to the financial statements set out on pages 147 to 168
145
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SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002
--------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
For the year ended 30th June 2002
CONSOLIDATED PARTNERSHIP
2002 2001 2002 2001
NOTES $ $ $ $
INFLOWS INFLOWS INFLOWS INFLOWS
(OUTFLOWS) (OUTFLOWS) (OUTFLOWS) (OUTFLOWS)
--------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts in the course of operations 856,792,111 797,250,016 470,996,064 453,977,589
Cash payments in the course of operations (869,810,717) (810,226,386) (419,944,120) (469,572,050)
Interest received 3,689,606 1,442,101 6,871,624 5,473,572
Borrowing costs paid (14,463,889) (19,316,863) (13,615,309) (18,358,025)
Income taxes (paid)/refunded 6(b) (112,184) 1,960,747 - -
-------------------------------------------------------
Net cash provided by/(used in) operating
activities 30(c) (23,905,073) (28,890,385) 44,308,259 (28,478,914)
-------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on disposal of controlled
entities 1,983,805 - - -
Proceeds on disposal of property, plant
and equipment 2,919,839 34,493,521 2,595,976 31,350,563
Payments for businesses, (net of cash
acquired) 30(b) (1,246,831) (85,200) - -
Payments for property, plant and
equipment (14,750,236) (15,637,266) (10,740,966) (11,591,038)
-------------------------------------------------------
Net cash provided by/(used in) investing
activities (11,093,423) 18,771,055 (8,144,990) 19,759,525
-------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from partner contributions - 117,675,137 - 117,675,137
Proceeds from borrowings 136,589,773 - 61,095,014 -
Repayment of borrowings (79,935,051) (103,363,095) (74,470,749) (99,837,337)
Dividends paid (2,146) (30,990) - -
-------------------------------------------------------
Net cash provided by/(used) in financing
activities 56,652,576 14,281,052 (13,375,735) 17,837,800
-------------------------------------------------------
Net increase/(decrease) in cash held 21,654,080 4,161,722 22,787,534 9,118,411
Cash at the beginning of the financial year 14,170,702 9,831,097 7,010,723 (2,107,688)
Effects of exchange rate fluctuations on the
balances of cash held in foreign currencies 273,082 177,883 - -
-------------------------------------------------------
Cash at the end of the financial year 30(a) 36,097,864 14,170,702 29,798,257 7,010,723
-------------------------------------------------------
The statements of cash flows are to be read in conjunction with the notes to the
financial statements set out on pages 147 to 168
146
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--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The significant policies which have been adopted in the preparation of this
financial report are:
(a) BASIS OF PREPARATION
In accordance with Section 11 of the Partnership Agreement, South Pacific Tyres
("the partnership") is required to prepare a financial report as if it were a
public company under the provisions of the Corporations Act 2001.
In the opinion of the directors, the partnership is not a reporting entity. The
financial report of the partnership has been drawn up as a special purpose
financial report for distribution to the members and for the purpose of
fulfilling the requirements of the Corporations Act 2001.
The financial reports have been prepared in accordance with the Corporations Act
2001, the recognition and measurements aspects of all applicable accounting
standards and other mandatory professional reporting requirements (Urgent Issues
Group Consensus Views) that have a material effect.
The financial report does not include disclosure requirements of the following
pronouncements having a material effect:
(i) AASB 1005 Financial Reporting by Segments
(ii) AASB 1017 Related Party Disclosures
(iii) AASB 1028 Accounting for Employee Entitlements (disclosure
requirements only)
It has been prepared on the basis of historical costs and except where stated,
does not take into account changing money values or fair values of non-current
assets.
These accounting policies have been consistently applied by each entity in the
consolidated entity and, except where there is a change in accounting policy,
are consistent with those of the previous year.
(b) PRINCIPLES OF CONSOLIDATION
CONTROLLED ENTITIES
The financial statements of controlled entities are included from the date
control commences until the date control ceases.
Outside interests in the equity and results of the entities that are controlled
by the partnership are shown as a separate item in the consolidated financial
statements.
TRANSACTIONS ELIMINATED ON CONSOLIDATION
Unrealised gains and losses and inter-entity balances resulting from
transactions with or between controlled entities are eliminated in full on
consolidation.
(c) REVENUE RECOGNITION - NOTE 3
Revenues are recognised at fair value of the consideration received net of the
amount of goods and services tax (GST) payable to the taxation authority.
SALE OF GOODS
Revenue from the sale of goods is recognised (net of returns, discounts and
allowances) when control of the goods passes to the customer.
RENDERING OF SERVICES
Revenue from rendering services is recognised when the service has been
completed.
INTEREST REVENUE
Interest revenue is recognised as it accrues, taking into account the effective
yield on the financial asset.
OTHER REVENUE
Supply agreement revenue relating to tyre purchasing commitments is recognised
at the date of the agreement with the supplier.
147
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NOTES TO THE FINANCIAL STATEMENTS (continued)
SALE OF NON-CURRENT ASSETS
The gross proceeds of non-current asset sales are included as revenue at the
date control of the asset passes to the buyer, usually when an unconditional
contract of sale is signed.
The gain or loss on disposal is calculated as the difference between the
carrying amount of the asset at the time of disposal and the net proceeds on
disposal. Any related balance in the asset revaluation reserve is transferred to
the capital profits reserve on disposal.
(d) GOODS AND SERVICES TAX
Revenues, expenses and assets are recognised net of the amount of goods and
services tax (GST), except where the amount of GST incurred is not recoverable
from the Australian Tax Office (ATO). In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item
of the expense.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the ATO is included as a
current asset or current liability in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST
components of cash flows arising from investing and financing activities which
are recoverable from, or payable to, the ATO are classified as operating cash
flows.
(e) FOREIGN CURRENCY
TRANSACTIONS
Foreign currency transactions are translated to Australian currency at the rates
of exchange ruling at the dates of the transactions. Amounts receivable and
payable in foreign currencies at balance date are translated at the rates of
exchange ruling on that date.
Exchange differences relating to amounts payable and receivable in foreign
currencies are brought to account as exchange gains or losses in the statement
of financial performance in the financial year in which the exchange rates
change.
TRANSLATION OF CONTROLLED FOREIGN ENTITIES
The assets and liabilities of foreign operations that are self-sustaining are
translated at the rates of exchange ruling at balance date. Equity items are
translated at historical rates. The statements of financial performance are
translated at a weighted average rate for the year. Exchange differences arising
on translation are taken directly to the foreign currency translation reserve
until the disposal, or partial disposal, of the operations.
The balance of the foreign currency translation reserve relating to a foreign
operation that is disposed of, or partially disposed of, is transferred to
retained earnings in the year of disposal.
(f) DERIVATIVES
The consolidated entity is exposed to changes in interest rates, foreign
exchange rates and commodity prices from its activities. The consolidated entity
uses the following derivative financial instruments to hedge these risks:
interest rate swaps and forward foreign exchange contracts. Derivative financial
instruments are not held for speculative purposes.
Where transactions are designated as a hedge of the purchase or sale of goods or
services, purchase of qualifying assets, or an interest transaction, gains and
losses on the hedge arising up to the date of the transaction, together with any
costs or gains arising at the time of entering into the hedge, are deferred and
included in the measurement of the transaction when it has occurred as
designated. Any gains or losses on the hedge transaction after that date are
included in the statement of financial performance.
The net amounts receivable or payable under open swaps and forward rate
agreements and the associated deferred gains or losses are not recorded in the
statement of financial position until the hedge transaction occurs. The net
receivables or payables are then revalued using the foreign currency and
interest rates current at reporting date. Refer to Note 22.
148
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--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
(g) BORROWING COSTS
Borrowing costs include interest, amortisation of discounts or premiums relating
to borrowings and amortisation of ancillary costs incurred in connection with
arrangement of borrowings. Borrowing costs are expensed as incurred unless they
relate to qualifying assets. Qualifying assets are assets which take more than
12 months to get ready for their intended use or sale. In these circumstances,
borrowing costs are capitalised to the cost of the asset. Where funds are
borrowed specifically for the acquisition, construction or production of a
qualifying asset, the amount of borrowing costs capitalised is those incurred in
relation to that borrowing, net of any interest earned on those borrowings.
Where funds are borrowed generally, borrowing costs are capitalised using a
weighted average capitalisation rate.
(h) TAXATION - NOTE 6
PARTNERSHIP
Income tax is not provided for in the financial statements of South Pacific
Tyres, as the partnership does not pay tax. The partners are taxable in their
individual capacities on their share of the net partnership income.
CONTROLLED ENTITIES
The controlled entities adopt the income statement liability method of tax
effect accounting. Income tax expense is calculated on operating profit adjusted
for permanent differences between taxable and accounting income. The tax effect
of timing differences, which arise from the items being brought to account in
different periods for income tax and accounting purposes, is carried forward in
the statement of financial position as a future income tax benefit or a
provision for deferred income tax.
Future income tax benefits are not brought to account unless realisation of the
asset is assured beyond reasonable doubt. Future income tax benefits relating to
tax losses are only brought to account when their realisation is virtually
certain. The tax effects of capital losses are not recorded unless realisation
is virtually certain.
(i) ACCOUNTING FOR ACQUISITIONS
Acquired businesses are accounted for on the basis of the cost method. Fair
values are assigned at the date of acquisition to all the identifiable
underlying assets acquired and to the liabilities assumed. Specific assessment
is undertaken at the date of acquisition of any additional costs to be incurred.
Goodwill, representing the excess of the purchase consideration plus incidental
costs over the fair value of the identifiable net assets acquired on the
acquisition of the business, is amortised to the statement of financial
performance using the following criteria:
GOODWILL ACQUIRED WRITE-OFF PERIOD
Up to $1.25m Written off over 5 years in equal instalments,
but at a rate of not less than $250,000 pa
$1.25m to $10m Written off over 20 years on a straight line
basis, but at a rate of not less than $250,000 pa
The unamortised balance of goodwill is reviewed at least annually. Where the
balance exceeds the value of expected future benefits, the difference is charged
to the statement of financial performance.
RESEARCH AND DEVELOPMENT COSTS
Research and development expenditure is expensed as incurred.
SUBSEQUENT ADDITIONAL COSTS
Costs incurred on assets subsequent to initial acquisition are capitalised when
it is probable that future economic benefits in excess of the originally
assessed performance of the asset will flow to the consolidated entity in future
years. Costs that do not meet the criteria for capitalisation are expensed as
incurred.
(j) REVISIONS OF ACCOUNTING ESTIMATES
Revisions of accounting estimates are recognised prospectively in current and
future periods only.
149
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--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
(k) RECEIVABLES - NOTE 8
The collectibility of debts is assessed at balance date and specific provision
is made for any doubtful accounts.
TRADE DEBTORS
Trade debtors to be settled within agreed terms are carried at amounts due.
(l) INVENTORIES - NOTE 9
Inventories are carried at the lower of cost and net realisable value. Costs
include direct materials, direct labour, other direct variable costs and
allocated production overheads necessary to bring inventories to their present
location and condition, based on normal operating capacity of the production
facilities.
MANUFACTURING ACTIVITIES
The cost of manufacturing inventories and work-in-progress are assigned on a
first-in, first-out basis. Costs arising from exceptional wastage are expensed
as incurred.
NET REALISABLE VALUE
Net realisable value is determined on the basis of each inventory line's normal
selling pattern. Expenses of marketing, selling and distribution to customers
are estimated and are deducted to establish net realisable value.
(m) INVESTMENTS - NOTE 11
Investments in controlled entities are carried in the financial statements of
the partnership at the lower of cost and recoverable amount.
(n) LEASED ASSETS
OPERATING LEASES
Payments made under operating leases are expensed on a straight line basis over
the term of the lease, except where an alternative basis is more representative
of the pattern of benefits to be derived from the leased property.
Also refer to Note 23.
(o) RECOVERABLE AMOUNT OF NON-CURRENT ASSETS VALUED ON COST BASIS
The carrying amount of non-current assets valued on the cost basis are reviewed
to determine whether they are in excess of their recoverable amount at balance
date. If the carrying amount of a non-current asset exceeds its recoverable
amount, the asset is written down to the lower amount. The write-down is
expensed in the reporting period in which it occurs.
Where a group of assets working together supports the generation of cash
inflows, recoverable amount is assessed in relation to that group of assets. In
assessing recoverable amount of non-current assets the relevant cash flows have
not been discounted to their present value, except where specifically stated.
COST VERSUS FAIR VALUE
Except where specifically stated, non-current assets are recorded at the lower
of cost and recoverable amount.
(p) DEPRECIATION AND AMORTISATION
COMPLEX ASSETS
The components of major assets that have materially different useful lives, are
effectively accounted for as separate assets, and are separately depreciated.
USEFUL LIVES
All non-current assets have limited useful lives and are depreciated/amortised
using the straight line method over their estimated useful lives.
Assets are depreciated or amortised from the date of acquisition or, in respect
of internally constructed assets, from the time an asset is completed and held
ready for use.
Depreciation and amortisation rates and methods are reviewed annually for
appropriateness. When changes are made, adjustments are reflected prospectively
in current and future periods only. Depreciation and amortisation are expensed,
except to the extent that they are included in the carrying amount of another
asset as an allocation of production overheads.
150
PART III
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--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
The depreciation/amortisation rates used for each class of asset are as follows:
2002 2001
.. Freehold buildings 2.50% 2.50%
.. Leasehold buildings and improvements 2.5%-40% 2.5%-40%
.. Plant and equipment 6.7%-33.33% 6.7%-33.33%
.. Leased plant and equipment 15%-20% 15%-20%
(q) PAYABLES - NOTE 14
Liabilities are recognised for the amounts to be paid in the future for goods or
services received. Trade accounts payable are settled within agreed terms.
(r) INTEREST BEARING LIABILITIES - NOTE 15
Bank loans are recognised at their principal amount, subject to set-off
arrangements. Interest expense is accrued at the contracted rate and included in
"Other creditors and accruals."
Debentures, bills of exchange and notes payable are recognised when issued at
the net proceeds received, with the premium or discount on issue amortised over
the period of maturity. Interest expense is recognised on an effective yield
basis.
(s) EMPLOYEE ENTITLEMENTS
WAGES, SALARIES, ANNUAL LEAVE AND SICK LEAVE
Liabilities for employee entitlements to wages, salaries, annual leave and sick
leave represent present obligations resulting from employees' services provided
up to the reporting date, calculated at undiscounted amounts based on current
wages and salary rates including related on-costs. Related on-costs are recorded
in trade creditors.
LONG SERVICE LEAVE
The provision for employee entitlements to long service leave represents the
present value of the estimated future cash outflows to be made resulting from
employees' services provided to reporting date.
The provision is calculated using the estimated future increases in wage and
salary rates including related on-costs and expected settlement dates based on
turnover history and is discounted using the rates attaching to national
government securities at balance date which most closely match the terms of
maturity of the related liabilities.
SUPERANNUATION PLAN
The partnership and other controlled entities contribute to various defined
benefit and accumulation superannuation plans. Contributions are charged against
income as they are made, as set out in Note 26.
(t) PROVISIONS
A provision is recognised when a legal or constructive obligation exists as a
result of a past event and it is probable that an outflow of economic benefits
will be required to settle the obligation.
If the effect is material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of
the time value of money and the risks specific to the liability, except where
noted below.
RESTRUCTURING
Provisions for restructuring are only recognised when a detailed plan has been
approved and the restructuring has either commenced or been publicly announced.
Costs related to ongoing activities are not provided for.
SURPLUS LEASED PREMISES
Provision is made for rentals payable on surplus leased premises when it is
determined that no substantive future benefit will be obtained by the
consolidated entity from its occupancy. This arises where premises are currently
leased under non-cancellable operating leases and either the premises are not
occupied, are being sub-leased for lower rentals than the consolidated entity
pays or there will be no substantive benefits beyond a known future date.
Any necessary provision is calculated on the basis of discounted net future cash
flows, using the interest rate implicit in the lease or an estimate thereof.
151
PART III
SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002
--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
2. ACCOUNTING POLICIES
There are no changes in accounting policy to disclose for the year ended
30 June, 2002.
3. REVENUE FROM ORDINARY ACTIVITIES
CONSOLIDATED PARTNERSHIP
2002 2001 2000 2002 2001 2000
$ $ $ $ $ $
-----------------------------------------------------------------------------------------------------------------
Sale of goods revenue from
operating activities 769,790,943 774,668,166 871,392,335 489,234,884 483,486,879 501,900,862
Rendering of services revenue from
operating activities 59,595,043 59,426,109 63,415,235 - - -
OTHER REVENUE FROM OPERATING
ACTIVITIES
DIVIDENDS:
Associated entities - - - - - -
Other parties - - - - - -
INTEREST:
Controlled entities - - - 3,598,712 4,141,000 2,943,654
Associated entities 1,828,580 969,471 4,433 1,828,580 969,471 4,433
Other parties 1,861,026 472,630 93,206 1,444,332 363,101 92,025
REVENUES FROM OUTSIDE OPERATING
ACTIVITIES
Gross proceeds from sale of
non-current assets 3,926,091 34,493,521 2,450,608 2,595,976 31,350,563 1,380,371
Supply agreement consideration - 25,000,000 - - 25,000,000 -
Insurance proceeds received - - 1,843,775 1,843,775
----------------------------------------------------------------------------
Total other revenue 7,615,697 60,935,622 4,392,022 9,467,600 61,824,135 6,264,258
----------------------------------------------------------------------------
Total revenue from ordinary
activities 837,001,683 895,029,897 939,199,592 498,702,484 545,311,014 508,165,120
============================================================================
152
PART III
SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002
--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
4. PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE
CONSOLIDATED PARTNERSHIP
2002 2001 2000 2002 2001 2000
$ $ $ $ $ $
-----------------------------------------------------------------------------------------------------------------
(a) INDIVIDUALLY SIGNIFICANT
EXPENSES/(REVENUES) INCLUDED IN
PROFIT FROM ORDINARY ACTIVITIES
BEFORE INCOME TAX EXPENSE
Closure of Footscray & Thomastown
tyre factories 94,900,000 - 94,900,000 -
Closure of BA Hamill 2,900,000 - - - -
Retail store restructure programme 1,924,813 - - -
Closure of radial truck tyre
factory (3,516,017) 51,325,856 (3,516,017) 51,325,856
Supply agreement consideration - (25,000,000) - (25,000,000)
Overhead reduction programme (4,600,437) 6,000,000 (4,600,437) 5,267,121
GST Implementation costs - - 906,342 - - 906,342
----------------------------------------------------------------------------
91,608,359 32,325,856 906,342 86,783,546 31,592,977 906,342
----------------------------------------------------------------------------
(b) PROFIT FROM ORDINARY ACTIVITIES
BEFORE INCOME TAX EXPENSE HAS BEEN
ARRIVED AT AFTER
CHARGING/(CREDITING) THE FOLLOWING
ITEMS
Cost of goods sold 644,149,590 657,564,347 679,736,099 483,937,136 506,770,316 489,779,294
DEPRECIATION OF:
Buildings 104,319 231,770 342,315 - 104,529 209,059
Plant and Equipment 26,628,428 33,609,742 36,248,232 17,716,624 24,194,389 26,669,353
----------------------------------------------------------------------------
26,732,747 33,841,512 36,590,547 17,716,624 24,298,918 26,878,412
----------------------------------------------------------------------------
AMORTISATION OF:
Leasehold land and buildings 1,315,525 1,266,474 1,289,452 1,054,413 1,055,695 1,051,050
Leased plant and equipment - - 135,687 - - -
Goodwill 485,062 916,281 1,322,848 - - -
Capitalised interest - 575,094 1,150,188 - 575,094 1,150,188
----------------------------------------------------------------------------
1,800,587 2,757,849 3,898,175 1,054,413 1,630,789 2,201,238
----------------------------------------------------------------------------
Total depreciation and amortisation 28,533,334 36,599,361 40,488,722 18,771,037 25,929,707 29,079,650
----------------------------------------------------------------------------
BORROWING COSTS
Associated Entities 3,164,641 1,183,238 68,017 3,164,641 1,183,238 68,017
Bank loans and overdrafts 10,495,907 15,156,976 15,764,117 9,647,327 14,198,138 14,950,712
Finance charges on capitalised
leases - - 15,916 - - -
----------------------------------------------------------------------------
Total borrowing costs 13,660,548 16,340,214 15,848,050 12,811,968 15,381,376 15,018,729
----------------------------------------------------------------------------
RESEARCH AND DEVELOPMENT
EXPENDITURE
Capitalised and written off 1,938,620 2,771,437 2,400,000 1,938,620 2,771,437 2,400,000
Net bad and doubtful debts expense
including movements in provision
for doubtful debts 1,487,774 3,577,421 2,250,489 (7,248) 162,752 90,000
NET EXPENSE FOR MOVEMENTS IN
PROVISION FOR:
Employee entitlements 83,347,032 70,069,314 27,385,170 67,617,203 57,546,824 15,908,352
Rationalisation and
restructuring costs 31,475,000 7,400,000 - 30,700,000 7,400,000 -
Rebates, allowances and
warranty claims 19,979,619 16,554,727 9,709,528 - - -
NET FOREIGN EXCHANGE (GAIN)/LOSS:
Borrowings (13,907) (82,387) (60,365) (18,407) (82,387) (60,365)
NET (GAIN)/LOSS ON DISPOSAL OF
NON-CURRENT ASSETS:
Property plant & equipment 13,327,002 4,151,257 (380,928) 13,260,833 4,583,063 (208,658)
Investments 625,815 - - - - -
OPERATING LEASE RENTAL EXPENSE
Minimum lease payments 31,589,141 30,721,754 31,010,933 2,799,403 3,455,549 3,965,696
153
PART III
SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002
--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
5. AUDITORS' REMUNERATION
CONSOLIDATED PARTNERSHIP
2002 2001 2000 2002 2001 2000
$ $ $ $ $ $
------------------------------------------------------------------------------------------------------------------
AUDIT SERVICES
Auditors of the company - KPMG 388,622 405,013 413,599 118,405 121,400 125,869
FOR OTHER SERVICES
Auditors of the company - KPMG 2,550 9,988 16,249 500 8,000 -
6. TAXATION
CONSOLIDATED
2002 2001 2000
$ $ $
-----------------------------------------------------------------------------------------------------------------
(a) INCOME TAX EXPENSE
Prima facie income tax expense/(benefit) calculated at 30% (2001 : 34%,
2000: 36%) on the profit/(loss) from ordinary activities (43,081,846) (32,928,711) (4,156,506)
INCREASE IN INCOME TAX EXPENSE DUE TO:
Depreciation on buildings 61,316 67,305 77,102
Amortisation of goodwill 145,519 311,536 476,225
Sundry items 415,404 348,130 363,891
DECREASE IN INCOME TAX EXPENSE DUE TO:
Tax exempt dividends from foreign companies - (81,026) -
Effects of lower/higher rates of tax on overseas income 157 168 28,087
Tax at standard rate on partnership profits attributed to partners (29,039,039) (26,316,550) (7,002,860)
Sundry items - 17,000 -
Income tax expense/(benefit) on operating profit/(loss) before
individually significant income tax items (13,420,725) (5,821,332) 3,735,485
INDIVIDUALLY SIGNIFICANT INCOME TAX ITEMS:
Restatement of deferred tax balances due to change in company tax rate - 1,020,693 392,281
-------------------------------------
(13,420,725) (4,800,639) 4,127,766
Add: Income tax under/(over) provided in prior year (158,728) 7,599 (72,452)
-------------------------------------
Income tax expense/(benefit) attributable to operating profit (13,579,453) (4,793,040) 4,055,314
-------------------------------------
INCOME TAX EXPENSE/(BENEFIT) ATTRIBUTABLE TO OPERATING PROFIT IS MADE UP
OF:
Current income tax provision (11,560,219) (4,673,630) 1,980,817
Under/(over) provision in prior year (158,728) 7,599 (72,452)
Changes in tax rates - 1,020,693 392,281
Future income tax benefit (1,860,506) (1,147,702) 1,754,668
-------------------------------------
(13,579,453) (4,793,040) 4,055,314
-------------------------------------
(b) CURRENT TAX LIABILITIES
PROVISION FOR CURRENT INCOME TAX MOVEMENTS DURING THE YEAR:
Balance at the beginning of year 167,096 336,975 3,840,269
Other debtor tax receivable reclassified - (3,059,756) 3,059,756
Income tax (paid)/received (112,184) 1,960,747 (8,428,895)
Under provision in prior year (72,516) 659,116 21,027
Current year's income tax expense on operating profit (11,560,219) (4,673,630) 1,844,818
Disposal of controlled entity 78,048 - -
Tax loss transferred to FITB 11,558,662 4,943,644 -
-------------------------------------
58,887 167,096 336,975
=====================================
(c) DEFERRED ASSETS
FUTURE INCOME TAX BENEFIT
Future income tax benefit comprises the estimated future benefit at the
applicable rate of 30% (2001 : 34%) on the following items:
Accumulated non-allowable provisions 6,499,991 4,534,967 3,173,605
Accumulated tax losses 15,941,336 4,362,039 -
-------------------------------------
22,441,327 8,897,006 3,173,605
=====================================
154
PART III
SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002
--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
7. CASH ASSETS
CONSOLIDATED PARTNERSHIP
2002 2001 2002 2001
$ $ $ $
----------------------------------------------------------------------------------------------------------------
Cash 8,400,672 9,531,203 1,098,257 7,000
Bank short term deposits, maturing daily and paying
interest at a weighted average interest rate of 4.7%
(2001 : 5.3% ) 28,700,000 9,500,000 28,700,000 9,500,000
----------------------------------------------------
37,100,672 19,031,203 29,798,257 9,507,000
====================================================
8. RECEIVABLES
CURRENT
Gross debtors 138,762,403 144,342,429 24,849,049 32,347,783
Less : Securitisation - - 11,365,764 -
----------------------------------------------------
Trade debtors 138,762,403 144,342,429 13,483,285 32,347,783
Less : Provision for doubtful trade debtors 3,050,317 2,978,136 - 7,248
Less : Provision for rebates, allowances and warranty
claims 6,978,516 6,236,155 - -
----------------------------------------------------
128,733,570 135,128,138 13,483,285 32,340,535
-
Amounts owing by controlled entities - - 68,602,978 121,569,174
Other debtors 5,945,571 9,729,633 3,397,784 7,437,719
----------------------------------------------------
134,679,141 144,857,771 85,484,047 161,347,428
NON-CURRENT
Other receivables from controlled entities and owners 30,384,952 29,091,771 97,765,964 56,622,712
----------------------------------------------------
165,064,093 173,949,542 183,250,011 217,970,140
====================================================
Other receivable amounts generally arise from transactions outside the usual
operating activity of the consolidated entity.
9. INVENTORIES
CURRENT
Raw materials and stores at cost 10,302,933 8,586,621 8,568,591 7,171,153
Less : Provision for stock obsolescence 490,527 687,974 490,527 687,974
----------------------------------------------------
Raw materials and stores 9,812,406 7,898,647 8,078,064 6,483,179
----------------------------------------------------
Work in progress at cost 4,950,537 10,049,660 4,934,215 10,036,443
Less : Provision for stock obsolescence 70,301 - 70,301 -
----------------------------------------------------
Work in progress 4,880,236 10,049,660 4,863,914 10,036,443
----------------------------------------------------
Finished goods at cost 142,658,001 146,653,991 113,780,984 110,174,879
Less : Provision for stock obsolescence 1,816,842 3,148,426 1,642,676 3,000,000
----------------------------------------------------
Finished goods 140,841,159 143,505,565 112,138,308 107,174,879
----------------------------------------------------
Other stocks at cost 6,390,959 6,482,468 6,280,260 6,385,272
Less : Provision for stock obsolescence 1,182,795 689,807 1,144,795 686,807
----------------------------------------------------
Other stocks 5,208,164 5,792,661 5,135,465 5,698,465
----------------------------------------------------
160,741,965 167,246,533 130,215,751 129,392,966
====================================================
10. OTHER CURRENT ASSETS
Prepayments 2,258,575 2,521,577 857,597 147,388
====================================================
11. OTHER FINANCIAL ASSETS
NON-CURRENT
INVESTMENTS IN CONTROLLED ENTITIES
Unlisted shares at cost - - 21,496,245 21,496,245
----------------------------------------------------
- - 21,496,245 21,496,245
====================================================
155
PART III
SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002
--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
12. PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED PARTNERSHIP
2002 2001 2002 2001
$ $ $ $
-----------------------------------------------------------------------------------------------------------------
FREEHOLD LAND
At cost 3,350,000 3,350,000 609,000 609,000
-----------------------------------------------------
3,350,000 3,350,000 609,000 609,000
-----------------------------------------------------
FREEHOLD BUILDINGS
At cost 11,841,455 12,644,461 8,362,347 8,362,347
Accumulated depreciation (1,008,840) (1,105,417) (627,168) (627,168)
-----------------------------------------------------
10,832,615 11,539,044 7,735,179 7,735,179
-----------------------------------------------------
LEASEHOLD LAND AND BUILDINGS
At cost 57,096,991 57,359,594 54,544,116 54,525,141
Accumulated depreciation (6,667,761) (5,634,349) (4,720,005) (3,665,593)
-----------------------------------------------------
50,429,230 51,725,245 49,824,111 50,859,548
-----------------------------------------------------
PLANT AND EQUIPMENT
At cost 369,419,397 400,274,271 260,033,784 286,379,746
Accumulated depreciation (242,149,279) (248,977,499) (163,111,821) (170,595,183)
-----------------------------------------------------
127,270,118 151,296,772 96,921,963 115,784,563
-----------------------------------------------------
Buildings and plant under construction
At cost 10,945,130 14,837,434 9,559,432 13,456,677
-----------------------------------------------------
Total property, plant and equipment net book value 202,827,093 232,748,495 164,649,685 188,444,967
=====================================================
RECONCILIATIONS
Reconciliations of the carrying amounts for each class
of property, plant and equipment are set out below:
FREEHOLD LAND
Carrying amount at the beginning of year 3,350,000 4,580,000 609,000 609,000
Additions - - - -
Disposals - (1,230,000) - -
----------------------------------------------------
Carrying amount at the end of year 3,350,000 3,350,000 609,000 609,000
----------------------------------------------------
BUILDINGS
Carrying amount at the beginning of year 11,539,044 12,814,218 7,735,179 7,839,708
Currency conversion (101,481) (125,248) - -
Additions 11,706 25,621 - -
Transfer from capital works in progress 30,818 28,895 - -
Transfer from related companies/divisions - (341) - -
Disposal of businesses / subsidiary (net) (543,153) - - -
Disposals - (972,331) - -
Depreciation (104,319) (231,770) - (104,529)
----------------------------------------------------
Carrying amount at the end of year 10,832,615 11,539,044 7,735,179 7,735,179
----------------------------------------------------
LEASEHOLD LAND AND BUILDINGS
Carrying amount at the beginning of year 51,725,245 52,716,895 50,859,548 51,758,844
Additions - - - -
Transfer from capital works in progress 39,515 302,772 18,976 156,399
Disposals (20,005) (27,948) - -
Depreciation (1,315,525) (1,266,474) (1,054,413) (1,055,695)
----------------------------------------------------
Carrying amount at the end of year 50,429,230 51,725,245 49,824,111 50,859,548
----------------------------------------------------
PLANT AND EQUIPMENT
Carrying amount at the beginning of year 151,296,772 203,667,295 115,784,563 163,555,493
Currency conversion (31,013) (42,312) - -
Acquired businesses/subsidiaries - - - -
Additions 188,971 76,744 - -
Transfer from leased to fixed assets - - - -
Transfer from capital works in progress 16,242,450 18,193,833 12,032,131 12,962,920
Transfer from related companies/divisions - 547 91,590 (30,741)
Disposals (13,639,725) (36,414,499) (13,269,697) (35,933,626)
Disposal of businesses / subsidiary (net) (158,909) - - -
Amortisation of capitalised interest - (575,094) - (575,094)
Depreciation (26,628,428) (33,609,742) (17,716,624) (24,194,389)
----------------------------------------------------
Carrying amount at the end of year 127,270,118 151,296,772 96,921,963 115,784,563
----------------------------------------------------
156
PART III
SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002
--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
12. PROPERTY, PLANT AND EQUIPMENT (continued)
CONSOLIDATED PARTNERSHIP
2002 2001 2002 2001
$ $ $ $
----------------------------------------------------------------------------------------------------------------
CAPITAL WORKS IN PROGRESS
Carrying amount at the beginning of year 14,837,434 17,803,033 13,456,677 14,984,959
Additions 15,007,591 15,559,901 10,740,966 11,591,038
Transfer to property, plant and equipment (16,312,783) (18,525,500) (12,051,099) (13,119,320)
Other disposals (2,587,112) - (2,587,112) -
----------------------------------------------------
Carrying amount at the end of year 10,945,130 14,837,434 9,559,432 13,456,677
----------------------------------------------------
13. INTANGIBLES
Goodwill - at cost 7,768,104 7,546,103 - -
Accumulated amortisation (2,563,842) (2,078,779) - -
----------------------------------------------------
5,204,262 5,467,324 - -
======================================================
14. PAYABLES
CURRENT
Trade creditors 160,979,937 144,000,065 135,888,649 102,296,485
Other creditors 802,781 136,276 8,523 8,696
----------------------------------------------------
161,782,718 144,136,341 135,897,172 102,305,181
NON-CURRENT
Trade creditors 871,199 936,640 441,908 542,766
Other creditors 27,620,616 25,870,616 27,620,616 25,870,616
----------------------------------------------------
28,491,815 26,807,256 28,062,524 26,413,382
----------------------------------------------------
190,274,533 170,943,597 163,959,696 128,718,563
======================================================
15. INTEREST BEARING LIABILITIES
CURRENT
Bank overdrafts - unsecured 1,002,808 4,860,501 - 2,496,277
Bank loans - unsecured 65,897,645 145,832,697 60,149,693 134,756,120
Securitisation 75,494,759 - 135,677 -
----------------------------------------------------
142,395,212 150,693,198 60,285,370 137,252,397
NON-CURRENT
Partner Loan - Pacific Dunlop Tyres Pty Ltd 30,547,507 - 30,547,507 -
Partner Loan - Goodyear Tyres Pty Ltd 30,547,507 - 30,547,507 -
----------------------------------------------------
61,095,014 - 61,095,014 -
----------------------------------------------------
203,490,226 150,693,198 121,380,384 137,252,397
====================================================
FINANCING ARRANGEMENTS
THE CONSOLIDATED ENTITY HAS ACCESS TO THE FOLLOWING LINES
OF CREDIT:
TOTAL FACILITIES AVAILABLE:
Bank overdrafts 6,500,000 8,421,909 5,000,000 5,000,000
Bank loans 105,500,000 140,500,000 100,000,000 135,000,000
Trade bills 6,000,000 7,000,000 - -
Money market line - 1,137,527 - -
----------------------------------------------------
118,000,000 157,059,436 105,000,000 140,000,000
----------------------------------------------------
FACILITIES UTILISED AT BALANCE DATE:
Bank overdrafts 1,012,585 2,332,579 - -
Bank loans 63,500,000 140,000,000 60,000,000 135,000,000
Trade bills 2,247,952 6,076,577 - -
Money market line - 478,640 - -
----------------------------------------------------
66,760,537 148,887,796 60,000,000 135,000,000
----------------------------------------------------
FACILITIES NOT UTILISED AT BALANCE DATE:
Bank overdrafts 5,487,415 6,089,330 5,000,000 5,000,000
Bank loans 42,000,000 500,000 40,000,000 -
Trade bills 3,752,048 923,423 - -
Money market line - 658,887 - -
----------------------------------------------------
51,239,463 8,171,640 45,000,000 5,000,000
----------------------------------------------------
Interest on bank overdrafts is charged at prevailing market rates. The effective
interest rates for all overdrafts as at 30 June 2002 is 8.6% (2001: 8.75%).
within one year. The effective interest rate on bank loans is 6.56% (2001:
5.58%). All bank loans are denominated in Australian dollars. The bank loans
amount in current liabilities comprises the portion of the consolidated entity's
bank loan payable. The effective interest rate on trade bills is 5.32% (2001:
5.33%).
157
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--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
16. PROVISIONS
CONSOLIDATED PARTNERSHIP
2002 2001 2002 2001
$ $ $ $
----------------------------------------------------------------------------------------------------------------
CURRENT
Employee entitlements 72,463,386 43,855,274 55,433,416 29,550,117
Rationalisation and restructuring 23,395,956 6,846,979 22,620,956 6,846,979
----------------------------------------------------
95,859,342 50,702,253 78,054,372 36,397,096
====================================================
NON-CURRENT
Employee entitlements 7,978,203 8,561,903 4,025,842 4,946,604
----------------------------------------------------
7,978,203 8,561,903 4,025,842 4,946,604
====================================================
Number of employees 3,730 4,323 1,154 1,565
17. AMOUNTS PAYABLE/RECEIVABLE IN FOREIGN CURRENCIES
The Australian dollar equivalents of unhedged amounts
payable or receivable in foreign currencies, calculated
at year-end exchange rates, are as follows:
UNITED STATES DOLLARS
Amounts payable :
Current 1,382,011 2,922,742 1,366,138 2,709,191
DEUTSCHE MARKS
Amounts payable :
Current 69,881 69,881
JAPANESE YEN
Amounts payable :
Current 1,432,379 1,432,379
EURO DOLLAR
Amounts payable :
Current 195,889 1,230,277 195,889 1,230,277
----------------------------------------------------
Total 3,010,279 4,222,900 2,994,406 4,009,349
====================================================
18. CONTRIBUTED EQUITY
GOODYEAR TYRES PTY LTD
Contributed equity at the beginning of year 158,837,569 100,000,000 158,837,569 100,000,000
Additional contributed equity - 58,837,569 - 58,837,569
----------------------------------------------------
Contributed equity at the end of year 158,837,569 158,837,569 158,837,569 158,837,569
====================================================
PACIFIC DUNLOP TYRES PTY LTD
Contributed equity at the beginning of year 158,837,569 100,000,000 158,837,569 100,000,000
Additional contributed equity - 58,837,568 - 58,837,568
----------------------------------------------------
Contributed equity at the end of year 158,837,569 158,837,568 158,837,569 158,837,568
----------------------------------------------------
317,675,138 317,675,137 317,675,138 317,675,137
====================================================
19. RESERVES
Asset revaluation 12,570,229 12,561,891 11,409,810 11,409,810
Foreign currency translation - (3,341,868) - -
----------------------------------------------------
12,570,229 9,220,023 11,409,810 11,409,810
====================================================
MOVEMENTS DURING THE YEAR
ASSET REVALUATION RESERVE
Balance at the beginning of year 12,561,891 12,420,308 11,409,810 11,409,810
Transferred to retained profits 8,338 141,583 - -
----------------------------------------------------
Balance at the end of year 12,570,229 12,561,891 11,409,810 11,409,810
----------------------------------------------------
FOREIGN CURRENCY TRANSLATION RESERVE
Balance at the beginning of year (3,341,868) (2,956,331) - -
Translation adjustment on assets and liabilities held in
foreign currencies (303,980) (385,537) - -
Transferred to retained profits 3,645,848 - - -
----------------------------------------------------
Balance at the end of year - (3,341,868) - -
----------------------------------------------------
158
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--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
19. RESERVES (continued)
NATURE AND PURPOSE OF RESERVES
ASSET REVALUATION
The asset revaluation reserve includes the net revaluation increments and
decrements arising from the revaluation of non-current assets.
FOREIGN CURRENCY RESERVE
The foreign currency translation reserve records the foreign currency
differences arising from the translation of self-sustaining foreign operations,
the translation of transactions that hedge the Entity's net investment in a
foreign operation or the translation of foreign currency monetary items forming
part of the net investment in a self-sustaining operation. Refer to accounting
policy Note 1(e).
20. RETAINED PROFITS/(ACCUMULATED LOSSES)
CONSOLIDATED PARTNERSHIP
2002 2001 2002 2001
$ $ $ $
----------------------------------------------------------------------------------------------------------------
GOODYEAR TYRES PTY LTD
Retained profits/(accumulated losses) at the beginning
of year (49,795,200) (3,696,211) (35,222,044) 3,478,764
Net profit/(loss) attributable to partners (65,013,585) (46,028,197) (48,398,398) (38,700,808)
Amounts transferred from reserves (1,827,093) (70,792) - -
Distribution of profits to partners - - - -
----------------------------------------------------
Retained profits/(accumulated losses) at the end of year (116,635,878)(49,795,200) (83,620,442) (35,222,044)
----------------------------------------------------
PACIFIC DUNLOP TYRES PTY LTD
Retained profits/(accumulated losses) at the beginning
of year (48,792,015) (2,693,027) (34,218,857) 4,481,952
Net profit/(loss) attributable to partners (65,013,585) (46,028,197) (48,398,397) (38,700,809)
Amounts transferred from reserves (1,827,093) (70,791) - -
Distribution of profits to partners - - - -
----------------------------------------------------
Retained profits/(accumulated losses) at the end of year (115,632,693)(48,792,015) (82,617,254) (34,218,857)
----------------------------------------------------
(232,268,571)(98,587,215) (166,237,696) (69,440,901)
====================================================
21. OUTSIDE EQUITY INTEREST
CONSOLIDATED
2002 2001 2000
$ $ $
----------------------------------------------------------------------------------------------------------------
OUTSIDE EQUITY INTEREST IN CONTROLLED ENTITIES COMPRISE:
Interest in retained profits at the beginning of the financial
year after adjusting for outside equity interests in entities 1,034,550 1,065,255 1,026,952
Interest in operating profit after income tax 470 285 38,303
Interest in dividends provided for or paid (2,146) (30,990) -
Disposal of Interest in Retained Profits (1,032,874) - -
---------------------------------------
Interest in retained profits at the end of the financial year - 1,034,550 1,065,255
Interest in share capital - 95,458 95,458
Interest in reserves - (644,320) (547,934)
---------------------------------------
Total outside equity interest - 485,688 612,779
=======================================
22. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE
(a) INTEREST RATE RISK
The consolidated entity enters into interest rate swaps to manage cash flow
risks associated with the floating interest rates on borrowings.
Interest rate swaps and forward rate agreements
Interest rate swaps allow the consolidated entity to swap floating rate
borrowings into fixed rates. Maturities of swap contracts are principally
between one to five years.
Each contract involves quarterly payment or receipt of the net amount of
interest. At 30 June 2002 the fixed rates varied from 5.5% to 5.9% (2001: 5.5%
to 7.2%) and floating rates were at bank bill rates plus the consolidated
entity's credit margin. The weighted average effective floating interest rate at
30 June 2002 was 5.7% (2001: 6.3%).
159
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--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
22. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (continued)
Interest rate risk exposures
The consolidated entity's exposure to interest rate risk and the effective
weighted average interest rate for classes of financial assets and financial
liabilities is set out below:
FIXED INTEREST MATURITY IN:
WEIGHTED
AVERAGE FLOATING OVER MORE NON-
INTEREST INTEREST 1 YEAR 1 YEAR TO THAN 5 INTEREST
2002 NOTE RATE RATE OR LESS 5 YEARS YEARS BEARING TOTAL
Financial assets
Cash 7 4.70% 37,092,372 8,300 37,100,672
Receivables 8 - 165,064,093 165,064,093
------------------------------------------------------------------------------------
37,092,372 165,072,393 202,164,765
------------------------------------------------------------------------------------
Financial liabilities
Bank overdrafts and loans 15 6.59% 64,652,501 64,652,501
Securitisation 15 5.06% 75,494,759 75,494,759
Partner Loans 15 5.46% 61,095,014 61,095,014
Trade bills 15 5.32% 2,247,952 2,247,952
Accounts payable 14 190,274,533 190,274,533
Employee entitlements 16 2.00% 72,463,386 4,278,361 3,699,842 80,441,589
------------------------------------------------------------------------------------
203,490,226 72,463,386 4,278,361 3,699,842 190,274,533 474,206,348
------------------------------------------------------------------------------------
Interest rate swaps (50,000,000) 20,000,000 30,000,000
------------------------------------------------------------------------------------
2001
Financial assets
Cash 7 5.30% 18,919,043 112,160 19,031,203
Receivables 8 - 173,949,542 173,949,542
------------------------------------------------------------------------------------
18,919,043 - - - 174,061,702 192,980,745
------------------------------------------------------------------------------------
Financial liabilities
Bank overdrafts and loans 15 5.80% 144,616,621 144,616,621
Trade bills 15 5.33% 6,076,577 6,076,577
Accounts payable 14 - 170,943,597 170,943,597
Employee entitlements 16 3.00% 43,855,274 5,435,984 3,125,919 52,417,177
------------------------------------------------------------------------------------
150,693,198 43,855,274 5,435,984 3,125,919 170,943,597 374,053,972
------------------------------------------------------------------------------------
Interest rate swaps (40,000,000) 20,000,000 20,000,000
------------------------------------------------------------------------------------
(b) FOREIGN EXCHANGE RISK
The consolidated entity enters into forward foreign exchange contracts to hedge
foreign currency purchases expected in each month within the following six
months within Board approval limits. The amount of anticipated future purchases
and sales are forecast in light of current conditions in foreign markets,
commitments from customers and experience.
160
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--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
22. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (continued)
The following table sets out the gross value to be received under foreign
currency contracts, the weighted average contracted exchange rate and the
settlement periods of outstanding contracts for the consolidated entity
2002 2001 2002 2001
AVERAGE RATE $ $
------------------------------------------------
BUY US DOLLARS
Not later than one year 0.56 0.51 43,978 11,865,049
Later than one year but not later than two years - -
Later than two years but not later than three years - -
-------------------------
43,978 11,865,049
-------------------------
BUY EURO DOLLARS
Not later than one year 0.60 0.60 1,096,037 4,444,162
Later than one year but not later than two years - -
Later than two years but not later than three years - -
-------------------------
1,096,037 4,444,162
-------------------------
BUY JAPANESE YEN
Not later than one year 67.3 62.42 223,131 551,735
Later than one year but not later than two years - -
Later than two years but not later than three years - -
-------------------------
223,131 551,735
-------------------------
BUY ENGLISH POUND
Not later than one year 0.37 0.36 71,779 164,002
Later than one year but not later than two years - -
Later than two years but not later than three years - -
-------------------------
71,779 164,002
-------------------------
As these contracts are hedging anticipated purchases, any unrealised gains and
losses on the contracts, together with the costs of the contracts, will be
deferred and then recognised in the financial statements at the time the
underlying transaction occurs as designated. The gross deferred gains and losses
on hedges of anticipated foreign currency purchases are:
CONSOLIDATED
2002 2001
GAINS LOSSES GAINS LOSSES
$ $ $ $
Not later than one year 54,818 - 130,010 -
Later than one year but not later than two years - - - -
Later than two years but not later than three years - - - -
When the underlying transaction has occurred as designated, the effect of the
hedge has been recognised in the financial statements.
(c) COMMODITY PRICE RISK
The consolidated entity does not enter into futures contracts to hedge (or hedge
a proportion of ) commodity purchase prices on anticipated specific purchase
commitments of natural rubber.
161
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--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
22. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (continued)
(d) CREDIT RISK EXPOSURES
Credit risk represents the loss that would be recognised if counterparts failed
to perform as contracted.
Recognised Financial Instruments
The credit risk on financial assets, excluding investments, of the consolidated
entity which have been recognised on the statement of financial position, is the
carrying amount, net of any provision for doubtful debts.
The consolidated entity minimises concentrations of credit risk by undertaking
transactions with a large number of customers and counterparties in various
countries.
The consolidated entity is not materially exposed to any individual overseas
country or individual customer. Concentrations of credit risk on trade debtors
and term debtors due from customers are the motor vehicle and transport
industries.
Unrecognised Financial Instruments
Credit risk on derivative contracts which have not been recognised on the
statement of financial position is minimised as counterparts are recognised
financial intermediaries with acceptable credit ratings determined by a
recognised rating agency.
Interest rate swaps and foreign exchange contracts are subject to credit risk in
relation to the relevant counterparties, which are principally large banks.
As all future contracts are transacted through a recognised futures exchange,
there is no credit risk associated with these contracts.
(e) NET FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES
VALUATION APPROACH
Net fair value of financial assets and liabilities are determined by the
consolidated entity on the following basis:
Recognised Financial Instruments
The carrying amounts of bank term deposits, trade debtors, other debtors, bank
overdrafts, accounts payable, bank loans and employee entitlements approximate
net fair value.
Unrecognised Financial Instruments
The valuation of financial instruments not recognised on the statement of
financial position detailed in this note reflects the estimated amounts which
the consolidated entity expects to pay or receive to terminate the contracts
(net of transaction costs) or replace the contracts at their current market
rates as at reporting date. This is based on independent market quotations and
determined using standard valuation techniques.
162
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--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
22. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (continued)
NET FAIR VALUES
Recognised Financial Instruments
The carrying amounts and net fair values of financial assets and financial
liabilities as at the reporting date are as follows:
CONSOLIDATED
2002 2001
CARRYING NET FAIR CARRYING NET FAIR
AMOUNT VALUE AMOUNT VALUE
$ $ $ $
----------------------------------------------------------------------------------------------------------------
FINANCIAL ASSETS
Cash assets 37,100,672 37,100,672 19,031,203 19,031,203
Receivables 165,064,093 165,064,093 173,949,542 173,949,542
FINANCIAL LIABILITIES
Payables 190,274,533 190,274,533 170,943,597 170,943,597
Bank overdrafts and loans 64,652,501 64,652,501 144,616,621 144,616,621
Securitisation 75,494,759 75,494,759 - -
Partner Loans 61,095,014 61,095,014 - -
Trade bills 2,247,952 2,247,952 6,076,577 6,076,577
Employee entitlements 80,441,589 80,441,589 52,417,177 52,417,177
UNRECOGNISED FINANCIAL INSTRUMENTS
The net fair value of financial instruments not recognised on the statement of
financial position held at the reporting date are:
2002 2001
$ $
----------------------------------------------------------------------------------------------------------------
Forward foreign exchange contracts gains/(losses) 54,818 130,010
Futures commodity contracts
-------------------------
54,818 130,010
-------------------------
23. COMMITMENTS
CONSOLIDATED PARTNERSHIP
2002 2001 2002 2001
$ $ $ $
----------------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURE COMMITMENTS
Plant
Contracted but not provided for and payable within one
year 4,505,841 3,443,409 4,505,841 3,443,409
----------------------------------------------------
4,505,841 3,443,409 4,505,841 3,443,409
====================================================
LEASE COMMITMENTS
OPERATING LEASE EXPENSE COMMITMENTS
FUTURE OPERATING LEASE COMMITMENTS NOT PROVIDED
FOR IN THE FINANCIAL STATEMENTS AND PAYABLE:
Within one year 25,799,409 24,943,656 - 45,803
One year or later and no later than five years 48,518,490 52,461,006 - -
Later than 5 years 10,596,215 11,994,208 - -
====================================================
84,914,114 89,398,870 - 45,803
====================================================
South Pacific Tyres leases property under non=cancellable operating leases
expiring from one to ten years. Leases generally provide the company with a
right of renewal at which time all terms are renegotiated. Lease payments
comprise a base amount plus an incremental contingent rental. Contingent rentals
are based on either movements in the Consumer Price Index or operating criteria.
163
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--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
24. CONTINGENT LIABILITIES
There were no contingent liabilities as at 30 June 2002 and 30 June 2001
25. RELATED PARTY TRANSACTIONS
The partnership from time to time has dealings with Ansell Limited Group
Companies and Goodyear Tire & Rubber Co. Group Companies.
Under the partnership agreement, South Pacific Tyres leases certain properties
from Ansell Limited and Goodyear Australia Limited (a wholly owned subsidiary of
Goodyear Tire & Rubber Co.) on the basis of equitable rentals between the
partners.
The amounts of these transactions are detailed below:
CONSOLIDATED
2002 2001
LEASE PAYMENTS $ $
----------------------------------------------------------------------------------------------------------------
Ansell Limited Group Companies 217,885 238,094
Goodyear Tire & Rubber Co. Group Companies 75,273 82,254
During the financial year the partnership received loans from the partners that
are subject to interest at market rates compounding quarterly as detailed in
Note 15.
On 29/12/2000, the partnership entered into a supply agreement whereby Goodyear
will be (subject to certain conditions) the exclusive supplier of certain tyres
for a period of ten years commencing 01/01/2001. The partnership will receive
$25.0m plus interest in consideration for this exclusivity of supply.
On 20/12/2000, the partnership received a loan of $25.0m from Ansell Limited on
which interest is charged quarterly in arrears.
CONSOLIDATED
2002 2001
$ $
----------------------------------------------------------------------------------------------------------------
INTEREST BROUGHT TO ACCOUNT BY THE PARTNERSHIP IN RELATION TO THESE
LOANS DURING THE YEAR:
Interest expense 1,750,000 848,630
Interest revenue 1,750,000 848,630
The amounts included in receivables and payables in relation to these loans are:
NON-CURRENT RECEIVABLES
Goodyear Tire & Rubber Co. Group Companies 27,598,630 25,848,630
NON-CURRENT PAYABLES
Ansell Limited Group Companies 27,598,630 25,848,630
All other dealings with the above parties are on normal commercial terms and
involve the purchase and/or supply of materials from/to both parties and the
provision of forward exchange cover and commodity hedging by Ansell Limited
Group Companies.
164
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--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
25. RELATED PARTY TRANSACTIONS (continued)
The amounts of these transactions are detailed below:
CONSOLIDATED
2002 2001
SALE OF GOODS AND SERVICES $ $
----------------------------------------------------------------------------------------------------------------
Ansell Limited Group Companies 37,791 1,069,123
Goodyear Tire & Rubber Co. Group Companies 4,396,011 1,651,599
PURCHASE OF GOODS AND SERVICES
Ansell Limited Group Companies 1,252,256 6,341,537
Goodyear Tire & Rubber Co. Group Companies 107,439,259 97,095,319
Details of interest received/paid to related parties are set out in Notes 3 & 4
The amounts included in receivables and payables in relation to South Pacific
Tyres are set out in the notes to the financial statements and the amounts
relating to the other parties are:
CURRENT RECEIVABLES
Ansell Limited Group Companies - 366,461
Goodyear Tire & Rubber Co. Group Companies 526,745 838,112
CURRENT PAYABLES
Ansell Limited Group Companies 81,767 1,032,402
Goodyear Tire & Rubber Co. Group Companies 23,663,413 22,124,586
The names of each person holding the position of director of the company during
the year were:
Mr R Bartlett Mr D Graham Mr R Tieken
Mr P Devereux Mr H Pace Mr E Tweddell
Mr H Elliott Mr J Rennie Mr I Veal
Mr P Gay Mr E Rodia
Mr S Gibara Mr C Sprang
At the time of holding the office of director of the company each director was
an executive of the South Pacific Tyres partnership, and held the office of
director of the company in order to discharge, in whole or in part, the duties
as an executive officer of the partnership.
26. SUPERANNUATION COMMITMENTS
EMPLOYER PLANS
The partnership and its controlled entities participate in the Pacific Dunlop
Superannuation Fund for employees.
DATE OF LAST ACTUARIAL
BENEFIT TYPE BASIS OF CONTRIBUTION VALUATION ACTUARY
Defined Balance of cost/Defined
benefit/accumulation contribution 30/6/1999 William M Mercer Pty Ltd
The liabilities of the superannuation fund is covered by the assets in the fund
or by specific provisions created by the partnership or its controlled entities.
The partnership and its controlled entities are obliged to contribute to the
superannuation fund as a consequence of Legislation or Trust Deed. Legal
enforceability is dependent on the terms of the Legislation and the Trust Deed.
165
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--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
26 SUPERANNUATION COMMITMENTS (continued)
DEFINITIONS
Balance of cost The Group's contribution is assessed by the Actuary
after taking into account the member's contribution
and the value of assets.
Defined contribution The Group's contribution is set out in the
appropriate fund rules, usually as a fixed percentage
of salary.
INDUSTRY/UNION PLANS
The partnership participates in industry and union plans on behalf of certain
employees. These plans operate on an accumulation basis and provide lump sum
benefits for members on resignation, retirement or death.
The partnership has a legally enforceable obligation to contribute at varying
rates to the plans.
27. SEGMENT REPORTING
The principal activity of the group during the year was the manufacture and sale
of motor vehicle and aircraft tyres in Australia and Papua New Guinea.
28. PARTICULARS RELATING TO CONTROLLED ENTITIES
Details of controlled entities, including the extent that each contributed to
the period's result are given below:
Tyre South
South Marketers Sacrt Pacific
Pacific (Australia) Trading Pty Tyres (PNG) Dunlop PNG Consolidated
Tyres Limited Ltd Pty Ltd Pty Ltd adjustments
Place of Incorporation Vic Vic PNG PNG
Beneficial Interest held by
Partnership 100% 100% 80% 80%
Class of shares Ordinary Ordinary Ordinary Ordinary
Book value of partnership's
investment
2002 21,496,245
2001 21,496,245
Dividends received or receivable
by partnership:
2002
2001
Dividends credited to
investment account
2002
2001
Contribution to the consolidated
profit after tax inclusive of
abnormal items and after
deducting the amount
attributable to Outside
Equity Interest:
2002 (96,796,795) (33,840,907) 365,417 27,119 (25,244) 243,240
2001 (77,401,617) (17,107,153) 217,544 12,315 (11,172) 2,233,689
29. EVENTS SUBSEQUENT TO BALANCE DATE
There has not arisen in the interval between the end of the financial year and
the date of this report any item, transaction or event of a material nature
likely, in the opinion of the directors of the company, to affect significantly
the operations, or the state of affairs of the company in subsequent financial
years.
30. NOTES TO THE STATEMENTS OF CASH FLOWS
(a) RECONCILIATION OF CASH
For the purposes of the statement of cash flows, cash includes cash on hand and
at bank and investments in money market instruments net of outstanding bank
overdrafts. Cash as at the end of the financial year as shown in the statement
of cash flows is reconciled to the related items in the statement of financial
position as follows:
CONSOLIDATED PARTNERSHIP
2002 2001 2002 2001
$ $ $ $
-------------------------------------------------------------------------
Cash assets 8,400,672 9,531,203 1,098,257 7,000
Cash on deposit 28,700,000 9,500,000 28,700,000 9,500,000
Bank overdrafts (1,002,808) (4,860,501) - (2,496,277)
---------------------------------------------------
36,097,864 14,170,702 29,798,257 7,010,723
---------------------------------------------------
166
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--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
30. NOTES TO THE STATEMENTS OF CASH FLOWS (continued)
(b) ACQUISITION/DISPOSAL OF BUSINESSES AND ENTITIES
During both the 2001 and 2002 financial years the partnership purchased no
businesses.
During the year the consolidated entity purchased 100% of businesses of which
the details are as follows:
CONSOLIDATED
2002 2001
ACQUISITIONS OF BUSINESSES $ $
----------------------------------------------------------------------------
Net assets acquired/disposed
Property, plant and equipment 458,033 25,000
Inventories 298,112 7,000
Receivables 268,685 -
Creditors - (9,077)
-------------------------
1,024,830 22,923
Goodwill 222,001 62,277
CONSIDERATION
-------------------------
Cash paid/(received) 1,246,831 85,200
-------------------------
OUTFLOW/(INFLOW) OF CASH
-------------------------
Cash consideration 1,246,831 85,200
-------------------------
DISPOSAL OF ENTITIES
During the year, the consolidated entity
disposed of all of its 80% share of
South Pacific Tyres PNG Ltd.
Details of the disposal is as follows:
Consideration ( Cash ) 1,983,805 -
Net assets of entity disposed of
Property, plant and equipment 702,062 -
Inventories 2,174,162 -
Receivables 1,096,993 -
Other assets 60,964 -
Prepayments 82,822 -
Creditors (952,514) -
Other liabilities and provisions (146,852) -
Outside equity (408,017) -
-------------------------
2,609,620 -
-------------------------
Profit / (loss) on disposal (625,815) -
-------------------------
167
PART III
SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002
--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (continued)
30. NOTES TO THE STATEMENTS OF CASH FLOWS (continued)
(c) RECONCILIATION OF PROFIT/(LOSS) FROM ORDINARY ACTIVITIES AFTER INCOME
TAX TO NET CASH PROVIDED BY OPERATING ACTIVITIES
CONSOLIDATED PARTNERSHIP
2002 2001 2002 2001
$ $ $ $
-----------------------------------------------------------------------------------------------------------------
Loss from ordinary activities after income tax (130,026,700) (92,056,109) (96,796,795) (77,401,617)
ADD /(LESS) ITEMS CLASSIFIED AS INVESTING/FINANCING
ACTIVITIES:
(Profit)/loss on sale of non-current assets 13,327,002 4,151,257 13,260,833 4,583,063
(Profit)/loss on sale of controlled entities 625,815 - - -
ADD(LESS) NON-CASH ITEMS:
Amortisation 1,800,587 2,757,849 1,054,413 1,630,789
Depreciation 26,732,747 33,841,512 17,716,624 24,298,918
Amounts set aside to provisions 134,902,663 94,962,097 98,309,955 64,849,718
(Decrease)/increase in income taxes payable (180,144) (169,879) - -
Decrease/(increase) in future income tax benefit (13,605,285) (5,723,401) - -
Write-off bad trade debts 1,386,762 2,639,365 - 259,858
------------------------------------------------------
Net cash provided by operating activities before change
in assets and liabilities 34,963,447 40,402,691 33,545,030 18,220,729
------------------------------------------------------
CHANGE IN ASSETS AND LIABILITIES ADJUSTED FOR EFFECTS
OF PURCHASE AND DISPOSAL OF CONTROLLED ENTITIES
DURING THE FINANCIAL YEAR:
(Increase)/decrease in receivables (13,406,489) (36,514,319) 34,727,376 (25,893,987)
(Increase)/decrease in inventories 4,628,518 (3,729,448) (822,786) (292,656)
(Increase)/decrease in prepayments 180,180 4,960,263 (710,209) 1,029,887
(Decrease)/increase in accounts payable 20,283,451 33,917,471 35,149,537 33,496,399
(Decrease)/increase in provisions (70,029,855) (67,430,296) (57,580,689) (55,039,286)
(Decrease)/increase in reserves (524,325) (496,747) - -
------------------------------------------------------
(58,868,520) (69,293,076) 10,763,229 (46,699,643)
------------------------------------------------------
Net cash provided by / (used in) operating activities (23,905,073) (28,890,385) 44,308,259 (28,478,914)
------------------------------------------------------
31. RECONCILIATION TO US GAAP
No adjustments have been made to the Financial Statements of South Pacific Tyres
and Controlled Entities for the year ended 30 June 2002 to ensure compliance
with US GAAP. The only adjustment of a non material nature, which would be
required would be the elimination of the Asset Revaluation Reserve recorded
within equity under AGAAP, and the elimination of the impact of the incremental
depreciation charge which emanated therefrom.
The annual depreciation charge under US GAAP would be $125,000 lower than the
amount reflected in the AGAAP financials.
This adjustment would result in a reduction in US GAAP equity and a reduction in
property, plant and equipment of $10.7 million at 30 June 2002 ($10.8 million at
30 June 2001).
168
PART III
SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002
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DIRECTORS' DECLARATION
In the opinion of the directors of South Pacific Tyres ("the partnership"):
(a) the partnership is not a reporting entity;
(b) the financial statements and notes, set out on pages 140 to 168 are in
accordance with the Corporations Act 2001, as required by Section 11 of
the Partnership Agreement, including:
(i) giving a true and fair view of the financial position of the
partnership as at 30 June 2002 and of its performance, as
represented by the results of its operations and its cash flows,
for the year ended on that date, in accordance with the basis of
accounting described in Note 1; and
(ii) complying with Accounting Standards in Australia to the extent
described in Note 1 and the Corporations Regulations 2001; and
(c) there are reasonable grounds to believe that the partnership will be
able to pay its debts as and when they become due and payable.
Signed in accordance with a resolution of the directors:
/s/
--------------------------------
Director
/s/
--------------------------------
Director
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PART III
SOUTH PACIFIC TYRES - STATUTORY ACCOUNTS YEAR ENDED 30 JUNE 2002
--------------------------------------------------------------------------------
INDEPENDENT AUDIT REPORT
The Partners
South Pacific Tyres:
We have audited the accompanying consolidated statements of financial position
of South Pacific Tyres and its controlled entities comprising the South Pacific
Tyres Partnership ("the Partnership) as of June 30, 2002 and 2001, and the
related consolidated statements of financial performance, cash flows, and
changes in stockholders' equity as set out on pages 144 to 169. These
consolidated financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of South Pacific Tyres
as of June 30, 2002 and 2001, and the results of its operations and its cash
flows, in conformity with generally accepted accounting principles in Australia.
Accounting principles generally accepted in Australia vary in certain respects
from accounting principles generally accepted in the United States of America.
An explanation of the significant difference between the two sets of principles
as they relate to the Partnership is presented in Note 31 to the consolidated
financial statements. The application of accounting principles generally
accepted in the United States of America would have affected consolidated net
loss for the years ended June 30, and shareholders' equity as of June 30, 2002
and 2001, to the extent summarized in Note 31 to the consolidated financial
statements.
/s/ KPMG
Dated in Melbourne this 31st day of October 2002
170
PART III
ITEM 19 : EXHIBITS
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EXHIBIT INDEX
1.1 Constitution of Ansell Limited.
4.1 Co-ordination Agreement--Sale of Pacific Brands dated November 30, 2001
made between Pacific Dunlop Limited, Textile Industrial Design and
Engineering Pty Ltd, Union Knitting Mills Pty Ltd, Boydex International
Pty Ltd, Foamlite (Australia) Pty Ltd, Vita Pacific Pty Ltd, Pacific
Dunlop Holdings (NZ) Limited, Pacific Dunlop Holdings (Europe) Ltd,
Pacific Dunlop Holdings (USA) Inc, PD International Pty Limited, Pacific
Dunlop Holdings (Singapore) Pte Ltd, PD Holdings (Malaysia) Sdn Bhd, PD
Licensing Pty Ltd, Niblick Pty Ltd, Cliburn Investments Pty Ltd, and PD
Shared Services Holdings Pty Ltd (as sellers) and PB Holdings NV,
Pacific Brands Holdings Pty Ltd, Pacific Brands Household Products Pty
Ltd, Pacific Brands Footwear Pty Ltd, Pacific Brands Sport & Leisure Pty
Ltd, Pacific Brands Clothing Pty Ltd and Pacific Brands Holdings (NZ)
Ltd (as buyers).
4.2 Sale of Business Agreement, Pacific Brands--Australia dated November 30,
2001 made between Pacific Dunlop Limited, Textile Industrial Design and
Engineering Pty Ltd, Union Knitting Mills Pty Ltd, Boydex International
Pty Ltd, Foamlite (Australia) Pty Ltd, Vita Pacific Pty Ltd, PD
Licensing Pty Ltd, Niblick Pty Ltd and Cliburn Investments Pty Ltd (as
sellers) and Pacific Brands Holdings Pty Ltd, Pacific Brands Footwear
Pty Ltd, Pacific Brands Sport & Leisure Pty Ltd, Pacific Brands Clothing
Pty Ltd, Pacific Brands Household Products Pty Ltd, and PB Holdings NV
(as buyers).
4.3 Sale of Business Agreement dated November 30, 2001 between Pacific
Dunlop Limited, Pacific Dunlop Holdings (NZ) Limited, PD Licensing Pty
Ltd and Pacific Brands Holdings (NZ) Ltd (as sellers) and PB Holdings NV
(as buyer).
4.4 Letter Agreement dated November 30, 2001 between PB Holdings NV (as
buyer) and PD Holdings (Malaysia) Sdn Bhd (as Seller) regarding proposed
sale of shares of Restonic (M) Sdn Bhd.
4.5 Share Sale Agreement, PD Shared Services LSM Pty Ltd dated November 30,
2001 between PD Shared Services Holdings Pty Ltd and Pacific Dunlop
Limited (as sellers) and Pacific Brands Holdings Pty Ltd (as buyer).
4.6 Share Sale Agreement, Pacific Brands (Fiji) Limited dated November 30,
2001 between P.D. International Pty Ltd and Pacific Dunlop Limited (as
sellers) and PB Holdings NV (as buyer).
4.7 Share Sale Agreement, Pacific Dunlop Holdings (Hong Kong) Limited dated
November 30, 2001 between Pacific Dunlop Limited and P.D. International
Pty Ltd (as sellers) and PB Holdings NV (as buyer).
4.8 Share Sale Agreement, PT Barlei Indonesia dated November 30, 2001
between PD International Pty Ltd and Pacific Dunlop Holdings (Singapore)
Pte Ltd (as sellers) and PB Holdings BV (as buyer).
4.9 Share Sale Agreement, Pacific Brands (UK) Ltd dated November 30, 2001
between Pacific Dunlop Holdings (Europe) Limited and Pacific Dunlop
Limited (as sellers) and PB Holdings NV (as buyer).
4.10 Stock Purchase Agreement, PacBrands USA Inc dated November 30, 2001
between Pacific Dunlop Holdings (USA) Inc and Pacific Dunlop Limited (as
sellers) and PB Holdings NV (as buyer).
171
PART III
ITEM 19 : EXHIBITS
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4.11 Share Sale Agreement, Bonds Industries Limited dated November 30, 2001
between Pacific Dunlop Limited (as seller) and Pacific Brands Holdings
Pty Ltd and PB Holdings NV (as buyers).
4.12 Letter Agreement dated November 30, 2001 between Pacific Dunlop Limited
and PB Holdings NV relating to the Shares Agreement Australia, Shares
Agreement USA and Novare Shares Agreement.
4.13 Letter Agreement dated November 30, 2001 between Pacific Dunlop Limited
and PB Holdings NV relating to the Shares Agreement Indonesia, Shares
Agreement Fiji, Shares Agreement Hong Kong and Shares Agreement UK.
4.14* Australian Deed dated October 19, 2001 made between The Goodyear Tire &
Rubber Company, Goodyear Tyres Pty Ltd, Goodyear Australia Pty Ltd,
Pacific Dunlop Limited, Pacific Dunlop Tyres Pty Ltd and Tyre Marketers
(Australia) Limited in relation to the restructuring of the South
Pacific Tyres (incorporated by reference to File No. 0-15850, Form 20-F,
filed by the Registrant on November 9, 2001).
4.15* Co-ordination Deed dated October 19, 2001 made between The Goodyear Tire
& Rubber Company, Goodyear Tyres Pty Ltd, Goodyear Australia Pty Ltd,
Pacific Dunlop Limited, Pacific Dunlop Tyres Pty Ltd and Tyre Marketers
(Australia) Limited, Goodyear New Zealand Limited, Pacific Dunlop
Holdings (NZ) Limited and South Pacific Tyres NZ Limited in relation to
the restructuring of the South Pacific Tyres (incorporated by reference
to File No. 0-15850, Form 20-F, filed by the Registrant on November 9,
2001).
4.16* Sale of Business Agreement dated September 20, 2001, made between the
following Pacific Dunlop Group Companies: Ashdown Enterprise (Wholesale)
Pty Ltd, The Distribution Group Pty Limited, The Distribution Group
Holdings Pty Limited, PD Licensing Pty Limited, TDG Warehousing Pty Ltd
and Pacific Dunlop Limited (as sellers) and Automotive Parts Group
Limited and Automotive Parts Group Holdings Limited (as buyers) in
relation to the sale of Pacific Automotive in Australia (incorporated by
reference to File No. 0-15850, Form 20-F, filed by the Registrant on
November 9, 2001).
4.17* Agreement for the Sale of Australian business dated February 26, 2001,
made between Sara Lee Apparel (Australasia) Pty Limited and Sara Lee
Corporation (the sellers) and Pacific Dunlop Ltd (the buyer) in respect
of the Sara Lee Apparel business (incorporated by reference to File No.
0-15850, Form 20-F, filed by the Registrant on November 9, 2001).
4.18* Form of agreement with non-Executive Directors of Pacific Dunlop Limited
in relation to benefits upon retirement (incorporated by reference to
File No. 0-15850, Form 20-F, filed by the Registrant on November 9,
2001).
7.1 Computation of the Ratio of Earnings to Fixed Charges
* Previously filed
172