South Pacific
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Company Information for Investors Company Information for Investors Public Documents To view these files you need to have Adobe Acrobat Reader installed. To view our 2001 HALF YEAR RESULTS click here Rules of Non-Executive Directors Share Plan referred to in the Notice of Meeting for the Annual General Meeting to be held on Friday 13 October, 2000 at 11.00am: here To view our 2000 ANNUAL REVIEW click here To view our 2000 FINANCIAL STATEMENTS click here To view our 1999 ANNUAL REPORT click here To view our 1999 FINANCIAL STATEMENTS click here To view our 1998 ANNUAL REPORT: YEAR IN REVIEW click here To view our 1998 ANNUAL REPORT: FINANCIALS click here Broughthttp://www.pacdun.com/info/public_documents_introduction.htm to you by Global Reports [3/13/2001 3:52:59 PM] Annual Report 1998 PacificDDunlop Brought to you by Global Reports Contents Financial Results 1 Year in Summary 2 Performance Summary 3 Chairman’s Review 4 Managing Director’s Review 6 Business Profile 12 Review of Operations Ansell 14 Pacific Brands 16 South Pacific Tyres 18 Pacific Distribution 20 Cables and Engineered Products 22 Pacific Dunlop Board 24 Corporate Governance 26 Financial Statements Analysis 30 Financial Statements 33 Five Year Summary 34 Directors’ Report 35 Profit and Loss Accounts 38 Balance Sheets 39 Business Segments 40 Statements of Cash Flows 41 Notes on the Accounts 42 Statement by Directors 89 Independent Auditors’ Report 90 Shareholders 91 Investor Information 92 Directory Inside back cover The Annual General Meeting will be held in the John Batman Theatre at the Melbourne Convention Centre, corner Spencer Street and Flinders Street, Melbourne on 4 November 1998 at 2.15pm. Details of the business of the meeting are contained in the Notice of Meeting enclosed with this Annual Report. Voting by proxy is the most effective way for shareholders to participate in the Company’s affairs. All shareholders are therefore encouraged to complete and return the proxy form enclosed with the Notice of Meeting. Brought to you by Global Reports Our products are supported by strong brand recognition and, in most cases, have a predominant share of their markets. We recognise that success will be built on competitive advantage, a commitment to excellence, quality customer service and the delivery of attractive returns to our shareholders. Financial Results $ million 1998 1997 % change Revenue 5,984 5,783 +3.5 Operating profit before interest and tax 326 337 –3.3 Profit before abnormal items 181 176 +2.8 Abnormal (loss)/gain (156) 2 N/A Profit/(loss) after abnormals 25 178 –86.0 Assets employed 5,342 5,593 –4.5 Return on shareholders’ equity before abnormals 10.7% 9.5% +12.6 Average shares on issue (million) 1,028 1,024 +0.4 Earnings per share before abnormal items (cents) 17.6 17.2 +2.3 Dividends per share (cents) 14.0 14.0 – All figures in A$ unless otherwise stated. 1 Brought to you by Global Reports • Pre-abnormals profit of $181 million, compared with $176 million in the previous year, an increase of 3 per cent. • Sales increased by 3.5 per cent to $5.98 billion. • Previously foreshadowed abnormal losses of $156 million. • Profit after abnormals of $25 million. • Earnings per share before abnormals up 2.3 per cent to 17.6 cents. • Final dividend of 7 cents making 14 cents for the year (previous year 14 cents). The final dividend will be unfranked. 2 Brought to you by Global Reports Performance Summary Dividends per Share (cents) 25 20 15 Operating Revenue Ansell 18.4% 10 GNB Technologies 21.1% Pacific Distribution 24.5% Pacific Brands 20.1% 5 South Pacific Tyres (50%) 9.0% Cables and Engineered Products 6.9% 0 94 95 96 97 98 Profit Attributable to Shareholders before Abnormals / Assets Employed ($ million) Assets Profit Employed 400 6,000 320 5,000 Operating Profit 4,000 240 Ansell 35.9% 3,000 Pacific Distribution 13.8% 160 Pacific Brands 20.8% 2,000 GNB Technologies 12.2% 80 South Pacific Tyres (50%) 8.8% 1,000 Cables and Engineered Products 8.5% 0 0 94 95 96 97 98 Assets Employed Profit Attributable Earnings per Share before Abnormals (cents) 35 30 25 20 Operating Profit post GNB Ansell 40.9% 15 Pacific Distribution 15.7% Pacific Brands 23.7% 10 Cables and Engineered Products 9.7% 5 South Pacific Tyres (50%) 10.0% 0 94 95 96 97 98 After Goodwill Before Goodwill 3 Brought to you by Global Reports Chairman’s Review Mr John T Ralph Chairman Dear shareholder Pacific Dunlop has been undergoing great change and this year we expect the benefits to start to become apparent. The change process started two years ago with two purposes. One was to lift performance and with it the returns and value for shareholders. The second was to reshape Pacific Dunlop for the different, more globalised trading environment which businesses face today, and in doing so chart a course for the Company’s future growth. Progress had already been made in the previous year The sale of GNB will also lead to a greatly strengthened towards reducing costs and improving efficiency and balance sheet. A substantial portion of the proceeds productivity through rationalisation within business received from the sale of GNB will be used to retire debt, units. In the financial year ending 30 June 1998, this thereby enhancing the capacity for growth acquisitions was carried further, but with one important addition – and other capital requirements. Once debt is repaid, an evaluation of the future growth prospects of each gearing will be down to its most conservative level business as well as their ability to generate acceptable in many years, providing the financial platform for returns. future growth. This assessment now governs investment priorities Another recent and equally important change has for the Company. In a number of cases it will have been the resolution, subject to certain court approvals, a significant bearing on the strategic future of some of nearly all outstanding litigation related to the Accufix businesses. Pacemaker Lead. The main agreement reached in July covers the claims made in the United States and The recently-announced sale of GNB Technologies and follows earlier settlements in Canada and Australia. the sale earlier of the communications cables operations All settlements are without any admission of liability. are part of this new approach to the future. With their sale, two financially under-performing businesses will be The situation leading to the litigation has been one removed from the Company. As a result we will have a of the most unfortunate in the Group’s history and for better-performing asset base which is less diversified. more than three years has had a depressing effect on the Group as well as being a major distraction to management. We are pleased to see that this is nearly behind us. These developments are all helpful in clearing the way for better results ahead. 4 Brought to you by Global Reports The reshaping of Pacific Dunlop, however, is based Profit after tax and abnormals was lower because primarily on the recognition that the exciting potential of extra provisioning either necessary or considered of Ansell will be a key source of growth and earnings prudent in relation to GNB environmental remediation well into the future. and the Accufix settlement in the USA. The remediation provision is for contingencies over a period of at least Ansell possesses a unique combination of technology, five years. low-cost production and marketing power which has already given its products world leadership, and sales A final dividend of 7.0 cents a share has been declared, in more than 100 countries. Last year was excellent for which will be unfranked (1997 – 7.0 cents per share, Ansell. It strengthened its market hold, particularly in 60 per cent franked). The total dividend for the year the United States, and passed $1 billion in sales. It also was 14.0 cents, the same as for the previous year, enlarged the capacity of its principal manufacturing but without the benefit of franking. Dividends are likely facilities in South-East Asia and India. to remain unfranked this year and next as international profit grows as a proportion of Pacific Dunlop’s total Ansell has grasped the opportunity to become a truly profit, while at the same time, we take up previously global business as the worldwide demand for its products deferred Australian tax losses. increases. Investment priority will be directed towards furthering this objective. The current year begins a new phase for Pacific Dunlop where the priority is growth and the immediate goal is The excellent Ansell result offset disappointing returns improved earnings. The foundation is now in place for from the domestic-based businesses, whose markets both to be achieved. were mostly characterised by lower levels of demand, stronger import competition as a result of the Asian The preparation for this phase has called for an intensive crisis and tighter margins. We are confident, however, effort by management and many others throughout the of stronger performance as a result of better productivity Company. On behalf of my Board colleagues, we thank and other profit improvement initiatives flowing through them all. in the current year. John T Ralph Chairman 5 Brought to you by Global Reports Managing Director’s Review Mr Rod L Chadwick Managing Director and Chief Executive Management’s main challenge in the past two years has been to reposition the Company so that it can begin growing shareholder returns again. Substantial progress has been made in meeting this challenge. The process has been intensive, involving changes to strategic direction, improvement to operational effectiveness, and upgrading the people side of our skills and capabilities.