RNS Number:4511R
Pacific Dunlop Ld
14 February 2002
APPENDIX 4B (Rule 4.13(b))
HALF YEARLY REPORT
Name of entity
Pacific Dunlop Limited and its controlled entities
ACN Half Preliminary Half Year ended
yearly final ('current period')
(tick) (tick)
ACN 004 085 330 X 31/12/2001
FOR ANNOUNCEMENT TO THE MARKET A$millions
Extracts from this report for announcement to the market (see note 1).
Revenues from ordinary activities
(item 1.1a) up/down (35.5)% to 1,533.9
Profit (loss) from ordinary activities
after tax (before amortisation
of goodwill) attributable to members
(item 1.20) up/down (135.8)% to (77.6)
Profit (loss) from ordinary activities
after tax attributable to members
(item 1.23) up/down (147.2)% to (92.8)
Profit (loss) from extraordinary items
after tax attributable to members
(item 2.5(d)) gain/loss of -
Net profit (loss) for the period
attributable to members
(item 1.11) up/down (147.2)% to (92.8)
DIVIDENDS (DISTRIBUTIONS) AMOUNT PER SECURITY FRANKED AMOUNT
(cents) PER SECURITY
(cents)
Interim dividend (item 15.6) 0.0c N/A
Previous corresponding period (item 15.7) 5.0c Unfranked
Record date for determining entitlements to the
dividend, (in the case of a trust, distribution)
(see item 15.2) N/A
Page 1
Consolidated profit and loss account
31 December 2001 31 December 2000
A$ millions A$ millions
1.1a Revenues from ordinary activities 1,533.9 2,379.9
1.1b Proceeds from sale of businesses 980.5 1,047.5
1.2a Expenses from ordinary activities
(see item 1.24 + 12.5 + 12.6) (1,560.3) (2,203.3)
1.2b Net assets of businesses disposed (968.6) (888.1)
1.3 Borrowing costs (45.3) (85.9)
1.4 Share of net profit (loss) of associates
and joint venture entities (see item 16.7) 0.8 (33.6)
1.5 Profit (loss) from ordinary activities before tax (59.0) 216.5
1.6 Income tax expense on ordinary activities 32.6 18.2
1.7 Profit (loss) from ordinary activities after tax (91.6) 198.3
1.8 Profit (loss) from extraordinary items after tax
(see item 2.5) - -
1.9 Net profit (loss) (91.6) 198.3
1.10 Net profit (loss) attributable to outside
equity interests 1.2 1.7
1.11 Net profit (loss) attributable to members (92.8) 196.6
Consolidated retained profits
1.12 Retained profits (accumulated losses) at
beginning of the financial period (289.9) (103.6)
1.13 Net profit (loss) attributable to members
(item 1.11) (92.8) 196.6
1.14 Net transfers to and from reserves - -
1.15 Amount transferred from share capital - -
1.16 Dividends and other equity distributions paid or
payable - (46.6)
1.17 Retained profits (accumulated losses) at end of the
financial period (382.7) 46.4
Profit restated to exclude amortisation of goodwill
1.18 Profit (loss) from ordinary activities after tax
before outside equity interests (item 1.7) and
amortisation of goodwill (76.4) 218.5
1.19 Less (plus) outside equity interests 1.2 1.7
1.20 Profit (loss) from ordinary activities after tax
(before amortisation of goodwill) attributable
to members (77.6) 216.8
Page 2
Profit (loss) from ordinary activities attributable to members
31 December 2001 31 December 2000
A$ millions A$ millions
1.21 Profit (loss) from ordinary activities after tax (item 1.7) (91.6) 198.3
1.22 Less (plus) outside equity interests 1.2 1.7
1.23 Profit (loss) from ordinary activities after tax, attributable to members (92.8) 196.6
Revenue and expenses from ordinary activities
31 December 2001 31 December 2000
1.24 Details of revenue and expenses A$ millions A$ millions
Sales Revenue 1,513.3 2,340.4
Other revenue from ordinary activities 20.6 39.5
Revenues from ordinary activities 1,533.9 2,379.9
Proceeds on sale of businesses 980.5 1,047.5
Total revenue 2,514.4 3,427.4
Net assets of business disposed (968.6) (888.1)
Cost of goods sold (1,024.5) (1,633.4)
521.3 905.9
Selling, distribution and administration expenses (385.2) (553.8)
Borrowing costs (45.3) (85.9)
Write-down of assets (135.6) -
Other (15.0) (16.1)
Profit (loss) from ordinary activities before tax and share of net profit (loss) of associates
and joint venture entities (59.8) 250.1
Changes in equity and individually significant items included in profit from ordinary activities
31 December 2001 31 December 2000
A$ millions A$ millions
Total equity at the beginning of the year 1,066.2 1,499.9
Net profit attributable to members of the parent entity (item 1.11) (92.8) 196.6
Non-owner transaction changes in equity
Increase/(Decrease) in asset revaluation reserve - -
Net exchange differences on translation of financial statements of self-sustaining foreign
operations (2.3) 15.4
Total changes in equity other than those resulting from transactions with owners as
owners (95.1) 212.0
Contributions of equity 0.9 0.5
Share buy-back - (164.9)
Dividends - (46.6)
Total changes in outside equity interest (0.9) (2.3)
Total equity at the end of the period (item 4.35) 971.1 1,498.6
31 December 2001 31 December 2000
A$ millions A$ millions
Individually significant items included in profit from ordinary activities before
income tax expense:
Write-down of Exide investment (61.5) -
Write-down of Ansell fixed assets (64.7) -
Net gain on sale of controlled entities and businesses 20.3 -
Gain on sale of Electrical Distribution business - 145.0
Page 3
Intangible and extraordinary items
Consolidated - current period
Related outside Amount (after tax)
Before tax Related tax equity interests attributable to members
A$ millions (a) A$ millions (b) A$ millions (c) A$ millions (d)
2.1 Amortisation of goodwill 15.4 (0.2) - 15.2
2.2 Amortisation of other intangibles - - - -
2.3 Total amortisation of intangibles 15.4 (0.2) - 15.2
2.4 Extraordinary items - - - -
N/A - - - -
2.5 Total extraordinary items - - - -
Intangible and extraordinary items
Consolidated - Prior period
Related outside Amount (after tax)
Before tax Related tax equity interests attributable to members
A$ millions A$ millions A$ millions A$ millions
2.1 A Amortisation of goodwill 20.4 (0.2) - 20.2
2.2 A Amortisation of other intangibles - - - -
2.3 A Total amortisation of intangibles 20.4 (0.2) - 20.2
2.4 A Extraordinary items
N/A - - - -
2.5 A Total extraordinary items - - - -
Comparison of half year profits 31 December 2001 31 December 2000
(Preliminary final report only)
A$ millions A$ millions
3.1 Consolidated operating profit (loss) after tax attributable to
members reported for the 1st half year N/A N/A
3.2 Consolidated operating profit (loss) after tax attributable to
members for the 2nd half year N/A N/A
Prima facie tax reconciliation
31 December 2001 31 December 2000
A$ millions A$ millions
Prima facie income tax expense calculated at 30% (2000: 34%)
on the profit from ordinary activities (17.7) 73.6
Add increased taxation arising from:
Goodwill amortisation 0.6 2.2
Income tax under provided in previous years - -
Other permanent differences not deductible - 0.4
Foreign losses and costs not deductible - -
Deduct reduced taxation arising from:
Income tax over provided in previous years 1.4 0.1
Investment and export incentive allowances 1.9 4.2
Net lower overseas tax rates 1.4 3.7
Other allowable permanent differences 0.3 -
Share of associates' net profit 0.2 0.7
Income Tax as per Profit and Loss Accounts attributable
to Operating Profit Before Effect of Tax Rate Change
and Individually Significant Items (22.3) 67.5
Individually significant income tax items:
Write off of tax balances attributable
to Australian operations 15.2 -
Net gain on sale of businesses (6.0) -
Write down of investments 18.4 -
Restructuring costs 27.3 -
Gain on sale of Electrical Distribution business - (49.3)
Income Tax as per Profit and Loss Accounts attributable
to Operating Profit Before Effect of Tax Rate Change 32.6 18.2
Effect of tax rate change - -
Income Tax as per Profit and Loss Accounts attributable
to Operating Profit 32.6 18.2
Income tax provided comprises:
Provision attributable to current year 11.5 23.5
Under/(over) provision in respect of previous years (1.4) (0.1)
Provision attributable to future years
Deferred tax liability 1.7 2.8
Future income tax benefit 20.8 (8.0)
32.6 18.2
Page 4
Consolidated balance sheet 31 December 2001 30 June 2001 31 December 2000
A$ millions A$ millions A$ millions
Current assets
4.1 Cash 436.0 310.9 907.4
4.1a Cash - restricted deposits 24.7 27.0 39.8
4.2 Receivables 318.7 643.8 728.6
4.3 Investments - - -
4.4 Inventories 288.0 794.3 840.6
4.5 Prepayments 25.3 27.4 32.8
4.6 Total current assets 1,092.7 1,803.4 2,549.2
Non-current assets
4.7 Receivables * 70.0 92.0 39.0
4.8 Investments in associates and
partnerships (equity accounted) 12.6 149.7 21.3
4.9 Other investments 154.3 76.9 158.8
4.1 Inventories - - -
4.11 Exploration and evaluation expenditure
capitalised - - -
4.12 Development properties - - -
4.13 Other property, plant and equipment (net) 394.4 669.9 646.3
4.14 Intangibles (net) 457.5 556.5 631.9
4.15 Future income tax benefit 66.7 106.8 262.6
4.15a Other - 21.0 25.7
4.16 Total non-current assets 1,155.5 1,672.8 1,785.6
4.17 Total assets 2,248.2 3,476.2 4,334.8
Current liabilities
4.18 Payables 206.6 420.9 463.5
4.19 Interest bearing liabilities 314.1 748.8 1,282.8
4.20 Provisions 139.1 274.9 290.4
4.21 Other (Amounts due under contractual
arrangements and deferred income) 7.0 5.2 6.4
4.22 Total current liabilities 666.8 1,449.8 2,043.1
Non-current liabilities
4.23 Payables 4.2 5.1 6.5
4.24 Interest bearing liabilities 556.3 861.9 695.9
4.25 Provisions 29.7 54.9 50.1
4.25a Provisions for deferred income tax 20.1 22.1 23.00
4.26 Other (Amounts due under contractual
arrangements and deferred income) - 16.2 17.6
4.27 Total non-current liabilities 610.3 960.2 793.1
4.28 Total liabilities 1,277.1 2,410.0 2,836.2
4.29 Net assets 971.1 1,066.2 1,498.6
* Non Current Receivables include interest bearing loans of $59.8 million
Page 5
Consolidated balance sheet continued 31 December 2001 30 June 2001 31 December 2000
A$ millions A$ millions A$ millions
Equity
4.30 Capital 1,455.2 1,454.3 1,452.8
4.31 Reserves (120.3) (118.0) (15.9)
4.32 (Accumulated losses) retained profits (382.7) (289.9) 46.4
4.33 Equity attributable to members of
the parent entity 952.2 1,046.4 1,483.3
4.34 Outside equity interests in
controlled entities 18.9 19.8 15.3
4.35 Total equity 971.1 1,066.2 1,498.6
4.36 Preference capital included as part of 4.33 - - -
Exploration and evaluation expenditure capitalised
To be completed only by entities with mining interests if amounts are material.
Include all expenditure incurred regardless of whether written off directly
against profit.
31 December 2001 31 December 2000
A$ millions A$ millions
5.1 Opening balance
5.2 Expenditure incurred during current period N/A N/A
5.3 Expenditure written off during current period
5.4 Acquisitions, disposals, revaluation increments, etc.
5.5 Expenditure transferred to Development Properties
5.6 Closing balance as shown in the consolidated balance
sheet (item 4.11) - -
Development properties
(To be completed only by entities with mining interests if amounts are material)
31 December 2001 31 December 2000
A$ millions A$ millions
6.1 Opening balance
6.2 Expenditure incurred during current period
6.3 Expenditure transferred from exploration and evaluation N/A N/A
6.4 Expenditure written off during current period
6.5 Acquisitions, disposals, revaluation increments, etc.
6.6 Expenditure transferred to mine properties
6.7 Closing balance as shown in the consolidated balance sheet
(item 4.12) - -
Page 6
Consolidated statement of cash flows
31 December 2001 31 December 2000
A$ millions A$ millions
Cash Flows related to Operating Activities
7.1 Receipts from customers (excluding non recurring and
Accufix Research Institute) 1,644.3 2,443.4
7.2 Payments to suppliers and employees (excluding non
recurring and Accufix Research Institute (1,507.9) (2,364.0)
7.3 Net receipts from customers (excluding non recurring
and Accufix Research Institute) 136.4 79.4
7.4 Income taxes paid (12.6) (14.7)
7.5 Dividends received 0.3 0.1
7.6 Net Cash Provided by Operating Activities (excluding non
recurring and Accufix Research Institute) 124.1 64.8
7.7 Non recurring payments to suppliers and employees (78.7) (17.2)
7.8 Payments to suppliers and employees net of customer
receipts (Accufix Research Institute) (6.1) (7.6)
7.9 Amounts refunded from Accufix Settlement Funds (United
States) by the Court - 24.3
7.10 Net Cash Provided by Operating Activities 39.3 64.3
Cash Flows related to Investing Activities
7.11 Payments for businesses, net of cash acquired (40.9) (20.8)
7.12 Payments for property, plant and equipment (27.1) (48.2)
7.13 Payments for brandnames / trademarks - -
7.14 Proceeds from sale of businesses, net of cash disposed 958.1 940.9
7.15 Proceeds from sale of plant and equipment in the ordinary
course of business 10.4 8.5
7.16 Loans (made) / repaid - (7.9)
7.17 Proceeds from / (Payments for) other investments - (15.7)
7.18 Net Cash Provided By Investing Activities 900.5 856.8
Cash Flows related to Financing Activities
7.19 Proceeds from borrowings 722.9 5,330.2
7.20 Repayments of borrowings (1,454.5) (6,024.5)
7.21 Net repayments of borrowings (731.6) (694.3)
7.22 Proceeds from issues of shares 0.8 0.5
7.23 Payment for share buyback - (164.9)
7.24 Lease payments - -
7.25 Dividends paid (48.2) (108.5)
7.26 Interest received 9.6 30.3
7.27 Interest and borrowing costs paid (45.2) (86.3)
7.28 Net Cash Used In Financing Activities (814.6) (1,023.2)
7.29 Net Increase / (Decrease) in Cash Held 125.2 (102.1)
7.30 Cash at beginning of period (see Reconciliation
of cash) 328.4 1,019.8
7.31 Effects of exchange rate changes on the balances of
cash held in foreign currencies at the beginning - 20.3
of the financial year
7.32 Cash at the End of Period 453.6 938.0
(see Reconciliation of cash)
Page 7
Non-cash financing and investing activities
Details of financing and investing transactions which have a material effect on
consolidated assets and liabilities but did not involve cash flows are as
follows. If an amount is quantified, show comparative amount.
Nil
Reconciliation of cash
Reconciliation of cash at the end of the period (as shown
in the consolidated statement of cash flows) to the related 31 December 2001 31 December 2000
items in the accounts is as follows. A$ millions A$ millions
8.1 Cash on hand and at bank 58.8 164.0
8.2 Deposits at call 401.9 783.2
8.3 Bank overdraft (7.1) (9.2)
8.4 Other (provide details) - -
8.5 Total cash at end of the financial year (item 7.32) 453.6 938.0
Ratios 31 December 2001 31 December 2000
% %
Profit before tax / revenue from ordinary activities
9.1 Consolidated profit (loss) from ordinary activities
before tax (item 1.5)
as a percentage of revenue from ordinary activities
(item 1.1) (3.8)% 9.1%
Profit after tax / equity interests
9.2 Consolidated net profit (loss) from ordinary activities
after tax attributable to members (item1.11) as a percentage
of equity (similarly attributable) at the end of the
period (item 4.33) (9.7)% 13.4%
Earnings per share (EPS) 31 December 2001 31 December 2000
cents cents
10.1 Calculation of the following in accordance with
AASB 1027: Earnings per Share
(a) Basic EPS (9.9)c 19.5c
(b) Diluted EPS (9.9)c 19.4c
(c) weighted average number of ordinary
shares outstanding during the period used in
the calculation of the Basic EPS 934,155,055 1,008,540,523
NTA backing 31 December 2001 31 December 2000
cents cents
11.1 Net tangible asset backing per ordinary share
(including FITB) 53c 91c
Net asset backing per ordinary share 102c 159c
Calculated on the basis of Net Assets attributable to shareholders of Pacific
Dunlop Limited (item 4.33)
Page 8
Industry Segments
of Pacific Dunlop Limited and Controlled Entities for the six months ended
31 December 2001
Operating Revenue Assets Employed Operating Result
December December December June December December December
$ in millions 2001 2000 2001 2001 2000 2001 2000
INDUSTRY
Ansell Healthcare
Occupational Healthcare 337.9 341.3 442.8 519.1 521.8 29.8 35.3
Professional Products 279.1 264.8 438.0 457.8 458.5 49.8 41.7
Personal Healthcare 89.8 80.1 143.0 153.3 146.9 12.5 7.5
Total Ansell Healthcare 706.8 686.2 1,023.8 1,130.2 1,127.2 92.1 84.5
Unallocated Items 20.6 39.5 96.9 157.7 320.3 (33.2) (27.0)
Operating EBIT from Continuing
Operations 58.9 57.5
Automotive
South Pacific Tyres JV Share (1) 135.4 134.2 100.3 (12.7)
NON RECURRING
Discontinued Businesses
Trading 806.5 1,654.2 72.0 1,159.7 1,207.9 60.6 116.4
Net gain on sale of Controlled
Entities and Businesses 980.5 1,047.5 20.3 145.0
Rationalisation/Restructuring
Ansell Healthcare (8.2)
Tyres (16.2)
Other (8.5)
Write-down of assets
Ansell Healthcare (64.7)
Exide investment (61.5)
Other (9.4)
Operating EBIT (12.5) 290.0
Goodwill and Brand names 457.5 556.5 631.9 (15.4) (20.4)
Earnings before Net Interest
and Tax (EBIT) (27.9) 269.6
Net Consolidated Interest Expense (31.1) (53.1)
Tax (32.6) (18.2)
Outside Equity Interests (1.2) (1.7)
Operating Result (92.8) 196.6
Cash 460.7 337.9 947.2
Total Consolidated 2,514.4 3,427.4 2,248.2 3,476.2 4,334.8 (92.8) 196.6
REGIONS
Australia & S.E. Asia 76.9 74.5 356.0 359.3 348.4 18.1 15.0
America 424.5 407.1 483.7 571.9 563.3 56.8 55.7
Europe 205.4 204.6 184.1 199.0 215.5 17.2 13.8
706.8 686.2 1,023.8 1,130.2 1,127.2 92.1 84.5
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.
(1) Effective 1 July 2001 Pacific Dunlop Limited discontinued equity accounting
for its interest in the South Pacific Tyres operation.
Notes to the Industry Segments Report
Operating Revenue
The Operating Revenue of Discontinued Businesses represents the external sales
of such businesses to the date of disposal and the cash received from the sale
of such businesses.
Unallocated Revenue and Costs
Represents costs of Corporate Head Office, costs of Ansell Healthcare's Head
Office and non-sales revenue.
Tax
Includes the write off of tax balances attributable to Australian operations of
$15.2 million and tax attributable to Discontinued Businesses.
Cash
Represents Cash of Ansell Healthcare and Corporate.
Inter-Segment Transactions
Operating revenue is shown net of inter-segment values. Accordingly, the
Operating revenues shown in each segment reflect only the external sales made by
that segment. There have been no significant inter-segment sales.
Regions
The allocations of Operating Revenue, Assets Employed and Operating Results
reflect the geographical regions in which the relevant assets are employed and
products manufactured. Operating Revenue Assets Employed Operating Result
Page 9
Details of specific receipts/outlays, revenues/expenses
31 December 2001 31 December 2000
A$ millions A$ millions
12.1 Interest revenue included in
determining item 1.5 9.8 30.9
12.2 Interest revenue included in item 12.1
but not yet received (if material) - -
12.3 Interest costs excluded from borrowing
costs, capitalised in asset values - -
12.4 Interest costs excluded from item 12.3
and capitalised in asset values
(if material) - -
12.5 Outlays (except those arising from the
acquisition of an existing business)
capitalised in intangibles (if material) - -
12.6 Depreciation and amortisation (excluding
amortisation of intangibles) 37.1 61.6
Control gained over entities having material
effect Consideration
$Millions
13.1 Name of entity (or group of entities)
NIL
13.2 Consolidated profit (loss) from ordinary
activities and extraordinary items after
tax of the entity (or group of entities) N/A
since the date in the current period on
which control was acquired
13.3 Date from which such profit has been
calculated N/A
13.4 Profit (loss) from ordinary activities and
extraordinary items after tax of the
entity (or group of entities) for the whole
of the previous corresponding period N/A
2000 The economic entity did not gain control over any businesses in prior
corresponding half-year.
Loss of control of entities having material effect
Consideration
(net of disposal costs)
Consolidated Entity's Interest $Millions
14.1 Name of entity (or
group of entities) Pacific Automotive 100% 246.7
Pacific Brands 100% 716.6
14.2 Consolidated profit (loss) from
ordinary activities and extraordinary items after
tax of the entity (or group of entities)
for the current period to the date
of loss of control
Pacific Automotive $5.7 million
Pacific Brands $43.4 million
14.3 Date to which the profit (loss) in item
14.2 has been
calculated Pacific Automotive - 31 August 2001
Pacific Brands - 30 November 2001
14.4 Consolidated profit
(loss) from ordinary
activities and
extraordinary items
after tax of the
entity (or group of
entities)
while controlled
during the whole of the
previous Pacific Automotive $5.1 million
corresponding
period Pacific Brands $36.0 million
14.5 Contribution to
consolidated profit
(loss) from ordinary
activities and
extraordinary items
from sale of Pacific Automotive $(9.2) million
interest leading to
loss of control Pacific Brands $21.1 million
2000 The economic entity lost control of GNB Technologies and the Electrical
Distribution business in the prior corresponding half-year.
Page 10
Dividends (in the case of a trust, distributions)
15.1 Date the dividend (distribution) is payable N/A
15.2 Record date to determine entitlements to the
dividend (distribution)
(ie, on the basis of registrable transfers received
up to 5.00 pm if securities are not +CHESS approved,
or security holding balances established by 5.00 pm
or such later time permitted by SCH Business
Rules if +securities are +CHESS approved) N/A
15.3 If it is a final dividend, has it been declared? N/A
(Preliminary final report only)
Amount per security
Franked amount per Amount per security of
Amount per security at 30% tax foreign source dividend
security (previous year 34%)
(Preliminary final report only)
15.4 Final Dividend:
Current year N/A N/A N/A
15.5 Previous year N/A N/A N/A
15.6 Interim Dividend:
Current year 0.c N/A N/A
15.7 Previous year 5.c Unfranked N/A
Total dividend (distribution) per security (interim plus final)
(Preliminary final report only) 31 December 2001 31 December 2000
15.8 Ordinary securities N/A N/A
15.9 Preference securities N/A N/A
Half yearly report - interim dividend (distribution) on all securities
31 December 2001 31 December 2000
A$ millions A$ millions
15.10 Ordinary shares - 46.6
15.11 Preference securities - -
15.12 Other equity instruments - -
15.13 Total - 46.6
The dividend or distribution plans shown below are in operation.
Not Applicable
The last date(s) for receipt of election notices for the dividend or
distribution plans N/A
Any other disclosures in relation to dividends (distributions)
Not Applicable
Page 11
Details of aggregate share of profits (losses) of associates and joint venture
entities
Aggregate share of profits/(losses) of associates 31 December 2001 31 December 2000
and joint venture entities A$ millions A$ millions
16.1 Profit (loss) from ordinary activities
before income tax
- associates 1.0 2.9
- joint venture entities 0.0 (35.5)
1.0 (32.6)
16.2 Income tax on ordinary activities
- associates 0.2 1.0
16.3 Profit (loss) from ordinary activities after
income tax 0.8 (33.6)
16.4 Extraordinary items net of tax - -
16.5 Net profit (loss) 0.8 (33.6)
16.6 Outside equity interests - -
16.7 Net profit (loss) attributable to members 0.8 (33.6)
Income tax benefit on the loss from ordinary activities of joint venture
entities in 2000 of $11.5 million is included in the economic entity's income
tax expense in that period as the income tax liability is borne by the economic
entity.
Material interests in entities which are not controlled entities
The economic entity has an interest (that is material to it) in the following
entities.
Name of entity Percentage of ownership interest Contribution to Operating Profit (Loss and
held at end of period or date of disposal Extraordinary items after tax
31 December 2001 31 December 2000 31 December 2001 31 December 2000
% % A$ millions A$ millions
17.1 Equity accounted
associates
and joint venture
entities
Associates:
South Pacific Tyres
N.Z. Ltd. * 50% 50% - 1.0
Pacific Marine Batteries Pty.
Ltd. 50% 50% 0.8 0.9
BT Equipment Pty Ltd 45% 0% - -
Car Parts Distribution Pty Ltd ** 0% 50% - -
Joint venture entities:
South Pacific Tyres * 50% 50% - (20.3)
Novare Asia Pacific *** 100% 50% - (3.7)
17.2 Total 0.8 (22.1)
17.3 Other material
interests
Nil
17.4 Total - -
* Effective 1 July 2001 Pacific Dunlop Limited discontinued equity accounting
for its interest in the South Pacific Tyres operation.
** The economic entity disposed of its interest in Car Parts Distribution Pty Ltd
as at 31 August 2001.
*** The economic entity acquired the remaining 50% interest in Novare Asia Pacific
as at 31 August 2001.
Page 12
Issued and quoted securities at end of current period
Description includes rate of interest and any redemption or conversion rights
together with prices and dates.
Amount
Issue price paid-up
Category of securities Total number Number quoted per security per security
(See note 14) (See note 14)
(cents) (cents)
18.1 Preference securities (description) N/A N/A N/A N/A
18.2 Changes during current period N/A N/A N/A N/A
18.3 Ordinary securities
Ordinary shares 931,242,851 931,242,851 n/a 50
Ordinary - Executive Plan Shares 6,386,500 - variable 1
Ordinary - Employee Plan Shares 3,568,650 - variable 50
18.4 Changes during current period
(a) Increase through issues
Ordinary - converted from Executive Plan Shares 1,022,000 1,022,000 variable 50
Ordinary - converted from Employee Plan Shares 169,682 169,682 variable 50
18.5 Convertible debt securities
(description and conversion factor) N/A N/A N/A N/A
18.6 Changes during current period N/A N/A N/A N/A
18.7 Options (description and Exercise Expiry
conversion factor) price date
(if any)
Options issued 11th December 1997 2,610,000 Nil 3.30 11/12/02
18.8 Issued during current period. Nil Nil N/A N/A
18.9 Exercised during current period Nil Nil N/A N/A
18.10 Expired during current period 1,575,000 Nil 3.30 11/12/2002
18.11 Debentures (totals only) N/A N/A
18.12 Unsecured notes (totals only) N/A N/A
Page 13
Contingent Liabilities
Accufix Litigation
Claims have been made against Accufix Research Institute, Inc. (ARI), other
Group companies and, in some instances, Pacific Dunlop Limited relating to
certain Accufix Pacing leads manufactured by ARI which were withdrawn in late
1994 following reports of fracture of the "J" shaped retention wire, which forms
part of the lead.
Approximately 40,500 Accufix Pacing leads were implanted worldwide between 1987
and 1994. Lawsuits arising out of these claims were filed in the United States,
Canada, Australia, France, Germany, Japan, Argentina, the United Kingdom and
Turkey.
All these lawsuits had been resolved by December 31, 2001, save for:
* one lawsuit in Japan involving the claims of two individual plaintiffs;
* two lawsuits in France: one involving the claim of one individual plaintiff,
and the other involving the claims of twenty-one plaintiffs (acting together as
individuals, and not as, or on behalf of, a class) and the subrogated claims of
16 of their health funds; and
* any claims to be subsequently made by any of the 150 persons who opted out of
the class settlement in the United States. As of December 31, 2001 none of the
150 had commenced action.
The settlements in the United States, Australia and elsewhere in the world, were
fully covered by the provisions made in the financial statements for the year
ending June 30, 1998. The balance of these provisions as at December 31, 2001 is
considered adequate to address any remaining liability of the economic entity
arising from claims relating to Accufix Pacing leads that are as yet not
resolved.
Encor Lead Litigation
A putative class action lawsuit was filed in the United States District Court
for the Eastern District of California in 1997, against ARI and others,
including Pacific Dunlop Limited, on behalf of all United States implantees of
Encor 330-854 and Encor 033-856 bipolar Telectronics passive fixation atrial "J"
pacemaker leads manufactured by ARI (Encor Pacing Leads). 9,049 Encor 330-854
bipolar passive leads were distributed in the United States between 1989 and
their voluntary withdrawal from the market in September 1995. No Encor 033-856
bipolar passive leads were distributed in the US.
The Court denied the application for class certification. The plaintiff appealed
to the United States Court of Appeals for the Ninth Circuit, which affirmed the
lower court's denial. On December 14, 2001 the Court of Appeals denied the
plaintiff s request for a hearing before the full Court of Appeals. The
plaintiff has until March 13, 2002 to request the United States Supreme Court to
review that decision.
In these circumstances, the liability (if any) of the Defendants in relation to
the claims in the United States relating to Encor Pacing Leads, cannot be
quantified.
Ansell Latex Allergy Litigation
Ansell Healthcare Products Inc, Ansell Protective Products Inc, 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 1993 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 February 1, 2002 there were approximately 379 such cases pending against
one or more of the Ansell Defendants, representing some 50 percent of cases
filed against all defendants. Of these cases 270 have been consolidated for
discovery and deposition pursuant to the rules on multi-district litigation
before the United States District Court for the Eastern District of
Pennsylvania. The remaining 109 cases are spread through state courts in 18
States, with the greatest concentration in New York (18 cases). One law suit is
current in Australia.
Pacific Dunlop Limited remains a defendant in 1 case only (and application for
dismissal in that case is under consideration). Further, since the inception of
this litigation in 1993, Ansell has been dismissed as a defendant from
approximately 100 cases. With this pattern of dismissals 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
these circumstances the liability of the Ansell Defendants, if any, in relation
to these claims cannot be quantified.
Page 14
Contingent Liabilities (Continued)
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.
Simplot Australia Pty Ltd instituted proceeds against the Company and other
Group companies in the Supreme Court of Victoria in relation to the sale of the
Edgell-Bird's 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.
Except as set out above the contingent liabilities of the economic entity have
not changed since the Annual Report for this year ended 30 June 2001.
Page 15
Comments by Directors
Nil
Basis of preparation of half-year financial report
The half-year consolidated financial report is a general purpose financial
report which has been prepared in accordance with the requirements of the
Corporations Act 2001. Accounting Standard AASB 1029 Interim Financial
Reporting, the recognition and measurement requirements of applicable AASB
standards, other authoritative pronouncements of the Australian Accounting
Standards Board and Urgent Issues Group consensus views. This half-year
financial report is to be read in conjunction with the 30 June 2001 Annual
Financial Report and any public announcements by Pacific Dunlop Limited and its
Controlled Entities during the half-year in accordance with continuous
disclosure obligations arising under 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 current valuations of non-
current assets.
These accounting policies have been consistently applied by each entity in the
economic entity and, except where there is a change in accounting policy as
disclosed herein, are consistent with those applied in the 30 June 2001 Annual
Financial Report.
The carrying amounts of non-current assets are reviewed to determine whether
they are in excess of their recoverable amount at the end of the half-year. If
the carrying amount of a non-current asset exceeds the recoverable amount, the
asset is written down to the lower amount. In assessing recoverable amounts the
relevant cash flows have not been discounted to their present value.
The half-year report does not include full note disclosure of the type normally
included in the annual financial report.
Material factors affecting the revenues and expenses of the economic entity for
the current period:
The Group produced a loss after tax of $92.8 million, which was impacted by
write-downs of the company's investment in Exide Technologies $61.5 million and
Ansell Healthcare's manufacturing facility, at Troy in the USA $63.9 million.
During the six month's period the company finalised the sale of the Pacific
Automotive and Pacific Brands businesses. The Group's continuing business.
Ansell Healthcare saw operating profit rise from $84.5 million to $92.1 million.
This result was achieved despite on-going restructuring of manufacturing
operations and significant weakness in the global economy. Ansell held, or
increased market share in most of its key markets and products in this difficult
environment.
Refer to the accompanying media release for further details.
A description of each event since the end of the current period which has had a
material effect and it is not related to matters already reported, with
financial effect quantified (if possible):
Since the end of the current period no matters or circumstances have arisen that
have significantly affected or may significantly affect the operations, results
of operations or state of affairs of the Group in future periods.
Franking credits available and prospects for paying fully or partly franked
dividends for at least the next year:
The balance of available franking credits in the franking account as at 31
December 2001 was Nil (2000 - Nil). No further franking credits are expected to
arise during the year ending 30 June 2002.
Page 16
Changes in accounting policies since the last annual report are disclosed as
follows:
Statement of significant accounting policies
2 Changes 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.
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.
Page 17
Additional disclosure for trusts N/A
Annual meeting N/A
Page 18
Compliance statement
1 This report has been prepared under accounting policies which comply with
accounting standards as defined in the Corporations Act 2001 or other standards
acceptable to ASX.
2 This report, and the accounts upon which the report is based (if separate),
use the same accounting policies.
3 This report does give a true and fair view of the matters disclosed.
4 This report is based on accounts to which one of the following applies.
X The accounts have been subject to review.
5 If the audit report or review by the auditor is not attached, details of any
qualifications are attached.
6 The entity has a formally constituted audit committee.
Date 14 February 2002
R J Bartlett
Company Secretary
Page 19
PACIFIC DUNLOP LIMITED
ACN 004 085 330
Directors' Declaration
The Directors of Pacific Dunlop Limited (the Company) declare that:
(a) the consolidated financial statements of the economic entity in the form of
ASX Appendix 4B for the half-year ended 31 December 2001 have been made out in
compliance with Accounting Standard AASB 1029 Interim Financial Reporting:
(b) the consolidated financial statements of the economic entity give a true and
fair view of the financial performance of the economic entity for the half-year
ended 31 December 2001 and of the financial position of the economic entity as
at 31 December 2001; and
(c) in the opinion of the Directors, as at the date of this declaration there
are reasonable grounds to believe that the Company will be able to pay its debts
as and when they become due and payable.
This declaration is made in accordance with a resolution of the Directors.
Dr E.D. Tweddell
Director
Mr P.L. Barnes
Director
Dated at Melbourne this 14th day of February 2002.
Page 20
KPMG
Independent review report to the members of Pacific Dunlop Limited
Scope
We have reviewed the financial report of Pacific Dunlop Limited for the
half-year ended 31 December 2001 in the form of the Rule 4.13(b) version
of Appendix 4B of the Australian Stock Exchange Listing Rules, consisting
of the statement of financial performance, statement of financial
position, statement of cash flows, accompanying notes and the directors'
declaration set out on pages 1 to 20.
The financial report includes the consolidated financial statements of
the consolidated entity, comprising the Company and the entities it
controlled at the end of the half-year or from time to time during the
half-year. The Company's directors are responsible for the financial
report.
We have performed an independent review of the financial report in order to
state whether, on the basis of procedures described, anything has come to our
attention that would indicate that the financial report is not presented
fairly in accordance with Accounting Standard AASB 1029 "Interim Financial
Reporting" and other mandatory professional reporting requirements and
statutory requirements in Australia so as to present a view which is
consistent with our understanding of the consolidated entity's financial
position and performance as represented by the results of its operations and
its cash flows and in order for the Company to lodge the financial report
with the Australian Securities and Investments Commission.
Our review has been conducted in accordance with Australian Auditing
Standards applicable to review engagements. The review is limited
primarily to inquiries of company personnel and analytical procedures
applied to the financial data. Our review has not involved a study and
evaluation of internal accounting controls, tests of accounting records
or tests of responses to inquiries by obtaining corroborative evidence
from inspection, observation or confirmation. The procedures do not
provide all the evidence that would be required in an audit, thus the
level of assurance is less than given in an audit. We have not performed
an audit and, accordingly, we do not express an audit opinion.
Statement
Based on our review, which is not an audit, we have not become aware of
any matter that makes us believe that the half-year financial report of
Pacific Dunlop Limited is not in accordance with:
a) the Corporations Act 2001, including.
i. giving a true and fair view of the consolidated entity's financial
position as at 31 December 2001 and of its performance for the half-year
ended on that date; and
ii. complying with Accounting Standard AASB 1029 "Interim Financial
Reporting" and the Corporations Regulations 2001; and
b) other mandatory professional reporting requirements in Australia.
Melbourne
14th February, 2002
PACIFIC DUNLOP LIMITED
ACN 004 085 330
DIRECTORS' REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2001
This Report by the Directors of Pacific Dunlop Limited (the
Company) is made pursuant to Chapter 2M of the Corporations Act
2001 for the half-year ended 31 December 2001 and is accompanied
by consolidated financial statements for the six months of the
economic entity comprising the Company and the entities it
controlled from time to time during that period ("economic
entity").
The information set out in this Report is to be read in
conjunction with that appearing in the attached Half-Yearly
Results Announcement and in the Notes to the consolidated
financial statements which are included in this report.
1. Directors
The name of each person who has been a Director of the
Company at any time during or since the end of the half-year, is:
Dr Edward D. Tweddell (Chairman)
Mr John T. Ralph AC (Former Chairman)
Mr Anthony B. Daniels OAM (Former Acting Managing Director)
Mr Peter L. Barnes
Mr Nuno A. D'Aquino
Mr Herbert J. Elliott MBE
Mr Stanley P. Gold
Ms S. Carolyn H. Kay
Mr Michael J. McConnell (Alternate for Mr Gold)
Mr Robert J. McLean
Mr Ian E. Webber AO
Ms Kay and Messrs Daniels, Elliott and Webber held office
from 1 July 2001 to the date of this report. Dr Tweddell and
Messrs Gold, Barnes and McConnell (in his capacity as alternate
director) were appointed on 26 October 2001. Mr Mclean retired on
27 July 2001, Mr D'Aquino retired on 30 September 2001, and Mr Ralph
retired on 30 November 2001.
2. Review and Results of Operations
A review of the operations of the economic entity during the
ended 31 December 2001 and the results of those operations
is contained in the attached Results Announcement.
3. Rounding Off
The Company is of a kind referred to in BASIC Class Order 98/100
dated 10 July 1998 and in accordance with that Class Order, amounts
in the Financial Report and Directors' Report have been rounded off
to the nearest one hundred thousand dollars, unless otherwise
stated.
This Report is made in accordance with a resolution of the Board of
Directors and is signed for and on behalf of the Directors.
Dr E.D. Tweddell
Director
Mr P.L. Barnes
Director
Dated at Melbourne this 14th day of February 2002.
14 February 2002
PACIFIC DUNLOP HALF YEAR RESULTS - A PERIOD OF CONSOLIDATION
AND REFOCUS
CONSOLIDATION:
• A reduction in Net Debt of $865.7 million, the return to conservative gearing
levels and a strong balance sheet, providing a platform for growth of the
Ansell business.
Key drivers of the reduction were:-
• The sale of Pacific Automotive for $251.5m in August.
• The sale of Pacific Brands in November, for $730 million.
• The restructuring of South Pacific Tyres, Pacific Dunlop's Joint Venture with
the Goodyear Tire and Rubber Company, resulting in no further cash
requirements from Pacific Dunlop Ltd.
REFOCUS:
• The Group's Operating Revenue for the half was $1.534 billion, including $806
million from discontinued businesses. Group Operating EBIT from continuing
operations was $58.9 million.
• Operating revenue from Ansell of $706.8 million, up 3% on the previous
corresponding period.
• Operating profit from Ansell of $92.1 million, up 9% on the previous
corresponding period of $84.5 million.
• The Group produced a loss after tax attributable to shareholders of
$92.8 million as a result of non-cash write-downs of the Company's investment
in Exide Technologies ($61.5 million), the Ansell manufacturing facility at
Troy in the USA (non-cash $55.7 million, and cash $8.2 million) and write
down of Group assets, associated with business disposals.
• Changes to the Company's Board of Directors and management structure,
including the appointment of Dr. Ed Tweddell as Chairman, and the initiation
of a major strategic review of Ansell.
• The Company will hold an Extraordinary General Meeting of Shareholders on
12 April, 2002 to consider a change of name and other corporate issues.
DIVIDEND:
• No interim dividend will be paid.
The Directors of Pacific Dunlop today announced the Company results for the half
year ended 31 December, 2001. The Group's continuing business, Ansell, saw
Operating Profit increase from $84.5 million in the previous corresponding
period to $92.1 million in the current year. This was based on sales of $706.8
million in the current year, up from $686.2 million in the previous
corresponding period. This result was achieved despite ongoing restructuring of
manufacturing operations and significant weakness in the global economy.
The after tax loss of $92.8 million includes the non-cash write-downs of the
Group's investment in Exide Technologies, a write-down of certain Ansell assets
and a net profit on sale of businesses. For a full explanation of the write-
downs see page 10.
In reviewing the half year results, the Chairman, Dr. Ed Tweddell commented:
This half year completes the transformation of Pacific Dunlop from a
conglomerate to, substantially, a single business corporation. It marks a
significant milestone for the Company and creates a strong base for the future.
"My predecessor, John Ralph, announced a number of initiatives which he
completed before stepping down from the Board. They included the sale of the
Pacific Automotive business, the sale of the Pacific Brands business, and the
ring fencing of South Pacific Tyres with an option to exit the investment in
four years. All of these projects were completed on a timely basis and
established a solid foundation for the future."
"The restructured Group now comprises Ansell and a number of non core
investments including South Pacific Tyres (50%), Ambri Ltd. (19.9%), Pacific
Marine Batteries Pty. Ltd. (50%), BT Equipment Ltd. (45%) in Australia, and
Exide Technologies (16%) in USA. As advised, the South Pacific Tyres investment
has been the subject of restructuring during the period. The other investments
will be reviewed against the background of enhancement of shareholder value and
potential release of cash for further growth of Ansell."
"The balance sheet has been strengthened significantly by the sale of businesses
with the proceeds being applied to the reduction of debt. Pacific Dunlop is now
in a strong position both financially and strategically to maximise the Ansell
business."
"We are committed to the restoration of shareholder value. Our intention is to
rigorously review the Company s strategic options going forward and continually
assess the potential contribution to growth of the Company s assets. We will
take steps to manage assets as required in the interests of transparency,
consolidation of core businesses and a commitment to build shareholder value."
"As previously announced, a major strategic review of Ansell has commenced. This
will provide an important insight and enable a clear strategy to be formulated,
based on sound knowledge of the business and its potential. The review is well
underway and the Company is being assisted in the process by Bain International.
It is expected the review will be completed in early April. A decision regarding
the appointment of a Chief Executive Officer of Pacific Dunlop is expected to be
announced after the completion of the review."
"Today we also announce the intention to formalise the Company s focus by
seeking shareholder approval for a change of name. I am sure that the name
change in conjunction with the outcome of the strategic review and the
appointment of a Chief Executive Officer, will all contribute to the Group
moving forward into an exciting new era focussing on protective products in a
broad healthcare context", said Dr. Tweddell.
-2-
Business Review Ansell Healthcare
31 December 2001 31 December 2000
$M $M
Operating Revenue 706.8 686.2
Operating Profit (EBITA) 92.1 84.5
Assets Employed 1,023.8 1,130.2
Depreciation 20.0 22.7
Note: Ansell Head Office costs are (based on Australian Accounting Standard AASB
1005 Segment Reporting) included in Unallocated in the ASX Release. The current
year s cost is $11.5 million, compared with the corresponding period last year
of $7.6 million. Of the increase, approximately $2.6 million relates to the
hedging program noted below, and the translation impact.
Ansell's sales of $706.8 million were up 3.0% up on the previous corresponding
period, and Operating Profit of $92.1 million was 9% higher. These results were
achieved despite the weak global economic conditions which saw a substantial
manufacturing slowdown in the USA and Europe, particularly in the automotive
sector, and further uncertainty following the events of 11 September 2001.
Significantly, Ansell held or increased market share in most of its key markets
and products in this difficult trading environment.
Ansell operates worldwide in a range of currencies, the most predominant of
which are US dollars and the Euro. Any impact of currency movements is recorded
against Ansell s trading results. Ansell does not hedge profits, with the
exception of Euro Operating Profit , 75% of which is hedged into US dollars on a
rolling six month basis.
Ansell is a global leader in healthcare barrier protection. Ansell s extensive
range of products and supporting services provide tailored barrier protection
solutions for the prevention of infection or injury to a broad spectrum of
users. Ansell's customers range from medical professionals, police, military,
postal and fire forces, to everyday consumers and almost every type of industry
where there is a growing focus on injury prevention and cleanliness of products
and workplace environments.
Ansell is organised across three geographic regions (Americas, Europe,
Asia/Pacific), and three broad market segments (Occupational Professional,
Consumer), supported by centralised Global Operations and Supply Chain, and
Science and Technology groups.
As previously noted, all assets are continually being assessed to ensure a
positive contribution to shareholder value. This review revealed that Ansell's
manufacturing facility at Troy, Alabama, (USA) was not contributing to
shareholder value. It has therefore been decided to close the plant.
The Troy plant currently produces disposable synthetic nitrile examination
gloves for general-purpose barrier protection (TNT), and low particulate
synthetic Nitrilite(TM) Critical Environment (CE) gloves for the micro-
electronics industry.
In the mid-1990's, margins for CE gloves were highly attractive, and forecast
growth in the micro-electronics industry supported the construction of three
highly-specialised CE glove production lines at Troy. These new lines
supplemented the existing two older general-purpose nitrile disposable synthetic
glove lines.
Subsequently, fluctuations in the global microelectronics industry and changes
in product specifications have held back growth to levels below those
anticipated. Further, the microelectronics industry has developed a new
generation of products requiring ultra-clean gloves, which have exceeded both
the design capabilities and economic viability of the Troy lines.
-3-
Under present operating conditions, the Troy facility is incurring an operating
loss of $7.7 million annually and is using cash of $3.5 million. It is now more
cost-effective for Ansell to service the CE market from its Asian facilities
which utilise a flexible and lower cost manufacturing process. In addition, the
general-purpose TNT nitrile disposable gloves manufactured at Troy can also now
be more economically sourced in Asia.
Based on the above changes in market conditions, the Board has determined that
it is in the best interest of shareholders to cease operations at the loss
making Troy site. This decision has been made after all other avenues have been
explored, and will necessitate a one-time charge of $63.9 million which has been
fully provided in the accounts. Of this amount, $8.2 million will be a cash
charge, with the remaining $55.7 million, a non-cash charge.
The benefit of this approach is to eliminate the above-mentioned annual loss,
and pave the way for a $5.5 million operating profit in the first full year
after completion of the closure, a $13.2 million turnaround in the first full
year. The closure will be cash positive to the extent of $5.5 million, a $9.0
million turnaround in the first full year.
A brief review of each of Ansell's Market Segments for the first half year
follows:
Professional Healthcare
31 December 2001 31 December 2000
$M $M
Operating Revenue 279.1 264.8
Operating Profit 49.8 41.7
Assets Employed 438.0 458.5
Depreciation 9.2 10.3
The Professional Healthcare segment supports health care providers with medical,
surgical and examination gloves for hand barrier protection and infection
control. It accounts for approximately 40% of Ansell s revenue, and 54% of
operating profit. Ansell is the undisputed world leader in market share of
natural latex and synthetic surgeons 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 current half 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 Ansell winning over 65% of head to
head trials against competitive gloves. Europe launched the new Gammex PF(TM)
(powder free) surgeons glove late in the period, and market trials show rapid
user acceptance. In Australia, where Ansell holds a clear leadership position,
the growth in powder free and synthetic latex surgeons gloves continued its
positive momentum. World wide, surgeons gloves flowing from the new Shah Alam
facility in Malaysia are being well accepted. New synthetic latex surgeons
gloves are also gaining increasing acceptance in the fast-growing and
profitable, but still relatively small sector.
-4-
Ansell'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 Ansell'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 Ansell's strategy of
out-sourcing powdered gloves and concentrating production on the higher margin
powder free and synthetic products. As a result of this approach, examination
gloves now represent less than 16% of Ansell's total sales revenue, with only
sales at attractive margins being retained.
Occupational Healthcare
31 December 2001 31 December 2000
$M $M
Operating Revenue 337.9 341.3
Operating Profit 29.8 35.3
Assets Employed 442.8 521.8
Depreciation 8.1 9.4
Ansell 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 47% of Ansell's total
revenues, and 32% of operating profit. Ansell also markets a range of
housekeeping gloves through a small number of selected partners in international
markets.
With significant resources and expertise in the field of Occupational Health and
Safety, Ansell 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 economic recession that has affected most industrialised countries during
the current period has negatively impacted the Occupational Healthcare segment
of Ansell s business, when compared with the buoyant conditions in the same
period last year. A significant part of Ansell s customer base is in the
manufacturing sector, and this has been particularly hard hit, especially in USA
and Germany.
In face of the economic downturn, Ansell has increased its share of the
available market in all major categories. This has been driven by the ongoing
introduction of the Hyflex(TM) family of ergonomic gloves that combines the
polymer science and dipping process know-how of Ansell with the fibre and
knitting technology of Golden Needles (acquired in 1997). Additionally, the
rollout of the Ford Global Distribution Alliance contract in USA has progressed
steadily, despite the reduction in automobile production compared with last
year. 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 Ansell
s product and supply recommendations.
The Occupational Healthcare 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 benefits of this
restructuring will begin to flow through to the results late in the second half.
Additional restructuring initiatives being announced today are anticipated to
provide further significant margin improvement when completed.
-5-
Consumer Healthcare
31 December 2001 31 December 2000
$M $M
Operating Revenue 89.8 80.1
Operating Profit 12.5 7.5
Assets Employed 143.0 146.9
Depreciation 2.7 3.0
Consumer Healthcare covers the markets for condoms and other personal products,
and is approximately 12% of Ansell's revenues and 14% of operating profit.
Ansell ranks in the global top 3 in the condom segment, with a 12% share of the
world market, covering both retail and public sectors.
Significant improvement in performance is being driven by steady gains in
Ansell's 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.
Ansell's Consumer Healthcare marketing teams in USA, Europe and Australia have
again won a number of awards for innovative packaging and advertising, and the
Company s leading brands include LifeStyles(TM) , ChekMate(TM), Manix(TM),
Mates(TM), Prime(TM), Contempo(TM), Kama Sutra(TM) and Akuel(TM). 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. Ansell 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.
Prospects
As previously reported, the major global restructuring of Ansell is now well
under way, and is anticipated to be completed late in this financial year. The
focus of this restructuring is on further improving competitiveness and involves
the transfer of significant USA manufacturing activity to state-of-the-art
facilities in Mexico and Asia. Substantial and sustainable profit improvements
are expected once the facilities are fully operational. The costs associated
with this previously announced restructuring were fully provided for at 30 June,
2001, and benefits will begin to flow late in fiscal 2002, with the full impact
being seen in fiscal 2003. Other important aspects of this restructuring are the
consolidation of European sales and administrative functions into one new
facility in Belgium; the integration of Occupational, Professional and Consumer
Regional Sales Management; the consolidation of global Supply Chain management,
and the centralisation and relocation of Science & Technology into a major new
world class facility in Malaysia.
Ansell's Science & Technology group has provided a steady flow of new products,
new materials, and improved processes in recent years. This flow of innovation,
combined with global Supply Chain capabilities and a solution-oriented
approach to providing customer value, continues to provide Ansell with a major
differentiation to its competitors. In each of the past three years, Ansell has
had more than 15% of sales from new products that were introduced less than
three years ago.
Based on the above, it is anticipated that Ansell s full year results will be
ahead of last year.
-6-
Other Investments and Discontinued Businesses
• South Pacific Tyres
As previously reported, an Agreement with our partner, The Goodyear Tire &
Rubber Company of the United States, governing the restructure of the South
Pacific Tyres joint venture, was executed by both companies during the half.
Significant initiatives announced have been:
• a major overhaul of the Company s manufacturing division, with the closure of
three manufacturing facilities and an upgrading to world-class levels of its two
remaining factories.
• an aggressive plan to franchise selected Goodyear Auto Service Centres and
Beaurepaire stores nationally is expected to realise significant distribution
efficiencies.
The continuing restructuring of South Pacific Tyres will not require any further
cash contribution from Pacific Dunlop. Pacific Dunlop's future funding is
limited to the loans of $56 million currently in the business. The Agreement
with Goodyear contains a put option in favour of Pacific Dunlop, exercisable in
four to five years. If this put option is not exercised, Goodyear has a call
option, exercisable in the following six months.
The company has recognised that South Pacific Tyres should be classed as an
investment and will not be equity accounted for as in previous years, although
the Partners equity ownership and voting rights remain unchanged at 50% each.
Highlights of the past six months have been:
• the successful renegotiation of new enterprise bargaining agreements with key
manufacturing union groups;
• the Partners have approved significant capital investment earmarked for the
Somerton tyre factory, enabling production of higher quality passenger tyres;
• the launch of a totally revitalised and expanded product range across all
sectors including passenger, light truck, truck and commercial vehicle tyres;
• the launch of an expanded retreaded tyre range and the new SP Treads brand;
• the launch of exciting new marketing and advertising campaigns across all major
product and retail brand categories; and
• significant original equipment supply contracts signed with the largest
Australian vehicle manufacturers.
Importantly, the major factory restructuring and store franchising programs are
tracking in line with South Pacific Tyres detailed master plan.
-7-
• Ambri
In July, Pacific Dunlop announced the sale of its wholly owned subsidiary Ambri
Pty. Ltd. to Optecom Ltd. for $10 million cash and 8.32million shares (or 19.9%)
in Optecom (which subsequently changes its name to Ambri Ltd.). This business
was sold to relieve the Company of the burden of financing the ongoing research
and development required to bring the Ambri technology to market. By retaining
an investment in the business, Pacific Dunlop will share in any commercial
success.
• Pacific Automotive
As announced on 20 September, Pacific Dunlop completed the sale of its
Australian and New Zealand Automotive Distribution business for $251.5 million.
Potentially, an additional payment of $20 million may be achieved if the
business meets certain profit criteria over the next two years. Pacific
Automotive was sold to a company owned and funded by institutional investors
comprising GS Private Equity, Gresham Private Equity, and Macquarie Direct
Investment.
Operating Revenue for the two months Pacific Automotive was owned by the Group
was $132 million, up on the previous corresponding period s $130 million.
Operating Profit was $7.5 million compared to the previous corresponding period's
$4.5 million. The previous year's results reflected a slow start to the year
and was achieved after absorbing some one-off costs. The current year's trading
results were achieved in a difficult market.
• Pacific Brands
The Company announced the successful completion of the sale of its Pacific
Brands business for $730 million on 30 November, 2001. Depending on the
financial performance of the business over the current financial year, Pacific
Dunlop may potentially receive additional consideration of up to $10 million.
The business was sold to an investor consortium led by CVC Asia Pacific, and co-
led by Catalyst Investments Managers Pty Ltd.
The five month trading results were strong compared to the previous year. This
was assisted by the results of the Sara Lee business acquired in March, 2001.
Operating Profit for the period was $52.4 million, 7.8% above the previous
corresponding period of $48.6 million. This was based on sales of $662 million,
up on the previous corresponding period of $595.5 million. These were creditable
results in a period when retail sales were heavily affected by international
events and uncertainty, and reflect slightly improved margins and better expense
control.
Dividend
The Directors announced that no interim dividend would be paid.
-8-
Extraordinary General Meeting of Shareholders
The Directors of Pacific Dunlop also announced today the intention to seek
shareholder approval to change the Company's name. This is in keeping with the
new focus and direction of the company. An Extraordinary General Meeting will be
held on April 12, 2002 to approve this and other proposals, including a new
constitution in line with recent regulatory changes, revision to the non
executive directors share plan, and a consolidation of capital. The Board
believes all items are in the best interests of shareholders. Information
relating to the Extraordinary General Meeting will be provided by mail to
shareholders shortly.
Management and Board of Directors
As previously foreshadowed, there have been changes to the Company's senior
management and Board of Directors.
Former Chairman, John Ralph, stepped down in December and was replaced by Dr. Ed
Tweddell, formerly the Managing Director of F.H. Faulding & Company Ltd.
Mr. Nuno D'Aquino stepped down in September to focus on other interests. New
appointments to the Board were; Mr. Stanley Gold of Shamrock Holdings Inc., and
Mr. Peter Barnes, formerly President of Philip Morris Asia Inc.
The new appointments bring considerable business acumen to the Company and will
assist in steering the Company on its new path as a major player in the global
healthcare industry.
With the restructuring now complete, Mr. Tony Daniels stepped aside as Acting
Managing Director and CEO at the end of December, a position which he took over
in April. His contributions during this period were exceptional. Dr. Tweddell is
assisting management in the interim and until the appointment of a new CEO is
completed.
Litigation
Simplot Australia Pty. Ltd. (Simplot) 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. In
2001, Simplot separately 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.
Pacific Dunlop Holdings (USA) Inc. and other Group Entities have instituted
proceedings against Exide Corporation, the purchaser of the GNB business, to
recover an amount of approximately US$20.1 million ($39.3 million), due to the
Group in connection with the sale of the GNB business and as a consequence of
contractual obligations between the Group and Exide. Exide is currently
resisting this claim. The Group will continue to aggressively pursue this claim
to recover the amounts owed.
-9-
Finance
Late in 2001 a number of bank debt facilities matured and were repaid using the
proceeds of asset sales. At the same time a new facility for US$100 million was
put in place. The facility has a term of three years and will be used for
general funding purposes.
The Company's balance sheet has been strengthened significantly by the sale of
businesses and non-core assets. Net Debt (Current and Non Current Interest
Bearing Liabilities less Cash) was reduced from $1.3 billion (excludes
Restricted Deposits and Non Current Interest Bearing Loans included in Non
Current Receivables) to $435 million in the half, a reduction of approximately
$865 million. Gearing (Net Debt:Net Debt & Equity) is now at a more conservative
level of 31.3%, compared to the 30 June, 2001 level of 55.4%. The Company is now
in a strong position, both financially and strategically.
Net cash provided by Operating activities in the period was $39.3 million,
compared to the previous corresponding period s $64.3 million. The current
period includes one-off payments totalling $78.7 million associated with the
restructuring of Ansell, Pacific Brands and the closure of the Engineered
Products operations. This compares to $17.2 million in the previous
corresponding period. Ansell's working capital was reduced by $37.3 million,
which exceeded the capital expenditure and restructuring capital used by Ansell
of $32.0 million.
The write-downs are substantially non-cash. These were as follows:
• On the sale of the GNB battery business to Exide in September 2000, the $M
Group received USD 333 million plus 4 million Exide Technology shares
with a market value of USD 9.0625 per share. The value of these shares
at 31 December, 2001 was USD 1.23 per share, and they have been
written down to this level (61.5)
• There are two Ansell related write-downs:
(i) The Troy USA manufacturing facility. See Page 3 (63.9)
(ii) Land and buildings written-down as a result of the restructuring of
Ansell' s operations in America and the downturn in real-estate values
of the facilities being exited (9.0)
• Loss on Sale of Pacific Automotive (9.2)
• Gain on acquisition of Ambri Shares 8.5
• Gain on Sale of Pacific Brands 21.0
• The write down of Australian tax timing differences unable to be recouped
due to the sale of Pacific Brands (15.2)
• Other, including write down of leasehold improvements on exited
properties and head office restructuring costs (17.9)
$(147.2)
Note: Of the $147.2 million write-down, $135.5 million is non-cash. The cash
costs are $8.2 million related to the closure of the Troy manufacturing
facility, and $3.5 million primarily in Head Office restructuring.
-10-
Outlook
The Board is fully cognisant of the fact that shareholders have been extremely
disappointed in the performance of the Group in recent years. The steps taken to
refocus the Group, including the sale of businesses, reduction of debt and
management changes, in conjunction with the strategy review, the intended
appointment of a new Chief Executive Officer and a strong growth plan, should
result in an outcome in keeping with a commitment to increase shareholder value.
The outlook for the coming half is for continuing improvement. The benefits of
the Ansell restructuring in the U.S. (including the transfer of most
manufacturing to Asia and Mexico) and Europe (reorganisation of the European
businesses) are expected to flow through in the fourth quarter, and the forecast
pick up in the world economy at that time should also produce greater
opportunity. Ansell's full year results are anticipated to be ahead of last
year.
For further information:
Ms Diana Holt
Corporate Affairs
Tel: (+613) 9270 7185
-11-
This information is provided by RNS
The company news service from the London Stock Exchange
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