fisher & paykel appliances holdings limited annual report

180 Pages·2012·3.96 MB·English

FISHER & PAYKEL
APPLIANCES HOLDINGS LIMITED
ANNUAL REPORT
For the year ended 31 March 2012
Contents
1 Chairman's Review 7
2 Managing Director and CEO’s Review 15
3 Our Brand 26
4 Corporate Responsibilities 42
5 Directors 48
6 Directors' Report and Corporate Governance 54
7 Auditors' Report 66
8 Financial Statements 68
9 Notes to the Financial Statements 73
10 Company Information 165
P2 FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIES
Ë p
TECH 37.8M
NEW DIRECT DRIVE MOTOR AGREEMENT FINANCE BUSINESS PERFORMANCE — THE
— AGREEMENT TO DEVELOP, DESIGN AND FINANCE BUSINESS REPORTED A
MANUFACTURE DIRECT DRIVE WASHING NORMALISED OPERATING PROFIT BEFORE
MACHINE MOTORS SIGNED IN INTEREST AND TAX OF $37.8 MILLION
AUGUST 2011
p p
$0.9M $4M
NORTH AMERICAN BUSINESS PROFIT —  IMPROVED CASHFLOW — CASHFLOW FROM
THE NORTH AMERICAN DISTRIBUTION OPERATIONS, EXCLUDING THE MOVEMENT
AND SERVICES BUSINESS MADE AN IN FINANCE LOANS WAS $117 MILLION
OPERATING PROFIT BEFORE INTEREST COMPARED TO $113 MILLION LAST YEAR
AND TAX OF $0.9 MILLION
CHAIRMAN’S REVIEW P3
Ë q
RANGE $65M
NEW PRODUCTS — NEW PRODUCT DEBT REDUCTION — APPLIANCES NET
RELEASES INCLUDED THE PHASE 7 DEBT AS AT 31 MARCH 2012 WAS
DISHDRAWER, GAS ON GLASS COOK TOPS $65 MILLION
AND THE DCS UNITED INDOOR COOKING
RANGES AND DCS REFRIGERATION
Ë
INDIA
APPLIANCES’ ENTERED THE MARKET IN
INDIA WITH A FOCUS ON THE SPECIFER,
DESIGNER AND ARCHITECT COMMUNITY
IN THE DELHI REGION
P4 FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIES
Ontario Milton Keynes
Canada UK
Dublin
Ireland
Los Angeles
USA
Borso del Grappa
Italy
Clyde
USA

Reynosa
Mexico

Refrigeration Cooking Laundry DishDrawer® Regional/Sales Research And
Office Development
P5
Qingdao
China
Rayong
Thailand

Singapore
Auckland
New Zealand

Sydney
Australia
Marketing and selling
in over 50 countries.
Dunedin
New Zealand
A Global Company
Fisher & Paykel Founded in 1934 as an Internationally recog- Designs, manufactures Research and Develop- Fisher & Paykel Finance
Appliances Holdings importer business. nised brand. and sells direct drive ment centres based in is a leading provider of
Limited comprises two Now has over 3,300 _ #1 in New Zealand washing machine com- Auckland and Dunedin, consumer finance in
operating divisions: employees. _ #2 in Australia ponents and technology New Zealand. New Zealand.
_ Appliances _ Niche high-end to the global appliances
_ Finance (New Zealand market positions industry
only) in North America,
Europe and China
Marketing and selling
in over 50 countries.
P6 FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIES
CHAIRMAN’S REVIEW P7
Dr Keith Turner, Chairman
P8 FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIES
RESULTS on profitable sales, notably in North America. Total
Group net profit after tax was $18.4 million for the operating revenue for the Appliances business was
financial year ended 31 March 2012. This result com- down 7.6% to $891 million compared to $965 million
pares to $33.5 million for the previous year. for the previous year. This reflected weaker retail
There were three items which affected compa- market conditions, rebalancing for profitable sales and
rability, namely an onerous lease charge of $2.7 mil- unfavourable currency translation effects.
lion before tax (Appliances business), a fair valuation Gross margin, as a percentage of sales, increased
adjustment for property held for sale (Appliances by 0.9 percentage points to 31.2%. Appliances’ gross
business) of $1.2 million before tax and litigation costs margin in dollar terms decreased by $13.5 million to
of $6.8 million before tax (Finance Group). In aggre- $278.4 million for the year ended 31 March 2012 as
gate these one off items resulted in a charge of $10.7 a result of lower sales and higher raw materials and
million before tax compared to a gain of $5.1 million freight costs. Sales, general & administration costs
for the previous year. reduced by $10.9 million to $215 million on cost sav-
Adjusting for items affecting comparability, nor- ings, in particular in North America and favourable
malised group net profit after tax was $26.3 million currency translation effects.
compared to $30.0 million last year. The full year result was also impacted by trans-
Net bank debt as at 31 March 2012 was $65.2 actional hedging losses of $25.6 million, with $5.3
million compared to $100.2 million as at 31 March million recorded in the second half following a mid
2011, excluding operating borrowings for the Finance year change in hedging policy.
business. Group interest charges, excluding Finance On a segment reporting basis the North Ameri-
operating interest expense, decreased by 30% from can distribution business reported an operating profit
$15.4 million to $10.9 million on lower debt levels. before interest and tax of $0.9 million for the year
Cashflow from operations, before the movement compared to a $9.8 million loss in the previous year.
in loans to Finance business customers, was $117 mil- The Finance business recorded a solid result
lion compared to $113 million for the previous year. with reported operating earnings before interest and
Group capital expenditure for the year was $50.5 tax (including operating interest) of $31.0 million,
million including capital expenditure related to new compared to $34.7 million for the previous year. After
motor contracts of $22 million. Capital expenditure in adjusting for litigation costs of $6.8 million before tax,
the previous financial year was $28.3 million. normalised profit before interest and tax (including
The Appliances business reported an operating operating interest) was $37.8 million compared to
profit before interest and tax of $7.3 million compared $34.7 million last year. This result is above the market
to $28.8 million last year. After adjusting for items guidance provided in December 2011 of around $32
affecting comparability of $3.9 million before tax, million. Net income remained steady on 2011 levels.
normalised profit before interest and tax was $11.3 Bad debt expenses were lower than the prior year,
million compared to $23.7 million last year. This result however operating costs were higher due to increased
is ahead of market guidance provided in December promotional activity to grow Q Card receivables.
2011 of approximately $10 million. In respect of litigation costs, a case raised by a
For the second half the Appliances business re- U.S. based software company was heard in the High
ported a normalised operating profit before interest Court at Auckland, New Zealand in late 2011. A judge-
and tax of $13.7 million, compared to a loss of $2.4 ment on the issue is now expected this year. There are
million in the first half. complex legal issues and a range of possible outcomes.
As foreshadowed in November 2011, the full year Accordingly, the Directors took the prudent decision at
result reflects lower revenue as the business refocuses the half year to make a provision given this uncertainty.
CHAIRMAN’S REVIEW P9
GROUP FINANCIAL PERFORMANCE YEAR 6 MONTHS
31 March 31 March 31 March 30 Sept
2012 2011 2012 2011
NZ$000 NZ$000 NZ$000 NZ$000
Total Revenue and Other Income
Appliances business 891,449 965,053 450,603 440,846
Finance business 139,719 145,289 69,417 70,302
Other Income 6,790 10,601 3,497 3,293
1,037,958 1,120,943 523,517 514,441
Normalised Operating Profit/(Loss) before Interest and Taxation
Appliances business 11,282 23,675 13,656 (2,374)
Finance business (including Operating Interest) 37,814 34,722 19,447 18,367
49,096 58,397 33,103 15,993
Items affecting comparability
Onerous contracts (2,694) (882) (147) (2,547)
Litigation costs (6,774) - (857) (5,917)
Fair Valuation of Non-Current Assets held for Sale (East Tamaki site) (1,241) (500) (1,241) -
Profit on Sale of Land & Buildings - 6,508 - -
Earnings before Interest & Taxation 38,387 63,523 30,858 7,529
Interest (excluding Finance Business Operating Interest) (10,857) (15,403) (5,414) (5,443)
Operating Profit before Taxation 27,530 48,120 25,444 2,086
Taxation (9,099) (14,575) (7,989) (1,110)
Group Profit after Taxation 18,431 33,545 17,455 976
Normalised Group Profit after Taxation 26,300 30,040 19,408 6,892
CAPITAL STRUCTURE New Zealand. In March 2011, the recycling building
During 2012 financial year further progress was made at the East Tamaki site was sold for $2.25 million and
towards reducing bank debt and improving the overall settlement was completed in December 2011. In May
financial position of the Company. As at 31 March 2012, the Company sold the components building at
2012, the Appliances business had total outstand- the East Tamaki site for $5.1 million with settlement
ing net bank debt of $65.2 million, a reduction of expected by October 2012.
$35 million since 31 March 2011. Debt reduction was
primarily achieved by improved operating cashflow. GOVERNANCE
On 11 November 2011, the Company renewed its The Board refreshment programme continued during
Guaranteeing Group banking facilities on materially the year with two director retirements and two new
similar terms and conditions as the previous debt director appointments.
facilities. In March 2012, the Banking Group agreed to In September 2011, the Company announced
remove the FPAL Interest Coverage Ratio. This ratio the appointment of Lynley Marshall as a Director.
only included earnings before interest, tax, deprecation Lynley’s extensive commercial, retail and media ex-
and amortisation derived by the Appliances business. perience brings a dimension to the Board at a time
As at 31 March 2012, the Group was in full compliance when brand, communication and digital strategy is
with all its banking covenants. increasingly important. Her Australasian experience
During the year, the Company continued with and proven track record at delivering business growth
property sales at the East Tamaki site in Auckland, make her a strong addition to the Board. Pursuant to