Brambles 2006 Annual Report - Alle jaarverslagen

42
Brambles
2006 Annual Report
Dividends
The Board has declared dividends totalling 48.0 Australian
cents (19.364 pence) per share.
In addition to the 2006 final dividend (second interim
dividend) of 13.5 Australian cents (5.446 pence), the
Board has declared a special dividend of 34.5 Australian
cents (13.918 pence). The 2006 final dividend and special
dividend will be fully franked for BIL shareholders.
This special dividend includes 13.5 Australian cents
(5.446 pence) in lieu of the 2007 interim dividend. The
2007 interim dividend would normally be paid in April
2007, however it is being brought forward and paid prior
to Unification as Brambles Limited, the new holding
company of the Group following Unification, will only be
permitted to declare dividends out of profits the Group
generates subsequent to Unification. This means that the
first dividend paid by Brambles Limited post-Unification
will be the final dividend for 2007, which is scheduled to
be paid in October 2007.
The remainder of the special dividend, consisting
of 21.0 Australian cents (8.472 pence), has been
declared in recognition of the success of Brambles’
divestment programme.
Risk management
Brambles is exposed to a variety of financial and market
based risks, including exposure to fluctuating interest and
exchange rates, changing economic conditions through
operations spread across diverse geographic territories,
technological and industry based risks, competitive
environment, counterparty credit risks, regulatory changes
which either singularly or collectively may affect revenue,
cost structure or value of assets within the business, and
all of which are difficult to quantify.
The policies with respect to interest and exchange rate
risk are described below. Treasury is responsible for the
management of these risks within Brambles.
Standard financial derivatives are used by Brambles
to manage financial exposures in the normal course of
business. Dealings in financial derivatives are restricted
through a set of delegated authorities approved by the
Board. No derivatives are used for speculative purposes.
In addition, derivatives are transacted predominantly with
relationship banks which have a reasonable understanding
of Brambles’ business operations. Furthermore, individual
credit limits are assigned to those banks, thereby limiting
exposure to credit-related losses in the event of nonperformance
by a counterparty.
Funding and liquidity
Brambles funds its operations through existing equity,
retained cash flow and borrowings, principally from bank
credit facilities. The credit facilities are generally structured
on a committed multi-currency revolving basis with
maturities ranging out to November 2010. Borrowings
under the facilities are floating-rate, unsecured obligations
with covenants and undertakings typical for these types
of arrangements. To minimise foreign exchange risks,
borrowings are arranged in the currency of the relevant
operating asset to be funded. Brambles also has access
to further funding through overdrafts, uncommitted
and standby lines of credit, principally to manage
day-to-day liquidity.
Brambles borrowed US$425.0 million in the US private
placement debt market in August 2004. The terms
of the debt raising are: (i) US$171.0 million 5.39%
Guaranteed Senior Unsecured Notes due 4 August 2011;
(ii) US$157.5 million 5.77% Guaranteed Senior Unsecured
Notes due 4 August 2014; and (iii) US$96.5 million 5.94%
Guaranteed Senior Unsecured Notes due 4 August 2016.
At the end of the financial year, committed borrowing
facilities, inclusive of the US private placement, totalled the
equivalent of US$3,624 million. The weighted average term
of the facilities is 4.2 years.
Interest rate risk
Brambles’ interest rate risk policy is designed to reduce
volatility in funding costs through prudent selection of
hedging instruments. This policy comprises maintaining a
mix of fixed and floating rate instruments within a target
band, over a certain time horizon. In some cases, interest
rate derivatives are used to achieve this result synthetically.
The present policy is to require the level of fixed-rate debt
to be within 40% to 70% of total forecast debt arising over
a 12 month period, progressively decreasing to 0% to 50%
for debt maturities extending beyond three years.
As at 30 June 2006, 47% of Brambles’ total interestbearing
debt was at fixed interest rates (64% in 2005).
The weighted average period was 4.5 years (3.5 years in
2005). The fair value of all interest rate swap instruments
was US$9.1 million.