Brambles 2006 Annual Report - Alle jaarverslagen

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Brambles
2006 Annual Report CORPORATE GOVERNANCE REPORT
The principal risks and uncertainties facing Brambles
are described below:
• Global economic and business conditions –
Brambles has operations spread across a diverse range
of countries and territories. It is subject to risk related
to global economic and business conditions and climate.
This may affect, among other things, profitability,
demand for services, the solvency of counterparties and
the ability to obtain additional finance.
• Political sensitivity and instability – Brambles
has operations spread across a diverse range of
countries and territories. It is subject to risk related
to, and affected by, political developments and laws
and regulations, such as forced divestiture of assets,
nationalisation, restrictions on production, restrictions
on imports and/or exports, boycotts, embargoes, war
and other international conflicts, terrorism, civil unrest
and local security concerns that threaten the safe and
smooth operation of Brambles‘ business, price controls,
tax increases and retroactive tax claims, expropriation
of property, cancellation of contract rights, and
environmental regulations.
• Force majeure – Brambles is subject to the risk of
strikes, terrorism, war, fire, flood, earthquakes and other
acts of God and other acts outside its control. Some of
these risks may be uninsurable.
• Loss of key customers – Brambles is subject to the
risk of losing a significant number of key customers,
whether to competitors, new entrants or substitute
technologies. This would potentially have an impact
on revenue, cost base, economies of scale and value
of existing assets.
• Loss of senior management – Brambles is subject to
the risk of losing one or more of its senior management
team. Such a loss could affect its business until a
suitable replacement is found. There may be a limited
number of persons with the requisite skills to serve in
such positions.
• Reduction in demand by customers – Brambles is
subject to the risk of a reduction in customer demand
for its services.
• Limitation on ability to obtain additional capital
– The ability of Brambles to obtain additional capital on
acceptable terms or at all may fluctuate, and may be
affected by general economic conditions, the terms of
existing or future debt facilities, or other factors. Any
limitation on the ability to obtain additional capital may
materially and adversely affect business.
• Impact of, and changes in, competition – Brambles
operates in a competitive environment. Many of the
markets in which it operates are served by numerous
competitors. Some of Brambles’ competitors may
have greater financial resources, greater geographical
diversification, greater brand recognition and/or be
better able to withstand adverse market conditions
within the industry or generally.
• Impact of future acquisitions – Brambles may from
time to time acquire additional undertakings or assets.
It may therefore be subject to the risk of loss or liability,
whether contractual, tortious, fiscal or otherwise arising
from such acquisitions.
• Credit risk on counterparties – Brambles is subject
to the risk that any counterparty to a contract to which
Brambles or one of its subsidiaries is a party may
fail to meet its obligations due to that counterparty’s
insolvency, immunity, refusal or inability to meet
such obligations. Such failure could affect the
Brambles business.
• Market size – Brambles is subject to the risk that the
market for its services reduces in size and/or scope.
• Operational hazards – Brambles is subject to the
risk of various operational hazards including, but not
limited to, industrial accidents, road traffic or other
transportation accidents involving its vehicles or
employees, fire, leaks, flooding and other hazards.
• Contract management – Recall – Brambles is subject
to risks associated with contract management by Recall.
Part of Recall’s business is the storage of its customers’
information and other goods. To manage the risk of
loss of its customers’ information and goods, Recall
maintains appropriate fire protection and other loss
control measures. Nevertheless it is possible that future
claims could exceed the level or scope of Brambles’
insurance and that provisions in the company’s accounts
for self-insured risks could prove insufficient.
• Equipment control and quality – CHEP – Brambles is
subject to the risk that the operating and capital costs
of CHEP may fluctuate because of the equipment pool
operated by CHEP. These costs are sensitive to the
efficiency and effectiveness of the control and quality
standards employed. To ensure the profitability and
sustainability of its pool, CHEP optimises the pool
type and equipment control and quality. CHEP closely
monitors the performance of each equipment pool.
• Impact of possible changes in legislation and
taxation and regulatory policies – Brambles is subject
to the risk of change in legislation, taxation, regulations
and policy in the countries and territories in which
it operates. These changes can affect land tenure,
transportation, pricing, environmental protection,
social impact, exports, taxes and foreign exchange.
• Risk of litigation due to the nature of some
operations – Brambles is, due to the nature of some
of its operations, subject to claims for personal injury or
property damage resulting from the use of its products
or services. Brambles is also subject to the risk of claims
arising from motor vehicle accidents in which delivery
and service personnel and/or vehicles are involved and
claims arising from Recall’s data protection operations
and secure destruction services.
• Competition laws – Brambles could, by virtue of its
position in the markets in which it operates, be exposed
to the risk of various issues arising under Australian,
UK, European, US or other competition law regimes.
These could constrain Brambles’ trade practices, and,
in particular, could prevent it from discriminating
between its customers in setting prices, from charging
excessive prices and from requiring its customers to
commit exclusively to Brambles’ services. If Brambles
were found to be in breach of applicable competition
laws or regulations, it could be subject to significant
fines and/or liable for third party damages.