UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F/A
(Mark One)
[_] REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR (G) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2001
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
_______ - _______
Commission file number 0-15850
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Ansell Limited
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(Australian Company Number 004 085 330)
(Exact name of Registrant as specified in its charter)
Ansell Limited
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(Translation of Registrant's name into English)
Victoria, Australia
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(Jurisdiction of incorporation or organisation)
Level 3, 678 Victoria Street, Richmond, Victoria, 3121, Australia
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(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class Name of each exchange on which registered
None None
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Securities registered or to be registered pursuant to Section 12(g) of the Act.
Ordinary Shares
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American Depositary Shares*
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* Evidenced by American Depositary Receipts, each American Depositary Share
representing four (4) Ordinary Shares
Securities registered or to be registered pursuant to Section 15(d) of the Act.
None
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Indicate the number of outstanding shares of each of the issuer's classes of
capital stock as of the close of the period covered by the annual report.
Ordinary Shares - 930,051,169 (at June 30, 2001)**
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** This figure includes 5,091,396 shares represented by the 1,272,849 American
Depositary Shares outstanding on June 30, 2001.
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [_] No
Indicate by check mark which financial statement
item the registrant has elected to follow [_] Item 17 [X] Item 18
EXPLANATORY NOTE REGARDING AMENDED 20-F
We are filing this Form 20-F/A to add at the end of Part III the
Statutory Accounts of South Pacific Tyres and Controlled Entities for the Year
Ended June 30, 2001.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorised.
Ansell Limited
Registrant
/s/ David M. Graham
David M. Graham
Chief Financial Officer
Dated: January 7, 2003
Certifications
I, Harry Boon, certify that:
1. I have reviewed this amendment to the annual report on Form 20-F of Ansell
Limited;
2. Based on my knowledge, this amendment to the annual report does not contain
any untrue statement of material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this annual report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this amendment to the annual report, fairly present
in all material respects the financial condition, results of operations and
cash flows of South Pacific Tyres & Controlled Entities as of, and for, the
periods presented.
Dated: January 8, 2003 /s/ Harry Boon
----------------
Name: Harry Boon
Title: Chief Executive Officer
I David M. Graham certify that:
1. I have reviewed this amendment to the annual report on Form 20-F of Ansell
Limited;
2. Based on my knowledge, this amendment to the annual report does not contain
any untrue statement of material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this annual report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this amendment to the annual report, fairly present
in all material respects the financial condition, results of operations and
cash flows of South Pacific Tyres & Controlled Entities as of, and for, the
periods presented.
Dated: January 8, 2003 /s/ David M. Graham
---------------------
Name: David M. Graham
Title: Chief Financial Officer
SOUTH PACIFIC TYRES
& CONTROLLED ENTITIES
STATUTORY ACCOUNTS
FOR THE YEAR ENDED
30TH JUNE 2001
Contents
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PAGE NO
Directors Report ......................................................................... 1
Statement of Financial Performance ....................................................... 5
Statement of Financial Position .......................................................... 6
Statement of Cash Flows .................................................................. 7
Notes to the Financial Statements ........................................................ 8
1. Statement Of Significant Accounting Policies ................................. 8
2. Change in Accounting Policy .................................................. 13
3. Revenue from ordinary activities ............................................. 14
4. Profit from ordinary activities before income tax expense .................... 14
4. Profit from ordinary activities before income tax expense (continued) ........ 15
5. Auditors' Remuneration ....................................................... 15
6. Taxation ..................................................................... 16
7. Cash assets .................................................................. 17
8. Receivables .................................................................. 17
9. Inventories .................................................................. 17
10. Other current assets ......................................................... 17
11. Other financial assets ....................................................... 17
12. Property, plant and equipment ................................................ 18
13. Intangibles .................................................................. 19
14. Payables ..................................................................... 19
15. Interest bearing liabilities ................................................. 20
16. Provisions ................................................................... 20
17. Amounts payable/receivable in foreign currencies ............................. 21
18. Contributed equity ........................................................... 21
19. Reserves ..................................................................... 21
20. Retained profits/(accumulated losses) ........................................ 22
21. Outside equity interest ...................................................... 22
22. Additional financial instruments disclosure .................................. 22
23. Commitments .................................................................. 26
24. Contingent liabilities ....................................................... 27
25. Related party transactions ................................................... 27
26. Superannuation commitments ................................................... 28
27. Segment reporting ............................................................ 29
28. Particulars relating to controlled entities .................................. 29
29. Events subsequent to balance date ............................................ 29
30. Notes to the statements of cash flows ........................................ 30
Directors Declaration .................................................................... 32
Independent Audit Report ................................................................. 33
Directors Report
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The directors of South Pacific Tyres (a partnership between Pacific Dunlop Tyres
Pty. Ltd. and Goodyear Tyres Pty. Ltd.) present their report together with the
financial report of South Pacific Tyres ("the partnership") and the consolidated
financial report of the consolidated entity, being the partnership and its
controlled entities, for the year ended 30th June 2001 and the auditor's report
thereon.
(a) The names of the directors, appointed pursuant to the Partnership Agreement
dated 30th March 1987, at any time during or since the end of the financial
year are:
Names Experience, Special Responsibilities
Mr. Samir G. Gibara Chairman & Chief Executive Officer of The
Masters - International Bus & Finance - Goodyear Tire & Rubber Company.
Harvard 38 years service with the Company.
Appointed as director 1995
Mr. R Chadwick Appointed as director 1995
Resigned March 31st 2001.
Mr. Phillip Gay Appointed as director 1996.
Mr. Hugh D. Pace President Asia Region of The Goodyear Tire
Masters in International Management & Rubber Company.
27 years service with the Company.
Appointed as director December 1st 1998
Mr. John Rennie Appointed as director 1996.
Mr. Ernie J. Rodia Appointed as director 1999.
Resigned September 30th 2001.
Mr. Clark E. Sprang Senior Vice President for Business
Graduate Ohio State University Development & Integration of
The Goodyear Tire & Rubber Company.
36 years service with the Company.
Appointed as director October 1st 2001.
Mr. Robert W. Tieken Executive Vice President & Chief Financial
Graduate Illinois Wesleyan University Officer of The Goodyear Tire & Rubber Company
8 years service with the Company.
Appointed director 1995
Mr. Ian Veal Appointed as director 1990
SPT Statutory Accounts 30/06/2001 Page 1
Directors Report
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(b) The number of directors' meetings and number of meetings attended by each
director of the partnership during the financial year are:
Director Directors Meetings
A B
Mr. R Chadwick 1 1
Mr. P. Gay 1 1
Mr. S. Gibara 0 1
Mr. H. Pace 1 1
Mr. J. Rennie 0 1
Mr. E. Rodia 1 1
Mr. C. Sprang 0 0
Mr. R. Tieken 0 1
Mr. I. Veal 1 1
A = Number of meetings attended
B = Number of meetings held during the time the director held office
during the year.
(c) The principal activities of the consolidated entity during the period
were:
. Manufacture of tyres for vehicles and aircraft
. Wholesaling and retailing of vehicle and aircraft tyres;
There were no significant changes in the nature of the principal
activities of the consolidated entity during the year.
(d) The net loss of the consolidated entity for the year after deducting
outside equity interests and after providing for income tax was
$92,056,394. The comparative figure for the previous year ended 30th June
2000, was a net loss of $15,639,468. The contribution to profits by each
entity in the consolidated entity is set out in Note 28 to the financial
statements.
The directors have apportioned the loss to the partners in accordance with
the Partnership Agreement.
(e) For the year ended 30/th/ June 2001, South Pacific Tyres paid nil (2000 :
$7,276,000) to the partners by way of a distribution of profits.
(f) The directors' review of the operations of the consolidated entity during
the year, and the results of those operations is as follows:
Worldwide industry over-capacity and severe pressure from competitive
imports made last year very difficult for South Pacific Tyres. It was also
a period of significant change in all operations.
A loss after tax of $92.1 million was incurred by South Pacific Tyres,
compared with the previous years' loss of $15.6 million. The losses
reflected the lower volumes, falling prices, and other inefficiencies
which are currently being addressed in a wide-ranging review of SPT
operations. The losses include $32.3 million non-recurring restructuring
costs including $26.3 million associated with the closure of the medium
truck radial tyre plant at Somerton (closure costs of $52.3 million net of
$25.0 million supply agreement consideration) and $6.0 million costs
associated with an overhead reduction program.
Market share decreased even though total Australian demand for tyres
increased slightly. Competitive imports, mainly from low cost Asian
manufacturers, increased significantly - up to 21.4% in light truck
radials, 8.5% in truck radials, and 7.3% in passenger radials. The
increase in competitive imports from Asia has increased more than three
fold in the past 10 years.
SPT Statutory Accounts 30/06/2001 Page 2
Directors Report
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(g) In the opinion of the directors, other than referred to in this report,
there were no significant changes in the state of affairs of the
consolidated entity that occurred during the year.
(g) Since the end of the financial year, the following matters or
circumstances have arisen that have significantly affected, or may
significantly affect, the operations, results of operations or state of
affairs of the consolidated entity.
A memorandum of undertaking has been signed by the partners on issues
regarding the future of the South Pacific Tyres Joint Venture, including
the basis of future funding and opportunities for continuance or
dissolvement of the partnership. Agreement to give effect to the
understandings in the memorandum is subject to completion of a definitive
agreement.
Further, on the 28th September 2001, South Pacific Tyres announced
details of major restructuring plans for its Australian tyre
manufacturing operations. The restructure is aimed at turning around its
recent poor performance to ensure its survival as a profitable
competitive business. The key elements include:
. Closure of the Footscray factory over the period December 2001,
through to March 2002, with a total of 440 redundancies;
. Reconfiguration of passenger tyre production to consolidate all
current Somerton and Thomastown production of this category at the
Somerton site by July 2002, with 380 redundancies and the closure of
the Thomastown factory;
. Streamlining of some related corporate and executive level
administration with the redundancy of 70 staff.
(i) The operations of the partnership are subject to various environmental
regulations under both Commonwealth and State legislation. The
partnership has an Environmental Specialist who monitors compliance with
environmental regulations. The directors are not aware of any breaches of
the legislation during the financial year which are material in nature.
(j) Likely Developments
Information about likely developments in the operations of the
consolidated entity and the expected results of those operations in
future financial years, has not been included in this report because
disclosure of the information would be likely to result in unreasonable
prejudice to the consolidated entity.
(k) No director of the partnership, since the end of the previous financial
year, has received or become entitled to receive a benefit (other than a
benefit included in the aggregate amount of remuneration received or due
and receivable by directors shown in the financial statements or the
fixed salary of a full time employee of the partnership or of a related
corporation) by reason of a contract made by the partnership or a related
corporation with the director or with a firm of which he is a member, or
with an entity in which the director has a financial interest.
(l) This special purpose financial report has been drawn up in accordance
with Section 11 of the Partnership Agreement. As required by that
section, the financial report has been prepared as if the partnership
were a public company under the provisions of the Corporations Act 2001.
The financial report complies with the Corporations Act 2001, Urgent
Issues Group Consensus Views, other authoritative pronouncements of the
Australian Accounting Standards Board, and, except as stated below,
applicable Accounting Standards. The directors do not consider the
partnership to be a reporting entity and the matters required to be
disclosed by AASB 1017 - Related Party Disclosures, and AASB 1029 -
Accounting for Employee Entitlements ( disclosure requirements only ),
have not been included in the financial report, as the directors do not
consider those matters to be relevant.
(m) Indemnification and insurance of officers and auditors
Since the end of the previous financial year, the partnership has not
indemnified or made a relevant agreement for indemnifying against a
liability any person who is or has been an officer or auditor of the
partnership.
SPT Statutory Accounts 30/06/2001 Page 3
Directors Report
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During the financial year the partnership has paid premiums in respect of
directors' and officers' liability and legal expenses insurance contracts
for the year ended 30th June 2001. Such insurance contracts insure
against certain liability (subject to specific exclusions) persons who
are or have been directors or executive officers of the partnership. The
directors have not included details of the nature of the liabilities
covered or the amount of the premium paid in respect of the directors'
and officers' liability and legal expenses' insurance contracts, as such
disclosure is prohibited under the terms of the contract.
Signed in accordance with a resolution of the directors:
/s/ Robert W. Tieken 30/Oct./01
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Director Dated
/s/ Philip R. Gay 16th October, 2001
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Director Dated
SPT Statutory Accounts 30/06/2001 Page 4
Statement of Financial Performance
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For the year ended 30th June 2001
Consolidated Partnership
2001 2000 1999 2001 2000 1999
Notes $m $m $m $m $m $m
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Revenue from sale of goods 7 774,668,166 871,392,335 889,212,814 483,486,879 501,900,862 538,954,897
Revenue from rendering services 3 59,426,109 63,415,235 61,948,854 - - -
Other revenues from ordinary activities 3 60,935,622 4,392,022 5,984,759 61,824,135 6,264,258 33,822,379
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Total revenue from ordinary activities 895,029,897 939,199,592 957,146,427 545,311,014 508,165,120 572,777,276
Changes in inventories of finished
goods and work in progress (9,386,419) (15,897,755) (2,984,594) (5,306,693) (10,323,639) (3,488,887)
Raw materials and consumables used 145,679,698 176,882,512 180,239,475 129,514,359 157,188,607 160,068,479
Employee expenses 243,283,796 265,671,039 251,360,614 130,898,250 150,381,852 140,961,934
Depreciation and amortisation expenses 4(b) 36,599,361 40,488,722 37,686,538 25,929,707 29,079,650 26,563,490
Borrowing costs 4(b) 16,340,214 15,848,050 14,477,308 15,381,376 15,018,729 14,149,965
Other expenses from ordinary activities 559,362,396 467,752,875 436,919,203 326,295,632 186,272,310 201,932,512
Expenses from ordinary activities 991,879,046 950,745,443 917,698,544 622,712,631 527,617,509 540,187,493
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Profit/(loss) from ordinary activities
before related income tax expense (96,849,149) (11,545,851) 39,447,883 (77,401,617) (19,452,389) 32,589,783
Income tax expense/(benefit)
relating to ordinary activities 6(a) (4,793,040) 4,055,314 12,512,703 - - -
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Profit/(loss) from ordinary activities
after related income tax expense (92,056,109) (15,601,165) 26,935,180 (77,401,617) (19,452,389) 32,589,783
Net profit/(loss) attributable to
outside equity interests 21 285 38,303 7,345 - - -
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Net profit/(loss) after income tax
attributable to the partnership (92,056,394) (15,639,468) 26,927,835 (77,401,617) (19,452,389) 32,589,783
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The statements of financial performance are to be read in conjunction with the
notes to the financial statements set out on pages 8 to 28
SPT Statutory Accounts 30/06/2001 Page 5
Statement of Financial Position
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For the year ended 30th June 2001
Consolidated Partnership
Notes 2001 2000 2001 2000
$ $ $ $
- -------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash assets 7 19,031,203 16,764,042 9,507,000 3,007,895
Receivables 8 144,857,771 154,534,601 161,347,428 161,404,598
Inventories 9 167,246,533 163,510,085 129,392,966 129,100,310
Other 10 2,521,577 7,481,840 147,388 1,177,275
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TOTAL CURRENT ASSETS 333,657,084 342,290,568 300,394,782 294,690,078
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NON-CURRENT ASSETS
Receivables 8 29,091,771 3,028,266 56,622,712 30,834,307
Other financial assets 11 - - 21,496,245 21,496,245
Property, plant and equipment 12 232,748,495 291,581,442 188,444,967 238,748,004
Intangible assets 13 5,467,324 6,321,328 - -
Deferred tax assets 6(c) 8,897,006 3,173,605 - -
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TOTAL NON-CURRENT ASSETS 276,204,596 304,104,641 266,563,924 291,078,556
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TOTAL ASSETS 609,861,680 646,395,209 566,958,706 585,768,634
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CURRENT LIABILITIES
Payables 14 150,212,918 141,958,615 102,305,181 94,529,597
Interest bearing liabilities 15 144,616,621 250,052,160 137,252,397 239,709,040
Current tax liabilities 6(b) 167,096 336,975 - -
Provisions 16 50,702,253 39,225,142 36,397,096 25,048,134
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TOTAL CURRENT LIABILITIES 345,698,888 431,572,892 275,954,674 359,286,771
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NON-CURRENT LIABILITIES
Payables 14 26,807,256 1,134,803 26,413,382 723,309
Provisions 16 8,561,903 9,999,996 4,946,604 6,388,028
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TOTAL NON-CURRENT LIABILITIES 35,369,159 11,134,799 31,359,986 7,111,337
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TOTAL LIABLITIES 381,068,047 442,707,691 307,314,660 366,398,108
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NET ASSETS 228,793,633 203,687,518 259,644,046 219,370,526
========================================================
PARTNERS' EQUITY
Contributed equity 18 317,675,137 200,000,000 317,675,137 200,000,000
Reserves 19 9,220,023 9,463,977 11,409,810 11,409,810
Retained profits/(accumulated losses) 20 (98,587,215) (6,389,238) (69,440,901) 7,960,716
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TOTAL PARTNERS' EQUITY 228,307,945 203,074,739 259,644,046 219,370,526
Outside equity interest 21 485,688 612,779 - -
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TOTAL PARTNERS' EQUITY 228,793,633 203,687,518 259,644,046 219,370,526
========================================================
The statements of financial position are to be read in conjunction with the
notes to the financial statements set out on pages 8 to 28
SPT Statutory Accounts 30/06/2001 Page 6
Statement of Cash Flows
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For the year ended 30th June 2001
Consolidated Partnership
2001 2000 2001 2000
$ $ $ $
Inflows Inflows Inflows Inflows
Notes (Outflows) (Outflows) (Outflows) (Outflows)
- ----------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities
Cash receipts in the course of operations 797,250,016 933,135,755 453,977,589 513,443,925
Cash payments in the course of operations (810,226,386) (879,160,826) (469,572,050) (486,310,858)
Interest received 1,442,101 97,639 5,473,572 3,040,112
Borrowing costs paid (19,316,863) (13,937,731) (18,358,025) (13,108,410)
Income taxes (paid)/refunded 6(b) 1,960,747 (8,428,895) - -
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Net cash provided by/(used in) operating
activities 30(c) (28,890,385) 31,705,942 (28,478,914) 17,064,769
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Cash flows from investing activities
Proceeds on disposal of property, plant
and equipment 34,493,521 2,450,608 31,350,563 1,380,371
Payments for businesses, (net of cash
acquired) 30(b) (85,200) (8,981,735) - -
Payments for property, plant and
equipment (15,637,266) (24,256,706) (11,591,038) (17,204,527)
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Net cash provided by/(used in) investing
activities 18,771,055 (30,787,833) 19,759,525 (15,824,156)
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Cash flows from financing activities
Proceeds from partner contributions 117,675,137 - 117,675,137 -
Proceeds from borrowings - - - 591,570
Repayment of borrowings (103,363,095) (102,672) (99,837,337) -
Finance lease payments (336,189) -
Dividends paid (30,990) (7,276,000) - (7,276,000)
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Net cash provided by/(used) in financing
activities 14,281,052 (7,714,861) 17,837,800 (6,684,430)
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Net increase/(decrease) in cash held 4,161,722 (6,796,752) 9,118,411 (5,443,817)
Cash at the beginning of the financial year 9,831,097 16,857,003 (2,107,688) 3,336,129
Effects of exchange rate fluctuations on the
balances of cash held in foreign currencies 177,883 (229,154) - -
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Cash at the end of the financial year 30(a) 14,170,702 9,831,097 7,010,723 (2,107,688)
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The statements of cash flows are to be read in conjunction with the notes to the
financial statements set out on pages 8 to 28
SPT Statutory Accounts 30/06/2001 Page 7
Notes to the Financial Statements
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1. Statement Of Significant Accounting Policies
The significant policies which have been adopted in the preparation of this
financial report are:
(a) Basis of preparation
In accordance with Section 11 of the Partnership Agreement, South Pacific Tyres
("the partnership") is required to prepare a financial report as if it were a
public company under the provisions of the Corporations Act 2001.
In the opinion of the directors, the partnership is not a reporting entity. The
financial report of the partnership has been drawn up as a special purpose
financial report for distribution to the members and for the purpose of
fulfilling the requirements of the Corporations Act 2001.
The financial report has been prepared in accordance with Accounting Standards,
Urgent Issues Group Consensus Views, other authoritative pronouncements of the
Australian Accounting Standards Board and the Corporations Act 2001 that have a
material effect with the following exceptions:
(i) AASB 1005 Financial Reporting by Segments
(ii) AASB 1017 Related Party Disclosures
(iii) AASB 1028 Accounting for Employee Entitlements (disclosure
requirements only)
It has been prepared on the basis of historical costs and except where stated,
does not take into account changing money values or fair values of non-current
assets.
These accounting policies have been consistently applied by each entity in the
consolidated entity and, except where there is a change in accounting policy,
are consistent with those of the previous year.
(b) Reclassification of financial information
Some line items and sub-totals reported in the previous financial year have been
reclassified and repositioned in the financial statements as a result of the
first time application on 1 July 2000 of the revised standards AASB 1018
Statement of Financial Performance, AASB 1034 Financial Report Presentation and
Disclosures and the new AASB 1040 Statement of Financial Position.
Adoption of these standards has resulted in the transfer of the reconciliation
of opening to closing retained profits from the face of the statement of
financial performance to Note 20.
Revenue and expense items previously disclosed as abnormal have been
reclassified and are now disclosed as individually significant items in Note 4.
These items are no longer identified separately on the face of the statement of
financial performance.
The following assets and liabilities have been removed from previous
classifications and are now disclosed as separate line items on the face of the
statement of financial position:
- - deferred tax assets, previously presented within other non-current assets
- - current tax liabilities, previously presented within current provisions
- - deferred tax liabilities, previously presented within non-current
provisions.
(c) Principles of consolidation
Controlled entities
The financial statements of controlled entities are included from the date
control commences until the date control ceases.
Outside interests in the equity and results of the entities that are controlled
by the partnership are shown as a separate item in the consolidated financial
statements.
SPT Statutory Accounts 30/06/2001 Page 8
Notes to Financial Statements
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1. Statement Of Significant Accounting Policies (continued)
(c) Principles of consolidation (continued)
Transactions eliminated on consolidation
Unrealised gains and losses and inter-entity balances resulting from
transactions with or between controlled entities are eliminated in full on
consolidation.
(d) Revenue recognition - Note 3
Revenues are recognised at fair value of the consideration received net of the
amount of goods and services tax (GST) payable to the taxation authority.
Sale of goods
Revenue from the sale of goods is recognised (net of returns, discounts and
allowances) when control of the goods passes to the customer.
Rendering of services
Revenue from rendering services is recognised when the service has been
completed.
Interest revenue
Interest revenue is recognised as it accrues, taking into account the effective
yield on the financial asset.
Other revenue
Supply agreement revenue relating to tyre purchasing commitments is recognised
at the date of the agreement with the supplier.
Sale of non-current assets
The gross proceeds of non-current asset sales are included as revenue at the
date control of the asset passes to the buyer, usually when an unconditional
contract of sale is signed.
The gain or loss on disposal is calculated as the difference between the
carrying amount of the asset at the time of disposal and the net proceeds on
disposal. Any related balance in the asset revaluation reserve is transferred to
the capital profits reserve on disposal.
(e) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and
services tax (GST), except where the amount of GST incurred is not recoverable
from the Australian Tax Office (ATO). In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item
of the expense.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the ATO is included as a
current asset or current liability in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST
components of cash flows arising from investing and financing activities which
are recoverable from, or payable to, the ATO are classified as operating cash
flows.
(f) Foreign currency
Transactions
Foreign currency transactions are translated to Australian currency at the rates
of exchange ruling at the dates of the transactions. Amounts receivable and
payable in foreign currencies at balance date are translated at the rates of
exchange ruling on that date.
Exchange differences relating to amounts payable and receivable in foreign
currencies are brought to account as exchange gains or losses in the statement
of financial performance in the financial year in which the exchange rates
change.
SPT Statutory Accounts 30/06/2001 Page 9
Notes to the Financial Statements
- --------------------------------------------------------------------------------
1. Statement Of Significant Accounting Policies (continued)
(f) Foreign currency (continued)
Translation of controlled foreign entities
The assets and liabilities of foreign operations that are self-sustaining are
translated at the rates of exchange ruling at balance date. Equity items are
translated at historical rates. The statements of financial performance are
translated at a weighted average rate for the year. Exchange differences arising
on translation are taken directly to the foreign currency translation reserve.
The balance of the foreign currency translation reserve relating to a foreign
operation that is disposed of, or partially disposed of, is transferred to
retained earnings in the year of disposal.
(g) Derivatives
The consolidated entity is exposed to changes in interest rates, foreign
exchange rates and commodity prices from its activities. The consolidated entity
uses the following derivative financial instruments to hedge these risks:
interest rate swaps and forward foreign exchange contracts. Derivative financial
instruments are not held for speculative purposes.
Hedges
Anticipated transactions
Where transactions are designated as a hedge of the purchase or sale of goods or
services, purchase of qualifying assets, or an interest transaction, gains and
losses on the hedge arising up to the date of the transaction, together with any
costs or gains arising at the time of entering into the hedge, are deferred and
included in the measurement of the transaction when it has occurred as
designated. Any gains or losses on the hedge transaction after that date are
included in the statement of financial performance.
The net amounts receivable or payable under open swaps and forward rate
agreements and the associated deferred gains or losses are not recorded in the
statement of financial position until the hedge transaction occurs. The net
receivables or payables are then revalued using the foreign currency and
interest rates current at reporting date. Refer to Note 22.
Other hedges
All other hedge transactions are initially recorded at the relevant rate at the
date of the transaction. Hedges outstanding at balance date are valued at the
rates ruling on that date and any gains or losses are brought to account in the
statement of financial performance. Costs or gains arising at the time of
entering into the hedge are deferred and amortised over the life of the hedge.
(h) Borrowing costs
Borrowing costs include interest, amortisation of discounts or premiums relating
to borrowings and amortisation of ancillary costs incurred in connection with
arrangement of borrowings and finance lease charges. Borrowing costs are
expensed as incurred unless they relate to qualifying assets. Qualifying assets
are assets which take more than 12 months to get ready for their intended use or
sale. In these circumstances, borrowing costs are capitalised to the cost of the
asset. Where funds are borrowed specifically for the acquisition, construction
or production of a qualifying asset, the amount of borrowing costs capitalised
is those incurred in relation to that borrowing, net of any interest earned on
those borrowings. Where funds are borrowed generally, borrowing costs are
capitalised using a weighted average capitalisation rate.
(i) Taxation - Note 6
Partnership
Income tax is not provided for in the financial statements of South Pacific
Tyres, as the partnership does not pay tax. The partners are taxable in their
individual capacities on their share of the net partnership income.
SPT Statutory Accounts 30/06/2001 Page 10
Notes to the Financial Statements
- --------------------------------------------------------------------------------
1. Statement Of Significant Accounting Policies (continued)
(i) Taxation - Note 6 (continued)
Controlled entities
The controlled entities adopt the income statement liability method of tax
effect accounting.
Income tax expense is calculated on operating profit adjusted for permanent
differences between taxable and accounting income. The tax effect of timing
differences, which arise from the items being brought to account in different
periods for income tax and accounting purposes, is carried forward in the
statement of financial position as a future income tax benefit or a provision
for deferred income tax.
Future income tax benefits are not brought to account unless realisation of the
asset is assured beyond reasonable doubt. Future income tax benefits relating to
tax losses are only brought to account when their realisation is virtually
certain. The tax effects of capital losses are not recorded unless realisation
is virtually certain.
(j) Accounting for acquisitions
Acquired businesses are accounted for on the basis of the cost method. Fair
values are assigned at the date of acquisition to all the identifiable
underlying assets acquired and to the liabilities assumed. Specific assessment
is undertaken at the date of acquisition of any additional costs to be incurred.
Goodwill, representing the excess of the purchase consideration plus incidental
costs over the fair value of the identifiable net assets acquired on the
acquisition of the business, is amortised to the statement of financial
performance using the following criteria:
Goodwill Acquired Write-Off Period
Up to $1.25m Written off over 5 years in equal instalments, but
at a rate of not less than $250,000 pa
$1.25m to $10m Written off over 20 years on a straight line basis,
but at a rate of not less than $250,000 pa
The unamortised balance of goodwill is reviewed at least annually. Where the
balance exceeds the value of expected future benefits, the difference is charged
to the statement of financial performance.
Research and development costs
Research and development expenditure is expensed as incurred.
Subsequent additional costs
Costs incurred on assets subsequent to initial acquisition are capitalised when
it is probable that future economic benefits in excess of the originally
assessed performance of the asset will flow to the consolidated entity in future
years. Costs that do not meet the criteria for capitalisation are expensed as
incurred.
(k) Revisions of accounting estimates
Revisions of accounting estimates are recognised prospectively in current and
future periods only.
(l) Receivables - Note 8
The collectability of debts is assessed at balance date and specific provision
is made for any doubtful accounts.
Trade debtors
Trade debtors to be settled within agreed terms are carried at amounts due.
(m) Inventories - Note 9
Inventories are carried at the lower of cost and net realisable value. Costs
include direct materials, direct labour, other direct variable costs and
allocated production overheads necessary to bring inventories to their present
location and condition, based on normal operating capacity of the production
facilities.
Manufacturing activities
The cost of manufacturing inventories and work-in-progress are assigned on a
first-in, first-out basis. Costs arising from exceptional wastage are expensed
as incurred.
SPT Statutory Accounts 30/06/2001 Page 11
Notes to the Financial Statements
- --------------------------------------------------------------------------------
1. Statement Of Significant Accounting Policies (continued)
(m) Inventories - Note 9 (continued)
Net realisable value
Net realisable value is determined on the basis of each inventory line's normal
selling pattern. Expenses of marketing, selling and distribution to customers
are estimated and are deducted to establish net realisable value.
(n) Investments - Note 11
Investments in controlled entities are carried in the financial statements of
the partnership at the lower of cost and recoverable amount.
(o) Leased assets
Leases under which the partnership or its controlled entities assume
substantially all the risks and benefits of ownership are classified as finance
leases. Other leases are classified as operating leases.
Finance leases
Finance leases are capitalised. A lease asset and a lease liability equal to the
present value of the minimum lease payments are recorded at the inception of the
lease. Lease liabilities are reduced by the repayments of principal. The
interest components of the lease payments are expensed. Contingent rentals are
expensed as incurred.
Operating leases
Payments made under operating leases are expensed on a straight line basis over
the term of the lease, except where an alternative basis is more representative
of the pattern of benefits to be derived from the leased property.
Also refer to Note 23.
(p) Recoverable amount of non-current assets valued on cost basis
The carrying amount of non-current assets valued on the cost basis are reviewed
to determine whether they are in excess of their recoverable amount at balance
date. If the carrying amount of a non-current asset exceeds its recoverable
amount, the asset is written down to the lower amount. The write-down is
expensed in the reporting period in which it occurs.
Where a group of assets working together supports the generation of cash
inflows, recoverable amount is assessed in relation to that group of assets. In
assessing recoverable amount of non-current assets the relevant cash flows have
not been discounted to their present value, except where specifically stated.
(q) Depreciation and amortisation
Complex assets
The components of major assets that have materially different useful lives, are
effectively accounted for as separate assets, and are separately depreciated.
Useful lives
All non-current assets have limited useful lives and are depreciated/amortised
using the straight line method over their estimated useful lives.
Assets are depreciated or amortised from the date of acquisition or, in respect
of internally constructed assets, from the time an asset is completed and held
ready for use.
Depreciation and amortisation rates and methods are reviewed annually for
appropriateness. When changes are made, adjustments are reflected prospectively
in current and future periods only. Depreciation and amortisation are expensed,
except to the extent that they are included in the carrying amount of another
asset as an allocation of production overheads.
The depreciation/amortisation rates used for each class of asset are as follows:
2001 2000
[X] Freehold buildings 2.50% 2.50%
[X] Leasehold buildings and improvements 2.5%-40% 2.5%-40%
[X] Plant and equipment 6.7%-33.33% 6.7%-33.33%
[X] Leased plant and equipment 15%-20% 15%-20%
SPT Statutory Accounts 30/06/2001 Page 12
Notes to the Financial Statements
- --------------------------------------------------------------------------------
1. Statement Of Significant Accounting Policies (continued)
(r) Payables - Note 14
Liabilities are recognised for the amounts to be paid in the future for goods or
services received. Trade accounts payable are settled within agreed terms.
(s) Interest bearing liabilities - Note 15
Bank loans are recognised at their principal amount, subject to set-off
arrangements. Interest expense is accrued at the contracted rate and included in
"Other creditors and accruals".
(t) Employee entitlements
Wages, salaries, annual leave and sick leave
The provisions for employee entitlements to wages, salaries, annual leave and
sick leave represent present obligations resulting from employees' services
provided up to the balance date, calculated at undiscounted amounts based on
current wages and salary rates including related on-costs. Related on-costs are
recorded in trade creditors.
Long service leave
The provision for employee entitlements to long service leave represents the
present value of the estimated future cash outflows to be made resulting from
employees' services provided to reporting date.
The provision is calculated using the estimated future increases in wage and
salary rates including related on-costs and expected settlement dates based on
turnover history and is discounted using the rates attaching to national
government securities at balance date which most closely match the terms of
maturity of the related liabilities.
Superannuation plan
The partnership and other controlled entities contribute to various defined
benefit and accumulation superannuation plans. Contributions are charged against
income as they are made, as set out in Note 26.
(u) Provisions
A provision is recognised when a legal or constructive obligation exists as a
result of a past event and it is probable that an outflow of economic benefits
will be required to settle the obligation.
If the effect is material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of
the time value of money and the risks specific to the liability, except where
noted below.
Restructuring
Provisions for restructuring are only recognised when a detailed plan has been
approved and the restructuring has either commenced or been publicly announced.
Costs related to ongoing activities are not provided for.
Surplus leased premises
Provision is made for rentals payable on surplus leased premises when it is
determined that no substantive future benefit will be obtained by the
consolidated entity from its occupancy. This arises where premises are currently
leased under non-cancellable operating leases and either the premises are not
occupied, are being sub-leased for lower rentals than the consolidated entity
pays or there will be no substantive benefits beyond a known future date. Any
necessary provision is calculated on the basis of discounted net future cash
flows, using the interest rate implicit in the lease or an estimate thereof.
2. Change in Accounting Policy
Revaluation of non-current assets
The standard requires each class of non-current asset to be measured on either
the cost or fair value basis. AASB 1041 does not apply to inventories, foreign
currency monetary assets, goodwill, investments accounted for using the equity
method, deferred tax assets and other assets measured at net market value where
the market value movements are recognised in the statement of financial
performance. The partnership has applied revised AASB 1041 as follows:
Freehold land and buildings
The partnership has adopted the deemed cost basis for measuring land and
buildings.
SPT Statutory Accounts 30/06/2001 Page 13
Notes to the Financial Statements
- --------------------------------------------------------------------------------
2. Change in Accounting Policy (continued)
Other non-current assets
The partnership has continued to apply the cost basis for other applicable
non-current assets such as receivables, other financial assets and plant and
equipment.
3. Revenue from ordinary activities
Consolidated Partnership
2001 2000 1999 2001 2000 1999
$m $m $m $m $m $m
- ------------------------------------------------------------------------------------------------------------------------------
Sale of goods revenue from operating
activities 774,668,166 871,392,335 889,212,814 483,486,879 501,900,862 538,954,897
Rendering of services revenue from
operating activities 59,426,109 63,415,235 61,948,854 - - -
Other revenue from operating activities
Dividends:
Associated entities - - - - - 26,220,000
Other parties - - - -
Interest:
Controlled entities - - 4,141,000 2,943,654 2,425,866
Associated entities 969,471 4,433 29,477 969,471 4,433 29,477
Other parties 472,630 93,206 153,384 363,101 92,025 153,384
Revenues from outside operating
activities
Gross proceeds from sale of
non-current assets 34,493,521 2,450,608 1,501,898 31,350,563 1,380,371 693,652
Supply agreement consideration 25,000,000 - - 25,000,000 - -
Insurance proceeds received - 1,843,775 4,300,000 1,843,775 4,300,000
-----------------------------------------------------------------------------------
Total other revenue 60,935,622 4,392,022 5,984,759 61,824,135 6,264,258 33,822,379
-----------------------------------------------------------------------------------
Total revenue from ordinary activities 895,029,897 939,199,592 957,146,427 545,311,014 508,165,120 572,777,276
-----------------------------------------------------------------------------------
4. Profit from ordinary activities before income tax expense
Consolidated Partnership
----------------------------------------------------------------------------------------------------------------
2001 2000 1999 2001 2000 1999
$ $ $m $ $ $m
----------------------------------------------------------------------------------------------------------------
(a) Individually significant
expenses/(revenues) included in profit
from ordinary activities before income
tax expense
Closure of radial truck tyre factory 51,325,856 - - 51,325,856 - -
Supply agreement consideration (25,000,000) - - (25,000,000) - -
Overhead reduction programme 6,000,000 - - 5,267,121 - -
GST Implementation costs - 906,342 - - 906,342 -
----------------------------------------------------------------------
32,325,856 906,342 - 31,592,977 906,342 -
----------------------------------------------------------------------
SPT Statutory Accounts 30/06/2001 Page 14
Notes to the Financial Statements
- --------------------------------------------------------------------------------
4. Profit from ordinary activities before income tax expense (continued)
Consolidated Partnership
- ------------------------------------------------------------------------------------------------------------------------------------
2001 2000 1999 2001 2000 1999
$ $ $m $ $ $m
- ------------------------------------------------------------------------------------------------------------------------------------
(b) Profit from ordinary activities
before income tax expense has been
arrived at after charging/(crediting)
the following items
Cost of goods sold 638,908,006 679,736,099 663,624,006 503,820,725 489,779,294 501,360,991
Depreciation of:
Buildings 231,770 342,315 344,879 104,529 209,059 209,058
Plant and Equipment 33,609,742 36,248,232 33,391,059 24,194,389 26,669,353 24,159,981
----------------------------------------------------------------------------------
33,841,512 36,590,547 33,735,938 24,298,918 26,878,412 24,369,039
----------------------------------------------------------------------------------
Amortisation of:
Leasehold land and buildings 1,266,474 1,289,452 1,291,961 1,055,695 1,051,050 1,044,263
Leased plant and equipment - 135,687 388,331 - - -
Goodwill 916,281 1,322,848 1,120,120 - - -
Capitalised interest 575,094 1,150,188 1,150,188 575,094 1,150,188 1,150,188
----------------------------------------------------------------------------------
2,757,849 3,898,175 3,950,600 1,630,789 2,201,238 2,194,451
----------------------------------------------------------------------------------
Total depreciation and amortisation 36,599,361 40,488,722 37,686,538 25,929,707 29,079,650 26,563,490
----------------------------------------------------------------------------------
Borrowing costs
Associated Entities 1,183,238 68,017 31,568 1,183,238 68,017 31,568
Bank loans and overdrafts 15,156,976 15,764,117 14,374,681 14,198,138 14,950,712 14,118,397
Finance charges on capitalised leases - 15,916 71,059 - - -
----------------------------------------------------------------------------------
Total borrowing costs 16,340,214 15,848,050 14,477,308 15,381,376 15,018,729 14,149,965
----------------------------------------------------------------------------------
Research and development expenditure
Capitalised and written off 2,771,437 2,400,000 2,400,000 2,771,437 2,400,000 2,400,000
Net bad and doubtful debts expense including
movements in provision for doubtful debts 3,577,421 2,250,489 1,427,188 162,752 90,000 28,732
Net expense for movements in provision
for:
Employee entitlements 26,369,314 27,385,170 25,565,689 14,579,703 15,908,352 14,153,677
Rationalisation and restructuring costs 7,400,000 - - 7,400,000 - -
Rebates, allowances and warranty claims 16,554,727 9,709,528 28,119,307 - - -
Net foreign exchange (gain)/loss:
Borrowings 82,387 60,365 209,370 82,387 60,365 137,228
Net (gain)/loss on disposal of non-current
assets:
Property plant & equipment 4,151,257 (380,928) 565,291 4,583,063 (208,658) 199,509
Operating lease rental expense
Minimum lease payments 30,721,754 31,010,933 28,153,677 3,455,549 3,965,696 2,106,212
5. Auditors' Remuneration
Consolidated Partnership
- ------------------------------------------------------------------------------------------------------------------------------------
2001 2000 1999 2001 2000 1999
$ $ $m $ $ $m
- ------------------------------------------------------------------------------------------------------------------------------------
Audit Services
Auditors of the company - KPMG 388,613 413,599 309,063 110,954 125,869 100,340
For other Services
Auditors of the company - KPMG 9,988 16,249 9,517 8,000 - -
SPT Statutory Accounts 30/06/2001 Page 15
Notes to the Financial Statements
- --------------------------------------------------------------------------------
6. Taxation
Consolidated
2001 2000 1999
$ $ $
- -------------------------------------------------------------------------------------------------------------------------
(a) Income tax expense
Prima facie income tax expense/(benefit) calculated at 34% (2000: 36% 1999:
36%) on the profit/(loss) from ordinary activities (32,928,711) (4,156,506) 14,201,237
Increase in income tax expense due to:
Depreciation on buildings 67,305 77,102 85,974
Amortisation of goodwill 311,536 476,225 403,243
Sundry items 348,130 363,891 251,772
Decrease in income tax expense due to:
Tax exempt dividends from foreign companies (81,026) - -
Effects of lower/higher rates of tax on overseas income 168 28,087 5,387
Tax at standard rate on partnership profits attributed to partners (26,316,550) (7,002,860) 11,732,322
Tax rebate on dividends from investments (9,439,200)
Sundry items 17,000 - -
Income tax expense/(benefit) on operating profit/(loss) before
individually significant income tax items (5,821,332) 3,735,485 -
Individually significant income tax items:
Restatement of deferred tax balances due to change in company tax rate 1,020,693 392,281 -
------------------------------------------
(4,800,639) 4,127,766 12,643,717
Add: Income tax under/(over) provided in prior year 7,599 (72,452) (131,014)
------------------------------------------
Income tax expense/(benefit) attributable to operating profit (4,793,040) 4,055,314 12,512,703
------------------------------------------
Income tax expense/(benefit) attributable to operating profit is made up of:
Current income tax provision (4,673,630) 1,844,818 12,339,744
Under/(over) provision in prior year 7,599 (72,452) (131,014)
Changes in tax rates 1,020,693 385,396 -
Future income tax benefit (1,147,702) 1,897,552 303,973
------------------------------------------
(4,793,040) 4,055,314 12,512,703
------------------------------------------
(b) Current tax liabilities
Provision for current income tax
Movements during the year:
Balance at the beginning of year 336,975 3,840,269 10,439,651
Other debtor tax receivable reclassified (3,059,756) 3,059,756 -
Income tax (paid)/received 1,960,747 (8,428,895) (18,834,180)
Under provision in prior year 659,116 21,027 (104,946)
Current year's income tax expense on operating profit (4,673,630) 1,844,818 12,339,744
Tax loss transferred to FITB 4,943,644 - -
------------------------------------------
167,096 336,975 3,840,269
==========================================
(c) Deferred assets
Future income tax benefit
Future income tax benefit comprises the estimated future benefit at the
applicable rate of 30% (2000 : 34%) on the following items:
Accumulated non-allowable provisions 4,534,967 3,173,605 5,320,555
Accumulated tax losses 4,362,039 - -
------------------------------------------
8,897,006 3,173,605 5,320,555
==========================================
SPT Statutory Accounts 30/06/2001 Page 16
Notes to the Financial Statements
- --------------------------------------------------------------------------------
7. Cash assets
Consolidated Partnership
2001 2000 2001 2000
$ $ $ $
- -----------------------------------------------------------------------------------------------------------------
Cash 9,531,203 13,764,042 7,000 7,895
Bank short term deposits, maturing daily and paying
interest at a weighted average interest rate of 5.3%
(2000 : 5.6% ) 9,500,000 3,000,000 9,500,000 3,000,000
-----------------------------------------------------
19,031,203 16,764,042 9,507,000 3,007,895
=====================================================
8. Receivables
Current
Trade debtors 144,342,429 151,167,149 32,347,783 28,500,169
Less : Provision for doubtful trade debtors 2,978,136 2,044,584 7,248 104,354
Less : Provision for rebates, allowances and warranty
claims 6,236,155 6,844,271 - -
-----------------------------------------------------
135,128,138 142,278,294 32,340,535 28,395,815
Amounts owing by controlled entities - - 121,569,174 125,281,585
Other debtors 9,729,633 12,256,307 7,437,719 7,727,198
-----------------------------------------------------
144,857,771 154,534,601 161,347,428 161,404,598
Non-current
Other receivables from controlled entities and owners 29,091,771 3,028,266 56,622,712 30,834,307
-----------------------------------------------------
173,949,542 157,562,867 217,970,140 192,238,905
=====================================================
Other receivable amounts generally arise from transactions outside the usual
operating activity of the consolidated entity.
9. Inventories
Current
Raw materials and stores at cost 8,586,621 11,169,258 7,171,153 9,442,092
Less : Provision for stock obsolescence 687,974 - 687,974 -
-----------------------------------------------------
Raw materials and stores 7,898,647 11,169,258 6,483,179 9,442,092
-----------------------------------------------------
Work in progress at cost 10,049,660 12,190,619 10,036,443 12,171,274
Less : Provision for stock obsolescence - 376,870 - 376,870
-----------------------------------------------------
Work in progress 10,049,660 11,813,749 10,036,443 11,794,404
-----------------------------------------------------
Finished goods at cost 146,653,991 133,186,303 110,174,879 100,526,263
Less : Provision for stock obsolescence 3,148,426 831,246 3,000,000 416,038
-----------------------------------------------------
Finished goods 143,505,565 132,355,057 107,174,879 100,110,225
-----------------------------------------------------
Other stocks at cost 6,482,468 8,608,902 6,385,272 8,153,270
Less : Provision for stock obsolescence 689,807 436,881 686,807 399,681
-----------------------------------------------------
Other stocks 5,792,661 8,172,021 5,698,465 7,753,589
-----------------------------------------------------
167,246,533 163,510,085 129,392,966 129,100,310
=====================================================
10. Other current assets
Prepayments 2,521,577 7,481,840 147,388 1,177,275
=====================================================
11. Other financial assets
Non-current
Investments in controlled entities
Unlisted shares at cost - - 21,496,245 21,496,245
-----------------------------------------------------
- - 21,496,245 21,496,245
=====================================================
SPT Statutory Accounts 30/06/2001 Page 17
Notes to the Financial Statements
- --------------------------------------------------------------------------------
12. Property, plant and equipment
Consolidated Partnership
2001 2000 2001 2000
$ $ $ $
- -----------------------------------------------------------------------------------------------------------------
Freehold land
At cost 3,350,000 - 609,000 -
Independent valuation 1997 - 4,580,000 - 609,000
-----------------------------------------------------
3,350,000 4,580,000 609,000 609,000
-----------------------------------------------------
Freehold buildings
At cost 12,644,461 283,554 8,362,347 615
Accumulated depreciation (1,105,417) (11,120) (627,168) 30
-----------------------------------------------------
11,539,044 272,434 7,735,179 585
-----------------------------------------------------
Independent valuation 1997 - 13,518,015 - 8,361,732
Accumulated depreciation - (976,231) - (522,609)
-----------------------------------------------------
- 12,541,784 - 7,839,123
-----------------------------------------------------
11,539,044 12,814,218 7,735,179 7,839,708
-----------------------------------------------------
Leasehold land and buildings
At cost 57,359,594 4,126,604 54,525,141 1,183,044
Accumulated depreciation (5,634,349) (2,033,238) (3,665,593) (47,729)
-----------------------------------------------------
51,725,245 2,093,366 50,859,548 1,135,315
-----------------------------------------------------
Independent valuation 1997 - 53,185,698 - 53,185,698
Accumulated depreciation (2,562,169) - (2,562,169)
-----------------------------------------------------
- 50,623,529 - 50,623,529
-----------------------------------------------------
51,725,245 52,716,895 50,859,548 51,758,844
-----------------------------------------------------
Plant and equipment
At cost 400,274,271 478,297,045 286,379,746 365,525,644
Accumulated depreciation (248,977,499)(274,629,749) (170,595,183) (201,970,151)
-----------------------------------------------------
151,296,772 203,667,296 115,784,563 163,555,493
-----------------------------------------------------
Buildings and plant under construction
At cost 14,837,434 17,803,033 13,456,677 14,984,959
-----------------------------------------------------
Total property, plant and equipment net book value 232,748,495 291,581,442 188,444,967 238,748,004
=====================================================
Reconciliations
Reconciliations of the carrying amounts for each class of property,
plant and equipment are set out below:
Freehold land
Carrying amount at the beginning of year 4,580,000 4,580,000 609,000 609,000
Additions - - - -
Disposals (1,230,000) - - -
-----------------------------------------------------
Carrying amount at the end of year 3,350,000 4,580,000 609,000 609,000
-----------------------------------------------------
Buildings
Carrying amount at the beginning of year 12,814,218 12,957,752 7,839,708 8,048,767
Currency conversion (125,248) 123,058 - -
Additions 25,621 41,599 - -
Transfer from capital works in progress 28,895 34,124 - -
Transfer from related companies/divisions (341) - - -
Disposals (972,331) - - -
Depreciation (231,770) (342,315) (104,529) (209,059)
-----------------------------------------------------
Carrying amount at the end of year 11,539,044 12,814,218 7,735,179 7,839,708
-----------------------------------------------------
Leasehold land and buildings
Carrying amount at the beginning of year 52,716,895 53,832,087 51,758,844 52,695,013
Additions - - - -
Transfer from capital works in progress 302,772 188,809 156,399 114,881
Disposals (27,948) (14,549) - -
Depreciation (1,266,474) (1,289,452) (1,055,695) (1,051,050)
-----------------------------------------------------
Carrying amount at the end of year 51,725,245 52,716,895 50,859,548 51,758,844
-----------------------------------------------------
SPT Statutory Accounts 30/06/2001 Page 18
Notes to the Financial Statements
- --------------------------------------------------------------------------------
12. Property, plant and equipment (continued)
Consolidated Partnership
2001 2000 2001 2000
$ $ $ $
- -----------------------------------------------------------------------------------------------------------------
Plant and equipment
Carrying amount at the beginning of year 203,667,295 208,653,030 163,555,493 167,905,481
Currency conversion (42,312) 43,960 - -
Acquired businesses/subsidiaries - 483,835 - -
Additions 76,744 148,930 - -
Transfer from leased to fixed assets - 100,655 - -
Transfer from capital works in progress 18,193,833 33,690,436 12,962,920 25,105,106
Transfer from related companies/divisions 547 - (30,741) (463,840)
Disposals (36,414,499) (2,055,130) (35,933,626) (1,171,713)
Amortisation of capitalised interest (575,094) (1,150,188) (575,094) (1,150,188)
Depreciation (33,609,742) (36,248,232) (24,194,389) (26,669,353)
-----------------------------------------------------
Carrying amount at the end of year 151,296,772 203,667,296 115,784,563 163,555,493
-----------------------------------------------------
Capital works in progress
Carrying amount at the beginning of year 17,803,033 26,931,518 14,984,959 23,000,419
Additions 15,559,901 24,784,884 11,591,038 17,204,527
Transfer to property, plant and equipment (18,525,500) (33,913,369) (13,119,320) (25,219,987)
-----------------------------------------------------
Carrying amount at the end of year 14,837,434 17,803,033 13,456,677 14,984,959
-----------------------------------------------------
13. Intangibles
Goodwill - at cost 7,546,103 7,421,324 - -
Accumulated amortisation (2,078,779) (1,099,996) - -
-----------------------------------------------------
5,467,324 6,321,328 - -
=====================================================
14. Payables
Current
Trade creditors 144,000,065 141,618,505 102,296,485 94,304,965
Other creditors 136,276 340,110 8,696 224,632
-----------------------------------------------------
144,136,341 141,958,615 102,305,181 94,529,597
Non-current
Trade creditors 936,640 1,112,817 542,766 701,323
Other creditors 25,870,616 21,986 25,870,616 21,986
-----------------------------------------------------
26,807,256 1,134,803 26,413,382 723,309
-----------------------------------------------------
170,943,597 143,093,418 128,718,563 95,252,906
=====================================================
SPT Statutory Accounts 30/06/2001 Page 19
Notes to the Financial Statements
- --------------------------------------------------------------------------------
15. Interest bearing liabilities
Consolidated Partnership
2001 2000 2001 2000
$ $ $ $
- -----------------------------------------------------------------------------------------------------------------
Current
Bank overdrafts - unsecured 4,860,501 6,932,945 2,496,277 5,115,583
Bank loans repayable in A$ - unsecured 50,000,000 80,000,000 50,000,000 80,000,000
Bills of exchange - unsecured 89,756,120 160,093,457 84,756,120 154,593,457
Other loans repayable in A$ - unsecured - 3,025,758 - -
-----------------------------------------------------
144,616,621 250,052,160 137,252,397 239,709,040
-----------------------------------------------------
Financing arrangements
The consolidated entity has access to the following lines
of credit:
Total facilities available:
Bank overdrafts 8,421,909 8,331,253 5,000,000 5,000,000
Commercial Bills 90,500,000 160,500,000 85,000,000 155,000,000
Bank loans 50,000,000 80,000,000 50,000,000 80,000,000
Money market line 11,137,527 20,000,000 10,000,000 20,000,000
-----------------------------------------------------
160,059,436 268,831,253 150,000,000 260,000,000
-----------------------------------------------------
Facilities utilised at balance date:
Bank overdrafts 2,332,579 (1,373,968) (237,869) (2,913,291)
Commercial bills 90,000,000 160,500,000 85,000,000 155,000,000
Bank loans 50,000,000 80,000,000 50,000,000 80,000,000
Money market line (9,021,360) (3,000,000) (9,500,000) (3,000,000)
-----------------------------------------------------
133,311,219 236,126,032 125,262,131 229,086,709
-----------------------------------------------------
Facilities not utilised at balance date:
Bank overdrafts 6,089,330 9,705,221 5,237,869 7,913,291
Commercial bills 500,000 - - -
Bank loans - - - -
Money market line 20,158,887 23,000,000 19,500,000 23,000,000
-----------------------------------------------------
26,748,217 32,705,221 24,737,869 30,913,291
-----------------------------------------------------
Interest on bank overdrafts is charged at prevailing market rates. The effective
interest rates for all overdrafts as at 30 June 2001 is 8.75% (2000: 7.75%). All
bank loans are denominated in Australian dollars. The bank loans amount in
current liabilities comprises the portion of the consolidated entity's bank loan
payable within one year The effective interest rate on commercial bills and bank
loans is 5.58% (2000: 6.27%).
16. Provisions
Consolidated Partnership
2001 2000 2001 2000
$ $ $ $
- -----------------------------------------------------------------------------------------------------------------
Current
Employee entitlements 43,855,274 39,225,142 29,550,117 25,048,134
Rationalisation and restructuring 6,846,979 - 6,846,979 -
-----------------------------------------------------
50,702,253 39,225,142 36,397,096 25,048,134
=====================================================
Non-current
Employee entitlements 8,561,903 9,999,996 4,946,604 6,388,028
-----------------------------------------------------
8,561,903 9,999,996 4,946,604 6,388,028
=====================================================
Number of employees 4,323 4,975 1,565 2,124
SPT Statutory Accounts 30/06/2001 Page 20
Notes to the Financial Statements
- --------------------------------------------------------------------------------
17. Amounts payable/receivable in foreign currencies
Consolidated Partnership
2001 2000 2001 2000
$ $ $ $
- -----------------------------------------------------------------------------------------------------------------
The Australian dollar equivalents of unhedged amounts
payable or receivable in foreign currencies, calculated
at year-end exchange rates, are as follows:
United states dollars
Amounts payable :
Current 2,922,742 3,752,339 2,709,191 3,752,339
Deutsche marks
Amounts payable :
Current 69,881 - 69,881 -
Euro dollar
Amounts payable :
Current 1,230,277 321,507 1,230,277 321,507
-----------------------------------------------------
Total 4,222,900 4,073,846 4,009,349 4,073,846
=====================================================
18. Contributed equity
Goodyear Tyres Pty Ltd
----------------------
Contributed equity at the beginning of year 100,000,000 100,000,000 100,000,000 100,000,000
Additional contributed equity 58,837,569 - 58,837,569 -
-----------------------------------------------------
Contributed equity at the end of year 158,837,569 100,000,000 158,837,569 100,000,000
=====================================================
Pacific Dunlop Tyres Pty Ltd
----------------------------
Contributed equity at the beginning of year 100,000,000 100,000,000 100,000,000 100,000,000
Additional contributed equity 58,837,568 - 58,837,568 -
-----------------------------------------------------
Contributed equity at the end of year 158,837,568 100,000,000 158,837,568 100,000,000
-----------------------------------------------------
317,675,137 200,000,000 317,675,137 200,000,000
=====================================================
19. Reserves
Asset revaluation 12,561,891 12,420,308 11,409,810 11,409,810
Foreign currency translation (3,341,868) (2,956,331) - -
-----------------------------------------------------
9,220,023 9,463,977 11,409,810 11,409,810
=====================================================
Movements during the year
Asset revaluation reserve
Balance at the beginning of year 12,420,308 12,420,308 11,409,810 11,409,810
Transferred to retained profits 141,583 - - -
-----------------------------------------------------
Balance at the end of year 12,561,891 12,420,308 11,409,810 11,409,810
-----------------------------------------------------
Foreign currency translation reserve
Balance at the beginning of year (2,956,331) (2,568,182) - -
Translation adjustment on assets and liabilities held in
foreign currencies (385,537) (388,149) - -
-----------------------------------------------------
Balance at the end of year (3,341,868) (2,956,331) - -
-----------------------------------------------------
Nature and purpose of reserves
Asset revaluation
The asset revaluation reserve includes the net revaluation increments and
decrements arising from the revaluation of non-current assets.
Foreign currency reserve
The foreign currency translation reserve records the foreign currency
differences arising from the translation of self-sustaining foreign operations,
the translation of transactions that hedge the Entity's net investment in a
foreign operation or the translation of foreign currency monetary items forming
part of the net investment in a self-sustaining operation. Refer to accounting
policy Note 1(f).
SPT Statutory Accounts 30/06/2001 Page 21
Notes to the Financial Statements
- --------------------------------------------------------------------------------
20. Retained profits/(accumulated losses)
Consolidated Partnership
2001 2000 2001 2000
$ $ $ $
- -----------------------------------------------------------------------------------------------------------------
Goodyear Tyres Pty Ltd
----------------------
Retained profits/(accumulated losses) at the beginning of
year (3,696,211) 7,761,523 3,478,764 16,842,958
Net profit/(loss) attributable to partners (46,028,197) (7,819,734) (38,700,808) (9,726,194)
Amounts transferred from reserves (70,792) - - -
Distribution of profits to partners - (3,638,000) - (3,638,000)
-----------------------------------------------------
Retained profits/(accumulated losses) at the end of year (49,795,200) (3,696,211) (35,222,044) 3,478,764
-----------------------------------------------------
Pacific Dunlop Tyres Pty Ltd
----------------------------
Retained profits/(accumulated losses) at the beginning of
year (2,693,027) 8,764,707 4,481,952 17,846,147
Net profit/(loss) attributable to partners (46,028,197) (7,819,734) (38,700,809) (9,726,195)
Amounts transferred from reserves (70,791) - - -
Distribution of profits to partners - (3,638,000) - (3,638,000)
-----------------------------------------------------
Retained profits/(accumulated losses) at the end of year (48,792,015) (2,693,027) (34,218,857) 4,481,952
-----------------------------------------------------
(98,587,215) (6,389,238) (69,440,901) 7,960,716
=====================================================
21. Outside equity interest
Consolidated
2001 2000 1999
$ $ $
- ----------------------------------------------------------------------------------------------------------------
Outside equity interest in controlled entities comprise:
Interest in retained profits at the beginning of the financial year
after adjusting for outside equity interests in entities 1,065,255 1,026,952 1,019,607
Interest in operating profit after income tax 285 38,303 7,345
Interest in dividends provided for or paid (30,990) - -
---------------------------------------
Interest in retained profits at the end of the financial year 1,034,550 1,065,255 1,026,952
Interest in share capital 95,458 95,458 95,458
Interest in reserves (644,320) (547,934) (644,971)
---------------------------------------
Total outside equity interest 485,688 612,779 477,439
=======================================
22. Additional financial instruments disclosure
(a) Interest rate risk
The consolidated entity enters into interest rate swaps to manage cash flow
risks associated with the floating interest rates on borrowings.
Interest rate swaps and forward rate agreements
Interest rate swaps allow the consolidated entity to swap floating rate
borrowings into fixed rates. Maturities of swap contracts are principally
between one to five years.
Each contract involves quarterly payment or receipt of the net amount of
interest. At 30 June 2001 the fixed rates varied from 5.5% to 7.2% (2000: 7.2%
to 7.3%) and floating rates were at bank bill rates plus the consolidated
entity's credit margin. The weighted average effective floating interest rate at
30 June 2001 was 6.3% (2000: 5.9%).
SPT Statutory Accounts 30/06/2001 Page 22
Notes to the Financial Statements
- --------------------------------------------------------------------------------
22. Additional financial instruments disclosure (continued)
Interest rate risk exposures
The consolidated entity's exposure to interest rate risk and the effective
weighted average interest rate for classes of financial assets and financial
liabilities is set out below:
Fixed interest maturity in:
Weighted
Average Floating Over More Non-
Interest interest 1 year 1 year to than 5 interest
2001 Note Rate rate or less 5 years years bearing Total
- ------------------------------------------------------------------------------------------------------------------------------
Financial assets
----------------
Cash 7 5.30% 18,919,043 112,160 19,031,203
Receivables 8 - 173,949,542 173,949,542
------------------------------------------------------------------------------
18,919,043 174,061,702 192,980,745
------------------------------------------------------------------------------
Financial liabilities
---------------------
Bank overdrafts and loans 15 5.80% 144,616,621 144,616,621
Accounts payable 14 - 177,020,174 177,020,174
Employee entitlements 16 3.00% 43,855,274 5,435,984 3,125,919 52,417,177
------------------------------------------------------------------------------
144,616,621 43,855,274 5,435,984 3,125,919 177,020,174 374,053,972
------------------------------------------------------------------------------
Interest rate swaps (40,000,000) 20,000,000 20,000,000
2000
- ------------------------------------------------------------------------------------------------------------------------------
Financial assets
----------------
Cash 7 5.60% 16,647,959 116,083 16,764,042
Receivables 8 - 157,562,867 157,562,867
------------------------------------------------------------------------------
16,647,959 - - - 157,678,950 174,326,909
------------------------------------------------------------------------------
Financial liabilities
---------------------
Bank overdrafts and loans 15 6.40% 247,026,402 3,025,758 250,052,160
Accounts payable 14 - 143,093,418 143,093,418
Employee entitlements 16 3.00% 39,255,142 5,593,163 4,406,833 49,255,138
------------------------------------------------------------------------------
247,026,402 39,255,142 5,593,163 4,406,833 146,119,176 442,400,716
------------------------------------------------------------------------------
Interest rate swaps (40,000,000) 20,000,000 20,000,000
------------------------------------------------------------------------------
(b) Foreign Exchange Risk
The consolidated entity enters into forward foreign exchange contracts to hedge
foreign currency purchases expected in each month within the following six
months within Board approval limits. The amount of anticipated future purchases
and sales are forecast in light of current conditions in foreign markets,
commitments from customers and experience.
SPT Statutory Accounts 30/06/2001 Page 23
Notes to the Financial Statements
- --------------------------------------------------------------------------------
22. Additional financial instruments disclosure (continued)
The following table sets out the gross value to be received under foreign
currency contracts, the weighted average contracted exchange rate and the
settlement periods of outstanding contracts for the consolidated entity
2001 2000 2001 2000
Average rate $ $
---------------------------------------------
Buy US Dollars
- --------------
Not later than one year 0.51 0.60 11,865,049 10,828,075
Later than one year but not later than two years -
Later than two years but not later than three years -
----------------------
11,865,049 10,828,075
----------------------
Buy EURO dollars
- ----------------
Not later than one year 0.60 0.63 4,444,162 577,373
Later than one year but not later than two years - -
Later than two years but not later than three years - -
----------------------
4,444,162 577,373
----------------------
Buy Japanese yen
- ----------------
Not later than one year 62.42 61.75 551,735 266,265
Later than one year but not later than two years - -
Later than two years but not later than three years - -
----------------------
551,735 266,265
----------------------
Buy English pound
- -----------------
Not later than one year 0.36 - 164,002 -
Later than one year but not later than two years - -
Later than two years but not later than three years - -
----------------------
164,002 -
----------------------
As these contracts are hedging anticipated purchases, any unrealised gains and
losses on the contracts, together with the costs of the contracts, will be
deferred and then recognised in the financial statements at the time the
underlying transaction occurs as designated. The gross deferred gains and losses
on hedges of anticipated foreign currency purchases are:
Consolidated
2001 2000
Gains Losses Gains Losses
$ $ $ $
Not later than one year 130,010 - - 30,986
Later than one year but not later than two years - - - -
Later than two years but not later than three years - - - -
When the underlying transaction has occurred as designated, the effect of the
hedge has been recognised in the financial statements.
(c) Commodity price risk
The consolidated entity enters into futures contracts to hedge (or hedge a
proportion of ) commodity purchase prices on anticipated specific purchase
commitments of natural rubber. The terms of these contracts are rarely more than
one year. There were no contracts outstanding at year end (2000: $982,528).
As these contracts are hedging anticipated future purchases, any unrealised
gains and losses on the contracts, together with the costs of the contracts,
will be recognised in the measurement of the underlying purchase commitment. The
net unrecognised loss on hedges of anticipated future commodity purchase
contracts as at 30 June 2001 was $Nil (2000: $193,646)
SPT Statutory Accounts 30/06/2001 Page 24
Notes to the Financial Statements
- --------------------------------------------------------------------------------
22. Additional financial instruments disclosure (continued)
(d) Credit risk exposures
Credit risk represents the loss that would be recognised if counterparts failed
to perform as contracted.
Recognised Financial Instruments
The credit risk on financial assets, excluding investments, of the consolidated
entity which have been recognised on the statement of financial position, is the
carrying amount, net of any provision for doubtful debts.
The consolidated entity minimises concentrations of credit risk by undertaking
transactions with a large number of customers and counterparties in various
countries.
The consolidated entity is not materially exposed to any individual overseas
country or individual customer. Concentrations of credit risk on trade debtors
and term debtors due from customers are the motor vehicle and transport
industries.
Unrecognised Financial Instruments
Credit risk on derivative contracts which have not been recognised on the
statement of financial position is minimised as counterparts are recognised
financial intermediaries with acceptable credit ratings determined by a
recognised rating agency.
Interest rate swaps and foreign exchange contracts are subject to credit risk in
relation to the relevant counterparties, which are principally large banks. The
maximum credit risk exposure on foreign currency contracts is the full amount
the consolidated entity pays when settlement occurs, should the counterparty
fail to pay the amount which it is committed to pay the consolidated entity as
is disclosed at Note 22(b).
As all future contracts are transacted through a recognised futures exchange,
there is no credit risk associated with these contracts.
(e) Net fair values of financial assets and liabilities
Valuation approach
Net fair value of financial assets and liabilities are determined by the
consolidated entity on the following basis:
Recognised Financial Instruments
The carrying amounts of bank term deposits, trade debtors, other debtors, bank
overdrafts, accounts payable, bank loans and employee entitlements approximate
net fair value.
Unrecognised Financial Instruments
The valuation of financial instruments not recognised on the statement of
financial position detailed in this note reflects the estimated amounts which
the consolidated entity expects to pay or receive to terminate the contracts
(net of transaction costs) or replace the contracts at their current market
rates as at reporting date. This is based on independent market quotations and
determined using standard valuation techniques.
SPT Statutory Accounts 30/06/2001 Page 25
Notes to the Financial Statements
- --------------------------------------------------------------------------------
22. Additional financial instruments disclosure (continued)
Net fair values
Recognised Financial Instruments
The carrying amounts and net fair values of financial assets and financial
liabilities as at the reporting date are as follows:
Consolidated
2001 2000
Carrying Net fair Carrying Net fair
amount value amount value
$ $ $ $
- ------------------------------------------------------------------------------------------------------------------
Financial assets
Cash assets 19,031,203 19,031,203 16,764,042 16,764,042
Receivables 173,949,542 173,949,542 157,562,867 157,562,867
Financial liabilities
Payables 177,020,174 177,020,174 143,093,418 143,093,418
Bank overdrafts and loans 144,616,621 144,616,621 250,052,160 250,052,160
Employee entitlements 52,417,177 52,417,177 49,225,138 49,225,138
Unrecognised Financial Instruments
The net fair value of financial instruments not recognised on the statement of
financial position held at the reporting date are:
2001 2000
$ $
- ------------------------------------------------------------------------------
Forward foreign exchange contracts gains/(losses) 130,010 (30,986)
Futures commodity contracts - (193,646)
-----------------------
130,010 (224,632)
-----------------------
23. COMMITMENTS
Consolidated Partnership
2001 2000 2001 2000
$ $ $ $
- ------------------------------------------------------------------------------------------------------------------
Capital expenditure commitments
Plant
Contracted but not provided for and payable within one
year 3,443,409 2,924,713 3,443,409 2,924,713
------------------------------------------------------
3,443,409 2,924,713 3,443,409 2,924,713
======================================================
Lease commitments
Operating lease expense commitments
Future operating lease commitments not provided
for in the financial statements and payable:
Within one year 24,943,656 23,145,222 45,803 277,940
One year or later and no later than five years 52,461,006 45,346,408 - 20,995
Later than 5 years 11,994,208 10,091,396 - -
------------------------------------------------------
89,398,870 78,583,026 45,803 298,935
======================================================
South Pacific Tyres leases property under non-cancellable operating leases
expiring from one to ten years. Leases generally provide the company with a
right of renewal at which time all terms are renegotiated. Lease payments
comprise a base amount plus an incremental contingent rental. Contingent rentals
are based on either movements in the Consumer Price Index or operating criteria.
SPT Statutory Accounts 30/06/2001 Page 26
Notes to the Financial Statements
- --------------------------------------------------------------------------------
24. Contingent liabilities
There were no contingent liabilities as at 30 June 2001 and 30 June 2000
25. Related party transactions
The partnership from time to time has dealings with Pacific Dunlop Limited Group
Companies and Goodyear Tire & Rubber Co. Group Companies.
Under the partnership agreement, South Pacific Tyres leases certain properties
from Pacific Dunlop Limited and Goodyear Australia Limited (a wholly owned
subsidiary of Goodyear Tire & Rubber Co.) on the basis of equitable rentals
between the partners.
The amounts of these transactions are detailed below:
Consolidated
2001 2000
Lease Payments $ $
- ------------------------------------------------------------------------------
Pacific Dunlop Limited Group Companies 238,094 259,976
Goodyear Tire & Rubber Co. Group Companies 82,254 89,814
On 20/12/2000, the partnership sold fixed assets to Goodyear and the proceeds
from the sale of $31.3m are payable in two years from the date of sale. Interest
on the outstanding amount is charged at market rate and is payable quarterly in
arrears.
On 29/12/2000, the partnership entered into a supply agreement whereby Goodyear
will be (subject to certain conditions) the exclusive supplier of certain tyres
for a period of ten years commencing 01/01/2001. The partnership will receive
$25.0m plus interest in consideration for this exclusivity of supply. The
amount, although not receivable until 01/01/2003, has been recognised as
indirect revenue in the current year.
On 20/12/2000, the partnership received a loan of $56.3m from Pacific Dunlop
Limited for a period of two years. Interest is charged at market rate and is
payable quarterly in arrears.
In addition, the partnership has assigned the receivable from Goodyear for the
proceeds due on the sale of fixed assets of $31.3m noted above as partial
settlement of the loan from Pacific Dunlop Limited.
Consolidated
2001 2000
$ $
- ------------------------------------------------------------------------------------------------------------------
Interest brought to account by the partnership in relation to these
loans during the year:
Interest expense 848,630 -
Interest revenue 848,630 -
The amounts included in receivables and payables in relation to these loans are:
Non-current receivables
- -----------------------
Goodyear Tire & Rubber Co. Group Companies 25,848,630 -
Non-current payables
- --------------------
Pacific Dunlop Limited Group Companies 25,848,630 -
All other dealings with the above parties are on normal commercial terms and
involve the purchase and/or supply of materials from/to both parties and the
provision of forward exchange cover and commodity hedging by Pacific Dunlop
Limited Group Companies.
SPT Statutory Accounts 30/06/2001 Page 27
Notes to the Financial Statements
- ---------------------------------------------------------------------------
25. Related party transactions (continued)
The amounts of these transactions are detailed below:
Consolidated
2001 2000
Sale of goods and services $ $
- ---------------------------------------------------------------------------
Pacific Dunlop Limited Group Companies 1,069,123 1,425,500
Goodyear Tire & Rubber Co. Group Companies 1,651,599 22,530,154
Purchase of goods and services
Pacific Dunlop Limited Group Companies 6,341,537 18,787,973
Goodyear Tire & Rubber Co. Group Companies 97,095,319 53,790,686
Details of interest received/paid to related parties are set out in Notes 3 & 4
The amounts included in receivables and payables in relation to South Pacific
Tyres are set out in the notes to the financial statements and the amounts
relating to the other parties are:
Current receivables
- -------------------
Pacific Dunlop Limited Group Companies 366,461 133,484
Goodyear Tire & Rubber Co. Group Companies 838,112 1,514,660
Current payables
- ----------------
Pacific Dunlop Limited Group Companies 1,032,402 942,111
Goodyear Tire & Rubber Co. Group Companies 22,124,586 10,620,245
The names of each person holding the position of director of the company during
the year were:
Mr S Gibara Mr E Rodia
Mr R Tieken Mr H Pace
Mr P Gay Mr R Chadwick
Mr J Rennie Mr I Veal
At the time of holding the office of director of the company each director was
an executive of the South Pacific Tyres partnership, and held the office of
director of the company in order to discharge, in whole or in part, the duties
as an executive officer of the partnership.
26. Superannuation commitments
Employer Plans
The partnership and its controlled entities participate in a number of
superannuation funds for employees.
Date of last actuarial
Fund Benefit Type Basis of Contribution valuation Actuary
Pacific Dunlop Defined Balance of cost/Defined
Superannuation Fund benefit/accumulation contribution 1/07/1999 William M Mercer Pty Ltd
Pacific Dunlop Executive
Superannuation Fund Defined Benefit Balance of cost 1/07/1999 William M Mercer Pty Ltd
The liabilities of all superannuation funds are covered by the assets in the
funds or by specific provisions created by the partnership or its controlled
entities.
The partnership and its controlled entities are obliged to contribute to the
superannuation funds as a consequence of Legislation or Trust Deeds. Legal
enforceability is dependent on the terms of the Legislation and the Trust Deed.
SPT Statutory Accounts 30/06/2001 Page 28
Notes to the Financial Statements
- --------------------------------------------------------------------------------
26 Superannuation commitments (continued)
Definitions
Balance of cost The Group's contribution is assessed by the Actuary after
taking into account the member's contribution and the
value of assets.
Defined contribution The Group's contribution is set out in the appropriate
fund rules, usually as a fixed percentage of salary.
Industry/Union plans
The partnership participates in industry and union plans on behalf of certain
employees. These plans operate on an accumulation basis and provide lump sum
benefits for members on resignation, retirement or death.
The partnership has a legally enforceable obligation to contribute at varying
rates to the plans.
27. Segment reporting
The principal activity of the group during the year was the manufacture and sale
of motor vehicle and aircraft tyres in Australia and Papua New Guinea.
28. Particulars relating to controlled entities
Details of controlled entities, including the extent that each contributed to
the period's result are given below:
Tyre South
South Marketers Sacrt Pacific
Pacific (Australia) Trading Tyres (PNG) Dunlop PNG Consolidated
Tyres Limited Pty Ltd Pty Ltd Pty Ltd adjustments Totals
Place of Incorporation Vic Vic PNG PNG
Beneficial Interest held by
Partnership 100% 100% 80% 80%
Class of shares Ordinary Ordinary Ordinary Ordinary
Book value of partnership's
investment
2001 21,496,245 21,496,245
2000 21,496,245 21,496,245
Dividends received or
receivable by partnership:
2001
2000
Dividends credited to
investment account
2001
2000
Contribution to the consolidated
profit after tax inclusive of
abnormal items and after deducting
the amount attributable to Outside
Equity Interest:
2001 (77,401,617) (17,107,153) 217,544 12,315 (11,172) 2,233,689 (92,056,394)
2000 (19,452,389) 3,363,501 411,212 24,720 128,488 (115,000) (15,639,468)
29. Events subsequent to balance date
Since the end of the financial year, the following matters or circumstances have
arisen that have significantly affected, or may significantly affect, the
operations, results of operations or state of affairs of the consolidated
entity.
A memorandum of understanding has been signed by the partners on issues
regarding the future of the South Pacific Tyres Joint Venture, including the
basis of future funding and opportunities for continuance or dissolvement of the
partnership. Agreement to give effect to the understandings in the memorandum is
subject to completion of a definitive agreement and the approval of the boards
of the partners.
Further on the 28/th/ September 2001, South Pacific Tyres announced details of
major restructuring plans for its Australian tyre manufacturing operations. The
restructure is aimed at turning around its recent poor performance to ensure its
survival as a profitable competitive business. The key elements include:
.. Closure of the Footscray factory over the period December 2001 through to
March 2002, with a total of 440 redundancies;
SPT Statutory Accounts 30/06/2001 Page 29
Notes to the Financial Statements
- --------------------------------------------------------------------------------
29 Events subsequent to balance date (continued)
.. Reconfiguration of passenger tyre production to consolidate all current
Somerton and Thomastown production of this category at the Somerton site
by July 2002, with 380 redundancies and the closure of the Thomastown
factory.
.. Streamlining of some related corporate and executive level administration
with the redundancy of 70 staff.
30. Notes to the statements of cash flows
(a) Reconciliation of cash
For the purposes of the statement of cash flows, cash includes cash on hand and
at bank and investments in money market instruments net of outstanding bank
overdrafts. Cash as at the end of the financial year as shown in the statement
of cash flows is reconciled to the related items in the statement of financial
position as follows:
Consolidated Partnership
2001 2000 2001 2000
$ $ $ $
- ------------------------------------------------------------------------------------
Cash assets 9,531,203 13,764,042 7,000 7,895
Cash on deposit 9,500,000 3,000,000 9,500,000 3,000,000
Bank overdrafts (4,860,501) (6,932,945) (2,496,277) (5,115,583)
------------------------------------------------------
14,170,702 9,831,097 7,010,723 (2,107,688)
======================================================
(b) Acquisition/disposal of businesses and entities
During both the 2000 and 2001 financial years the partnership purchased no
businesses.
During the year the consolidated entity purchased 100% of businesses of which
the details are as follows:
Consolidated
2001 2000
Acquisitions of businesses $ $
-------------------------------------------------------------------------
Net assets acquired/disposed
Property, plant and equipment 25,000 1,202,541
Inventories 7,000 632,584
Other assets - 1,105
Prepayments - 30,178
Creditors (9,077) (307,276)
Other liabilities and provisions - (121,573)
-------------------------
Goodwill 22,923 1,437,559
Consideration 62,277 7,544,176
-------------------------
Cash paid/(received) 85,200 8,981,735
=========================
Outflow/(inflow) of cash
-------------------------
Cash consideration 85,200 8,981,735
=========================
SPT Statutory Accounts 30/06/2001 Page 30
Notes to the Financial Statements
- --------------------------------------------------------------------------------
30. Notes to the statements of cash flows (continued)
(c) Reconciliation of profit/(loss) from ordinary activities after income tax
to net cash provided by operating activities
Consolidated Partnership
2001 2000 2001 2000
$ $ $ $
- ----------------------------------------------------------------------------------------------------------------
Loss from ordinary activities after income tax (92,056,109) (15,601,165) (77,401,617) (19,452,389)
Add /(less) items classified as investing/financing
activities:
(Profit)/loss on sale of non-current assets 4,151,257 (380,928) 4,583,063 (208,658)
Add(less) non-cash items:
Amortisation 2,757,849 3,898,175 1,630,789 2,201,238
Depreciation 33,841,512 36,590,547 24,298,918 26,878,412
Amounts set aside to provisions 43,862,097 37,464,342 4,482,597 15,998,352
(Decrease)/increase in income taxes payable (169,879) (3,503,294) - -
Decrease/(increase) in future income tax benefit (5,723,401) 2,146,950 - -
Write-off bad trade debts 2,639,365 1,880,845 259,858 -
------------------------------------------------------
Net cash provided by operating activities before change
in assets and liabilities (10,697,309) 62,495,472 (32,146,392) 25,416,955
------------------------------------------------------
Change in assets and liabilities adjusted for effects of
purchase and disposal of controlled entities during the
financial year:
(Increase)/decrease in receivables (36,514,319) (1,782,612) (25,893,987) 16,071,003
(Increase)/decrease in inventories (3,729,448) (17,398,112) (292,656) (12,459,775)
(Increase)/decrease in prepayments 4,960,263 (3,708,002) 1,029,887 (83,947)
(Decrease)/increase in accounts payable 33,917,471 18,283,443 33,496,399 2,653,427
(Decrease)/increase in provisions (16,330,296) (26,735,090) (4,672,165) (14,532,894)
(Decrease)/increase in reserves (496,747) 550,843 - -
------------------------------------------------------
(18,193,076) (30,789,530) 3,667,478 (8,352,186)
------------------------------------------------------
Net cash provided by / (used in) operating activities (28,890,385) 31,705,942 (28,478,914) 17,064,769
======================================================
SPT Statutory Accounts 30/06/2001 Page 31
Directors Declaration
In the opinion of the directors of South Pacific Tyres ("the partnership"):
(a) the partnership is not a reporting entity;
(b) the financial statements and notes, set out on pages 1 to 33 are in
accordance with the Corporations Act 2001, as required by Section 11 of
the Partnership Agreement, including:
(i) giving a true and fair view of the financial position of the
partnership as at 30 June 2001 and of their performance, as
represented by the results of its operations and their cash
flows, for the year ended on that date, in accordance with the
basis of accounting described in Note 1; and
(ii) complying with Accounting Standards to the extent described in
Note 1 and the Corporations Regulations 2001; and
(c) there are reasonable grounds to believe that the partnership will be able
to pay its debts as and when they become due and payable.
Signed in accordance with a resolution of the directors:
/s/ Robert W. Tieken
- ----------------------------------------
Director
/s/ Philip R. Gay
- ----------------------------------------
Director
SPT Statutory Accounts 30/06/2001 Page 32
Independent Audit Report
To the partners of South Pacific Tyres
Scope
We have audited the financial report of South Pacific Tyres for the financial
year end June 30, 2001, being a special purpose financial report consisting of
the statements of financial performance, statements of financial position,
statements of cash flows, accompanying notes and the directors' declaration set
out on pages 1 - 34. The financial report includes the consolidated financial
statements of the consolidated entity, comprising the South Pacific Tyres
Partnership (the "Partnership") and the entities it controlled at the end of the
year or from time to time during the financial year. The Partnership's directors
are responsible for the financial report. In accordance with Section 11 of the
Partnership agreement, the Partnership is required to prepare a financial report
as if it were a public company under the provisions of the Corporations Act
2001.
The directors have determined that the accounting policies used and described in
Note 1 to the financial statements are appropriate to meet the requirements of
the Corporations Act 2001 and the needs of the partners of the Partnership. We
have conducted an independent audit of the financial report in order to express
an opinion on it to the partners. No opinion is expressed whether the accounting
policies used, and described in Note 1 to the financial statements, are
appropriate to the needs of the partners.
The financial report has been prepared for distribution to the partners for the
purpose of fulfilling the requirements of the Corporations Act 2001. We disclaim
any assumption of responsibility for any reliance on this report, or on the
financial report to which it relates, to any person other than the partners, or
for any purpose other than that for which it was prepared.
Our audit has been conducted in accordance with Australian Auditing Standards to
provide reasonable assurance whether the financial report is free of material
misstatement. Our procedures included examination, on a test basis, of evidence
supporting the amounts and other disclosures in the financial report, and the
evaluation of accounting policies and significant accounting estimates. These
procedures have been undertaken to form an opinion whether, in all material
respects, the financial report is presented fairly in accordance with the basis
of accounting described in Note 1 to the financial statements, so as to present
a view which is consistent with our understanding of the Partnership's and the
consolidated entity's financial position, and performance as represented by the
results of their operations and their cash flows. These policies do not require
the application of all accounting standards nor other mandatory professional
reporting requirements in Australia.
The audit opinion expressed in this report has been formed on the above basis.
Audit Opinion
In our opinion, the financial report of South Pacific Tyres is in accordance
with:
(a) the Australian Corporations Act 2001, including:
(i) giving a true and fair view of the Partnership's and consolidated
entity's financial position as at June 30, 2001 and of their
performance for the financial year ended on that date in accordance
with the accounting policies described in Note 1 to the financial
statements; and
(ii) complying with AASB 1025 "Application of the Reporting Entity Concept
and Other Amendments", AASB 1034 "Information to be Disclosed in the
Financial Reports" other Accounting Standards to the extent described
in Note 1 to the financial statements and the Corporations Regulations
2001; and
(b) mandatory professional reporting requirements to the extent described in
Note 1 to the financial statements.
/s/ KPMG
KPMG
P A Jovic
Partner
Melbourne this 31 October 2001
SPT Statutory Accounts 30/06/2001 Page 33