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FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED
ANNUAL REPORT
For the year ended 31 March 2012
Contents
1 Chairman's Review 7
2 Managing Director and CEO’s Review 15
3 Our Brand 26
4 Corporate Responsibilities 42
5 Directors 48
6 Directors' Report and Corporate Governance 54
7 Auditors' Report 66
8 Financial Statements 68
9 Notes to the Financial Statements 73
10 Company Information 165
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP2
p
$4Mp
$0.9M
p
37.8MË
TECH
NORTH AMERICAN BUSINESS PROFIT —
THE NORTH AMERICAN DISTRIBUTION
AND SERVICES BUSINESS MADE AN
OPERATING PROFIT BEFORE INTEREST
AND TAX OF $0.9 MILLION
NEW DIRECT DRIVE MOTOR AGREEMENT
— AGREEMENT TO DEVELOP, DESIGN AND
MANUFACTURE DIRECT DRIVE WASHING
MACHINE MOTORS SIGNED IN
AUGUST 2011
IMPROVED CASHFLOW — CASHFLOW FROM
OPERATIONS, EXCLUDING THE MOVEMENT
IN FINANCE LOANS WAS $117 MILLION
COMPARED TO $113 MILLION LAST YEAR
FINANCE BUSINESS PERFORMANCE — THE
FINANCE BUSINESS REPORTED A
NORMALISED OPERATING PROFIT BEFORE
INTEREST AND TAX OF $37.8 MILLION
CHAIRMAN’S REVIEW P3
Ë
RANGE
APPLIANCES’ ENTERED THE MARKET IN
INDIA WITH A FOCUS ON THE SPECIFER,
DESIGNER AND ARCHITECT COMMUNITY
IN THE DELHI REGION
NEW PRODUCTS — NEW PRODUCT
RELEASES INCLUDED THE PHASE 7
DISHDRAWER, GAS ON GLASS COOK TOPS
AND THE DCS UNITED INDOOR COOKING
RANGES AND DCS REFRIGERATION
DEBT REDUCTION — APPLIANCES NET
DEBT AS AT 31 MARCH 2012 WAS
$65 MILLION
q
$65M
Ë
INDIA
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP4
Refrigeration Cooking Laundry DishDrawer® Regional/Sales Office
Research And Development
Milton Keynes UK
Ontario Canada
Borso del Grappa Italy
Dublin Ireland
Los Angeles USA
Clyde USA
Reynosa Mexico
P5
A Global Company
Fisher & Paykel Appliances Holdings Limited comprises two operating divisions:
_ Appliances _ Finance (New Zealand
only)
Founded in 1934 as an importer business. Now has over 3,300 employees.
Internationally recog-nised brand.
_ #1 in New Zealand _ #2 in Australia _ Niche high-end
market positions in North America, Europe and China
Marketing and selling in over 50 countries.
Designs, manufactures and sells direct drive washing machine com-ponents and technology to the global appliances industry
Research and Develop-ment centres based in Auckland and Dunedin, New Zealand.
Fisher & Paykel Finance is a leading provider of consumer finance in New Zealand.
Auckland New Zealand
Rayong Thailand
Qingdao China
Dunedin New Zealand
Sydney Australia
Singapore
Marketing and selling in over 50 countries.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP6
CHAIRMAN’S REVIEW P7
Dr Keith Turner, Chairman
RESULTS
Group net profit after tax was $18.4 million for the
financial year ended 31 March 2012. This result com-
pares to $33.5 million for the previous year.
There were three items which affected compa-
rability, namely an onerous lease charge of $2.7 mil-
lion before tax (Appliances business), a fair valuation
adjustment for property held for sale (Appliances
business) of $1.2 million before tax and litigation costs
of $6.8 million before tax (Finance Group). In aggre-
gate these one off items resulted in a charge of $10.7
million before tax compared to a gain of $5.1 million
for the previous year.
Adjusting for items affecting comparability, nor-
malised group net profit after tax was $26.3 million
compared to $30.0 million last year.
Net bank debt as at 31 March 2012 was $65.2
million compared to $100.2 million as at 31 March
2011, excluding operating borrowings for the Finance
business. Group interest charges, excluding Finance
operating interest expense, decreased by 30% from
$15.4 million to $10.9 million on lower debt levels.
Cashflow from operations, before the movement
in loans to Finance business customers, was $117 mil-
lion compared to $113 million for the previous year.
Group capital expenditure for the year was $50.5
million including capital expenditure related to new
motor contracts of $22 million. Capital expenditure in
the previous financial year was $28.3 million.
The Appliances business reported an operating
profit before interest and tax of $7.3 million compared
to $28.8 million last year. After adjusting for items
affecting comparability of $3.9 million before tax,
normalised profit before interest and tax was $11.3
million compared to $23.7 million last year. This result
is ahead of market guidance provided in December
2011 of approximately $10 million.
For the second half the Appliances business re-
ported a normalised operating profit before interest
and tax of $13.7 million, compared to a loss of $2.4
million in the first half.
As foreshadowed in November 2011, the full year
result reflects lower revenue as the business refocuses
on profitable sales, notably in North America. Total
operating revenue for the Appliances business was
down 7.6% to $891 million compared to $965 million
for the previous year. This reflected weaker retail
market conditions, rebalancing for profitable sales and
unfavourable currency translation effects.
Gross margin, as a percentage of sales, increased
by 0.9 percentage points to 31.2%. Appliances’ gross
margin in dollar terms decreased by $13.5 million to
$278.4 million for the year ended 31 March 2012 as
a result of lower sales and higher raw materials and
freight costs. Sales, general & administration costs
reduced by $10.9 million to $215 million on cost sav-
ings, in particular in North America and favourable
currency translation effects.
The full year result was also impacted by trans-
actional hedging losses of $25.6 million, with $5.3
million recorded in the second half following a mid
year change in hedging policy.
On a segment reporting basis the North Ameri-
can distribution business reported an operating profit
before interest and tax of $0.9 million for the year
compared to a $9.8 million loss in the previous year.
The Finance business recorded a solid result
with reported operating earnings before interest and
tax (including operating interest) of $31.0 million,
compared to $34.7 million for the previous year. After
adjusting for litigation costs of $6.8 million before tax,
normalised profit before interest and tax (including
operating interest) was $37.8 million compared to
$34.7 million last year. This result is above the market
guidance provided in December 2011 of around $32
million. Net income remained steady on 2011 levels.
Bad debt expenses were lower than the prior year,
however operating costs were higher due to increased
promotional activity to grow Q Card receivables.
In respect of litigation costs, a case raised by a
U.S. based software company was heard in the High
Court at Auckland, New Zealand in late 2011. A judge-
ment on the issue is now expected this year. There are
complex legal issues and a range of possible outcomes.
Accordingly, the Directors took the prudent decision at
the half year to make a provision given this uncertainty.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP8
CAPITAL STRUCTURE
During 2012 financial year further progress was made
towards reducing bank debt and improving the overall
financial position of the Company. As at 31 March
2012, the Appliances business had total outstand-
ing net bank debt of $65.2 million, a reduction of
$35 million since 31 March 2011. Debt reduction was
primarily achieved by improved operating cashflow.
On 11 November 2011, the Company renewed its
Guaranteeing Group banking facilities on materially
similar terms and conditions as the previous debt
facilities. In March 2012, the Banking Group agreed to
remove the FPAL Interest Coverage Ratio. This ratio
only included earnings before interest, tax, deprecation
and amortisation derived by the Appliances business.
As at 31 March 2012, the Group was in full compliance
with all its banking covenants.
During the year, the Company continued with
property sales at the East Tamaki site in Auckland,
New Zealand. In March 2011, the recycling building
at the East Tamaki site was sold for $2.25 million and
settlement was completed in December 2011. In May
2012, the Company sold the components building at
the East Tamaki site for $5.1 million with settlement
expected by October 2012.
GOVERNANCE
The Board refreshment programme continued during
the year with two director retirements and two new
director appointments.
In September 2011, the Company announced
the appointment of Lynley Marshall as a Director.
Lynley’s extensive commercial, retail and media ex-
perience brings a dimension to the Board at a time
when brand, communication and digital strategy is
increasingly important. Her Australasian experience
and proven track record at delivering business growth
make her a strong addition to the Board. Pursuant to
GROUP FINANCIAL PERFORMANCE YEAR 6 MONTHS
31 March 31 March 31 March 30 Sept
2012 2011 2012 2011
NZ$000 NZ$000 NZ$000 NZ$000
Total Revenue and Other Income
Appliances business 891,449 965,053 450,603 440,846
Finance business 139,719 145,289 69,417 70,302
Other Income 6,790 10,601 3,497 3,293
1,037,958 1,120,943 523,517 514,441
Normalised Operating Profit/(Loss) before Interest and Taxation
Appliances business 11,282 23,675 13,656 (2,374)
Finance business (including Operating Interest) 37,814 34,722 19,447 18,367
49,096 58,397 33,103 15,993
Items affecting comparability
Onerous contracts (2,694) (882) (147) (2,547)
Litigation costs (6,774) - (857) (5,917)
Fair Valuation of Non-Current Assets held for Sale (East Tamaki site) (1,241) (500) (1,241) -
Profit on Sale of Land & Buildings - 6,508 - -
Earnings before Interest & Taxation 38,387 63,523 30,858 7,529
Interest (excluding Finance Business Operating Interest) (10,857) (15,403) (5,414) (5,443)
Operating Profit before Taxation 27,530 48,120 25,444 2,086
Taxation (9,099) (14,575) (7,989) (1,110)
Group Profit after Taxation 18,431 33,545 17,455 976
Normalised Group Profit after Taxation 26,300 30,040 19,408 6,892
CHAIRMAN’S REVIEW P9
the Company’s Constitution, Lynley Marshall will hold
office until the Annual Shareholders Meeting set for
23 August 2012 and being eligible, will offer herself
for election.
In September 2011, the Company also announced
the appointment of Philip Lough as a Director. Philip
filled the vacancy created by the retirement of John
Gilks. Philip is currently the Chairman of Methven
Limited and Quotable Value, Deputy Chairman of Port
Nelson Limited and a director of Livestock Improve-
ment Corporation. Philip is well known in business
circles and brings a wealth of international experi-
ence and strong governance credentials to the Board.
Pursuant to the Company’s Constitution, Philip Lough
will hold office until the Annual Shareholders Meeting
set for 23 August 2012 and being eligible, will offer
himself for election.
The new Directors bring with them a wealth of ex-
perience to complement that of the existing Directors.
As foreshadowed in the 2011 Annual Report,
John Gilks retired from the Board in August 2011. The
Board would like to thank John for his outstanding
contribution during his long service to the Company
as a non-executive Director and Deputy Chairman of
the Board. John has continued as Chairman of the
Finance business board.
In March 2012, Peter Lucas retired from the
Board in accordance with the board refreshment pro-
gramme that commenced in 2010. The Board would
like to thank Peter for his extensive contribution to
the Company as an independent director over his 10
year tenure.
On behalf of the Board I would like to wish both
John and Peter all the best for the future.
The Board refreshment plans will be completed
this year with the previously announced retirement of
Gary Paykel at the 2012 Annual Shareholders Meeting
in August.
The Finance business continues to maintain its
own separate board of directors.
PEOPLE
The Board would like to acknowledge the contin-
ued support and commitment from all employees
during what has been a year of consolidation and
improvement. With over 3,300 employees located
across the globe, the Board recognises the important
contribution that each individual employee makes to
the future development of the Company. The Board
would like to record its thanks to all employees for
their dedicated efforts.
DIVIDENDS
The Directors intend to restore dividend payments
to shareholders as soon as possible. However, with
conditions in our key markets remaining very un-
certain, the Directors believe it is prudent to take a
cautious approach and have resolved not to pay a
dividend at this time.
OUTLOOK
Retail market conditions are expected to remain
soft across all of the Company’s key markets in the
near term due to global economic uncertainty. The
Board remains particularly concerned about retail
market conditions in Australia, which deteriorated
in the second half of the 2012 financial year. While
there was a slight improvement in the U.S. economic
outlook, there are already signs that this might not
be sustained.
In the past two years the Appliances business
has rejuvenated investment in new products and at
the same time has significantly reduced bank debt
and controlled working capital and overheads. The
business has been repositioned for the current eco-
nomic climate and now has the financial flexibility to
pursue market opportunities including growth in the
components and technology business.
In financial year 2013 (FY13), the Appliances busi-
ness will benefit from the commencement of two new
motor contracts signed in 2011. The line for the Haier
motor contract was commissioned in April 2012 with
commercial volumes expected to ramp up in October
2012. A second line for another customer is on track
for production in the second quarter of FY13, with a
ramp up to commercial volumes from October 2012.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP10
In addition, the product development programme
of the past few years will culminate in the release of
new refrigeration, laundry and cooking products dur-
ing the coming year. On the downside, raw material
prices have increased in recent months.
The Finance businesses earnings should remain
resilient in the coming year, despite an expectation
that New Zealand retail trading conditions will remain
soft. Increased promotional activity with the Farmers
Trading Company and a broader merchant base for
Q Card should improve interest income.
Capital expenditure for the Group is expected
to be approximately $42 million in the 2013 financial
year.
An update on trading and market conditions
will be provided at the Annual Shareholders Meeting
in August 2012.
Dr. K S Turner
Chairman
24 May 2012
CHAIRMAN’S REVIEW P11
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP14
Stuart Broadhurst
Managing Director & CEO
P15MANAGING DIRECTOR AND CEO’S REVIEW
OVERVIEW
It has been a year of consolidation for the Company
as we continue to build for the future. We have made
further progress on our core strategies in the past
year as demonstrated by:
_ Delivery of new products;
_ Continued improvement in systems and struc-
tures to improve product quality;
_ Maintained strong operating cashflow, reduced
working capital and made further reductions
in net debt;
_ Appliances’ gross margin improved as a per-
centage of sales demonstrating that we are
maintaining our product mix despite difficult
market conditions;
_ The North American sales and customer ser-
vices business returning to profit on a segment
reporting basis;
_ Continued investment in product development,
brand and our people;
_ Signed two new component and technology
supply agreements with major global appliance
manufacturers for development, design and
manufacturing technology;
_ Achieved a record normalised profit for the
Finance business;
_ The Finance business successfully navigated
through the expiry of the Crown Guarantee.
These achievements show that progress has been
made over the year, notwithstanding the difficult
global economic conditions the business has faced
across its key markets. While our financial goals for
Appliances have not been met this year we have
continued to invest for the future.
The Finance business delivered a record nor-
malised result and continues to build on the strength
of Q Card and Farmers Finance Card. There are op-
portunities to continue to grow the business further,
without losing focus on the core business of providing
consumer point of sale solutions.
Overall we remain committed to generating a
healthy yield for shareholders in the future.
Group Results
In New Zealand dollar terms, Total Revenue and Other
Income decreased by $83 million to $1,038 million.
Appliances’ revenue was down 7.6% from $965
million to $891 million on lower volumes and unfa-
vourable foreign exchange translation effects. Sales
in Australia were down 2.4% in local currency terms
compared to the previous year. As foreshadowed in
GROUP REVENUE YEAR 6 MONTHS
31 March 31 March 31 March 30 Sept
2012 2011 2012 2011
NZ$000 NZ$000 NZ$000 NZ$000
Appliances business
New Zealand 159,829 162,429 81,652 78,177
Australia 410,493 419,035 214,505 195,988
North America 165,766 207,883 75,882 89,884
Europe 64,304 81,330 34,997 29,307
Rest of World 74,393 69,505 36,461 37,932
874,785 940,182 443,497 431,288
Appliances business other sales of goods revenue 4,701 12,217 1,295 3,406
Appliances business sales of service 11,963 12,654 5,811 6,152
Total Appliances 891,449 965,053 450,603 440,846
Finance business 139,719 145,289 69,417 70,302
Other Income 6,790 10,601 3,497 3,293
Total Revenue & Other Income 1,037,958 1,120,943 523,517 514,441
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP16
the first half, sales in North America declined as that
business focused on profitable sales. European sales
decreased by 17.7% on the last year in local currency
terms.
Finance business revenue was down slightly from
$145 million to $140 million as a result of continued
soft retail market conditions in New Zealand.
Items affecting comparability
The Group recorded three one-off items during the
financial year, which together resulted in a net charge
of $10.7 million before tax compared to a gain of
$5.1 million for the previous year. The three one-off
items were:
_ Onerous lease: A provision was made for the
estimated unavoidable costs associated with a
warehouse lease in Chicago, USA. This resulted
in a charge of $2.7 million before tax.
_ Fair valuation adjustment: The fair value of the
remaining East Tamaki property held for sale has
been reassessed on a vacant possession sale
basis. This resulted in a further charge of $1.2
million before tax. The remaining property titles
at East Tamaki continue to be offered for sale.
_ Litigation costs: In respect of litigation costs, a
case was heard in the High Court at Auckland,
New Zealand in late 2011. A judgement on
this issue is now expected this year. There are
complex legal issues and a range of possible
outcomes. Accordingly, the Directors took the
prudent decision at the half year to make a
provision given this uncertainty. This amount,
together with subsequent further legal costs,
has been reported as litigation costs in the
Financial Statements. Litigation costs for the
current financial year were $6.8 million, with a
$0.9 million increase in the second half.
Depreciation and Amortisation
The charge for depreciation and amortisation was
$40.6 million for the year ended 31 March 2012, com-
pared to $40.9 million for the previous year.
Capital Expenditure
Total capital expenditure for the Group on a cash
flow basis was $50.5 million for the year ended 31
March 2012. Capital expenditure for the Appliances
business at $48.3 million accounted for the majority
ITEMS AFFECTING COMPARABILITY YEAR 6 MONTHS
31 March 31 March 31 March 30 Sept
2012 2011 2012 2011
NZ$000 NZ$000 NZ$000 NZ$000
Fair Valuation of Non-Current Assets held for Sale (East Tamaki site) (1,241) (500) (1,241) -
Onerous contracts (2,694) (882) (147) (2,547)
Profit on Sale of Land & Buildings - 6,508 - -
Litigation costs (6,774) - (857) (5,917)
Total Items Affecting Comparability (10,709) 5,126 (2,245) (8,464)
DEPRECIATION AND AMORTISATION YEAR
31 March 31 March 31 March 31 March
2012 2011 2010 2009
NZ$000 NZ$000 NZ$000 NZ$000
Appliances business 31,667 32,550 38,096 50,625
Finance business 8,959 8,343 8,010 7,864
40,626 40,893 46,106 58,489
MANAGING DIRECTOR AND CEO’S REVIEW P17
of the investment which was primarily focused on
new product development and new motor supply
agreements signed in 2011. Of the total spend for
Appliances, $22.2 million relates to the two new mo-
tor contracts signed in 2011. Total capital expenditure
for the Group increased by $22 million compared to
the previous year.
Cash Flow and Group Net debt
Cash flow from operating activities, before the move-
ment in loans to Finance business customers, was $117
million compared to $113 million for the previous year.
Group Net Debt (excluding operating borrowings
for the Finance business) as at 31 March 2012 was $65.2
million, compared to $100.2 million as at 31 March 2011.
Appliances Business
Appliances’ revenue at $891 million was down 7.6%
compared to the previous year. This reflected weaker
retail market conditions, rebalancing volumes for
profitable sales, in particular in North America, and
unfavourable currency translations effects.
Appliances’ gross margin, as a percentage of
sales, increased by 0.9 percentage points to 31.2%.
Gross margin in dollar terms declined by $13.5 million
to $278 million as a result of lower volumes and higher
raw materials and freight costs.
Overheads were also lower as a result of cost
savings, notably in North America, and favourable
currency translation effects. The North American sales
and customer services business reported an operating
CAPITAL EXPENDITURE IN CASH FLOW TERMS YEAR
31 March 31 March 31 March 31 March
2012 2011 2010 2009
NZ$000 NZ$000 NZ$000 NZ$000
Appliances business 48,313 24,263 29,738 71,768
Finance business 2,163 4,078 2,036 2,282
50,476 28,341 31,774 74,050
APPLIANCES BUSINESS FINANCIAL PERFORMANCE YEAR 6 MONTHS
31 March 31 March 31 March 30 Sept
2012 2011 2012 2011
NZ$000 NZ$000 NZ$000 NZ$000
Operating Revenue 891,449 965,053 450,603 440,846
Normalised Operating Profit/(Loss) before Interest and Taxation
- Appliances business 11,282 23,675 13,656 (2,374)
Items affecting comparability
- Onerous contracts (2,694) (882) (147) (2,547)
- Fair Valuation of Non-Current Assets held for Sale (East Tamaki site) (1,241) (500) (1,241) -
- Profit on Sale of Land & Buildings - 6,508 - -
Reported Operating Profit before interest and Taxation 7,347 28,801 12,268 (4,921)
Gross Margin 31.2% 30.3% 30.7% 31.8%
Operating Margin* 1.3% 2.5% 3.0% -0.5%
Invested Capital 379,104 419,098 379,928 408,806
Return on Invested Capital** 3.0% 5.6% 5.6% 3.6%
*Normalised Operating Profit before Interest and taxation to Operating Revenue**Last 12 months normalised operating Profit before Interest and taxation to Invested Capital
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP18
profit before interest and tax of $0.9 million compared
to a loss of $9.8 million for the previous year.
Normalised operating profit before interest and
tax improved in the second half of the year to $13.7
million compared to a loss of $2.4 million in the first
half. As signalled in the Interim Report, the full year
result was negatively impacted by transactional hedg-
ing losses of $25.6 million, of which $5.3 million was
incurred in the second half.
Return on invested capital declined from 5.6%
as at 31 March 2011 to 3.0%, reflecting lower earnings
and capital expenditure that will start generating a
return in financial year 2013 (FY13).
MARKET REVIEWS
Appliances’ revenue, by geographic region and local
currency, has been compared to the previous year in
the table below. Revenues continue to be impacted
by weak retail market conditions, currency translation
effects and intense competition across all markets.
New Zealand
Appliance imports for the industry were down 5.0%
in unit terms compared to the previous year and
market demand for appliances did not recover post
the Rugby World Cup. Record low building consents
in New Zealand were also a contributing factor to
weaker demand conditions. Competition was intense
as suppliers chased sales in soft retail market condi-
tions, via a combination of selected price reductions
and discounting.
Appliances' revenues were down 1.6% on the
previous year, however, second half revenues were up
0.6% on the previous corresponding period. Fisher &
Paykel branded volumes were flat compared to last
year, however, market share increased in unit terms.
The reduction in Fisher & Paykel brand revenues was
due to selected price discounting, however gross
margin increased due to product mix improvements.
De Longhi branded sales through third party distribu-
tors also declined and contributed to lower overall
sales for the year. Spare parts sales were lower due
to improved product quality.
Haier sales continued to grow as additional
products were added to existing distribution channels.
Australia
The Australian home appliances market decreased
by 0.2% in unit terms compared to the previous year.
However, there was a significant slow down in the
second half of the financial year when the market
declined by 2.2%.
Weaker consumer confidence and record low
building consents negatively impacted retail sales. The
2012 financial year was characterised by intense compe-
tition as suppliers passed on the benefits of a high cur-
rency to consumers through selected price reductions.
Australian revenue was down 2.4% in local cur-
APPLIANCES REVENUE ANALYSIS IN LOCAL CURRENCY YEAR 6 MONTHS
31 March 31 March 31 March 30 Sept
2012 2011 2012 2011
NZ$000 NZ$000 NZ$000 NZ$000
Appliances business
New Zealand NZD 159,829 162,429 81,652 78,177
Australia AUD 316,955 324,727 166,486 150,469
North America USD 134,684 152,915 63,049 71,635
Europe EUR 36,733 44,617 19,663 17,070
Rest of World NZD 74,393 69,505 36,462 37,931
-
Appliances business other sales of goods revenue NZD 4,701 12,217 1,295 3,406
Appliances business sales of service NZD 11,963 12,654 5,811 6,152
MANAGING DIRECTOR AND CEO’S REVIEW P19
rency terms, reflecting difficult market conditions.
Fisher & Paykel brand revenue was down on lower
volumes and selected price reductions. Market share
in unit terms increased in the cooking segment, how-
ever, was down slightly across other categories. Haier
brand sales continued to grow at the value end of the
retail appliance market. Sales of spare parts were also
lower due to further product quality improvements.
North America
The U.S. market contracted by 7.5% in unit terms
compared to the previous year, in part due to the
absence of Government stimulus incentives compared
to the first quarter for the financial year 2011 (FY11).
Fears of a U.S. double dip recession and the European
crisis negatively impacted consumer confidence in the
first three quarters of the financial year. Early signs
of economic improvement appeared in January and
February this year, however, it is too early to determine
whether this will be sustained. Notwithstanding the
weaker demand environment, competitors increased
prices in January 2012.
North American revenues were down 11.9% in lo-
cal currency terms, due to a focus on profitable sales.
Pleasingly, second half revenues were only down 1.8%
in tough market conditions. Fisher & Paykel brand
revenues were lower as the focus shifted to profit-
able sales, however gross margin improved due to an
improved product mix. DCS brand sales were higher
following the release of the DCS United indoor cook-
ing range in the first half of the year.
The result also reflected lower component and
technology sales in North America.
The focus on profitable sales and cost reduc-
tion activities resulted in the North American sales
and customer services business reporting a segment
operating profit before interest and tax of $0.9 million
compared to a $9.8 million loss in the previous year.
Pleasingly, gains from the first half were held through
the fourth quarter, which is traditionally the weakest
sales quarter for the business.
Other International markets
European sales were down 17.7% in local currency
terms. Difficult market conditions continued in Ire-
land and the United Kingdom. Revenues were lower
in part due to lower sales by our Italian factory to
third party customers. In January 2012, distribution
of Haier branded products commenced in Ireland.
Rest of World revenues increased by 7.0% in
New Zealand dollar terms compared to the previous
year, however, second half sales declined by 1.8%.
Price increases and higher volumes were more than
offset by unfavourable currency translation effects.
As indicated in the Interim Report, Singaporean sales
were lower compared to the previous year due to
the Company ceasing the distribution of Whirlpool
product on 1 April 2011.
During the year the Company commenced sales
in India following an 18 month market assessment.
The market entry strategy is to target the specifier,
designer and architect community, starting with one
distributor in the Delhi region. The Company views
the Indian market as a long term growth opportunity.
Haier Relationship
The relationship with Haier continues to develop with
further milestones achieved in the past year.
In March 2011, the Company announced a com-
ponent and technology supply agreement with Haier
for the development, design and manufacture of
direct drive washing machine motors for the Chinese
market. The installation and commissioning of the
manufacturing plant has been completed in Thailand
and first commercial volumes were shipped to Haier
in April 2012.
The sale of Haier branded product in Australia
and New Zealand continues to grow as new products
are added to the portfolio. As mentioned previously,
Fisher & Paykel commenced distribution of the Haier
brand in Ireland in January 2012.
Sales of Fisher & Paykel branded products in
China have been slower than expected. The process
for certification of product for the China market has
been frustratingly slow and for many products will not
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP20
be completed until the end of the calendar year. As
a result of slower than expected sales, the Company
is boosting support in China to assist Haier to deliver
increased sales of Fisher & Paykel branded products.
The relationship continues to grow and both
companies are working on other mutually beneficial
opportunities.
Appliances Business Strategy
The business has been focused on delivering Five Main
Things to improve the return for our Shareholders.
Our Strategic Plan has two main themes, to improve
the core appliances business and seek to monetise
our technology investment.
The Appliances business is focused on our
customers and we put our customers at the centre
of everything we do. This is across all aspects of our
business to ensure we deliver premium customer
experiences, products and services. As a business
we will continue to drive technology innovation, but
also bring innovation and creativity across all touch
points in the business to improve everyday life for our
customers. We have a clearly focused market strategy
and are delivering our product development plans.
A key aspect of our strategy is to diversify earn-
ings by growing our component and technology busi-
ness and explore the potential to expand our original
equipment manufacturing business. Examples of this
strategy in action include the two new direct drive
motor contracts signed in the last year and our new
compressor technology developed in conjunction
with Embraco. We will seek to explore other options
to monetise our technology investment in a way that
is complementary to building the core appliances
business.
A strong Fisher & Paykel brand is critical to the
future of our components and technology business as
we need to demonstrate to other appliance manufac-
turers our ability to deliver world leading technologies.
We continue to focus on Five Main Things, an
element of which includes Five Key Opportunities for
the business (see pages 22 and 23).
Financial targets for financial year 2016 (FY16)
have been set, including revenue growth 2% – 4% per
annum, earnings before interest and tax margin (EBIT
Margin) of 6% – 8% and a return on invested capital
(ROIC) of 15%. Our investment in product develop-
ment, quality, brand and people in recent times will
start to improve results this year and we will continue
to build towards reaching our financial goals.
STRATEGIC THEMES APPROACH FY16 TARGETS
Improve 'Core'
Appliances
Put the customer at the
centre of everything
we do
Five Main Things
AND
Five Key
Opportunities
Revenue Growth
2-4% pa
Execute our market
strategy and deliver our
Product PlanEBIT Margin
6-8% pa
Monetise Technology
to Diversify Earnings
Grow earnings from
technology and seek
original equipment
manufacture
opportunities
ROIC
15%
MANAGING DIRECTOR AND CEO’S REVIEW P21
Five Main Things
We continue to focus on the Five Main Things in the
business.
We will execute our Marketing and Product
Plans to provide consumers with an experience and
products that exceeds their expectations. To achieve
this goal the business has increased investment in
products, brands and people over the past few years.
We are committed to ensuring that the quality of our
products and services delivers customer satisfaction,
which builds the reputation and value of the Fisher &
Paykel brand. We continue to make improvements in
product quality and have now achieved best in class
across many categories.
Our market strategy is well defined and targeted.
We will protect and grow our home markets of New
Zealand and Australia, whilst seeking profitable growth
in niche market segments in North America and in
other countries. China and India are long term growth
options, as both markets are expected to experience
double digit growth per annum in appliances sales
over the next five years. We are taking a low cost entry
approach to build a niche position in the commercial
segment in selected cities.
We continue to implement the business excel-
lence framework to build best in class processes and
deliver continuous improvement across the business.
We continue to create the right environment
to recruit and retain talented and passionate people
needed to achieve our goals.
Cost reduction is focused on lean thinking as a
key principle across the Group, and we must continue
to optimise costs across all aspects of the business to
remain competitive.
Five Key Opportunities
Fisher & Paykel Appliances has a 100 year heritage in
cooking and is well positioned to leverage both the
Fisher & Paykel and DCS brands to grow earnings.
We have increased our focus in the cooking category,
as evidenced by new products, the “Social Kitchen”
branding, improved product training and online
content like “Our Kitchen” cooking blog. In addition,
our sponsorship of food and cooking events such as
New Zealand Masterchef and the Australian Good
Food & Wine show, has increased. We are leveraging
the cooking opportunity in the context of our wider
kitchen strategy.
FIVE MAIN THINGS
DelIvering Customer
Benefits
Customer focused, differentiated products
Brand experience
Product innovation
Focus on quality
Environmental
Disciplined Market
Growth
New Zealand and Australia — protect and grow home markets
North America — profitable growth
Rest of World — profitable sales
China/India — long term options to access growth markets
Alliances — Haier, Whirlpool and others
Components & Technology — build expertise and diversify earnings
Business ExcellenceOrganisational excellence framework
Structures and systems
Organisational
Capability
People and leadership
Talent management
Cost Reduction
Consolidate manufacturing cost reduction
Ongoing review of manufacturing facilities
"Delivering Profitable Growth" program
Lean thinking — raw materials and overheads
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP22
North America is a potential growth market
for the Company. Over the last two years the North
American business has been resized to focus on build-
ing a strong niche market position for both the Fisher
& Paykel and DCS brands. In the next few years, new
product releases and a refocused business model are
expected to deliver earnings growth for the Company.
We have commenced our global manufacturing
review to ensure our manufacturing facilities are op-
erating at the fore-front of advanced manufacturing
technologies and processes. In addition, we are also
reviewing the location of our manufacturing facilities
that remain in high cost labour locations to ensure
that our products remain competitive in the long term.
Growth in components and technology has been
a feature during the past year with the addition of
two new direct drive motor contracts. The business
is targeting revenue of $120 million to $150 million by
financial year 2016. We have three foundation custom-
ers which should deliver between $56 million to $86
million in financial year 2014.
We are also exploring opportunities to com-
mercialise our technology beyond the reach of the
Fisher & Paykel brand and we are actively exploring
partnership opportunities with Haier.
In summary, the Strategic Plan sets out the
roadmap for the business over the next four years.
We have aligned our activity to this Plan to ensure we
achieve our operating and financial goals and deliver
a healthy return for our Shareholders.
FINANCE BUSINESS
The Finance business reported a solid result for the
year ended 31 March 2012. Operating profit before
interest and tax (including operating interest) was
down $3.7 million to $31.0 million after provisioning
$6.8 million for litigation costs. Please refer to Note
8 of the Financial Statements for an explanation of
the litigation costs.
Normalised operating profit before interest and
tax of $37.8 million was up 9% from $34.7 million the
previous year.
The improved result was built on higher net
margins, cost containment and a continued focus on
credit management.
Although operating revenue was lower and operating
costs increased due to promotional expenditure, these
were offset by lower bad debt expenses.
Operating revenue decreased from $145.3 mil-
lion to $139.7 million. Interest expense was margin-
ally down, reflecting lower funding costs and lower
volumes of new lending.
The bad debt expense to gross receivables ratio
decreased from 3.1% to 1.8%. This partly reflected the
full reversal of the $2 million Christchurch earthquake
provision which was established in FY11. As it trans-
pired, this was not required.
Operating costs increased by $5.4 million (exclud-
ing litigation costs) primarily as a result of increased
promotion related to the Q Card product.
Net finance receivables increased by 1% in the
FIVE KEY OPPORTUNITIES
STRATEGIC THEMES KEY OPPORTUNITIES OUTCOME
Improve 'Core' Appliances Earnings
1. Cooking StrategyCategory growth
2. North American DistributionImprove profitability
3. Global Manufacturing ReviewAdvanced manufacturing
Reduce product costs
Monetising Technology To Diversify Earnings
4. Components & TechnologyFY16 Revenue target $120m — $150m
5. Original Equipment Manufacture (OEM)Commercialise "know—how" beyond
Fisher & Paykel brand market reach
MANAGING DIRECTOR AND CEO’S REVIEW P23
second half to $594 million, however, were down 1%
on March 2011 levels. Growth in the second half re-
flected a strengthening promotional program with the
Farmers Trading Company. Q Card receivables were
flat on March 2011 levels, with new receivables growth
offsetting the loss of a major account representing
approximately $50 million in receivables. Farmers
Finance Card receivables declined by 3% on March
2011 levels, however, increased by 1% on September
2011 levels. Farmers fixed instalment business declined
from $13 million last year to $10 million. Bulk funding
receivables were down $2 million to $74 million.
Total external debt funding at 31 March 2012
was $551 million. The Finance business continues to
maintain a diversified funding portfolio represented by
retail debentures (21%), RFS commercial paper (37%)
and term wholesale bank debt (42%). The business
continued to maintain surplus liquidity in the form of
undrawn term and standby committed banking facili-
ties. The Finance business has successfully navigated
the expiry of the Crown Deposit Guarantee Scheme on
31 December 2011. Monthly retail debenture reinvest-
ment rates have increased post 31 December and the
reinvestment rate in March 2012 was 89%. As a result
of increased retail debentures, the Finance business
intends to remove $85 million of wholesale banking
facilities that were principally put in place to cover
any shortfall in debenture funding post the expiry
of the Crown Deposit Guarantee. Net of this reduc-
tion undrawn term and standby committed banking
facilities amounted to $152 million as at 31 March 2012
During the year further steps were taken to
strengthen the funding position of the Finance busi-
ness and the Non Bank Deposit Taker, Fisher & Paykel
Finance Limited. Fisher & Paykel Appliances Holdings
Limited injected a further $8.5 million as capital into
Fisher & Paykel Finance Limited to take the capital
adequacy ratio to 15.27% compared to the minimum
requirements of 8.0%. Fisher & Paykel Finance Limited,
as a Non Bank Deposit Taker, has maintained a long
term issuer credit rating of ‘BB’ (Stable Outlook) from
Standard & Poor’s.
Finance Business Strategic Direction
There are opportunities to continue to grow the
business without losing focus on the core business
of consumer point of sale solutions.
We want to grow Q Card and Farmers Finance
Card receivables and enhance our other offerings in
the market.
Going forward the business is focused on the
following growth opportunities:
_ Fully develop the partnership with Farmers
Trading Company;
_ Broaden merchant reach (target to move from
15% to 20% in the next two years);
_ Target new retail channels, for example, the
health and agriculture sectors;
_ Promote customer loyalty to retailers;
_ White label opportunities for retail stores;
_ Expand gift and cash card offerings;
_ Deliver further technology solutions to custom-
ers including digital and on-line;
_ Consider selective acquisitions of core portfolio
receivables.
FINANCE BUSINESS FINANCIAL PERFORMANCE YEAR 6 MONTHS
31 March 31 March 31 March 30 Sept
2012 2011 2012 2011
NZ$000 NZ$000 NZ$000 NZ$000
Operating Revenue 139,719 145,289 69,417 70,302
Normalised Operating Profit before Interest and Taxation (including Operating Interest) 37,814 34,722 19,447 18,367
Items affecting comparability
- Litigation costs (6,774) - (857) (5,917)
Reported Operating Profit before Interest and Taxation (including Operating Interest) 31,040 34,722 18,590 12,450
Net Finance Receivables 594,532 601,595 594,532 589,337
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP24
People
I would like to acknowledge the significant contribution
of our staff over the past year. Their talent, passion,
creativity and dedication have been instrumental in
positioning the Company for the future. I am grateful
for the efforts made by the Fisher & Paykel team across
both Appliances and Finance and believe we have the
momentum to make further advancements this year.
I would also like to thank our suppliers, custom-
ers and business partners for their continued support
during the year.
SUMMARY
In the next financial year our investment in product
development, quality brand and direct drive motors
will start to deliver results. This is an exciting prospect
as we deliver new refrigeration, laundry and cooking
products to the market and the two direct drive mo-
tor contracts commence. While market conditions are
expected to remain difficult, our strategic roadmap
provides clarity and direction for the business and
we are aligned to delivering on the Five Main Things
and Five Key Opportunities.
The Finance business has continued to perform
in difficult retail market conditions and is a world-class
consumer point of sale finance business. We see op-
portunities to further grow this business over the next
few years within its core capabilities.
The business has come a long way in the past three
years and the balance sheet is now in a much stron-
ger position. Going forward I am looking forward to
meeting the challenges of the next few years as we
deliver on our strategic plan and generate a healthy
return for our Shareholders.
S B Broadhurst
Managing Director & Chief Executive Officer
24 May 2012
MANAGING DIRECTOR AND CEO’S REVIEW P25
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP26
The aim is to refresh, realign and reposition the brand
globally over a medium-term horizon, in tandem with
other initiatives including our product development
strategy.
When we talk about brand, we mean the sum
of all experiences, large and small, that people have
with Fisher & Paykel. Our brand is our company-wide
reputation, not just our logo.
We have taken our products to the world. Now
we need to support them with the stories that build
our reputation beyond high performance products
to a brand that people aspire to have in their lives.
Real
Our brand has real substance and is delivered with
integrity by ordinary people with extra-ordinary skill
and commitment to build relationships with our cus-
tomers through trust and reputation.
Generous
We care about our customers, our people and our
planet and have a willingness and spirit of openness
throughout our business.
Human
Life is about routine as much as it is about the un-
expected, and we cater for both. Our customers are
people with routines and rituals, expectations and
surprises, busy and quiet times, joys and tragedies.
Curious
We understand the dynamic nature of modern living.
We’re curious about the world and how people live,
wherever they may be. Our outlook is global, but we
understand each local neighbourhood.
REAL
GENEROUS
HUMAN
CURIOUS
2012 SAW THE FURTHER DEVELOPMENT
OF A BRAND AND COMMUNICATIONS
STRUCTURE TO SUPPORT FISHER &
PAYKEL’S BUSINESS OBJECTIVES AND
PROVIDE CLEAR FOCUS FOR A GLOBAL
BRAND PLATFORM.
A GLOBAL BRAND
OUR BRAND VALUES
P27OUR BRAND
OUR POSITIONING IS EVERYDAY PREMIUM.
FOR US, THIS MEANS HIGH QUALITY AT
AFFORDABLE PRICES AND ASPIRATIONAL
DESIGN THAT IS ACHIEVABLE TO OWN.
TO BE THE MOST
HUMAN-CENTRED APPLIANCE
BRAND IN THE WORLD.
EVERYDAY PREMIUM
OUR BRAND VISION
Our Positioning
Everybody deserves product that is well designed,
with real value and substance. We are in the middle
and upper middle positions in the market, over the
best of the conventional offerings and below the
ultra-premium solutions. This is where our heritage
and legacy has brought us and where we can add
real value.
Our Brand Goal
The goal is to create an everyday premium brand
that is very aspirational yet still accessible; a brand
that continues to be human-focused and real. One
that people are proud to be part of, whether they are
consumers, distributors, employees or shareholders.
At the heart of the Fisher & Paykel story are people
looking for the innovation that changes the everyday
into something out of the ordinary. It appeals to our
basic human desire to live life and improve it. Our
brand voice sets the tone for the way we look, sound
and communicate.
All brand communications over the past year
have been executed with this vision in mind. They
have been varied and wide-reaching.
OUR DESIGN PHILOSOPHY:
DESIGN FOR REAL LIFE
We are curious about people. How they live, where
they live, what they do and how they use things. This
is where hidden insights wait to be uncovered. We are
curious not only with the function and performance
of our products but with the emotional role they play
in peoples lives. For us, design is not a self-serving
goal; it is a human endeavour to make life better.
Continuous innovation is part of the Fisher &
Paykel design philosophy. As evident in the release
of the Phase 7 DishDrawer™, we have applied valu-
able research insights to deliver a product that is
considerably more in tune with the way that humans
are living their lives.
We live in a designed world and we believe ev-
erybody deserves good design. who use our products
day in and day out. The ongoing collaboration be-
tween design engineers and customers has changed
the course of appliance design for us as a company
and for those who use our products day in and day
out. Our future will be built on fostering this spirit of
collaboration and curiosity.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP28
DISHDRAWER™
PHASE 7
Released in 2012, the latest DishDrawer™ dishwasher
continues to change the way people wash their dishes.
The Phase 7 DishDrawer™ brings a new level of
performance and quality into the kitchen. Range im-
provements include: pitch adjustable racking that can
also be folded flat for large items and accommodate
plates and deep bowls, improved fit for seamless in-
stallation into kitchen cabinetry, a wireless badge to
provide uninterrupted surfaces on integrated models,
reduced operating sound and an increase in wash and
energy performance.
We have found new ways to improve usability,
increasing the height of the drawer to allow for even
larger plates and platters. No longer limited to one
size of DishDrawer™ dishwasher, a wider version has
been developed to suit smaller families. We all know
every kitchen is different. The DishDrawer™ family is
designed for choice and convenience, offering mul-
tiple configurations, along with a choice of material
finishes to integrate seamlessly into new and existing
kitchen designs.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP30
GAS ON GLASS
COOKTOP
The Gas on Glass cooktop range combines the
cleanability of the highest quality glass surface with
the efficiency of gas cooking. It delivers total cook-
ing precision through the latest burner technology
and elegant stainless steel controls. Gas on Glass is
a modular family of appliances, available in a range
of sizes to suit every home.
Premium quality materials and finish are strong
design cues in the Gas on Glass cooktop range. Trivets
of heavy duty cast iron sit alongside black glass and
a polished stainless trim, a combination that signifies
this range of everyday premium product.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP32
COMPANION
PRODUCTS
The Companion Product range has been designed to
complement any kitchen. The range includes a Coffee
Maker, Steam Oven, Compact Oven and Combina-
tion Microwave Oven, offering a complete modular
family. Whether it’s a fresh coffee in the morning, a
healthy steamed lunch or a quick ready-made meal
in the evening, the companion product range takes
convenience to a new level.
Each product is based on standard dimen-
sions and can be easily configured to suit the kitch-
en — whether it is stacked vertically, placed side by
side in a linear fashion or configured in a Two x Two
Block. Any combination will deliver a unified built-in
solution. Design features including capacitive touch
controls, standard fascia height and brushed handles,
Stopsol glass and chrome trim ensure the Companion
Products sit perfectly alongside the broader Fisher &
Paykel range.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP34
FRENCH DOOR
REFRIGERATOR
The refreshed French Door Refrigerator was launched
late 2011. As the hero product of Fisher & Paykel's
refrigeration range, the French Door Refrigerator is
powered by our latest refrigeration development:
ActiveSmart™ Technology, embodying our sophisti-
cated knowledge of food care.
This technology means that at the heart of
Fisher & Paykel refrigerators is the ability to sense
and respond to daily use in an intelligent way. The
combination of temperature sensors with smart
electronics and variable speed fans creates a
controlled environment and optimum temperature
for better food care.
Combining Ice & Water features with ergonomic
sliding drawers and a large 610 litre capacity, the
French Door Refrigerator provides the ultimate food
care solution.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP36
At the heart of all Fisher & Paykel washing machines
is the ability to sense and respond to each load in
an intelligent way. The combination of a direct drive
motor with smart electronics means greater reliabil-
ity and better performance. We call it SmartDrive™
technology.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP38
At the heart of Fisher & Paykel refrigerators is the abil-
ity to sense and respond to daily use in an intelligent
way. The combination of temperature sensors with
smart electronics and variable speed fans creates a
controlled environment and optimum temperature for
better food care. We call it ActiveSmart™ Technology.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP40
ENVIRONMENTAL RESPONSIBILITY
Fisher & Paykel Appliances Holdings Limited ("Fisher &
Paykel") has long been committed to environmentally
conscious operations as a business, and to creating
new products that increasingly limit the impact on
the environment’s natural resources.
New Zealand’s clean, green reputation has
formed part of our philosophy for decades. Today we
strive to emphasise sustainability in everything we do,
from comprehensive recycling programmes in New
Zealand and abroad, to continual energy and water
consumption reduction efforts both in manufacturing
and new product design.
Efficiency
Fisher & Paykel aims to meet the highest industry
standards with our appliances achieving top ranking
results with Energy Star and WELS water ratings.
Over the past thirty years our appliance energy and
water usage has decreased across all our appliances.
The most dramatic result in energy use is from
the highest-consuming whiteware appliance in the
house, the refrigerator, which has reduced energy
consumption on average by over 60 percent. Water
use by our dishwashers and clothes washers has also
decreased, with these appliances now using around
55 percent and 80 percent less water on average
respectively.
Last year we launched our world-leading, revo-
lutionary refrigerator compressor design that is up to
35 percent more energy efficient than conventional
compressors and further reduces the consumption of
the most energy-hungry appliance in the home. The
compressor is now in trial and will be entering the
market in the next couple of years. We continued our
environmental improvements in 2012, this time in the
laundry with our unique Direct Drive motor technol-
ogy providing eco-friendly engineering and design
innovation behind our new suite of washing machines.
When we developed Direct Drive motor tech-
nology 20 years ago, the focus was on delivering
higher performance and reliability in our washing
machines at a lower cost to the consumer. Today, the
Direct Drive motor technology continues to evolve
and play a powerful role, enabling new efficiencies
across the upgraded SmartDrive™ washing machine
range. Consumers can now select machines based
on their household’s unique needs, be it top water
and energy efficiency or optimal clothes care for a
longer-wearing wardrobe, all due to technology de-
velopments at the core.
Local Product Stewardship
Fisher & Paykel appreciates that the environmental
impact of an appliance continues long after it leaves
the factory gate. Taking responsibility for our products
throughout their life cycle, we opened our appliance
recycling operation in New Zealand nearly two de-
cades ago. Through this initiative, Fisher & Paykel is
able to save around 25,000 appliances from landfill
each year and enable the re-use of bulk materials.
Alongside appliance recycling, we recently
launched a local programme for operational appliances
ten years or older in partnership with the Energy Ef-
ficiency and Conservation Authority (EECA).
Called ‘Take Back’, this initiative offers free col-
lection of working but unwanted refrigerators and
freezers in New Zealand’s main centres. As well as
recycling these products, we report back to EECA,
calculating the amount of energy saved from the
appliance’s decommissioning and replacement with
a more efficient, modern model. ‘Take Back’ has so
far collected more than 650 refrigerators and freez-
ers, delivering a total estimated energy savings of
394MWh/y, or enough energy to power around 200
homes over a year.
Global Initiatives
Across the globe our people are similarly commit-
ted to reducing our environmental footprint through
aggressive waste reduction and energy reduction
targets. We are successfully meeting our own high
targets in each country we are located and comply
with the strict emissions rules specific to each country.
Our goal is to continually reduce our emissions
and apply the principle of reduce, re-use and re-cycle
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP42
to all of our process waste in all markets in which we
operate.
OUR COMMUNITIES
Across the globe, Fisher & Paykel’s people share
a drive to help the communities in which we are
located. To do this we forge relationships with key
community organisations who, at a local level help
us identify the people most at need, and the things
they need most to assist them.
Regional Responses
At the heart of our business lie two core areas — our
appliances and our people. Both are integral to the
initiatives through which we can demonstrate support
to our local communities.
From New Zealand to Italy and in between,
Fisher & Paykel acts locally to support projects close
to our people, their families, and our customers. Our
outreach can be through donated appliances, commu-
nity sponsorship, grass roots charity funding, schools
initiatives, or simply, people power.
Our people’s expertise ranges across engineering and
design, to sales and marketing, manufacturing and
customer service, so their guidance can be invaluable
when donated to assist with community projects.
In many of the markets we reside, Fisher & Paykel
taps into the community in areas where we can assist
through local activity. In New Zealand for example, Re-
cycling Days are just one way our people can engage
with the community to make a difference. As part of
our ongoing appliance recycling effort we host these
days where the public is invited to drop off any retired
whiteware appliances to our main centres for free. Not
only are we able to save thousands of tonnes from
landfill as a result, but these events provide an easy
recycling option for the public and an opportunity to
meet our neighbours.
Our Auckland Head Office has also long sup-
ported an initiative to recognise hardworking students
from three local schools in the East Tamaki and Otara
area, The Young Endeavour Award. As part of the pro-
gramme, Fisher & Paykel participates in the judging
alongside the schools, provides trophies and certifi-
cates, an exciting field trip for the winning students
and a donation to assist with school fees and materials.
Further afield in Thailand, our factories have
consultative committees made up of staff represen-
tatives and management who consider the requests
that come in from the community. One example of the
many donations made to schools, orphanages and
underprivileged groups is the annual end of year food
packs donated by staff members and supplemented
by company donations, which are then sourced by
local Monks and distributed to those in need among
the community.
In Mexico the team has multiple initiatives to
support its communities, from donations of native
trees to ecology units for study and redistribution
where needed, to appliances donated to educational
institutions for the students’ investigations into new
technologies. Like so many others in the Fisher &
Paykel family, Mexico is an active supporter of those
communities affected by natural disasters, donating
essential supplies and fundraising to help people get
back on their feet.
Helping Hands in Hard Times
Providing practical responses to communities in need
is an integral part of our culture in every region we
operate. The worldwide Fisher & Paykel family rally
with fundraising to support relief efforts for the com-
munities in which we operate.
In New Zealand for example, the region of Can-
terbury has continued to be rattled by unsettling
aftershocks following the devastating earthquakes
that destroyed communities in 2010 and 2011. As
communities gather in a now-familiar response to
support one another, our people continue to provide
appliances to community service centres when needed
and help relief efforts as required, to get this stoic
region through.
When Australia felt the impact of the Queensland
floods in 2010 our people rallied to respond with relief
efforts in the community and assistance provided to
relief organisations like the Red Cross.
P43
Culinary Coaching
The kitchen has always been the heart of the home
and it is still where families and friends share their
lives, even in today’s busy world. Enjoying a feast with
family and friends is one of life’s simple pleasures
and Fisher & Paykel designs products specifically to
make cooking easier, more enjoyable and more social.
As an extension of this driving product philoso-
phy, our New Zealand, Australian and US markets are
passionate supporters of a range of cooking schools,
community programmes, events and shows. One new
programme we support in New Zealand is called ‘Gar-
den to Table’, where school children are taught how
to eat healthily and create meals from items they’ve
grown themselves.
These are just some examples of our community
“hand up” in action across our global markets. Our
philosophy is to support the communities in which we
live, or where our customers reside, and through our
people, expertise, funding and products we can be
the helping hand that assists these neighbourhoods
where they need it most.
OUR PEOPLE
Fisher & Paykel is renowned for its leading-edge,
human-centred products, and it is ultimately the
human element of our Company – our people – that
drive this innovation and excellence. Their knowledge
and commitment is the foundation on which Fisher
& Paykel builds its reputation. From product design
to point-of-sale, it is our excellent people, working
together, who have set the Fisher & Paykel brand apart.
A Wellness Strategy
The health of our people is critical to the strength of
our business and a focus that transcends divisions
through Company-wide involvement and leadership.
Wellness programmes across the business, such as
Fisher & Paykel Finance’s recently awarded programme
in New Zealand, are delivering marked improvements
in the overall health and wellbeing of our staff. The
programmes are also contributing to health and safety
risk reduction and outcomes, and downward trends
in sick leave and turnover.
Sharing Our Design Stories
There is a story of fresh thinking behind every Fisher
& Paykel appliance – stories of the people who chal-
lenged the norm and those who designed new ways
of doing things. Fisher & Paykel takes great pride in
sharing these design stories with our customers and
regularly seeks opportunities to do so.
Displaying the talents from our flagship design
centres in Auckland and Dunedin, events like Urbis
Design Day are an opportunity for our designers and
engineers to engage directly with our customers.
Through their creation of bespoke design installations
inspired by Fisher & Paykel’s ‘Social Kitchen’ concept,
our people are able to demonstrate the unique think-
ing and stories behind our appliances and discuss the
impact of our designs with the people who use our
products every day.
Globally Grown, Locally Honed
The pioneering spirit of our founders drove the early
development of the business and that focus continues
today as we expand globally. Key to our success in
each market is the quality and consistency of our
staff, all focussed on delivering the best customer
experience possible. This is fostered by the high-
quality leadership we have in each country we oper-
ate, enabling us to grow strong local teams united
by a common purpose and belief in the Company’s
strategic direction.
Our growth internationally means the Fisher &
Paykel of today is a rapidly changing business made up
of a diverse range of people spread around the globe
in Oceania, Asia, Europe and the Americas. While New
Zealand remains the hub for our collective design
and engineering expertise and home to around 44%
of our employee base, our workforce is increasingly
representative of the global nature of our business
and the customers and communities that we serve.
With responsibility for more than 50 international
markets, our New Zealand and Australian Call Centres
act as a central point for both local and global mar-
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP44
kets, working to provide consistently high standards
of customer support. As we expand, this service be-
comes intrinsic to the calibre and perception of our
brand internationally.
Career Opportunities
The future of Fisher & Paykel is truly global and we
encourage opportunities for career enhancement for
our people both within their local markets and out-
side their borders as we grow the brand's strengths
world-wide.
By helping to foster individual talent, we grow
our collective expertise, and it is common to find our
people on international assignments within the Com-
pany. From engineers to managers to those within our
sales force, our people regularly head to our centres
overseas and we welcome staff from abroad.
The recent global expansion of our Fisher &
Paykel sales force mirrors our growing presence in
markets like Canada, China and India. As we grow, so
to do the career opportunities within our business. All
the while, we strive to build talent through our product
development pipeline to ensure our engineering capa-
bility remains strong and able to support our increased
investment in research and development. Our global
manufacturing teams are equally committed to quality
and excellence in all they do, ensuring our products
meet the highest standards of production.
Fisher & Paykel people remain united by a com-
mon belief in the Company’s past track record of
entrepreneurship and success, and a commitment
from all markets to being part of its future success.
P45
KEITH TURNER, 61, was appointed Chairman of the Company in February
2011 and has been a Director since November 2010. Dr Turner is a now a
professional director and is the Deputy Chairman of Auckland International
Airport, a Director of Spark Infrastructure (in Australia) and a Director of
Chorus, the newly established NZ telecommunications network operator.
He is also currently Chairman of Solar City Limited. Dr Turner possesses
extensive experience in the New Zealand energy sector. Most recently, he
served for 9 years as Chief Executive Officer of Meridian Energy Limited
from 1999 to 2008. Prior to that, he worked as a private energy expert
advising a range of large corporate clients and Government. He has previ-
ously served in a number of industry reform functions that established the
current New Zealand industry structure and has had many years in senior
industry operations and planning roles. He has a PhD in Engineering and
is a Distinguished Fellow of IPENZ
PHILIP LOUGH, 65, is a professional Director. His current roles include
Chairman of Methven Limited and Quotable Value, Deputy Chairman of
Port Nelson Limited and Director of Livestock Improvement Corporation.
Mr Lough is the former Chairman of New Zealand Trade and Enterprise.
He has had an executive career in building businesses in the dairy and
seafood industries that have succeeded by developing a network of global
distribution channels. His previous roles include the New Zealand Dairy
Board, Mainland Foods, Ernest Adams, Sealord Group and Deputy Chief
Executive of the New Zealand Dairy Board. Mr Lough holds a Bachelor of
Technology and is a Fellow of the Institute of Directors in New Zealand.
STUART BROADHURST, 45, was appointed Managing Director and Chief
Executive Officer on 11 December 2009. Mr Broadhurst has over 24 years
industry experience in every aspect of the Company’s global operations.
Since 1988 he has held a number of senior management positions within
New Zealand and Australia. He has been employed in key leadership roles
for the Fisher & Paykel Appliances Group in the USA, the United Kingdom
and Europe, where he project managed, established and developed major
business units. Mr Broadhurst received a Bachelor of Commerce degree
from the University of Auckland.
LIANG HAISHAN, 45, has been a Director of the Company since April 2011.
Mr Liang has been Executive Vice President of Haier Group and President
of Haier White Goods Group since 2007. Prior to his current roles, Mr
Liang was Vice President of Haier Group and Managing Director of Haier
Refrigeration Division since 2005. Between 2002 and 2005, Mr Liang was
the Vice President of Haier Group and Managing Director of Haier Home
Integration Product Division. Previously he was the Acting Vice President
of Haier Group and Managing Director of Haier Logistics Division since
1999. Mr Liang joined Haier in 1988 and prior to his appointment to the
position of Managing Director of Haier Air Conditioner Division in 1995,
held a variety of positions in the manufacturing, engineering, QC and en-
terprise management departments. Mr Liang received a Bachelor Degree
of Management Science & Engineering from Xi’an Jiaotong University and
has a PhD Business Administration.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP48
TAN LIXIA, 41, has been a Director of the Company since July 2009. Ms
Tan was appointed as Senior Vice President of the Haier Group in 2010 in
addition to her existing role as Chief Financial Officer. Previously, Ms Tan
was Vice President of Haier Group Corporation and Director of the Finance
Division of Haier Group Corporation, responsible for the Group’s financial
management including its risk, investment and financing strategies. Between
2002 and 2006 Ms Tan was the Director of the Haier Overseas Business
Division, where she established Haier as a household name in overseas
markets. Ms Tan has received awards for her outstanding contributions
towards Haier’s globalisation strategy as China’s “Female Business Enterprise
and Creator of the Year, 2006”, China’s “Chief Accountant of the Year, 2006”,
one of China’s Top Ten Businesswomen in 2006, Chief Finance Officer of
the Year, 2009 and Outstanding Entrepreneur in Shandong Province. Ms
Tan is a 1992 graduate of the Central University of Finance and Economics
and has an EMBA from China Europe International Business School in 2009.
LYNLEY MARSHALL, 52, has over 25 years experience in senior executive
roles in the media and consumer product sectors across New Zealand and
Australia. Mrs Marshall has expertise in competitive strategy, consumer
markets, innovation, taking new technology and services to the market
and multi-channel retail. She is Executive Director of the ABC Commercial
Division of the Australian Broadcasting Corporation. Mrs Marshall was ap-
pointed to ABC in 2000 as Director of New Media and Digital Services and
was responsible for the integrated delivery of ABC’s digital content and
multi channel services, development and delivery of Australia’s first free-
to-air digital television and broadband services. Prior to joining ABC she
held a variety of executive positions in radio, television and new media in
New Zealand. Mrs Marshall is a Non Executive Director of the Melbourne
Jazz Festival. She is a member of the Australian Institute of Company
Directors and has an Executive MBA from the University of Auckland.
GARY PAYKEL, 70, was Chairman of the Company from April 2004 until he
stood down from his role in November 2009. Mr Paykel remains a Director
of the Company. Mr Paykel was Executive Chairman of the Company fol-
lowing the separation from Fisher & Paykel Industries Limited. He was a
Director of Fisher & Paykel Industries from August 1979, Managing Director
from April 1987 and Chief Executive Officer from December 1989. He was
appointed Chairman of Fisher & Paykel Healthcare Corporation Limited
(previously Fisher & Paykel Industries Limited) following the separation
in November 2001. Mr Paykel joined Fisher & Paykel Industries Limited
in 1960 and prior to his appointment to the position of Sales Director
in 1985, held a variety of positions in the manufacturing, engineering,
purchasing and sales departments. Mr Paykel is a Companion of the New
Zealand Order of Merit.
BILL ROEST, 64 is the Chief Financial Officer of Fletcher Building Limited,
having been appointed on the separate listing of that company in 2001.
He had several leadership roles in the New Zealand finance sector before
joining Fletcher Challenge Limited upon the acquisition of Group Rentals
in 1986. Since then, he has been Managing Director of Fletcher Residential
and Fletcher Aluminium before taking up his present position. Mr Roest
is an Associate Chartered Accountant and a member of the Institute of
Chartered Accountants of New Zealand and a fellow of the Association
of Certified Corporate Accountants (UK).
From top Left: Keith Turner, Philip Lough, Stuart Broadhurst, Liang Haishan, Tan Lixia, Lynley Marshall, Gary Paykel, Bill Roest.
P49DIRECTORS
STUART BROADHURST, was appointed Managing Director and Chief
Executive Officer on 11 December 2009. Mr Broadhurst has over 24 years
industry experience in every aspect of the Company’s global operations.
Since 1988 he has held a number of senior management positions within
New Zealand and Australia. He has been employed in key leadership roles
for the Fisher & Paykel Appliances Group in the USA, the United Kingdom
and Europe, where he project managed, established and developed major
business units. Mr Broadhurst received a Bachelor of Commerce degree
from the University of Auckland.
BRETT BUTTERWORTH, Vice President, Components & Technology,
Production Machinery, Haier PMO, has extensive international experience
in the Company’s manufacturing and commercial businesses and has held
a variety of senior executive positions within the organisation over the
past 30 years. His current role also includes project management of the
Company’s Haier business relationship, VP of Production Machinery, and
more recently appointment as VP Components & Technology, reflecting
the increasing importance of this business to the Company.
ANDREW COOKE, Vice President, Supply Chain Management and
Information Technology, joined Fisher & Paykel Appliances in 1987 as
a Control Systems Engineer in the East Tamaki Refrigeration Division.
He has held several manufacturing support roles in Australia and New
Zealand before moving to Information Technology in 1997. He was ap-
pointed Vice President of Information Technology in 2002 and in 2009
was appointed to the additional role of Vice President Supply Chain
Management. Andrew has a Bachelor of Engineering with First Class
Honours from the University of Auckland.
ROGER COOPER, Vice President Operations, was appointed to this
role in 2010. He has gained extensive knowledge and experience of our
global operations since he joined our Company in 1973, progressing
from junior supervisory roles in the early stages of his career, to senior
management positions, including an appointment as Site Manager of our
Cleveland, Australia operations prior to his current Role. Roger has a NZ
Certificate of Engineering.
DALE FARRAR, Vice President Human Resources, joined Fisher & Paykel
Appliances in July 2010 on her appointment as Vice President Human
Resources. Prior to that Dale was General Manager Human Resources
at the Ministry of Social Development. Dale has extensive experience
in human resource management in international contexts. Before 2004,
Dale held senior global human resource roles at Fonterra Co-operative
Group, New Zealand Dairy Board and Air New Zealand Ltd. Dale has a
Bachelor of Arts (History) and Bachelor of Laws and Law Professionals
from Victoria University of Wellington. She has been admitted as a Bar-
rister and Solicitor of the High Court of New Zealand.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP50
GARRY MOORE, Vice President Quality and Customer Services, was
appointed Vice President Quality and Customer Services in March 2011.
Prior to that he was General Manager Global Quality. Garry joined Fisher
& Paykel in 1991 as a Quality Engineer in our Cleveland, Australia opera-
tion. He moved to operational management in 1994 and has been Site
Manager for both our Dunedin and Auckland operations, and in 2008,
he was appointed New Zealand Operations Manager.
MATT ORR, Vice President Corporate Planning and Investor Relations,
joined Fisher & Paykel Appliances in 2009 as Vice President Corporate
Planning. In addition to this, he took up the role of Vice President Inves-
tor Relations in early 2010. Prior to joining Fisher & Paykel Appliances he
was Vice President Investment Banking at Deutsche Bank New Zealand.
Before 2003, Matt held roles at ABN Amro, Ernst & Young and Telecom
New Zealand. Matt has a Bachelor of Commerce with Combined Hon-
ours (First Class Accounting and Finance) from the University of Otago.
CRAIG REID, Chief Sales & Marketing Officer, joined Fisher & Paykel
Appliances in 2010, on his appointment as Chief Sales & Marketing Of-
ficer. Craig has extensive international sales and marketing experience,
acquired in a variety of roles within the Fisher & Paykel and Panasonic
organisations. This experience included senior management roles within
Panasonic New Zealand, culminating in his appointment as Managing
Director of that organisation in 2008.
DAVID SULLIVAN, Chief Financial Officer, joined Fisher & Paykel Ap-
pliances in August 2011. David has extensive financial and global com-
mercial experience spanning 28 years. His previous business background
includes Chief Financial Officer roles at SkyCity Entertainment Group and
Vodafone New Zealand. He has also worked in a number of senior finance
executive roles in New Zealand and Internationally. He has a Bachelor of
Commerce degree and is a Chartered Accountant.
DANIEL WITTEN-HANNAH, Vice President Product Development, was
appointed Vice President of Product Development in February 2010. He
has extensive experience in all aspects of the Company’s engineering and
project management operations. In 2008 Daniel was appointed to the
position of Dunedin Site Manager and prior to that held management
positions within our Cooking, Dishwashing and Refrigeration engineer-
ing operations. Daniel has a BE (Hons) of Mechanical Engineering from
Auckland University. Daniel is also leading a working group review of the
Company’s Go to Market opportunities, to ensure the Company provides
an integrated consumer experience and a positive environment for their
decision making process.
From top Left: Stuart Broadhurst, Brett Butterworth, Andrew Cooke, Roger Cooper, Dale Farrar, Garry Moore, Matt
Orr, Craig Reid, David Sullivan, Daniel Witten-Hannah.
P51EXECUTIVES / APPLIANCES
ALASTAIR MACFARLANE, Managing Director of Fisher & Paykel Finance
Group, joined Fisher & Paykel Finance in 1988 in his current role and has
been extensively involved in the development of the Finance business,
as the Finance Group has evolved from a small strategic investment into
the current operation offering retail point of sale finance to customers
through a diversified range of retail merchants and commercial dealers.
Prior to joining Fisher & Paykel, Alastair was with Citibank in New Zealand
and KPMG, London, San Francisco and Auckland in an accountancy role.
Alastair has a Bachelor of Commerce degree from Auckland University
and is a member of the NZ Institute of Chartered Accountants.
IAN MCGREGOR, Chief Financial Officer of Fisher & Paykel Finance
Group, joined Fisher & Paykel Finance in 2010 in his current role. Ian
has extensive experience in top tier investment banks in New Zealand
and overseas. Prior to his current role he was Head of Market Risk for
the BNZ, after a secondment to Tokyo with the NAB. Ian changed from
banking to the corporate sector 10 years ago. While in the UK he es-
tablished a market risk treasury consulting team for SunGard, a global
financial software firm. On returning to New Zealand he joined Fonterra
as a Manager in Group Treasury. Ian has a Bachelor of Business Studies
degree from Massey University and is a registered CPA.
SARAH CARSTENS, General Counsel and Company Secretary, joined
Fisher & Paykel Finance in December 2009. Prior to that, Sarah was a
lawyer with ANZ National Bank Ltd, responsible for legal affairs for its
subsidiary company, UDC Finance Ltd. Sarah has also acquired legal
experience in her previous employment with law firms Buddle Findlay
and Minter Ellison. Prior to that Sarah was with Linklaters London, in their
banking and restructuring team. Sarah has an honours degree in Law
and Bachelor of Science from Canterbury University. She is admitted to
practise as a Barrister and Solicitor of the High Court of New Zealand.
Sarah is currently on parental leave from her General Counsel role, but
remains as Company Secretary.
ADRIAN LICHKUS, Chief Risk Officer, joined Fisher & Paykel Finance in
January 2006 as Chief Credit Risk Officer. Prior to that, Adrian was head
of the Internal Audit function of the Auckland District Health Board. He
has Chaired the Auckland Branch of the Institute of Internal Auditors of
New Zealand and represented Auckland on the National Board of the
Institute. Adrian has over 15 years experience in credit risk manage-
ment decision roles, both consumer and commercial, in the banking
sector. Adrian was with Deloitte for 3 years, completing his professional
development training. Adrian has a Bachelor of Commerce from Natal
University and a Bachelor of Accounting Science (Honours) from the
University of South Africa.
From top Left: Alastair Macfarlane, Ian McGregor, Sarah Carstens, Adrian Lichkus, Sarah O'Connor,
Gregory Shepherd, Colin Smith.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP52
SARAH O’CONNOR, Chief Human Resources Officer, was appointed to
her current role in 2010. Sarah’s experience includes Customer Service
Manager for Retail Financial Services before she moved to Fisher & Paykel
Finance, following the purchase of the Farmers Finance business. She
has been involved in process improvement, procurement and human
resources. Sarah has also held operational management roles with the
ANZ Bank, culminating in a role managing the Mortgage Operations
Team at their Lending Support Centre.
GREGORY SHEPHERD, Chief Operating Officer, was appointed to his
current role in May 2006 and prior to that was Group General Manager
Lending & Business Development. Gregory has extensive financial ser-
vices experience with Westpac Banking Corporation and Bank of New
Zealand and Securities Trading (debt and equity instruments). He has held
a number of senior management roles in regional banking, marketing,
operations and business development. Gregory was a member of strategic
leadership and project management programmes for Westpac and the
Bank of New Zealand on cross Tasman initiatives. He has a Bachelor of
Commerce from Otago University and a NZ Stock Exchange Diploma.
COLIN SMITH, Chief Information Officer, joined Fisher & Paykel Finance
in 2010. Prior to that, Colin was Chief Information Officer of Manukau
City Council. His other experience includes responsibility for group and
business management functions at 3i plc. This included the areas of
business intelligence, financial systems, operations, customer service and
information technology. Colin has a Bachelor of Science (Hons) degree
from the University of East Anglia and a Masters of Business Administra-
tion degree from Aston University.
P53EXECUTIVES / FINANCE
DIRECTORS’ REPORT
Your Directors are pleased to submit to shareholders
their Annual Report, incorporating the financial state-
ments and the auditors’ report, for the year ended
31 March 2012.
Result
Profit for the year was $18.4 million after tax, com-
pared to $33.5 million after tax for the previous year.
Earnings were 2.5 cents per share (2011 earnings
of 4.6 cents per share).
Shareholders’ Equity
Shareholders’ equity as at 31 March 2012 totalled
$605.2 million (2011 $614.9 million).
The Group had 724,235,162 authorised and issued
shares as at 31 March 2012.
During the year no shares were issued.
Dividends
The Directors have not declared a dividend for the
year ended 31 March 2012 (2011 no dividend declared)
due to continued uncertain market conditions. The
Directors are conscious of the importance of dividends
to shareholders and will resume dividends as soon as
financial and operating conditions permit.
Directors
In accordance with the Company’s Constitution, Dr
Keith Turner and Ms Tan Lixia will retire by rotation
and being eligible offer themselves for re-election. Mr
Philip Lough and Mrs Lynley Marshall, being eligible,
offer themselves for election.
As previously announced, Mr Gary Paykel intends
to retire at the Annual Shareholders Meeting set for
23 August 2012.
Disclosure of Interests by Directors
Directors’ certificates to cover entries in the Inter-
ests Register in respect of remuneration, insurance,
indemnities, dealing in the Company’s shares and
other interests have been disclosed as required by
the Companies Act 1993.
NZX Waivers
NZSX Listing Rule 9.2.1
In 2009, the Company conducted an equity capital
raising, a consequence of which was that Haier became
a 20% shareholder in the Company and is accordingly
a Related Party of the Company. At the time of the
equity raising, it was also announced that Haier and
the Company had entered into a Cooperation Agree-
ment to work together on a number of initiatives for
the benefit of both companies. It is possible that, over
time, aspects of the specific agreements entered into
to give effect to the terms of the Cooperation Agree-
ment will exceed the thresholds in NZSX Listing Rule
9.2.1. The rule provides that entry by an Issuer into
a Material Transaction with a Related Party must be
approved by an Ordinary Resolution of the Issuer.
On 22 March 2010, NZX granted the Company
a waiver, subject to certain conditions, from the re-
quirement in NZSX Listing Rule 9.2.1 that would have
required the Company to seek shareholder approval
of the agreements entered into to give effect to the
terms of the Cooperation Agreement.
On 30 November 2011, NZX granted the Com-
pany a waiver from NZSX Listing Rule 9.2.1 such that
the Company need not obtain shareholder approval for
the sale of parts under a Motor Supply Agreement that
the Company entered into with Haier on 21 March 2011.
A condition of each of these waivers was that
the Company includes details in its annual report of
the values of products sold to, and purchased from,
the Haier group under the various agreements in the
relevant financial year. In relation to the financial year
ended 31 March 2012 that information is set out in Note
39 to the Financial Statements.
Remuneration of Directors
The remuneration of the Directors for the year ended
31 March 2012 has been disclosed on page 59 of this
Annual Report.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP54
Outlook
An update on trading and market conditions will be
provided at the Annual Shareholders Meeting set for
23 August 2012.
The Board of Directors of the Company authorised
the financial statements for issue on 24 May 2012.
For and on behalf of the Board
K S Turner S B Broadhurst
Chairman Managing Director &
Chief Executive Officer
24 May 2012
CORPORATE GOVERNANCE
The Board and management of the Company are
committed to ensuring that the Company adheres to
best practice governance principles and maintains the
highest ethical standards. The Board has agreed to
regularly review and assess the Company’s governance
structures to ensure that they are consistent, both in
form and substance, with best practice.
The Company operates under a dual listed com-
pany structure, being listed in both New Zealand and
Australia. Corporate governance requirements apply
in both jurisdictions. These requirements include the
ASX Corporate Governance Council’s Principles and
Recommendations (2nd edition), the New Zealand
Securities Commission’s (now the Financial Markets
Authority) Governance Principles and Guidelines con-
tained in its report entitled “Corporate Governance in
New Zealand - Principles and Guidelines” (together,
the Principles) and the NZX Corporate Governance
Best Practice Code (NZX Code).
The Board has adopted a Governance Manual
for the Company, consisting of various charters and
policies which reflect the Principles.
The Board considers that the Company’s cor-
porate governance practices and procedures are not
materially different to the Principles.
The Company meets all of the best practice
requirements of the Principles and the NZX Code as
at the date of this Annual Report.
Code of Conduct (Ethics)
The Company expects its Directors and employees to
maintain high ethical standards. A Code of Conduct
for the Company and a separate Directors’ Code of
Conduct apply.
Both Codes address, amongst other things:
_ conflicts of interest
_ receipt of gifts
_ corporate opportunities
_ confidentiality
_ expected behaviours
_ delegated authority
_ reporting issues regarding breaches of the Code
P55DIRECTORS' REPORT AND CORPORATE GOVERNANCE
of Conduct, legal obligations or other policies
of the Company
_ obligations for a Director to act in good faith
and in what the Director believes to be the best
interests of the Company
The full content of the Company’s Codes of Conduct
can be found on the Company’s website (www.fish-
erpaykel.co.nz). At the date of this Annual Report, no
serious instances of unethical behaviour have been
reported under the Company’s Code of Conduct.
Responsibilities of the Board and Management
The business and affairs of the Company are managed
under the direction of the Board of Directors. At a
general level, the Board is elected by shareholders to:
_ establish the Company’s objectives
_ develop, in consultation with the Chief Executive
Officer, strategies for achieving the Company’s
objectives
_ identify and manage risks
_ determine and approve the overall policy frame-
work within which the business of the Company
is conducted
_ monitor management’s performance with respect
to these matters
The Board Charter regulates internal board procedure
and describes the Board’s specific role and responsi-
bilities. A copy of the Board Charter is provided on
the Company’s website.
The Board delegates management of the
day-to-day affairs of the Company to the Executive
team under the leadership of the Managing Director &
Chief Executive Officer to deliver the strategic direc-
tion and goals determined by the Board.
The Board
Board Composition
At present there are eight Directors on the Board, of
which seven are non-executive Directors.
The Executive Director is Mr Stuart Broadhurst,
who is the Managing Director & Chief Executive Of-
ficer of the Company. Mr Broadhurst was appointed
to this role on 11 December 2009.
Mr Liang Haishan was appointed to the Board
on 14 April 2011.
Mr Simon Botherway resigned on 30 April 2011.
Mr John Gilks retired on 25 August 2011 but
continues as Chairman of the Finance business board.
Mr Philip Lough and Mrs Lynley Marshall were
appointed to the Board on 12 September 2011.
Mr Peter Lucas retired on 31 March 2012.
A summary of the tenure, skills and experience
of each Director is provided at pages 48 to 49 of this
Annual Report.
Independence of Directors
The factors the Board considers to assess the indepen-
dence of its Directors are set out in its Board Charter.
No materiality thresholds have been adopted, as the
Board’s approach is to determine independence on
a case by case basis.
After consideration of these factors and criteria,
the Board is of the view that:
_ Mr Liang Haishan and Ms Tan Lixia are not
independent directors as they are associated
directly with Haier (Singapore) Management
Holding Co. Pte Ltd, a substantial shareholder of
the Company. No other Director is a substantial
shareholder of the Company or an officer of, or
otherwise associated directly with, a substantial
shareholder of the Company.
_ There is one Director who within the last three
years has been employed in an executive capacity
by the Company or another Group member, or
been a Director after ceasing to hold any such
employment, namely Mr Stuart Broadhurst.
_ No Director is a material supplier or customer
of the Company or other Group member, or an
officer of or otherwise associated directly or
indirectly with a material supplier or customer,
other than Mr Liang Haishan and Ms Tan Lixia.
Mr Liang and Ms Tan are executive officers of
Haier which is both a supplier to and customer
of the Company.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP56
_ No Director other than the Haier representative
Directors has a material contractual relationship
with the Company or another Group member
other than as a Director of the Company.
_ No Director has served on the Board for a period
which could, or could reasonably be perceived
to, materially interfere with the Director’s abil-
ity to act in the best interests of the Company.
_ All Directors are free from any interest or busi-
ness or other relationship, which could or could
reasonably be perceived to, materially interfere
with the Director’s ability to act in the best in-
terests of the Company.
_ Based on the above assessments, the Company
considers that five of the current eight Direc-
tors are independent directors, namely Dr Keith
Turner, Mrs Lynley Marshall and Messrs Philip
Lough, Gary Paykel and Bill Roest.
As Mr Stuart Broadhurst held an executive position
during the financial year he is not, in the Board’s
opinion, independent.
The Company notes it has a minimum of three
independent directors as required by the NZSX List-
ing Rules.
Following his retirement from the Board on 25
August 2011, Mr John Gilks continued as Chairman of
the Finance business board. Mr Gilks is a director and
shareholder of a company which provides debt collec-
tion services to the Finance business in the ordinary
course of business. Mr Gilks does not take part in the
selection of debt collection service providers on behalf
of the Finance business or the day to day running of
the debt collection company.
Board Statement
The Board is committed to ensuring that the mix of
skills and diversity at Board level reflects the nature
and structure of the business and its customer base
in order to maximise the future success of the Com-
pany. The skills that are considered necessary for the
Board include retail markets knowledge, branding and
marketing, international business, financial, strategic
acumen, leadership, communication capabilities, tech-
nology, finance industry and manufacturing industry
experience. In respect of diversity, the Board aims to
have members who have a broad range of experience,
who will bring and express a diversity of thought, can
operate as a team and see a wide range of oppor-
tunities for the Company. The Board recognises that
diversity in a variety of forms, including in particular
gender diversity, contributes to improved Company
performance. Details regarding each Director can be
found at pages 48 to 49.
Having reviewed the position, the Company con-
siders that the Board is composed of an appropriate
mix of skills, expertise and independence.
Committees
Specific responsibilities are delegated to the Audit &
Risk Management Committee, the Human Resources
and Remuneration Committee and the Nomination
Committee. These Board Committees support the
Board by working with management on relevant is-
sues at a suitably detailed level and then reporting
back to the Board. Each of these Committees has
a charter setting out the committee’s objectives,
procedures, composition and responsibilities. These
charters can be viewed on the Company’s website,
www.fisherpaykel.co.nz.
Audit & Risk Management Committee
Under the Audit & Risk Management Committee
Charter, the Committee Chair must be an indepen-
dent Director and not the Chairman of the Board,
the Committee must have at least three members,
the Committee must consist only of non-executive
directors and a majority of the Committee’s members
must be independent. The members of the Committee
are presently Mr Bill Roest, Mrs Lynley Marshall and
Ms Tan Lixia. Mr Roest succeeded Mr John Gilks as
Chairman of the Committee on 27 May 2011.
The Audit & Risk Management Committee
Charter is available on the Company’s website, www.
fisherpaykel.co.nz. The qualifications and expertise of
each member of the Committee is outlined on pages
P57DIRECTORS' REPORT AND CORPORATE GOVERNANCE
48 to 49 of the Annual Report.
The Committee’s role is to assist the Board in
its oversight of all matters relating to the financial
accounting and reporting of the Company. The Com-
mittee also monitors risk management, the processes
which are undertaken by management and both
external and internal auditors. External auditors are
monitored in accordance with the External Auditors
Policy, a summary of which appears on the Company’s
website, www.fisherpaykel.co.nz.
Human Resources and Remuneration Committee
The Human Resources and Remuneration Commit-
tee’s role is to assist the Board in establishing co-
herent human resources and remuneration policies
and practices. The current members of the Human
Resources and Remuneration Committee are Messrs
Philip Lough and Gary Paykel and Mrs Lynley Marshall.
The composition of the Committee satisfies the re-
quirement of the Committee Charter that a majority
of the members be independent.
The Human Resources and Remuneration Com-
mittee Charter is available on the Company’s website,
www.fisherpaykel.co.nz. The qualifications and exper-
tise of each member of the Committee is outlined on
pages 48 to 49 of the Annual Report.
Nomination Committee
The procedure for the appointment and removal of
Directors is ultimately governed by the Company’s
Constitution. A Director is appointed by ordinary
resolution of the shareholders, although the Board
may fill a casual vacancy.
The Board has delegated to the Nomination
Committee the responsibility for recommending candi-
dates to be nominated as a Director on the Board and
candidates for the committees. When recommending
candidates to act as a Director, the Committee takes
into account such factors as it deems appropriate,
including the experience and qualifications of the
candidate.
Currently, all of the Directors of the Board serve
on the Nomination Committee. The composition
of the Committee satisfies the requirement of the
Committee Charter that a majority of the members
be independent.
The Nomination Committee Charter is available
on the Company’s website, www.fisherpaykel.co.nz.
The qualifications and expertise of each member of
the Committee is outlined on pages 48 to 49 of the
Annual Report.
Board Processes
The Board held 12 monthly meetings during the
year ended 31 March 2012. The table on the follow-
ing page shows attendance at the Board (including
Board meetings additional to the scheduled monthly
meetings), Finance business board and Committee
meetings. Board meetings are normally held monthly,
with the exception of January and June. There is a
formal procedure agreed by the Board to allow Direc-
tors to take independent professional advice at the
expense of the Company.
There is a separate board for the Finance busi-
ness. This is chaired by Mr John Gilks. The other
directors are Messrs Stuart Broadhurst, Alastair Mac-
farlane, Gary Paykel, Carlos da Silva and Hugh Rennie
QC. Messrs da Silva and Rennie QC are autonomous
directors as required by the Reserve Bank of New
Zealand Act 1989 and the Deposit Takers (Fisher &
Paykel Finance Limited) Exemption Notice 2010. The
Finance business board normally meets monthly, with
the exception of January and June.
Directors’ Remuneration
Shareholders fix the total remuneration available to
non-executive Directors. Shareholders approved the
current annual fee pool limit at the annual meeting
in August 2010 as $1,250,000.
The Company recognises the key role personnel
play in the pursuit of its strategic objectives. The Hu-
man Resources and Remuneration Committee reviews
Director remuneration and is charged with establishing
remuneration policies and guidelines to ensure links
exist between corporate performance and remunera-
tion paid to Directors. The policies are also designed
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP58
to enable the Company to attract, retain and motivate
Directors who will create value for shareholders.
The Company takes advice from independent
consultants to benchmark Directors’ fees with fees
paid to directors of comparable companies in New
Zealand and Australia.
The Company’s policy is to pay its non-executive
Directors’ fees in cash. However, the Company encour-
ages the Directors to hold shares in the Company.
Non-executive Directors received the following
Directors’ fees (including a retirement allowance where
applicable) from the Company in the year ended 31
March 2012:
Simon Botherway $9,350 (retired 30 April 2011)
Philip Carmichael $3,185* (retired 14 April 2011)
John Gilks $65,120 (retired 25 August 2011)
Liang Haishan $86,015* (appointed 14 April 2011)
Philip Lough $53,618 (appointed 12 September
2011)
Peter Lucas $87,200 (retired 31 March 2012)
Lynley Marshall $57,480 (appointed 12 September
2011)
Gary Paykel $117,200
Willem (Bill) Roest $110,526
Tan Lixia $104,200*
Keith Turner $178,200
* Paid to Haier (Singapore) Management Holding Co. Pte Ltd
2012 BOARD AND OTHER MEETING ATTENDANCE
MONTHLY BOARD MEETINGS1
OTHER BOARD MEETINGS
BOARD COMMITTEE MEETINGS
ARMC2 HR & REMCOMMITTEE
Eligible Attended Eligible Attended Eligible Attended Eligible Attended Eligible Attended
Directors
Keith Turner 12 12 6 6 8 8 7 7
John Gilks [retired 25.08.11] 5 5 4 4 3 3 3 3
Simon Botherway [retired 30.04.11] 1 1 1 1 1 1
Stuart Broadhurst 12 12 6 6 9 9 8 8
Liang Haishan 12 0 6 0
Philip Lough [appointed 12.09.11] 7 7 1 1 4 4
Peter Lucas 12 12 6 6 7 7
Lynley Marshall [appointed 12.09.11] 7 7 1 1 5 5
Gary Paykel 12 11 6 6 1 1 7 6
Bill Roest 12 12 6 4 6 6 8 8
Tan Lixia 12 0 6 0 8 0
Alternate Directors
Hou Xinlai (alternate for Liang Haishan) 12 11 6 2
Tommy Leung (alternate for Tan Lixia) 12 12 6 3 8 8
FINANCE MTHLY BOARD MTGS
FINANCE OTHER BOARD MTGS
BOARD COMMITTEE MTGS
Eligible Attended Eligible Attended Eligible Attended
Finance business board
Stuart Broadhurst 10 10 13 12
Carlos da Silva 10 10 13 12 6 5
John Gilks 10 9 13 12 6 6
Alastair Macfarlane 10 10 13 13 6 5
Gary Paykel 10 8 13 10
Hugh Rennie 10 8 13 10
1 As all Directors of the Board serve on the Nomination Committee, Committee meetings were held as part of the Board Meetings2 Audit & Risk Management Committee
P59DIRECTORS' REPORT AND CORPORATE GOVERNANCE
Mr Stuart Broadhurst does not receive remunera-
tion as a Director of the Company or any subsidiary
company. Mr Broadhurst acting in his capacity as an
employee of the Company and subsidiaries received
total remuneration, inclusive of the value of other
benefits, in respect of the year ended 31 March 2012
of $977,244 (2011 $770,659).
As directors of the Finance business board,
Messrs John Gilks and Gary Paykel received $18,098
and $30,000 respectively (included in the remunera-
tion figures quoted above) in the year ended 31 March
2012. Mr Gilks received a further $26,902 (not included
in the remuneration figures quoted previously) for his
continued services as Chairman of the Finance busi-
ness board following his retirement from the Board,
in the year ended 31 March 2012. Messrs Carlos da
Silva and Hugh Rennie QC received directors’ fees
of $53,268 each for serving on the Finance business
board, in the year ended 31 March 2012. Mr Alastair
Macfarlane did not receive remuneration as a director
of the Finance business board.
Except as stated above, no employee of the
Company or its subsidiaries receives or retains any
remuneration or other benefits in their capacity as
a Director.
Under the Company’s constitution, the Board is
permitted under the NZSX Listing Rules to authorise
the payment of retirement allowances to any Direc-
tor who was in office before 1 May 2004 and has
continued to hold office since that date, where such
payments do not exceed the total remuneration of a
Director in any three years. The Board has resolved,
however, that it will not pay out any future retire-
ment benefits for Directors appointed prior to 1 May
2004, other than at the Board’s discretion, an amount
equivalent to one year’s fees calculated according to
the per annum average of the fees paid to that Direc-
tor in their last three years of office. Subject to Board
approval, any such retirement benefit will be payable
following each Director’s retirement.
Mr Ralph Waters retired from the Board on 28
February 2011 and during the year ended 31 March
2012 the Board approved payment of a retirement
allowance of $120,928 based on the per annum aver-
age of the fees received by Mr Waters in the previous
three years. Except for Mr Waters, no other Director
was paid a retirement benefit by the Company in the
year ended 31 March 2012.
The Company has provisioned for Directors’
retirement allowances, based on the per annum aver-
age of the fees received by the qualifying Directors
in the previous three years. As at 31 March 2012, the
provisioned amount was $384,402 ($528,795 as at
31 March 2011).
Senior Management Remuneration
The Human Resources and Remuneration Committee
is responsible for reviewing the remuneration of the
Company’s senior management in consultation with
the Managing Director & Chief Executive Officer of the
Company. Similar policies and principles that guide
remuneration of Directors apply to the remuneration
of the Company’s senior management, although
remuneration packages consist of a mixture of cash
and other benefits, including Company share based
payments. The expected outcomes of the Company’s
remuneration policies for senior management are
to balance motivating and retaining key employees,
attracting quality management and providing perfor-
mance incentives that allow executives to share the
rewards of the success of the Company. In addition,
an Executive Long Term Incentive Plan was recently
implemented to secure the retention of key execu-
tives and is focused on achieving the objective of
long term shareholder wealth.
ASX recommends that listed companies that
are not required to comply with section 300A of the
Corporations Act (which requires disclosure of the top
five (5) senior management remuneration packages
paid by the Company) should consider the range of
means by which they may achieve the same ends. As
these figures are distorted by the Company having
a number of senior managers who reside outside of
New Zealand, where remuneration market levels differ
widely, senior management remuneration is included
in the wider disclosure made by the Company on
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP60
page 167 of this Annual Report, where the Company
has included in relevant bandings the number of em-
ployees, whose remuneration, inclusive of the value of
other benefits received by such employees, exceeds
$100,000.
Performance Evaluation and Training
The Board has a range of policies in place relating to
the performance evaluation of the Board, the Board’s
committees, individual Directors and Executives. Dur-
ing the year ended 31 March 2012, the Chairman led a
performance evaluation of the Board, its committees
and Directors in accordance with its policies. The
Chief Executive Officer led a performance evaluation
of the senior Executives in accordance with Company
policies. A summary of the Company’s Performance
Evaluation Policy is available on the Company’s web-
site, www.fisherpaykel.co.nz.
The Board Charter requires the Board to under-
take an annual performance evaluation of itself that:
_ compares the performance of the Board with
the requirements of its Charter
_ reviews the performance of the Board’s
committees
_ sets forth the goals and objectives of the busi-
ness for the upcoming year
_ effects any improvements to the Board Charter
deemed necessary or appropriate
The Company believes that a mix of skills and ex-
perience is important to ensure that the Board per-
forms most effectively. The Nomination Committee
has responsibility for the Board’s appointment and
training processes. The selection criteria and training
policy for directors can be found in the Nomination
Committee Charter.
Risk Management
The Company’s Risk Management Policy Summary
is available on the Company’s website, www.fisher-
paykel.co.nz.
The Company has a number of risk management
policies for the oversight of financial and non-financial
material business risks, as well as related internal
compliance systems that are designed to:
_ optimise the return to and protect the interests
of stakeholders
_ safeguard the Company’s assets and maintain
its reputation
_ improve the Company’s operating performance
_ fulfil the Company’s strategic objectives
The Board, through management, ultimately has
responsibility for internal control and compliance.
Twice yearly, management prepares a detailed re-
view of material business risks for the Audit & Risk
Management Committee. The Committee reports to
the Board on the effectiveness of the Company’s
management of its material business risks. The Board
has received the report of the effectiveness of the
Company’s management of material business risks
for the year ended 31 March 2012.
Whilst s295A of the Corporations Act 2001 (Cth)
does not apply to the Company, the Board monitors
financial reporting risks in relation to the financial
statements and ensures they are founded on an effec-
tive system of risk management and internal control.
Market Disclosure and Shareholder Communication
The Company is dedicated to upholding a high stan-
dard of disclosure, ensuring that all investors have
equal and timely access to material information and
that information is presented in a clear and balanced
way. A summary of the Company’s Market Disclosure
Policy is available on the Company’s website, www.
fisherpaykel.co.nz.
The Company communicates with its sharehold-
ers publicly by posting information on the Company’s
website, www.fisherpaykel.co.nz, by releasing on the
NZX and ASX as well as providing an annual review
and interim review to all shareholders.
Diversity
The Company has a Group wide Diversity Policy
which reflects the Company’s commitment to diversity
and provides a structure for, and complements, the
P61DIRECTORS' REPORT AND CORPORATE GOVERNANCE
MEASURABLE OBJECTIVES
FOCUS OBJECTIVE PROGRESS TO 31 MARCH 2012
1 Board Ensure that the director selection process includes a suitable pool of candidates with the aim of achieving diversity on the Board.
2nd female director appointed September 2011.
Female representation increased from 11% to 22% in year ended 31 March 2012.
2 Organisational Analysis Conduct an analysis of the current state of diversity (including gender diversity) in the global organisation that captures:
_ Representation by organisational strata _ Representation by occupational group _ Retention rates _ Attraction and recruitment rates
A comprehensive report for the year ended 31 March 2012 has been prepared. The current state of the Company’s gender and age diversity is now known.
Establishment of data capture for other diversity dimensions (e.g. ethnicity) is a priority.
3 Common View Build knowledge and alignment among the leadership team about the benefits of diversity to the organisation through self-assessment, education and debate.
Three Executive members are on the Steering Group.
The programme objectives and format for achieving a common view have been agreed. Relevant background information has been gathered and Executive sessions scheduled.
4 Systems and Structures Review (and where necessary modify) core recruitment and promotion systems to ensure that processes are designed to support the achievement of diversity at all levels and across all areas of the organisation.
The initial focus towards achieving this objective has been on:
_ Understanding the barriers to diverse representation in leadership
_ Reviewing the Company’s recruitment process and prac-tice globally
_ Establishing a dedicated project team _ Focusing on systemic factors that need to be addressed to
ensure a wider pool of skills and capability are identified
5 Initiatives /
programmes
Establish a Steering Group to assist the Executive with overseeing the development and implementation, and ongoing monitoring of the Company’s diversity strategy and progress towards achievement of objectives.
Achieved. Development of this Steering Group's strategy, actions and milestones are being developed.
6 Reporting Establish a process for measuring and reporting on progress towards achieving diversity.
Six monthly reporting to Executive initiated. The reporting focus for the year ending 31 March 2013 will be on Gender, including in particular:
_ Gender in each Business Unit and Country _ Gender in each Management Tier _ Leadership appointments (attraction and selection rates)
Other dimensions will be added once gaps in the Company’s data are closed.
Company’s diversity related initiatives and policies.
A copy of the Company’s Diversity Policy is available
on the Company’s website www.fisherpaykel.co.nz.
In accordance with the Company’s Diversity
Policy, the Board has established measureable objec-
tives for achieving diversity, including gender diversity.
The table below details the measureable objectives for
achieving diversity set by the Board and the progress
made towards achieving these during the year ended
31 March 2012.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP62
The table above details the proportion of women in
the whole organisation, on the Board and in senior
Executive positions for the entire Fisher & Paykel
Appliances Group, the Appliances business and Fi-
nance business.
Policies
Other than policies referred to earlier in this Corpo-
rate Governance section, the Company has in place
a number of policies related to respecting the rights
of shareholders and other stakeholders, which aim to:
_ ensure the Company communicates effectively
with them
_ provides appropriate access to the Board, man-
agement and external auditors
_ encourage effective shareholder participation
at shareholder meetings
_ prescribe the circumstances where directors,
officers and employees can trade in Company
securities
All policies relating to corporate governance are
available either in full or in summary form on the
Company’s website, www.fisherpaykel.co.nz.
PROPORTION OF FEMALE EMPLOYEES
Fisher & Paykel Appliances Finance
Appliances Group business business
Whole Organisation 35% 33% 71%
Senior Executive Positions 18%* 10% 29%
Fisher & Paykel Fisher & Paykel Finance business
Appliances Holdings Appliances Limited board
Limited
Women on the Board 22%* 0% 0%
As at 31 March 2012*Managing Director included in both Board and Executive numbers
P63DIRECTORS' REPORT AND CORPORATE GOVERNANCE
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2012
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP66
68 to 163
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz
1
Independent Auditors’ Report to the shareholders of Fisher & Paykel Appliances Holdings Limited
Report on the Financial Statements We have audited the financial statements of Fisher & Paykel Appliances Holdings Limited on pages which comprise the statements of financial position as at 31 March 2012, the income statements, statements of comprehensive income, statements of changes in equity and cash flow statements for the year then ended, and the notes to the financial statements that include a summary of significant accounting policies and other explanatory information for both the Company and the Group. The Group comprises the Company and the entities it controlled at 31 March 2012 or from time to time during the financial year.
Directors' Responsibility for the Financial Statements The Directors are responsible for the preparation of these financial statements in accordance with generally accepted accounting practice in New Zealand and that give a true and fair view of the matters to which they relate and for such internal controls as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (New Zealand) and International Standards on Auditing. These standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal controls relevant to the Company's and Group's preparation of financial statements that give a true and fair view of the matters to which they relate in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's and Group's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
We have no relationship with, or interests in Fisher & Paykel Appliances Holdings Limited or any of its subsidiaries other than in our capacities as providers of providers of audit, tax compliance and other assurance services. These services have not impaired our independence as auditors of the Company and Group.
P67
2
Independent Auditors’ Report Fisher & Paykel Appliances Holdings Limited
Opinion In our opinion, the financial statements on pages 68 to 163:
(i) comply with generally accepted accounting practice in New Zealand;
(ii) comply with International Financial Reporting Standards; and
(iii) give a true and fair view of the financial position of the Company and Group as at 31 March 2012, and their financial performance and cash flows for the year then ended.
Report on Other Legal and Regulatory Requirements We also report in accordance with Sections 16(1)(d) and 16(1)(e) of the Financial Reporting Act 1993. In relation to our audit of the financial statements for the year ended 31 March 2012:
(i) we have obtained all the information and explanations that we have required; and
(ii) in our opinion, proper accounting records have been kept by the Company as far as appears from an examination of those records.
Restriction on Distribution or Use This report is made solely to the Company's shareholders, as a body, in accordance with Section 205(1) of the Companies Act 1993. Our audit work has been undertaken so that we might state to the Company's shareholders those matters which we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's shareholders, as a body, for our audit work, for this report or for the opinions we have formed.
Chartered Accountants Auckland 24 May 2012
AUDITORS' REPORT
For and on behalf of the Board
Date: 24 May 2012
K S Turner S B Broadhurst
Chairman Managing Director & Chief Executive Officer
INCOME STATEMENTFOR THE YEAR ENDED 31 MARCH 2012
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
Notes $’000 $’000 $’000 $’000
Revenue
Operating revenue 7 1,031,168 1,110,342 - -
Other income
Profit on sale of land & buildings - 6,508 - -
Other income 6,790 4,093 - 1
Total other income 7 6,790 10,601 - 1
Total revenue and other income 1,037,958 1,120,943 - 1
Items affecting comparability:
Onerous contracts 8 (2,694) (882) - -
Fair valuation of non-current assets held for sale 8 (1,241) (500) - -
Litigation costs 8 (6,774) - - -
(10,709) (1,382) - -
Other operating expenses (988,862) (1,056,038) 136 111
Total operating expenses 8 (999,571) (1,057,420) 136 111
Operating profit 38,387 63,523 136 112
Finance costs 8 (10,857) (15,403) - -
Profit before income tax 27,530 48,120 136 112
Income tax expense 9 (9,099) (14,575) (82) 35
Profit for the year 18,431 33,545 54 147
Profit per share attributable to the ordinary equity holders of the Company during the year:
Basic and diluted profit per share 27 2.5 4.6
The above Income Statement should be read in conjunction with the accompanying Notes.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP68
STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 MARCH 2012
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
Notes $’000 $’000 $’000 $’000
Profit for the year 18,431 33,545 54 147
Other comprehensive (loss) / income
Cash flow hedges 36 17,073 (15,041) - -
Exchange differences on translation of foreign operations 28 (40,491) (10,352) - -
Income tax relating to components of other comprehensive income 36 (4,780) 5,644 - -
Other comprehensive (loss) / income for the year net of tax (28,198) (19,749) - -
Total comprehensive (loss) / income for the year (9,767) 13,796 54 147
The above Statement of Comprehensive Income should be read in conjunction with the accompanying Notes.
FINANCIAL STATEMENTS P69
STATEMENT OF FINANCIAL POSITIONAS AT 31 MARCH 2012
CONSOLIDATED APPLIANCES BUSINESS*
FINANCE BUSINESS PARENT
31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March
2012 2011 2012 2011 2012 2011 2012 2011
Notes $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Assets
Current assets
Cash & cash equivalents 10 109,347 113,529 22,273 21,375 87,074 92,154 1 1
Trade receivables & other current assets 11 125,652 150,628 116,354 140,547 9,298 10,081 21 27
Finance business receivables 12 359,662 369,876 - - 359,662 369,876 - -
Inventories 13 151,772 195,108 151,772 195,108 - - - -
Non-current assets classified as held for sale 14 13,843 15,021 13,843 15,021 - - - -
Derivative financial instruments 15 2,365 2,654 2,361 2,654 4 - - -
Tax receivables 2,023 1,162 2,023 1,162 - - 4 -
Intergroup advances 39 - - - - - - 637,620 637,585
Total current assets 764,664 847,978 308,626 375,867 456,038 472,111 637,646 637,613
Non-current assets
Property, plant & equipment 16 200,521 202,155 199,448 200,909 1,073 1,246 - -
Investment in subsidiaries 33 100,263 100,263
Investment in Finance business 207,362 205,383
Intangible assets 17 196,709 210,948 83,252 90,649 113,457 120,299 - -
Finance business receivables 12 234,870 231,719 - - 234,870 231,719 - -
Derivative financial instruments 15 151 4 103 3 48 1 - -
Tax receivables - 7,015 - 7,015 - - 6
Deferred taxation 18 54,783 55,857 71,275 75,385 - - 148 228
Other non-current assets 1,988 2,738 1,432 1,694 556 1,044 - -
Total non-current assets 689,022 710,436 562,872 581,038 350,004 354,309 100,411 100,497
Total assets 1,453,686 1,558,414 871,498 956,905 806,042 826,420 738,057 738,110
Liabilities
Current liabilities
Current borrowings 19 3,205 - 3,205 - - - - -
Finance business borrowings 20 319,865 328,917 - - 319,865 328,917 - -
Trade creditors 21 96,560 99,141 96,560 99,141 - - - -
Current finance leases - 17 - 17 - - - -
Provisions 22 20,485 18,341 20,477 18,333 8 8 - -
Derivative financial instruments 15 2,881 21,000 2,213 20,397 668 603 - -
Tax liabilities 1,515 6,869 1,515 6,869 2,138 3,857 - -
Other current liabilities 23 62,359 73,534 34,457 49,600 27,902 23,934 774 820
Total current liabilities 506,870 547,819 158,427 194,357 350,581 357,319 774 820
Non-current liabilities
Non-current borrowings 19 83,605 121,557 83,605 121,557 - - - -
Finance business borrowings 20 231,101 244,998 - - 231,101 244,998 - -
Non-current finance leases - - - - - - - -
Provisions 22 15,575 14,195 14,979 13,696 596 499 - -
Derivative financial instruments 15 2,782 5,701 734 3,151 2,048 2,550 - -
Deferred taxation 24 5,610 6,871 5,610 6,871 14,354 15,671 - -
Other non-current liabilities 25 2,962 2,325 2,962 2,325 - - - 61
Total non-current liabilities 341,635 395,647 107,890 147,600 248,099 263,718 - 61
Total liabilities 848,505 943,466 266,317 341,957 598,680 621,037 774 881
Shareholders’ equity
Contributed equity 26 841,869 841,869 841,869 841,869 842,381 842,381
Accumulated losses 28 (147,992) (166,423) (147,992) (166,423) (107,068) (107,122)
Reserves 28 (88,696) (60,498) (88,696) (60,498) 1,970 1,970
Investment in Finance business 207,362 205,383
Total shareholders’ equity 605,181 614,948 605,181 614,948 207,362 205,383 737,283 737,229
Total liabilities and shareholders’ equity 1,453,686 1,558,414 871,498 956,905 806,042 826,420 738,057 738,110
*For disclosure purposes, the Appliances business includes both the Parent entity and AF Investments LimitedThe above Statement of Financial Position should be read in conjunction with the accompanying Notes.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP70
STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MARCH 2012
CONSOLIDATED ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Share Accumulated Translation Foreign Interest Treasury Share- Total
capital losses of foreign exchange rate stock based equity
operations hedges hedges payments
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Balance at 1 April 2011 841,869 (166,423) (50,370) (11,350) (1,260) 512 1,970 614,948
Changes in equity
Other comprehensive income for the year - - (40,491) 12,363 (70) - - (28,198)
Profit for the period - 18,431 - - - - - 18,431
Balance at 31 March 2012 841,869 (147,992) (90,861) 1,013 (1,330) 512 1,970 605,181
Balance at 1 April 2010 841,869 (199,968) (40,018) (3,213) - 512 1,970 601,152
Changes in equity
Other comprehensive income for the year - - (10,352) (8,137) (1,260) - - (19,749)
Profit for the year - 33,545 - - - - - 33,545
Balance at 31 March 2011 841,869 (166,423) (50,370) (11,350) (1,260) 512 1,970 614,948
PARENT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Share Accumulated Translation Foreign Interest Treasury Share- Total
capital losses of foreign exchange rate stock based equity
operations hedges payments
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Balance at 1 April 2011 842,381 (107,122) - - - - 1,970 737,229
Changes in equity
Other comprehensive income for the year - - - - - - - -
Profit for the period - 54 - - - - - 54
Balance at 31 March 2012 842,381 (107,068) - - - - 1,970 737,283
Balance at 1 April 2010 842,381 (107,269) 1,970 737,082
Changes in equity
Other comprehensive income for the year - - - - - - - -
Profit for the year - 147 - - - - - 147
Balance at 31 March 2011 842,381 (107,122) - - - - 1,970 737,229
The above Statement of Changes in Equity should be read in conjunction with the accompanying Notes.
FINANCIAL STATEMENTS P71
CASH FLOW STATEMENTFOR THE YEAR ENDED 31 MARCH 2012
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
Notes $’000 $’000 $’000 $’000
Cash flows from operating activities
Receipts from customers 912,704 985,208 - -
Financing interest and fee receipts 140,941 144,808 - -
Interest received 780 504 - 1
Payments to suppliers and employees (872,796) (958,656) (1,292) (1,785)
Income taxes paid (12,824) (1,896) - -
Interest paid (52,023) (57,066) - -
116,782 112,902 (1,292) (1,784)
Principal on loans repaid by Finance business customers 571,897 579,958 - -
New loans to Finance business customers (577,974) (586,699) - -
Net cash inflow / (outflow) from operating activities 35 110,705 106,161 (1,292) (1,784)
Cash flows from investing activities
Sale of property, plant & equipment 7 2,080 29,335 - -
Purchase of property, plant & equipment 16 (40,023) (17,734) - -
Capitalisation of intangible assets 17 (10,453) (10,607) - -
Acquisition of Mexican operations - instalment (12,812) (12,419) - -
Other investments 500 - - -
Net cash inflow / (outflow) from investing activities (60,708) (11,425) - -
Cash flows from financing activities
New non-current borrowings 19 133,754 50,426 - -
New Finance business borrowings 20 119,080 104,057 - -
Repayment of borrowings 19 (162,502) (140,159) - -
Repayment of Finance business borrowings 20 (142,447) (79,102) - -
Lease liability payments 2 (344) - -
Intercompany borrowings - - 1,292 1,785
Net cash inflow / (outflow) from financing activities (52,113) (65,122) 1,292 1,785
Net increase / (decrease) in cash & cash equivalents (2,116) 29,614 - 1
Cash & cash equivalents at the beginning of the year 113,529 82,650 1 -
Effects of foreign exchange rate changes on cash & cash equivalents (2,066) 1,265 - -
Cash and cash equivalents at the end of the year 10 109,347 113,529 1 1
The above Cash Flow Statement should be read in conjunction with the accompanying Notes.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP72
CONTENTS OF THE NOTESTO THE FINANCIAL STATEMENTS
Page
1 General information 74
2 Summary of significant accounting policies 74
3 Critical accounting estimates and judgements 86
4 Financial risk management - Appliances business & Parent 88
5 Financial risk management - Finance business 96
6 Segment information 106
7 Revenue & other income 110
8 Expenses 111
9 Income tax expense 114
10 Cash & cash equivalents 115
11 Trade receivables & other current assets 116
12 Finance receivables 118
13 Inventories 122
14 Non-current assets classified as held for sale 122
15 Derivative financial instruments 123
16 Property, plant & equipment 126
17 Intangible assets 128
18 Deferred tax assets 132
19 Current and non-current borrowings 133
20 Finance borrowings 135
21 Trade creditors 140
22 Provisions 141
23 Other current liabilities 143
24 Deferred tax liabilities 143
25 Other non-current liabilities 144
26 Contributed equity 144
27 Earnings per share 146
28 Accumulated losses and reserves 146
29 Imputation credits 148
30 Defined benefit obligations 149
31 Contingencies 154
32 Commitments 154
33 Investments in subsidiaries 156
34 Share-based payments 157
35 Reconciliation of profit after income tax to net cash inflow from operating activities 159
36 Disclosure of components of other comprehensive income 160
37 Disclosure of tax effects relating to each component of other comprehensive income 160
38 Government grants 160
39 Related party transactions 161
40 Events occurring after the Statement of Financial Position date 163
41 Foreign currency exchange rates 163
NOTES TO THE FINANCIAL STATEMENTS P73
1. GENERAL INFORMATION
The Group and Company are profit-oriented limited liability entities incorporated and domiciled in New Zealand.
The Company is dual listed on the New Zealand and Australian Stock exchanges and, under dual listing rules, the
Company is required to have registered offices in each country. The addresses are:
_ 78 Springs Road, East Tamaki, Auckland, New Zealand
_ Weippin Street, Cleveland, Queensland 4163, Australia
The financial statements were authorised for issue by the Board of Directors on 24 May 2012.
The Group has two principal areas of business:
_ Appliance manufacturer, distributor and marketer (Appliances business)
_ Financial services in New Zealand (Finance business)
The principal activity of the Appliances business is the design, manufacture and marketing of major household ap-
pliances. Its major markets are New Zealand, Australia, North America and Europe. The Appliances business has
manufacturing operations in New Zealand, United States of America, Mexico, Italy and Thailand.
The Finance business is a leading provider of retail point of sale consumer finance (including the Farmers Finance
Card and Q Card), insurance services and rental & leasing finance.
The Directors do not have the authority to amend the financial statements after issue.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These general purpose financial statements for the year ended 31 March 2012 have been prepared in accordance
with New Zealand Generally Accepted Accounting Practice (NZ GAAP) and comply with New Zealand Equivalents
to International Financial Reporting Standards (NZ IFRS), International Financial Reporting Standards (IFRS) and
any other applicable Financial Reporting Standards.
(a) Basis of preparation
Entities reporting and statutory base
The Parent Company’s financial statements are for Fisher & Paykel Appliances Holdings Limited as a separate legal
entity (“the Company”) and the consolidated financial statements are for the Fisher & Paykel Appliances Holdings
Limited Group (“the Group”), which includes all its subsidiaries. The Group and Company are reporting entities for
the purpose of the Financial Reporting Act 1993 and the financial statements comply with that Act and the Com-
panies Act 1993.
Going concern
The financial statements have been prepared under the going concern convention, which assumes the Group con-
tinues to operate in full compliance with banking covenants.
In the absence of an unanticipated deterioration in the Group’s operating performance, the Directors consider there
is reasonable headroom between the forecast financial performance of the Guaranteeing Group and that required
to meet banking covenants. This is supportive of the financial statements being prepared on a going concern basis.
These financial statements are stated in New Zealand dollars rounded to the nearest thousand unless otherwise indicated.
In accordance with NZ IAS 1 (Revised), Presentation of Financial Statements, items which are relevant to understand-
ing the Group’s financial performance are disclosed on the face of the Income Statement.
Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation
of certain financial assets and liabilities (including derivative instruments) at fair value through profit or loss.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP74
Critical accounting estimates and judgements
The preparation of financial statements in conformity with NZ IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the financial statements, are highlighted in Note 3.
(b) Principles of Consolidation
Subsidiaries are entities that are controlled either directly by the Company or where the substance of the relationship
between the Company and the entity indicates the Company controls it. A list of subsidiaries appears in Note 33. The
results of subsidiaries acquired or disposed of during the year are included in the Consolidated Income Statement
from the date of acquisition or up to the date of disposal.
The Company and subsidiary company accounts (including special purpose entities) applies the acquisition method
to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair
values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests
issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair values at the acquisition date. The Group recognises
any non-controlling interest in the acquiree on an acquisition- by-acquisition basis, either at fair value or at the
non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets. The
excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is
recorded as goodwill.
All material intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries are consistent with those adopted by the Group.
Acquisition-related costs are expensed as incurred.
Where settlement of any cash consideration is deferred, the amounts payable in the future are discounted to their
present value as at the date of exchange. The discount rate used is the Group’s incremental borrowing rate, being
the rate at which a similar borrowing could be obtained under the Group’s existing funding arrangements.
(c) Segment reporting
An operating segment is presented on the same basis as that used for internal reporting purposes and its results
are regularly reviewed by the chief operating decision maker, which consists of the Board of Directors together with
the Executives of the Appliances and Finance businesses.
All costs are directly allocated to the segment in which they are incurred, otherwise they are presented as unallocated.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency that best
reflects the economic substance of the underlying events and circumstances relevant to that entity (‘the functional
currency’), which is currently the country of domicile for each overseas subsidiary. The consolidated and Company
financial statements are presented in New Zealand dollars, which is the Group’s presentation currency and Company’s
functional currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions or at the hedged rate if financial instruments have been used to reduce exposure.
At balance date, monetary assets and liabilities in foreign currency are translated at the year-end closing or hedged rates.
NOTES TO THE FINANCIAL STATEMENTS P75
Translation differences are recognised in the Income Statement, except when deferred in equity as qualifying cash
flow hedges or net investment hedges.
(iii) Foreign Operations
The financial statements of foreign operations with a different functional currency are translated to the presentation
currency at the following exchange rates:
_ year-end closing exchange rate for assets and liabilities
_ monthly weighted average exchange rates for revenue and expense transactions
Exchange differences arising from the translation of any net investment in foreign operations are taken to share-
holders’ equity.
Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities
of the foreign operation and translated at the closing rate.
(e) Revenue recognition
(i) Sales of goods
Revenue from sales of goods is recognised when the significant risks and rewards of ownership have transferred
to the buyer.
(ii) Sales of services
Revenue from sales of services is recognised when the service, such as installation or repair of products, has been
performed.
(iii) Long-term contracts
Revenue on long-term contracts is recognised over the period of the project, once the outcome can be estimated
reliably. The stage of completion method is used to determine the appropriate amount of revenue to recognise at
balance date. The stage of completion is determined by reference to contract terms agreed with the customer. The
full amount of any expected loss, including that related to future work on the contract, is recognised in the Income
Statement as soon as it becomes probable.
(iv) Income on Finance receivables
Interest income on Finance receivables is recognised in the Income Statement and is measured at amortised cost
using the effective interest method.
Yield related fees for finance receivables are accrued to income over the term of the loan using the effective inter-
est method. Fees not included in the effective interest calculation are recognised on an accruals basis when the
service has been provided.
Fees charged to customer accounts in arrears are recognised as income at the time the fees are charged.
(v) Premium revenue
Premium revenue comprises revenue from direct business and includes amounts charged to the insured but excludes
fire service levies, GST and other amounts collected on behalf of third parties.
Premium revenue is recognised in the Income Statement when it has been earned from the attachment date over the
period of the contract for direct business. The proportion of premium received or receivable not earned in the Income
Statement as at balance date is recognised in the Statement of Financial Position as an unearned premium liability.
(vi) Interest income
Interest income is recognised on a time-proportionate basis using the effective interest method, which takes into
account the effective yield on the financial asset.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP76
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(vii) Royalty income
Royalty income is recognised on an accruals basis in accordance with the substance of the relevant agreements.
(viii) Dividend income
Dividend income from investments is recognised when the shareholder’s right to receive payment is established.
(f) Government grants
Government grants include government assistance relating to specific research activities, amounts received to en-
courage retention of employees and also amounts received to encourage set up of operations in certain regions.
Grants are deducted against the expenses they are intended to compensate.
(g) Income tax
The income tax expense for the period is the total of the tax payable on the current period’s taxable income based
on the income tax rate for each jurisdiction. This is then adjusted for any changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in
the financial statements and any unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rate expected to apply when the
assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantially enacted for
each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary
differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences
arising from the initial recognition of an asset or liability. No deferred tax asset or liability is recognised in relation
to these temporary differences if they arose in a transaction, other than a business combination, that at the time of
the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and
tax bases of investments in foreign operations where the company is able to control the timing of the reversal of
temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly
in equity.
(h) Goods and Services Tax (GST)
The financial statements have been prepared so that all components are stated exclusive of GST except where the
GST is not recoverable from the IRD. In these circumstances the GST component is recognised as part of the under-
lying item. Trade and other receivables and payables are stated GST inclusive. The net amount of GST recoverable
from or payable to the IRD is included within these categories.
(i) Leases
(i) Group as lessee
Leases under which the Group assumes substantially all the risks and rewards of ownership are classified as finance
leases. All other leases are classified as operating leases. Assets acquired under finance leases are stated at an
amount equal to the lower of their fair value and the present value of the minimum lease payments at the inception
of the lease, less accumulated depreciation and any impairment losses.
Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net
of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to
the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. Payments made under operating leases (net of any incentives received from
the lessor) are charged to the income statement on a straight-line basis over the period of the lease.
NOTES TO THE FINANCIAL STATEMENTS P77
(ii) Group as lessor
Assets leased out to third parties under a finance lease are recognised as a receivable at an amount equal to the
present value of the minimum lease payments. The difference between the gross receivable and the present value
of the receivable is recognised as unearned finance income. Finance lease income is recognised over the term of the
lease using the net investment method, which reflects a constant periodic rate of return.
(j) Insurance expenses (Finance business)
Claims handling costs include costs that can be associated directly with individual claims, such as legal and other
professional fees, and costs that can only be indirectly associated with individual claims, such as claims administra-
tion costs. Discounting is not applied as claims are typically resolved within one year.
Amounts paid to insurers under insurance contracts are recorded as an outwards reinsurance expense and are
recognised in the Income Statement from the attachment date over the period of the indemnity of the reinsurance
contract in accordance with the expected pattern of the incidence of risk ceded.
(k) Cash & cash equivalents
Cash & cash equivalents includes cash on hand, deposits held at call with financial institutions, bank overdrafts and
other short-term, highly liquid investments with original maturities of three months or less that are readily convert-
ible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts
are shown within current liabilities on the Statement of Financial Position.
The Finance business has determined that certain money market deposits and government stock are held to support
general insurance liabilities. These assets are designated at fair value through profit or loss. Initial recognition is at
fair value in the Statement of Financial Position and subsequent measurement is at fair value with any resultant fair
value gains or losses recognised in the Income Statement. The fair value of these assets is recorded at amounts based
on valuations using rates of interest equivalent to the yields obtainable on comparable investments at balance date.
(l) Trade receivables
Trade receivables are recognised initially at fair value less transaction costs and subsequently measured at amortised
cost less an allowance account for impaired receivables. The amount of any loss is recognised in the Income State-
ment within Administration expenses.
Collectability of trade receivables is reviewed on an ongoing basis. When there is objective evidence the Appliances
business will not be able to collect all amounts due, they are written off against the allowance account for impaired
trade receivables.
(m) Inventories
Inventories are valued at the lower of cost, on a first-in, first-out basis, or net realisable value. Cost includes direct
materials, direct labour, an appropriate proportion of variable and fixed overhead expenditure (the latter being al-
located on the basis of normal operating capacity) but excludes finance, administration, research & development and
selling & distribution overheads. Net realisable value is the estimated selling price in the ordinary course of business
less all estimated costs of completion and the costs incurred in marketing, selling and distribution.
(n) Financial assets
Regular purchases and sales of financial assets are recognised on the trade date, i.e. the date on which the Group
commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from
the investments have expired or the Group has transferred substantially all the risks and rewards of ownership.
Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or
loss’, ‘held to maturity’ investments, ‘available-for-sale’ financial assets and ‘loans and receivables’. The classifica-
tion depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Financial assets at fair value through profit or loss
This category has two sub-categories: financial assets held for trading and those designated at fair value through
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP78
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of
selling in the short term or if so designated by management. Derivatives are also categorised as held for trading
unless they are designated as hedges. Assets in this category are classified as current assets if they are either held
for trading or are expected to be realised within 12 months of the balance date.
Held to maturity investments
Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturities that the Group has the positive intention and ability to hold to maturity.
Loans & receivables
Loans & receivables are non-derivative instruments with fixed or determinable payments that are not quoted in an
active market. They are included in current assets, except for maturities greater than 12 months after the balance
date, which are classified as non-current assets. Loans & receivables are reported separately in Trade or Finance
receivables on the Statement of Financial Position.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in
any of the other categories. They are included in non-current assets unless the company intends to dispose of the
investment within 12 months of the balance date.
Available-for-sale financial assets and financial assets at fair value through profit or loss are carried at fair value. Held
to maturity investments and loans & receivables are carried at amortised cost less impairment using the effective
interest method. Realised and unrealised gains and losses arising from changes in the fair value of the financial assets
through profit or loss category are recognised in the Income Statement in the period in which they arise. Unrealised
gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are
recognised in equity. When securities classified as available-for-sale are sold, the accumulated fair value adjustments
are included in the Income Statement as gains and losses from investment securities.
(o) Insurance assets (Finance business)
Assets that back general insurance liabilities are designated at fair value through profit or loss. Initial recognition is at
cost in the Statement of Financial Position and subsequent measurement is at fair value with any resultant fair value
gains or losses recognised in the Income Statement. The fair value of these assets is recorded at amounts based on
valuations using rates of interest equivalent to the yields obtainable on comparable investments at the reporting date.
Acquisition costs incurred in obtaining general insurance contracts are deferred and recognised as assets where they
can be reliably measured and where it is probable they will give rise to premium revenue that will be recognised in
the Income Statement in subsequent reporting periods.
Deferred acquisition costs are amortised systematically in accordance with the expected pattern of the incidence
of risk under the general insurance contracts to which they relate. This pattern of amortisation corresponds to the
earning pattern of the corresponding premium revenue.
(p) Derivatives
The Group enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate
risk and interest rate risk including forward foreign exchange contracts, interest rate swaps and options. Further
details of derivative financial instruments are provided in Note 15.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each balance date. Recognition of the resulting gain or loss depends on whether
the derivative is designated as a hedging instrument and the nature of the item being hedged. As appropriate, the
Group designates derivatives as either hedges of the fair value of recognised assets or liabilities or firm commitments
(fair value hedges) or hedges of highly probable forecast transactions (cash flow hedges).
NOTES TO THE FINANCIAL STATEMENTS P79
(i) Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the
Income Statement, together with any changes in the fair value of the hedged asset or liability that are attributable
to the hedged risk.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged
item for which the effective interest method is used is amortised to profit or loss over the period to maturity.
(ii) Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
is recognised in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised im-
mediately in the Income Statement.
Amounts accumulated in equity are recycled in the Income Statement in the periods when the hedged item will
affect profit or loss (for instance when the forecast sale that is hedged takes place). However, when the forecast
transaction that is hedged results in the recognition of a non-financial asset (for example, inventory) or a non-financial
liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial
measurement of the asset or liability.
When a hedging instrument expires, is sold or terminated, or when a hedge no longer meets the hedge account-
ing criteria, any cumulative gain or loss existing in equity at that time remains in equity and is recognised in the
Income Statement when the forecast transaction is ultimately recognised in the Income Statement. When a forecast
transaction is no longer expected to occur, the cumulative gain or loss that was deferred in equity is immediately
transferred to the Income Statement.
(iii) Derivatives that do not qualify for hedge accounting
Changes in the fair value of derivatives that do not qualify for hedge accounting are recognised immediately in the
Income Statement.
(q) Non-current assets held for sale
Non-current assets held for sale are stated at the lower of their carrying amount and fair value less costs to sell.
Non-current assets are not depreciated or amortised while they are classified as held for sale.
(r) Property, plant & equipment
Property, plant & equipment is stated at historical cost less accumulated depreciation and any impairment losses
if applicable. Historical cost includes all expenditure directly attributable to the acquisition or construction of the
item, including interest.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the asset will flow to the Group and the cost of
the asset can be measured reliably. All other repairs and maintenance are charged to the Income Statement during
the financial period in which they are incurred.
Property, plant & equipment, other than Freehold Land and Capital Work-in-Progress, is depreciated on a straight-line
basis over its estimated useful life as follows:
Freehold buildings 50 years
Leasehold improvements Life of lease
Plant & equipment 3-15 years
Fixtures & fittings 3-10 years
Motor vehicles 5 years
An asset’s useful life is reviewed and adjusted, if appropriate, at each balance date.
Property, plant & equipment which is temporarily idle (mothballed) is held at historical cost and is depreciated on a
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP80
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
straight-line basis over its estimated useful life as above.
(s) Intangible assets
Acquired intangible assets
(i) Goodwill
Goodwill arises on the acquisition of subsidiaries, and represents the excess of the consideration transferred over
the groups interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree.
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but is tested for
impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired,
and is carried at cost less any accumulated impairment losses.
Goodwill is allocated to cash generating units for the purpose of impairment testing. Impairment losses on goodwill
are not reversed.
Goodwill is allocated to those cash generating units that are expected to benefit from the business combination in
which the goodwill arose, identified according to operating segment.
(ii) Patents, trademarks and licences
Patents, trademarks and licences are finite life intangible assets and are recorded at cost less accumulated amor-
tisation and impairment losses. Amortisation is charged on a straight-line basis over their estimated useful lives,
which vary from 10 to 20 years. The estimated useful life and amortisation method is reviewed at each balance date.
(iii) Computer software
External software costs together with payroll and related costs for employees directly associated with the develop-
ment of software are capitalised. Costs associated with upgrades and enhancements are capitalised to the extent
they result in additional functionality. Amortisation is charged on a straight-line basis over the estimated useful life
of the software of 3-15 years. The estimated useful life and amortisation method is reviewed at each balance date.
(iv) Brands
Acquired brands, for which all relevant factors indicate there is no limit to the foreseeable net cash flows, are not
amortised on the basis that they have an indefinite useful life and are carried at fair value acquired less any accumu-
lated impairment losses. The carrying amount of acquired brands is tested annually for impairment.
(v) Customer relationships
Customer relationships are finite life intangible assets and are recorded at fair value acquired less accumulated am-
ortisation and any impairment losses. Amortisation is charged on a straight-line basis over their estimated useful life
of 10 years. The estimated useful life and amortisation method is reviewed at each balance date.
Internally generated intangible assets
(vi) Research & development
Research expenditure is expensed as it is incurred. Development expenditure is expensed as incurred, unless that
expenditure directly relates to new or improved products where the level of certainty of their future economic ben-
efits and useful life is probable, in which case the expenditure is capitalised and amortised on a systematic basis
reflecting the period of consumption of the benefit, which varies from 3-5 years.
(t) Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment.
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances
indicate the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair
value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash generating units).
NOTES TO THE FINANCIAL STATEMENTS P81
(u) Impairment of financial assets (Finance business)
The Finance business classifies its receivables at amortised cost (using the effective interest method) less any im-
pairment adjustment.
An assessment is made at each reporting date whether there is objective evidence that a financial asset or group
of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are
incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred
after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated
future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Objective evidence that a financial asset or group of assets is impaired includes observable data about the follow-
ing loss events:
_ significant financial difficulty of the issuer or obligor
_ breach of contract, such as default or delinquency in interest or principal payments
_ a concession granted to the borrower that the lender would not otherwise consider for economic or legal
reasons relating to the borrowers financial difficulty
_ it becoming probable that the borrower will enter bankruptcy or other financial reorganisation
_ the disappearance of an active market for that financial asset because of financial difficulties
_ observable data indicating that there is a measurable decrease in the estimated future cash flows from a group
of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified
with the individual financial assets in the group including adverse changes in the payment status of borrowers
in the group
Firstly an assessment is made whether objective evidence of impairment exists individually for financial assets that
are individually significant, and individually or collectively for financial assets that are not individually significant.
If it is determined that no objective evidence exists for an individually assessed financial asset, whether significant
or not, the assets are included in a group of financial assets with similar credit risk characteristics and collectively
assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is
or continues to be recognised are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been
incurred, the amount of loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the
financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an
allowance account and the amount of the loss is recognised in the statement of comprehensive income. If a loan
has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate
determined under the contract. As a practical expedient impairment may be measured on the basis of an instrument’s
fair value using an observable market price.
The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the
cashflows that may result from foreclosure less costs for obtaining and selling collateral, whether or not foreclosure
is probable.
For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit
risk characteristics. Those characteristics are relevant to the estimation of future cash flows for groups of such assets
by being indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the assets
being evaluated. Future cash flows in a group of financial assets that are collectively evaluated for impairment are
estimated on the basis of the contractual cash flows of the assets in the Finance business and historical loss experi-
ence for assets with credit characteristics similar to those in the Group. Estimates of changes in future cash flows
for groups of assets should reflect and be directionally consistent with changes in related observable data from
period to period (for example, changes in payment status or other factors indicative of changes in probability of
losses in the group and their magnitude). The methodology and assumptions used for estimating future cash flows
are reviewed regularly to reduce any differences between loss estimates and actual loss experience. When a loan
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP82
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
is uncollectible, it is written off to the statement of comprehensive income. Such loans are written off after all the
necessary procedures have been completed and the amount of the loss has been determined. If, in a subsequent
period, the amount of the impairment loss decreases and the decrease can be related objectively to an event oc-
curring after the impairment was recognised (such as an improvement in the debtors credit rating), the previously
recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised
in the statement of comprehensive income.
(v) Borrowings and borrowing costs
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in the Income Statement over the period of the borrowings using the effective interest method.
Borrowing costs are expensed, except for costs directly attributable to assets under construction, which are capitalised
during the period of time that is required to complete and prepare the asset for its intended use.
(w) Trade and other payables
Trade and other payables are recognised when the Group becomes obliged to make future payments resulting from
the purchases of goods and services.
Trade and other payables are recognised initially at fair value and, if applicable, subsequently measured at amortised
cost using the effective interest method.
(x) Employee benefits
(i) Wages & salaries, annual leave and sick leave
Liabilities for wages & salaries, including non-monetary benefits, annual leave and accumulating sick leave expected
to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ ser-
vices up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.
(ii) Long service leave
Liabilities for long service leave, which are not expected to be settled within 12 months of the balance date are
measured as the present value of estimated future cash outflows from the Group in respect of services provided by
employees up to the balance date. Consideration is given to expected future wage and salary levels, experience of
employee departures, periods of service and age.
(iii) Defined contribution plan
Contributions to the defined contribution superannuation plans are recognised as employee benefit expenses when
incurred. The Group has no further payment obligations once the contributions have been paid.
(iv) Defined benefit plan
The cost of providing benefits is determined using the Projected Unit Credit Method, with independent actuarial
valuations being carried out annually. Actuarial gains and losses arising from experience adjustments and changes
in actuarial assumptions in excess of the greater of 10% of the value of the plan assets or 10% of the defined benefit
obligation are charged or credited to income over the expected average remaining working lives of employees’
participating in the plan. Otherwise, the actuarial gain or loss is not recognised.
Net provision for post-employment benefits in the Statement of Financial Position represents the present value of
the Group’s obligations at year-end less market value of plan assets, together with adjustments for unrecognised
actuarial gains and losses and unrecognised past service costs.
Where the calculation results in a net benefit to the Group, the recognised asset is limited to the net total of any
unrecognised actuarial losses and past service costs and the present value of any future refunds from the plan or
reductions in future contributions to the plan.
NOTES TO THE FINANCIAL STATEMENTS P83
(v) Share-based payments
The Group has operated equity-settled share option and share ownership schemes and a cash settled share-based
payment scheme. Currently, only one cash settled scheme is active.
The fair value of share options and shares is expensed on a straight-line basis over the vesting period with a cor-
responding increase in equity. The fair value of options granted is measured using a binomial model taking into
consideration factors such as expected dividends and estimates of the number of options that are expected to be-
come exercisable and shares expected to be distributed. Advances from within the Group fund the initial purchase
of shares in the share ownership scheme, which is taken into consideration in arriving at fair value.
For cash-settled schemes, the Group recognises an employee benefit expense over the life of the scheme and re-
measures the fair value of the associated liability at each reporting date, with any change in fair value recognised
in profit or loss for the period.
(vi) Profit-sharing and bonus plans
The Group recognises a liability and an expense for bonuses and profit-sharing based on a formula that takes into
consideration the profit attributable to the company’s shareholders after certain adjustments. The Group recognises
a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
(y) Insurance liabilities (Finance business)
The liability for outstanding claims is measured as the central estimate of the present value of expected future pay-
ments against claims incurred at the reporting date under general insurance contracts issued by the Finance business,
with an additional risk margin to allow for the inherent uncertainty in the central estimate.
The expected future payments include those in relation to claims reported but not yet paid; claims incurred but not
reported (IBNR), claims incurred but not enough reported (IBNER) and anticipated claims handling costs. Actuarial
calculations were performed to determine the outstanding claims liability. The outstanding claims liability has been
determined using the Bornhuetter-Fergusson (incurred claims) methodology. It has been assumed that future incurred
claims patterns for each group of business will continue to follow observed historic patterns.
(z) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event
and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate
can be made of the amount of the obligation. Where the effect of the time value of money is material, the amount
recognised is the present value of the estimated expenditures.
(i) Warranty
Provisions for warranty costs are recognised at the date of sale of the relevant products or resultant from specific
issues, at management’s best estimate of the expenditure required to settle the Group’s liability based on historical
warranty trends. Warranty terms vary, but generally are 1-2 years parts & labour (dependent on region) with selected
parts (only) covered for periods up to 10 years.
(ii) Redundancy
A redundancy provision is recognised when as part of a publicly announced restructuring plan a reliable estimate
can be made of the direct costs associated with the plan and where it has raised a valid expectation of its imple-
mentation for those employees affected.
(iii) Onerous contracts
An onerous contract provision is recognised where the unavoidable costs of meeting the contract obligations exceed
the economic benefits expected to be received under the contract.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP84
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(aa) Contributed equity
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the
acquisition of a business are included in the cost of the acquisition as part of the purchase consideration.
Treasury stock is used to recognise those shares held and controlled by Fisher & Paykel Employee Share Purchase
Trustee Limited.
(ab) Dividends
Provision is made for the amount of any dividend declared on or before the end of the financial year but not dis-
tributed at balance date.
(ac) New and amended accounting Standards adopted by the Group
During the year the Group adopted the following new and amended NZ IFRSs as of 1 April 2011:
NZ IAS 24 (Revised), Related Party Disclosures.
The revised Standard clarifies and simplifies the definition of a related party. The group has disclosed transactions
between its subsidiaries and its associates. However, there has been no impact on any amounts recognised in the
financial statements.
(ad) Standards, interpretations and amendments to published standards that are not yet effective
New standards, amendments and interpretations to existing standards have been published by the International
Accounting Standards Board (IASB) and the External Reporting Board (XRB) that are mandatory for future periods
and which the Group will adopt when they become mandatory. These new standards, amendments and interpreta-
tions include:
_ NZ IAS 1 Amendments Presentation of Items of Other Comprehensive Income (effective 1 July 2012)
The amendment requires entities to separate items presented in other comprehensive income into two groups,
based on whether they may be recycled to profit or loss in the future. This will not affect the measurement of
any of the items recognised in the balance sheet or the profit or loss in the current period. The group intends
to adopt the new standard from 1 April 2012.
_ NZ IFRS 9 Financial Instruments: Classification and Measurement (mandatory for annual periods beginning
on or after 1 January 2015). The major changes under the Standard are:
__ NZ IFRS 9 replaces parts of NZ IAS 39 Financial Instruments: Recognition and Measurement that relate
to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be
classified into two measurement categories: amortised cost and fair value.
__ The classification depends on the entities business model for managing its financial instruments and the
contractual cash flow characteristics of the instrument.
__ For financial liabilities the standard retains most of IAS 39 requirements. The main change is that in cases
where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s
own credit risk is recorded in other comprehensive income rather than in the income statement, unless
this creates an accounting mismatch.
__ The Group will apply NZ IFRS 9 prospectively from 1 April 2015.
_ NZ IFRS 10 Consolidated Financial Statements and NZ IFRS 12 Disclosure of Interests in Other Entities (ef-
fective 1 January 2013) NZ IFRS 10 replaces all of the guidance on control and consolidation in NZ IAS 27
Consolidated and Separate Financial Statements, and NZ IFRIC 12 Consolidation – Special Purpose Entities.
The core principle that a consolidated entity presents a parent and its subsidiaries as if they are a single eco-
nomic entity remains unchanged, as do the mechanics of consolidation. However, the standard introduces a
single definition of control that applies to all entities. It focuses on the need to have both power and rights or
exposure to variable returns before control is present. Power is the current ability to direct the activities that
significantly influence returns. Returns must vary and can be positive, negative or both. There is also new guid-
ance on participating and protective rights and on agent/principal relationships. The group does not expect the
NOTES TO THE FINANCIAL STATEMENTS P85
new standard to have a significant impact on its composition.NZ IFRS 12 sets out the required disclosures for
entities reporting under the new standard, NZ IFRS 10. The group does not expect the new standards to have
a significant impact on the Financial Statements.
_ NZ IFRS 13 Fair Value Measurement (effective 1 January 2013) NZ IFRS 13 explains how to measure fair value and
aims to enhance fair value disclosures. The group has yet to determine which, if any, of its current measurement
techniques will have to change as a result of the new guidance. It is therefore not possible to state the impact,
if any, of the new rules on any of the amounts recognised in the financial statements. However, application of
the new standard will impact the type of information disclosed in the notes to the financial statements. The
group does not intend to adopt the new standard before its operative date, which means that it would be first
applied in the annual reporting period ending 31 March 2014.
_ Revised NZ IAS 19 Employee Benefits (effective 1 January 2013) The standard requires the recognition of all
re-measurements of defined benefit liabilities/assets immediately in other comprehensive income (removal of
the so-called ‘corridor’ method) and the calculation of a net interest expense or income by applying the dis-
count rate to the net defined benefit liability or asset. This replaces the expected return on plan assets that is
currently included in profit or loss. The standard also introduces a number of additional disclosures for defined
benefit liabilities/assets and could affect the timing of the recognition of termination benefits. The amendments
will have to be implemented retrospectively. The group does not expect the new standard to have a significant
impact on the Financial Statements.
_ FRS 44 New Zealand Additional Disclosures and Harmonisation Amendments (effective 1 July 2012) FRS 44
sets out New Zealand specific disclosures for entities that apply NZ IFRSs. These disclosures have been relo-
cated from NZ IFRSs to clarify that these disclosures are additional to those required by IFRSs. Adoption of the
new rules will not affect any of the amounts recognised in the financial statements, but may simplify some of
the group’s current disclosures. The Harmonisation Amendments amends various NZ IFRSs for the purpose of
harmonising with the source IFRSs and Australian Accounting Standards. The significant amendments include
introduction of the option to use the indirect method of reporting cash flows that is not currently in NZ IAS 7.
In addition, various disclosure requirements have been deleted. The group intends to adopt FRS 44 and the
Harmonisation Amendments from 1 July 2012.
_ Other interpretations and amendments are unlikely to have an impact on the Group’s accounts and have
therefore not been analysed in detail.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, includ-
ing expectations of future events that are believed to be reasonable under the circumstances.
(a) Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by defini-
tion, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(i) Impairment of goodwill and other indefinite life intangible assets
The Group annually tests whether goodwill or brands have suffered any impairment, in accordance with the account-
ing policy stated in Note 2(s). The recoverable amounts of cash generating units for goodwill impairment testing
have been determined based on value-in-use calculations and recoverable amounts for brands have been based on
relief-from-royalty calculations. These calculations require the use of assumptions. Refer Note 17 for details of these
assumptions and the potential impact of changes to these assumptions.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP86
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(ii) Impairment of property, plant & equipment
The Group tests for impairment of property, plant & equipment when indicators exist that an impairment may have
occurred. The recoverable amount of property is based on fair market valuation less costs to sell and the recoverable
amount of plant & equipment assets is based on value-in-use calculations requiring the use of assumptions. Refer Note
16 for details of these assumptions and the impact on the performance for the years ended 31 March 2012 and 2011.
(iii) Warranty provision
Provision is made for estimated warranty claims in respect of products sold which are still under warranty at bal-
ance date. The majority of these claims are expected to be settled within the next 24 months but this may extend
to 10 years for certain washer components. Management estimates the present value of the provision based on
historical warranty claim information and any recent specific trends that may suggest future claims could differ
from historical amounts.
While changes in management’s assumptions would result in different valuations, management considers the effect
of any likely changes would be immaterial to the Group’s result or financial position.
As at 31 March 2012, the Group had recognised a warranty provision amounting to $18.3 million (2011 $21.8 million).
(iv) Product support provision
Provision is made for costs to support older products sold in previous years which are outside warranty periods.
The provision recognised is based on estimated costs to address product issues.
While changes in management’s assumptions would result in different valuations, management considers the effect
of any likely changes would be immaterial to the Group’s result or financial position.
As at 31 March 2012 the Group had recognised a product support provision amounting to $4.9 million (2011 nil).
(v) Finance receivables
Allowance is made for losses to Finance receivables where there is objective evidence that impairment has occurred
due to one or more loss events. Management assesses whether these loss events have an impact upon the estimated
future cash flows of the receivables on either an individual (if significant) or collective (if similar characteristics) basis.
While changes in management’s assumptions would result in different valuations, management considers the effect
of any likely changes would be immaterial to the Group’s result or financial position.
As at 31 March 2012, the Group had recognised an allowance for impairment losses amounting to $20.7 million
(2011 $26.7 million).
(vi) Inventories
The cost of inventory is sensitive to currency fluctuations. Management applies a blended exchange rate to account
for purchases covered by forward foreign exchange contracts. As at 31 March 2012, a 10% movement in the blended
rate used is estimated to have a $6.7 million impact on the value of inventory.
The provision for obsolescence has reduced in the year ended 31 March 2012 to $9.5 million (2011 $11.3 million).
Whilst Management are satisfied the provision is fairly stated, this involves significant judgement on forecast usage
of materials.
(vii) Income taxes
The Group is subject to income taxes in New Zealand and jurisdictions where it has foreign operations. Significant
judgement is required in determining the worldwide provision for income taxes. There are certain transactions and
calculations undertaken during the ordinary course of business for which the ultimate tax determination may be
uncertain. Where the final tax outcome of these matters is different from the amounts that were initially recorded,
such differences will impact the current and deferred tax provisions in the period in which such determination is made.
NOTES TO THE FINANCIAL STATEMENTS P87
As at 31 March 2012, the Group had recognised $49.2 million net deferred tax assets in excess of deferred tax li-
abilities. The Group has assumed continuity of shareholdings as required by New Zealand and USA tax legislation
and therefore has included all available tax loss carry forwards and other deductible temporary differences in the
computation of deferred tax assets except for $0.6 million of New Zealand operating losses and unrecognized US
tax losses and credits totalling $24.0 million.
(viii) Employment benefits
The Group provides long service leave benefits to employees in certain countries and calculation of the provision for
the unvested component of these obligations is based on assumptions about future salary/wage increases, promo-
tion rates and employee turnover. The discount rates used to calculate the present value of these obligations are
based on 10 year Government bond yields as no deep market is deemed to exist for high quality corporate bonds
in these countries.
While changes in management’s assumptions would result in different liabilities, management considers the effect
of any likely changes would be immaterial to the Group’s result or financial position.
As at 31 March 2012, the Group had recognised a provision for unvested long service leave amounting to $9.0 mil-
lion (2011 $8.2 million).
(ix) Restructuring charges
Restructuring charges comprise estimated costs for associated redundancies and relocation costs. These charges
are calculated based on detailed plans that are expected to improve the Group’s cost structure and productivity. The
outcomes of similar historical restructuring plans are used as a guideline to minimise any uncertainties arising. There
were no restructuring plans announced during the year ended 31 March 2012 (2011 $0.9 million).
(x) Litigation costs
Fisher & Paykel Financial Services Limited is currently involved in legal proceedings with a software supplier. The
case was heard in the High Court at Auckland, New Zealand in late 2011 and a judgement on the issue is expected
this year (refer Note 8).
(b) Critical judgements in applying the entity’s accounting policies
Special purpose entity
The activities of Retail Financial Services Limited are funded through a master trust securitisation structure established
on 8 May 2006. This structure allows for the creation of multiple, separate, standalone trusts. The first trust created
under the master trust structure was the RFS Trust 2006-1 (the Trust). Fisher & Paykel Financial Services Limited
is the residual income and capital beneficiary of the Trust and therefore the financial statements of the Trust have
been consolidated in the Group’s financial statements. Refer Note 33.
4. FINANCIAL RISK MANAGEMENT - APPLIANCES BUSINESS & PARENT
The Group’s business activities expose it to a variety of financial risks, namely market risk (including currency risk,
interest rate risk and commodity risk), credit risk and liquidity risk. The overall risk management approach focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance
of the business. Derivative financial instruments such as foreign exchange contracts, foreign exchange options and
interest rate swaps are used to hedge certain risk exposures.
The Board of Directors has approved policy guidelines for the Appliances business and Parent that identify, evaluate
and authorise various financial instruments to hedge financial risks.
The principal financial risks and hedging policies for the Appliances business and Parent are shown below.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP88
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)
(a) Market risk
(i) Foreign exchange risk
The Appliances business operates internationally and is exposed to foreign exchange risk arising from both trans-
acting in foreign currencies and from translation of the net assets of overseas subsidiaries into New Zealand dollars
for consolidation purposes.
The principal currency exposures are the United States dollar cross rates with the Australian dollar and Thai baht.
The Appliances business monitors current and anticipated future foreign currency operating cash flows to determine
net exposures, which are hedged with forward exchange contracts within prescribed bands for up to a maximum
period of 12 months (24 months by exception). Major capital expenditure in foreign currency is hedged with forward
foreign exchange contracts. The Group’s exposure to translation risk of foreign currency denominated net assets
is not hedged.
Notional principal of foreign exchange agreements outstanding at 31 March 2012 were as follows:
_ Purchase commitments forward exchange contracts $127.7 million (2011 $280.0 million)
_ Sale commitments forward exchange contracts $40.4 million (2011 $122.9 million)
(ii) Interest rate risk
Debt funding for the Appliances business is subject to floating interest rates which can impact on the segment’s
financial result. When considered appropriate, in accordance with the policy guidelines, the Appliances business
enters into interest rate swaps and caps to manage its exposure to such fluctuations. These financial instruments
are subject to the risk that interest rates may change subsequent to implementation.
Notional principal or contract amounts outstanding on interest rate swaps and caps at 31 March 2012 were $65.7
million (2011 $80.7 million). The interest rate contracts in place at the time of the debt restructuring in March 2009,
were deemed to be ineffective and are fair valued through profit or loss. Interest rate contracts entered into subse-
quent to the restructuring are deemed effective and fair valued through the cash flow hedge reserve.
(iii) Commodity risk
Pricing for some of the Appliances business’ raw material purchases is subject to fluctuations in commodity indices for
base metals and crude oil. This is routinely managed through agreements with suppliers however, when considered
appropriate and in accordance with the policy guidelines, the Appliances business enters into commodity derivatives
to manage its exposure to such fluctuations.
Appliances has commodity derivatives as at 31 March 2012 these were less than $1,000 (2011 $Nil).
(iv) Summarised sensitivity analysis
The following table summarises the sensitivity of the Appliances business’ financial assets and financial liabilities (with
all other variables held constant) to interest rate risk and foreign exchange risk. The sensitivity analyses represent
the range of movements for each type of risk that are considered reasonably possible as at balance date. The risk
profile will vary throughout the financial year.
Figures disclosed within profit in the sensitivity analyses represent the after tax impact of the variable movements.
NOTES TO THE FINANCIAL STATEMENTS P89
4. FINANCIAL RISK MANAGEMENT - APPLIANCES BUSINESS & PARENT (CONTINUED)
APPLIANCES BUSINESS INTEREST RATE RISK FOREIGN EXCHANGE RISK
-1% +2% -15% +15%
Carrying Profit Equity Profit Equity Profit Equity Profit Equity
amount
31 March 2012 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Financial assets
Cash & cash equivalents 22,273 (137) (137) 275 275 3,624 3,624 (2,679) (2,679)
Trade receivables 108,456 - - - - 9,344 9,344 (6,906) (6,906)
Foreign exchange derivatives 2,361 - - - - 2,897 8,417 (2,141) (6,221)
Interest rate derivatives 103 - (4) 30 38 (9) (9) 7 7
Financial liabilities
Borrowings (86,810) 707 707 (1,414) (1,414) (7,322) (7,322) 5,412 5,412
Trade creditors (96,560) - - - - (9,685) (9,685) 7,159 7,159
Foreign exchange derivatives (1,736) - - - - 7,761 8,844 (5,736) (6,537)
Interest rate derivatives (1,211) (183) (183) 353 353 178 178 (132) (132)
Total increase/ (decrease) 387 383 (756) (748) 6,788 13,391 (5,016) (9,897)
APPLIANCES BUSINESS INTEREST RATE RISK FOREIGN EXCHANGE RISK
-1% +2% -15% +15%
Carrying Profit Equity Profit Equity Profit Equity Profit Equity
amount
31 March 2011 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Financial assets
Cash & cash equivalents 21,375 (135) (135) 270 270 3,678 3,678 (2,719) (2,719)
Trade receivables 128,117 - - - - 11,902 11,902 (8,797) (8,797)
Foreign exchange derivatives 2,657 - - - - (1,887) (1,635) 1,394 1,208
Financial liabilities
Borrowings (121,557) 910 910 (1,819) (1,819) (11,051) (11,051) 8,168 8,168
Trade creditors (99,141) - - - - (9,057) (9,057) 6,694 6,694
Other creditors (10,934) - - - - (1,343) (1,343) 993 993
Foreign exchange derivatives (20,213) - - - - 3,000 22,529 (886) (12,663)
Interest rate derivatives (3,334) (196) (196) 371 371 412 412 (305) (305)
Total increase/ (decrease) 579 579 (1,178) (1,178) (4,346) 15,435 4,542 (7,421)
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP90
(b) Credit risk
The Appliances business incurs credit risk with trade receivables and has a credit policy which is used to manage
exposure to this credit risk. As part of this policy, limits are reviewed on a regular basis. In addition, risk is selectively
mitigated through trade indemnity policies and letters of credit where an unacceptably high credit risk is perceived
to exist.
Foreign currency forward exchange contracts and interest rate swaps have been entered into with trading banks.
The Appliances business’ exposure to credit risk from these financial instruments is limited because it does not
expect non-performance of the obligations contained therein due to the credit rating of the financial institutions
concerned. The Appliances business does not require collateral or other security to support financial instruments.
Further disclosure on Trade receivables is reported in Note 11.
(i) Concentrations of credit exposure
As at 31 March 2012, the Appliances business had trade receivables from certain major customers of $29.4 million
(2011 $25.0 million). However, this largely comprises Australian receivables and all Australian receivables balances
are covered by trade indemnity insurance, the main terms of which include:
_ maximum sum insured of A$30 million
_ insured percentage of 90% subject to A$5,000 excess
_ discretionary credit limit up to A$300,000
_ maximum payment terms of 60 days from the end of the month following delivery of goods
_ Excluding the major customers above, the Appliances business had no other significant concentration of credit
exposure.
(ii) Geographic concentrations of trade receivables
The Appliances business’ maximum exposure to credit risk for trade receivables by geographic region is as follows:
PARENT INTEREST RATE RISK FOREIGN EXCHANGE RISK
-1% +2% -15% +15%
Carrying Profit Equity Profit Equity Profit Equity Profit Equity
amount
31 March 2012 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Financial assets
Cash & cash equivalents 1 - - - - - - - -
Other current assets 27 - - - - - - - -
Intergroup advances 637,585 - - - - - - - -
Total increase/ (decrease) - - - - - - - -
PARENT INTEREST RATE RISK FOREIGN EXCHANGE RISK
-1% +2% -15% +15%
Carrying Profit Equity Profit Equity Profit Equity Profit Equity
amount
31 March 2011 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Financial assets
Cash & cash equivalents 1 - - - - - - - -
Other current assets 21 - - - - - - - -
Intergroup advances 637,620 - - - - - - - -
Total increase/ (decrease) - - - - - - - -
NOTES TO THE FINANCIAL STATEMENTS P91
4. FINANCIAL RISK MANAGEMENT - APPLIANCES BUSINESS & PARENT (CONTINUED)
(c) Liquidity risk
Prudent liquidity risk management requires maintaining sufficient cash to meet contractual obligations, the availability
of funding through an adequate amount of committed credit facilities and the ability to close-out market positions.
Pursuant to its banking facilities, Management is required to maintain sufficient headroom to meet facility requirements.
The Board of Directors approves all new loans and funding facilities and is updated regularly on liquidity risk.
The table below analyses the Appliances business’ financial liabilities into relevant maturity groupings based on the
remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the
contractual undiscounted cash flows, except for interest rate swaps.
31 March 31 March
2012 2011
$’000 $’000
New Zealand 20,510 17,456
Australia 40,774 51,699
North America 16,817 31,144
Europe 23,532 18,167
Rest of World 6,823 9,651
108,456 128,117
On Call Less than Between Between
1 year 1 and 2 2 and 5
years years
31 March 2012 $’000 $’000 $’000 $’000
Borrowings - 10,103 13,764 79,440
Trade creditors - 96,560 - -
Finance lease liabilities - - - -
Interest rate swaps * - 477 734 -
31 March 2011
Borrowings - - 128,151 -
Trade creditors - 99,141 - -
Finance lease liabilities - 17 - -
Interest rate swaps * - 2,353 933 49
* The amounts expected to be payable in relation to the interest rate swaps have been estimated using forward interest rates applicable at the reporting date.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP92
The table below analyses the Appliances business’ derivative financial instruments that will be settled on a gross
basis into relevant maturity groupings based on the remaining period to the contractual maturity date at balance
date. The amounts disclosed in the table are the contractual undiscounted cash flows. They are expected to occur
and affect profit or loss at various dates between balance date and the following 24 months.
(d) Fair value estimation
The fair value of financial instruments are estimated using discounted cash flows. Fair value of interest rate swaps
is calculated as the present value of the estimated future cash flows. The fair value of forward exchange contracts
is determined using forward exchange market rates at balance date.
The carrying value less impairment provision of trade receivables and payables is a reasonable approximation of
their fair values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is
available to the Appliances business for similar financial instruments.
Unless otherwise stated, all other carrying amounts are assumed to equal or approximate fair value.
Financial instruments are measured in the Statement of Financial Position at fair value, which requires disclosure of
fair value measurements by level of the following fair value measurement hierarchy:
_ Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
_ Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices) (Level 2).
_ Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
Less than Between
1 year 1 and 2
years
31 March 2012 $’000 $’000
Forward foreign exchange contracts - cash flow hedges
- inflow 168,719 -
- outflow 168,094 -
Forward foreign exchange contracts - cash flow hedges
- inflow 378,718 6,155
- outflow 399,171 6,557
NOTES TO THE FINANCIAL STATEMENTS P93
4. FINANCIAL RISK MANAGEMENT - APPLIANCES BUSINESS & PARENT (CONTINUED)
There are no financial instruments carried at fair value in the Parent entity.
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting
date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer,
broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly oc-
curring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the
Group is the current bid price. These instruments are included in Level 1.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter de-
rivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable
market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is included in Level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
Specific valuation techniques used to value financial instruments include:
_ Quoted market prices or dealer quotes for similar instruments.
_ The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based
on observable yield curves.
_ The fair value of forward foreign exchange contracts is determined using forward exchange rates at balance
date, with the resulting value discounted back to present value
_ Other techniques, such as discounted cash flow analysis, are used to determine fair value for other financial
instruments.
Note that all of the resulting fair value estimates for the Appliances business are included in Level 2.
Level 1 Level 2 Level 3 Total
balance
31 March 2012 $’000 $’000 $’000 $’000
Assets
Derivative financial instruments - held for trading - 934 - 934
Derivative financial instruments - cash flow hedges - 1,530 - 1,530
Total assets - 2,464 - 2,464
Liabilities
Derivative financial instruments - held for trading - 2,823 - 2,823
Derivative financial instruments - cash flow hedges - 124 - 124
Total liabilities - 2,947 - 2,947
Level 1 Level 2 Level 3 Total
balance
31 March 2011 $’000 $’000 $’000 $’000
Assets
Derivative financial instruments - held for trading - 1,205 - 1,205
Derivative financial instruments - cash flow hedges - 1,452 - 1,452
Total assets - 2,657 - 2,657
Liabilities
Derivative financial instruments - held for trading - 6,193 - 6,193
Derivative financial instruments - cash flow hedges - 17,355 - 17,355
Total liabilities - 23,548 - 23,548
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP94
(e) Financial instruments by category
ASSETS AS PER STATEMENT OF FINANCIAL POSITION Fair value Derivatives Loans and Total
through used for receivables
profit or hedging
loss—held
for trading
$’000 $’000 $’000 $’000
Appliances business
31 March 2012
Cash & cash equivalents - - 22,273 22,273
Trade receivables - - 108,456 108,456
Derivative financial instruments 934 1,530 - 2,464
934 1,530 130,729 133,193
31 March 2011
Cash & cash equivalents - - 21,375 21,375
Trade receivables - - 128,117 128,117
Derivative financial instruments 1,205 1,452 - 2,657
1,205 1,452 149,492 152,149
Parent
31 March 2012
Cash & cash equivalents - - 1 1
Intergroup advances - - 637,620 637,620
- - 637,621 637,621
31 March 2011
Cash & cash equivalents - - 1 1
Intergroup advances - - 637,585 637,585
- - 637,586 637,586
LIABILITIES AS PER STATEMENT OF FINANCIAL POSITION Fair value Derivatives Measured at Total
through used for amortised
profit or hedging cost
loss—held
for trading
$’000 $’000 $’000 $’000
Appliances business
31 March 2012
Borrowings - - 86,810 86,810
Trade creditors 96,560 96,560
Derivative financial instruments 2,823 124 - 2,947
Finance leases - - - -
2,823 124 183,370 186,317
31 March 2011
Borrowings - - 121,557 121,557
Trade creditors 99,141 99,141
Derivative financial instruments 6,193 17,355 - 23,548
Finance leases - - 17 17
6,193 17,355 220,715 224,263
NOTES TO THE FINANCIAL STATEMENTS P95
5. FINANCIAL RISK MANAGEMENT - FINANCE BUSINESS
The Finance business’ activities expose it to a variety of financial risks including credit risk, liquidity risk and interest
rate risk. The Finance business has a separate Board of Directors, which has appointed the following committees and
other specialists to manage these risks and report key outcomes to the Board in accordance with approved policy:
Asset & Liability Committee
Comprises the Managing Director, Chief Operating Officer, Chief Financial Officer (Chair) and Treasury & Funding
Manager. The Committee is responsible for managing interest rate risk, liquidity risk and Statement of Financial
Position and capital structure. The Committee’s activities are governed by a formal charter to ensure all treasury
risk management policies are followed.
Pricing, Marketing & Operations Committee
Comprises the Managing Director, Chief Operating Officer (Chair) and Chief Financial Officer. Its principal responsi-
bility is to establish and review interest rates on money advanced to customers and productivity, performance and
compliance of Finance business operations.
Credit Committee
Comprises the Managing Director, Chief Operating Officer, Chief Financial Officer and Chief Risk Officer (Chair). The
committee’s principal responsibility is to oversee all aspects of credit risk assessment and management and operates
within formal credit policies and guidelines that ensure any credit risk incurred falls within acceptable parameters.
Insurance Committee
Comprises the Managing Director, Chief Operating Officer (Chair), Chief Financial Officer and Marketing Manager.
The committee’s principal responsibility is to oversee all aspects of the insurance business; including approving
and recommending strategies, monthly review of risks and returns and the delivery of and compliance to current
prudential and regulatory requirements for the insurance sector.
Information & Support Services Steering Committee
Comprises the Management Director, the Chief Operating Officer, Chief Financial Officer and Chief Information &
Support Services Officer (Chair). The committee is responsible for approving strategy, setting policy, monitoring risk
and reviewing work in progress across information services, human resources, process improvement and procurement.
Treasury
The Treasury function’s principal responsibility is the day-to-day management of the liability side of the statement
of financial position, especially focusing on maintaining the appropriate level and mix of funding sources and ensur-
ing that the Finance business has sufficient liquidity for its requirements. In addition, Treasury is responsible for:
_ execution of interest rate risk management strategies including the use of derivative financial instruments in
accordance with formal treasury risk management policies
_ ensuring compliance with all internal and external measures, covenants and ratios.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP96
(a) Interest rate risk
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will
fluctuate because of changes in market interest rates.
The Finance business is exposed to fluctuations in the prevailing levels of market interest rates on both fair value
and cash flow risks relating to its financial instruments. Interest margins may increase or decrease, as the case may
be, as a result of changes in market interest rates.
(i) Interest rate risk management process
The Asset & Liability Committee is responsible for managing interest rate risk in accordance with its Charter and
treasury risk management policy. A Pricing Committee is responsible for establishing and reviewing interest rates
on money lent.
The Finance business manages interest rate risk through:
_ monitoring the maturity profile of assets and liabilities and seeking, where appropriate, to match the date at
which these mature and reprice
_ monitoring market interest rates and reviewing the impact of these on interest rate risk exposure
_ economically hedging a portion of any residual risk exposure using financial derivative instruments. This activity
is undertaken in accordance with treasury risk management policies approved by the Finance business Board
of Directors
_ reviewing lending rates from time to time
(ii) Concentrations of interest rate exposure
The Finance business’ borrowings are generally short term in nature to match the profile of the maturing assets.
Borrowings issued at variable rates expose the Finance business to cash flow interest rate risk. Borrowings issued
at fixed rates expose the Finance business to fair value interest rate risk.
(iii) Repricing schedule
The Finance business has a policy which establishes risk control limits for the net repricing gap. Interest rate exposure
is monitored on a regular basis and reported to and reviewed monthly by the Asset and Liability Committee and the
Finance business Board of Directors.
The table below summarises the Finance business exposure to interest rate risks. It includes the Finance business
financial instruments at carrying amounts, categorised by the earlier of their contractual repricing or expected
maturity dates.
NOTES TO THE FINANCIAL STATEMENTS P97
5. FINANCIAL RISK MANAGEMENT - FINANCE BUSINESS (CONTINUED)
Weighted 0 to 6 7 to 12 13 to 24 25 to 60 Over 60 Non Total
average months months months months months interest
effective bearing
interest
rate
31 March 2012 % $’000 $’000 $’000 $’000 $’000 $’000 $’000
Financial assets
Cash & cash equivalents 2.5 87,074 - - - - - 87,074
Derivative financial instruments 2.8 4 - 48 - - - 52
Finance receivables 18.1 495,111 51,342 37,972 10,095 12 - 594,532
Other financial assets 0.5 - - - 556 - 2,817 3,373
582,189 51,342 38,020 10,651 12 2,817 685,031
Financial liabilities
Finance borrowings
Bank loans 4.0 245,507 - - - - - 245,507
Debentures 7.4 50,331 39,930 18,361 2,740 - - 111,362
Notes 3.5 194,097 - - - - - 194,097
Derivative financial instruments 3.9 213 455 949 1,099 - - 2,716
Other financial liabilities - - - - - - 10,972 10,972
490,148 40,385 19,310 3,839 - 10,972 564,654
Net effective interest rate gap 92,041 10,957 18,710 6,812 12 (8,155) 120,377
Weighted 0 to 6 7 to 12 13 to 24 25 to 60 Over 60 Non Total
average months months months months months interest
effective bearing
interest
rate
31 March 2011 % $’000 $’000 $’000 $’000 $’000 $’000 $’000
Financial assets
Cash & cash equivalents 3.6 92,154 - - - - - 92,154
Derivative financial instruments 2.8 - - 1 - - - 1
Finance receivables 18.0 466,733 43,229 74,400 17,164 69 - 601,595
Other financial assets 0.7 - 1,044 - - - 2,682 3,726
558,887 44,273 74,401 17,164 69 2,682 697,476
Financial liabilities
Finance borrowings
Bank loans 4.2 224,837 - - - - - 224,837
Debentures 7.0 79,422 39,568 17,232 4,190 - - 140,412
Notes 4.1 134,805 - - - - - 134,805
Committed liquidity facilities 4.0 73,861 - - - - - 73,861
Derivative financial instruments 4.0 170 432 1,325 1,225 - - 3,152
Other financial liabilities - - - - - - 5,143 5,143
513,095 40,000 18,557 5,415 - 5,143 582,210
Net effective interest rate gap 45,792 4,273 55,844 11,749 69 (2,461) 115,266
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP98
(iv) Summarised sensitivity analysis
The following table summarises the sensitivity of the Finance business’ financial assets and financial liabilities to
interest rate risk in terms of the effect on post-tax profit and equity. The analysis is based on the assumption that all
other variables remain constant and incorporates the effect a -/+ 100 basis point movement in interest rates has on
the financial assets and financial liabilities held at balance date. The sensitivity analyses below represent the range
of movements for each type of risk that are considered reasonably possible as at balance date. The risk profile will
vary throughout the financial year.
(b) Credit risk
The Finance business is exposed to credit risk, which is the risk that a counterparty will cause a financial loss for the
Finance Business by failing to discharge an obligation. Credit risk arises principally on advances made to customers
and deposits held with other entities and also in off-statement of financial position items such as loan commitments.
(i) Credit risk management process
A Credit Committee oversees all aspects of credit risk assessment and management and operates within credit poli-
cies and guidelines approved by the Finance business Board of Directors. These policies ensure that any credit risk
incurred falls within acceptable parameters.
INTEREST RATE RISK
-1% +1%
Carrying Profit Equity Profit Equity
amount
31 March 2012 $’000 $’000 $’000 $’000 $’000
Financial assets
Cash & cash equivalents 87,074 (628) (628) 628 628
Finance receivables 594,532 (4,282) (4,282) 4,282 4,282
Derivative financial instruments 52 (243) (285) 239 279
Other financial assets 3,373 (4) (4) 4 4
Financial liabilities
Finance borrowings (550,966) 3,958 3,958 (3,958) (3,958)
Derivative financial instruments (2,716) (527) (1,548) 517 1,508
Other financial liabilities (10,972) - - - -
Total increase/ (decrease) (1,726) (2,789) 1,712 2,743
INTEREST RATE RISK
-1% +1%
Carrying Profit Equity Profit Equity
amount
31 March 2011 $’000 $’000 $’000 $’000 $’000
Financial assets
Cash & cash equivalents 92,154 (648) (648) 648 648
Finance receivables 601,595 (4,211) (4,211) 4,211 4,211
Derivative financial instruments 1 - - - -
Other financial assets 3,726 - - - -
Financial liabilities
Finance borrowings (573,915) 4,010 4,010 (4,010) (4,010)
Derivative financial instruments (3,153) (778) (2,254) 763 2,807
Other financial liabilities (5,143) - - - -
Total increase/ (decrease) (1,627) (3,103) 1,612 3,656
NOTES TO THE FINANCIAL STATEMENTS P99
5. FINANCIAL RISK MANAGEMENT - FINANCE BUSINESS (CONTINUED)
The Finance business manages credit risk in a number of ways:
_ In consumer lending, robust credit processes are employed to originate new loans to customers. These processes
incorporate credit scorecards, credit checks, fraud detection software, business rules and review of customer
credit history to assess a customer’s credit worthiness. Wherever appropriate, a charge will be taken by way of
reservation of title over the asset financed, except for personal loans, where advances are generally unsecured.
The personal loans business ceased originating new loans in January 2006. Additionally where appropriate the
Finance business registers a Purchase Money Security Interest (PMSI) charge over each customer and all details
of the asset used as security on the Personal Property Securities Register.
_ In commercial lending, the integrity and financial standing of approved borrowers is relied upon. All equipment
finance and rental & leasing contracts are assessed in accordance with a range of credit criteria and the amount
of each advance. Criteria include credit checks, trade references and financial account analysis. These contracts
are secured over the goods financed and guarantees are requested from business proprietors in certain circum-
stances. Assets financed include machinery and plant & equipment but do not include residential or commercial
property. Additionally where appropriate the Finance business registers a PMSI charge over each customer and
all equipment used as security on the Personal Property Securities Register.
_ In bulk funding, security is a general security interest charging all present and after acquired personal property
and a specific security interest (first mortgage) over the Finance receivables sold to Smithcorp Finance Limited.
In addition, several factors are taken into account in determining the amount of money advanced, including
average yield and arrears levels. A general security reserve is also maintained to ensure a margin exists between
the amounts advanced and the value of the underlying Finance receivables.
_ Interest rate instruments have been entered into with trading banks. The Finance business’ exposure to credit
risk from these financial instruments is limited because it does not expect non-performance of the obligations
contained therein due to the credit rating of the financial institutions concerned. The Finance business does
not require collateral or other security to support these financial instruments.
(ii) Concentrations of Credit Exposure
As at 31 March 2012, the Finance business had advanced $74.5 million to Smithcorp Finance Limited, a bulk finance
merchant (2011 $75.4 million). Security is a general security interest charging all present and after acquired property
and a specific interest over finance receivables. These receivables, taken as individual finance receivable agreements,
are largely low value advances to retail customers.
Excluding Smithcorp Finance Limited, the Finance business had no exposure to retailers, commercial accounts or
individual receivable agreements that exceeded 10% of Finance business equity (2011 Nil).
Maximum exposure to credit risk before collateral held or other credit enhancements is shown in the table below:
The above table represents a maximum credit risk exposure at 31 March 2012, without taking into account any col-
lateral, other credit enhancements attached or the cancellation of undrawn lending commitments. For on-statement
of financial position assets, the exposures set out above are based on net carrying amounts as reported in the
31 March 31 March
2012 2011
$’000 $’000
Credit exposures relating to on-statement of financial position assets:
Cash & cash equivalents 87,074 92,154
Derivative financial instruments 52 1
Finance receivables 594,532 601,595
Other financial assets 3,373 3,726
Credit exposures relating to off-statement of financial position items:
Undrawn lending commitments* 1,819,864 1,775,323
2,504,895 2,472,799
*Undrawn lending commitments include unutilised Q Card, Farmers Finance Card and fixed instalment limits, which can be unconditionally cancelled at any time.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP100
Statement of Financial Position.
Further details on Finance receivables and impairment are disclosed in Note 12.
(iii) Geographic Concentrations of Finance Receivables
The table below details the geographic split of Finance receivables:
Upper North Island comprises the Auckland and Northland regions. Lower North Island comprises the Wellington
and Manawatu regions.
(c) Liquidity risk
Liquidity risk is the risk that the Finance business is unable to meet its payment obligations associated with its
financial liabilities when they fall due. It includes the risk that the Finance business may have insufficient liquid
funds or may not be able to raise sufficient funds at short notice to meet its payment obligations associated with
financial liabilities when they fall due. This situation can arise if there is a significant mismatch of its financial assets
and financial liabilities.
(i) Liquidity risk management process
The Finance business operates an Asset & Liability Committee that oversees all aspects of statement of financial
position risk. This Committee has a formal charter, which outlines its role and responsibilities. All treasury related
activity must comply with treasury risk management policies approved by the Finance business Board of Directors.
Liquidity risk is managed through:
_ day to day funding requirements and future cash flows are monitored to ensure requirements can be met. This
includes replenishment of funds as they mature or are borrowed by customers. The Finance business maintains
an active presence in local money markets to enable this to happen
_ regularly forecasting future cash flows to assess maturity mismatches between financial assets and financial
liabilities in advance
_ not relying on one funding source, but maintaining a diverse and stable funding base
_ maintaining strong bank relationships and committed bank credit balances
_ monitoring statement of financial position liquidity ratios against internal and external requirements
The Asset & Liability Committee also monitors the level and type of undrawn lending commitments against commit-
ted credit facilities to ensure there is sufficient capacity.
The table below analyses the Finance business’ financial assets and financial liabilities and net settled derivative
financial instruments into relevant maturity groupings based on the remaining period at the reporting date to the
contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows, except
for derivative financial instruments.
31 March 31 March
2012 2011
$’000 $’000
Upper North Island 208,904 212,691
Central North Island 138,832 138,386
Lower North Island 75,969 77,049
South Island 170,827 173,469
594,532 601,595
NOTES TO THE FINANCIAL STATEMENTS P101
5. FINANCIAL RISK MANAGEMENT - FINANCE BUSINESS (CONTINUED)
(d) Fair value estimation
The fair value of financial instruments that are not traded in an active market is determined using generally accepted
valuation techniques. The Finance business uses a variety of methods and makes assumptions that are based on
market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are
used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to
determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the
present value of the estimated future cash flows.
The fair value of financial liabilities and financial assets for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to the Finance business for similar financial
instruments. For short-term financial assets and liabilities, their carrying amount is a reasonable approximation of
their fair values.
Call 0 to 6 7 to 12 13 to 24 25 to 60 Over 60 Total
months months months months months
31 March 2012 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Financial assets
Cash & cash equivalents 87,074 - - - - - 87,074
Derivative financial instruments* - 8 25 60 17 - 110
Finance receivables - 223,979 148,718 171,624 201,225 40,920 786,466
Other financial assets - 2,830 15 30 545 - 3,420
87,074 226,817 148,758 171,714 201,787 40,920 877,070
Financial liabilities
Finance borrowings
Bank loans - 4,931 142,016 4,205 105,115 - 256,267
Debentures 5,478 47,894 41,440 20,706 3,043 - 118,561
Notes - 195,000 - - - - 195,000
Derivative financial instruments* - 1,145 728 644 174 - 2,691
Other financial liabilities - 10,972 - - - - 10,972
5,478 259,942 184,184 25,555 108,332 - 583,491
Call 0 to 6 7 to 12 13 to 24 25 to 60 Over 60 Total
months months months months months
31 March 2011 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Financial assets
Cash & cash equivalents 23,653 68,758 - - - - 92,411
Derivative financial instruments* - (1) - 1 - - -
Finance receivables - 225,663 151,043 174,366 205,551 53,344 809,967
Other financial assets - 2,537 1,030 - - - 3,567
23,653 296,957 152,073 174,367 205,551 53,344 905,945
Financial liabilities
Finance borrowings
Bank loans - 4,761 4,735 112,310 124,645 - 246,451
Debentures 8,288 74,478 41,012 19,516 4,630 - 147,924
Notes - 135,500 - - - - 135,500
Committed liquidity facilities - 1,840 73,728 - - - 75,568
Derivative financial instruments* - 1,491 1,242 708 (172) - 3,269
Other financial liabilities - 4,968 - - - - 4,968
8,288 223,038 120,717 132,534 129,103 - 613,680
* The amounts expected to be receivable/payable in relation to the derivative financial instruments have been estimated using forward interest rates applicable at the reporting date.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP102
Where present value techniques are used to value future cash flows deriving from interest rate derivative contracts, the Finance
business uses an MS Excel based valuation model licensed from a reputable third party vendor. Market data used for valuation
purposes (i.e. interest rate yield curves) are provided by independent third party data providers where possible. In addition,
month-end derivative portfolio valuations are obtained from all derivative counterparties for comparison with internal valuations.
Financial instruments which are measured in the Statement of Financial Position at fair value, require disclosure of fair value
measurements by level of the following fair value measurement hierarchy:
_ Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
_ Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is,
as prices) or indirectly (that is, derived from prices) (Level 2)
_ Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
The following table presents the Group’s assets and liabilities that are measured at fair value.
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. A mar-
ket is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group,
pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s
length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are
included in Level 1. Government stock has been included in Level 1.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is
available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are
observable, the instrument is included in Level 2.
Level 1 Level 2 Level 3 Total
balance
31 March 2012 $’000 $’000 $’000 $’000
Assets
Deposits - 16,950 - 16,950
Derivative financial instruments - cash flow hedges - 7 - 7
Derivative financial instruments - held for trading - 33 - 33
Derivative financial instruments - fair value hedges - 12 - 12
Government stock 556 - - 556
Total assets 556 17,002 - 17,558
Liabilities
Derivative financial instruments - cash flow hedges - 2,035 - 2,035
Derivative financial instruments - held for trading - 641 - 641
Derivative financial instruments - fair value hedges - 40 - 40
Total liabilities - 2,716 - 2,716
Level 1 Level 2 Level 3 Total
balance
31 March 2011 $’000 $’000 $’000 $’000
Assets
Deposits - 20,123 - 20,123
Derivative financial instruments - held for trading - 1 - 1
Government stock 1,044 - - 1,044
Total assets 1,044 20,124 - 21,168
Liabilities
Derivative financial instruments - cash flow hedges - 1,881 - 1,881
Derivative financial instruments - held for trading - 991 - 991
Derivative financial instruments - fair value hedges - 281 - 281
Total liabilities - 3,153 - 3,153
NOTES TO THE FINANCIAL STATEMENTS P103
5. FINANCIAL RISK MANAGEMENT - FINANCE BUSINESS (CONTINUED)
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
Specific valuation techniques used to value financial instruments include:
_ Quoted market prices or dealer quotes for similar instruments.
_ The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based
on observable yield curves.
_ Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining
financial instruments.
The following table presents the changes in Level 3 instruments.
As at 31 March 2012, all bulk finance receivables were measured at amortised cost.
Total loss for the year ended 31 March 2012 included in the Income Statement (included within Finance business
revenue) for assets held at 31 March 2012 was $nil (2011 $nil).
Bulk
finance
receivables
31 March 2012 $’000
Balance at the beginning of the year -
Gains & losses recognised in the Income Statement -
Interest & similar charges -
Repayments -
Balance at the end of the year -
Bulk
finance
receivables
31 March 2011 $’000
Balance at the beginning of the year 11,292
Gains & losses recognised in the Income Statement (17)
Interest & similar charges 148
Repayments (11,423)
Balance at the end of the year -
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP104
(e) Financial instruments by category
ASSETS AS PER STATEMENT OF FINANCIAL POSITION Fair value Fair value Loans and Derivatives Total
through through receivables used for
profit or profit or hedging
loss — loss — held
designated for trading
$’000 $’000 $’000 $’000 $’000
31 March 2012
Cash and cash equivalents 16,950 - 70,124 - 87,074
Derivative financial instruments - 33 - 19 52
Finance receivables - - 594,532 - 594,532
Other financial assets 556 - 2,816 - 3,372
17,506 33 667,472 19 685,030
31 March 2011
Cash and cash equivalents 20,123 - 72,031 - 92,154
Derivative financial instruments - - - 1 1
Finance receivables - - 601,595 - 601,595
Other financial assets 1,044 - 2,682 - 3,726
21,167 - 676,308 1 697,476
LIABILITIES AS PER STATEMENT OF FINANCIAL POSITION Fair value Derivatives Measured at Total
through used for amortised
profit or hedging cost
loss - held
for trading
$’000 $’000 $’000 $’000
31 March 2012
Borrowings - - 550,966 550,966
Derivative financial instruments 641 2,075 - 2,716
Other financial liabilities - - 10,972 10,972
641 2,075 561,938 564,654
31 March 2011
Borrowings - - 573,915 573,915
Derivative financial instruments 991 2,162 - 3,153
Other financial liabilities - - 5,143 5,143
991 2,162 579,058 582,211
NOTES TO THE FINANCIAL STATEMENTS P105
6 SEGMENT INFORMATION
Chief Operating Decision Maker
The ‘Chief Operating Decision Maker’ has been identified as the Board of Directors together with the Executives of
the Appliances and Finance businesses, who review the Group’s internal reporting in order to assess performance
and allocate resources. Management has determined the operating segments based on these reports.
Reportable segments
The Appliances business’ reportable segments are based primarily on the nature of activities undertaken (factory
operations and sales/customer service companies) and are then split by geographic location. Factory operations
include sites that manufacture goods for both the Group and external customers. Sales & service includes sales &
distribution operations and also customer service operations.
The Finance business is considered as one reportable segment.
Other segment information
Performance of operating segments is assessed based on a measure of earnings before interest and taxation (op-
erating profit or loss). This excludes interest costs associated with core funding and other overheads that are held
at Group level and cannot be allocated.
Intersegment revenue is recognised on the basis of arm’s length transactions and reflects returns required for taxa-
tion transfer pricing purposes where applicable.
Other information provided, except as noted below, is measured in a manner consistent with that in the financial
statements.
Significant one-off costs have been excluded from the segment disclosures to reflect underlying segment operating
performance.
Segment total assets exclude certain elements of deferred tax that are associated with adjustments held for consoli-
dation purposes, derivative financial instruments and non-current assets held for sale that are managed on a central
basis and fair value adjustments held on consolidation. These form part of the reconciliation to total assets in the
Statement of Financial Position.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP106
SEGMENT REVENUE & PROFIT ANALYSIS
31 MARCH 2012 31 MARCH 2011
Revenue Inter- Total Operating Revenue Inter- Total Operating
from segment segment profit from segment segment profit
external revenue revenue external revenue revenue
customers customers
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Factory operations
New Zealand 4,701 114,287 118,988 3,173 12,220 135,550 147,770 19,736
Australia - - - - 0 - - (1,629)
North America 28,855 83,546 112,401 (12,838) 33,071 105,614 138,685 (7,758)
Thailand - 224,219 224,219 36,738 0 225,338 225,338 43,173
Europe 97,044 34,625 131,669 8,833 106,283 44,687 150,970 4,484
130,600 456,677 587,277 35,906 151,574 511,189 662,763 58,006
Sales & customer service
New Zealand 162,295 7,343 169,638 13,655 162,825 7,801 170,626 8,462
Australia 412,143 2,121 414,264 49,622 423,263 3,145 426,408 40,086
North America 135,653 - 135,653 916 172,863 - 172,863 (9,802)
Europe 17,966 - 17,966 307 18,270 - 18,270 118
Rest of World 32,792 - 32,792 1,637 36,258 - 36,258 112
760,849 9,464 770,313 66,137 813,479 10,946 824,425 38,976
Unallocated overheads (65,150) (59,122)
Currency Fluctuations (25,611) (14,185)
One-off expenses* (3,935) (1,382)
One-off income* - 6,508
Appliances business 891,449 466,141 1,357,590 7,347 965,053 522,135 1,487,188 28,801
Finance business 139,719 - 139,719 31,040 145,289 - 145,289 34,722
Total 1,031,168 466,141 1,497,309 38,387 1,110,342 522,135 1,632,477 63,523
SEGMENT REVENUE RECONCILIATION TO THE INCOME STATEMENT
$’000 $’000
Total segment revenue 1,497,309 1,632,477
Inter-segment revenue elimination (466,141) (522,135)
Interest income 2,408 1,484
Other miscellaneous income 4,382 9,117
Total revenue & other income as per the Income Statement 1,037,958 1,120,943
* Refer Notes 8 & 14
NOTES TO THE FINANCIAL STATEMENTS P107
6 SEGMENT INFORMATION (CONTINUED)
SEGMENT TOTAL ASSETS
31 March 31 March
2012 2011
$’000 $’000
Factory operations
New Zealand 16,661 22,209
Australia - -
North America 111,913 127,344
Thailand 114,474 101,177
Europe 78,778 92,157
321,826 342,887
Sales & customer service
New Zealand 44,267 52,140
Australia 103,930 130,667
North America 35,464 45,433
Europe 7,638 8,072
Rest of World 7,623 8,835
198,922 245,147
Inter-segment eliminations (15,945) (16,799)
Unallocated assets 159,333 180,287
Appliances business 664,136 751,522
Finance business 806,042 826,420
Intersegment Eliminations (16,492) (19,528)
Total assets as per the Statement of Financial Position 1,453,686 1,558,414
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP108
OTHER SEGMENT DEPRECIATION AMORTISATION INTEREST INTEREST CAPITAL WORKING
DISCLOSURES EXPENSE* INCOME** EXPENDITURE CAPITAL
31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March
2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Factory operations
New Zealand 2,772 3,806 3 4 - 1 (9) (51)
Australia - - - - - - - -
North America 7,455 7,976 579 165 (365) 1,418 - -
Thailand 6,893 7,669 20 19 1,683 1,614 (2) (2)
Europe 2,223 2,102 4,277 4,556 554 964 (33) (46)
19,343 21,553 4,879 4,744 1,872 3,996 (44) (99)
Sales & customer service
New Zealand 320 73 94 93 - - - -
Australia 1,038 766 10 35 - - (398) (366)
North America 811 843 9 9 - - - -
Europe 81 116 - - - - (2) (2)
Rest of World 31 117 - - - 17 - -
2,281 1,915 113 137 - 17 (400) (368)
Unallocated 360 283 4,691 3,918 8,985 11,389 (335) (15)
Appliances business 21,984 23,751 9,683 8,799 10,857 15,403 (779) (482) 48,313 24,263 163,668 224,084
Finance business 493 483 8,466 7,860 - - (1,629) (1,002) 2,163 4,078 - -
Total 22,477 24,234 18,149 16,659 10,857 15,403 (2,408) (1,484) 50,476 28,341 163,668 224,084
Refer also Note 8* Excludes Finance business operating interest** Excludes interest on Finance business receivables, which forms part of revenue from external customers
NOTES TO THE FINANCIAL STATEMENTS P109
7. REVENUE & OTHER INCOME
(a) Sales revenue
Revenue figures reported above are disclosed by location of customer and therefore do not agree directly to Seg-
ment disclosures at Note 6, where revenue is reported by country or region of operation.
(b) Net gains on disposal of property, plant & equipment
Net gains on disposal of property, plant & equipment for the period ending 31 March 2011 included a gain on sale
of land & buildings of $6.5 million.
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Appliances business sales of goods revenue
New Zealand 159,829 162,429 - -
Australia 410,493 419,035 - -
North America 165,766 207,883 - -
Europe 64,304 81,330 - -
Rest of World 74,393 69,505 - -
Appliances business other sales of goods revenue 4,701 12,217
Appliances business sales of services revenue 11,963 12,654 - -
Finance business revenue 139,719 145,289 - -
Total operating revenue 1,031,168 1,110,342 - -
Other income
Interest 2,408 1,484 - 1
Net gains on disposal of property, plant & equipment - 6,300 - -
Appliances business fee income 1,412 1,250 - -
Appliances business miscellaneous income 2,665 2,341 - -
Finance business fair valuation adjustments 305 (774) - -
Total other income 6,790 10,601 - 1
Total revenue & other income 1,037,958 1,120,943 - 1
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP110
8. EXPENSES
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Net gains and expenses
Profit before income tax includes the following specific expenses:
Appliances business
Cost of goods sold (“COGS”) 613,017 673,118 - -
Onerous contracts 2,694 882 - -
Fair valuation of non-current assets held for sale (refer note (i)) 1,241 500 - -
Net foreign exchange losses 25,611 14,185 - -
Other administration expenses 133,729 134,834 - -
Administration expenses 163,275 150,401 - -
Selling, marketing & distribution expenses 112,666 123,106 - -
Total operating expenses 888,958 946,625 - -
The above expenses include:
Movement of inventory within COGS 531,905 573,312 - -
Employee benefits 187,512 189,718 - -
Depreciation 21,984 23,751 - -
Amortisation 9,683 8,799 - -
Rental expense relating to operating leases 22,946 25,383 - -
Defined contribution superannuation expense 12,874 12,500 - -
Research & development 17,153 15,668 - -
Donations 16 352 - -
Appliance business finance costs
External interest expense 10,857 15,403 - -
Finance costs expensed 10,857 15,403 - -
NOTES TO THE FINANCIAL STATEMENTS P111
8. EXPENSES (CONTINUED)
(i) Asset Impairments
In the year ended 31 March 2012 on fair valuing the remaining East Tamaki, Auckland land & buildings held for sale,
an impairment of $1.2 million (2011 $0.5 million) was recognised - refer also Note 14.
(ii) Christchurch earthquake adjustment
In the year ended 31 March 2011, the impairment charge for credit losses includes a provision overlay of $2.0 million
in relation to the Christchurch earthquake that occurred in February 2011. This provision overlay was fully released
in the current year.
(iii) Litigation costs
Previously a contingency has been reported for litigation which alleged that software developed by Fisher & Paykel
Financial Services Limited (FPFS) breaches intellectual property rights of a USA software company. No specific provi-
sion was previously made for this, as the known basis of claim was considered to have little or no prospect of success.
The case was heard in the High Court at Auckland, New Zealand in late 2011 and a judgement on the issue is ex-
pected this year.
At trial, the USA software company modified its previous stance that FPFS copied software and instead focussed on
its alleged intellectual property rights in the logic that underpins certain software functionality.
While the Directors believe on the information available to them that the claim is novel and lacks commercial merit,
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Finance business
Receivables written off during the year 18,762 19,545 - -
Recovery of amounts previously written off (1,670) (1,509) - -
Movement in allowance for impairment (5,980) 1,312 - -
Impairment charge for credit losses (refer sub-note (ii)) 11,112 19,348 - -
Interest expense & similar charges 40,818 41,360 - -
Litigation costs (refer sub-note (iii)) 6,774 - - -
Other Finance business expenses before unearned premium movements 53,599 47,548 - -
Movement in unearned insurance & warranty premiums (1,690) 2,539 - -
Other Finance business expenses 51,909 50,087 - -
Total operating expenses 110,613 110,795 - -
Other Finance business expenses include:
Employee benefits 17,725 15,585 - -
Depreciation 493 483 - -
Amortisation 8,466 7,860 - -
Marketing & promotion 7,396 5,529 - -
Insurance and warranty commissions & claims 3,648 3,392 - -
Rental expense relating to operating leases 1,471 1,988 - -
Defined contribution superannuation expense 718 686 - -
Donations 3 - - -
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP112
there are complex legal issues and a range of possible outcomes. Accordingly, the Directors consider it is now pru-
dent to make a provision given this uncertainty.
This amount, together with legal costs incurred by FPFS through to 31 March 2012, has been reported as Litigation
Costs in the Income Statement. The amount of the provision recorded by FPFS has not been disclosed separately
as this may prejudice FPFS’s position in this matter.
Auditors’ fees
During the year the following fees were paid or payable for services provided by the Auditor of the Company and
the Group, its related practices and non-related audit firms:
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
(a) Assurance services
Audit services
PricewaterhouseCoopers
Statutory audit - current year 1,137 1,181 - -
Statutory audit - prior year - - - -
Compliance audits - Appliances Thailand 35 31 - -
Share register audit 2 2 - -
Fisher & Paykel Finance Limited Debenture Prospectus audit 10 10 - -
Farmers Finance securitisation compliance audit 33 30 - -
Other audit firm
Statutory audit - current year 24 23 - -
Total remuneration for audit services 1,241 1,277 - -
Other assurance services
PricewaterhouseCoopers
Review of Group Interim Financial Statements 84 106 - -
Accounting advice 35 28 - -
Tax compliance services 97 65 - -
Other assurance services 254 61 - -
Total remuneration for other assurance services 470 260 - -
Total remuneration for assurance services 1,711 1,537 - -
(b) Other services
PricewaterhouseCoopers
Statutory reporting software 25 28 - -
Total remuneration for advisory services 25 28 - -
Total remuneration 1,736 1,565 - -
NOTES TO THE FINANCIAL STATEMENTS P113
9. INCOME TAX EXPENSE
Tax legislation passed in 2010 reduced the New Zealand company tax rate from 30% to 28%, effective
1 April 2011.
The weighted average applicable effective tax rate was 33.1% (2011 30.3%).
The Group has estimated New Zealand tax losses available to carry forward of $21.7 million (2011 $15.9
million), subject to shareholder continuity being maintained as required by New Zealand tax legislation.
In addition, the Group has unrecognized New Zealand tax losses of $0.6 million.
The Group has estimated North American tax losses available to carry forward of $14.6 million (2011
$14.8 million) and tax credits of $2.8 million. These are subject shareholder continuity being maintained
as required by US tax legislation. In addition, the Group has unrecognized US tax losses and credits
totalling $24.0 million.
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
(a) Income tax expense
Current tax 14,068 23,259 - 66
Deferred tax (4,969) (8,684) 82 (101)
9,099 14,575 82 (35)
Deferred income tax (credit)/expense included in income tax expense comprises:
Decrease/(increase) in deferred tax assets (Note 18) (3,707) (8,313) 82 (101)
(Decrease)/increase in deferred tax liabilities (Note 24) (1,262) (371) - -
(4,969) (8,684) 82 (101)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit from continuing operations before income tax expense 27,530 48,120 136 112
Tax at the New Zealand tax rate of 28% (2011: 30%) 7,708 14,436 38 34
Tax effect of a change in New Zealand tax rate to 28% - 1,116 - 16
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Other non-assessable income (490) (2,541) - -
Forfeited NRWT 298 823 - -
Unrealised losses on New Zealand FC1 debenture 391 182 - -
Net (Recognition) / Derecognition of deferred tax (524) (1,680) - -
Credits provided to/from Group companies - - 44 (151)
Other non-deductible amounts 1,442 3,144 - -
8,825 15,480 82 (101)
Difference in overseas tax rates (62) (126) - -
Under/(over) provision in prior years 336 (779) - 66
274 (905) - 66
Income tax expense 9,099 14,575 82 (35)
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP114
10. CASH & CASH EQUIVALENTS
(a) Reconciliation to cash at the end of the year
The above figures are reconciled to cash at the end of the financial year as shown in the Cash Flow Statement as follows:
(b) Cash at bank and on hand
This consists of both interest and non-interest bearing balances denominated in various currencies. The weighted
average interest rate as at 31 March 2012 was 2.0% (2011 1.8%).
(c) Deposits
These are Finance business call and term deposits. The call deposits bear a weighted average interest rate of 2.5%
(2011 2.5%). There were no fixed term deposits during the year to 31 March 2012 (2011 weighted average interest
rate ranged from 3.3% to 4.3%). During the year to 31 March 2011 the average maturity period was 39 days.
(d) Fair value
The carrying amount for cash & cash equivalents equals the fair value.
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Cash at bank and on hand 35,497 40,654 1 1
Deposits 73,850 72,875 - -
109,347 113,529 1 1
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Balance as above 109,347 113,529 1 1
NOTES TO THE FINANCIAL STATEMENTS P115
11. TRADE RECEIVABLES & OTHER CURRENT ASSETS
(a) Impaired receivables
As at 31 March 2012 current trade receivables of the Group with a nominal value of $0.6 million (2011 $1.1 million),
which relate to a number of customers, were fully impaired and provisioned. There were no impaired trade receiv-
ables in the Parent in 2012 or 2011.
The ageing of these impaired receivables is as follows:
As of 31 March 2012, trade receivables of $3.0 million (2011 $5.1 million) were past due but not impaired. These
relate to a number of customers who pay outside terms (but consistent with custom & practice for their sector) and
for whom there is no recent history of default. The ageing analysis of these past due but not impaired receivables
is as follows:
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Net trade receivables
Trade receivables 109,079 129,222 - -
Allowance account for impairment of trade receivables (623) (1,105) - -
108,456 128,117 - -
Other debtors & prepayments 17,196 22,511 21 27
125,652 150,628 21 27
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
0 to 60 days 67 390 - -
61 to 120 days 72 66 - -
Over 120 days 484 649 - -
623 1,105 - -
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
0 to 60 days 3,544 3,638 - -
61 to 120 days (156) 888 - -
Over 120 days (423) 584 - -
2,965 5,110 - -
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP116
Movements in the provision for impairment of receivables are as follows:
The creation and release of the provision for impaired receivables has been included in Administration expenses in
the Income Statement. Trade Receivables are provisioned when there is no expectation of collection.
The other classes within trade and other current assets do not contain impaired assets and are not past due. Based
on the credit history of these other classes, it is expected that these amounts will be received when due.
(b) Bad and doubtful trade receivables
The Group has recognised a net gain of $203,000 in respect of bad and doubtful trade receivables during the year
ended 31 March 2012 (2011 net loss $373,000). This gain / expense has been included in Administration expenses.
(c) Other debtors & prepayments
These amounts generally arise from transactions outside the usual operating activities of the Group.
Other debtors & prepayments as at 31 March 2011 included $2.0 million deferred sale proceeds from the sale of
land & buildings in East Tamaki, Auckland. These proceeds were received on 19 December 2011, refer also Note 14.
(d) Foreign exchange and interest rate risk
A summarised analysis of the sensitivity of trade and other receivables to foreign exchange and interest rate risk
can be found in Note 4.
(e) Fair value and credit risk
Due to the short term nature of these trade receivables, carrying value is assumed to approximate their fair value.
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Carrying amount at the start of the year 1,105 1,568 - -
Exchange rate variance on opening balance (126) (46) - -
Additional provision recognised 263 749 - -
Utilised during the year (619) (1,166) - -
623 1,105 - -
NOTES TO THE FINANCIAL STATEMENTS P117
12. FINANCE RECEIVABLES
The Finance business recognised an impairment charge for credit losses of $11.1 million in respect of impaired
receivables for the year ended 31 March 2012 (2011 $19.3 million). Refer to Note 8.
(a) Finance business leases
Included within finance receivables are finance leases which the Finance business provides to customers for purchase
of office and other equipment.
31 March 31 March
2012 2011
$’000 $’000
Current
Finance receivables 376,083 391,475
Provision for unearned interest (3,889) (5,186)
Allowance for impairment (12,532) (16,413)
Total current Finance receivables 359,662 369,876
Non-current
Finance receivables 245,593 245,250
Provision for unearned interest (2,540) (3,249)
Allowance for impairment (8,183) (10,282)
Total non-current Finance receivables 234,870 231,719
Total Finance receivables 594,532 601,595
31 March 31 March
2012 2011
$’000 $’000
Finance lease receivables
Gross receivables from finance leases:
Not later than 1 year 20,435 21,624
Later than 1 year and not later than 5 years 20,544 21,626
Later than 5 years 13 83
40,992 43,333
Unearned finance income (2,160) (2,511)
Allowance for uncollectible minimum lease payments receivable (1,143) (1,914)
(3,303) (4,425)
Net investment in finance leases 37,689 38,908
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP118
The net investment in finance leases is analysed as follows
(b) Impaired receivables
Net Finance receivables are summarised as follows:
The past due but not impaired category includes those Finance receivables for which the customer has failed to make
a payment when contractually due and for which the receivable has not been individually assessed for impairment.
The gross figures disclosed include the customers’ entire balance rather than the overdue portion.
The carrying amount of Finance receivables that would otherwise be past due whose terms have been renegotiated
at 31 March 2012 was $46.6 million (2011 $44.5 million). These receivables are included in the neither past due nor
impaired category and are considered by Management to be fully performing.
The table below shows a reconciliation of the movement in gross Finance receivables (after provision for unearned
interest) that are individually determined to be impaired.
31 March 31 March
2012 2011
$’000 $’000
Not later than 1 year 18,540 19,151
Later than 1 year and not later than 5 years 19,137 19,689
Later than 5 years 12 68
37,689 38,908
31 March 31 March
2012 2011
$’000 $’000
Neither past due nor impaired 559,287 562,002
Past due but not impaired 26,376 32,252
Impaired - individually assessed 29,584 34,036
Gross 615,247 628,290
Less:
Allowance for impairment - collectively assessed 2,928 5,690
Allowance for impairment - individually assessed 17,787 21,005
Net Finance receivables 594,532 601,595
31 March 31 March
2012 2011
$’000 $’000
Balance at 1 April 34,036 37,009
Net additions to class 12,187 14,300
Receivables written off during the year (16,639) (17,273)
Balance at 31 March 29,584 34,036
NOTES TO THE FINANCIAL STATEMENTS P119
12. FINANCE RECEIVABLES (CONTINUED)
The ageing of other gross Finance receivables past due but not impaired is as follows:
Collateral held for Finance receivables individually determined to be impaired and Finance receivables past due but
not impaired is as follows:
_ Q Card advances are generally secured by way of reservation of title over the asset financed. Personal Loans
are generally unsecured
_ Farmers credit card receivables are unsecured. Farmers fixed instalment receivables are generally secured over
the goods financed
_ It is impracticable to estimate the fair value of collateral held because of the average size of each advance
outstanding, the number of advances outstanding, the term to maturity of each advance and the wide
variety and condition of each asset financed. The Finance business will, in the first instance, attempt to
collect the outstanding debt without recourse to the secured asset. In many instances third party collec-
tion agencies are utilised. Repossession of secured assets occurs only in limited circumstances and where
it is economic to do so. The carrying amount of these collateralised assets at balance date was immaterial
Movements in the “allowance for impairment - collectively assessed” is as follows:
Movements in the “allowance for impairment - individually assessed” is as follows:
The creation and release of the allowances for impaired Finance receivables has been included in the ‘Impairment
charge for credit losses’ in Note 8. Amounts charged to the allowance account are generally written off when there
is no expectation of recovering additional cash.
31 March 31 March
2012 2011
$’000 $’000
Up to 30 days 17,819 22,324
31-60 days 6,197 7,312
61-90 days 2,285 2,546
Over 90 days 75 70
26,376 32,252
31 March 31 March
2012 2011
$’000 $’000
Balance at 1 April 5,690 3,288
Movement in allowance for impairment during the year (2,762) 2,402
Balance at 31 March 2,928 5,690
31 March 31 March
2012 2011
$’000 $’000
Balance at 1 April 21,005 22,095
Movement in allowance for impairment during the year (3,218) (1,090)
Balance as at 31 March 17,787 21,005
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP120
(c) Fair values
The fair values and carrying values of Finance receivables are as follows:
The fair values of Finance receivables other than bulk finance receivables are based on cash flows discounted using
current lending rates ranging between 13.7% to 14.8% (2011 15.4% to 15.7%).
The fair value of Finance lease receivables are based on cash flows discounted using a current lending rate of 13.3%
(2011 14.8%).
The fair values of bulk Finance receivables are based on cash flows discounted using current lending rates ranging
between 2.7% to 2.9% (2011 2.5% to 2.9%).
The fair value of other Finance receivables equals their carrying amount as the effect of discounting was immaterial.
(d) Interest rate risk
For an analysis of the sensitivity of Finance receivables to interest rate risk, refer to Note 5.
(e) Credit risk
Refer to Note 5 for more information on credit risk from Finance receivables including objectives, policies and pro-
cesses for managing credit risk.
31 MARCH 31 MARCH
2012 2011
Carrying Fair value Carrying Fair value
amount amount value
$’000 $’000 $’000 $’000
Finance receivables 594,532 594,409 601,595 598,640
NOTES TO THE FINANCIAL STATEMENTS P121
13. INVENTORIES
Inventory expense
Raw materials, consumables and changes in finished goods and work-in-progress recognised as cost of goods sold
in the year ending 31 March 2012 was $531.9 million (2011 $573.3 million).
Write-downs of inventories to net realisable value recognised as an expense during the year ended 31 March 2012
amounted to $1.4 million (2011 $2.1 million). This expense is included in cost of goods sold in the Income Statement.
The carrying value of inventories carried at fair value less costs to sell as at 31 March 2012 was $9.5 million (2011
$11.3 million).
14. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE
Surplus land & buildings at East Tamaki, New Zealand are currently for sale under 3 separate titles. These have been
recorded at the lower of cost or fair value less anticipated costs to sell. There is currently a signed conditional agreement
on one of the properties. If all conditions are met then the property sale will settle on or before 30 September 2012.
An impairment charge of $1.2 million (2011 $0.5 million) was recognised in the year ended 31 March 2012 relating
to fair value adjustments for the land & buildings at the East Tamaki site. These assets are classified as unallocated
assets in the Segment Note — refer Note 6.
In March 2011, subdivided land & buildings at the East Tamaki site were sold for $2.25 million and the final instalment
of sale proceeds amounting to $2 million was received on 19th December 2011.
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Raw materials 43,678 54,355 - -
Spare parts 12,953 15,909 - -
Work-in-progress 12,407 13,605 - -
Finished goods 82,734 111,239 - -
151,772 195,108 - -
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Land 7,757 9,501 - -
Buildings 6,086 5,520 - -
13,843 15,021 - -
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP122
15. DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial assets and liabilities are classified as current or non-current according to the underlying hedge rela-
tionship. Where an effective hedged item has a remaining maturity of more than 12 months it is classified as non-current.
(a) Instruments used by the Group
The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure
to fluctuations in interest and foreign exchange rates in accordance with the Group’s financial risk management
policies(Refer Notes 4 & 5).
(i) Forward foreign exchange contracts
The Appliances business hedges net receipts of US dollars from related parties for products manufactured in Thailand.
The Appliances business hedges net payments in US dollars for imported raw materials and appliances from third
parties and finished products manufactured in Thailand and Mexico into New Zealand, Australia, Canada, Singapore
and the United Kingdom.
These contracts are hedging highly probable forecasted purchases and receipts for up to 12 months (24 months by
exception) and the contracts are timed to mature when payments are scheduled to be made or when sales have
been recognised.
The Appliances business also hedges significant capital expenditure transactions with a policy de minimis of NZ$500,000.
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised
directly in equity. When the cash flows occur, the Appliances business adjusts the initial measurement of the com-
ponent recognised in the Statement of Financial Position by the related amount deferred in equity.
During the year ended 31 March 2012 a loss of $19.4 million (2011 loss of $11.6 million) was reclassified from equity
and included in gross margin. There was no hedge ineffectiveness in the current or prior year.
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Current assets
Forward foreign exchange contracts ((a)(i)) 2,361 2,654 - -
Interest rate swaps ((a)(ii)) 4 - - -
Total current derivative financial instrument assets 2,365 2,654 - -
Non-current assets
Forward foreign exchange contracts ((a)(i)) - 3 - -
Interest rate swaps ((a)(ii)) 151 1 - -
Total non-current derivative financial instrument assets 151 4 - -
Total derivative financial instrument assets 2,516 2,658 - -
Current liabilities
Forward foreign exchange contracts ((a)(i)) 1,736 20,029 - -
Interest rate swaps ((a)(ii)) 1,145 971 - -
Total current derivative financial instrument liabilities 2,881 21,000 - -
Non-current liabilities
Forward foreign exchange contracts ((a)(i)) - 183 - -
Interest rate swaps ((a)(ii)) 2,782 5,518 - -
Total non-current derivative financial instrument liabilities 2,782 5,701 - -
Total derivative financial instrument liabilities 5,663 26,701 - -
Total derivative financial instruments (3,147) (24,043) - -
NOTES TO THE FINANCIAL STATEMENTS P123
15. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
(ii) Interest rate derivatives
Appliances business
The Appliances business has loans totalling €6million and THB800million that form part of the core borrowings rather
than operational floats. The Group Treasury Policy states between 30 and 70 percent of these loans should be fixed
via interest rate derivatives to protect the Group from exposure to fluctuations in interest rates. Accordingly, the
Group has entered into interest rate swap and cap contracts under which it is obliged to receive interest at variable
rates and to pay interest at fixed rates.
The interest rate contracts in place at the time of the debt restructuring in March 2009 were deemed to be ineffec-
tive and are fair valued through profit or loss. Interest rate contracts entered into subsequent to the restructuring
are deemed effective and fair valued through the cash flow hedge reserve.
The Appliances business has interest rate swaps with a notional value of USD 24million; there is no USD loan out-
standing as at 31 March 2012. There are swaps and caps currently in place to cover approximately 208% (2011 78%)
of the Euro loan principal amount. The swap cover on the US dollar and Euro loans are outside policy limits (with
Board consent), due to the reduction of foreign currency denominated loans as total debt levels have fallen.
There is an interest rate swap with a notional value of NZD $5 million that hedges NZD floating rate risk. The remain-
ing floating rate risk is offset by a floating rate receivable from the Finance business. There are Caps in place to
cover approximately 35% of the Thai Baht loan principal outstanding (2011 44% coverage with interest rate swaps).
The fixed interest rates average 4.25% for the Euro loan (2011 4.25%) and 3.52% for NZD loan. On the THB debt
Caps have been bought that protect at an average rate of 4.75%. The variable rates are set at the LIBOR 90 day
settlement rates for the Euro loans and NZD BBR Bid for NZD, and THBFIX 180 day for THB, at balance date were
0.89% (2011 1.18%) for the Euro and 2.80% (2011 2.70%) for the NZD. For the THB the rate of 3.08% was under the
Cap rate (2011 1.88%).
The contracts require settlement of net interest receivable or payable each 90/180 days as appropriate. The contracts
are settled on a net basis.
Finance business
The Finance business only applies fair value hedge accounting for hedging fixed interest on its bulk Finance receiv-
ables and uses fair value hedges to protect against movements in the fair value of its fixed rate receivables due to
movements in market interest rates. Changes in the fair value of derivative financial instruments that are designated
and qualify as fair value hedges are recorded in the statement of comprehensive income (within “Finance business
fair value adjustments” in Other Income - refer Note 7), together with any changes in the fair value of the hedged
item that are attributable to the hedged risk.
The Finance business has designated certain interest rate swaps as hedging instruments against loans and advances
made to Smithcorp Finance Limited (bulk Finance receivables). The notional principal outstanding at 31 March 2012
for these interest rate swaps was $73.3 million (2011 $74.0 million).
The fair value movement on the hedging instrument (interest rate swaps) for the year ended 31 March 2012 was
a gain of $242,000 (2011 loss of $201,000). The fair value movement on the hedged item (attributable risk of bulk
Finance receivables) for the year ended 31 March 2012 was a loss of $242,000 (2011 gain of 201,000).
The Finance business only applies cash flow hedge accounting for hedging the variability in cash flows arising from
the rollover of its bank loans and uses cash flow hedges to protect against variability in future cash flows due to
movements in market interest rates. Changes in the fair value of derivative financial instruments that are designated
and qualify as cash flow hedges are recorded in equity (Interest rate hedge reserve).
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP124
The Finance business has designated a portion of certain interest rate swaps as hedging instruments against the vari-
ability in the cash outflows arising on the rollover of bank loans after 1 April 2010. The notional principal outstanding
at 31 March 2012 for these interest rate swaps was $117 million (2011 $99 million).
The fair value movement on the hedging instrument for the year ended 31 March 2012 recognised in equity was a
loss of $70,000 (2011 $1.26 million). For the year ended 31 March 2012 there was no ineffectiveness recognised in
the Income Statement arising from these cash flow hedges.
The Finance business uses interest rate swaps to economically hedge a portion of its asset/liability gap. The no-
tional principal outstanding at 31 March 2012 for these interest rate swaps was $102.0 million (2011 $104.0 million).
Refer also to ‘Financial risk management - Finance business’ Note 5(d) & (e) for further details on Finance business
derivatives.
(b) Credit risk exposures
Credit risk arises from the potential failure of counterparties to meet their obligations under the respective contracts
at maturity. At balance date $2.4 million is receivable (New Zealand dollar equivalents) for the Appliances business
from forward foreign exchange contracts (2011 $2.7 million).
The Appliances business undertakes 100% of its transactions in foreign exchange, interest rate and commodity price
contracts with financial institutions. Management spreads this risk across several counterparties, all of which are
required to hold a minimum Standard & Poor’s long-term credit rating of “BBB+”. Credit risk control limits are then
applied to Board approved counterparties dependent on the rating.
The Finance business enters into interest rate derivatives with Board approved financial institutions. All approved
counterparties have a minimum Standard & Poor’s long-term credit rating of “AA-” and the Finance business does
not require collateral or other security to support these financial instruments. At balance date $52,000 (2011 $1,000)
is receivable in respect of these financial instruments.
(c) Interest rate risk exposures
For an analysis of the sensitivity of derivatives to interest rate risk refer to Notes 4 and 5.
NOTES TO THE FINANCIAL STATEMENTS P125
16. PROPERTY, PLANT & EQUIPMENT
Freehold Freehold Leasehold Plant & Fixtures Motor Capital Total
land buildings improve- equipment & fittings vehicles Work-in-
ments Progress
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
1 April 2010
Cost 19,215 61,387 6,317 529,132 11,131 1,984 4,743 633,909
Accumulated depreciation & impairment - (4,650) (3,934) (398,065) (6,960) (1,926) - (415,535)
Net book amount 19,215 56,737 2,383 131,067 4,171 58 4,743 218,374
Year ended 31 March 2011
Opening net book amount 19,215 56,737 2,383 131,067 4,171 58 4,743 218,374
Additions - 42 1,660 13,011 633 72 3,906 19,324
Disposals - - (19) (5,185) (102) (1) -- (5,307)
Reclassification* - (2,738) - 2,738 - - - -
Depreciation charge - (997) (933) (21,305) (952) (47) - (24,234)
Exchange differences (343) (1,174) (56) (4,241) 56 (1) (243) (6,002)
Closing net book amount 18,872 51,870 3,035 116,085 3,806 81 8,406 202,155
31 March 2011
Cost 18,872 57,490 7,437 511,501 11,552 1,953 8,406 617,211
Accumulated depreciation & impairment - (5,620) (4,402) (395,416) (7,746) (1,872) - (415,056)
Net book amount 18,872 51,870 3,035 116,085 3,806 81 8,406 202,155
* Assets incorrectly classified as “Buildings” in prior periods were reclassified in the current period to “Plant & equipment”. Depreciation rates were unaffected and remain valid for these assets, which are infrastructure related items located in Thailand.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP126
(a) Leased assets
Plant & equipment includes the following amounts where the Group is a lessee under a finance lease:
(b) Impairment charges
Total impairment charges for property, plant & equipment in the year ended 31 March 2012 were $nil (2011 $nil).
Refer also Note 17 for details of impairment charges relating to associated intangible assets.
Freehold Freehold Leasehold Plant & Fixtures Motor Capital Total
land buildings improve- equipment & fittings vehicles Work-in-
ments Progress
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Year ended 31 March 2012
Opening net book amount 18,872 51,870 3,035 116,085 3,806 81 8,406 202,155
Additions - 75 145 25,514 462 15 13,618 39,829
Disposals - (2) - (129) (13) - - (144)
Depreciation charge - (1,049) (704) (19,739) (959) (26) - (22,477)
Exchange differences (2,164) (5,732) (123) (10,217) (258) (6) (342) (18,842)
Closing net book amount 16,708 45,162 2,353 111,514 3,038 64 21,682 200,521
31 March 2012
Cost 16,708 51,123 7,164 505,773 10,737 1,832 21,682 615,019
Accumulated depreciation & impairment - (5,961) (4,811) (394,259) (7,699) (1,768) - (414,498)
Net book amount 16,708 45,162 2,353 111,514 3,038 64 21,682 200,521
31 March 31 March
2012 2011
$’000 $’000
Cost - 131
Accumulated depreciation - (54)
Net book amount - 77
NOTES TO THE FINANCIAL STATEMENTS P127
17. INTANGIBLE ASSETS
Develop- Goodwill Patents & Computer Brands Licences Customer Total
ment trademarks software Relation-
costs ships
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
1 April 2010
Cost 23,820 117,422 6,579 34,844 22,101 147,430 35,853 388,049
Accumulated amortisation & impairment (13,589) (56,438) (3,457) (24,183) - (58,407) (13,744) (169,818)
Net book amount 10,231 60,984 3,122 10,661 22,101 89,023 22,109 218,231
Year ended 31 March 2011
Opening net book amount 10,231 60,984 3,122 10,661 22,101 89,023 22,109 218,231
Additions 7,588 - 497 4,618 - 4 - 12,707
Subsidiary sold - - (157) - - - - (157)
Amortisation charge (3,228) - (614) (2,836) - (6,555) (3,426) (16,659)
Impairment charge - - - - - - - -
Exchange differences (476) (765) 36 (228) (1,241) (89) (411) (3,174)
Closing net book amount 14,115 60,219 2,884 12,215 20,860 82,383 18,272 210,948
31 March 2011
Cost 32,609 115,890 6,104 39,899 20,860 147,091 35,366 397,819
Accumulated amortisation & impairment (18,494) (55,671) (3,220) (27,684) - (64,708) (17,094) (186,871)
Net book amount 14,115 60,219 2,884 12,215 20,860 82,383 18,272 210,948
Develop- Goodwill Patents & Computer Brands Licences Customer Total
ment trademarks software Relation-
costs ships
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Year ended 31 March 2012
Opening net book amount 14,115 60,219 2,884 12,215 20,860 82,383 18,272 210,948
Additions 9,019 - 327 2,347 - - - 11,693
Disposals - - (10) (220) - - - (230)
Amortisation charge (4,531) - (426) (3,408) - (6,540) (3,244) (18,149)
Exchange differences (530) (2,462) (37) 11 (1,734) (665) (2,136) (7,553)
Closing net book amount 18,073 57,757 2,738 10,945 19,126 75,178 12,892 196,709
31 March 2012
Cost 40,326 106,461 6,165 41,131 19,126 143,978 30,940 388,127
Accumulated amortisation & impairment (22,253) (48,704) (3,427) (30,186) - (68,800) (18,048) (191,418)
Net book amount 18,073 57,757 2,738 10,945 19,126 75,178 12,892 196,709
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP128
(a) Goodwill
(i) Impairment tests for goodwill
Goodwill is allocated to the Group’s cash-generating units (CGUs) according to the operations expected to benefit
from the synergies of the business combination.
A summary of the goodwill allocation is shown below:
(ii) Key assumptions used for value in use calculations
The recoverable amount of a CGU is determined based on value in use calculations. These calculations use cash flow
projections based on financial budgets prepared by management and approved by the Board covering a five year
period. Cashflow projections are derived using past experience, expectations for the future and external sources of
financial and economic data where appropriate.
In arriving at the projected cashflows, management has made assumptions about sales revenue growth, key raw
material prices and foreign currency average exchange rates based on industry and economic indicators.
The following EBITDA (operating earnings before interest, taxation, depreciation & amortisation) growth rates
(Finance business uses NPBT or net profit before taxation) have been applied by management in the budgeted
cashflow projections:
_ EBITDA growth rate applied to sales & customer services goodwill: Nil
_ EBITDA growth rate applied to North America factory operations goodwill: between 11 - 27% (3 years based on
Management 5 year forecast including new products and refreshed United Range, 2% growth applied thereafter)
_ NPBT growth rate applied to Consumer Finance goodwill: 9.5% (on average; ranges from 4.8% 12.6%)
The terminal growth rates used to extrapolate cash flows beyond the budget period were:
_ North American factory operations goodwill: 2.0%
_ Sales & customer services goodwill: 2.0%
_ Consumer Finance goodwill: 2.1%
Sales & Factory Consumer Other Total
customer operations finance
services
2012 $’000 $’000 $’000 $’000 $’000
Appliances New Zealand 7,427 - - - 7,427
Appliances North America 2,478 7,765 - - 10,243
Appliances Australia 3,645 - - - 3,645
Appliances Rest of World 2,718 - - - 2,718
Finance business - - 32,118 1,606 33,724
16,268 7,765 32,118 1,606 57,757
Sales & Factory Consumer Other Total
customer operations finance
services
2011 $’000 $’000 $’000 $’000 $’000
Appliances New Zealand 7,921 - - - 7,921
Appliances North America 2,833 8,467 - - 11,300
Appliances Australia 4,167 - - - 4,167
Appliances Rest of World 3,107 - - - 3,107
Finance business - - 32,118 1,606 33,724
18,028 8,467 32,118 1,606 60,219
NOTES TO THE FINANCIAL STATEMENTS P129
17. INTANGIBLE ASSETS (CONTINUED)
The following pre-tax discount rates have been applied to the cash flow projections:
_ Goodwill allocated to North American factory operations: 11.88%
_ Goodwill allocated to sales & customer services: ranges between 10.9% and 11.2%
_ Goodwill allocated to Consumer Finance: 15.28%
(iii) Impact of possible changes in key assumptions
The recoverable amount of the North American factory operations CGU was $40.2 million, which exceeded the car-
rying amount by $12.6 million. If the EBITA was 70% of the forecast then the recoverable amount of the CGU would
approximately equal the carrying value.
Management does not consider any reasonably possible change in other key assumptions applied to other goodwill
balances would reduce the recoverable amounts below their carrying amounts.
(b) Brands
(i) Impairment tests for brands
Acquired brands are allocated to the Group’s CGUs identified according to country of operation.
(ii) Key assumptions used for relief-from-royalty calculations
The recoverable amount for brands is determined based on relief-from-royalty calculations. These calculations use
cash flow projections based on financial budgets prepared by management and approved by the Board covering a
five-year period. Cashflow projections are derived using past experience, expectations for the future and external
sources of financial and economic data where appropriate.
In arriving at the projected cashflows, management has made assumptions about sales revenue growth and foreign
currency average exchange rates based on industry and economic indicators.
The following growth rates have been applied to brand sales revenue by management in the cash flow projections:
_ “DCS”: between 2 - 16% (3 years based on Management 5 year forecast including new products and refreshed
United Range, 2% growth applied thereafter)
_ “Elba”: Nil
The royalty rates used in the relief-from-royalty calculations were as follows:
_ “DCS”: 3.0%
_ “Elba”: 2.0%
The terminal growth rates used to extrapolate cash flows beyond the budget period were:
_ “DCS”: 2%
_ “Elba”: Nil
“DCS” “Elba” Total
2012 $’000 $’000 $’000
Sales & customer services North America 15,867 - 15,867
Sales & customer services New Zealand - 3,259 3,259
15,867 3,259 19,126
“DCS” “Elba” Total
2011 $’000 $’000 $’000
Sales & customer services North America 17,135 17,135
Sales & customer services New Zealand - 3,725 3,725
17,135 3,725 20,860
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP130
The following pre-tax discount rates have been applied to the cash flow projections:
_ “DCS”: 11.88%
_ “Elba”: 12.62%
(iii) Impact of possible changes in key assumptions
DCS brand
The recoverable amount of the DCS brand at 31 March 2012 is estimated to be $28.1 million, which exceeds the
carrying amount by $12.2 million.
Detailed sales figures for the DCS brand are considered commercially sensitive and therefore are not disclosed.
Management have used budgeted sales revenues for 2012/13, and Management have performed a detailed 5 year
forecast, which has been used for 2013/14 - 2015/16 and results in a growth rate of up to 16%. Thereafter a growth
rate of 2% and a terminal growth rate of 2% have been used.
Management does not consider any reasonably possible change in other key assumptions would reduce the recover-
able amount below the carrying amount.
Elba brand
The recoverable amount of the Elba brand at 31 March 2012 is estimated to be $4.7 million, which is $1.4 million above
the carrying amount. The recoverable amount is based on nil sales growth over the next 5 years and nil terminal growth.
Detailed sales figures for the Elba brand are considered commercially sensitive and therefore are not disclosed.
The recoverable amount is sensitive to changes in the assumed royalty rate. If the royalty rate decreased from 2.0%
to 1.4%, the recoverable amount is equal to the carrying amount.
Management does not consider any reasonably possible change in other key assumptions would reduce the recover-
able amount below the carrying amount.
(d) Other material intangible assets
The Finance business has a license with a net book value of $70.4 million as at 31 March 2012 (2011 $76.5 million).
This is an exclusive license to provide financial services to the Farmers Trading Company for a period of 20 years.
The license has a remaining amortisation period of 11.6 years.
There were no indicators of impairment in the year ended 31 March 2012.
NOTES TO THE FINANCIAL STATEMENTS P131
18. DEFERRED TAX ASSETS
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
The balance comprises temporary differences attributable to:
Receivables provisions 6,329 8,216 - -
Employee benefits 6,012 5,633 40 228
Inventories 1,702 2,429 - -
Warranty provisions 3,963 4,130 - -
Property, plant & equipment 4,956 9,969 - -
Intangibles (excl DCS brand) (17,049) (21,425) - -
DCS brand 814 2,841 - -
Impairment of barter credits 3,907 4,230 - -
Derivative financial instruments 305 2,005 - -
USA energy tax credit* 2,813 4,260 - -
Tax losses to carry forward* 36,368 30,605 - -
Other temporary differences 4,663 2,964 108 -
Net deferred tax assets 54,783 55,857 148 228
Movements:
Opening balance at 1 April 55,857 76,206 228 127
Effect of a change in New Zealand tax rate to 28% - 800 - (16)
Credited/(charged) to the Income Statement (Note 9) 3,898 8,313 (39) 101
Credited /(charged) to equity (4,780) (5,646) - -
Prior period adjustment (726) (5,140) (41) 6
Transfer from Deferred tax liabilities (1) (19,487) - -
Foreign exchange differences (2,645) 2,406 - -
Other movements 3,180 (1,595) - 10
Closing balance at 31 March 54,783 55,857 148 228
Expected settlement
Within 12 months 15,830 17,167 59 204
In excess of 12 months 38,953 38,690 89 24
54,783 55,857 148 228
* The utilisation of these deferred tax assets is dependent on future taxable profits in excess of the profits arising from the reversal of existing taxable temporary differences and shareholder continuity being maintained in accordance with New Zealand and USA tax legislation. The recognition of these deferred tax assets is evidenced by forecasts of taxable income arising in the next ten years.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP132
19. CURRENT AND NON-CURRENT BORROWINGS
(a) Assets pledged as security
The Appliances business borrowings are secured through the Guaranteeing Group by a Security Trust Deed with
the Group’s banking syndicate. The Guaranteeing Group comprises Fisher & Paykel Appliances Holdings Limited
and subsidiary companies except for the New Zealand Finance business entities. All borrowings are drawn down at
interest rates current at draw down date.
The Security Trust Deed, as amended and restated from time to time, limits any other security over the Guaranteeing
Group’s assets and imposes the following financial covenants:
_ (i) Total Leverage ratio of the Guaranteeing Group each quarter < 3.0 times
_ (ii) Total Interest Cover ratio of the Guaranteeing Group each quarter > 3.0 times
_ (iii) FPAL Interest Cover Ratio of the Guaranteeing Group each quarter > 2 times. This covenant was removed
effective 26 March 2012
_ (iv) Total tangible assets of the Guaranteeing Group shall constitute no less than 95% of the total tangible assets
of the Consolidated Group, excluding the Finance business entities, for each quarter
_ (v) Total EBITDA of the Guaranteeing Group shall constitute no less than 95% of the EBITDA for the Consoli-
dated Group, excluding the Finance business entities, for each quarter.
For the purposes of the financial covenants above:
“Total Leverage Ratio” is the ratio of Total Bank Debt to Normalised EBITDA.
“Total Interest Cover” means the ratio of Normalised EBITDA to Total Interest
“FPAL Interest Cover Ratio” is the ratio of FPAL Normalised EBITDA to Total Interest.
“Total Interest” means, interest and financing costs of the Guaranteeing Group for the last 12 months, less any interest
received on cash held at the bank (for the avoidance of doubt, interest received on loans to the Finance business
shall not reduce Total Interest).
"Normalised EBITDA” means operating earnings before interest, tax, depreciation and amortisation for the last 12
months for the Guaranteeing Group, adjusted to exclude certain non-recurring items. Normalised EBITDA includes
the Appliances business earnings plus any dividends or interest paid by the Finance business to its parent, AF Invest-
ments Limited, a subsidiary of the ultimate parent Fisher & Paykel Appliances Holdings Limited.
“FPAL Normalised EBITDA” means operating earnings before interest, tax, depreciation and amortisation for the last
12 months for the Guaranteeing Group adjusted to exclude certain non-recurring items and any dividends or interest
paid by the Finance business to its parent AF Investments Limited.
“Total Bank Debt” means Guaranteeing Group indebtedness to the Group’s banking syndicate less cash deposited with
the banking syndicate or other approved banks. As at 31 March 2012 Total Bank Debt was approximately $65.2 million.
The current debt facilities expire on 30 September 2014, except for repayments under a $27 million Amortising Facil-
ity which funds capital expenditure associated with the recently announced motor supply contracts. The Amortising
facility is subject to the following minimum repayments:
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Current borrowings 3,205 - - -
Non-current borrowings 83,605 121,557 - -
Total current and non-current borrowings 86,810 121,557 - -
NOTES TO THE FINANCIAL STATEMENTS P133
19. CURRENT AND NON-CURRENT BORROWINGS (CONTINUED)
Repayment date Repayment amount
$000’s
30 September 2012 $1,470
31 March 2013 $2,000
30 September 2013 $3,610
31 March 2014 $3,610
Further repayments are required under the Amortising Facility to the extent of 50% of Free Cash Flow attributable to
the new motor supply contracts. Free Cash Flow is defined as free cash flow attributable to the new motor supply
contracts less the repayments above for a 6 month period.
(b) Financing arrangements
The Appliances business had unrestricted access at balance date to the following lines of credit, except for $27 million
which can only be used to finance capital expenditure associated with motor supply contracts:
(c) Fair value
The carrying amounts of borrowings at 31 March 2012 were equal to their fair values (2011 equal).
(d) Risk exposures
The exposure of the Appliances business’ borrowings to interest rate changes and the contractual repricing dates
at balance date were as follows:
The borrowings were aged in accordance with the facility’s terms.
31 March 31 March
2012 2011
$’000 $’000
Total facilities
Working capital 47,000 50,000
Borrowings 202,000 183,649
249,000 233,649
Used at balance date
Working capital* - 9,221
Borrowings 86,810 121,557
86,810 130,778
Unused at balance date
Working capital 47,000 40,779
Borrowings 115,190 62,092
162,190 102,871
*The March 2011 amount of $9.2 million utilisation in the table above relates to Letters of Credit issued in favour of selected suppliers and balance of payment guarantees.
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Less than 12 months 3,205 - - -
One to two years 7,220 121,557 - -Two to three years 76,385 - - -
86,810 121,557 - -
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP134
The carrying amounts of the Appliances business’ borrowings were denominated in the following currencies:
(e) Interest rate risk
For an analysis of the sensitivity of the Appliance business borrowings to interest rate risk refer to Note 4.
20. FINANCE BORROWINGS
There were no unsecured Finance borrowings as at 31 March 2012 (2011 Nil).
(a) Assets pledged as security
(i) Bank loans and debentures
Bank loans and debentures are secured by a first ranking general security interest in favour of the Trustee over the
undertaking and assets of the Fisher & Paykel Finance Limited Charging Group. Bank overdrafts and bank borrowings
are secured by Security Stock issued under the terms of the Trust Deed. The Fisher & Paykel Finance Limited Charging
Group includes Fisher & Paykel Finance Limited and all of its subsidiaries except Consumer Insurance Services Limited.
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
New Zealand dollars 45,387 45,740 - -
US dollars - 11,203 - -
Euros 9,777 29,801 - -
Thai baht 31,646 34,813 - -
86,810 121,557 - -
31 March 31 March
2012 2011
$’000 $’000
Current secured
Bank loans 35,507 1,260
Debentures 90,261 118,991
Notes 194,097 134,805
Committed liquidity facilities - 73,861
Total current Finance borrowings 319,865 328,917
Non-current secured
Bank loans 210,000 223,577
Debentures 21,101 21,421
Total non current interest bearing Finance borrowings 231,101 244,998
Total non current Finance borrowings 231,101 244,998
Total Finance borrowings 550,966 573,915
NOTES TO THE FINANCIAL STATEMENTS P135
20. FINANCE BORROWINGS (CONTINUED)
The carrying amounts of Charging Group assets pledged as security for Charging Group bank loans and debentures are:
(ii) Notes and Committed liquidity facilities
Notes issued and Committed liquidity facilities utilised under the securitisation programme are secured by a first ranking
general security interest over Finance receivables plus cash & cash equivalents in the special purpose entity RFS Trust
2006-1 (the Trust). The book value of these assets as at 31 March 2012 totalled $211.1 million (2011 $223.7 million).
The carrying amounts of assets pledged as security by the Trust for secured interest bearing liabilities were:
(b) Bank loans
The bank loans are a combination of call and short-term loans (with fixed interest rates for periods of approximately
90 days) and bear interest at a weighted average interest rate (excluding line fees, establishment fees and extension
fees) of 4.0% (2011 4.2%).
Fisher & Paykel Finance Limited has a $385 million ( refer note 20 (e)) syndicated banking facility with a maturity
profile as follows:
_ Tranche A ($20 million) matures 10 April 2015
_ Tranche B ($105 million) matures 10 October 2013
_ Tranche C ($105 million) matures 10 October 2012
_ Tranche D ($105 million) matures 10 April 2014
_ Tranche E ($50 million) matures 10 October 2012
The syndicated banking facility imposes a number of financial covenants with which the Charging Group must comply
and requires a formal compliance certificate to be provided to the facility agent and the lending banks on a monthly
basis. The financial covenants comprise:
_ a liquidity ratio
_ an interest cover ratio
31 March 31 March
2012 2011
$’000 $’000
Current
Cash and cash equivalents 56,290 46,761
Finance receivables 219,096 223,200
Other assets 8,895 9,187
Total current assets pledged as security 284,281 279,148
Non-current
Property, plant & equipment 1,074 1,247
Intangible assets 9,295 10,056
Finance receivables 176,221 171,132
Derivative financial instruments 19 1
Total non-current assets pledged as security 186,609 182,436
Total assets pledged as security 470,890 461,584
31 March 31 March
2012 2011
$’000 $’000
Cash & cash equivalents 11,240 15,292
Finance receivables 199,904 208,359
Non-current liability 211,144 223,651
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP136
_ a minimum capitalisation covenant
_ a limit on lending concentration
_ two impaired asset tests, one relating to asset net write-off levels and one relating to the level of greater than
three month impaired assets compared to total receivables
_ a prior charges limit
If a covenant breach occurs and depending on its nature, the Charging Group is generally able to remedy the breach
by procuring additional capital from its immediate parent (Fisher & Paykel Finance Holdings Limited) in the form
of equity or subordinated debt. Under the facility agreement, the Charging Group is only permitted one remedy in
any twelve month period.
The facility documentation also includes a “Change in Market Conditions” clause, which defines a “Market Disrup-
tion Event” as:
_ (i) Circumstances, such as adverse funding conditions or market liquidity constraints, which result in a lender
becoming unable to participate in an advance requested under the facility, or
_ (ii) Notification to the facility agent by a lender that it’s cost of obtaining matching deposits in the interbank
market would be in excess of the base rate for an advance
In the event of a market disruption event occurring, and depending on the exact circumstances, then the parties to
the agreement will enter into negotiations either to agree a substitute basis for maintaining advances, or to agree
the rate of interest applicable to further advances.
During the year ended 31 March 2012 and up to the date these financial statements were signed, no market disrup-
tion event occurred.
(c) Debentures
Debenture stock which is issued on the basis that it is repayable on demand, may be repaid by the Finance busi-
ness at any time. Other debenture stock is issued on terms ranging from 3 months to 5 years and is repayable on
the maturity date. For the majority of debentures, interest is payable quarterly in arrears on the last day of March,
June, September and December. On other debentures, interest is paid on the last working day of each month. The
weighted average interest rate of the debenture stock (excluding brokerage and New Zealand Deposit Guarantee
fees) at 31 March 2012 was 7.4% (2011 7.0%).
NOTES TO THE FINANCIAL STATEMENTS P137
20. FINANCE BORROWINGS (CONTINUED)
(d) Notes and Committed liquidity facilities
Each Note issued has a minimum subscription price of $500,000 and must be a multiple of $100,000. The term of
Notes cannot exceed 364 days or the maturity of the Committed liquidity facility, whichever is earlier. Notes are
normally issued on the basis that they bear no interest but are issued at a discount to their principal amount. The
weighted average interest rate of Notes at 31 March 2012 was 3.5% (2011 4.1%).
Liquidity support for the Notes is provided under a Committed liquidity facility. The committed liquidity facility
was undrawn as at 31 March 2012. The weighted average interest rate of the liquidity facility (excluding line fees,
establishment fees and extension fees) at 31 March 2011 was 4.0%.
(e) Financing arrangements
Unrestricted access was available at each balance date to the following lines of credit:
The figures in the above tables for financing arrangements are principal amounts only.
The bank loan facilities were $385 million at 31 March 2012 and had maturity dates in October 2012 ($155 million),
October 2013 ($105 million) and April 2014 ($105 million) and April 2015 ($20 million). However, this has been
reported as $335 million due to the expectation that the Finance business will elect, post balance date, to reduce
surplus facilities by $50 million which are maturing in October 2012.
The committed liquidity facilities were $285 million as at 31 March 2012 and mature on 26 October 2012. However,
this has been reported as $250 million due to the expectation that the Finance business will elect, post balance date,
to reduce surplus facilities by $35 million. On 23 April 2012, the maturity date of the committed liquidity facility was
extended from 26 October 2012 to 29 April 2013.
31 March 31 March
2012 2011
$’000 $’000
Credit standby arrangements
Total facilities
Bank loans 335,000 385,000
Bank overdrafts 5,100 5,100
Notes/Committed liquidity facilities 250,000 285,000
590,100 675,100
Used at balance date
Bank loans 245,000 225,000
Bank overdrafts - -
Notes/Committed liquidity facilities 193,325 207,626
438,325 432,626
Unused at balance date
Bank loans 90,000 160,000
Bank overdrafts 5,100 5,100
Notes/Committed liquidity facilities 56,675 77,374
151,775 242,474
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP138
(f) Fair value
The fair values of Finance business borrowings are:
(i) On-balance sheet
The fair value of Bank loans for the year ended 31 March 2012 was based on cash flows discounted using a bor-
rowing rate of 3.9% (2011 4.0%).
The fair value of Notes is based on cash flows discounted using borrowing rates averaging 3.4% based on the maturity
date of those Notes (2011 averaging 3.7%).
The fair value of the Committed liquidity facility for 31 March 2011 was based on cash flows discounted using a
borrowing rate of 3.7%.
The fair values of Debentures are based on cash flows discounted using borrowing rates varying from 5.8% to 7.7%,
depending on the maturity date of those debentures (2011 5.0% to 7.8%).
(ii) Contingent liabilities
There were no interest bearing contingent liabilities as at 31 March 2012 (2011 Nil).
(g) Priority of claims
In the event the Finance business was liquidated or ceased trading, bank loans and debentures rank equally as to
the priority of claims over the assets of the Charging Group. The Notes and the liquidity facility are secured over the
Finance receivables and cash & cash equivalents held by the special purpose entity RFS Trust 2006-1.
(h) Interest rate risk
For an analysis of the sensitivity of Finance business borrowings to interest rate risk refer to Note 5.
31 MARCH 2012 31 MARCH 2011
Carrying Fair value Carrying Fair value
amount amount
$’000 $’000 $’000 $’000
On-balance sheet
Bank loans 245,507 245,531 224,837 224,870
Notes 194,097 194,112 134,805 134,861
Committed liquidity facilities - - 73,861 73,883
Debentures 111,362 111,937 140,412 141,320
550,966 551,580 573,915 574,934
NOTES TO THE FINANCIAL STATEMENTS P139
21 TRADE CREDITORS
(a) Foreign currency risk
The carrying amounts of the Group’s trade creditors are denominated in the following currencies
For an analysis of the sensitivity of trade creditors to foreign currency risk refer to Note 4.
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Trade creditors 96,560 99,141 - -
96,560 99,141 - -
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
New Zealand dollars 10,656 17,001 - -
Australian dollars 5,642 8,569 - -
United States dollars 27,703 21,423 - -
Euros 26,154 31,118 - -
Thai baht 25,385 19,737 - -
Canadian dollars 58 622 - -
British pounds 851 554 - -
Other 111 117 - -
96,560 99,141 - -
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP140
22. PROVISIONS
(a) Employee benefits
Current
In certain jurisdictions, the Group is required to accrue for accumulating short-term benefits such as sick leave.
Non-current
Provision is made for both vested and unvested long service leave accruing to employees. Vested long service leave
is calculated on unused entitlements according to Group policy and unvested long service leave is calculated on an
actuarial basis taking into account future entitlements under Group policy. Key assumptions in the actuarial model
include:
_ Discount rate: 4.09% (2011 5.71%)
_ Exit rate: Variable (2011 Variable)
_ Promotion rate: 0.50% (2011 0.50%)
_ Wage/salary inflation rate: 3.00% (2011 3.50%)
The method for calculating the exit rate assumed in the actuarial model uses exit rate patterns which vary according
to length of service and a mix of exponential decay formulae in addition to straight-line assumptions and excludes
the extreme values in the historical data.
(b) Warranty
Provision is made for estimated warranty claims in respect of products sold which are still under warranty at bal-
ance date. The majority of these claims are expected to be settled within the next 24 months but this may extend
to 10 years for washing machine motor components. Management estimates the present value of the provision
based on historical warranty claim information and any recent trends that may suggest future claims could differ
from historical amounts.
The warranty provision has been discounted using an interest rate of 3.61% (2011 4.25%).
(c) Product support
Provision is made for costs to support older products sold in previous years which are outside warranty periods.
The provision recognised is based on estimated costs to address product issues.
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Current
Employee benefits 76 76 - -
Warranty 14,577 17,028 - -
Redundancy - 284 - -
Product support 4,866 - - -
Onerous contracts 699 544 - -
Other 267 409 - -
Total current provisions 20,485 18,341 - -
Non-current
Employee benefits 8,987 8,166 - -
Warranty 3,694 4,751 - -
Onerous contracts 2,302 776 - -
Other provisions 592 502 - -
Total non-current provisions 15,575 14,195 - -
Total provisions 36,060 32,536 - -
NOTES TO THE FINANCIAL STATEMENTS P141
22. PROVISIONS (CONTINUED)
(d) Onerous contracts
In the year ended 31 March 2012, additional provision was made for the estimated unavoidable costs associated with
a warehouse lease in Chicago, USA. This is expected to be paid out in the years ending 31 March 2013 through 2016.
(e) Other
Other non-current provisions as at 31 March 2012 includes a $0.5 million (2011 $0.4 million) dilapidations provision
associated with the onerous warehouse lease adjustment referred to in (d) above.
(f) Movements in provisions
Movements in each class of provision during the financial year are set out below:
Employee Warranty Redundancy Product Onerous Other Total
benefits support contracts provisions
$’000 $’000 $’000 $’000 $’000 $’000 $’000
2012
Carrying amount at start of year 8,242 21,779 284 - 1,320 911 32,536
Exchange rate variance on opening balance (150) (1,200) (88) (38) (1,476)
Additional provision recognised 2,046 19,808 - 4,866 2,585 10 29,315
Utilised during the year (997) (22,147) (284) - (774) (17) (24,219)
Change in discounted amount arising from passage of time
and effect of any change in the discount rate
(78) 31 - - (42) (7) (96)
Carrying amount at end of year 9,063 18,271 - 4,866 3,001 859 36,060
Employee Warranty Redundancy Product Onerous Other Total
benefits support contracts provisions
$’000 $’000 $’000 $’000 $’000 $’000 $’000
2011
Carrying amount at start of year 8,440 23,703 1,410 - 350 428 34,331
Exchange rate variance on opening balance 119 381 40 - 8 2 550
Additional provision recognised 861 19,802 461 - 1,279 484 22,887
Utilised during the year (917) (22,076) (1,627) - (317) (3) (24,940)
Change in discounted amount arising from passage of time
and effect of any change in the discount rate
(261) (31) - - - - (292)
Carrying amount at end of year 8,242 21,779 284 - 1,320 911 32,536
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP142
23. OTHER LIABILITIES
Employee entitlements include a statutory termination indemnity obligation (TFR) for employees of the Group’s
Italian operating subsidiary – refer Note 30(2). Also included within employee entitlement are liabilities for employee
leave entitlements, wage & salary withholdings and wages & salaries payable.
24. DEFERRED TAX LIABILITIES
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Employee entitlements 24,051 25,119 144 280
Other creditors 37,924 48,092 246 217
Directors’ retirement allowances 384 323 384 323
62,359 73,534 774 820
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
The balance comprises temporary differences attributable to:
Provisions (1,259) (876) - -
Property, plant & equipment 4,925 5,629 - -
Intangible assets 2,940 4,008 - -
Tax credits (1,028) (1,203) - -
Derivative financial instruments (43) (532) - -
Other temporary differences 75 (155) - -
Net deferred tax liabilities 5,610 6,871 - -
Movements:
Opening balance at 1 April 6,871 27,730 - -
Charged/(credited) to the Income Statement (Note 9) 80 (371) - -
Transfer to Deferred tax assets 1 (19,487) - -
Prior period adjustment 329 (426) - -
Foreign exchange differences (864) (129) - -
Other movements (807) (446) - -
Closing balance at 31 March 5,610 6,871 - -
Expected settlement
Within 12 months (295) (109) - -
in excess of 12 months 5,905 6,980 - -
5,610 6,871 - -
NOTES TO THE FINANCIAL STATEMENTS P143
25. OTHER NON-CURRENT LIABILITIES
(a) Accrued rent expense
In certain jurisdictions where the Group operates, operating lease agreements for land & buildings contain periodic
fixed rental increases. The associated lease payments are recognised on a straight-line basis resulting in an accrued
rent expense.
(b) Retirement benefit obligation
Further details of the Group’s retirement benefit obligation are provided at Note 30.
26. CONTRIBUTED EQUITY
(a) Movements in ordinary share capital:
(b) Ordinary shares
All shares issued are fully paid and have no par value. All ordinary shares rank equally with one vote attached to
each fully paid ordinary share.
(c) Capital risk management - Appliances business & Parent
The Company’s objective when managing capital is to safeguard its ability to continue as a going concern, so that
it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital after taking into consideration the cyclical nature of the industry.
In order to maintain or adjust the capital structure, the Company’s options include adjusting the amount of dividends
paid to shareholders, returning capital to shareholders, issuing new shares or selling assets to reduce debt.
The Appliances business manages capital risk by ensuring there is an adequate amount of headroom above the
minimum requirements of the banking covenants. The principal indicator used is the Total Leverage Ratio, which is
calculated as Net Debt divided by Normalised operating earnings before Interest, Tax, Depreciation and Amortisation
of the Guaranteeing Group (refer Note 19). Net Debt is calculated as total borrowings less cash & cash equivalents
(excluding the Finance business).
The capital risk management policy for the Appliances business is to maintain the Total Leverage Ratio below 2.5 times
compared to the current maximum permitted level under the Guaranteeing Group’s banking facilities of 3.0 times.
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Accrued rent expense 2,436 1,919 - -
Retirement benefit obligation 526 345 - -
Directors’ retirement allowances - 61 - 61
2,962 2,325 - 61
31 March 31 March 31 March 31 March
2012 2011 2012 2011
Shares Shares $’000 $’000
Opening balance of ordinary shares authorised and issued 724,235,162 724,235,162 841,869 841,869
Issue of ordinary shares during the year - - - -
Closing balance of ordinary shares issued 724,235,162 724,235,162 841,869 841,869
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP144
(d) Capital risk management - Finance business
The Finance business’ objective when managing capital is to safeguard its ability to continue as a going concern,
so that it can continue to provide returns to its shareholder and to maintain a strong capital base to support the
development of its business.
Fisher & Paykel Finance Limited
The level and mix of capital in Fisher & Paykel Finance Limited (the Charging Group) is determined by the Finance
business Board taking into account the requirements of the Debenture Trust Deed (under which the Charging Group
issues debentures) and financial covenants contained in the syndicated banking facility documentation.
The syndicated banking facility documentation contains a minimum capitalisation covenant, under which:
_ (i) the ratio of net tangible assets to total tangible assets must not be less than 12.0%.
The Charging Group has fully complied with this covenant during all periods reported.
During the reporting period the Charging Group’s Debenture Trust Deed was amended to incorporate a new capital
adequacy covenant in compliance with the Part 5D of the Reserve Bank of New Zealand Act 1989 and the Deposit
Takers (Credit Ratings, Capital Ratios, and Related Party Exposures) Regulations 2010.
Under the terms of this covenant the Charging Group’s minimum capital ratio should not be less than:
_ (a) 8%, for as long as Fisher & Paykel Finance Limited has a credit rating, or
_ (b) 10% at all other times
The Charging Group has complied with this minimum capital ratio covenant since it came into force on 1 December
2010. As at 31 March 2012, the capital ratio was 15.3%.
During the year ended 31 March 2012, Fisher & Paykel Finance Limited increased its share capital by $13.5 million
to $86.3 million.
Fisher & Paykel Financial Services Limited
Fisher & Paykel Financial Services Limited is the company that owns and operates the Famers Finance business,
which is funded under a master trust securitisation programme.
The securitisation programme requires a minimum level of credit enhancement that is provided by way of a sub-
ordinated loan from Fisher & Paykel Financial Services Limited. The minimum level of credit enhancement is the
greater of 7.5% (2011 7.5%) of receivables or the amount established by applying a dynamic credit enhancement
calculation. 31 March 2012 was 8.7%.
Fisher & Paykel Finance Holdings Limited
Whilst there are no minimum levels of capital required in Fisher & Paykel Finance Holdings Limited, capital is main-
tained at a level to ensure compliance with the Finance business capital management objectives outlined above.
NOTES TO THE FINANCIAL STATEMENTS P145
27. EARNINGS PER SHARE
(a) Reconciliations of earnings used in calculating earnings per share
(b) Weighted average number of shares used as the denominator
28. ACCUMULATED LOSSES AND RESERVES
In the Parent Company financial statements, amounts showing as Treasury Stock in the Group financial statements
are recorded as share capital. This increases share capital in the Parent Company by $512,000 at balance date (2011
$512,000).
31 March 31 March
2012 2011
Basic and diluted earnings per share (cents) 2.5 4.6
31 March 31 March
2012 2011
$’000 $’000
Basic earnings per share
Profit attributable to the ordinary equity holders of the Company used in calculating basic and diluted earnings per share 18,431 33,545
31 March 31 March
2012 2011
Number Number
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share 724,235,162 724,235,162
Adjustments for calculation of diluted earnings per share - -
Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share 724,235,162 724,235,162
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
(a) Reserves
Treasury stock 512 512 - -
Foreign exchange cash flow hedge reserve 1,013 (11,350) - -
Share-based payments reserve 1,970 1,970 1,970 1,970
Foreign currency translation reserve (90,861) (50,370) - -
Interest rate cash flow hedge reserve (1,330) (1,260) - -
(88,696) (60,498) 1,970 1,970
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Movements:
Treasury Stock
Opening balance 512 512 - -
Balance 31 March 512 512 - -
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP146
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Movements:
Hedging reserve - cash flow hedges
Opening balance (11,350) (3,213) - -
Recognised income & expense 12,363 (8,137) - -
Balance 31 March 1,013 (11,350) - -
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Movements:
Share-based payments reserve
Opening balance 1,970 1,970 1,970 1,970
Balance 31 March 1,970 1,970 1,970 1,970
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Movements:
Foreign currency translation reserve
Opening balance (50,370) (40,018) - -
Translation differences arising during the year (40,491) (10,352) - -
Balance 31 March (90,861) (50,370) - -
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Movements:
Interest rate cash flow hedge reserve
Opening balance (1,260) - - -
Recognised income & expense (70) (1,260) - -
Balance 31 March (1,330) (1,260) - -
NOTES TO THE FINANCIAL STATEMENTS P147
28. ACCUMULATED LOSSES AND RESERVES (CONTINUED)
(b) Nature and purpose of reserves
(i) Treasury Stock
Treasury stock is used to recognise those shares held and controlled by Fisher & Paykel Appliances Employee Share
Purchase Trustee Limited.
(ii) Foreign exchange hedge reserve
The cash flow hedge reserve is used to record gains or losses on a hedging instrument in a forward foreign currency
cash flow hedge that are recognised directly in equity. Amounts are recognised in profit and loss when the associ-
ated hedged transaction affects profit and loss.
(iii) Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options granted but not exercised and
discounted employee share scheme entitlements.
(iv) Foreign currency translation reserve
Exchange differences arising on translation of foreign operations are taken to the foreign currency translation reserve.
When any net investment is disposed of, the related component of the reserve is recognised in profit and loss.
(v) Interest rate hedge reserve
The interest rate hedge reserve is used to record gains or losses on a hedging instrument in an interest rate hedge
that are recognised directly in equity. Amounts are recognised in profit and loss when the associated hedged trans-
action affects profit and loss.
When a forecast transaction is no longer expected to occur or becomes ineffective, the cumulative gain or loss that
was deferred in equity is immediately transferred to the Income Statement.
(c) Accumulated losses
29. IMPUTATION CREDITS
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Opening balance (166,423) (199,968) (107,122) (107,269)
Net profit for the year 18,431 33,545 54 147
Closing balance (147,992) (166,423) (107,068) (107,122)
31 March 31 March
2012 2011
$’000 $’000
Balance at beginning of year 1,746 1,635
Tax payments, net of refunds (1,009) 69
Other adjustments - 42
Balance at end of year 737 1,746
Imputation credits are available to shareholders as follows:
Direct - Fisher & Paykel Appliances Holdings Limited Imputation Group 737 1,746
Balance at end of year 737 1,746
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP148
30. DEFINED BENEFIT OBLIGATIONS
The Group has two defined benefit schemes, one in New Zealand and one in Italy. These are presented separately below.
(1) Superannuation Scheme - New Zealand
All New Zealand employees of the Group are entitled to benefits from the Group’s superannuation scheme on re-
tirement, disability or death. Previously, the New Zealand scheme consisted of a defined benefit plan and a defined
contribution plan.
The defined benefit plan provided lump sum benefits based on years of service and final average salary and has
been closed to new members for several years. On 1 October 2006, all except 30 members transferred from the
defined benefit plan to a new defined contribution master trust plan. There are 14 members remaining in the plan
as at 31 March 2012.
The remaining obligation is largely in respect of certain defined benefit guarantees provided to members who
transferred from the defined benefit plan to the new defined contribution master trust plan and is fully provided
for as at 31 March 2012.
The defined contribution plan receives fixed contributions from Group companies and the Group’s legal or construc-
tive obligation is limited to these contributions.
The following tables set out details in respect of the defined benefit liabilities only.
(a) Statement of Financial Position amounts
The amounts recognised in the Statement of Financial Position are determined as follows:
(b) Categories of plan assets
The major categories of plan assets are as follows:
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Present value of the defined benefit obligation 830 767 - -
Fair value of defined benefit plan assets (519) (536) - -
Present value of unfunded obligations 311 231 - -
Adjustment for ESCT* 153 114 - -
Net liability in the Statement of Financial Position 464 345 - -
*ESCT - Employer Superannuation Contribution Tax
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
% % % %
Cash 81 78 - -
Equity instruments 8 10 - -
Debt instruments 9 10 - -
Property 2 2 - -
100 100 - -
NOTES TO THE FINANCIAL STATEMENTS P149
30. DEFINED BENEFIT OBLIGATIONS (CONTINUED)
(c) Reconciliations
(d) Amounts recognised in Income Statement
The amounts recognised in the Income Statement are as follows:
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Reconciliation of the present value of the defined benefit obligation, which is partly funded:
Balance at the beginning of the year 767 662 - -
Current service cost 33 27 - -
Interest cost 26 24 - -
Actuarial gains & losses 264 250 - -
Benefits paid (260) (196) - -
Balance at the end of the year 830 767 - -
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Reconciliation of the fair value of plan assets:
Balance at the beginning of the year 536 371 - -
Expected return on plan assets 27 22 - -
Actuarial gains & losses (19) (2) - -
Contributions by Group companies 83 180 - -
Contributions by plan participants 152 161 - -
Benefits paid (260) (196) - -
Balance at the end of the year 519 536 - -
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Current service cost 33 27 - -
Interest cost 26 24 - -
Expected return on plan assets (27) (22) - -
Net actuarial losses (gains) recognised in year 283 252 - -
Total included in employee benefits expense 315 281 - -
Actual return on plan assets 12 23 - -
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP150
(e) Principal actuarial assumptions
The principal actuarial assumptions used (expressed as weighted averages) were as follows:
The expected rate of return on assets has been based on historical and future expectations of returns for each of the
major categories of asset classes as well as the expected and actual allocation of plan assets to these major categories.
(f) Historic summary
(2) Termination Indemnity (TFR) - Italy
TFR is a mandatory severance pay plan for employees of Italian entities. A lump sum payment is provided in any
case of employment termination (e.g. dismissal, voluntary resignation, disability, death).
Every year, the employee accrues 6.91% of his/her salary. The accrual is fully employer sponsored. The amount ac-
crued at the beginning of the year is revalued at the end of the year by an index stated as follows: 1.5% plus 75% of
the actual inflation rate. The revaluation is reduced net of an 11% tax rate.
Advance payments can be made for house purchase and medical expenses, subject to certain conditions.
Pursuant to legislation enacted on 1 January 2007, the future annual accrual for companies with over 50 employees
was transferred either to an external pension fund or to the State fund held by INPS (Instituto Nazionale Previdenza
Sociale) and meets the definition of a defined contribution plan. However, the TFR liability accrued prior to 1 Janu-
ary 2007 remains in the Statement of Financial Position of the Group’s Italian operating subsidiary (Fisher & Paykel
Appliances Italy S.p.A.) and meets the definition of a defined benefit plan.
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
Discount rate 2.94% 4.11% -% -%
Expected return on plan assets 5.00% 5.00% -% -%
Future salary increases 3.00% 4.00% -% -%
31 March 31 March
2012 2011
$’000 $’000
Defined benefit plan obligation 830 767
Plan assets (519) (536)
311 231
ESCT 153 114
Deficit 464 345
Experience adjustments arising on plan liabilities 264 250
Experience adjustments arising on plan assets (19) (2)
NOTES TO THE FINANCIAL STATEMENTS P151
30. DEFINED BENEFIT OBLIGATIONS (CONTINUED)
The following tables set out details in respect of the defined benefit liabilities:
(a) Statement of Financial Position amounts
The amounts recognised in the Statement of Financial Position are determined as follows:
(b) Reconciliations
(c) Amounts recognised in Income Statement
The amounts recognised in the Income Statement are as follows:
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Present value of the defined benefit obligation 3,686 3,912 - -
Net liability in the Statement of Financial Position 3,686 3,912 - -
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Reconciliation of the present value of the defined benefit obligation, which is partly funded:
Balance at the beginning of the year 3,912 4,218 - -
Interest cost 187 182 - -
Actuarial gains & losses 397 (315) - -
Benefits paid (306) (105) - -
Foreign currency exchange rate changes (504) (68) - -
Balance at the end of the year 3,686 3,912 - -
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Interest cost 187 182 - -
Total included in employee benefits expense 187 182 - -
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP152
(d) Principal actuarial assumptions
The principal actuarial assumptions used (expressed as weighted averages) were as follows:
(e) Employer contributions
Employer contributions to the TFR defined benefit plan ceased on 31 December 2006.
(f) Historic summary
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
Discount rate 4.00% 5.50% -% -%
Expected return on plan assets 2.00% 2.00% -% -%
Future salary increases 2.00% 2.00% -% -%
31 March 31 March
2012 2011
$’000 $’000
Defined benefit plan obligation 3,686 3,912
Deficit 3,686 3,912
NOTES TO THE FINANCIAL STATEMENTS P153
31. CONTINGENCIES
Periodically, the Group is party to litigation including product liability claims. To date, such claims have been settled
for relatively small amounts, which have either been expensed or covered by insurance.
32. COMMITMENTS
(a) Capital commitments
Capital expenditure contracted for at balance date but not recognised as liabilities is as follows:
The above balances have been committed in relation to future expenditure on capital projects. Amounts already
spent have been included as work in progress in the current year results.
(b) Lease commitments
(i) Operating leases
These relate mainly to building occupancy leases under non-cancellable operating leases expiring within 15 years. The
leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
(ii) Finance leases
The Appliances business has no finance leases as at 31 March 2012 (2011 carrying value of plant & equipment under
finance lease of $0.1 million).
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Property, plant and equipment 5,153 4,719 - -
5,153 4,719 - -
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within one year 22,073 24,947 - -
Between one and two years 18,969 22,962 - -
Between two and three years 15,648 18,286 - -
Between three and four years 12,336 15,197 - -
Between four and five years 9,448 11,595 - -
Over five years 49,496 58,971 - -
127,970 151,958 - -
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Within one year - 17 - -
Minimum lease payments - 17 - -
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP154
The weighted average interest rate implicit in the finance leases is N/A (2011 4.5%).
(c) Undrawn lending commitments (Finance business)
Undrawn lending commitments include unutilised Q Card, Farmers Finance Card and fixed instalment limits, which
can be unconditionally cancelled by the Finance business at any time.
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Undrawn lending commitments 1,819,864 1,775,323 - -
NOTES TO THE FINANCIAL STATEMENTS P155
33. INVESTMENTS IN SUBSIDIARIES
The Parent Company’s investment in subsidiaries comprises shares at cost plus share-based payments expensed by
the Finance business. The assets and liabilities attributed to Fisher & Paykel Appliances Holdings Limited are owned
by the following subsidiaries:
All subsidiaries have a balance date of 31 March, except for Fisher & Paykel Appliances Mexico, S. de R.L. de C.V.,
which has a balance date of 31 December to comply with local regulations.
The activities of Retail Financial Services Limited are funded through a master trust securitisation structure estab-
lished on 8 May 2006. This structure allows for the creation of multiple, separate, standalone trusts. The first trust
created under the master trust structure was the RFS Trust 2006-1 (the Trust). Fisher & Paykel Financial Services
Limited is the residual income and capital beneficiary of the Trust. The financial statements of the Trust have been
consolidated in the Group’s financial statements.
NAME OF ENTITY COUNTRY OF INCORPORATION PRINCIPAL ACTIVITY EQUITY HOLDING
2012 2011
% %
AF Investments Limited* New Zealand Non-trading holding company 100 100
Fisher & Paykel Appliances Employee Share Purchase New Zealand Employee share purchase scheme 100 100
Trustee Limited
Appliances business
Fisher & Paykel Appliances Limited* New Zealand Manufacture & distribution of appliances 100 100
Fisher & Paykel Production Machinery Limited* New Zealand Machinery manufacturer 100 100
New Zealand Export Corporation Limited* New Zealand Contract manufacture of appliances 100 100
Allied Industries Limited* New Zealand Non-trading holding company 100 100
Fisher & Paykel Australia Holdings Limited* Australia Non-trading holding company 100 100
Fisher & Paykel Australia Pty Limited* Australia Distribution of appliances 100 100
Fisher & Paykel Manufacturing Pty Limited* Australia Manufacture of appliances 100 100
Fisher & Paykel Customer Services Pty Limited* Australia Servicing of appliances 100 100
Fisher & Paykel Appliances (USA) Holdings Inc* USA Non-trading holding company 100 100
Fisher & Paykel Appliances Inc* USA Distribution of appliances 100 100
Dynamic Cooking Systems Inc* USA Manufacture of appliances 100 100
Fisher & Paykel Laundry Manufacturing Inc* USA Manufacture of appliances 100 100
Fisher & Paykel Appliances Canada Inc* Canada Distribution of appliances 100 100
Fisher & Paykel Appliances Mexico, S. de R.L. de C.V.* Mexico Contract manufacture of appliances 100 100
Fisher & Paykel Appliances Limited* UK Distribution of appliances 100 100
Fisher & Paykel Appliances Italy Holdings S.r.l.* Italy Non-trading holding company 100 100
Fisher & Paykel Appliances Italy S.p.A.* Italy Manufacture & distribution of appliances 100 100
Fisher & Paykel (Singapore) Pte Limited* Singapore Distribution of appliances 100 100
Fisher & Paykel Appliances (Thailand) Co. Ltd* Thailand Manufacture of appliances 100 100
Finance business
Fisher & Paykel Finance Holdings Limited New Zealand Non-trading holding company 100 100
Fisher & Paykel Finance Limited New Zealand Consumer & bulk finance 100 100
Fisher & Paykel Financial Services Limited New Zealand Securitisation services 100 100
Consumer Finance Limited New Zealand Consumer finance 100 100
Consumer Insurance Services Limited New Zealand Consumer insurance & extended warranty 100 100
Equipment Finance Limited New Zealand Commercial finance 100 100
Retail Financial Services Limited New Zealand Consumer finance 100 100
*Fisher & Paykel Appliances Holdings Limited together with the companies above marked with an asterisk are the companies in the Security Trust Deed (refer note 19).
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP156
Fisher & Paykel Appliances (Thailand) Co. Ltd’s immediate parent is Fisher & Paykel (Singapore) Pte Limited (486,198
ordinary shares). Thai law requires a minimum of three shareholders, therefore in accordance with normal practice,
two ordinary shares are also held individually by Company executives.
34. SHARE-BASED PAYMENTS
(a) Executive Long Term Incentive Plan
The Board approved a new Long Term Incentive Plan (the Plan) for selected executive managers, effective 1 October
2011. The Plan is designed to secure the retention of key executives and is focused on achieving the objective of
long term shareholder wealth creation.
Under the Plan, phantom options are granted to participants from time to time. The phantom options are not securi-
ties issued by the Company and should a phantom option become exercisable, it will be settled in cash.
The phantom options become exercisable three years after the grant date provided Total Shareholder Returns per
annum for Fisher & Paykel Appliances Holdings Limited are equal to or greater than a compound annual post-tax
rate of 13.8% for the preceding three year period. The Total Shareholder Return of 13.8% per annum includes a 1
percentage point stretch component above the Company’s assessed cost of equity.
Phantom options remain exercisable for a period of two years from the date that they become exercisable.
The maximum amount payable to a participant on the exercise of phantom options shall not exceed an amount equal
to five times the aggregate grant value of those phantom options.
The phantom options will lapse if a participate ceases to be an employee of the Company. However should that occur
by reason of injury, ill health, permanent disability, death or redundancy the Board may at its discretion determine
that the phantom options will not lapse.
Set out below is a summary of phantom options granted under the Plan:
The assessed fair value of the Plan was $848,000 as at grant date and $865,000 as at 31 March 2012. The fair value
was derived using a 250-period binomial options pricing model and the following inputs:
_ (a) Grant date: 1 October 2011
_ (b) Issue price : $0.463 (based on the volume weighted average share price over the 20 days immediately
preceding the grant date)
_ (c) Share price on grant date: $0.45
_ (d) The Phantom options were granted for no consideration
_ (e) Exercisable date: 30 September 2014
_ (f) Lapse date: 30 September 2016
_ (g) Assumed cost of equity: 12.8%
_ (h) Assumed stretched cost of equity:13.8%
_ (i) Volatility: 31.9% annualised
_ (j) Expected dividends: market consensus
_ (k) Risk-free interest rate: 3.57% continuous compounding
31 MARCH 2012
Expiry date Balance Granted Vested Lapsed Balance
at start during during /forfeited at end
of the year the year the year during of the year
the year
Number Number Number Number Number
GRANT DATE
01/10/11 30/09/16 - 10,473,192 - - 10,473,192
NOTES TO THE FINANCIAL STATEMENTS P157
34. SHARE-BASED PAYMENTS (CONTINUED)
(b) Executive Long Term Performance Incentive
The Board has an executive long-term performance incentive scheme (the Scheme) for selected senior managers
to link their remuneration with shareholder returns and encourage those employees to hold and retain shares in the
Company. Payment of any benefit is dependent on remaining employed during the vesting period and also on the
Group’s total shareholder return exceeding the 75th percentile of the total shareholder return (including imputation
credits) of a comparative group of companies over a three year vesting period.
Entitlements are granted under the Scheme for no consideration. At the end of the vesting period, the Group will pay
a cash bonus to the participating employees equivalent to half their allocated entitlement, which should be used to
buy shares in the Company on-market (subject to Insider Trading rules) unless the employee’s personal shareholding
(calculated at current market values) is greater than 50% of their annual fixed remuneration. To the extent performance
targets have been met, up to half of the allocated entitlement will also be paid as a cash bonus to the participating
employee and this should be used to buy shares on-market (subject to Insider Trading rules) unless the employee’s
personal shareholding (calculated at current market values) is greater than 50% of their annual fixed remuneration.
If employment ceases prior to the vesting date due to death, serious illness, accident, permanent disablement or redun-
dancy, the Board will make a pro rata payment or other such payment as may be determined at their sole discretion.
Set out below is a summary of movements in the number of shares attached to cash benefits granted under the Scheme:
Entitlements associated with the Scheme implemented effective 1 October 2008 matured on 30 September 2011 resulting
in a cash payment of approximately $226,000 for the retention component and $Nil for the performance component.
(c) Employee Share Scheme
No employee share offers were in operation during the years ended 31 March 2012 or 2011.
As at 31 March 2012 203,316 shares (2011 203,316) were held by the Trustee, being 0.03% (2011 0.03%) of the Group’s
issued and paid up capital. No shares are allocated to employees (2011 Nil) as there is no current offer under the
Scheme. All shares are allocated to employees at the time of issue, on the condition that should they leave the
Company before the qualifying period ends, their shares will be repurchased by the Trustees at the lesser of market
price and the price at which the shares were originally allocated to the employee, subject to the repayment of the
original loan. Any such repurchased shares are held by the Trustees for allocation to future issues under the Scheme.
31 MARCH 2012
Grant Date Expiry date Balance Granted Vested Lapsed Balance
at start of during the during the /forfeited at end of
the year year year during the the year
Number Number Number Number Number
01/10/08 30/09/11 635,000 - (605,000) (30,000) -
31 MARCH 2011
Grant Date Expiry date Balance Granted Exercised Lapsed Balance
at start of during the during /forfeited at end of
the year year the year during the the year
Number Number Number Number Number
01/10/08 30/09/11 720,000 - (40,000) (45,000) 635,000
01/07/07 30/06/10 319,000 - (319,000) - -
Total 1,039,000 - (359,000) (45,000) 635,000
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP158
(d) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee
benefit expense were as follows:
35. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW
FROM OPERATING ACTIVITIES
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Expenses in relation to Executive Long-Term Incentive Plan 144 - 144 -
Expenses in relation to Executive Long-Term Performance Incentive (250) 25 (280) 25
(106) 25 (136) 25
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Profit for the year after income tax 18,431 33,545 54 147
Add/(deduct) non-cash items:
Depreciation of property, plant & equipment to recoverable amount 22,477 24,234 - -
Amortisation of intangible assets 18,149 16,659 - -
Impairment loss on property, plant & equipment - - - -
Impairment loss on intangible assets - - - -
Fair valuation adjustments 1,241 500 - -
Loss/(gain) on sale of non-current assets 76 (6,300) - -
Finance business bad debts written off 12,782 20,983 - -
Movement in accrued interest 275 (558) - -
Net (increase) in loans and advances to customers (6,077) (6,741) - -
Movement in provisions 3,427 (1,675) - -
Movement in tax 640 6,435 (82) 104
Movement in payables and accruals 408 (17,568) (106) (361)
Movement in debtors and other current assets 22,920 29,986 - -
Movement in inventories 43,336 10,533 - -
Fair value adjustment/reclassification to derivative financial instruments (647) 2,288 - -
Fair value adjustments to other financial assets 275 774 - -
Non-cash share-based payments expense (136) 25 (136) 25
Internal cash flow from financing activities - - (1,022) (1,699)
Foreign currency exchange translation (26,872) (6,959) - -
Net cash inflow / (outflow) from operating activities 110,705 106,161 (1,292) (1,784)
NOTES TO THE FINANCIAL STATEMENTS P159
36. DISCLOSURE OF COMPONENTS OF OTHER COMPREHENSIVE INCOME
Exchange differences
The Appliances business has substantial foreign operations with assets and liabilities denominated in functional cur-
rencies other than the New Zealand dollar (NZD). The value of these investments, when translated to NZD, fluctuates
with exchange rate movements. Due to the appreciation of the NZD during the year ended 31 March 2012 (refer
Note 41) a $40.5 million adverse translation difference has arisen (2011 loss of $10.4 million).
37. DISCLOSURE OF TAX EFFECTS RELATING TO EACH COMPONENT
OF OTHER COMPREHENSIVE INCOME
38. GOVERNMENT GRANTS
The Appliances business has received funding for selected research & development activities from the Foundation
for Research, Science & Technology (FRST - now merged into the Ministry of Science & Innovation), a Crown Agent
that invested in such activities on behalf of the New Zealand government. The detailed nature and extent of this
funding is commercially sensitive. FRST grant funding of $0.3 million was recognised in the financial statements for
the year ended 31 March 2012 (2011 $Nil).
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Other comprehensive income:
Exchange differences on translating foreign operations (40,491) (10,352) - -
Cash flow hedges:
(Gains) arising during the year (2,211) (27,519) - -
Reclassification adjustments for losses included in profit or loss 19,284 12,478 - -
17,073 (15,041) - -
Income tax relating to components of other comprehensive income (4,780) 5,644 - -
Other comprehensive income for the year (28,198) (19,749) - -
Before tax Tax Net-of-tax
amount (expense)/ amount
benefit
$’000 $’000 $’000
Consolidated
31 March 2012
Exchange differences on translating foreign operations (40,491) - (40,491)
Cash flow hedges 17,073 (4,780) 12,293
Other comprehensive income (23,418) (4,780) (28,198)
31 March 2011
Exchange differences on translating foreign operations (10,352) - (10,352)
Cash flow hedges (15,041) 5,644 (9,397)
Other comprehensive income (25,393) 5,644 (19,749)
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP160
39. RELATED PARTY TRANSACTIONS
(a) Key management personnel compensation
The key management personnel are the Directors of the Company, the Directors of the Finance business and the
Executive teams of both the Appliances and Finance businesses.
Compensation of key management personnel for the years ended 31 March 2012 and 31 March 2011 was as follows:
Where there have been changes of key management personnel during the years ended 31 March 2012 and 31 March
2011, remuneration for these employees has been appropriately allocated on a pro-rata basis.
(b) Other transactions with key management personnel or entities related to them
Information on transactions with key management personnel or entities related to them, other than compensation,
are set out below.
(i) Other transactions and balances
Key management personnel invested cash in debenture stock issued by the Finance business during the period.
The debenture stock was acquired on the same terms & conditions that applied to other investors at the time the
investments were made.
During the year the company sold household appliances to key management personnel on the same terms and
conditions as available to all staff.
The Chairman of the Finance business board, Mr John Gilks, is a director and shareholder of Receivables Management
(NZ) Limited, a company which provides debt collection services to the Finance business. The services are provided
on normal commercial terms and conditions.
(c) Subsidiaries
Interests in subsidiaries are set out in Note 33.
(d) Parent Company
As at 31 March 2012, the Parent company had advanced funds to Group companies of $637.6 million (2011 $637.6
million). These intra-Group advances are interest free and repayable on demand.
(e) Transactions with related parties
Haier Group Corporation is a related party owing to its 20% shareholding in the Parent Company.
Short-term Post Other Termination Share-based Total
benefits employment benefits benefits payments
benefits long-term
$’000 $’000 $’000 $’000 $’000 $’000
2012 8,635 418 - 121 49 9,223
2011 7,372 330 57 - (2) 7,757
NOTES TO THE FINANCIAL STATEMENTS P161
39. RELATED PARTY TRANSACTIONS (CONTINUED)
The following transactions occurred with Haier Group Corporation (and its associated entities) during the years
ended 31 March 2012 and 2011:
(f) Outstanding balances with related parties
The following balances are outstanding at balance date in relation to transactions with Haier Group Corporation:
Current Receivables (other) reflects the estimated costs of Product Support reported as part of Provisions (refer
Note 22) related to Haier manufactured product and which Haier Group Corporation has agreed to indemnify the
Company for. The indemnity shall not exceed actual costs.
No allowances for impairment have been raised in relation to any outstanding balances and no expense has been
recognised in respect of bad or doubtful debts due from Haier Group Corporation.
(g) Terms & conditions of related party transactions
All transactions were made on normal commercial terms & conditions and at market rates.
Outstanding balances are unsecured and are repayable in cash.
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Sales of goods and services
Sales of goods 5,383 11,598 - -
Sales of services 1,506 1,330 - -
6,889 12,928 - -
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Purchases of goods
Purchases of goods 32,273 33,579 - -
32,273 33,579 - -
Other transactions
Directors fees and travel costs paid to subsidiaries of Haier Group Corporation 287 188 287 188
287 188 287 188
CONSOLIDATED PARENT
31 March 31 March 31 March 31 March
2012 2011 2012 2011
$’000 $’000 $’000 $’000
Current receivables (sales of goods and services) 3,751 1,432 - -
Current receivables (other) 1,930 - - -
Current payables (purchases of goods and services) 10,124 2,482 - -
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP162
40. EVENTS OCCURRING AFTER THE STATEMENT OF FINANCIAL POSITION DATE
On 23 April 2012, the maturity date of the RFS Trust 2006-1 Committed liquidity facility in the Finance business was
extended from 26 October 2012 to 29 April 2013.
41. FOREIGN CURRENCY EXCHANGE RATES
31 March 31 March
2012 2011
NZ$1.00 =
Australian dollar 0.7879 0.7353
United States dollar 0.8193 0.7587
Euro 0.6137 0.5369
Thai baht 25.28 22.98
Mexican peso 10.4751 9.0597
British pound 0.5129 0.4715
NOTES TO THE FINANCIAL STATEMENTS P163
COMPANY
INFORMATION
FIVE YEAR TREND STATEMENT (UNAUDITED)
NZ$’000 except where stated otherwise 2012 2011 2010 2009 2008
Group
Total operating revenue 1,031,168 1,110,342 1,157,029 1,359,531 1,399,709
Net profit after taxation 18,431 33,545 (83,328) (95,254) 54,212
Normalised net profit after taxation1 26,300 30,040 17,950 33,780 65,545
Cash flow from operations
Before movement in Finance business receivables 116,782 112,902 87,602 9,380 83,672
Movement in Finance business receivables (6,077) (6,741) (49,978) (23,096) (63,650)
110,705 106,161 37,624 (13,716) 20,022
Total assets 1,453,686 1,558,414 1,652,199 1,996,354 1,830,224
Earnings per share (cents)
Basic 2.5 4.6 (13.6) (33.1) 19.1
Diluted 2.5 4.6 (13.6) (33.1) 18.7
Dividends per share (cents) - - - 5.0 18.0
Appliances business
Operating revenue 891,449 965,053 1,020,966 1,222,613 1,275,816
Operating profit before interest and taxation 7,347 28,801 (103,779) (85,522) 68,432
Items affecting comparability 3,935 (5,126) 133,198 141,092 14,832
Normalised operating profit before interest and taxation 11,282 23,675 29,419 55,570 83,264
Normalised operating margin2 1.3% 2.5% 2.9% 4.5% 6.5%
Assets employed 664,136 751,522 858,059 1,232,237 1,051,612
Finance business
Operating revenue 139,719 145,289 136,063 136,918 123,893
Operating profit before interest and taxation3 37,814 34,722 28,904 21,086 26,143
Items affecting comparability (6,774) - - - 745
Normalised operating profit before interest and taxation 31,040 34,722 28,904 21,086 26,888
Finance receivables 594,532 601,595 615,693 587,326 584,931
1 Excludes items affecting comparability2 Normalised operating profit to operating revenue 3 Includes operating interest
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP166
EMPLOYEE REMUNERATION
The Group operates in a number of countries where remuneration market levels differ widely. During the year, the
number of employees, not being Directors of Fisher & Paykel Appliances Holdings Limited, who received remunera-
tion and the value of other benefits exceeding $100,000 was as follows:
REMUNERATION NUMBER OF EMPLOYEES REMUNERATION NUMBER OF EMPLOYEES
2012 2011 2012 2011
$ Overseas New Zealand Overseas New Zealand $ Overseas New Zealand Overseas New Zealand
100001-110000 15 61 33 38 340001-350000 1 - - 1
110001-120000 24 27 26 26 350001-360000 - - 2 -
120001-130000 23 25 31 16 360001-370000 1 1 - 2
130001-140000 22 18 12 11 380001-390000 1 1 - -
140001-150000 13 15 11 5 390001-400000 1 - 1 -
150001-160000 15 12 9 9 400001-410000 - 1 1 1
160001-170000 8 4 7 8 410001-420000 - - - -
170001-180000 7 15 9 1 420001-430000 - - - 1
180001-190000 1 4 3 3 440001-450000 - 2 1
190001-200000 5 4 3 2 450001-460000 - 1 - -
200001-210000 3 2 2 1 460001-470000 - 2 - -
210001-220000 4 4 3 3 470001-480000 1 1 - -
220001-230000 5 1 1 3 480001-490000 - 1 - 1
230001-240000 3 4 4 4 500001-510000 1 - - -
240001-250000 - 2 3 1 510001-520000 - - 1 -
250001-260000 1 2 1 1 520001-530000 - - - 1
260001-270000 2 3 2 - 550001-560000 1 - - -
270001-280000 1 - 2 - 570001-580000 - - - -
280001-290000 6 - 3 2 590001-600000 - 1 - -
290001-300000 - - 2 1 600001-610000 - - 1 -
300001-310000 1 1 1 - 660001-670000 - - - 1
310001-320000 - - - 1 730001-740000 1 1 1 -
320001-330000 - 1 - 1 790001-800000 1 - - -
330001-340000 - - 1
NOTES TO THE FINANCIAL STATEMENTS P167
SHAREHOLDER INFORMATION
2,347 shareholders held less than a marketable parcel of shares as per the ASX Listing Rules 4.10.8.
The details set out above were as at 21 May 2012.
Substantial Security Holders
Pursuant to Section 35F of the Securities Markets Act 1988, the substantial security holders as at 21 May 2012 were
as follows:
Size of Holdings Number of % Number of %
Holders Ordinary
Shares
1 – 999 1,755 12.97 858,462 0.12
1,000-4,999 5,432 40.16 13,749,680 1.90
5,000-9,999 2,412 17.83 16,446,487 2.27
10,000-99,999 3,613 26.71 86,848,691 11.99
Over 100,000 315 2.33 606,331,842 83.72
Total 13,527 100.0 724,235,162 100.00
Holder Ordinary
Shares
Haier (Singapore) Management Holding Co. Pte Ltd (notice dated 6 July 2009) 144,847,032
Orbis Investment Management (Australia) Pty Ltd (notice dated 29 November 2011) 125,794,772
Accident Compensation Corporation Limited (notice dated 26 August 2011) [1] [2] 54,407,522
AMP Capital Investors (New Zealand) Limited (notice dated 20 March 2012) 37,458,541
[1] Including Nicholas Bangnall, an employee and portfolio manager of Accident Compensation Corporation Limited (notice dated 29 August 2011) 54,208,842 ordinary shares[2] Including Blair Cooper, an employee and portfolio manager of Accident Compensation Corporation Limited (notice dated 29 August 2011) 54,239,166 ordinary shares
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP168
Principal Shareholders
The names and holdings of the twenty largest registered shareholders as at 21 May 2011 were:
Holder Ordinary %
Shares
New Zealand Central Securities Depository Limited 226,306,217 31.24
Haier (Singapore) Management Holding Co Pte Limited 144,847,032 19.99
JP Morgan Nominees Australia Limited 40,234,019 5.55
National Nominees Limited 36,845,152 5.08
Citicorp Nominees Pty Limited 29,711,117 4.10
HSBC Custody Nominees (Australia) Limited 22,772,588 3.14
Superlife Trustee Nominees Limited (SL NZ A/C) 6,403,305 0.88
Irene Margaret Fisher & Michael John Fisher & Pravir Atindra Tesiram & NZ Guardian Trust Company Limited 5,425,328 0.74
FNZ Custodians Limited 4,851,636 0.66
Gary Albert Paykel & Dorothy Mary Paykel & Keith Raymond Rushbrook 4,183,320 0.57
Citicorp Nominees Pty Limited [Colonial First State Inv A/c] 3,691,734 0.50
New Zealand Depository Nominee Limited 3,411,951 0.47
Michael Walter Daniel & Nigel Geoffrey Ledgard Burton & Michael Murray Benjamin 2,100,000 0.28
Investment Custodial Services Limited (A/C R) 2,089,001 0.28
John Julian Aubrey Williams & Shirley Anne Williams & William Lindsay Gillanders 2,035,464 0.28
Investment Custodial Services Limited [A/c C] 1,911,688 0.26
Forsyth Barr Custodians Limited 1,753,762 0.24
Robert Michael Lerner & John Keith Radley 1,597,424 0.22
Michael John Fisher & Gurshon Fisher & The New Zealand Guardian Trust Company Limited 1,439,776 0.19
Custodian Services Limited 1,347,466 0.18
NOTES TO THE FINANCIAL STATEMENTS P169
New Zealand Central Securities Depository Limited provides a custodial depository service to institutional sharehold-
ers and does not have a beneficial interest in these shares. Its major holders as at 21 May 2012 were:
A number of these registered shareholders hold shares as nominees on behalf of other parties.
Holder Ordinary
Shares
Accident Compensation Corporation 59,020,843
Custody and Investment Nominees Limited 30,878,890
JP Morgan Chase Bank NA 22,817,120
Citibank Nominees (New Zealand) Limited 20,961,347
AMP Investments Strategic Equity Growth Fund 17,085,025
HSBC Nominees (New Zealand) Limited A/c State Street 15,564,771
New Zealand Superannuation Fund Nominees Limited 11,761,720
NZGT Nominees Limited - AIF Equity Fund 8,567,439
Tea Custodians Limited 7,375,140
National Nominees New Zealand Limited 7,153,756
Premier Nominees Ltd – Onepath Wholesale Australasian Shr Fund 6,423,553
Cogent Nominees (NZ) Limited 6,265,279
HSBC Nominees (New Zealand) Limited 3,591,610
Public Trust O/A Permanent Nominees Limited Tower NZ Equity Trust 2,566,207
Newburg Nominees Limited 2,231,940
Cogent Nominees (NZ) Limited 1,443,791
NZGT Nominees Limited – AMP Capital NZ Shares Index Fund 717,100
AMP Custodians Services Limited 510,866
Premier Nominees Ltd – Onepath Wholesale NZ Share Fund 498,332
Onepath (NZ) Nominees Limited 490,198
Private Nominees Limited 259,910
NZGT Nominees Ltd 78,530
Mint Nominees Limited 42,850
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP170
Directors’ Shareholdings
Directors held interests in the following shares in the Company at 31 March 2012:
Share Dealings by Directors
The Board has received no disclosures, in accordance with Section 148(2) of the Companies Act 1993, from Direc-
tors of acquisitions or dispositions of relevant interests in the Company between 31 March 2011 and 31 March 2012.
Subsidiary Company Directors
Section 211(2) of the Companies Act 1993 requires the Company to disclose, in relation to its subsidiaries, the total
remuneration and value of other benefits received by Directors and former Directors, and particulars of entries in
the interests registers, made during the year ended 31 March 2012.
The remuneration and other benefits of such employees (received as employees) totalling $100,000 or more during the
year ended 31 March 2012, are included in the relevant bandings for remuneration disclosed on page 167 of this report.
No employee of the Group appointed as a Director of the Company’s subsidiaries receives or retains any remunera-
tion or other benefits in their capacity as Director. Payments were made to persons who are not employees of the
Group for their directorships of subsidiary companies. John Gilks received $45,000 and Gary Paykel received $30,000
(of which $18,098 for Mr Gilks and $30,000 for Mr Paykel were included as part of their total remuneration as Direc-
tors of the Group outlined on page 59) and Carlos da Silva and Hugh Rennie, QC each received $53,268 for their
directorships in the Finance business companies. Boardroom Corporate & Advisory Services Pte Limited received
S$1,800 for providing a nominee director for the Company’s wholly-owned subsidiary, Fisher & Paykel Singapore
Pte Limited, as required by Singaporean law.
The following persons respectively held office as Directors of the Company’s subsidiaries at 31 March 2012:
AF Investments Limited
Stuart Broadhurst, Mark Richardson, Gary Paykel
Fisher & Paykel Appliances Limited
Stuart Broadhurst, Mark Richardson, Gary Paykel
2012 2011
Ordinary Ordinary
Shares Shares
S B Broadhurst
Ordinary Shares
Beneficially Owned 500,000 500,000
J W Gilks (Retired 25 August 2011)
Ordinary Shares
Held by an Associated Person 500,000 * 500,000
P V Lough (Appointed 12 September 2011)
Ordinary Shares
Held by an Associated Person 22,936
P D Lucas (Retired 31 March 2012)
Ordinary Shares
Held by an Associated Person 200,000 200,000
G A Paykel
Ordinary Shares
Held by an Associated Person 4,183,320 4,183,320
* Holding as at date of retirement/resignation
NOTES TO THE FINANCIAL STATEMENTS P171
Fisher & Paykel Production Machinery Limited
Stuart Broadhurst, Mark Richardson, Gary Paykel
Allied Industries Limited
Stuart Broadhurst, Mark Richardson, Gary Paykel
Fisher & Paykel Appliances Employee Share Purchase Trustee Limited
Mark Richardson, Dale Farrar
New Zealand Export Corporation Limited
Stuart Broadhurst, Mark Richardson, Gary Paykel
Fisher & Paykel Australia Holdings Limited
Stuart Broadhurst, Mark Richardson, Michael Church, Timothy Kirkup, Roger Lonsdale-Cooper
Fisher & Paykel Finance Pty Limited
Stuart Broadhurst, Mark Richardson, Michael Church, Timothy Kirkup, Roger Lonsdale-Cooper
Fisher & Paykel Australia Pty Limited
Stuart Broadhurst, Mark Richardson, Michael Church, Timothy Kirkup, Roger Lonsdale-Cooper
Fisher & Paykel Manufacturing Pty Limited
Stuart Broadhurst, Mark Richardson, Michael Church, Timothy Kirkup, Roger Lonsdale-Cooper
Fisher & Paykel Customer Services Pty Limited
Stuart Broadhurst, Mark Richardson, Michael Church, Timothy Kirkup, Roger Lonsdale-Cooper
Fisher & Paykel Appliances Limited (UK)
Stuart Broadhurst, Mark Richardson, Craig Reid
Fisher & Paykel Appliances Italy Holdings S.r.l.
Stuart Broadhurst, Mark Richardson
Fisher & Paykel Appliances Italy S.p.A.
Stuart Broadhurst, Antonio Pilati
Fisher & Paykel (Singapore) Pte Limited
Stuart Broadhurst, Mark Richardson, Gary Paykel, Baey Cheng Song
Fisher & Paykel Appliances (Thailand) Co., Limited
Stuart Broadhurst, Mark Richardson, Gary Paykel, Roger Lonsdale-Cooper, Shaneel Prasad
Fisher & Paykel Appliances (USA) Holdings Inc
Stuart Broadhurst, Mark Richardson, Gary Paykel
Dynamic Cooking Systems Inc
Stuart Broadhurst, Mark Richardson, Gary Paykel
Fisher & Paykel Appliances Inc
Stuart Broadhurst, Mark Richardson, Gary Paykel
Fisher & Paykel Laundry Manufacturing, Inc
Stuart Broadhurst, Mark Richardson, Gary Paykel
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP172
Fisher & Paykel Appliances Canada Inc
Stuart Broadhurst, Mark Richardson, Gary Paykel
Fisher & Paykel Appliances Mexico, S. de R.L. de C.V.
Stuart Broadhurst, Mark Richardson, Gary Paykel
Fisher & Paykel Finance Holdings Limited
Stuart Broadhurst, Gary Paykel, Alastair Macfarlane, John Gilks, Carlos da Silva and Hugh Rennie
Fisher & Paykel Finance Limited
Stuart Broadhurst, Gary Paykel, Alastair Macfarlane, John Gilks, Carlos da Silva and Hugh Rennie
Consumer Finance Limited
Stuart Broadhurst, Gary Paykel, Alastair Macfarlane, John Gilks, Carlos da Silva and Hugh Rennie
Consumer Insurance Services Limited
Stuart Broadhurst, Gary Paykel, Alastair Macfarlane, John Gilks, Carlos da Silva and Hugh Rennie
Equipment Finance Limited
Stuart Broadhurst, Gary Paykel, Alastair Macfarlane, John Gilks, Carlos da Silva and Hugh Rennie
Fisher & Paykel Financial Services Limited
Stuart Broadhurst, Gary Paykel, Alastair Macfarlane, John Gilks, Carlos da Silva and Hugh Rennie
Retail Financial Services Limited
Stuart Broadhurst, Gary Paykel, Alastair Macfarlane, John Gilks, Carlos da Silva and Hugh Rennie
NOTES TO THE FINANCIAL STATEMENTS P173
GENERAL DISCLOSURE OF INTEREST BY DIRECTORS
SECTION 140(2) COMPANIES ACT 1993
The Directors and Alternate Directors of Fisher & Paykel Appliances Holdings Limited named below have made
a general disclosure of interest, that has not been disclosed elsewhere in this Annual Report, by a general notice
disclosed to the Board and entered in the Company’s interests register. General notices of interest were given by
these directors during the financial year ended 31 March 2012:
S B Broadhurst
Director of: Saratal Limited
a Shareholder in: Fisher & Paykel Appliances Holdings Limited
Liang Haishan
an Executive Officer of: Haier Group
P V Lough
Chairman of: Methven Ltd
Quotable Value
Deputy Chairman of: Port Nelson Limited
a Director of: Livestock Improvement Corporation
indirectly a
Shareholder in: Fisher & Paykel Appliances Holdings limited
P D Lucas (retired 31 March 2012)
a Shareholder in: Fisher & Paykel Appliances Holdings Limited
L A C Marshall
Executive Director of: ABC Commercial Division, Australian Broadcasting Corporation
a Director of: Melbourne International Jazz Festival
G A Paykel
Chairman of: Fisher & Paykel Healthcare Corporation Limited
a Director of: ACG Capital (NZ) Limited
Atlantis Healthcare Limited
Endeavour Yachting Limited
Fisher & Paykel Healthcare Corporation Limited
Fisher & Paykel Healthcare Employee Share Purchase Trustee Limited
Howgate Holdings Limited
Keano Enterprises Limited
Lady Ruby Investments Limited
Levante Holdings Limited
New Zealand 93 Limited
Stonex Systems Limited
Team New Zealand Ltd
a Trustee of: Andsar Family Trust
Levante No. 2 Trust
Maurice Paykel Charitable Trust (Inc)
Maurice & Phyllis Paykel Trust (Inc)
Team New Zealand Trust
a Shareholder in: Fisher & Paykel Appliances Holdings Limited
W J Roest
an Executive Officer of: Fletcher Building Limited
a Director of: Fletcher Building Limited Subsidiaries and Associated Companies
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP174
Housing Foundation Limited
New Zealand Housing Foundation
a Trustee of: Building Products Superannuation Fund Ltd
Crane Share Plan Pty Limited
Fletcher Building Nominees Limited
G E Crane Superannuation No 2 Pty Ltd
G E Crane Superannuation Pty Ltd
Penrose Retirement Nominees Limited
Rocla Group Superannuation Fund Pty Limited
Tan Lixia
an Executive Officer of: Haier Group
K S Turner
Chairman of: Waitaki Wind Limited
Solar City New Zealand Ltd
Deputy Chairman of: Auckland International Airport Limited
a Director of: Chorus Limited
Keith Turner & Associates Limited
Pacific Simulators 2010 Ltd
Spark Infrastructure Group and Subsidiaries
Alternate Directors
Tommy Leung
an Executive Officer of: Haier International Co. Ltd
Hou Xinlai
an Executive Officer of: Haier Electrical Appliances Corp. Ltd
Subsidiaries of Fisher & Paykel Appliances Holdings Limited
The Directors of the New Zealand subsidiaries of Fisher & Paykel Appliances Holdings Limited named below have
made a general disclosure of interest, that has not been disclosed elsewhere in this Annual Report, by a general notice
disclosed to the board of the relevant company and entered in the relevant interests register(s). General notices of
interest were given by these directors during the financial year ended 31 March 2012:
C M da Silva
a Director of: King St Advertising Limited
IT Partners Limited
IT Partners Group Limited
Trelise Cooper Group Limited
Trelise Cooper Property Limited
LGC Trustee Limited
Fisher & Paykel Finance Limited & Subsidiaries
Advisory Board of: Westervelt Sporting Lodges (NZ) Ltd
a Trustee of: Guarda Trust
Andrew Johnson Business Trust
Te Maunga Trust
Seguro Trust
Cabeca Trust
Coromandel Trust
Waikato Rental Trust
Homeopathic Trust
NOTES TO THE FINANCIAL STATEMENTS P175
J W Gilks
Chairman of: Queenstown Airport Corporation
Receivables Management (NZ) Limited and Subsidiaries
Fisher & Paykel Finance Holdings Limited and Subsidiaries
a Director of: Business Mentors NZ Limited
Dublin Bay Investments Limited
Fundit Holdings Limited
H B Rennie
a Director of: Cooke Family Children’s Trust
Estate Michael Avigdor Hirschfeld
Harbour Chambers Limited
Hebare Trust
Hirschfield Custodian Nominees Limited
Michael Hirschfeld Family Trust
Michael Hirschfeld Childrens’ Trust
Theatre Arts Charitable Trust
NZ Institute of Chartered Accountants
Fisher & Paykel Finance Ltd
Directors Indemnity and Insurance
The Group has arranged, as provided for under its Constitution, policies of Directors and Officers Liability Insur-
ance which, with a Deed of Indemnity, entered into with all Directors, ensures that generally Directors will incur no
monetary loss as a result of actions undertaken by them as Directors. Certain actions are specifically excluded, for
example, the incurring of penalties and fines, which may be imposed in respect of breaches of the law.
Use of Company Information
There were no notices from Directors of the Company requesting to use Company information received in their
capacity as Directors, which would not otherwise have been available to them.
Additional Information
The Company was incorporated in Auckland, New Zealand.
The Company is not subject to Chapters 6, 6A, 6B and 6C of the Corporations Act 2001 (Australia) dealing with the
acquisition of shares (ie substantial holdings and takeovers).
Limitations on the acquisition of securities imposed by the jurisdiction in which the Company is incorporated (New
Zealand) are:
_ a. In general, securities in the Company are freely transferable and the only significant restrictions in relation
to the acquisition of securities are those imposed by New Zealand laws relating to takeovers, overseas invest-
ment and competition.
_ b. The Takeovers Code creates a general rule under which the acquisition of more than 20% of the voting rights
in the Company, or the increase of an existing holding of 20% or more of the voting rights in the Company,
can only occur in certain permitted ways. These include a full takeover offer in accordance with the Takeovers
Code, a partial takeover offer in accordance with the Takeovers Code, an acquisition approved by an ordinary
resolution, an allotment approved by an ordinary resolution, a creeping acquisition (in certain circumstances)
or compulsory acquisition if a shareholder holds 90% or more of the shares in the Company.
_ c. The Overseas Investment Act 2005 and various Overseas Investment Regulations regulate certain invest-
ments in New Zealand by overseas persons. In general terms, the consent of the Overseas Investment Office is
likely to be required where an “overseas person” acquires shares or an interest in shares in the Company that
amount to more than 25% of the shares issued by the Company, or, if the overseas person already holds 25%
or more, the acquisition increases that holding.
_ d. The Commerce Act 1986 is likely to prevent a person from acquiring shares in the Company if the acquisition
would have, or would be likely to have, the effect of substantially lessening competition in a market.
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP176
The Company’s securities are quoted on the NZX and ASX.
As at 21 May 2012, the Company has only one class of equity securities, being ordinary shares. Each of the Com-
pany’s ordinary shares entitles the holder to one vote.
NOTES TO THE FINANCIAL STATEMENTS P177
EXECUTIVE
Parent Company
Stuart Broadhurst – Managing Director and Chief Executive Officer
David Sullivan – Chief Financial Officer
Appliances Business
Stuart Broadhurst – Managing Director
Brett Butterworth – VP Components & Technology, Production Machinery Limited and Haier PMO
Andrew Cooke – VP Supply Chain Management & Information Technology
Roger Cooper – VP Operations
Dale Farrar – VP Human Resources
Garry Moore – VP Quality & Customer Services
Matthew Orr – VP Corporate Planning & Investor Relations
Craig Reid – Chief Sales & Marketing Officer
David Sullivan – Chief Financial Officer
Daniel Witten-Hannah – VP Product Development
Finance Business
Alastair Macfarlane – Managing Director
Sarah Carstens – Company Secretary & General Counsel
Adrian Lichkus – Chief Risk Officer
Ian McGregor – Chief Financial Officer
Sarah O’Connor – Chief Human Resources Officer
Greg Shepherd – Chief Operating Officer
Colin Smith – Chief Information Officer
DIRECTORY
Fisher & Paykel Appliances Holdings Limited
Registered Offices
New Zealand
78 Springs Road, East Tamaki, Auckland 2013, New Zealand
Australia
Weippin Street, Cleveland, Queensland 4163, Australia
Contact Details
New Zealand
Company Secretary – Mark Richardson
PO Box 58546, Botany, Auckland 2163, New Zealand
Telephone: +64 9 273 0600
Facsimile: +64 9 273 0609
Australia
PO Box 798, Cleveland, Queensland 4163, Australia
Telephone: +61 7 3826 9100
Facsimile: +61 7 3821 2666
USA
5900 Skylab Road, Huntington Beach, CA 92647, USA
Telephone: +1 714 372 7000
Facsimile: +1 714 372 7002
FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED AND SUBSIDIARIESP178
United Kingdom
Maidstone Road, Kingston, Milton Keynes, MK10 0BD, UK
Telephone: +44 1908 585577
Facsimile: +44 1908 586235
Mexico
Blvd Montebello Lotes 1, 2, 3, Manzana 8, Col. Parque Industrial Colonial, Reynosa, Tamaulipas C.P 88780, Mexico
Telephone: +52 899 9217200
Facsimile: +52 899 9217299
Europe
Via Fabbian Matteo 7, Borso del Grappa, Treviso 31030, Italy
Telephone: +39 0423 9121
Facsimile: +39 0423 9124
Singapore
150 Ubi Avenue 4, #03-01A, Ubi Biz-hub, Singapore 408825
Telephone: +65 67482067
Facsimile: +65 65470123
Thailand
7/252, 7/282 Moo 6, Amata City Industrial Estate, Tambol Mapyangporn, Amphur Pluakdaeng, Rayong 21140, Thailand
Telephone: +66 38 640400
Facsimile: +66 38 650269
Internet Address
www.fisherpaykel.com
e-Mail [email protected]
Share Registry
New Zealand
Computershare Investor Services Ltd
Private Bag 92119, Auckland 1142, New Zealand
Telephone: +64 9 488 8777
Facsimile: +64 9 488 8787
Email: [email protected]
Australia
Computershare Investor Services Pty Ltd
GPO Box 3329, Melbourne, Victoria 3001, Australia
Telephone Within Australia: 1 800 501 366
Telephone Outside Australia: +61 3 9415 4083
Facsimile: +61 3 9473 2500
NOTES TO THE FINANCIAL STATEMENTS P179