Home' Ansell annual report : Ansell Annual Report 2018 Contents The primary adjustments were:
1. To exclude the one-time impact of the Sexual Wellness business divestment, encompassing the gain
on sale, disposal costs, and the portion of costs arising from the Transformation Program directly
associated with restructuring company overhead aligned to support the new ongoing GBUs and
eliminating stranded cost remaining behind after the Sexual Wellness business divestment;
2. To exclude the net gain arising on the two non-cash accounting items disclosed separately in this report;
3. To exclude the demolition and site clearance costs associated with a legacy site dating back to Pacific
Dunlop times and with no connection to the current Ansell business.
The Board elected to retain within results for incentive purposes a number of other items. The Board
considered, but elected to make no adjustment for the benefit to interest expense of the cash arising from
the divestment. It recognised that while it was appropriate to exclude the gain on sale as a disproportionate
benefit to management, appropriate stewardship of the cash arising is a responsibility of management and
the successful receipt of disposal proceeds was only possible through successful execution of a complex
divestment transaction. The Board also elected to retain the benefit of the US legal entity restructuring that
gave rise to a reduction in capital gains earned on the Sexual Wellness divestment and allowed the carry
back to offset prior capital gains taxes previously recorded in ordinary continuing earnings. It recognised
that this benefit was of value to shareholders, only came about through management action, and would
have accrued to the Company whether or not the Sexual Wellness business had been sold. A number of
other favourable and unfavourable items were assessed, with a decision made to make no adjustment in
accordance with the principles the Board has established and consistently applied to assess whether such
items should be included or excluded from results for incentive purposes.
Calculating EPS Growth for Continuing Operations
Having determined the appropriate adjusted EPS for incentive purposes, the principles of constant
currency adjustment were then applied to the calculation of achieved EPS Growth. Consistent with
the application of the principles in prior years other LTI adjustments as described below were made.
Earnings per share
Prior year reported – continuing operations
Prior year EPS at Constant Currency (CC)
Current year EPS
Prior year EPS at CC plus Prior year LTI adjustments
Current year EPS plus Current year LTI adjustments
Achieved EPS Growth for LTI measurement
27.5 = (f-e)
Restructuring FY15 – Note 1
Restructuring FY18 – Note 2
Other – Note 3
Deduct net FX Gain/(loss) reported in EPS – Note 4
Exclude portfolio review costs – Note 5
EPS impact total adjustments
Notes on LTI adjustments
1. Represents amortising the FY15 restructuring cost that was excluded from the year incurred then deducted from LTI
achievement over the next years beginning FY16.
2. Excludes the post-tax cost in FY18 of the manufacturing and Global Supply Chain Transformation Program announced in
July 2017. These costs will be amortised for LTI purposes over the next three years beginning in FY18.
3. Other includes in FY18 the final year of the agreed amortisation of the post-tax cost of the cash related elements of the FY14
restructuring program. With these costs fully amortised by end of FY17, there is no impact on FY18.
4. Consistent with the policy to measure performance for incentive plans on a constant currency basis, P&L gains or losses
arising from FX movements are also excluded from reported EPS.
5. Excludes the costs of the FY17 portfolio review to be consistent with exclusion of the gain on sale on divestment of the Sexual
Wellness business as disclosed in the FY18 remuneration report.
A reconciliation from the EPS for LTI award purposes to the Adjusted EPS (as per Page 4) is shown below:
Reconciliation of EPS for LTI award to Adjusted EPS
EPS for LTI purposes (above)
FY18 Manufacturing and Supply Chain Transformation costs
Tax benefit from US legal entity restructure included in discontinued operations
Demolition and site clearance costs of legacy Pacific Dunlop site in Louisiana, US
Ansell Limited Annual Report 2018
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