Directors’ Report
For the Year ended 31 December 2007
The Directors of Vita Health, a subsidiary of Vita Health Pty Limited submit their report together with the financial report of Care Cosmetics and the consolidated financial report of the economic entity being Care Cosmetics and its controlled entities (Vita Health Pty Limited) for the year ended 31 December 2007 and the auditors’ report thereon.
Review of operations and results
The review of operations and results of Care Cosmetics for the year ended 31December 2007 is set out in the Chairman’s and Group Managing Director’s reports on pages 8-12 of the Annual Report.
The consolidated operating profit after income tax attributable to shareholders of Care Cosmetics for the year ended 31 December 2007 amounted to $20 million. (2006:$15 million).
Note: The branches in Sydney have made a large contribution to the operating profit income after tax. These are displayed below:
Principal activities
Details of the Vita Health Pty Limited group of companies operations are contained on pages 4 and 5 of their Annual Report. In brief, the principal activities of Care Cosmetics during the financial year were the provision of a wide range of cosmetic products to retail and wholesale businesses encompassing:
*Basic range of skin care products for moisturizing, toning etc.
*Skin care products related to sun care and skins with age based ailments.
*Makeup made with natural ingredients – supplied to the retail markets.
*Hair Care products made with natural ingredients.
Care Cosmetics operates in Australia, the United Kingdom, New Zealand, and Fiji. In addition, the group has joint venture interests in Thailand, Malaysia and Indonesia and representative offices in the People’s Republic of China and Vietnam. In June 2006, the Government of Turkey invited the company to apply for a licence to operate in Istanbul.
Future developments
Other than references on pages 8-12 of the Annual Report, the Directors do not make any reference to likely developments and expected results at this time as such information may be prejudicial to the interests of Care Cosmetics.
Significant changes in state of affairs
During the year, there was no significant change in the state of affairs of Care Cosmetics or the Vita Health Group other than those referred to on pages 8 and 12 of the Annual Report.
Environmental regulation
Care Cosmetics operations are not subject to any significant environmental regulations under either Commonwealth or State legislation.
Subsequent events
Other than as set out in note 43 to the consolidated financial report, there have been no material subsequent events between the balance date and the date of this report.
Contracts with Directors
In addition to remuneration paid or payable and options granted to Directors as detailed below and in notes 38 and 39, Care Cosmetics has entered into contracts with each non-Executive Director under which Care Cosmetics provides benefits for their retirement. Further details are set out on page 31 of the Annual Report. Bank, insurance and other financial services are available to Directors, or related parties, under the terms and conditions available to employees of Care Cosmetics.
Directors’ shareholdings
Directors’ shareholdings are set out on page 109 of the Annual Report.
Directors
Prior to 1 April 2007, the Board of Directors of Care Cosmetics consisted of 9 non-executive Directors (including the Chairman), with diverse business experience and the one executive Director, who is the Group Managing Director and Chief Executive Officer. On 1 April 2007, three additional non-executive Directors were appointed. The names, qualifications and experience of the Directors are contained on pages 14 and 15 of the Annual Report and their special responsibilities and attendances at meetings are contained on pages, 30 to 32 of the Annual Report.
Insurance premiums
Since the end of the previous financial year Care Cosmetics or a related body corporate has paid premiums for policies that cover liabilities of current and former directors, executive officers and secretaries of Care Cosmetics.
Indemnification
Since the end of the previous financial year, neither Care Cosmetics nor a related body corporate has agreed to indemnify any officer or auditor for any liability.
Directors’ remuneration and options
The Remuneration and Personnel Development Committee is responsible for remuneration policy and rewards applicable to senior executives, and for approving the remuneration of the Care Cosmetics board members and Vita Health Group Managing Director and Chief Executive Officer and his direct reporting executives. The board policy for determining board member and senior executive emoluments is to appropriately reward individuals relevant to their responsibilities and contribution to the Group. This is done in the context of competitive market rates to retain and attract high quality management, and with the benefit of external independent advice.
Executive remuneration is provided in three components:
*Fixed remuneration
*Short-term incentive; and
*Long-term incentive (Care Cosmetics Executive Share options)
Short and long term incentive for executive Directors and senior executive are based on the achievement of specific individual and company performance targets. Under the Care Cosmetics Executive Share options, the exercise of options is conditional upon remaining in the employ of the Group and performance incentives related to the increase in total return to shareholders.
The nature and amount of each major element of emoluments for each Director and the five named executive officers receiving the highest emoluments is set out below: