ANNUAL REPORT 2007
CORPORATE
INFORMATION
Gale Pacific Limited
ABN 80 082 263 778
Directors
Mr Harry Boon (Chairman)
Mr Peter McDonald (Managing Director and Chief Executive Officer)
Mr George Richards (Non Executive Director)
Mr John Murphy (Non Executive Director)
Company Secretary
Ms Sophie Karzis
Registered Office
145 Woodlands Drive, Braeside, Victoria, 3195
T + 613 9518 3333
Solicitors
Norton Gledhill
Level 23, 459 Collins Street, Melbourne, Victoria, 3000
T + 613 9614 8933
Share Register
Computershare
Yarra Falls, 452 Johnston Street, Abbotsford, Victoria, 3067
Local call 1300 850 505
T + 613 9415 4000
Auditor
Pitcher Partners
Level 19, 15 William Street, Melbourne, Victoria, 3000
T + 613 8610 5000
Website Address
www.galepacific.com
TABLE OF CONTENTS
CORPORATE INFORMATION .................................................................. 2
REPORT FROM THE CHAIRMAN AND THE MANAGING DIRECTOR &
CHIEF EXECUTIVE OFFICER .................................................................. 3
BOARD OF DIRECTORS .......................................................................... 7
SENIOR MANAGEMENT .......................................................................... 8
CORPORATE GOVERNANCE.................................................................. 9
DIRECTORS’ REPORT.......................................................................... 15
AUDIT REPORT ...................................................................................... 24
FINANCIAL RESULTS............................................................................. 25
INCOME STATEMENT............................................................................ 26
BALANCE SHEET ................................................................................... 27
STATEMENT OF CHANGES IN EQUITY................................................ 28
STATEMENT OF CASH FLOWS............................................................. 29
NOTES TO THE FINANCIAL STATEMENTS.......................................... 30
ADDITIONAL STOCK EXCHANGE INFORMATION ............................ 66
Gale Pacific Limited
2
Annual Report
REPORT FROM THE CHAIRMAN AND THE
MANAGING DIRECTOR & CHIEF EXECUTIVE
OFFICER
Gale Pacific Limited
3
Annual Report
REPORT FROM THE CHAIRMAN AND THE
MANAGING DIRECTOR & CHIEF EXECUTIVE
OFFICER
Dear Shareholders,
The Year in Review
In last year's Annual Report, we reported that the Gale Pacific Group
was in the progress of a challenging review of its strategy designed to
ensure that the Group had a strengthened and stable platform to fund
its future growth plans and operations. It is pleasing to report that this
review, and the restructuring that has occurred consequently, is now
complete.
team and systems, and
The restructuring initiatives that have been taken during the year have
led to the improvement in our balance sheet, strengthening of our
management
in many
levels have been
operational areas within
substantially reduced, efficiency levels in our China operation have
increased,
to working capital
management, there is a renewed focus on research and development
activities, and our senior management team is now in place worldwide.
improvements have been made
the business. Debt
improvements
A concentrated effort was made to streamline the business and to
ensure that the Group’s cost structure is better matched to projected
revenue generation.
This resulted in writing off equipment and raw material remaining from
the transfer of the knitting plant to China, writing down the carrying
value of certain research and development activities, and taking up
additional provisions for slow moving inventories. In addition, the
German garden product distribution business, Jung, was sold in
September 2006. After a detailed review, it was concluded that the
New Zealand manufacturing operations should be transferred to the
China manufacturing plant as this would assist the Group to operate
more efficiently. The New Zealand plant is expected to be fully
integrated into the China plant by early next calendar year.
long
term
revised
the Group’s bankers,
In July 2006 the Group successfully completed a capital raising of $20
million via a combination of a private placement and a share purchase
plan. In addition, $15.5 million of debt represented by unsecured
convertible notes was converted to ordinary shares. Despite these
initiatives, it became clear in November 2006, following discussions
with
financing
that
arrangements needed to be put into place. The Group appointed
advisors to assist in identifying and assessing long term refinancing
options. After a comprehensive process to identify a sustainable long
term capital structure, a recapitalisation proposal combining a $20
million equity placement and renewed Australian banking facilities was
announced
in June 2007. This proposal was approved by
shareholders at an extraordinary general meeting held in August 2007
and resulted in the issue of 30,300,000 shares to our new cornerstone
investor, Investec Wentworth Private Equity and its related entities at a
price of $0.50 per share, and 9,700,000 shares to our long-standing
major investor Thorney Holdings Pty Limited upon the same terms.
Net proceeds from the equity placement were used to reduce long-
term debt and provide working capital to assist in the growth of the
Group.
Revenue
Sales revenues from continuing activities declined by 1.6% or $1.8
million to $110.4 million due mainly to foreign exchange differences
year on year in consolidation of the accounts.
Operations
Asia / Pacific
Australia
Sales revenue in our Australian business increased by approximately
5%, or $2.6 million highlighted by a 15% increase in sales to retail
channels, double digit growth in all major retail product categories and
increased sales with all of our major retail customers. Strong export
sales to Japan were achieved resulting from a new product range we
developed in conjunction with our Japanese distributor. The ongoing
drought resulted in tough market conditions in the agricultural sector,
causing a reduction of sales in the commercial and industrial fabrics
segment of approximately 15% on the previous year. Most of these
sales losses were in the coated fabrics product range and were a
direct result of these market conditions.
forecasting and production planning which resulted
During the year we implemented new supply chain initiatives to
improve
in
inventory reductions year on year. Selective price increases were
implemented to offset the impact of global raw material increases
which continue to challenge our business.
New Zealand
Sales in New Zealand remained flat compared with the previous year,
with margin pressure continuing as a result of increased import
competition, exacerbated by a strong New Zealand dollar. These
factors, combined with the need to operate manufacturing plants at
maximum efficiency levels all year round, led to the decision
announced recently to relocate the New Zealand plant to the Group’s
wholly owned facility in Beilun, China. The plant relocation project is
now well underway with the first pieces of equipment shipped to China
at the end of August 2007. Our plan is to complete the necessary
stock build in New Zealand to service the market fully and then have
the majority of the extrusion and knitting equipment relocated to China
by the end of the 2007 calendar year. Our objective is to have the
plant and machinery installed in China early in 2008. The equipment
used in the manufacture of the extruded plastics products will be
relocated to the Melbourne, Australia plant and will be operational in
the New Year.
Gale Pacific Limited
4
Annual Report
China
We have successfully completed the relocation and recommissioning
of the Australian extrusion and knitting equipment to China which is
now operating at increased output and efficiency levels. During the
year we closed the Shanghai sales office and restructured the China
production, R&D and engineering departments
to reduce staff
headcount and provide a leaner operation with a focus on efficient
manufacture of high quality product. The clearing of the remaining
bottlenecks earlier this year have enabled us to free up more available
capacity in the plant enabling us to produce even more efficiently in
the future. Improved production planning and inventory management
processes have enabled us to significantly reduce the level of
inventory held in the China plant. The China operation also achieved
ISO9001:2000 quality accreditation.
Sourcing of colour master batches, one of our key raw materials has
been moved to local Chinese manufacturers. These master batches
will continue to be manufactured to our strict formulations and quality
levels but at reduced costs and shortened lead times. Resin prices
remained high throughout the financial year and, where possible, price
increases have been passed on to the market.
Europe / Middle East / Africa
Europe
Gale Europe completed its first season after the sale of the Jung
business. As trading in the European market had been done
previously through the Jung entity we had to establish all new
customer listings and trading terms with all major customers. This
process has been completed. During the year we processed, sorted
and re-worked the previous season’s returned inventory which resulted
in us carrying high levels of inventory in Europe and reducing our
ordering on the China plant as a result.
With European inventory being at very high levels following the
seasonal returns, particularly of products not core to our product range
or ongoing strategy, the decision was made in June 2007 to write
down our European assets by $4.9 million to allow management to
liquidate this inventory and focus on the opportunities for sustainable
business growth in Europe.
We have now exited the Jung warehouse where all inventory had been
held previously and are in the process of consolidating our European
warehouse locations as we reduce our inventory holdings. Staffing
levels in Europe have been reduced as we establish a base in this
market.
A full review of our product range and distribution channels has been
completed, and we are currently implementing a more focused
strategy, including our commercial fabric range. Range review and
customer presentations are well underway for the following season
with existing and new customers.
Middle East / Africa
Sales in the Middle East / Africa were down 7.6% on last year as a
result of earlier bottlenecks in the production process in China, which
have now been cleared. Management of the Middle East / Africa
business has now been merged with the European operation to reduce
costs and increase the senior management focus of this business.
The Americas
USA
Sales in the USA have almost doubled since 2005, and grew by 29%
in local currency over last year. During the year, we increased store
coverage to 639 Home Depot stores, expanded retail fabric business
into 1,327 Wal-Mart stores, and increased store coverage for Shade
Sails at Costco.
We have expanded our manufacturers representative network to 17
who now service independent retail customers across all major
in North America, and have also established a new
markets
warehouse facility in Georgia to provide shorter lead times and
improved customer service to our east coast customers.
Sales of commercial / architectural fabrics grew during the year but not
at the levels anticipated. We still see this as a strong growth area for
the business and are currently exploring ways to expand our market
penetration more rapidly.
Results
The Group reported a loss after tax of $16.36 million, which includes a
trading loss of $2.7 million, write downs and provisions in relation to
the European and New Zealand assets of $9.9 million, and the
additional write-off of the deferred tax asset relating to Gale Europe
GmbH of $3.75 million.
Research and Development (R & D)
We have now completed a full review of our R & D activities, structure
and project list and have aligned our R & D strategy with that of the
business. The R & D group now has a much clearer focus and is
working on a number of projects under the direction of Dr Paul Cacioli,
our new head of Research & Development appointed during the year.
Our plan is to start to commercialise some of these projects within the
FY08 financial year. Continuous product improvement and innovation
will be a key factor to ensure the Group’s future growth.
Information Technology
A new Group wide, global information system is currently being
implemented in Australia with the other regions to follow shortly. We
have also invested in improved demand forecasting and production
planning systems, which are expected to provide further improvements
to working capital management and customer service levels.
Cash Flow and Balance Sheet
The Group has reduced borrowings by $58 million during the last
twelve months through a combination of a capital raising, conversion
of unsecured notes to equity, sale of the Jung business, and positive
cash flow from operations. The Group also generated $9 million in
operating cash flow for the year primarily through working capital
reductions. Capital expenditure reduced to approximately $4 million,
down from $19.4 million in the previous financial year, as the
investment phase of the Group’s relocation and expansion plan was
completed.
Gale Pacific Limited
5
Annual Report
Tax
Corporate Governance
During Gale’s start up and entry into Europe over the past three years,
our German subsidiary has accumulated tax losses that are available
for offset against future profit in Europe, and would have been
classified in the accounts as a “deferred tax asset”. However, until
such time that the European business demonstrates consistent
profitability, it has been decided to write off the carrying value of this
deferred tax asset. As the European operations generate profits, the
ability to recover these tax losses will be an upside to the after tax
profit of the Group.
Dividends
There will be no dividend paid for the 2006 / 2007 financial year, and
Directors expect the payment of dividends will resume when the
the business has been
improved
demonstrated.
financial performance of
Annual General Meeting
A notice of the Company’s Annual General Meeting to be held on 26
November 2007 and a proxy form for voting is enclosed with this
report.
Directors
One of the items of business at the Annual General Meeting is the re-
election of Mr George Richards who retires as a Director by rotation in
accordance with the constitution of the Company and, being eligible,
offers himself for re-election. The Board endorses Mr Richards’ re-
election.
We also welcome Mr John Murphy to the board of directors of the
Company. Mr Murphy’s appointment was approved by shareholders
at the Company’s extraordinary general meeting on 24 August 2007.
Mr Murphy is the Managing Director of Investec Wentworth Private
Equity Limited. Mr Murphy’s qualifications which include Bachelors
and Masters degrees in Commerce, and his experience in a number of
public and private companies, strengthens the Board and we look
forward to his contribution.
to
is committed
The Group
the principles of good corporate
governance. A full discussion on the Group’s progress in creating
strong and transparent corporate governance and in meeting all of the
‘Principles and Best Practice Recommendations’ published by the
Corporate Governance Council of the Australian Stock Exchange is
contained in the Directors’ Report section of this Annual Report.
As part of this commentary, the Directors' Report contains the
Remuneration Report. This report shows how the Group seeks to align
employee remuneration with Group performance, putting a significant
portion of executive remuneration at risk. It details both variable short
term cash incentives and longer term performance hurdles. The Board
believes such short and long term incentive programs are vital to
improving organisational performance. At this year's Annual General
Meeting shareholders will be asked to provide a non binding vote on
the Remuneration Report.
Management and Staff
The Group has made a number of senior management appointments
during the last twelve months. We are confident that this team will
deliver improved performance for the business in the future.
We would like to thank the whole team at Gale for their hard work and
dedication to the business in what have been extremely challenging
times. With the restructuring work that has been completed and a
more positive outlook for the business we look forward to providing a
more secure and rewarding environment for all of our employees.
Outlook
With the recently announced $20 million capital raising now complete,
the Group will have a stronger Balance Sheet, significantly reduced
borrowings and long term banking facilities in place.
Driven by improved operating efficiencies and sales growth from our
northern hemisphere operations,
improved agricultural market
conditions in Australia and traction being gained from our refocused
R & D activities, we remain confident about the future prospects of the
business.
Mr Harry Boon
Chairman
28 September 2007
Mr Peter McDonald
Managing Director and Chief Executive Officer
28 September 2007
Gale Pacific Limited
6
Annual Report
BOARD OF DIRECTORS
HARRY BOON,
LLB (HONS), B. Com
PETER MCDONALD,
Bachelor of Business
(Marketing)
JOHN MURPHY,
CA, FCPA, B.Comm,
M.Comm
GEORGE RICHARDS,
CPA, AAICD
Harry Boon
John Murphy
Chairman & Non Executive Director since August 2005
Non Executive Director since August 2007
Mr Boon joined the Company in August 2005 and brings to the role
his experience as a senior executive in one of Australia’s leading
listed companies, Ansell Limited. Mr Boon’s executive career
culminated with the position of Chief Executive Officer of Ansell
Limited from April 2002 to June 2004, having previously been
President, Chief Executive Officer and Managing Director of Ansell
Healthcare since February 1989. Mr Boon is also Chairman of
Tattersalls Limited, a Non Executive Director of Hastie Group
Limited and Non Executive Director of Toll Group Limited.
Mr Boon has lived and worked in Australia, Europe, UK and Canada,
and has broad based experience in global marketing and sales, large
scale manufacturing operations, and product development. He is
multi-lingual, has a strong track record of delivering business results
through setting ambitious goals, building the appropriate organisation
structures, and pursuing achievement.
Mr Boon is Chairman of the Company’s Nomination Committee and
is a member of the Audit & Risk and Remuneration Committees.
Mr Murphy is the Managing Director of Investec Wentworth Private
Equity Limited and in this capacity is a board member of the fund’s
investments, including the following listed companies: Ariadne
Australia Limited, Staging Connections Group Limited and Gale
Pacific Limited.
Mr Murphy is also a non executive director of First Opportunity Fund
Limited and Investec Bank (Australia) Limited.
During the last 3 years, Mr Murphy was a non executive director of
the following listed companies: Kids Campus Limited (2004-2006),
Southcorp Limited (2003-2005), Invocare Limited (2001-2005) ,
SMS Management and Technology Limited (2001-2004), Fone
Zone Group Limited (2005 -2006) and Australian Pharmaceutical
Industries Limited (2004-2007).
Mr Murphy is the Chairman of the Company’s Remuneration
Committee and is a member of the Audit & Risk and Nomination
Committees.
Peter McDonald
George Richards
Managing Director & Chief Executive Officer
Non Executive Director since May 2004
Mr McDonald is the Company Managing Director and Chief
Executive Officer since April 2006 and Executive Director since
1998.
Mr McDonald joined Gale in 1988 and was appointed as an Executive
Director of the Company in 1998. Mr McDonald has held the positions
of Product Manager, National Marketing Manager, National Sales and
Marketing Manager and most recently the Company’s Chief Operating
Officer and Managing Director of the Company’s U.S. operations.
Mr Richards joined the Board in 2004. Mr Richards was the Chief
Executive of Mitre 10 South West Ltd from 1990 to 2000 and was
previously the Managing Director of Cooper Tools, a market leader
in hand tools manufacture and distribution. Mr Richards has had
over 45 years experience in retail, marketing, manufacturing and
distribution. He is a Board member of The Alfred Foundation, a
Director of Magnet Mart Pty Ltd, Bowen & Pomeroy Pty Ltd,
Chairman of Carpet Court Australia Limited, Associate Member of
the Australian Institute of Company Directors and Australian Society
of Accountants.
Mr Richards is Chairman of the Company’s Audit & Risk Committee
and is a member of the Nomination and Remuneration Committee.
Gale Pacific Limited
7
Annual Report
SENIOR MANAGEMENT
JEFF COX
DR PAUL
CACIOLI
STEPHEN
CARROLL
MARTIN
DENNEY
FRANK
ALBERTSMEIER
EMMA XU
PAUL
DUCRAY
Jeff Cox
Chief Financial Officer (“CFO”)
Jeff Cox is an experienced CFO and has held senior finance positions
for over 20 years. He has been the CFO of major divisions within the
Pacific Dunlop Group including the Battery Group, Food Group and at
Ansell. All these businesses had revenues in excess of $1 billion and
significant
international sales, distribution and manufacturing
operations. Jeff’s experience at Ansell included residing in the USA
for 5 years while playing a significant part of a successful and global
company.
Dr Paul Cacioli
General Manager, Research & Development and Technical Services
Dr Paul Cacioli joined Gale in late March 2007 and is responsible for
planning and managing the Company’s research and development
activities. Paul spent 19 years with Ansell, 14 of which were spent
overseas in Malaysia, Sri Lanka and the USA, rising to the position of
Senior Vice President of Science and Technology and Regulatory
Affairs. Paul brings to Gale a broad range of technical skills and a
world class knowledge of polymers and research and development
processes.
Stephen Carroll
Managing Director, Australia
In November 2005 Steve was appointed to the role of Managing
Director for the Australian operation. Steve has been involved in
helping manage the successful integration of numerous acquisitions
into the Gale model whilst helping the brands, people and the
Australian business strategy maintain its market leading position. Prior
to this appointment, Steve held the positions of National Sales and
Marketing Manager Consumer Products. As the business grew and
acquired a larger industrial product portfolio, he was appointed Group
Sales and Marketing Manager for Australia.
Martin Denney
Managing Director, USA
Martin has strong commercial and strategic planning skills gained over
20 years across a range of industries including food and beverage,
distribution, manufacturing, technology and property development. He
has held senior management roles including General Manager of
Socomin, a branded food import and distribution division of Pacific
Dunlop Group (turnover A$40 million). Other roles include National
Sales and Marketing Manager at Dennis Family Corporation (turnover
A$250 million), a leading Australian property developer, and Business
Development Manager at Adacel Technologies, a global simulation
and systems company based in Australia.
Frank Albertsmeier
Managing Director, Europe / Middle East / Africa
Frank has had extensive experience in managing sales, marketing and
business development in the consumer and professional goods
industry in various countries in Europe. Prior to joining Gale, Frank
was the Director of Sales for ICI paints Europe for four years,
responsible for a turnover of €85 million. He played a leading role in
the strategic process to develop the future direction for ICI in Europe.
Frank also managed more than 100 sales and marketing people within
this division while doubling the bottom line. Frank has held many
sales and management positions for Black and Decker Europe through
his 18 year tenure, reaching the level of Commercial Director.
Emma Xu
Managing Director, China
Prior to joining Gale, Emma worked as an attorney in China with
extensive experience in law and international business management.
Emma’s responsibilities initially included government relationships,
finance, internal control and communication with the Board. Emma
was promoted to Managing Director of Gale Pacific Special Textiles
(Ningbo) Limited (“GPST”) in September 2003 as GPST became a
wholly owned overseas enterprise of Gale. Emma was responsible for
managing the construction of the Gale facility in Ningbo and the
relocation of the manufacturing equipment from Braeside, Australia to
Ningbo, the installation of new machines purchased from Europe, the
set up of aluminium extrusion and powder coating lines in-house, and
selecting and leading the Chinese management team.
Paul Ducray
Chief Manufacturing Officer
Paul joined Gale in December 2004 and relocated to China in June
2006 and took on his current position of Chief Manufacturing Officer
responsible for all manufacturing and logistics functions at GPST.
Paul previously worked at BTR Dunlop in South Africa. In 2001 Paul
migrated to New Zealand and joined Donaghy’s NZ in the role of
Manufacturing Manager. A successful turnaround of the company
started with a management buyout, new management team and
restructuring of the business. This led to the purchase of the Industrial
Textiles division of Donaghys by Gale Pacific Limited in December
2004.
Gale Pacific Limited
8
Annual Report
CORPORATE GOVERNANCE
Gale Pacific Limited
9
Annual Report
CORPORATE GOVERNANCE STATEMENT
This statement sets out the corporate governance practices that were in operation throughout the financial year for Gale Pacific Limited (“the Company”)
and its controlled entities (“the Group”). Gale Pacific’s Directors and management are committed to conducting the Company’s business in an ethical
manner and in accordance with the highest standards of corporate governance. The Board has continued its strategy of strengthening its Corporate
Governance practices and believes that Gale Pacific now complies with the Corporate Governance Council’s Principles of Good Corporate Governance
and Best Practice Recommendation. A summary of how the Group complies with the ASX Corporate Governance Council’s Principles of Good
Corporate Governance and Best Practice Recommendations is included below. The various charters and policies are all available on the Gale Pacific
web site: www.galepacific.com.
ASX Principle
Status
Reference / Comment
Principle 1: Lay solid foundation for management oversight
1.1
Formalise and disclose the functions
reserved to the board and those
delegated to management.
Complying
The Board has adopted a charter which establishes the role of the Board and its
relationship with management. The primary role of the Board is the protection and
enhancement of long-term shareholder value. Its responsibilities include the overall
strategic direction of the Group, establishing goals for management and monitoring
the achievement of these goals. The functions and responsibilities of the Board and
management are consistent with ASX Principle 1. A copy of the Board Charter is
posted on the Group’s website.
Principle 2: Structure the Board to add value
2.1
A majority of the board members
should be independent.
Complying
The Board comprises four directors, three of whom are non executive and
independent. The Directors considered by the Board to constitute independent
directors are Mr H Boon, Mr G Richards and Mr J Murphy. The test to determine
independence which is used by the Company is whether a Director is independent of
management and any business or other relationship with the Group that could
materially interfere with – or could reasonably be perceived to materially interfere
with – the exercise of their unfettered and independent judgement.
2.2
chairman
The
independent director.
should
be
an
Complying
The Chairman, Mr H Boon has been chairman of the Company since August 2005
and was, at the date of his appointment and continues to be, independent. The
Chairman leads the Board and is responsible for the efficient organisation and
conduct of the Board’s functions.
2.3
The roles of the chairman and the
chief executive officer should not be
exercised by the same individual.
Complying
The positions of Chairman and Chief Executive Officer are held by separate
persons.
2.4
The board should establish a
nomination committee.
Complying
The Board has a formal Nomination Committee comprising of the non executive
independent Directors. The Nomination Committee’s functions and powers are
formalised in a Charter. Mr H Boon is Chairman of the Nominations Committee.
Gale Pacific Limited
10
Annual Report
ASX Principle
Status
Reference / Comment
2.5
Provide the information indicated in
the Guide to reporting on Principle 2.
Complying
The following information is set out in the Group’s annual report:
•
•
•
•
•
The skills and experience of Directors.
The Directors considered by the Board to constitute independent Directors
and the Group’s materiality thresholds.
A statement regarding Directors’ ability to take independent professional
advice at the expense of the Company.
The term of office held by each Director in office at the date of the report.
The names of members of the Company’s committees and their attendance
at committee meetings.
Principle 3: Promote ethical and responsible decision making
Complying
The Group has formulated a Code of Conduct which can be viewed on its website.
3.1
Establish a code of conduct to guide
the directors,
the chief executive
officer, the chief financial officer and
any other key executives as to the
practices necessary
to maintain
confidence in the company’s integrity
and
and
the
for
accountability of
reporting and investigating reports of
unethical practices.
responsibility
individuals
3.2
Disclose the policy concerning trading
in company securities by directors,
officers and employees.
Complying
The Group has adopted a Securities Trading Policy which can be viewed on its
website.
3.3
Provide the information indicated the
Guide to Reporting on Principle 3.
Complying
The Group’s policy documents are posted on its website.
Principle 4: Safeguard integrity in financial reporting
4.1
to
that
the board
Require the chief executive officer
and the chief financial officer to state
in writing
the
company’s financial reports present a
true and fair view, in all material
respects, of the company’s financial
condition and operational results and
are
relevant
accounting standards.
in accordance with
Complying
The Directors are committed to the preparation of financial statements that present a
balanced and clear assessment of the Group’s financial position and prospects. The
Audit & Risk Committee reviews the Group’s half yearly and annual financial
statements and makes recommendations to the Board. The Board requires the
Managing Director and Chief Executive Officer and the Chief Financial Officer to
state in writing to the Board that the Group’s financial reports present a true and fair
view, in all material respects, of the Group’s financial condition and operational
results and are in accordance with relevant accounting standards.
4.2
The board should establish an audit
committee.
Complying
The Company has an Audit & Risk Committee. The primary role of the Audit & Risk
Committee is to assist the Board in fulfilling its responsibilities relating to the
accounting, internal control and reporting practices of the Company and its
subsidiaries.
Gale Pacific Limited
11
Annual Report
ASX Principle
Status
Reference / Comment
4.3
The audit committee should be
structured so that it consists of only
non executive directors; a majority of
independent directors, and have an
independent chairperson who is not
chairman of the board and have at
least three members.
Complying
The Audit & Risk Committee consists of only non executive, independent Directors
and it has an independent Chairman who is not the Chairman of the Board. Mr G
Richards is the Chairman of the Audit & Risk Committee.
4.4
The audit committee should have a
formal charter.
Complying
The Audit & Risk Committee has a formal charter which sets out the Audit
Committee’s role and responsibilities, composition, structure and membership
requirements. The Audit Committee is given the necessary power and resources to
meet its charter.
4.5
Provide the information indicated in
Guide to Reporting on Principle 4.
Complying
Details of the names and qualifications of the members of the Audit & Risk
Committee and the number of meetings held and attended by each member are
contained in the Directors’ Report of the Annual Report.
Principle 5: Make timely and balanced disclosure
5.1
policies
and
Establish written
procedures designed
to ensure
compliance with ASX Listing Rule
to
disclosure
ensure accountability at a senior
management
that
level
compliance.
requirements and
for
Complying
The Group has a documented policy which has established procedures designed to
ensure compliance with Australian Stock Exchange Listing Rule disclosure
requirements and to ensure accountability at a senior management level for that
compliance. The Managing Director and Chief Executive Officer, the Chief Financial
Officer and the Company Secretary are responsible for interpreting the Group’s
policy and where necessary informing the Board. The Company Secretary is
responsible for all communications with the Australian Stock Exchange. The purpose
of the procedures for identifying information for disclosure is to ensure timely and
accurate information is provided equally to all shareholders and market participants.
5.2
Provide the information indicated in
Guide to Reporting on Principle 5.
Complying
A copy of the Group’s Disclosure Policy is posted on its website.
Principle 6: Respect the rights of shareholders
6.1
and
disclose
Design
a
communications strategy to promote
effective
with
shareholders and encourage effective
participation at general meetings.
communication
Complying
The Board informs shareholders of all major developments affecting the Group’s
state of affairs as follows:
1.
2.
3.
4.
5.
The annual report is distributed to all shareholders, including relevant
information about the operations of the Group during the year and changes in
the state of affairs.
The half-yearly report to the Australian Stock Exchange contains summarised
financial information and a review of the operations of the Group during the
period.
All major announcements are lodged with the Australian Stock Exchange, and
posted on the Group’s website.
Proposed major changes in the Group which may impact on share ownership
rights are submitted to a vote of shareholders.
The Board encourages full participation of shareholders at the Annual General
Meeting to ensure a high level of accountability and identification with the
Group’s strategy and goals.
Gale Pacific Limited
12
Annual Report
ASX Principle
Status
Reference / Comment
Complying
The Company’s auditor attends the Annual General Meeting.
6.2
Request the external auditor to attend
the Annual General Meeting and be
available
to answer shareholder
questions about the conduct of the
audit and the preparation and content
of the Auditor’s Report.
Principle 7: Recognise and manage risk
7.1
The board or appropriate board
committee should establish policies
on risk oversight and management.
Complying
The Board has responsibility for monitoring risk oversight and ensures that the
Managing Director and Chief Executive Officer and the Chief Financial Officer report
on the status of business risks through risk management programs aimed at
ensuring risks are identified, assessed and appropriately managed. In addition to its
financial reporting obligations, the Audit & Risk Committee is responsible for
reviewing the risk management framework and policies of the Group. The structure
of the Audit & Risk Committee and its responsibilities reflect the requirements of
ASX Principle 7. In performing this function, the Committee receives periodic reports
from the auditor, senior management and, in some instances, external consultants.
7.2
The chief executive officer and the
chief financial officer should state to
the
the Board
in writing
statement
the
integrity of financial statements is
founded on a sound system of risk
management and internal compliance
and control.
that
regarding
given
Complying
The Managing Director and Chief Executive Officer and the Chief Financial Officer
are required to state to the Board in writing that the integrity of the financial
statements is founded on a sound system of risk management and internal
compliance and control and that the Group’s risk management and internal
compliance and control system is operating efficiently and effectively in all material
respects.
7.3
Provide the information indicated in
Guide to Reporting on Principle 7.
Part
Complying
Management has completed a review of the Group’s major business units,
organisational structure and accounting controls and processes. As a result of this
review a number of risk management recommendations have been made and will be
implemented. A description of the Group’s risk management policy and internal
compliance and control systems has been documented and is posted on the Group’s
web site.
Principle 8: Encourage enhanced performance
8.1
Disclose the process for performance
evaluation
its
committees and individual directors,
and key executives.
board,
the
of
Complying
The Group has in place systems designed to fairly review and actively encourage
enhanced Board and management effectiveness. The Nomination Committee takes
the Group’s key
responsibility
executives.
the Board’s performance and
for evaluating
8.2
Provide the information indicated in
Guide to Reporting on Principle 8.
Complying
A performance evaluation for the Board and its members has been completed. No
material internal deficiencies or issues were identified through this process.
Gale Pacific Limited
13
Annual Report
ASX Principle
Status
Reference / Comment
Principle 9: Remunerate fairly and responsibly
9.1
Provide disclosure in relation to the
company’s remuneration policies to
enable investors to understand (i) the
costs and benefits of those policies
and (ii) the link between remuneration
paid to directors and key executives
and corporate performance.
Complying
Details of the Directors and key senior executives remuneration are set out in the
Remuneration Report of the Annual Report.
9.2
The board should establish a
remuneration committee.
Complying
The Board has in place a Remuneration Committee. The structure of this Committee
and its responsibilities reflect the requirements of ASX Principle 9. All three
members of the Committee are independent Directors. In addition to the members,
the Managing Director and Chief Executive Officer is invited to the meetings at the
discretion of the Committee. This Committee is responsible for ensuring that the
recruitment and remuneration policies and practices of the Group are consistent with
its strategic goals and are designed
individual
performance as well as meet the appropriate recruitment and succession planning
needs. The Chairman of the Remuneration Committee is Mr J Murphy.
to enhance corporate and
9.3
9.5
9.4
Clearly distinguish the structure of
non executive directors’ remuneration
from that of executives.
Complying
The structure of non executive Directors’ remuneration is distinct from that of
executives and is further detailed in the Remuneration Report of the Annual Report.
Provide the information indicated in
Guide to Reporting on Principle 9.
Complying
The charter setting out the responsibilities of the Remuneration Committee has been
adopted and a copy of this charter is posted on the Group’s website.
Ensure that payment of equity-based
executive remuneration is made in
accordance with thresholds set in
plans approved by shareholders.
Complying
The Remuneration Committee is responsible for reviewing and monitoring executive
performance, remuneration and incentive policies and the manner in which they
should operate, the introduction and operation of share plans, executive succession
planning and development programs to ensure that they are appropriate to the
Group’s needs and the remuneration framework for Directors (as approved by
shareholders). The Committee may consult with remuneration advisors to assist in
its role.
Principle 10: Recognise the legitimate interests of stakeholders
10.1
Establish and disclose a code of
conduct to guide compliance with
legal and other obligations
to
legitimate stakeholders.
Complying
The Group has in place a Code of Conduct which sets standards for the Board and
employees in dealing with the Group’s customers, suppliers, shareholders and other
stakeholders. A copy of this Code of Conduct has been posted on the Group’s
website.
Gale Pacific Limited
14
Annual Report
DIRECTORS’ REPORT
Gale Pacific Limited
15
Annual Report
DIRECTORS’ REPORT
The Directors of Gale Pacific Limited (“the
Company”) present their annual financial report
of the consolidated entity, being the Company
and
its subsidiaries (“the Group”) for the
financial year ended 30 June 2007.
The Directors in office at any time during or since the end of the year
to the date of this report are:
Harry Boon, LLB (HONS), B. Com
Chairman and Non Executive Director since August 2005
Mr Boon joined the Company in August 2005 and brings to the role his
experience as a senior executive in one of Australia’s leading listed
companies, Ansell Limited. Mr Boon’s executive career culminated
with the position of Chief Executive Officer of Ansell Limited from April
2002 to June 2004, having previously been President, Chief Executive
Officer and Managing Director of Ansell Healthcare since February
1989.
During the last three years, Mr Boon has also served as a Director of
Tattersall’s Limited, Hastie Group Limited, Toll Holdings Limited,
Funtastic Limited.
Mr Boon is a member of the Company’s Audit & Risk, Nomination and
Remuneration Committees.
Peter McDonald, Bachelor
(Marketing)
of Business
John Murphy, CA, FCPA, B.Comm, M.Comm
Non Executive Director since August 2007
Mr Murphy is the Managing Director of Investec Wentworth Private
Equity Limited and in this capacity is a board member of the fund’s
investments, including the following listed companies Ariadne Australia
Limited and Staging Connections Group Limited. Mr Murphy is also a
non executive director of First Opportunity Fund Limited and Investec
Bank (Australia) Limited.
During the last 3 years, Mr Murphy was a non executive director of the
following
listed companies Kids Campus Limited (2004-2006),
Southcorp Limited (2003-2005), Invocare Limited (2001-2005), SMS
Management and Technology Limited (2001-2004), Fone Zone Group
Limited (2005 -2006) and Australian Pharmaceutical Industries Limited
(2004-2007).
Mr Murphy is Chairman of the Company’s Remuneration Committee
and is also a member of the Audit and Risk and Nomination
Committees.
George Richards, CPA, AAICD
Non Executive Director since May 2004
Mr Richards was the Chief Executive of Mitre 10 South West Ltd from
1990 to 2000 and was previously the Managing Director of Cooper
Tools, a market leader in hand tools manufacture and distribution. Mr
Richards has had over 45 years experience in retail, marketing,
manufacturing and distribution. He is a Board member of The Alfred
Foundation, a Director of Magnet Mart Pty Ltd, Bowen & Pomeroy Pty
Ltd, Chairman of Carpet Court Australia Limited, Associate Member of
the Australian Institute of Company Directors and Australian Society of
Accountants.
Managing Director and Chief Executive Officer since April 2006
and Executive Director since 1998
No other directorships of listed companies were held by Mr Richards at
any time during the three years prior to 30 June 2007.
Mr McDonald was appointed Managing Director and Chief Executive
Officer of Gale in April 2006. Mr McDonald joined Gale in 1988 and
was appointed as an Executive Director of the Company in 1998. Mr
McDonald has held the positions of Product Manager, National
Marketing Manager, National Sales and Marketing Manager and most
recently the Company’s Chief Operating Officer and Managing Director
of the Company’s U.S. Operations.
No other directorships of listed companies were held by Mr McDonald
at any time during the three years prior to 30 June 2007.
Mr Richards is Chairman of the Company’s Audit and Risk and
Nomination Committees and is also a member of the Remuneration
Committee.
Gale Pacific Limited
16
Annual Report
Gary Gale
Review and Results of Operations
Executive Director since 1998, Non Executive Director since April
2006, retired 21 November 2006
Mr Gale studied textile engineering in Germany, and is the son of the
founder of the Gale business. Mr Gale was responsible for the
restructuring of the Gale Group both in Australia and the USA in
1996/97 and was appointed as Managing Director of the Company in
1998. He was responsible for the Company entering the advanced
polymer fabric industry as a manufacturer in 1977, taking the former
Gale family business public in late 2000, expansion into world markets,
and the establishment of a world-class manufacturing facility in China.
Mr Gale resigned as Managing Director in April 2006 but remained on
the Board as a Non Executive Director until his retirement at the 2006
Annual General Meeting.
No other directorships of listed companies were held by Mr Gale at
any time during the three years prior to his retirement.
Daryl Reilly, Graduate Diploma Of Business
(Accounting), CPA, ACIS, FTMA, AICD
Non Executive Director since 1998, retired 21 November 2006
Mr Reilly was previously an Executive Director and principal of Advent
Private Capital Pty Ltd (“APC”) and was APC’s Chief Financial Officer
and Company Secretary between 1984 and 2004. During his twenty
year career in private equity, he has been a Director on the Boards of
numerous companies involved in a diverse range of areas including
manufacturing, business to business, information technology, tourism,
leisure and hospitality and communications, in addition to his funds
management role within APC. He was a significant former shareholder
of APC. He is a Director of 8T8 Corporation Pty Ltd, the holding
company of Sleepmaster Pty Ltd and is a Director of its Chinese
subsidiary. No other directorships of listed companies were held by Mr
Reilly at any time during the three years prior to his retirement at the
2006 Annual General Meeting.
Ms Sophie Karzis, B JURIS LLB
The consolidated loss of the Group for the financial year attributable to
the members of Gale Pacific Limited was $16.4 million. Refer to the
Chairman and Managing Director’s & Chief Executive Officer’s Report
for further details on the Group’s result.
State of Affairs
In the opinion of the Directors there were no significant changes in the
state of affairs of the Company and its controlled entities that occurred
during the financial year under review not otherwise disclosed in this
report or the accompanying financial report.
Events Subsequent to Balance Date
On 30 August 2007, the Company completed a $20 million capital
raising via the private placement of 40,000,000 ordinary fully paid
shares at a price of 50 cents per share.
Other than the matters discussed above, nothing has arisen in the
interval between the end of the financial year and the date of this
report any item, transaction or event of a material and unusual nature
likely, in the opinion of the Directors of the Company, to affect
significantly, the operations of the Group, the results of those
operations, or the state of affairs of the Group in future financial years.
Likely Developments
likely developments
information regarding
the
Disclosure of
operations of the Group in future financial years has been made in part
in the Chairman and Managing Director’s and Chief Executive Officer’s
Report of this Annual Report. Any further such disclosure and the
expected results of those operations is likely to result in unreasonable
prejudice to the Group and has accordingly not been disclosed in this
report.
in
Company Secretary
Environmental Regulation and Performance
Ms Karzis was appointed as Company Secretary in June 2004. Ms
Karzis is a practising lawyer who holds roles at a number of public and
private companies.
Nature of Operations and Principal Activities
The Group’s principal activities in the course of the financial year were
the marketing, sales, manufacture and distribution of advanced
polymer fabrics and related products to global markets.
regulations under
to any significant
The Group’s operations are not subject
environmental
the Commonwealth or State
legislation. However, the Directors believe that the Group has
adequate systems in place for the management of its environmental
requirements and is not aware of any breach of those environmental
requirements as they apply to the Group.
Dividends
In respect of the financial year ended 30 June 2007, no interim
dividend was paid and the Directors have determined not to pay a final
dividend.
Gale Pacific Limited
17
Annual Report
Share Based Payments
Options
The Company maintains an option scheme for certain staff and
executives,
including Executive Directors, as approved by
shareholders at an Annual General Meeting. The number of unissued
ordinary shares under option as at the date of this report is 750,000.
The issue price of each option is zero. Each option entitles the option
holder to one (1) ordinary share in Gale Pacific Limited in the event
that the option is exercised.
Of the 750,000 options on issue, 180,000 options were issued under
the Company’s executive share plan to the Managing Director and
Chief Executive Officer, Mr Peter McDonald, as approved by the
Company’s shareholders at the Company’s Annual General Meeting
held on 15 November 2004. 450,000 options were issued on 16
November 2005 and 120,000 options were issued on 24 October 2006
to executives and staff of Gale. Included in these issues are options
issued to senior executives; 40,000 options issued to Mr Stephen
Carroll Managing Director Australia, 40,000 issued options to Mr Zafar
Fakroddin Business Unit Manager Gale Europe GmbH, and 20,000
options issued to Mr Paul Ducray Chief Manufacturing Officer. The
exercise price of the 180,000 issued options is $3.00, the exercise
price of the 450,000 issued options and the 120,000 issued options is
$1.52. The vesting of options is determined in accordance with specific
share price and/or performance hurdles. In the case of the 180,000
options their vesting is determined in accordance with the achievement
of certain levels of adjusted weighted average earnings per share and
the vesting of the 450,000 options and 120,000 options is determined
in accordance with the achievement of certain levels of adjusted
weighted average earnings per share. The 180,000 options and the
450,000 options are not exercisable after 1 December 2008. The
120,000 options are not exercisable after 31 December 2008. Options
carry no rights to dividends and no voting rights.
During the financial year no options vested. As set out in the
accounting standard AASB 2 and the revised ASIC guidelines, the
Company has valued the issued options. A Binomial or a Black –
Scholes option pricing model was used and these models take into
account the following inputs:
•
•
•
•
•
•
•
Current price of the underlying shares as at the grant date.
Exercise price.
Expected volatility of the share price over the expected life of
the options.
First exercisable date.
Expected life.
Expected dividend yield.
Risk free interest rate for the expected life of the options.
Performance Rights
On 2 February 2007, the Company issued 150,000 performance rights
to the Managing Director and Chief Executive Officer, Mr Peter
McDonald. Each performance right entitles the holder to one (1)
ordinary share in Gale Pacific Limited when exercised and is subject to
the satisfying of relevant performance hurdles based on improvements
in the Company’s diluted earnings per share against the base year of
the 2007 financial year. Performance rights are not exercisable until
after 30 September 2009 and expire on 2 February 2017. No amount
is payable on the vesting of a performance right. Performance rights
carry no rights to dividends and no voting rights.
Further details of the options and performance rights are disclosed in
Note 16 to the Financial Statements.
Indemnification of Officers and Auditors
During the financial year, the Company paid a premium in respect of a
contract insuring the Directors of the Company, the Company
Secretary and all executive officers of the Company and of any related
body corporate against a liability incurred as a Director, Secretary or
executive officer to the extent permitted by the Corporations Act 2001.
The contract of insurance prohibits disclosure of the nature of the
liability and the amount of the premium.
The Company has not otherwise, during or since the financial year,
indemnified or agreed to indemnify an officer or auditor of the
Company or of any related body corporate against a liability incurred
as an officer or auditor.
Directors’ Shareholdings
The following table sets out each Director’s relevant interest in shares
and options in shares of the Company as at the date of this report.
Directors
Fully Paid
Ordinary Shares
Shares Options
Performance
Rights
H Boon
G Richards
J Murphy
73,000
78,851
-
-
-
-
-
-
-
P McDonald
334,714
180,000
150,000
Gale Pacific Limited
18
Annual Report
Directors’ Meetings
The following table sets out the number of Directors’ meetings (including meetings of committees of Directors) held during the financial year and the
number of meetings attended by each Director while they were a Director or committee member.
Directors
H Boon
P McDonald
G Richards
G Gale
D Reilly
Directors’ Meetings
Audit & Risk Committee
Meetings
Remuneration Committee
Meetings
Nomination Committee
Meetings
No of
meetings
eligible to
attend
Attended
No of
meetings
eligible to
attend
Attended
No of
meetings
eligible to
attend
Attended
No of
meetings
eligible to
attend
Attended
14
14
14
7
7
13
14
13
6
6
4
0
4
0
3
4
0
4
0
3
1
0
1
0
1
1
0
1
0
1
1
0
1
0
1
1
0
1
0
1
Remuneration Report
Non Executive Director Remuneration
This report contains the remuneration arrangements in place for
Directors and executives of the Group.
Objective
The Remuneration Committee reviews the remuneration packages of
all Directors and executive officers on an annual basis and makes
recommendations to the Board. Remuneration packages are reviewed
with due regard to performance and other relevant factors, and advice
is sought from external advisors in relation to their structure.
The Group’s remuneration policy is based on the following principles:
•
•
•
Provide competitive rewards to attract high quality executives;
Provide an equity incentive for senior executives that will
provide an incentive to executives to align their interests with
those of the Group and its shareholders; and
Ensure that rewards are referenced to relevant employment
market conditions.
Remuneration packages contain the following key elements:
•
•
Primary benefits – salary / fees; and
Benefits, including the provision of motor vehicles and
incentive schemes,
the
executive share option plan as disclosed in Note 16 and Note
22 to the financial statements.
including share options under
Remuneration Structure
In accordance with best practice corporate governance, the structure
of Non Executive Directors and senior manager remuneration is
separate and distinct.
The Board seeks to set remuneration at a level which provides the
Company with the ability to attract and retain directors of relevant
experience and skill, whilst incurring costs which are acceptable to
shareholders.
Structure
that
The Company’s Constitution and the Australian Stock Exchange
Listing Rules specify
the aggregate remuneration of Non
Executive Directors shall be determined from time to time by a general
meeting. An amount not exceeding the amount determined is then
divided between the directors as agreed. The last determination was at
the Annual General Meeting held on 14 December 2000 when
shareholders’ approved the Company’s constitution which provides for
an aggregate remuneration of $300,000 per annum. The amount of the
aggregate remuneration and the manner in which it is apportioned is
reviewed periodically. The Board considers fees paid to Non Executive
Directors of comparable companies when undertaking this review
process.
Each Non Executive Director receives a fee for being a Director of the
in performance based
Company and does not participate
remuneration. Non Executive Directors are encouraged to hold shares
in
is
considered good governance for Directors to have a stake in the
Company.
the Company (purchased by
the Director on-market).
It
The remuneration of Non Executive Directors for the period ended 30
June 2007 is detailed below.
Gale Pacific Limited
19
Annual Report
&
Executive
Director
Structure
Senior Manager
Remuneration
Objective
The Group aims to reward executives with a level and mix of
remuneration commensurate with their position and responsibilities
within the Group. The objective of the remuneration policy is:
•
•
•
Reward executives for Group and individual performance;
Align the interests of the executives with those of the
shareholders; and
Ensure that total remuneration is competitive by market
standards.
In determining the level and make-up of executive remuneration, the
Remuneration Committee reviews reports detailing market levels of
remuneration for comparable roles. Remuneration consists of fixed
and variable elements.
Options issued to executives as a form of compensation are
dependant upon the performance conditions outlined in Note 16 of the
financial statements.
Cash bonuses granted to executives are based on the respective
performance of their regional business unit. Bonuses are paid out at
various times during the year and are determined at the discretion of
the Remuneration Committee.
The following table discloses the remuneration of the Directors of the Company:
2006 / 2007
Short term benefits
Share based payments
Post
employ-
ment
Termin-
ation
benefits
Total
Performance related
Directors
Salary &
fees
Bonus
Non-
monetary
Super
Options
Perform-
ance
rights
Total
Options
($)
($)
($)
($)
($)
($)
($)
($)
%
%
Executive Directors
P McDonald
354,215
32,000
44,609
27,929
47,138
19,930
Non Executive Directors
H Boon
G Richards
D Reilly (i)
G Gale (ii)
Total
150,000
71,667
31,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
607,132
32,000
44,609
27,929
47,138
19,930
-
-
-
-
-
-
525,821
18.8%
12.8%
150,000
71,667
31,250
-
778,738
-
-
-
-
-
-
-
-
-
-
2005 / 2006
Short term benefits
Share based payments
Post
employ-
ment
Termin-
ation
benefits
Total
Performance related
Directors
Salary &
fees
Bonus
Non-
monetary
Super
Options
Perform-
ance
rights
Total
Options
($)
($)
($)
($)
($)
($)
($)
($)
%
%
Executive Directors
P McDonald
G Gale (ii)
Non Executive Directors
H Boon (iii)
G Richards
D Reilly (i)
T Eversteyn (iv)
Total
359,942
371,635
137,500
65,000
75,000
14,166
1,023,243
-
-
-
-
-
-
-
62,401
61,964
5,171
12,139
72,580
51,658
-
-
-
-
-
-
-
-
-
-
-
-
124,365
17,310
124,238
-
-
-
-
-
-
-
-
500,094
617,096
1,114,492
14.5%
4.6%
14.5%
4.6%
-
-
-
-
137,500
65,000
75,000
14,166
617,096
1,906,252
-
-
-
-
-
-
-
-
Gale Pacific Limited
20
Annual Report
The following table discloses the remuneration of the five highest remunerated executives of the Group.
2006 / 2007
Executives
F Albertsmeier (v)
Z Fakroddin (vi)
S Carroll
J Cox
P Ducray (vii)
Total
2005 / 2006
Executives
Z Fakroddin (viii)
E Jung (ix)
S Carroll
C McCallum (x)
E Xu (xi)
Total
Post
Employ
Super
Share Based
Payments
Options
Total
Performance Related
Short Term Benefits
Salary &
Fees
($)
320,090
189,459
214,472
229,358
169,477
Bonus (xii)
Non-
monetary
($)
($)
77,506
33,479
-
105,064
15,000
25,000
30,873
-
-
28,771
1,122,856
117,506
198,187
39,785
Salary &
Fees
($)
148,610
255,940
208,900
198,825
150,013
962,288
Bonus
($)
129,111
38,538
-
36,357
24,318
Non-
monetary
($)
60,031
15,784
27,070
15,558
18,919
228,324
137,362
24,698
($)
-
-
19,143
20,642
-
Post
Employ
Super
($)
-
4,171
20,527
-
-
($)
-
6,408
6,408
-
3,204
16,020
($)
431,075
300,931
285,896
275,000
201,452
1,494,354
Share Based
Payments
Options
($)
3,950
-
3,950
4,938
48,600
61,438
($)
341,702
314,433
260,447
255,678
241,850
1,414,110
Total
%
18.0%
2.1%
7.5%
9.1%
1.6%
Options
%
-
2.1%
2.2%
-
1.6%
Total
%
38.9%
12.3%
1.5%
16.2%
30.2%
Options
%
1.2%
-
1.5%
1.9%
20.1%
Short Term Benefits
Total
Performance Related
(i)
(ii)
(iii)
(iv)
Mr Reilly retired from his role as a Non Executive Director on 21 November 2006 and therefore the details of his remuneration for the reporting
period are to that date.
Mr Gale resigned from his role as an Executive Director on 26 April 2006 and retired as a Non Executive Director on 21 November 2006. The
details of his remuneration for the 2006 reporting period are to 26 April 2006. Mr Gale did not receive any remuneration in his role as a Non
Executive Director.
Mr Boon was appointed a Non Executive Director on 25 August 2005 and therefore the details of his remuneration for the reporting period are
from that date.
Mr Eversteyn retired from his role as a Non Executive Director on 25 August 2005 and therefore the details of his remuneration for the reporting
period are to that date.
(v)
Mr Albertsmeier is based in Germany and is remunerated in Euro converted to Australian dollars in the table above.
(vi)
Mr Fakroddin is based in Europe and is remunerated in Euro converted to Australian dollars in the table above.
(vii) Mr Ducray is based in China and is remunerated in United States dollars converted to Australian dollars in the table above. Mr Ducray was
appointed Chief Manufacturing Officer on 1 July 2006. Prior to this appointment Mr Ducray was Manufacturing Manager Gale Pacific (New
Zealand) Limited.
(viii) Mr Fakroddin was based in the Middle East and was remunerated in United States dollars converted to Australian dollars in the table above.
The bonus payments related to the period ended 30 June 2005 and 30 June 2006 and were paid in United States dollars converted to Australian
dollars in the table above.
(ix)
Mr Jung is based in Germany and was remunerated in Euro converted to Australian dollars in the table above.
(x)
Mr McCallum is based in New Zealand and was remunerated in New Zealand dollars converted to Australian dollars in the table above.
(xi)
Ms Xu is based in China and was remunerated in United States dollars converted to Australian dollars in the table above.
(xii)
Incentive bonuses are granted annually. The grant date is tied to the performance review, which for the current year was completed by 30 June
2007. The service and performance criteria are set out in this report.
Gale Pacific Limited
21
Annual Report
Auditor Independence and Non-Audit Services
A copy of the auditor’s independence declaration in relation to the audit for the financial year is provided with this report.
Non-Audit Services
The following non-audit services were provided by the Company’s auditor, Pitcher Partners. Non-audit services have been ratified by the Audit
Committee and reported to the Board. The Directors are satisfied that the provision of non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act. The nature and scope of each non-audit service provided means that auditor independence
was not compromised.
Amounts paid or payable to an auditor for non-audit services provided during the year by the auditors to any entity that is part of the Group for:
Taxation services
Corporate secretarial services
Systems review
Capital raising related services
Jung divestment
Government grant review
General assistance
Total
Consolidated
Company
2006 / 2007
($000)
84
46
25
13
5
3
2
178
2005 / 2006
($000)
99
-
-
-
-
-
-
99
2006 / 2007
($000)
36
-
25
13
5
3
2
84
2005 / 2006
($000)
74
-
-
-
-
-
-
74
Proceedings on Behalf of the Company
No person has applied for leave of a Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a
party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any
such proceedings during the year.
Rounding Off of Amounts
The Company is a Company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts
in the financial report are rounded off to the nearest thousand dollars.
Signed in accordance with a resolution of Directors made pursuant to section 298(2) of the Corporations Act 2001.
On behalf of the Directors;
Mr Harry Boon
Chairman
28 September 2007
Mr Peter McDonald
Managing Director and Chief Executive Officer
28 September 2007
Gale Pacific Limited
22
Annual Report
Auditor’s Independence Declaration
To the Directors of Gale Pacific Limited and its controlled entities.
In relation to the independent audit for the year ended 30 June 2007, to the best of my knowledge and belief there have been:
(i) No contraventions of the auditor independence requirements of the Corporations Act 2001;
(ii) No contraventions of any applicable code of professional conduct.
S Schonberg
Partner
28 September 2007
PITCHER PARTNERS
MELBOURNE
Directors’ Declaration
The Directors of the Company declare that:
The financial statements and notes, as set out on pages 26 to 65 are in accordance with the Corporations Act 2001 including:
•
•
•
compliance with Accounting Standards in Australia and the Corporations Regulations 2001;
providing a true and fair view of the financial position as at 30 June 2007 and of the performance, as represented by the results of the operations
and the cash flows, of the Company and the Group for the year ended on that date; and
that the Directors have been given the declaration required under section 295A of the Corporations Act 2001.
In the Directors' opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Mr Harry Boon
Chairman
28 September 2007
Mr Peter McDonald
Managing Director and Chief Executive Officer
28 September 2007
Gale Pacific Limited
23
Annual Report
Independent Auditor’s Report
We have audited the accompanying financial report of Gale Pacific Limited and its controlled entities. The financial report comprises the Balance Sheet
as at 30 June 2007, and the Income Statement, Statement of Changes in Equity and Cash Flow Statement for the year ended on that date, a summary
of significant accounting policies, other explanatory notes and the directors' declaration of the consolidated entity comprising the company and the
entities it controlled at the year's end or from time to time during the financial year.
Directors' Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting
Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining
internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or
error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the
Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes,
complies with International Financial Reporting Standards.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing
Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the
audit to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected
depend on the auditor's judgement, including the assessment of the risks of material misstatement in the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial report 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
entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s Opinion
In our opinion,
(a)
the financial report of Gale Pacific Limited is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the company's and consolidated entity's financial position as at 30 June 2007 and of its performance for the
year ended on that date; and
(ii)
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations
2001; and
(b)
the consolidated financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
S Schonberg
Partner
28 September 2007
PITCHER PARTNERS
MELBOURNE
Gale Pacific Limited
24
Annual Report
FINANCIAL RESULTS
Gale Pacific Limited
25
Annual Report
INCOME STATEMENT
For the year ended 30 June 2007
Revenue
Expenses
Changes in inventories of finished goods & work in progress
Raw materials and consumables used
Employee benefits expense
Depreciation & amortisation expenses
Inventory write down
Impairment of goodwill & assets
Restructuring and termination costs
Provision for non recovery of related party receivables
Operating overheads
Other expenses
Finance costs
Loss from continuing operations before income tax
Income tax (expense) / benefit
Loss from continuing operations after income tax
Loss from discontinued operations
Loss attributable to minority interests
Loss attributable to the members of the parent entity
Earnings Per Share
From Continuing & Discontinued Operations:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
From Continuing Operations:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
The accompanying notes form part of these financial statements.
Consolidated
Company
Note
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
2
3
4
20(c)
19
18
29
29
29
29
110,404
112,190
57,801
62,212
5,776
(57,624)
(22,623)
(7,859)
(4,339)
(1,031)
(4,672)
-
(2,377)
(50,667)
(22,171)
(9,153)
-
(728)
-
-
(25,343)
(23,813)
(228)
(5,598)
(13,137)
(2,752)
(15,889)
(471)
-
(4,630)
(5,408)
(6,757)
4,037
(2,720)
(9,224)
2
(479)
(32,147)
(8,049)
(3,053)
(440)
(316)
-
(9,699)
(8,080)
(2,728)
(4,379)
(7,596)
(23,539)
(9,684)
(5,287)
-
(6,478)
-
-
(14,439)
(3,043)
(4,349)
(11,569)
(12,203)
2,884
(8,685)
-
-
3,196
(9,007)
-
-
(16,360)
(11,942)
(8,685)
(9,007)
(17.07)
(17.07)
(16.58)
(16.58)
(22.57)
(22.57)
(5.14)
(5.14)
Gale Pacific Limited
26
Annual Report
BALANCE SHEET
As at 30 June 2007
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Other current assets
Total current assets
Non Current Assets
Receivables
Other financial assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total non current assets
Total assets
Current Liabilities
Trade and other payables
Income received in advance
Borrowings
Other financial liabilities
Current tax liabilities
Provisions
Total current liabilities
Non Current Liabilities
Borrowings
Deferred tax liabilities
Provisions
Total non current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Parent entity interest
Minority interests
Total equity
Consolidated
Company
Note
2006 / 2007
($000)
2005 / 2006
($000)
2006 / 2007
($000)
2005 / 2006
($000)
5
6
7
4
8
6
9
10
11
4
12
13
14
4
15
13
4
15
16
17
18
19
7,642
19,363
30,143
362
1,517
59,027
-
-
60,893
11,538
270
72,701
131,728
11,104
-
47,073
31
658
6,182
65,048
4,348
1,133
998
6,479
71,527
60,201
81,936
(7,280)
(14,444)
60,212
(11)
60,201
10,552
36,702
47,599
1,047
1,497
97,397
-
-
70,220
12,486
2,054
84,760
182,157
22,243
-
97,672
-
344
1,283
121,542
12,070
1,185
974
14,229
135,771
46,386
47,124
(2,643)
1,916
46,397
(11)
46,386
3,654
5,557
10,581
-
1,169
20,961
42,244
25,326
9,339
5,091
2,908
84,908
105,869
2,865
-
27,074
31
382
902
31,254
4,348
-
78
4,426
35,680
70,189
81,936
344
(12,091)
70,189
-
70,189
6,055
6,414
11,257
591
365
24,682
55,072
25,909
19,407
5,913
-
106,301
130,983
3,768
1,026
73,030
-
-
768
78,592
7,237
1,185
73
8,495
87,087
43,896
47,124
178
(3,406)
43,896
-
43,896
The accompanying notes form part of these financial statements.
Gale Pacific Limited
27
Annual Report
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2007
Consolidated
Company
Note
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
Total Equity at the Beginning of the Period
46,386
54,534
43,896
49,373
Exchange differences on translation of foreign operations
Employee share based payment reserve
17(a)
17(b)
Net (loss) / income recognised directly in equity
(4,803)
166
(4,637)
266
80
346
-
166
166
-
80
80
Loss for the period
(16,360)
(11,944)
(8,685)
(9,007)
Total recognised income and expense for the period
(20,997)
(11,598)
(8,519)
(8,927)
Transaction with Equity Holders in their Capacity as Equity Holders
Contributions, net of raising costs and tax
Dividends provided for or paid
16
23
34,812
-
34,812
5,053
(1,603)
3,450
34,812
-
34,812
5,053
(1,603)
3,450
Total equity at the end of the period
60,201
46,386
70,189
43,896
Total Recognised
Attributable to
Income and Expense
for
the Period
is
Members of the parent
Minority interest
Total
The accompanying notes form part of these financial statements.
(16,360)
(11,944)
(8,685)
(9,007)
-
2
-
-
(16,360)
(11,942)
(8,685)
(9,007)
Gale Pacific Limited
28
Annual Report
STATEMENT OF CASH FLOWS
For the year ended 30 June 2007
Consolidated
Company
Note
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
Cash Flow From Operating Activities
Receipts from customers
Payments to suppliers and employees
Interest received
Borrowing costs paid
Income tax payments
Net cash provided / (used) by operating activities
20(b)
Cash Flow From Investing Activities
Proceeds from sale of plant and equipment
Proceeds from the disposal of business
20(c)
Payment for plant and equipment
Payment for intangible assets
Proceeds / (payments) for investments
Amounts advanced / (repaid) by related parties
127,586
181,639
(113,027)
(176,266)
489
(5,740)
(768)
8,540
537
15,690
(3,953)
(174)
-
-
114
(6,157)
(1,260)
(1,930)
134
-
(19,443)
(1,921)
-
-
Net cash provided / (used) by investing activities
12,100
(21,230)
Cash Flow From Financing Activities
Proceeds from issue of equity securities
Proceeds from issue of convertible notes
(Repayment) of / proceeds from borrowings
Repayment of principal on finance leases
Repayment of principal on hire purchase
Dividends paid
Net cash (used) / provided by financing activities
Net increase / (decrease) in cash held
Cash at beginning of year
Effects of exchange rate changes on items denominated in foreign
currencies
Cash at end of year
20(a)
The accompanying notes form part of these financial statements.
19,017
-
(30,949)
(226)
(1,783)
-
(13,941)
6,699
(6,414)
254
539
4,681
9,000
8,849
(219)
(1,646)
(1,232)
19,433
(3,727)
(2,348)
(339)
59,654
(55,849)
2,785
(4,379)
59
2,270
7,830
-
(1,211)
(174)
83
3,129
9,657
19,017
-
(26,489)
(226)
(1,783)
-
(9,481)
2,446
(3,236)
-
67,492
(56,648)
1,560
(4,349)
(721)
7,334
4,483
-
(3,208)
(1,941)
(6,843)
(15,341)
(22,850)
4,681
9,000
2,891
(220)
(1,819)
(1,232)
13,301
(2,215)
(1,021)
-
(6,414)
(790)
(3,236)
Gale Pacific Limited
29
Annual Report
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: BASIS OF PREPARATION
(c).
Principals of Consolidation
The consolidated financial statements are those of the
consolidated entity, comprising the financial statements of the
parent entity and of all entities, which Gale Pacific Limited
controlled from time to time during the year and at balance
date. Details of the controlled entities are contained in Note
26.
The financial statements of subsidiaries are prepared for the
same reporting period as the parent entity, using consistent
accounting policies. Adjustments are made to bring into line
any dissimilar accounting policies, which may exist.
All inter-company balances and transactions, including any
unrealised profits or
losses have been eliminated on
consolidation.
Minority interests in the equity and results of the entities that
are controlled are shown separately in the consolidated
financial report.
(d).
Change in Accounting Estimate
During the year, the Group reclassified a portion of the
company’s related party balances as net investments in
foreign operations as permitted by AASB 121 The Effects of
Changes
in Foreign Exchange Rates. The balances
reclassified were identified as being monetary items of a non
current nature as settlement of these balances is not planned
and the Group’s forecasts showed that any settlement would
not occur in the foreseeable future. While this situation
persists, impacting the Group’s current year profits with the
movement in the foreign exchange rates applying to these
monetary items would not provide the best representation of a
current year’s performance. As permitted by AASB 121, from
the date of reclassification, all changes in the Australian dollar
value of these items arising from changes in foreign exchange
rates are, in the consolidated financial statements, being
recognised in the foreign currency translation reserve. As and
when settlements occur, the cumulative amount of these
changes in value deferred in the foreign currency translation
reserve will be recognised in that current year’s profit in the
consolidated accounts.
In the accounts of the Company, these changes in value
continue to be recognised in the current year’s profit as
required by AASB 121.
This financial report is a general purpose financial report that has been
prepared in accordance with Australian Accounting Standards, Urgent
Issues Group Interpretations and other authoritative pronouncements
of the Australian Accounting Standards Board and the Corporations
Act 2001.
The financial report covers Gale Pacific Limited (“the Company”) as an
individual parent entity and Gale Pacific Limited and controlled entities
as a consolidated entity (“the Group”). Gale Pacific Limited is a
company limited by shares, incorporated and domiciled in Australia.
The following is a summary of material accounting policies adopted by
the Group in the preparation and presentation of the financial report.
The accounting policies have been consistently applied, unless
otherwise stated.
(a).
Basis of Preparation of the Financial Report
The financial report of Gale Pacific Limited and controlled
entities, and Gale Pacific Limited as an individual parent entity
comply with Australian equivalents to International Financial
Reporting Standards (AIFRS).
The financial report has been prepared under the historical
cost convention, as modified by revaluations to fair value for
certain classes of assets as described in the accounting
policies.
Compliance with AIFRS ensures compliance with International
Financial Reporting Standards (IFRS).
(b).
Going Concern Basis of Accounting
to
led
the
improvement
Restructuring initiatives that have been taken during the year
have
in our balance sheet,
strengthening of our management team and systems, and
improvements in many operational areas within the business.
Efficiency levels in our China operation have increased,
improvements have been made
to working capital
management, there is a renewed focus on research and
development activities, our senior management team is now
in place worldwide and a concentrated effort was made to
streamline the business and to ensure that the Group’s cost
structure is better matched to projected revenue generation.
In August 2007, the Company issued 40,000,000 shares at a
price of $0.50 per share raising $20 million. The net proceeds
of the placement have been used to repay banking facilities
with HSBC and the CBA. A new long term multi option facility
of $15 million has been arranged with the CBA. The remaining
net proceeds of the placement will be used to fund the
restructure of the New Zealand manufacturing operations and
support the growth of the business.
the
Given
foregoing has been satisfactorily completed,
Directors believe that the Company will continue to be able to
pay its debts as and when they become due and payable.
Gale Pacific Limited
30
Annual Report
Details of the monetary items reclassified and the total
exchange difference recognised in the foreign currency
translation reserve are detailed below.
Note
Consolidated
2006 /
2007
($000)
2005 /
2006
($000)
16,855
13,421
5,238
35,514
17(a)
(2,783)
-
-
-
-
-
Monetary item identified as
a net investment in a
foreign operation
Related party receivable to
the company from Gale
Europe GmbH
Vertriebsgesellschaft
Related party receivable to
the company from Gale
Pacific Special Textiles
(Ningbo) Limited
Related party receivable to
the company from Gale
Pacific (New Zealand)
Limited
Total
Exchange movement arising
on monetary item forming
part of the net investment in
related party, recognised in
foreign currency translation
reserve
It is impracticable to estimate the effect of this change on
future periods because movements in foreign exchange rates
cannot be predicted.
(e).
Revenue Recognition
Revenue from the sale of goods is recognised upon the
delivery of goods to customers.
Where a government grant (including Strategic Investment
Plan income (SIP)) is received or receivable relating to
research and development costs that have been expensed,
the grant is recognised as revenue. Where a grant is received
or receivable relating to research and development costs that
have been deferred, the grant is deducted from the carrying
amount of the deferred costs.
Other revenue is recognised when the right to receive the
revenue has been established.
All revenue is stated net of the amount of goods and services
tax (GST).
(f).
Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash
includes cash on hand and at call, deposits with banks or
financial
in money market
investments
instruments maturing within less than two months and net of
bank overdrafts.
institutions,
(g).
Inventories
Inventories are measured at the lower of cost and net
realisable value. Net realisable value is determined on the
basis of each inventory line’s normal selling pattern. Costs are
assigned on a first-in first-out basis and include direct
materials, direct labour and an appropriate proportion of
variable and fixed overhead expenses.
(h).
Plant and Equipment
Each class of plant and equipment is carried at cost less,
where applicable, any accumulated depreciation.
Plant and Equipment
Plant and equipment is measured on the cost basis. The
carrying value of plant and equipment is reviewed annually to
ensure it is not in excess of the recoverable amount from
those assets. The recoverable amount is assessed on the
basis of the expected discounted net cash flows that will be
received from the asset’s employment and subsequent
disposal. Refer to Note 1(k). The cost of fixed assets
constructed within the Group includes the cost of materials,
direct labour and an appropriate proportion of fixed and
variable overheads.
Depreciation
to
lives
their estimated useful
The depreciable amounts of all fixed assets, including
capitalised leased assets, are depreciated on a straight line
basis over
the entity
commencing from the time the asset is held ready for use.
Leasehold improvements are depreciated over the shorter of
either the unexpired period of the lease or the estimated
useful
improvements. Depreciation and
amortisation rates are reviewed annually for appropriateness.
When changes are made, adjustments are reflected in current
and future periods only.
lives of
the
The depreciation rates used for each class of assets are:
Class of Fixed
Asset
Depreciation
Rates
Depreciation
Basis
Buildings
2.25%
Straight line
Leasehold
improvements
Determined by
lease term
Straight line
Plant and
equipment
Leased plant and
equipment
6.7% - 20.0%
Straight line
6.7% - 20.0%
Straight line
Motor vehicles
20.0%
Straight line
Office equipment
14.3% - 50.0%
Straight line
Gale Pacific Limited
31
Annual Report
(i).
Leases
Finance Leases
Leases of fixed assets, where substantially all the risks and
benefits incidental to the ownership of the asset, but not the
legal ownership, are transferred to the entities within the
Group are classified as finance leases. Finance leases are
capitalised, recording at the inception of the lease an asset
and a liability equal to the present value of the minimum lease
payments, including any guaranteed residual values. Leased
assets are amortised on a straight line basis over their
estimated useful lives where it is likely that the Group will
obtain ownership of the asset or over the term of the lease.
Lease payments are allocated between the reduction of the
lease liability and the lease interest expense for the period.
(k).
Impairment of Assets
Assets with an indefinite useful life are not amortised but are
tested annually for impairment in accordance with AASB 136.
Assets subject to annual depreciation or amortisation are
reviewed for impairment whenever events or circumstances
arise that indicate that the carrying amount of the asset may
be impaired.
An impairment loss is recognised where the carrying amount
of the asset exceeds its recoverable amount. The recoverable
amount of an asset is defined as the higher of its fair value
less costs to sell and value in use.
Operating Leases
(l).
Taxes
Lease payments for operating leases, where substantially all
the risks and benefits remain with the lessor, are charged as
expenses in the periods in which they are incurred. Lease
incentives received under operating leases are recognised as
a liability.
(j).
Intangibles
Goodwill
Goodwill on consolidation represents the excess of the cost of
an acquisition over the fair value of the Group’s share of net
identifiable assets of the acquired entities at the date of
acquisition.
is not amortised but
for
Goodwill
impairment, or more frequently if events or changes in
circumstances indicate that it might be impaired. Goodwill is
carried at cost less accumulated impairment losses.
tested annually
is
Patents and Trademarks
Patents and trademarks are valued in the accounts at cost of
acquisition and are amortised over the period in which the
benefits are expected to be realised, but not exceeding 20
years.
Research and Development
Expenditure on research is recognised as an expense when
incurred. Expenditure on development activities is capitalised
only when it is expected that future benefits will exceed the
deferred costs. Capitalised development expenditure is
stated at cost less accumulated amortisation.
Amortisation is calculated using a straight line method to
allocate the cost over a period (not exceeding three years),
during which the related benefits are expected to be realised,
once commercial production is commenced.
Current income tax expense or revenue is the tax payable on
the current period’s taxable income based on the applicable
income tax rate adjusted by changes in deferred tax assets
and liabilities.
for
A balance sheet approach is adopted under which deferred
tax assets and
temporary
liabilities are recognised
differences between the tax bases of assets and liabilities and
financial statements. No
the
their carrying amounts
deferred tax asset or liability is recognised in relation to
temporary differences arising from the initial recognition of an
asset or a liability 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.
in
Deferred tax assets are recognised for temporary differences
and unused tax losses only when it is probable that future
taxable amounts will be available to utilise those temporary
differences and losses.
Current and deferred tax balances attributable to amounts
recognised directly in equity are also recognised directly in
equity.
(m). Employee Benefits
Provision is made for the Group’s liability for employee
entitlements arising from services rendered by employees to
balance date. Employee entitlements expected to be settled
within one year together with entitlements arising from wages
and salaries, annual leave and sick leave which will be settled
after one year, have been measured at their nominal amount.
Other employee entitlements payable later than one year
have been measured at the present value of the estimated
future cash outflows to be made for those entitlements.
Contributions are made by
to employee
superannuation funds and are charged as expenses when
incurred.
the Group
Gale Pacific Limited
32
Annual Report
Share Based Payments
(o).
Foreign Currencies
The Group operates an employee share option plan for senior
executives and a long term performance rights incentive plan
for the Managing Director and Chief Executive Officer. The
bonus element over the exercise price for these instruments is
recognised as an expense in the income statement in the
period(s) when the benefit is earned.
The total amount to be expensed over the vesting period is
determined by reference to the fair value of the options at
grant date. The fair value of options and performance rights
at grant date is determined using either the Binomial Tree or a
Black Scholes option pricing model, and is recognised as an
employee expense over
the
employees become entitled to the option or performance right.
the period during which
The market value of shares issued to employees for no cash
consideration under
is
recognised as an expense when the employees become
entitled to the shares.
the employee share scheme
(n).
Financial Instruments
The Group classifies its financial instruments in the following
categories: financial assets at fair value through profit or loss,
loans and receivables, held-to-maturity investments, and
available-for-sale financial assets. The classification depends
on the purpose for which the investments were acquired.
Management determines the classification of its investments
at initial recognition and re-evaluates the designation at each
reporting date.
Loans and Receivables
Loans and receivables are measured at fair value at inception
and subsequently at amortised cost using the effective
interest rate method.
Financial Liabilities
Financial liabilities include trade payables, other creditors and
loans from third parties including inter-company balances and
loans from or other amounts due to director-related entities.
Non-derivative financial liabilities are recognised at amortised
cost, comprising original debt less principal payments and
amortisation.
Investment in Controlled Entities
Investments in controlled entities are carried at cost and
tested for impairment.
Functional and Presentation Currency
The financial statements of each group entity are measured
using its functional currency, which is the currency of the
primary economic environment in which that entity operates.
The consolidated financial statements are presented in
Australian dollars, as this is the parent entity’s functional and
presentation currency.
Transactions and Balances
Transactions in foreign currencies of entities within the Group
are translated into functional currency at the rate of exchange
ruling at the date of the transaction.
Foreign currency monetary items that are outstanding at the
reporting date (other than monetary items arising under
foreign currency contracts where the exchange rate for that
monetary item is fixed in the contract) are translated using the
spot rate at the end of the financial year.
Resulting exchange differences arising on settlement or re-
statement are recognised as revenues and expenses for the
financial year.
Group Companies
financial statements of
The
foreign operations whose
functional currency is different from the Group’s presentation
currency are translated as follows:
•
•
•
Assets and liabilities are translated at year end
exchange rates prevailing at that reporting date;
Income and expenses are translated at average
exchange rates for the period; and
All resulting exchange differences are recognised as a
separate component of equity.
Exchange differences arising on
foreign
operations are transferred directly to the Group’s foreign
currency translation reserve as a separate component of
equity in the balance sheet.
translation of
(p).
Rounding Amounts
The Company is of a kind referred to in ASIC Class Order CO
98/0100 and in accordance with that Class Order, amounts in
the financial statements have been rounded off to the nearest
thousand dollars, or in certain cases, to the nearest dollar.
Fixed Assets at Fair Value Through Profit and Loss
(q).
Comparatives
Forward foreign currency contracts that do not qualify for
hedge accounting are measured at their fair value with any
increment or decrement in fair value recognised in profit and
loss.
Where necessary, comparative
information has been
reclassified and repositioned for consistency with current year
disclosures.
Gale Pacific Limited
33
Annual Report
NOTE 2: REVENUE
Operating Activities
Sale of goods – other parties
SIP income
Interest income – other parties
Other revenue
Total revenue
Operating Activities
Sale of goods – other parties
Sale of goods – related parties
SIP income
Interest income – other parties
Interest income – related parties
Other revenue
Total revenue
Consolidated
2006 / 2007
($000)
2005 / 2006
($000)
Continuing
Discontinuing
Continuing
Discontinuing
109,338
8,184
110,931
54,954
110
626
330
-
-
28
748
114
397
-
-
25
110,404
8,212
112,190
54,979
Company
2006 / 2007
($000)
2005 / 2006
($000)
Continuing
Discontinuing
Continuing
Discontinuing
53,930
969
110
446
2,339
7
57,801
-
-
-
-
-
-
-
53,026
6,758
748
114
1,446
120
62,212
-
-
-
-
-
-
-
Gale Pacific Limited
34
Annual Report
NOTE 3: LOSS
Loss before income tax expense has been determined after charging / (crediting):
Consolidated
2006 / 2007
($000)
2005 / 2006
($000)
Continuing
Discontinuing
Continuing
Discontinuing
Cost of sales
Finance Costs
Other persons
Depreciation of Non Current Assets
Buildings
Leasehold improvements
Plant and equipment
Motor vehicles
Office equipment
Amortisation of Non Current Assets
Leased plant and equipment
Leased motor vehicles
Patents and trademarks
Research and Development Expenditure
Capitalised and amortised
Expensed as incurred
Impairment
Impairment of Non Current Assets
Plant and equipment
Goodwill
Inventory write down
Restructuring and termination costs
Increase in provision for obsolete inventory
Bad and Doubtful Debts
Bad debts written off – trade debtors
Movement in provisions for doubtful debts – trade debtors
Remuneration of the Auditors of the Parent Entity For
Auditing the financial report
Taxation services
Systems review
Capital raising related services
Jung divestment
Government grant review
General assistance
Total remuneration of the auditors of the parent entity
Remuneration of Other Auditors of Controlled Entities For
Auditing the financial report
Taxation services
Corporate secretarial services
Total remuneration of other auditors
Total remuneration of auditors
Foreign currency translation (gains)
Net Loss on Disposal of Non Current Assets
Plant and equipment
Motor vehicles
Office equipment
Operating lease rental expense
Net equity settled share based payment expense
74,982
5,598
195
100
5,775
121
563
46
80
55
924
652
317
714
-
4,339
4,672
1,338
107
49
316
36
25
13
5
3
2
400
142
48
46
236
636
(1,238)
66
42
18
3,615
166
4,479
142
-
-
12
5
14
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
74,727
33,712
5,408
178
44
5,434
233
541
162
40
76
2,445
-
-
728
-
-
-
1,353
36
(179)
117
74
-
-
-
-
-
191
143
25
-
168
359
(984)
5
-
-
2,665
80
749
-
-
78
62
179
-
-
-
-
-
-
736
2,998
2,143
-
2,502
-
-
-
-
-
-
-
-
-
-
50
-
-
50
50
-
-
-
-
1,048
-
Gale Pacific Limited
35
Annual Report
NOTE 3: LOSS (CONTINUED)
Cost of sales
Finance Costs
Other persons
Depreciation of Non Current Assets
Leasehold improvements
Plant and equipment
Motor vehicles
Office equipment
Amortisation of Non Current Assets
Leased plant and equipment
Leased motor vehicles
Patents and trademarks
Research and Development Expenditure
Capitalised and amortised
Expensed as incurred
Impairment of Non Current Assets
Plant and equipment
Impairment of investment in subsidiary
Inventory write down
Provision for non recoverability of related party balances
Loss on sale of investment in subsidiary
Increase in provision for obsolete inventory
Bad and Doubtful Debts
Bad debts written off – trade debtors
Movement in provisions for doubtful debts – trade debtors
Remuneration of the Auditors of the Parent Entity For
Auditing the financial report
Taxation services
Systems review
Capital raising related services
Jung divestment
Government grant review
General assistance
Total remuneration of the auditors of the parent entity
Foreign currency translation losses / (gains)
Net Loss on Disposal of Non Current Assets
Plant and equipment
Motor vehicles
Office equipment
Operating lease rental expense
Net equity settled share based payment expense
Company
2006 / 2007
($000)
2005 / 2006
($000)
Continuing
Discontinuing
Continuing
Discontinuing
32,506
4,379
22
1,581
62
227
46
80
111
924
119
316
-
440
9,699
-
649
38
(28)
316
36
25
13
5
3
2
400
1,819
-
5
2
1,696
166
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
467
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
45,146
4,349
21
2,158
148
240
162
40
73
2,445
-
728
-
-
-
-
632
2
25
117
74
-
-
-
-
-
191
(984)
5
-
-
2,311
80
-
-
-
-
-
-
-
-
-
-
-
-
5,750
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Gale Pacific Limited
36
Annual Report
NOTE 4: INCOME TAX EXPENSE
(a).
The Components of Tax Expense
Current tax
Deferred tax
Total income tax expense / (benefit)
Disclosed in the financial statements as
Income tax expense / (benefit) from continuing business
Income tax expense / (benefit) from discontinuing business
Total
Consolidated
Company
2006 / 2007
($000)
2005 / 2006
($000)
2006 / 2007
($000)
2005 / 2006
($000)
811
1,917
2,728
2,752
(24)
2,728
1,631
(5,668)
(4,037)
(4,037)
-
(4,037)
914
(3,798)
(2,884)
(2,884)
-
(2,884)
712
(3,908)
(3,196)
(3,196)
-
(3,196)
(b).
The Prima Facie Income Tax Payable on Profit is Reconciled to the Income Tax Expense as Follows
Consolidated
Company
2006 / 2007
($000)
2005 / 2006
($000)
2006 / 2007
($000)
2005 / 2006
($000)
Prima facie tax payable on profit before income tax at 30%
(4,089)
(4,794)
(3,471)
(3,661)
Add tax effect of:
Tax rate differentials in foreign countries
Impairment of goodwill
Tax losses not recognised / derecognised
Attributed CFC income
Interest expense non allowable
Capital loss on divestment of business
Other non allowable / (non assessable) items
Movements of SIP income
Less tax effect of:
Over/(under) provision for income tax in the prior year
Income tax expense / (benefit) attributed to profit from ordinary
activities
Less income tax benefit from discontinuing business
Income tax expense / (benefit) from continuing business
(c).
Income Tax Recognised Directly in Equity
408
-
5,910
-
134
79
249
-
2,691
37
2,728
(24)
2,752
(271)
899
1,151
303
-
-
(12)
(70)
-
-
-
-
-
140
277
-
(2,794)
(3,054)
(1,243)
(4,037)
-
(4,037)
170
(2,884)
-
(2,884)
-
-
1,725
303
-
-
(250)
(70)
(1,953)
(1,243)
(3,196)
-
(3,196)
The following current and deferred tax amounts were credited directly to equity during the period
Consolidated
Company
2006 / 2007
($000)
2005 / 2006
($000)
2006 / 2007
($000)
2005 / 2006
($000)
Deferred Tax
Equity raising costs deductible over 5 years
Total
(295)
(295)
-
-
(295)
(295)
-
-
Gale Pacific Limited
37
Annual Report
NOTE 4: INCOME TAX EXPENSE (CONTINUED)
(d).
Current Tax
Current tax asset
Current tax liability
Total
(e).
Deferred Tax
Consolidated
Company
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
362
(658)
(296)
1,047
(344)
703
-
(382)
(382)
591
-
591
Consolidated
Company
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
Deferred Tax (Liabilities) / Assets Arise from the Following
Property, plant and equipment
(1,172)
(2,788)
Foreign exchange
Income not derived
Finance leases
Research and development
Doubtful debts
Other financial liabilities
Provisions
Employee benefits
Capitalised costs
Borrowing costs
Equity raising costs
Other
Total
Unused Tax Losses and Credits
Tax losses
Net deferred tax (liability) / asset
Represented By
Deferred tax asset
Deferred tax liability
Total
(250)
(153)
(15)
(449)
22
102
379
369
(170)
78
315
81
(863)
-
(863)
270
(1,133)
(863)
-
(524)
(55)
(698)
-
-
324
790
389
-
20
424
(866)
585
(153)
(15)
(449)
-
28
3,064
209
112
78
315
-
(1,526)
-
(524)
(55)
(698)
-
-
240
263
133
-
20
132
(2,118)
2,908
(2,015)
2,987
869
2,054
(1,185)
869
-
2,908
2,908
-
2,908
830
(1,185)
-
(1,185)
(1,185)
Gale Pacific Limited
38
Annual Report
NOTE 4: INCOME TAX EXPENSE (CONTINUED)
(f).
Unrecognised Deferred Tax Assets
The following deferred tax assets have not been brought to account as it is not probable that these can be recovered.
Consolidated
Company
2006 / 2007
($000)
2005 / 2006
($000)
2006 / 2007
($000)
2005 / 2006
($000)
Tax losses – income
Temporary differences not brought to account
Tax losses – capital
Total
4,071
1,567
1,990
7,628
1,151
-
1,725
2,876
-
-
1,990
1,990
-
-
1,725
1,725
Unrecognised deferred tax assets are calculated by applying to the pre tax value the tax rate of the jurisdiction in which the asset resides.
Assets are converted to Australian dollars at the prevailing period end exchange rate.
(g).
Tax Losses
The Group has recognised as a deferred tax asset income tax losses of nil (2006: $2,987,000) in tax jurisdictions where it is probable that future
taxable income will be available to utilise these losses.
The Group has derecognised as a deferred tax asset previously recognised income tax losses of $1,248,000 (2006: Nil) as it is no longer
probable that these can be recovered.
NOTE 5: CASH & CASH EQUIVALENTS
Cash on hand
Cash at bank
Cash on deposit
Total
NOTE 6: TRADE & OTHER RECEIVABLES
Current
Trade debtors
Less provision for doubtful debt
Other receivables
Total
Non Current
Amounts receivable from controlled entities
Less provision for non recoverability
Total
Consolidated
Company
2006 / 2007
($000)
2005 / 2006
($000)
2006 / 2007
($000)
2005 / 2006
($000)
13
3,806
3,823
7,642
2
10,550
-
10,552
1
1,173
2,480
3,654
2
6,053
-
6,055
Consolidated
Company
2006 / 2007
($000)
2005 / 2006
($000)
2006 / 2007
($000)
2005 / 2006
($000)
18,784
(159)
18,625
738
19,363
-
-
-
32,243
(135)
32,108
4,594
36,702
-
-
-
5,012
-
5,012
545
5,557
51,943
(9,699)
42,244
4,633
(28)
4,605
1,809
6,414
55,072
-
55,072
Gale Pacific Limited
39
Annual Report
NOTE 7: INVENTORIES
Current
Raw materials at cost
Work in progress at cost
Finished goods at cost
Less provision for obsolescence
Total
NOTE 8: OTHER ASSETS
Current
Prepayments
Total
NOTE 9: OTHER FINANCIAL ASSETS
Consolidated
Company
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
3,892
3,369
24,406
(1,524)
30,143
4,891
4,608
42,334
(4,234)
47,599
255
1,031
9,478
(183)
452
2,249
9,327
(771)
10,581
11,257
Consolidated
Company
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
1,517
1,517
1,497
1,497
1,169
1,169
365
365
Consolidated
Company
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
Non Current
Investments in subsidiaries at cost
-
-
25,326
25,909
Gale Pacific Limited
40
Annual Report
NOTE 10: PROPERTY, PLANT & EQUIPMENT
Consolidated
Company
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
Buildings
At cost
Less accumulated depreciation
Plant and Equipment
At cost
Less accumulated depreciation
Plant and Equipment Under Lease
At cost
Less accumulated amortisation
Leasehold Improvements
At cost
Less accumulated depreciation
Motor Vehicles
At cost
Less accumulated depreciation
Motor Vehicles Under Lease
At cost
Less accumulated amortisation
Office Equipment
At cost
Less accumulated depreciation
Capital Work in Progress
Total property, plant and equipment
7,842
(415)
7,427
62,047
(13,269)
48,778
270
(254)
16
578
(264)
314
594
(271)
323
342
(125)
217
3,673
(2,638)
1,035
2,783
60,893
8,618
(261)
8,357
77,189
(19,512)
57,677
1,376
(661)
715
409
(177)
232
2,174
(1,338)
836
240
(43)
197
5,430
(3,224)
2,206
-
70,220
-
-
-
13,479
(5,968)
7,511
270
(254)
16
328
(145)
183
306
(130)
176
342
(125)
217
2,188
(1,717)
471
765
9,339
-
-
-
29,034
(11,687)
17,347
1,376
(661)
715
318
(122)
196
899
(535)
364
240
(43)
197
2,082
(1,494)
588
-
19,407
Gale Pacific Limited
41
Annual Report
NOTE 10: PROPERTY, PLANT & EQUIPMENT (CONTINUED)
Movements in Carrying Amounts
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the year.
Consolidated
Company
2006 / 2007
($000)
2005 / 2006
($000)
2006 / 2007
($000)
2005 / 2006
($000)
Buildings
Balance at the beginning of the year
Additions / (transfers)
Depreciation expense
Net foreign currency movements arising from foreign operations
Carrying amount at the end of the year
Plant and Equipment
Balance at the beginning of the year
Reclassifications
Additions / (transfers)
Disposals
Depreciation expense
Impairment loss
Net foreign currency movements arising from foreign operations
Carrying amount at the end of the year
Plant and Equipment Under Lease
Balance at the beginning of the year
Reclassifications
Additions / (transfers)
Depreciation expense
Carrying amount at the end of the year
Leasehold Improvements
Balance at the beginning of the year
Reclassifications
Additions / (transfers)
Depreciation expense
Net foreign currency movements arising from foreign operations
Carrying amount at the end of the year
Motor Vehicles
Balance at the beginning of the year
Reclassifications
Additions / (transfers)
Disposals
Depreciation expense
Net foreign currency movements arising from foreign operations
Carrying amount at the end of the year
Motor Vehicles Under Lease
Balance at the beginning of the year
Additions / (transfers)
Depreciation expense
Carrying amount at the end of the year
Office Equipment
Balance at the beginning of the year
Reclassifications
Additions / (transfers)
Disposals
Depreciation expense
Net foreign currency movements arising from foreign operations
Carrying amount at the end of the year
8,357
53
(195)
(788)
7,427
57,677
6
384
(623)
(5,787)
(714)
(2,165)
48,778
715
(38)
(615)
(46)
16
232
46
133
(100)
3
314
836
(25)
71
(408)
(126)
(25)
323
197
100
(80)
217
2,206
9
218
(556)
(577)
(265)
1,035
5,637
2,475
(178)
423
8,357
48,225
-
16,017
(99)
(5,512)
(1,464)
510
57,677
877
-
-
(162)
715
259
-
7
(44)
10
232
1,000
-
65
(28)
(295)
94
836
29
208
(40)
197
1,738
-
879
(12)
(720)
321
2,206
-
-
-
-
-
17,347
(23)
80
(7,996)
(1,581)
(316)
-
7,511
715
(38)
(615)
(46)
16
196
(1)
10
(22)
-
183
364
9
-
(135)
(62)
-
176
197
100
(80)
217
588
-
132
(22)
(227)
-
471
-
-
-
-
-
21,471
-
3,230
(4,468)
(2,158)
(728)
-
17,347
877
-
-
(162)
715
217
-
-
(21)
-
196
525
-
-
(13)
(148)
-
364
29
208
(40)
197
683
-
153
(8)
(240)
-
588
Gale Pacific Limited
42
Annual Report
NOTE 11: INTANGIBLE ASSETS
Goodwill at cost
Less accumulated impairment
Patents, trademarks and licenses at cost
Less accumulated amortisation
Research and development
Less accumulated amortisation
Total intangible assets
Movements in Carrying Amounts
Movement in the carrying amounts for each class of intangible assets between
the beginning and the end of the year
Goodwill
Balance at the beginning of the year
Additions / (transfers)
Impairment loss
Net foreign currency movements arising from foreign operations
Carrying amount at the end of the year
Patents, Trademarks and Licences
Balance at the beginning of the year
Additions / (transfers)
Amortisation expense
Net foreign currency movements arising from foreign operations
Carrying amount at the end of the year
Research and Development
Balance at the beginning of the year
Reclassifications
Additions / (transfers)
Amortisation expense
Impairment loss
Carrying amount at the end of the year
NOTE 12: TRADE & OTHER PAYABLES
Consolidated
Company
2006 / 2007
($000)
2005 / 2006
($000)
2006 / 2007
($000)
2005 / 2006
($000)
10,313
(986)
9,327
1,281
(565)
716
4,865
(3,370)
1,495
11,538
9,491
-
-
(164)
9,327
669
120
(55)
(18)
716
2,326
356
54
(924)
(317)
1,495
13,928
(4,437)
9,491
1,169
(500)
669
4,772
(2,446)
2,326
12,486
12,315
294
(2,998)
(120)
9,491
648
103
(76)
(6)
669
3,247
-
1,524
(2,445)
-
2,326
4,127
(1,054)
3,073
1,057
(534)
523
4,865
(3,370)
1,495
5,091
3,073
-
-
-
4,127
(1,054)
3,073
937
(423)
514
4,772
(2,446)
2,326
5,913
2,782
291
-
-
3,073
3,073
514
120
(111)
-
523
2,326
39
54
(924)
-
1,495
461
126
(73)
-
514
3,247
-
1,524
(2,445)
-
2,326
Current
Unsecured Liabilities
Trade creditors
Sundry creditors and accruals
Total
Consolidated
Company
2006 / 2007
($000)
2005 / 2006
($000)
2006 / 2007
($000)
2005 / 2006
($000)
6,751
4,353
11,104
16,702
5,541
22,243
1,268
1,597
2,865
1,602
2,166
3,768
Gale Pacific Limited
43
Annual Report
NOTE 13: BORROWINGS
Current
Secured liabilities:
Bank overdrafts
Bank loans
Other loans
Commercial bills
Finance lease liability
Hire purchase liability
Convertible notes
Convertible notes
Unsecured liabilities:
Bank loans
Other loans
Non Current
Secured liabilities:
Bank loans
Other loans
Finance lease liability
Hire purchase liability
Unsecured liabilities:
Other loans
Consolidated
Company
2006 / 2007
($000)
2005 / 2006
($000)
2006 / 2007
($000)
2005 / 2006
($000)
7,103
35,197
747
-
228
2,225
-
-
16,966
52,906
681
9,700
239
1,680
6,500
9,000
4,444
19,215
747
-
228
2,225
-
-
9,291
35,939
681
9,700
239
1,680
6,500
9,000
45,500
97,672
26,859
73,030
1,358
215
1,573
-
3,267
273
406
3,946
402
402
-
-
-
4,833
4,015
488
2,734
12,070
-
-
-
215
215
-
3,267
273
406
3,946
402
402
-
-
-
-
4,015
488
2,734
7,237
-
-
Total
51,421
109,742
31,422
80,267
Disclosed in the Financial Statements As
Current borrowings
Non current borrowings
Security
Liabilities are secured by:
47,073
4,348
97,672
12,070
27,074
4,348
73,030
7,237
(i)
(ii)
(iii)
(iv)
First ranking registered equitable mortgage by Gale Pacific Limited over its assets and undertakings including uncalled capital.
First ranking registered equitable mortgage by Gale Pacific USA Inc. over its assets and undertakings including uncalled capital.
Mortgage over the buildings of Gale Pacific Special Textiles (Ningbo) Limited.
Fixed and floating charges (or equivalent) over assets of Gale Europe GmbH Vertriebsgescellsehaft, Gale Pacific (New Zealand) Limited and
Gale Pacific Special Textiles (Ningbo) Limited.
Gale Pacific Limited
44
Annual Report
NOTE 14: OTHER FINANCIAL LIABILITIES
Derivatives carried at fair value:
Current
Foreign currency forward contracts
Total
NOTE 15: PROVISIONS
Current
Employee benefits
Restructuring and termination costs
Factory make good costs
Non Current
Employee benefits
Disclosed in the Financial Statements As
Current provisions
Non current provisions
(a) Aggregate employee benefits liability
(b) Number of employees at year end
Consolidated
Company
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
31
31
-
-
31
31
-
-
Consolidated
Company
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
1,181
4,751
250
998
7,180
6,182
998
2,179
815
1,283
-
-
974
2,257
1,283
974
2,257
1,218
652
-
250
78
980
902
78
730
86
768
-
-
73
841
768
73
841
109
Restructuring and termination costs comprise costs associated with the New Zealand plant closure and the relocation of its equipment to China and
Australia.
Gale Pacific Limited
45
Annual Report
NOTE 16: CONTRIBUTED EQUITY
Paid Up Capital
96,834,516 fully paid ordinary shares (2006: 55,069,815)
81,936
47,124
Company
2006 / 2007
($000)
2005 / 2006
($000)
Movement in Share Capital
Shares issued at the beginning of the financial year
Costs of capital raising (net of tax)
99,969 shares used under Dividend Reinvestment Plan – 17 October 2005
2,936,000 shares issued as part of a share placement offer – 9 March 2006
127,985 shares issued under Dividend Reinvestment Plan – 18 April 2006
23,529,412 shares issued as part of a private placement and a Share Purchase Plan – 3 July 2006
10,941,177 shares issued in conversion of 4,270,271 convertible notes – 5 July 2006
7,294,112 shares issued in conversion of 2,594,593 convertible notes – 1 August 2006
47,124
(688)
-
-
-
20,000
9,000
6,500
81,936
42,071
(162)
160
4,844
211
-
-
-
47,124
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
A dividend reinvestment plan was established on 5 September 2001, and is available to all shareholders.
Following this year’s result, Directors consider it prudent not to pay a dividend this financial year.
(a). Movement in Share Capital
During the financial year, (3 July 2006) the Company raised
$20 million through a combination of a private placement and
a Share Purchase Plan where 23,529,412 shares were issued
at 85 cents.
On 5 July 2006, the Company issued 10,941,177 ordinary
shares in conversion of 4,270,271 convertible notes.
On 1 August 2006, the Company issued 7,294,112 ordinary
shares in conversion of 2,594,593 convertible notes.
Subsequent to the financial year, (30 August 2007) the
Company raised $20 million through private placements of
40,000,000 shares issued at 50 cents per share.
(b).
Share Based Payments
The Group maintains an option scheme for certain staff and
executives, including executive Directors, as approved by
shareholders at an annual general meeting. This scheme is
designed to reward key personnel when the Group meets
performance hurdles relating to:
•
•
•
Improvement in net profit after tax
Improvement in return to shareholders
Improvement in share price
The number of unissued ordinary shares under option as at
the date of this report is 750,000. The issue price of each
option is zero. Each option entitles the holder to one (1)
ordinary share in Gale Pacific Limited in the event that the
option is exercised.
Additionally, during the year the Group issued 150,000
performance rights to the Managing Director and Chief
Executive Officer. Each performance right entitles the holder
one (1) ordinary share in Gale Pacific Limited when exercised
and is subject to the satisfying of relevant performance
hurdles based on improvements in the Company’s diluted
earnings per share.
Options and performance rights issued to executives during
the year were
the Group’s
remuneration policy which:
in accordance with
issued
•
•
•
Reward
performance;
executives
for Group
and
individual
Align the interests of the executives with those of the
shareholders; and
Ensure that total remuneration is competitive by market
standards.
The following share based payment arrangements were in
existence during
the current and comparative reporting
periods.
Gale Pacific Limited
46
Annual Report
NOTE 16: CONTRIBUTED EQUITY (CONTINUED)
Options
Grant Date
Expiry Date
Consolidated and Parent Entity - 2007
5 May 2004
15 Dec 2004
16 Nov 2005
1 Dec 2006
1 Dec 2008
1 Dec 2008
24 Oct 2006
31 Dec 2008
Total
Weighted average exercise price
Consolidated and Parent Entity – 2006
5 May 2004
15 Dec 2004
16 Nov 2005
Total
1 Dec 2006
1 Dec 2008
1 Dec 2008
Weighted average exercise price
Exercise
Price
Balance at
Start of the
Year
No.
Granted
During the
Year
No.
Exercised
During the
Year
No.
Lapsed
During the
Year
No.
Balance at
End of the
Year
No.
Exercisable
at End of the
Year
No.
$1.50
$3.00
$1.52
$1.52
$1.50
$3.00
$1.52
50,000
240,000
580,000
-
870,000
$1.93
50,000
560,000
-
-
-
370,000
370,000
$1.52
-
-
-
1,260,000
610,000
1,260,000
$2.88
$1.52
-
-
-
-
-
-
-
-
-
-
-
(50,000)
(60,000)
(130,000)
(250,000)
(490,000)
$1.70
-
(320,000)
(680,000)
(1,000,000)
$1.99
-
180,000
450,000
120,000
750,000
$1.88
50,000
240,000
580,000
870,000
$1.93
-
-
-
-
-
-
-
-
-
-
-
Options Valuation Assumptions
Option Series
Grant date share price
Exercise price
Expected volatility
Option Life
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Dividend yield
Risk Free Interest Rate
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Grant Date
15 December 2004
Grant Date
16 November 2005
Grant Date
24 October 2006
$3.00
$3.00
35%
2.50 years
3.00 years
3.50 years
4.00 years
2.47%
4.86%
4.87%
4.91%
4.95%
$1.60
$1.52
40%
2.49 years
2.99 years
-
-
2.96%
5.21%
5.21%
-
-
$0.90
$1.52
45%
2.10 years
-
-
-
1.70%
6.04%
-
-
-
Gale Pacific Limited
47
Annual Report
NOTE 16: CONTRIBUTED EQUITY (CONTINUED)
Performance Rights
Grant Date
Expiry Date
Consolidated and Parent Entity - 2007
Exercise
Price
Balance at
Start of the
Year
No.
Granted
During the
Year
No.
Exercised
During the
Year
No.
Lapsed
During the
Year
No.
Balance at
End of the
Year
No.
Exercisable
at End of the
Year
No.
2 Feb 2007
2 Feb 2017
N/A
-
150,000
-
-
150,000
-
Performance Rights Valuation Assumptions
Grant date share price
Exercise price
Expected volatility
Expected life
Dividend yield
Risk free interest rate
NOTE 17: RESERVES
Foreign currency translation reserve
Employee share based payment reserve
Total
(a).
Foreign Currency Translation Reserve
Grant Date
2 February 2007
$0.83
N/A
N/A
2.40 years
1.80%
N/A
Consolidated
Company
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
(7,624)
344
(7,280)
(2,821)
178
(2,643)
-
344
344
-
178
178
Balance at the beginning of the year
Translation of foreign subsidiaries for the year
Movement arising from the reclassification of non current related
party monetary items to net investments in foreign operations
Gain realised on disposal of foreign subsidiary
Balance at the end of the year
Consolidated
Company
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
(2,821)
(1,789)
(2,783)
(231)
(7,624)
($000)
(3,087)
266
-
-
(2,821)
($000)
($000)
-
-
-
-
-
-
-
-
-
-
Exchange differences relating to foreign currency monetary items forming part of the net investment in a foreign operation and the translation of
foreign controlled entities are brought to account by entries made directly to the foreign currency translation reserve, as described in Note 1(o).
Gale Pacific Limited
48
Annual Report
NOTE 17: RESERVES (CONTINUED)
(b).
Employee Share Based Payment Reserve
Balance at the beginning of the year
Net equity settled share based payment expense
Balance at the end of the year
NOTE 18: RETAINED EARNINGS
Consolidated
Company
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
178
166
344
98
80
178
178
166
344
98
80
178
Consolidated
Company
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
Balance at the beginning of the year
1,916
15,461
Net loss attributable to members of the parent entity
(16,360)
(11,942)
Dividends paid
Balance at the end of the year
-
(14,444)
(1,603)
1,916
(3,406)
(8,685)
-
(12,091)
7,204
(9,007)
(1,603)
(3,406)
NOTE 19: MINORITY INTERESTS
Minority interest in controlled entities comprises:
Opening balance
Net loss attributable to minority interest
Balance at the end of the year
Consolidated
Company
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
(11)
-
(11)
(9)
(2)
(11)
-
-
-
-
-
-
Gale Pacific Limited
49
Annual Report
NOTE 20: CASH FLOW INFORMATION
(a).
Reconciliation of Cash
Cash at the end of the financial year as shown in the statement of
cash flows is reconciled to the related items in the statement of
financial position as follows:
Cash on hand
Cash at bank
Cash on deposit
Bank overdrafts
Consolidated
Company
2006 / 2007
($000)
2005 / 2006
($000)
2006 / 2007
($000)
2005 / 2006
($000)
13
3,806
3,823
(7,103)
539
2
10,550
-
(16,966)
(6,414)
1
1,173
2,480
(4,444)
(790)
2
6,053
-
(9,291)
(3,236)
(b).
Reconciliation of Cash Flow from Operations with Profit from Ordinary Activities
Consolidated
Company
2006 / 2007
($000)
2005 / 2006
($000)
2006 / 2007
($000)
2005 / 2006
($000)
Loss after income tax
(16,360)
(11,942)
(8,685)
(9,007)
Non Cash Flows in Loss from Ordinary Activities
Attributable to minority interest
Loss on disposal of fixed assets
Loss on disposal of investments
Depreciation of fixed assets
Impairment of fixed assets
Impairment of related party balances
Amortisation / impairment of intangible assets
Equity settled share based payments
Other
Changes in tax balances processed directly in equity
Changes in tax balances due to foreign exchange movements
-
126
-
6,911
714
-
1,296
166
-
295
(15)
Changes in assets and liabilities from the divestment of Jung
(15,914)
Changes in Assets and Liabilities
Decrease / (increase) in receivables
Decrease in inventories
Increase in other assets
(Increase) / decrease in payables, accruals and other financial
liabilities
Decrease / (increase) in tax balances
Net cash inflow /(outflow) provided by operations
17,339
17,456
(20)
(6,185)
2,731
8,540
(2)
5
-
6,951
1,464
-
5,519
-
-
-
-
-
(3,949)
2,978
(48)
2,391
(5,297)
(1,930)
-
7
467
2,018
316
9,699
1,035
166
-
295
-
76
857
676
(804)
(733)
(3,120)
2,270
-
5
-
2,567
6,478
-
2,720
-
80
-
-
-
704
7,985
12
(745)
(3,465)
7,334
Gale Pacific Limited
50
Annual Report
NOTE 20: CASH FLOW INFORMATION (CONTINUED)
(c).
Discontinued Business
On 24 August 2006 the Group announced the sale of its German garden products entity Jung Garten Freizeit Vertriebsgesellschaft mbH
(“Jung”). The entity was sold on 1 September 2006 and is reported in the financial report as a discontinued operation. As the details of this sale
were finalised prior to the completion of the Group’s accounts for the year end 30 June 2006, the impairment loss identified by the sale was
recognised in these accounts so that the loss on disposal generated in the current period relates only to the adjustments to the final settlement.
Financial information relating to the discontinued operation for the period to the date of the disposal is set out below. Further information is set
out in Note 27 Segment Reporting.
Profit From Discontinued Operations
Revenue
Expenses
Loss before income tax
Income tax benefit
Loss after income tax of discontinued operations
Loss on sale of division before income tax
Income tax (expense) / benefit
Loss on sale of division after income tax
Loss from discontinued operations
Cash Flows From Discontinued Operations
Net cash inflow / (outflow) from ordinary activities
Net cash inflow / (outflow) from investing activities
Effect of exchange rate changes on items nominated in foreign currencies
Net increase / (decrease) in cash generated by Jung
Carrying Amounts of Assets and Liabilities
The carrying amounts of assets and liabilities as at 1 September 2006 were:
Property, plant and equipment
Receivables
Inventories
Total assets
Payables
Net assets
Details of Sale of Jung
Consideration received
Foreign currency translation reserve realised on sale
Carrying amount of net assets sold
Foreign currency movements on deferred consideration from date of sale written off on final settlement
Loss on sale before income tax
Income tax (expense) / benefit
Loss on sale after income tax
Reconciliation of Proceeds From Disposal of Business
Repayment of related party balances by the purchaser
Assumption of debt
Sale consideration received from the purchaser
Total proceeds from disposal of business
Consolidated
2006 / 2007
($000)
2005 / 2006
($000)
8,212
(8,442)
(230)
24
(206)
(265)
-
(265)
(471)
1,400
15,674
(1,111)
15,963
968
13,426
7,290
21,684
(21,030)
654
83
231
314
(654)
75
(265)
-
(265)
12,416
3,191
83
15,690
54,979
(64,203)
(9,224)
-
(9,224)
-
-
-
(9,224)
(2,208)
(427)
-
(2,635)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Gale Pacific Limited
51
Annual Report
NOTE 21: COMPANY DETAILS
The registered office of the Company is:
Gale Pacific Limited
145 Woodlands Drive
Braeside, Vic, 3195
Australia
NOTE 22: DIRECTORS AND EXECUTIVES’ COMPENSATION
The key management personnel of the Group who held office during the year were:
Directors
H Boon (Chairman, Non Executive)
G Richards (Non Executive)
P McDonald (Managing Director and Chief Executive Officer)
G Gale (Non Executive), retired 21 November 2006
D Reilly (Non Executive), retired 21 November 2006
Executives
F Albertsmeier (Managing Director, Europe / Middle East / Africa)
P Cacioli (General Manager, Research & Development and Technical Services), appointed 30 March 2007
S Carroll (Managing Director, Australia)
J Cox (Chief Financial Officer)
M Denney (Managing Director, USA), appointed 25 September 2006
P Ducray (Chief Manufacturing Officer)
Z Fakroddin (Business Unit Manager, Gale Europe GmbH)
C McCallum (Managing Director, New Zealand)
E Xu (Managing Director, China)
Key Management Personnel Compensation
The Remuneration Committee reviews the remuneration packages of all Directors and executive officers on an annual basis and makes
recommendations to the Board. Remuneration packages are reviewed with due regard to performance and other relevant factors, and advice is sought
from external advisers in relation to their structure.
Remuneration packages contain the following key elements:
a.
b.
c.
Salary/fees;
Benefits, including the provision of motor vehicles and superannuation; and
Incentive schemes, including bonus and share options under the Executive Share Option Plan as disclosed in Note 16 to the Financial
Statements.
Gale Pacific Limited
52
Annual Report
NOTE 22: DIRECTORS AND EXECUTIVES’ COMPENSATION (CONTINUED)
2006 / 2007
Short Term Benefits
Post
Employ
Share Based Payments
Termin.
Benefits
Total
Performance Related
Directors
Salary &
Fees
Bonus
Non-
monetary
Super
Options
Perform.
Rights
Total
Options
($)
($)
($)
($)
($)
($)
($)
($)
%
%
Executive Directors
P McDonald
354,215
32,000
44,609
27,929
47,138
19,930
Non Executive Directors
H Boon
G Richards
D Reilly (i)
G Gale (ii)
Total
150,000
71,667
31,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
607,132
32,000
44,609
27,929
47,138
19,930
-
-
-
-
-
-
525,821
18.8%
12.8%
150,000
71,667
31,250
-
778,738
-
-
-
-
-
-
-
-
-
-
2005 / 2006
Short Term Benefits
Post
Employ
Share Based Payments
Termin.
Benefits
Total
Performance Related
Directors
Salary &
Fees
Bonus
Non-
monetary
Super
Options
Perform.
Rights
Total
Options
($)
($)
($)
($)
($)
($)
($)
($)
%
%
Executive Directors
P McDonald
G Gale (ii)
Non Executive Directors
H Boon (iii)
G Richards
D Reilly (i)
T Eversteyn (iv)
359,942
371,635
137,500
65,000
75,000
14,166
Total
1,023,243
-
-
-
-
-
-
-
62,401
5,171
72,580
61,964
12,139
51,658
-
-
-
-
-
-
-
-
-
-
-
-
124,365
17,310
124,238
-
-
-
-
-
-
-
-
500,094
14.5%
14.5%
617,096
1,114,492
4.6%
4.6%
-
-
-
-
137,500
65,000
75,000
14,166
617,096
1,906,252
-
-
-
-
-
-
-
-
(i)
(ii)
(iii)
(iv)
Mr Reilly retired from his role as a Non Executive Director on 21 November 2006 and therefore the details of his remuneration for the reporting
period are to that date.
Mr Gale resigned from his role as an Executive Director on 26 April 2006 and retired as a Non Executive Director on 21 November 2006. The
details of his remuneration for the 2005 / 2006 reporting period are to 26 April 2006. Mr Gale did not receive remuneration in his role as Non
Executive Director.
Mr Boon was appointed a Non Executive Director on 25 August 2005 and therefore the details of his remuneration for the reporting period are
from that date.
Mr Eversteyn retired from his role as a Non Executive Director on 25 August 2005 and therefore the details of his remuneration for the reporting
period are to that date.
Gale Pacific Limited
53
Annual Report
NOTE 22: DIRECTORS AND EXECUTIVES’ COMPENSATION (CONTINUED)
2006 / 2007
Short Term Benefits
Key Management Personnel
F Albertsmeier (i)
Z Fakroddin (ii)
S Carroll
J Cox
P Ducray (iii)
C McCallum (iv)
E Xu (v)
M Denney (vi)
P Cacioli (vii)
Total
Salary &
Fees
($)
320,090
189,459
214,472
229,358
169,477
190,748
179,517
126,964
62,713
1,682,798
Bonus (xiii)
($)
77,506
-
15,000
25,000
-
-
12,457
55,017
-
184,980
2005 / 2006
Short Term Benefits
Key Management Personnel
Z Fakroddin (viii)
E Jung (ix)
S Carroll
C McCallum (iv)
E Xu (v)
A London (x)
F Albertsmeier (xi)
J Cox (xii)
Total
Salary &
Fees
($)
148,610
255,940
208,900
198,825
150,013
157,888
79,888
69,833
1,269,897
Bonus
($)
129,111
38,538
-
36,357
24,318
-
-
-
228,324
Post
Employment
Superann-
uation
($)
-
-
19,143
20,642
-
-
-
-
5,644
45,429
Post
Employment
Superann-
uation
($)
-
4,171
20,527
-
-
10,956
4,650
6,285
46,589
Non-
monetary
($)
33,479
105,064
30,873
-
28,771
-
4,028
-
1,507
203,722
Non-
monetary
($)
60,031
15,784
27,070
15,558
18,919
17,007
2,422
-
156,791
Share Based
Payments
Options
Total
Performance Related
Total
Options
($)
-
6,408
6,408
-
3,204
8,010
2,493
-
-
26,523
($)
431,075
300,931
285,896
275,000
201,452
198,758
198,495
181,981
69,864
2,143,452
%
18.0%
2.1%
7.5%
9.1%
1.6%
4.0%
7.5%
30.2%
-
%
-
2.1%
2.2%
-
1.6%
4.0%
1.3%
-
-
Share Based
Payments
Options
Total
Performance Related
Total
Options
($)
3,950
-
3,950
4,938
48,600
6,406
-
-
67,844
($)
341,702
314,433
260,447
255,678
241,850
192,257
86,960
76,118
1,769,445
%
38.9%
12.3%
1.5%
16.2%
30.2%
3.3%
-
-
%
1.2%
-
1.5%
1.9%
20.1%
3.3%
-
-
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Mr Albertsmeier is based in Germany and remunerated in Euro converted to Australian dollars in the table above.
Mr Fakroddin is based in Europe and is remunerated in Euro converted to Australian dollars in the table above.
Mr Ducray is based in China and remunerated in US dollars converted to Australian dollars in the table above. Mr Ducray was appointed Group
Manufacturing Manager on 1 July 2006. Prior to this appointment Mr Ducray was Manufacturing Manager Gale Pacific (New Zealand) Limited.
Mr McCallum is based in New Zealand and is remunerated in New Zealand dollars converted to Australian dollars in the table above.
Ms Xu is based in China and is remunerated in US dollars converted to Australian dollars in the table above.
Mr Denney was appointed Managing Director Gale Pacific USA on 1 August 2006 and therefore the details of his remuneration for the reporting
period are from that date. He is based in USA and remunerated in US dollars converted to Australian dollars in the table above.
Mr Cacioli was appointed General Manager of R & D Technical Services on 1 March 2007 and therefore the details of his remuneration for the
reporting period are from that date.
(viii) Mr Fakroddin was based in the Middle East and is remunerated in US dollars converted to Australian dollars in the table above. The bonus
payments related to the period ended 30 June 2005 and 30 June 2006 and were paid in USD converted to Australian dollars in the table above.
(ix)
(x)
(xi)
(xii)
(xiii)
Mr Jung resigned 31 March 2006 and therefore the details of his remuneration for the reporting period are to that date. He is based in Germany
and remuneration is in Euro converted to Australian dollars in the table above.
Mr London resigned on 1 March 2006 and therefore the details of his remuneration for the reporting period are to that date.
Mr Albertsmeier was appointed Managing Director Gale Jung and Europe on 1 April 2006 and therefore the details of his remuneration for the
reporting period are from that date. He is based in Germany and remunerated in Euro converted to Australian dollars in the table above.
Mr Cox was appointed as Chief Financial Officer on 1 March 2006 and therefore the details of this remuneration for the reporting period are form
that date.
Incentive bonuses are granted annually. The grant date is tied to the performance review, which for the current year was completed by 30 June
2007. The service and performance criteria are set out in this report.
Gale Pacific Limited
54
Annual Report
NOTE 22: DIRECTORS AND EXECUTIVES’ COMPENSATION (CONTINUED)
Compensation by Category
Consolidated
Company
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
Short term employment benefits
2,755
2,380
1,263
1,206
Post employment benefits
Share based payments
Termination benefits
Total
73
94
-
59
120
617
73
73
-
50
62
617
2,922
3,176
1,409
1,935
Directors’ Equity Holdings: Fully Paid Ordinary Shares
2006 / 2007
Executive Directors
P McDonald
Non Executive Directors
H Boon
G Richards
Total
2005 / 2006
Executive Directors
G Gale
P McDonald
Non Executive Directors
H Boon
D Reilly
G Richards
Total
Balance
30 June 2006
Received as
Remuneration
Options Exercised
Net Change
Balance
30 June 2007
334,714
73,000
78,851
486,565
-
-
-
-
-
-
-
-
-
-
-
-
334,714
73,000
78,851
486,565
Balance
30 June 2005
Received as
Remuneration
Options Exercised
Net Change
Balance
30 June 2006
15,329,709
306,295
-
316,065
57,778
16,009,847
-
-
-
-
-
-
-
-
-
-
-
-
70,000
28,419
73,000
107,076
21,073
15,399,709
334,714
73,000
423,141
78,851
299,568
16,309,415
Gale Pacific Limited
55
Annual Report
NOTE 22: DIRECTORS AND EXECUTIVES’ COMPENSATION (CONTINUED)
Directors’ and Executives’ Equity Holdings, Compensation Options and Performance Rights: Granted and Vested During the Year
2006 / 2007
Vested
Number
Granted
Number
Grant Date
Value Per
Option / Right
at Grant Date
Exercise
Price
Expiry Date
First Exercise
Date
Last Exercise
Date
Executive Directors (Performance Rights)
P McDonald
-
150,000
02/02/2007
$0.79
Nil
02/02/2017
30/09/2009
02/02/2017
Terms & Conditions for Each Grant
Non Executive Directors
None
Executives (Options)
E Xu
Total
-
-
80,000
24/10/2006
$0.10
$1.52
31/12/2008
29/09/2008
31/12/2008
230,000
2005 / 2006
Vested
Number
Granted
Number
Grant Date
Value Per
Option / Right
at Grant Date
Exercise
Price
Expiry Date
First Exercise
Date
Last Exercise
Date
Terms & Conditions for Each Grant
Executive Directors
None
Non Executive Directors
None
Executives (Options)
S Carroll
Z Fakroddin
A London
C McCallum
Total
-
-
-
-
80,000
16/11/2005
80,000
16/11/2005
80,000
16/11/2005
100,000
16/11/2005
340,000
$0.445
$0.445
$0.445
$0.445
$1.52
01/12/2008
28/09/2007
01/12/2008
$1.52
01/12/2008
28/09/2007
01/12/2008
$1.52
01/12/2008
28/09/2007
01/12/2008
$1.52
01/12/2008
28/09/2007
01/12/2008
Gale Pacific Limited
56
Annual Report
NOTE 22: DIRECTORS AND EXECUTIVES’ COMPENSATION (CONTINUED)
Directors’ and Executives’ Equity Holdings Compensation Options and Performance Rights: Movements During the Year
2006 / 2007
Balance
30 June 2006
Received as
Remuneration
Options / Rights
Exercised
Options / Rights
Lapsed
Balance
30 June 2007
Total Vested
30 June 2006
Total
Exercisable
30 June 2007
Executive Directors (Options)
P McDonald
240,000
-
Executive Directors (Performance Rights)
P McDonald
-
150,000
Non Executive Directors
None
Executives (Options)
S Carroll
P Ducray
Z Fakroddin
C McCallum
E Xu
Total
40,000
20,000
40,000
50,000
50,000
440,000
-
-
-
-
80,000
230,000
-
-
-
-
-
-
-
-
(60,000)
180,000
-
-
-
-
-
(90,000)
(150,000)
150,000
40,000
20,000
40,000
50,000
40,000
520,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2005 / 2006
Balance
30 June 2006
Received as
Remuneration
Options / Rights
Exercised
Options / Rights
Lapsed
Balance
30 June 2007
Total Vested
30 June 2006
Total
Exercisable
30 June 2007
Executive Directors (Options)
G Gale
P McDonald
Non Executive Directors
None
Executives (Options)
S Carroll
Z Fakroddin
A London
C McCallum
E Xu
Total
320,000
240,000
-
-
-
-
50,000
610,000
Remuneration Practices
-
-
80,000
80,000
80,000
100,000
-
340,000
-
-
-
-
-
-
-
-
(320,000)
-
-
240,000
(40,000)
(40,000)
(80,000)
(50,000)
-
(530,000)
40,000
40,000
-
50,000
50,000
420,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The Group policy for determining the nature and amount of emoluments of Board members and senior executives is as follows. The remuneration
structure for executive officers, including Executive Directors, is based on a number of factors including length of service, particular experience of the
individual concerned, and overall performance of the Group. The contracts of service between the Group and Executive Directors and executives are on
a continuing basis, the terms of which are not expected to change in the immediate future. Upon retirement Executive Directors and executives are paid
employee benefit entitlements accrued to date of retirement. Payment of bonuses, share options and other incentive payments are made at the
discretion of the Remuneration Committee to key executives of the Group based predominantly on an objective review of the Group’s financial
performance, the individuals’ achievement of stated financial and non financial targets and any other factors the Committee deems relevant. Non
Executive Directors receive a fee for being Directors of the Company and do not participate in performance based remuneration.
Options and performance rights issued to executives as a form of compensation are dependant upon the performance conditions outlined in Note 16(b).
For the current year bonuses have been granted as at the 30 June 2007. Bonuses are paid out in cash as determined at the discretion of the
Remuneration Committee.
Gale Pacific Limited
57
Annual Report
NOTE 23: DIVIDENDS
Ordinary Shares
Interim dividend – fully franked
Final dividend – fully franked
Adjusted franking account balance
2006 / 2007
Cents Per
Share
2005 / 2006
Total
($000)
Cents Per
Share
-
-
-
-
-
1,076
1.5
1.5
Total
($000)
779
824
1,603
508
NOTE 24: CAPITAL AND LEASING COMMITMENTS
Consolidated
Company
Note
2006 / 2007
($000)
2005 / 2006
($000)
2006 / 2007
($000)
2005 / 2006
($000)
Finance Leasing Commitments
Payable:
Not later than one year
Later than one year and not later than five years
Minimum lease payments
Less future finance charges
Total lease liability
Represented By
Current liability
Non current liability
Hire Purchase Commitments
Payable:
Not later than one year
Later than one year and not later than five years
Minimum hire purchase payments
Less future finance charges
Total hire purchase liability
Represented By
Current liability
Non current liability
Operating Lease Commitments
Non cancellable operating leases contracted for but not capitalised in
the accounts:
Payable:
Not later than one year
Later than one year and not later than five years
Later than five years
13
13
13
13
438
365
803
(302)
501
228
273
501
2,376
430
2,806
(175)
2,631
2,225
406
2,631
444
691
1,135
(408)
727
239
488
727
2,002
2,909
4,911
(497)
4,414
1,680
2,734
4,414
3,009
9,256
752
13,017
3,156
6,146
3,321
12,623
438
365
803
(302)
501
228
273
501
2,376
430
2,806
(175)
2,631
2,225
406
2,631
1,596
6,828
-
8,424
444
691
1,135
(408)
727
239
488
727
2,002
2,909
4,911
(497)
4,414
1,680
2,734
4,414
1,818
2,007
171
3,996
The Group leases property and equipment under operating leases expiring in 1 to 10 years. Leases of property generally provide the Group with a right
of renewal at which time all leases are renegotiated. Lease payments comprise a base amount plus an incremental contingent rental. Contingent rental
increases are based on the consumer price index.
Gale Pacific Limited
58
Annual Report
NOTE 25: RELATED PARTY TRANSACTIONS
Equity Investments in Controlled Entities
Details of the percentage of ordinary shares held in controlled entities are disclosed in Note 26 to the financial statements.
Directors’ Remuneration
Details of Directors’ remuneration are disclosed in Note 22.
(a)
Transactions within the Wholly Owned Group
The wholly owned group includes:
•
•
The ultimate parent entity in the wholly owned group; and
Wholly owned controlled entities.
The ultimate parent entity in the wholly owned group is Gale Pacific Limited, which is also the parent entity in the economic entity.
Amounts receivable from or payable to entities in the wholly owned group are disclosed in Note 6. These amounts are unsecured and are
subordinate to other liabilities. These amounts outstanding will be settled in cash. At 30 June 2007 a review was undertaken on the timing of
recovery of related party balances owed to the parent by wholly owned controlled entities. Using discounted projected cash flows it was
concluded that the timeframes for recovery of the balances owed by Gale Europe GmbH Vertriebsgesellschaft and Gale (New Zealand) Limited
were of sufficient length to warrant the creation of a provision for impairment totalling $9,699,000 in the parent’s accounts against these two
balances. This provision is reversed on consolidation of the parent and wholly owned controlled entities so that the consolidated result is
unaffected by this provision.
During the financial year, the following transactions occurred between entities in the wholly owned group:
•
•
•
•
•
Sale and purchase of goods totalling $39,624,000 (2006: $22,958,000)
Gale Pacific Limited received interest income from its subsidiaries totalling $2,339,000 (2006: $1,446,000)
Gale Pacific Limited made interest payments to its subsidiaries totalling $1,337,000 (2006: $336,000)
Plant and equipment was transferred at written down value totalling $9,084,000 (2006: $3,274,000)
Reimbursement of certain operating costs totalling $1,577,000 (2006: $313,000)
(b)
Transactions with Non Wholly Owned Controlled Entity
Transactions that occurred during the financial year with a non wholly owned controlled entity were:
•
Net sales of goods at cost of nil (2006: $139,000)
(c)
Transactions with Directors and Director Related Entities
The following amounts were payable to Directors and their Director related entities as at the reporting date.
Consolidated
Company
2006 / 2007
2005 / 2006
2006 / 2007
2005 / 2006
($000)
($000)
($000)
($000)
Current – accrued bonus and director fees
38
5
38
5
Gale Pacific Limited
59
Annual Report
NOTE 26: CONTROLLED ENTITIES
Parent Entity
Gale Pacific Limited
Controlled Entities
Gale Pacific USA Inc
Gale Pacific FZE
Aquaspan Pty Ltd
Gale Pacific Special Textiles (Ningbo) Limited
Jung Garten & Freizeit Vertriebsgesellschaft mbH
Gale Europe GmbH Vertriebsgesellschaft
Gale Pacific (New Zealand) Limited
NOTE 27: SEGMENT REPORTING
Country of Incorporation
Ownership Interest (%)
2006 / 2007
2005 / 2006
Australia
United States of America
United Arab Emirates
Australia
China
Germany
Germany
New Zealand
-
100%
100%
50%
100%
-
100%
100%
-
100%
100%
50%
100%
100%
100%
100%
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Unallocated items mainly comprise income earning assets and revenue, interest bearing loans, borrowings and expenses, and corporate assets and
expenses.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one
period.
Inter-segment pricing is predominantly determined on an arm’s length basis.
Geographical Segment
In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets
are based on the geographical location of the assets.
The Group comprises the following main geographical segments, based on the Group’s management reporting system.
Asia/Pacific
Manufacturing and distribution facilities are located in Australia, China and New Zealand which supplies products to Australia, New Zealand, Europe,
USA and the Middle East. Sales offices are located in all states in Australia and through distribution agreements in New Zealand.
Americas
Sales offices are located in Florida and custom awning manufacturing and distribution facilities are located in California which service the North
American region.
Europe/Middle East/Africa
Sales offices and distribution facilities are located in the United Arab Emirates and Germany which service those regional markets.
Gale Pacific Limited
60
Annual Report
NOTE 27: SEGMENT REPORTING (CONTINUED)
Business Segment
The Group operates predominantly in one business segment, being the advanced polymer fabrics industry. The Group manufactures and markets
advanced durable knitted and woven polymer fabrics and value added structures made from these fabrics.
Segment Information Primary Reporting – Geographical Segments
Asia / Pacific
Americas
($000)
($000)
Europe /
Middle East /
Africa
($000)
Discontinued
Business
Eliminations
Consolidation
($000)
($000)
($000)
30 June 2007
Revenue outside the Group
Inter-segment revenue
Total revenue
Segment operating profit / (loss)
Income tax (expense) / benefit
Operating profit / (loss) after tax
Depreciation and amortisation
Individually Significant Items
Reimbursement of R & D expenditure
Impairment of assets
Inventory write down
Restructuring and termination costs
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
Acquisition of non current assets
30 June 2006
Revenue outside the Group
Inter-segment revenue
Total revenue
Segment operating profit / (loss)
Income tax (expense) / benefit
Operating profit / (loss) after tax
Depreciation and amortisation
Individually Significant Items
Reimbursement of R & D expenditure
Impairment of assets
Inventory write down
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
Acquisition of non current assets
Gale Pacific Limited
10,279
222
10,501
(10,472)
(1,609)
(12,081)
771
-
-
(3,899)
-
13,280
-
13,280
2,672
-
2,672
88
9,277
-
9,277
(1,728)
1,278
(450)
8,212
-
8,212
(495)
24
(471)
31
-
-
-
-
-
-
-
-
-
-
16
54,979
-
54,979
(9,224)
-
(9,224)
621
319
-
-
-
7,396
-
7,396
636
-
636
963
-
(3,734)
(2,143)
41,226
-
41,226
12,365
-
12,365
459
72,787
23,938
96,725
(4,298)
(492)
(4,790)
6,524
110
(1,031)
(440)
(4,672)
101,856
-
101,856
66,436
-
66,436
3,570
80,402
32,703
113,105
(5,204)
2,931
(2,273)
8,198
748
(728)
-
117,313
-
117,313
120,505
-
120,505
19,558
27,837
43
27,880
1,947
(737)
1,210
564
-
-
-
-
18,052
-
18,052
2,714
-
2,714
453
22,511
-
22,511
340
(145)
195
453
-
-
-
14,099
-
14,099
1,360
-
1,360
592
61
(499)
(24,203)
(24,702)
(314)
86
(228)
-
-
-
-
-
(1,564)
-
(1,564)
(89)
-
(89)
-
-
(32,703)
(32,703)
(165)
(27)
(192)
(119)
-
-
-
1,790
-
1,790
-
-
-
-
118,616
-
118,616
(13,632)
(2,728)
(16,360)
7,890
110
(1,031)
(4,339)
(4,672)
131,624
104
131,728
71,733
(206)
71,527
4,127
167,169
-
167,169
(15,981)
4,037
(11,944)
9,472
748
(4,462)
(2,143)
181,824
333
182,157
134,866
905
135,771
21,572
Annual Report
NOTE 29: EARNINGS PER SHARE
Basic Earnings Per Share
From continuing operations
From discontinued operations
Total basic earnings per share
Diluted Earnings Per Share
From continuing operations
From discontinued operations
Total diluted earnings per share
Consolidated
2006 / 2007
2005 / 2006
(Cents Per Share)
(Cents Per Share)
(16.58)
(0.49)
(17.07)
(16.58)
(0.49)
(17.07)
(5.14)
(17.43)
(22.57)
(5.14)
(17.43)
(22.57)
Consolidated
2006 / 2007
($000)
2005 / 2006
($000)
Earnings Per Share
The earnings and weighted average number of ordinary shares used in the calculation of basic and
diluted earnings per share are as follows:
Net loss
(16,360)
(11,944)
Earnings Used in the Calculation of Basic and Diluted EPS
Adjustments to exclude loss for the period from discontinued operations
Earnings used in the calculation of basic and diluted EPS from continuing operations
Weighted average number of ordinary shares for the purposes of basic earnings per share
471
(15,889)
9,224
(2,720)
Consolidated
2006 / 2007
(No. 000)
95,852
2005 / 2006
(No. 000)
52,911
Potential ordinary shares have not been included in the calculation of diluted EPS as losses for the current and comparative periods means that they are
anti-dilutive in nature.
Gale Pacific Limited
62
Annual Report
NOTE 30: FINANCIAL INSTRUMENTS
(a).
Financial Instruments
Derivative financial instruments may be used by the Group to limit exposure to exchange rate risk associated with foreign currency borrowings.
The derivative financial instruments are recognised in the financial statements. Transactions to reduce foreign currency exposure are
undertaken without the use of collateral as the Group only deals with reputable institutions with sound financial positions.
(b).
Credit Risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the
carrying amount of those assets, net of any provisions for doubtful debts of those assets, as disclosed in the statement of financial position and
notes to the financial statements.
Credit risk for derivative financial instruments arises from the potential failure by counterparties to the contract to meet their obligations. The
credit risk exposure to forward exchange contracts is the net fair value of these contracts.
The Group does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by
the Group.
(c).
Net Fair Values
The net fair value of assets and liabilities approximates their carrying value. No financial assets and financial liabilities are readily traded on
organised markets in standardised form other than forward exchange contracts.
(d).
Interest Rate Risk
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market
interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities, is as follows:
30 June 2007
Note
Weighted
Average
Effective
Interest Rate
(%)
Balance
with
Variable
Interest
Rate
($000)
Balance with Fixed Interest Maturing In
Less Than
1 Year
1 to 2 Years
2 to 5 Years
Balance
That is Non
Interest
Bearing
Total
($000)
($000)
($000)
($000)
($000)
Financial Assets
Cash and cash equivalents
Trade receivables
Other receivables
Current tax assets
Total
Financial Liabilities
Bank overdrafts
Trade creditors
Other payables (sundry
creditors and accruals)
Foreign currency forward
contracts
Current tax liabilities
Bank loans
Other loans
Finance lease liabilities
Hire purchase liabilities
Employee benefit
provisions
Total
5
6
6
4
13
12
12
14
4
13
13
13
13
15
3.47%
4,691
2,142
-
-
-
-
10.22%
-
-
-
-
5.90%
8.80%
7.04%
8.77%
-
-
-
-
-
-
-
4,691
2,142
7,103
759
-
-
-
-
-
-
-
-
1,459
32,576
-
-
-
-
1,364
228
2,225
-
-
-
-
-
-
-
-
-
-
-
-
3,267
273
406
-
9,321
36,393
3,946
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
809
18,625
738
362
7,642
18,625
738
362
20,534
27,367
-
5,992
4,353
7,103
6,751
4,353
31
31
658
2,520
-
-
-
2,179
658
36,555
4,631
501
2,631
2,179
15,733
65,393
Gale Pacific Limited
63
Annual Report
NOTE 30: FINANCIAL INSTRUMENTS (CONTINUED)
30 June 2006
Note
Weighted
Average
Effective
Interest Rate
(%)
Balance
with
Variable
Interest
Rate
($000)
Balance with Fixed Interest Maturing In
Less Than
1 Year
1 to 2 Years
2 to 5 Years
Balance
That is Non
Interest
Bearing
Total
($000)
($000)
($000)
($000)
($000)
Financial Assets
Cash and cash equivalents
Trade receivables
Other receivables
Current tax assets
Total
Financial Liabilities
Bank overdrafts
Trade creditors
Other payables (sundry
creditors and accruals)
Current tax liabilities
Bank loans
Other loans
Convertible notes
Finance lease liabilities
Hire purchase liabilities
Employee benefit
provisions
Total
5
6
6
4
13
12
12
4
13
13
13
13
13
15
5.50%
10,550
-
-
-
-
-
-
10,550
8.10%
16,966
-
-
-
6.20%
9.10%
8.67%
7.50%
8.20%
-
-
-
-
57,739
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,700
681
15,500
239
1,680
-
-
-
-
-
-
-
-
-
-
-
4,015
-
488
2,734
-
74,705
27,800
7,237
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
10,552
32,108
32,108
4,594
1,047
4,594
1,047
37,751
48,301
-
16,966
16,702
16,702
5,541
5,541
344
344
-
-
-
-
-
1,299
67,439
4,696
15,500
727
4,414
1,299
23,886
133,628
(e).
Forward Exchange Contracts
The Group enters into forward exchange contracts to buy and sell specified amounts of foreign currency in the future at stipulated exchange
rates. The objective in entering the forward exchange contracts is to protect the Group against unfavourable exchange rate movements for both
the contracted and anticipated future sales and purchases undertaken in foreign currencies.
The full amount of the foreign currency the Group will be required to pay or purchase when settling the brought forward exchange contracts
should the counterparty not pay the currency it is committed to deliver to the Group has been recognised in the Company’s balance sheet. At
balance date the net amount payable was $31,200.
The accounting policy in regard to forward exchange contracts is detailed in Note 1(n).
Gale Pacific Limited
64
Annual Report
At balance date, the details of outstanding forward exchange contracts are:
Average Exchange Rate
Foreign Currency
Contract Value
Fair Value
2007
2006
2007
(FC000)
2006
(FC000)
2007
($000)
2006
($000)
2007
($000)
2006
($000)
Buy United States Dollars / Sell Australian Dollars
Less than 6 months
0.7741
0.7405
57
1,200
73
1,620
(6)
(29)
Buy European Euro / Sell Australian Dollars
Less than 6 months
0.5742
0.6075
176
45
306
74
(25)
6
Buy United States Dollars / Sell European Euro
Less than 6 months
-
1.2133
-
955
-
1,705
Total
-
(31)
(55)
(78)
NOTE 31: SUBSEQUENT EVENTS
On 30 August 2007, the Company completed a $20 million capital raising via the private placement of 40,000,000 ordinary fully paid shares at a price of
50 cents per share.
Other than the matters discussed above, there has not arisen in the interval between the end of the financial year and the date of this report any item,
transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly, the operations of the
Group, the results of those operations, or the state of affairs of the Group in future financial years.
Gale Pacific Limited
65
Annual Report
ADDITIONAL STOCK EXCHANGE INFORMATION
Gale Pacific Limited
66
Annual Report
ADDITIONAL STOCK EXCHANGE INFORMATION
Number of Holdings of Equity Securities as at 18
September 2007
Twenty Largest Holders of Quoted Equity
Securities
The fully paid issued capital of the Company consisted of 136,834,516
ordinary fully paid shares held by 967 shareholders. Each share
entitles the holder to one vote.
Shareholder
Thorney Holdings Pty Ltd
Gale Australia Pty Ltd
No.
16,567,324
13,927,844
%
12.11
10.18
Thirty five holders hold 750,000 options and 150,000 performance
rights over ordinary shares. Options and performance rights do not
carry a right to vote.
IWPE Nominees Pty Ltd
12,120,000
Invia Custodian Pty Limited
10,501,938
Distribution of Holders of Equity Securities
Size of Shareholding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of Shareholders
Fully Paid
Ordinary
Shares
137
334
174
272
Options
Over
Ordinary
Shares
57,481
947,306
1,344,702
7,413,080
50
127,071,947
967
136,834,516
ANZ Nominees Limited
Citicorp Nominees Pty Limited
UBS Nominees Pty Ltd
IWPE Nominees Pty Ltd
HSBC Custody Nominees (Australia)
Limited-GSI ECSA
Investec Bank (Australia) Limited
National Nominees Limited
MGB Equity Growth Pty Limited
Equity Trustees Limited
Ruminator Pty Ltd
8,903,912
8,639,263
8,387,722
7,791,428
7,237,940
6,060,000
5,153,587
4,328,572
3,978,058
2,164,705
Unmarketable Parcels as at
18 September 2007
Minimum $500 parcel at $0.52 per
unit
Total
Minimum
Parcel
Size
962
962
Holders
Units
National Australia Trustees Limited
1,410,791
ANZ Nominees Limited
1,528,548
Gwynvill Trading Pty Limited
118
39,507
Crystal Transport Pty Ltd
118
39,507
GFS Securities Pty Ltd
Mr Daryl Edward James Reilly
916,213
853,243
554,638
377,731
8.86
7.67
6.51
6.31
6.13
5.69
5.29
4.43
3.77
3.16
2.91
1.58
1.12
1.03
0.67
0.62
0.41
0.28
88.73
Substantial Shareholders as at 18 September
2007
Shareholder
No.
Investec Wentworth Private Equity Limited
30,300,000
Thorney Holdings Pty Ltd
UBS Nominees Pty Ltd
27,336,560
16,647,761
Monterrey Investment Management Limited
14,051,045
Gale Australia Pty Ltd
Warakirri Asset Management Pty Ltd
Regal Funds Management Pty Ltd
13,927,844
10,354,702
9,599,656
%
22.14
19.98
12.17
10.30
10.18
7.57
7.02
Top 20 Holders of Ordinary Fully Paid
Shares as at 17 September 2007
121,403,457
Other Information
The name of the Company Secretary is Ms Sophie Karzis. The
address of the principal registered office in Australia, and the principal
administrative office is 145 Woodlands Drive, Braeside, 3195, Victoria,
Australia, telephone is (03) 9518 3333. The Company is listed on the
Australian Stock Exchange. The home exchange is Melbourne.
Registers of securities are held by Computer Investor Services Pty Ltd,
Yarra Falls, 452 Johnston Street, Abbotsford, 3067, Australia, local call
is 1300 850 505, international call is + 613 9415 4000.
Gale Pacific Limited
67
Annual Report
Melbourne, Australia
Christchurch, New Zealand
Orlando, USA
Jebel Ali, Dubai
Neunkirchen, Germany
Beilun, China
Gale Pacific Limited
ABN 80 082 263 778