ANNUAL REPORT 2008
For personal use only
C O N T E N T S
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CORPORATE INFORMATION
REPORT FROM THE CHAIRMAN &
THE MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER
BOARD OF DIRECTORS
SENIOR MANAGEMENT
10
CORPORATE GOVERNANCE
14
DIRECTORS’ 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 STATEMENT
68
ADDITIONAL SECURITIES EXCHANGE INFORMATION
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C O R P O R A T E I N F O R M A T I O N
G AL E PAC IF I C L I M IT ED
ABN 80 082 263 778
D i re cto r s
Mr Harry Boon (Chairman)
Mr Peter McDonald (Managing Director and Chief Executive Officer)
Mr John Murphy (Non Executive Director)
Mr George Richards (Non Executive Director)
Company Secret ary
Ms Sophie Karzis
R eg is t e r ed O f f i ce
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
Sh ar e R eg ist e r
Computershare
Yarra Falls, 452 Johnston Street, Abbotsford, Victoria, 3067
Local call 1300 850 505
T + 613 9415 4000
Au dit or
Pitcher Partners
Level 19, 15 William Street, Melbourne, Victoria, 3000
T + 613 8610 5000
W eb s it e A d d r e s s
www.galepacific.com
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R E P O R T F R O M T H E C H A I R M A N &
T H E M A N A G I N G D I R E C T O R A N D
C H I E F E X E C U T I V E O F F I C E R
Dear Shareholders,
T h e Y e a r in R e vi ew
It is pleasing to report the improved results for the year ended 30
June 2008 which reflects the significant advances made over the
last two years. The Gale Pacific Group underwent some substantial
restructuring during 2006 and 2007. The restructuring initiatives
were based around the strategy to ensure that the Group had a
strengthened and stable platform for future growth.
The key achievements for the year were for the Group to return to
profitability and to continue to generate strong positive cash flows
from operations. The net profit after tax for the year ended 30 June
2008 was $2.51 million, which was an $18.87 million improvement
compared with the reported loss for the year ended 30 June 2007.
Positive cash flow generated from operations for the year was $9.8
million and continues the positive trend of cash generation from the
prior year of $8.5 million.
Other significant improvements and strengthening of the Group’s
position included;
•
•
•
•
•
the group with a placement
Recapitalising
to key
shareholders, refinancing core debt and re-establishing a
stable financial position;
Completing the transfer and commissioning of regional
manufacturing equipment to China, maximising the group
leverage of the globally competitive Chinese manufacturing
base;
Liquidating remaining excess and obsolete inventory in
Europe;
Steady growth in the core Australian market and continued
strong growth in the Middle East; and,
Expanded retail presence in America and Europe, building
the sales base in those markets for future years.
The year was not without some challenges which
included
weakening economic conditions in some key markets, record high
polymer prices and the need to take a further write down on the
disposal of obsolete inventories held in Europe from previous
product introductions. The inventory write down unfavourably
impacted the results by $1.6 million.
Synthesis Horticultural
Fabrics
Protective Canopy Nets
Synthesis protective canopy nets help control the
growing environment, protect crops and enhance
yields.
Premium Hortshade
Synthesis Premium Hortshade helps manage and
modify climate conditions, allowing controlled crop
protection.
Bird Netting
Used as permanent canopies, drape over nets or
side nets, Synthesis Bird Netting fabrics protect
vineyards and orchards from bird attack.
Solarweave
Synthesis Solarweave is an innovative hot house
fabric that allows maximum superior light
transmission for optimum growing conditions.
Handyscreen
Installed over tunnel houses, Synthesis
Handyscreen reduces stress on vegetables,
plants and flowers by lowering temperatures
inside and promoting even light distribution.
Windbreak Fabrics
Synthesis windbreaks provide instant wind
protection for plants without creating turbulence.
General Tree and Plant Protection
Protect plants and trees from animals, frost and
other environmental conditions with Synthesis
Tree Tie Webbing,Treeguard and Frost Cloth.
T h e f a b r i c s
f o r l i f e o n e a r t h
s y n t h e s i s f a b r i c s . c o m
Dear Shareholders,
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R e ven ue
Europe
Sales revenues from continuing activities declined by 4.8% or $5.3
million to $105.1 million mainly due to foreign exchange differences
year on year in the consolidation of the accounts.
Op erat ion s
Asia / Pacific
Asia / Pacific revenue reduced marginally to $71.8 million from
$72.8 million in the previous corresponding period. Sales increased
in Australia. Domestic sales within New Zealand decreased and the
closure and relocation of the manufacturing operations to China was
completed smoothly. Operating profit after tax for the region
increased to $5.0 million from a loss of $4.8 million in the previous
corresponding period.
Australia
Sales in Australia for the full year increased by 7% compared with
the previous corresponding period. Sales to the retail market were
slightly lower as market conditions tightened towards the end of the
financial year against a particularly strong previous corresponding
period for retail product sales. This retail sales shortfall was offset
by strong sales of industrial fabrics highlighted by exceptionally
strong sales of our Landmark fabric for grain covers replacing
competitors PVC product. Sales of coated fabrics have increased
as market conditions have improved in many of our industrial
market segments.
New Zealand
Excluding exports, sales in New Zealand decreased by 19% in local
currency in a very competitive market. Some sales to New Zealand
export customers were transferred to other Gale regions during the
year. New Zealand manufacturing equipment was transferred to
China during the year leaving no remaining production in New
Zealand.
China
China operations continued to improve during the year, although we
are still experiencing some technical processing issues. Good
progress is being made and further improvements are planned
during the first half of FY09. Recent restructuring of China
management is designed to improve our technical capabilities and
manufacturing efficiencies. A key component of this has been the
recent implementation of a continuous improvement program.
Polymer costs have continued to rise to record high levels. Where
possible, these cost increases have been, and will continue to be
passed on in our selling prices.
Europe / Middle East / Africa
Europe / Middle East / Africa revenue increased to $11.9 million
from $10.3 million in the previous corresponding period. The
operating loss after tax for this region was $3.2 million compared
with a loss of $12.1 million for the previous corresponding period
which included the loss on sale of the Jung business in Germany
and larger inventory write downs. The result for this year includes
an inventory write down of $1.6 million in Europe.
Sales in Europe increased by 21% in local currency over the
previous corresponding period but were from a low base. The sales
increase was substantially lower than planned as the traction from
increased store listings has not yet fully converted to increased
sales levels, compounded by a delayed start to the selling season in
Europe due to poor weather. Remaining obsolete inventory that the
business has been burdened with since the 2005 and 2006 season
has been liquidated. With this completed, management in Europe is
focusing all of their efforts on growing both our retail and industrial
business in the European market.
Middle East / Africa
Revenue in the Middle East increased 41% in local currency driven
by the continued strong level of construction and development in
this region. The Middle East business has been integrated into the
Gale Europe operation improving the overall operations and focus
of the Middle East business. The region benefited from improved
supply of product from the China factory compared to the previous
corresponding period.
The Americas
USA
Sales in the USA declined 13% in local currency terms in a tough
market and following the loss of a product listing with a retail
customer. Despite this, the USA grew its retail store presence with
the two major retail customers, Lowe’s and The Home Depot, and
added new products with both of these accounts over the year. The
sell
these customers were encouraging,
considering the downturn in US retail spending, particularly in the
home improvement and DIY market.
through rates with
In Australian dollar terms, USA revenue reduced to $20.9 million
from $27.8 million in the previous corresponding period. The result
after tax was break even compared to a profit of $1.2 million for the
previous corresponding period.
While the financial results for FY08 were below expectations, we
are confident of the long term growth opportunity represented by the
American market.
R e se a rc h and D ev e lo p m e n t ( R & D )
The R & D group under the direction of Dr Paul Cacioli has been
working on a balance of shorter term product improvement and
technical projects, and longer term innovation and technology step
change projects. The R & D department is based in Australia and
China and projects include improved fire retardant architectural
fabrics and a breakthrough waterproof and breathable fabric.
Important improvements to our Landmark fabric used for covering
grain have assisted in winning new business for this product,
replacing competitors PVC
remains
committed to a substantial investment in R & D as a key factor in
the Group’s long term growth.
fabrics. The company
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I nfo rm at ion T e chno log y
D i vid en d s
The group wide global information system has been implemented in
Australia, New Zealand and the Middle East. The implementation to
be completed in the remaining regions during 2008 / 2009 will then
generate uniform processes and information. This investment in
information technology will continue to provide improvements in
support for decision making, ongoing working capital improvements
and customer service.
The Directors are pleased with the improved results, return to
profitability of the business and the debt reduction which has
occurred, placing the business in a much stronger financial position.
Directors believe it is prudent to maintain a strong balance sheet
with reduced borrowings in the current economic environment. No
final dividend will be declared for the year, and Directors will review
the position during the FY09 year.
F in anc i a l R es u lts
D i re cto r s
The Group reported a profit after tax of $2.51 million for FY08
(compared with a loss after tax of $16.36 million for the previous
corresponding period). This represents an increase of $18.87
million.
interest,
Earnings before
tax, depreciation and amortisation
(EBITDA) increased to $13.6 million or 13% of revenue compared
with an EBITDA loss of $0.3 million from continuing business for the
previous corresponding period.
Revenue for the year declined 4.8% to $105.1 million from $110.4
million. Revenue increased in Australia, Europe and the Middle
East. Difficult trading conditions in the USA resulted in a sales
decline from the same period last year.
The result includes a write down of the remaining obsolete inventory
held in Europe of $1.6 million. No tax benefit has been applied to
this write down and therefore the effect on the full year results of the
$1.6 million cost is both before and after tax. Normalised earnings
for FY08 (after removing this write down) were EBITDA of $15.2
million and a profit after tax of $4.1 million.
C a sh Flow and B a lan c e Sh eet
The Group significantly reduced net borrowings (borrowings less
cash and cash equivalents) by $23.3 million to $20.5 million during
the last twelve months through a combination of a capital raising
and positive cash flow from operations. Gross cash generated from
operations was $12.7 million. $2.9 million of cash payments were
made relating to the one-off New Zealand plant restructuring,
resulting in reported net cash generated from operations of $9.8
million.
The Group has a strong balance sheet with a gearing ratio at 30th
June 2008 of 26% (compared with 72%
the previous
corresponding period).
for
Capital expenditure on plant and equipment was substantially
reduced to $3.4 million including freight and installation costs of
equipment transferred from New Zealand to China. Inventory levels
reduced by $3.4 million from June 2007.
Net tangible assets per ordinary security was 49.6 cents per share
as at 30 June 2008.
Mr John Murphy was appointed as a Non Executive Director on 24
August 2007. There were no other changes to the composition of
the Board of Directors during the year.
C o rp o r at e G o v ern an c e
The Group is committed to 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 Securities
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.
An nual General Meeting
A notice of the Company’s Annual General Meeting to be held on 14
November 2008 and a proxy form for voting is enclosed with this
report.
Man ag em ent and St aff
The senior management team has remained committed to the
turnaround of the business throughout the year. On behalf of the
Directors, we would like to thank the entire Gale team for their
diligence and dedication to improving the business. The team
should rightly be proud of the resultant return to profitability of the
business.
We are confident that the Gale team and Gale culture has the
Group well placed to meet the challenges and capitalise on the
opportunities for the business as they arise in the period ahead.
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Out loo k
Enormous progress has been made within the business over the
last few years and we are planning for improved performance in
FY09. The current unsettled economic and market environment
makes it difficult to provide specific guidance on the Group’s
expected financial performance for the coming year.
Mr Harry Boon
Chairman
30 September 2008
Mr Peter McDonald
Managing Director and Chief Executive Officer
30 September 2008
Coolaroo Shade Sail
The Coolaroo Shade Sail state-of-the-art material blocks
up to 90% of the sun’s harmful UV rays yet remains totally
unaffected by moisture and natural temperature extremes.
Since Coolaroo fabric is knitted, it won’t tear or fray.
All Coolaroo Shade Sails feature reinforced polyester
webbing on all edges for long life performance and
are warranted against UV degradation for a full 10 years.
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B O A R D O F D I R E C T O R S
HARRY BOON,
LLB (HONS), B. Com
PETER MCDONALD,
Bachelor of Business
(Marketing)
JOHN MURPHY,
CA, FCPA, B.Comm, M.Comm
GEORGE RICHARDS,
CPA, AAICD
H a r ry Bo o n
John Mu rp hy
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 Tatts
Group Limited, a Non Executive Director of Hastie Group Limited,
Non Executive Director of Paperlinx Limited and Non Executive
Director of Toll Holdings Limited.
Mr Boon has lived and worked in Australia, Europe, United States
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 and Specialty
Fashion Group 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.
P e t e r M cD o n a l d
G eo rge 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 United States operations.
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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 Committees.
For personal use only
S E N I O R M A N A G E M E N T
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.
D r Pau l C ac io li
General Manager, Research & Development & 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.
M a rt in D enne y
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.
F r ank A lb e rts m ei e r
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
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.
Pa ul Du c ray
Chief Manufacturing Officer
Paul joined Gale in December 2004 and relocated to China in June 2006 and taking 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.
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C O R P O R A T E G O V E R N A N C E
the highest
This statement sets out the corporate governance
practices that were in operation throughout the
2007 / 2008 financial year for Gale Pacific Limited
(“the Company”) and its controlled entities (“the
Group”). Gale Pacific’s Directors and management
the Company’s
to conducting
are committed
business in an ethical manner and in accordance
with
corporate
governance. The Board has continued its strategy
of strengthening its corporate governance practices
and the Company has adopted and complies with
the ASX Corporate Governance Principles and
Recommendations Second Edition August 2007. It
is noted
revised principles and
recommendations are not required to be reported
on until the Company’s 2009 annual report is
published.
standards of
that
the
The ASX Corporate Governance Council has
encouraged companies to make an early transition
to the revised Principles and Recommendations
and the Company is reporting by reference to the
revised Principles and Recommendations in this
2008 Annual Report. A summary of how the Group
revised ASX Corporate
complies with
Governance Principles and Recommendations is
included below. The various charters and policies
are all available on the Gale Pacific web site:
www.galepacific.com.
the
Synthesis Architectural
Fabrics
Commercial 95
Synthesis Commercial 95 offers
the premium combination of
durability with the highest levels of
UV protection available from 91%
to 99% depending on colour.
It’s the proven performer
worldwide in an endless variety of
commercial shade sails and
architectural tension structures.
S t y l i s h f a b r i c s t o
e n h a n c e o u t d o o r
d e s i g n
S y n t h e s i s f a b r i c s . c o m
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Prin cip le 1:
m an age men t o ve r sig ht
L a y so lid
fo undation
f or
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.
Each director is given a letter upon his or her appointment which
outlines the director’s duties. The Group has in place systems
designed to fairly review and actively encourage enhanced Board
and management effectiveness. The Nomination Committee takes
responsibility for evaluating the Board’s performance and the
Group’s key executives annually.
P r in c ip le 2: S t r u ct u r e t h e B o ar d t o a d d v a lu e
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.
The chairman should be an independent director.
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.
The roles of the chairman and the chief executive officer
should not be exercised by the same individual.
Complying.
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 Nomination Committee.
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
independent directors and
thresholds.
the Board
to constitute
the Group’s materiality
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.
Pr in c ip le 3: Pro mot e eth i ca l and res pon si bl e
d e ci s io n m ak i n g
Establish a code of conduct and disclose the code as to:
•
•
•
The practices necessary to maintain confidence in the
company’s integrity.
The practices necessary to take into account their legal
obligations and the reasonable expectations of their
stakeholders.
The responsibility and accountability of individuals for
reporting and
reports of unethical
practices.
investigating
Companies should establish a policy concerning trading in
company securities by directors, senior executives and
employees, and disclose the policy or a summary of that
policy.
Companies should provide the information indicated in the
Guide to reporting on Principle 3.
The positions of Chairman and Chief Executive Officer are held by
separate persons.
Complying.
The Group has formulated a Code of Conduct which can be viewed
on its website.
The Group has adopted a Share Trading Policy which can be
viewed on its website.
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Prin cip le 4: Saf egu ard integrit y in f inancial
r e p o rti n g
Companies should have a structure to independently verify
and safeguard the integrity of their financial reporting.
Companies should establish written policies designed to
ensure compliance with ASX Listing Rule disclosure
requirements and
to ensure accountability at a senior
executive level for that compliance and disclose those policies
or a summary of those policies. Companies should provide the
information indicated in the Guide.
The board should establish an audit committee.
The audit committee should be structured so that it:
•
•
•
•
Consists only of non executive directors.
Consists of a majority of independent directors.
Is chaired by an independent chair, who is not chair of
the board.
Has at least three members.
The audit committee should have a formal charter.
Complying.
The Group has a documented policy which has established
procedures designed
to ensure compliance with Australian
Securities 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
for all
communications with the Australian Securities 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.
responsible
is
Companies should provide the information indicated in the
Guide.
A copy of the Group’s Disclosure Policy is posted on its website.
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 Company has an
Audit & Risk Committee. The Audit & Risk Committee consists of
only non executive,
it has an
independent chairman who is not the Chairman of the Board. Mr G
Richards is the Chairman of the Audit & Risk Committee. 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.
independent directors and
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.
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.
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.
P r in c ip le 5:
d i sc lo su re
M a ke
t i m el y a n d b al an c ed
Companies should promote timely and balanced disclosure of
all material matters concerning the company.
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P r in c ip le
6 :
s h ar eho ld e rs
R e spe c t
t h e
ri g h t s
o f
Companies should respect the rights of shareholders and
facilitate the effective exercise of those rights.
Companies should design a communications policy for
promoting effective communication with shareholders and
encouraging their participation at general meetings and
disclose their policy or a summary of that policy. Companies
should provide the information indicated in the Guide to
reporting on Principle 6.
Complying.
The Board informs shareholders of all major developments affecting
the Group’s state of affairs as follows:
1.
2.
3.
4.
5.
6.
The annual report is distributed to all shareholders who
have elected
relevant
receive a copy,
information about the operations of the Group during the
year and changes in the state of affairs.
including
to
The half yearly report to the Australian Securities 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
Securities 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.
The Company’s auditor attends
Meeting.
the Annual General
For personal use only
P r in c ip le 7: R eco g n i s e a n d m a n ag e r i s k
P r in c ip le
r e spo ns ib ly
8 :
R em u n e ra t e
f ai r l y
an d
Companies should establish a sound system of risk oversight
and management and internal control.
Companies should establish policies for the oversight and
management of material business risks and disclose a
summary of those policies.
Companies should ensure that the level and composition of
remuneration
its
relationship to performance is clear.
is sufficient and reasonable and
that
The board should establish a remuneration committee.
The board should require management
to design and
implement the risk management and internal control system to
manage the company’s material business risks and report to it
on whether those risks are being managed effectively. The
board should disclose that management has reported to it as
to the effectiveness of the company’s management of its
material business risks.
Companies should clearly distinguish the structure of non
executive directors’ remuneration from that of executive
directors and senior executives.
Companies should provide the information indicated in the
Guide to reporting on Principle 8.
The board should disclose whether it has received assurance
from the chief executive officer (or equivalent) and the chief
financial officer (or equivalent) that the declaration provided in
accordance with section 295A of the Corporations Act is
founded on a sound system of risk management and internal
control and that the system is operating effectively in all
material respects in relation to financial reporting risks.
Companies should provide the information indicated in the
Guide to reporting on Principle 7.
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.
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.
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.
Complying.
The Board has in place a Remuneration Committee. The structure
of this Committee and its responsibilities reflect the requirements of
ASX Principle 8. 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 to enhance corporate and individual performance as well
as meet the appropriate recruitment and succession planning
needs. The Chairman of the Remuneration Committee is Mr J
Murphy.
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.
Details of the directors and key senior executives remuneration are
set out in the Remuneration Report of the Annual Report.
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.
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.
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D I R E C T O R S ’ R E P O R T
(“the
The Directors of Gale Pacific Limited
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 2008.
Pet Beds
Coolaroo Pet Beds feature unique Coolaroo
knitted fabric that ‘breathes’ to keep pets cool and
comfortable, promoting a healthier skin and coat
condition and discouraging fleas and mites. This
strong, UV-treated fabric will not be affected by
moisture and temperature extremes.
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The Directors in office at any time during or since the end of the
year to the date of this report are:
G eo rg e R i cha r d s , C PA , A AI CD
Non Executive Director since May 2004
H a rry Bo on, LL B ( HON S) , 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 Non
Executive Director of Paperlinx Limited, Tatts Group Limited, Hastie
Group Limited, Toll Holdings Limited, Funtastic Limited.
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.
No other directorships of listed companies were held by Mr
Richards at any time during the three years prior to 30 June 2008.
Mr Richards is Chairman of the Company’s Audit & Risk Committee
and is a member of the Nomination and Remuneration Committees.
Mr Boon is Chairman of the Company’s Nomination Committee and
is a member of the Audit & Risk and Remuneration Committees.
M s So p h ie K a r z i s , B JU R I S L L B
P e t e r Mc D o n a ld, B ach e lo r
( Ma r ke tin g)
o f B u s in es s
Managing Director and Chief Executive Officer since April 2006
and Executive Director since 1998
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 2008.
John Mu rp hy, 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 listed companies Ariadne Australia Limited
and Staging Connections Group Limited. Mr Murphy is also a Non
Executive Director of First Opportunity Fund Limited, Investec Bank
(Australia) Limited and Specialty Fashion Group Limited.
During the last three 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 & Risk and Nomination
Committees.
Company Secretary
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.
N at u r e o f O p e rat ion s a n d Pr in c ip a l A ct iv it i es
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.
R e vi ew a nd R e sul ts of Op e rat ion s
the Group for the financial year
The consolidated profit of
attributable to the members of Gale Pacific Limited was $2.51
million. Refer to the Chairman and Managing Director’s & Chief
Executive Officer’s Report for further details on the Group’s result.
S t ate o f A f f ai r s
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.
E v ent s Sub se qu ent to Ba l an c e D at e
In the interval between the end of the financial year and the date of
this report, no item, transaction or event of a material and unusual
nature has arisen that is likely, in the opinion of the Directors, 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.
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L i ke l y D e ve lopm ent s
Disclosure of information regarding likely developments in the
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.
En viron men tal Regu lation and Perfo rm an ce
to any significant
The Group’s operations are not subject
environmental regulations under 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.
D i vid en d s
In respect of the financial year ended 30 June 2008, no interim
dividend was paid and the Directors have determined not to pay a
final dividend.
Sh ar e B as ed Pa ym ent s
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.
the Company’s shareholders at
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 on 15 December
2004 (as approved by
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
the
options
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.
in accordance with
is determined
their vesting
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 2006 / 2007 financial year. The performance
rights are not exercisable until after 30 September 2009 and expire
on 2 February 2017.
On 16 November 2007 the Company issued 700,000 performance
rights, 100,000 each to the following senior executives: Mr Frank
Albertsmeier, Managing Director Europe / Middle East / Africa; Dr
Paul Cacioli, General Manager Research & Development and
Technical Services; Mr Stephen Carroll, Managing Director
Australia; Mr Jeff Cox, Chief Financial Officer; Mr Martin Denney,
Managing Director USA; Mr Paul Ducray, Chief Manufacturing
Officer; and Ms Emma Xu, Managing Director, China. 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
tax, depreciation and
Company’s earnings before
amortisation (“EBITDA”) over the two year period 1 July 2007 to 30
June 2009. The first tranche (25%) of these performance rights,
which have as their hurdle, an EBITDA for the period 1 July 2007 to
30 June 2008 that has not been achieved, will now not vest. The
remaining tranches are not exercisable until 30 June 2009 and
expire on 16 November 2017. Any shares allocated upon vesting
are subject to dealing restrictions for a period of twelve (12) months
from the date of allocation.
interest,
No amount is payable on the vesting of a performance right.
Performance rights carry no rights to dividends and no voting rights.
As set out in the accounting standard AASB 2 and the revised ASIC
guidelines, the Company has valued the issued options and
performance rights. 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 option rights.
First exercisable date.
Expected life.
Expected dividend yield.
Risk free interest rate for the expected life of the option
rights.
Further details of the options and performance rights are disclosed
in Note 16 to the Financial Statements.
I nd emn ifi c ati on of Off ic er s and Aud ito r s
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.
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Directo r s’ Sh areh old ings
The following table sets out each Director’s relevant interest in shares, options and performance rights in shares of the Company as at the date of
this report.
Directors
H Boon
P McDonald
J Murphy
G Richards
D i re cto r s ’ Me e t ing s
Fully Paid Ordinary Shares
263,513
434,714
-
129,733
Options
-
180,000
-
-
Performance Rights
-
150,000
-
-
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
J Murphy
G Richards
Directors’ Meetings
Audit & Risk Committee
Meetings
Remuneration Committee
Meetings
Nomination Committee
Meetings
No of
meetings
eligible to
attend
12
12
9
12
Attended
12
12
9
12
No of
meetings
eligible to
attend
2
0
1
2
Attended
2
0
1
2
No of
meetings
eligible to
attend
3
0
1
3
Attended
3
0
1
3
No of
meetings
eligible to
attend
1
0
0
1
Attended
1
0
0
1
By Board invitation, Mr Peter McDonald also attended some of the Audit & Risk, Remuneration and Nomination meetings.
R emun e r at i o n R ep o rt
No n Execut ive Directo r Remun e ration
This report contains the remuneration arrangements in place for
Directors and executives of the Group.
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, including share options and performance
rights, as disclosed in Note 16 and Note 24 to the financial
statements.
R emun e r ati on St ruc tu re
In accordance with best practice corporate governance, the structure
of Non Executive Directors and senior manager remuneration is
separate and distinct.
Objective
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 Securities Exchange
the aggregate remuneration of Non
Listing Rules specify
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
Company and does not participate
in performance based
remuneration. Non Executive Directors are encouraged to hold shares
is
in
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 2008 is detailed below.
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S e nio r M an ag e r & E xe cut iv e D i re cto r R emun e rat ion
Objective
Structure
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 and performance rights 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:
2007 / 2008
Short term benefits
Share based payments
Total
Performance related
Post
employ-
ment
Directors
Salary &
fees
Bonus
Non-
monetary
Super
Options
Perform-
ance rights
Total
Options
$
$
$
$
$
$
$
%
%
Executive Directors
P McDonald
Non Executive Directors
H Boon
G Richards (i)
J Murphy (ii)
Total
380,379
85,000
26,471
37,114
5,521
49,285
583,770
23.9%
9.4%
150,000
79,000
55,161
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150,000
79,000
55,161
-
-
-
-
-
-
664,540
85,000
26,471
37,114
5,521
49,285
867,931
2006 / 2007
Short term benefits
Share based payments
Total
Performance related
Post
employ-
ment
Directors
Salary &
fees
Bonus
Non-
monetary
Super
Options
Perform-
ance rights
Total
Options
$
$
$
$
$
$
$
%
%
Executive Directors
P McDonald
Non Executive Directors
H Boon
G Richards
D Reilly (iii)
G Gale (iv)
Total
354,215
32,000
44,609
27,929
47,138
19,930
525,821
18.8%
12.8%
150,000
71,667
31,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150,000
71,667
31,250
-
607,132
32,000
44,609
27,929
47,138
19,930
778,738
-
-
-
-
-
-
-
-
-
-
(i)
(ii)
(iii)
(iv)
Mr Richards currently receives a fee of $75,000 per annum for his services as a Non Executive Director and Chairman of the Company’s
Audit Committee. In addition, in the 2008 financial year, Mr Richards received additional fees of $4,000 per annum for additional duties
undertaken at the Board’s request in relation to the Company’s China manufacturing plant.
Mr Murphy was appointed as a Non Executive Director on 24 August 2007. The details of his remuneration for the reporting period are
from that date.
Mr Reilly retired from his role as a Non Executive Director on 21 November 2006. The details of his remuneration for the reporting period
are to that date.
Mr Gale retired as a Non Executive Director on 21 November 2006. Mr Gale did not receive any remuneration in his role as Non Executive
Director during the reporting period.
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S e nio r M an ag e r & E xe cut iv e D i re cto r Remun e rat ion (Cont inued)
The following table discloses the remuneration of the key management personnel of the Group.
2007/2008
Short-term Benefits
Post
Employm
ent
Share Based
Payments
Termin.
Benefits
Total
Performance Related
Key management
personnel
Salary &
fees
$
Bonus
$
Non-
monetary
$
F Albertsmeier (i)
307,357
41,091
52,420
Z Fakroddin (ii)
356,807
-
Super
Options
J Cox
P Cacioli
S Carroll
M Denney (iii)
E Xu (iv)
P Ducray (v)
252,290
40,000
246,903
25,000
261,373
-
246,336
33,051
242,284
19,397
-
-
-
-
7,503
9,830
C McCallum (vi)
108,528
42,930
-
189,692
10,469
33,962
Perf.
Rights
$
22,541
$
-
$
423,409
$
-
6,426
-
27,932
391,165
-
-
6,426
-
1,832
3,213
10,050
22,541
22,541
22,541
22,541
22,541
22,541
-
-
-
-
-
-
339,787
314,954
312,297
309,431
295,884
259,877
-
51,097
212,605
Total
%
15.0%
1.6%
18.4%
15.1%
9.3%
18.0%
14.8%
13.9%
24.9%
Options /
Rights
%
5.3%
1.6%
6.6%
7.2%
9.3%
7.3%
8.2%
9.9%
4.7%
TOTAL
2,211,570
211,938
103,715
67,423
27,947
157,787
79,029
2,859,409
2006/2007
Short-term Benefits
Post
Employm
ent
Share Based Payments
Termin.
Benefits
Total
Performance Related
Key management
personnel
Salary &
fees
$
Bonus
$
Non-
monetary
$
Super
Options
F Albertsmeier (i)
320,090
77,506
Z Fakroddin (ii)
189,459
-
214,472
15,000
229,358
25,000
169,477
190,748
-
-
33,479
105,064
30,873
-
28,771
-
M Denney (viii)
126,964
55,017
-
179,517
12,457
4,028
S Carroll
J Cox
P Ducray (v)
C McCallum (vi)
E Xu (vii)
P Cacioli (ix)
TOTAL
62,713
-
1,507
5,644
1,682,798
184,980
203,722
45,429
26,523
$
-
6,408
6,408
-
3,204
8,010
2,493
-
-
Perf.
Rights
$
-
-
-
-
-
-
-
-
-
-
Total
%
Options /
Rights
%
$
431,075
18.0%
300,931
285,896
275,000
201,452
198,758
198,495
2.1%
7.5%
9.1%
1.6%
4.0%
7.5%
181,981
30.2%
69,864
0.0%
2,143,452
0.0%
2.1%
2.2%
0.0%
1.6%
4.0%
1.3%
0.0%
0.0%
$
-
-
-
-
-
-
-
-
-
-
$
-
-
24,956
20,510
21,957
-
-
-
-
$
-
-
19,143
20,642
-
-
-
-
(i)
(ii)
(iii)
(iv)
(v)
(vi)
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 Fakroddin departed his
role on 30 June 2008.
Mr Denney is based in the United States of America and remunerated in United States dollars converted to Australian dollars in the table
above.
Ms Xu is based in China and is remunerated in Chinese renminbi converted to Australian dollars in the table above.
Mr Ducray is based in China and remunerated in Chinese renminbi and United States dollars converted to Australian dollars in the table
above.
Mr McCallum is based in New Zealand and is remunerated in New Zealand dollars converted to Australian dollars in the table above. Mr
MaCallum was made redundant on 31 December 2007 following the completion of the restructuring of the New Zealand operations. His
remuneration details for the reporting period are to that date.
(vii) Ms Xu is based in China and is remunerated in Chinese renminbi and United States dollars converted to Australian dollars in the table
above.
(viii) 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 the United States of America and remunerated in United States dollars converted to
Australian dollars in the table above.
(ix)
Dr Cacioli was appointed General Manager, Research and Development and Technical Services on 1 March 2007 and therefore the details
of his remuneration for the reporting period are from that date.
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A u d it o r Ind ep en d en ce and N o n A u d i t S e r v ic e s
A copy of the auditor’s independence declaration in relation to the audit for the financial year is provided with this report.
Non Audit Se rvices
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
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
62
21
2
-
-
3
2
90
84
46
25
13
5
3
2
178
17
-
-
-
-
3
2
22
36
-
25
13
5
3
2
84
Proceed ing s on Behalf of th e Comp an y
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.
Ro und ing Off of Amo unts
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
30 September 2008
Mr Peter McDonald
Managing Director and Chief Executive Officer
30 September 2008
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A u d it o r ’ s Ind ep en d enc e D e cl a ra t io n
To the Directors of Gale Pacific Limited
In relation to the independent audit for the year ended 30 June 2008, 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
30 September 2008
PITCHER PARTNERS
MELBOURNE
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D i re cto r s ’ De c l ar at ion
The Directors of the Company declare that:
The financial statements and notes, as set out on pages 24 to 67 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 2008 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
30 September 2008
Mr Peter McDonald
Managing Director and Chief Executive Officer
30 September 2008
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Ind ependent Aud ito r’s Repo rt To The Memb ers of G ale Pacific Lim it ed
We have audited the accompanying financial report of Gale Pacific Limited and controlled entities. The financial report comprises the Balance
Sheet as at 30 June 2008, 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 of 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)
(ii)
giving a true and fair view of the company's and consolidated entity's financial position as at 30 June 2008 and of its performance for
the year ended on that date; and
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.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 17 to 19 of the directors' report for the year ended 30 June 2008. The directors of the
company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
Auditor’s Opinion
In our opinion the Remuneration Report of Gale Pacific Limited and controlled entities for the year ended 30 June 2008, complies with section 300A
of the Corporations Act 2001.
S Schonberg
Partner
30 September 2008
PITCHER PARTNERS
MELBOURNE
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F I N A N C I A L R E S U L T S
Synthesis Water
Conservation
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Water Storage Shade Covers
Synthesis shade fabrics are used to cover
large potable water storages to reduce
evaporation, decrease algal blooms, and
protect water from contamination by birds or
wind-blown debris.
Dam Liners
Synthesis fabrics such as Canvacon and
Landmark are used to line rural dams to
prevent water loss through seepage.
Water Containment Fabrics
Synthesis fabrics are used worldwide to
produce reliable water storage liners
domestic water tanks to industrial-sized tank
liners.
Irrigation Channels
Canvacon and Landmark can be used to
line irrigation channels to prevent water
seepage, and for tough, portable fluming.
Synthesis shade fabrics can be used as
channel covers to reduce evaporation and
minimise aquatic plant growth.
U n i qu e f a br i cs t o se c ur e
our mo st p r ec i ous
r e sou r c e
synthesisfabrics.com
For personal use only
I N C O M E S T A T E M E N T
F o r t h e y ea r e n d ed 3 0 Jun e 2 0 08
Consolidated
Company
Note
2007 / 2008
2006 / 2007
2007 / 2008
2006 / 2007
($000)
($000)
($000)
($000)
Revenue
Expenses
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Employee benefits expense
Depreciation and amortisation expense
Inventory write down
Impairment of goodwill and assets
Restructuring and termination costs
Impairment of related party receivables
Operating overheads
Other expenses
Finance costs
Profit / (loss) from continuing operations before income tax
Income tax (expense) / benefit
Profit / (loss) from continuing operations after income tax
Loss from discontinued operations
Profit / (loss) attributable to minority interests
Net profit / (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)
2
3
4
23(c)
19
18
21
21
21
21
The accompanying notes form part of these financial statements.
105,119
110,404
60,598
57,801
(597)
(479)
(30,012)
(32,147)
(3,334)
(42,209)
(17,799)
(7,361)
(1,581)
-
-
-
5,776
(57,624)
(22,623)
(7,859)
(4,339)
(1,031)
(4,672)
-
(7,698)
(2,604)
-
-
-
-
(25,202)
(25,343)
(10,647)
(405)
(3,037)
4,191
(1,686)
2,505
-
-
(228)
(5,598)
(13,137)
(2,752)
(15,889)
(471)
-
(3,249)
(2,252)
3,539
(1,232)
2,307
-
-
(8,049)
(3,053)
(440)
(316)
-
(9,699)
(8,080)
(2,728)
(4,379)
(11,569)
2,884
(8,685)
-
-
2,505
(16,360)
2,307
(8,685)
1.92
1.90
1.92
1.90
(17.07)
(17.07)
(16.58)
(16.58)
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B A L A N C E S H E E T
A s at 30 June 2 00 8
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Other current assets
Total current assets
Non Current Assets
Amounts receivable from controlled entities
Other financial assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total non current assets
Total assets
Current Liabilities
Trade and other payables
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
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Note
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
5
6
7
4
9
6
8
10
11
4
12
13
14
4
15
13
4
15
16
17
18
19
16,594
19,552
26,576
178
760
63,660
-
-
55,344
10,845
175
66,364
130,024
10,649
34,140
28
6
1,778
46,601
2,978
1,587
112
4,677
51,278
78,746
100,813
(10,026)
(12,030)
78,757
(11)
78,746
7,642
19,363
30,143
362
1,517
59,027
-
-
60,724
11,707
270
72,701
131,728
11,104
47,073
31
658
6,182
65,048
4,348
1,133
502
5,983
71,031
60,697
81,936
(6,784)
(14,444)
60,708
(11)
60,697
12,317
5,856
10,914
-
296
29,383
41,641
30,585
7,918
5,081
2,842
88,067
117,450
4,182
17,643
28
6
883
3,654
5,557
10,581
-
1,169
20,961
42,244
25,326
9,272
5,158
2,908
84,908
105,869
2,865
27,074
31
382
902
22,742
31,254
2,978
-
69
3,047
25,789
91,661
100,813
632
(9,784)
91,661
-
91,661
4,348
-
78
4,426
35,680
70,189
81,936
344
(12,091)
70,189
-
70,189
The accompanying notes form part of these financial statements.
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S T A T E M E N T O F C H A N G E S I N E Q U I T Y
F o r t h e y ea r e n d ed 3 0 Jun e 2 0 08
Consolidated
Company
Note
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
Total Equity at the Beginning of the Period
60,697
46,933
70,189
43,896
Exchange differences on translation of foreign operations
Employee share based expenditure
17(a)
17(b)
(3,621)
288
(4,854)
166
Net (loss) / income recognised directly in equity
(3,333)
(4,688)
-
288
288
-
166
166
Profit / (loss) for the period
2,505
(16,360)
2,307
(8,685)
Total recognised income and expense for the period
(828)
(21,048)
2,595
(8,519)
Transaction with Equity Holders in their Capacity as Equity Holders
Contributions, net of raising costs and tax
Dividends provided for or paid
16
20
18,877
34,812
18,877
34,812
-
-
-
-
18,877
34,812
18,877
34,812
Total equity at the end of the period
78,746
60,697
91,661
70,189
Total Recognised Income and Expense for the Period is Attributable
To
Members of the parent
Minority interest
Total
The accompanying notes form part of these financial statements.
2,505
-
2,505
(16,360)
-
(16,360)
2,307
-
2,307
(8,685)
-
(8,685)
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S T A T E M E N T O F C A S H F L O W S
F o r t h e y ea r e n d ed 3 0 Jun e 2 0 08
Consolidated
Company
Note
2007 / 2008
2006 / 2007
2007 / 2008
2006 / 2007
($000)
($000)
($000)
($000)
Cash Flow From Operating Activities
Receipts from customers
109,476
127,586
62,987
59,654
Payments to suppliers and employees
(96,139)
(113,027)
(55,035)
(55,849)
Interest received
Borrowing costs paid
Income tax (payments) / refunds
Net cash provided by operating activities
23(b)
Cash Flow From Investing Activities
Proceeds from sale of plant and equipment
Proceeds from the disposal of business
23(c)
Payment for plant and equipment
Payment for intangible assets
(Payments) / proceeds for / from investments
Amounts advanced by related parties
876
(3,276)
(1,118)
9,819
443
-
(3,370)
(866)
-
-
489
(5,740)
(768)
8,540
537
15,690
(3,953)
(174)
-
-
Net cash (used) / provided by investing activities
(3,793)
12,100
Cash Flow From Financing Activities
Proceeds from issue of equity securities
Repayment of borrowings
Repayment of principal on finance leases
Repayment of principal on hire purchase
Net cash provided / (used) by financing activities
Net increase in cash held
Cash at beginning of year
Effects of exchange rate changes on items denominated in foreign
currencies
18,395
(5,709)
(175)
(2,225)
10,286
16,312
539
(1,166)
Cash at the end of the year
23(a)
15,685
The accompanying notes form part of these financial statements.
19,017
(30,949)
(226)
(1,783)
(13,941)
6,699
(6,414)
254
539
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(1,060)
6,893
70
-
(402)
(836)
(5,259)
603
(5,824)
18,395
(4,866)
(175)
(2,225)
11,129
12,198
(790)
-
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)
-
11,408
(790)
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N O T E S T O T H E F I N A N C I A L
S T A T E M E N T S
NOT E 1: BASIS OF PR EPAR AT ION
(c).
Net Investments in Foreign Operations
This financial report is a general purpose financial report that has
been prepared in accordance with Australian Accounting Standards,
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.
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 Australian equivalents of International
Financial Reporting Standards ensures compliance with
International Financial Reporting Standards.
(b).
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 related party 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.
During the prior 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
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.
translation
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.
Details of the monetary items reclassified and the total
exchange difference recognised in the foreign currency
translation reserve are detailed below.
Note
Consolidated
2007 /
2008
($000)
2006 /
2007
($000)
16,855
16,855
13,421
13,421
5,238
5,238
35,514
35,514
17(a)
(4,374)
(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.
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NOT E 1: BASIS OF PR EPAR AT ION (CO NTINU ED)
(d).
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
research and
development costs that have been deferred, the grant is
deducted from the carrying amount of the deferred costs.
receivable
relating
to
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).
(e).
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,
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,
Cash has been offset against borrowings where;
•
•
the Group has a legally enforceable right to set off
cash and borrowings, and
the Group intends to settle on a net basis or realise
the asset and settle the liability simultaneously.
The amount recognised as an offset against borrowings
has been disclosed in Note 5 and Note 13.
(f).
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.
(g).
Plant and Equipment
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(j). 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
The depreciable amounts of all fixed assets, including
capitalised leased assets, are depreciated on a straight line
basis over their estimated useful lives to 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
improvements. Depreciation and
useful
for
are
amortisation
appropriateness. When changes are made, adjustments
are reflected in current and future periods only.
the
rates
reviewed
lives of
annually
The depreciation rates used for each class of assets are:
Class of Fixed
Asset
Buildings
Leasehold
improvements
Plant and
equipment
Leased plant and
equipment
Motor vehicles
Depreciation
Rates
Depreciation
Basis
2.25%
Straight line
Determined by
lease term
Straight line
6.7% - 20.0%
Straight line
6.7% - 20.0%
Straight line
20.0%
Straight line
Office equipment
14.3% - 50.0%
Straight line
(h).
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.
Each class of plant and equipment is carried at cost less,
where applicable, any accumulated depreciation.
Operating Leases
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
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.
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NOT E 1: BASIS OF PR EPAR AT ION (CO NTINU ED)
(i).
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.
Goodwill is not amortised but is tested annually for
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.
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.
Application Software
Application software is valued in the accounts at cost and
amortised on a straight line basis over its expected useful
life but not exceeding five 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
less accumulated
amortisation.
is stated at cost
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.
(j).
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.
(k).
Taxes
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.
A balance sheet approach is adopted under which deferred
tax assets and liabilities are recognised for temporary
differences between the tax bases of assets and liabilities
and their carrying amounts in the financial statements. No
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.
tax assets are
Deferred
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.
recognised
for
Current and deferred tax balances attributable to amounts
recognised directly in equity are also recognised directly in
equity.
(l).
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
Share Based Payments
The Group operates share option and performance rights
schemes
including
for certain staff and executives
executive directors. 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 share
options and performance rights 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 period during which the
employees become entitled to the option or performance
right.
The market value of shares issued to employees for no
cash consideration under an employee share scheme is
recognised as an expense when the employees become
entitled to the shares.
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NOT E 1: BASIS OF PR EPAR AT ION (CO NTINU ED)
(m).
Financial Instruments
Transactions and Balances
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
loans
Financial liabilities include trade payables, other creditors
and
inter-company
balances and loans from or other amounts due to director-
related entities.
third parties
including
from
financial
Non derivative
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.
Financial Instruments at Fair Value Through Profit and
Loss
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.
(n).
Foreign Currencies
Functional and Presentation Currency
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
The financial statements of foreign operations whose
functional currency
the Group’s
is different
presentation currency are translated as follows:
from
•
•
•
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 translation of foreign
operations are transferred directly to the Group’s foreign
currency translation reserve as a separate component of
equity in the balance sheet.
(o).
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.
The financial statements of each group entity are measured
using its functional currency, which is the currency of the
that entity
primary economic environment
operates. The consolidated
financial statements are
presented in Australian dollars, as this is the parent entity’s
functional and presentation currency.
in which
(p).
Comparatives
information has been
Where necessary, comparative
reclassified and repositioned for consistency with current
year disclosures.
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NOT E 2: R EV E NU E
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
2007 / 2008
($000)
2006 / 2007
($000)
Continuing
Discontinuing
Continuing
Discontinuing
104,020
102
946
51
105,119
-
-
-
-
-
109,338
8,184
110
626
330
-
-
28
110,404
8,212
Company
2007 / 2008
($000)
2006 / 2007
($000)
Continuing
Discontinuing
Continuing
Discontinuing
57,175
814
102
871
1,580
56
60,598
-
-
-
-
-
-
-
53,930
969
110
446
2,339
7
57,801
-
-
-
-
-
-
-
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NOT E 3: PROF IT
Profit before income tax expense has been determined after charging / (crediting):
Consolidated
2007 / 2008
($000)
2006 / 2007
($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
Application software
Research and Development Expenditure
Capitalised and amortised
Expensed as incurred
Impairment
Impairment of Non Current Assets
Plant and equipment
Inventory write down
Restructuring and termination costs
(Decrease) / 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
Management services
Systems review
Total remuneration of other auditors
Total remuneration of auditors
Foreign currency translation (gains)
Net (Gain) / Loss on Disposal of Non Current Assets
Plant and equipment
Motor vehicles
Office equipment
Operating lease rental expense
Share based payment expense
56,577
3,037
197
76
5,375
81
476
12
96
63
167
818
670
-
-
1,581
-
(709)
210
103
194
17
-
-
-
3
2
216
136
45
21
2
204
420
(252)
(5)
(3)
10
1,718
288
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
74,982
4,479
5,598
195
100
5,722
121
545
46
80
55
71
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
142
-
-
12
5
14
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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NOT E 3: PROF IT (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
Application software
Research and Development Expenditure
Capitalised and amortised
Expensed as incurred
Impairment of Non Current Assets
Plant and equipment
Inventory write down
Impairment of related party balances
Loss on sale of investment in subsidiary
(Decrease) / 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 auditors
Foreign currency translation (gains)
Net (Gain) / Loss on Disposal of Non Current Assets
Plant and equipment
Motor vehicles
Office equipment
Operating lease rental expense
Share based payment expense
Company
2007 / 2008
($000)
2006 / 2007
($000)
Continuing
Discontinuing
Continuing
Discontinuing
30,428
2,252
22
1,289
30
242
12
96
(38)
133
818
713
-
-
-
-
(43)
-
-
194
17
-
-
-
3
2
216
2,202
-
(5)
-
-
288
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32,506
4,379
22
1,581
62
209
46
80
111
18
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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NOT E 4: IN CO ME TA X
(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 benefit from discontinuing business
Total
Consolidated
Company
2007 / 2008
2006 / 2007
($000)
638
1,048
1,686
1,686
-
1,686
($000)
811
1,917
2,728
2,752
(24)
2,728
2007 / 2008
($000)
684
548
1,232
1,232
-
1,232
2006 / 2007
($000)
914
(3,798)
(2,884)
(2,884)
-
(2,884)
(b).
The Prima Facie Income Tax Payable on Profit is Reconciled to the Income Tax Expense as Follows
Prima facie tax payable on profit before income tax at 30%
Add tax effect of:
Tax rate differentials in foreign countries
Tax losses not recognised / derecognised
Exempt income
Effect of tax rate changes on deferred tax balances
Interest expense non allowable
Capital loss on divestment of business
Other non allowable / (non assessable) items
Less tax effect of:
Over 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
Consolidated
Company
2007 / 2008
2006 / 2007
2007 / 2008
2006 / 2007
($000)
1,257
(682)
1,269
(213)
7
-
-
43
1,681
5
1,686
-
1,686
($000)
(4,089)
($000)
1,062
($000)
(3,471)
408
5,910
-
-
134
79
249
2,691
37
2,728
(24)
2,752
-
-
-
-
-
-
170
1,232
-
1,232
-
1,232
-
-
-
-
-
140
277
(3,054)
170
(2,884)
-
(2,884)
(c).
Income Tax Recognised Directly in Equity
The following current and deferred tax amounts were credited directly to equity during the period.
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Deferred Tax
Equity raising costs deductible over 5 years
Total
Consolidated
Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
(482)
(482)
(295)
(295)
(482)
(482)
(295)
(295)
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NOT E 4: IN CO ME TA X (CONT IN U ED)
(d).
Current Tax
Current tax asset
Current tax liability
Total
Consolidated
Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
178
(6)
172
362
(658)
(296)
-
(6)
(6)
-
(382)
(382)
(e).
Movement in Net Carrying Amount
Movement in the current tax net carrying amount between the beginning and the end of the year.
Balance at the beginning of the year
Current year tax expense
Income tax payments / (refunds)
Disposed businesses
Net foreign currency movements arising from foreign operations
Carrying amount at the end of the year
(f).
Deferred Tax
Deferred Tax (Liabilities) / Assets Arise from the Following
Property, plant and equipment
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
Consolidated
Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
(296)
(638)
1,118
-
(12)
172
703
(811)
768
(1,051)
95
(296)
(382)
(684)
1,060
-
-
(6)
591
(914)
(59)
-
-
(382)
Consolidated
Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
(705)
(1,720)
(71)
133
(203)
45
91
58
327
(190)
44
590
199
(1,402)
(10)
(1,412)
175
(1,587)
(1,412)
(1,172)
(250)
(153)
(15)
(449)
22
102
379
369
(170)
78
315
81
(863)
-
(863)
270
(1,133)
(863)
(629)
(407)
(71)
133
(203)
-
71
2,933
265
116
44
590
-
2,842
-
2,842
2,842
-
2,842
(866)
585
(153)
(15)
(449)
-
28
3,064
209
112
78
315
-
2,908
-
2,908
2,908
-
2,908
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NOT E 4: IN CO ME TA X (CONT IN U ED)
(g).
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.
Tax losses – income
Temporary differences not brought to account
Tax losses – capital
Total
Consolidated
Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
6,205
143
1,990
8,338
4,071
1,567
1,990
7,628
-
-
1,990
1,990
-
-
1,990
1,990
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.
(h).
Tax Losses
The Group has recognised as a deferred tax asset income tax losses of $10,000 (2007: Nil) in tax jurisdictions where it is probable that
future taxable income will be available to utilise these losses.
NOT E 5: CASH & CA SH EQU I VAL ENT S
Cash on hand
Cash at bank
Cash on deposit 1
Total
NOT E 6: T RA DE & O T HER R EC E I VABL E S
Current
Trade debtors
Less provision for doubtful debts
Other receivables
Total
Non Current
Amounts receivable from controlled entities
Less provision for non recoverability
Total
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Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
18
3,514
13,062
16,594
13
3,806
3,823
7,642
1
493
11,823
12,317
1
1,173
2,480
3,654
Consolidated
Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
19,117
(244)
18,873
679
19,552
-
-
-
18,784
(159)
18,625
738
19,363
-
-
-
5,526
-
5,526
330
5,856
51,340
(9,699)
41,641
5,012
-
5,012
545
5,557
51,943
(9,699)
42,244
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1 Cash on deposit is after setting off $5,827,000 (2007 : Nil) of deposit against bank loans held with the bank.
For personal use only
NOT E 7: IN VENTO RIES
Current
Raw materials at cost
Work in progress at cost
Finished goods at cost
Less provision for obsolescence
Total
Consolidated
Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
3,659
2,383
21,146
(612)
26,576
3,892
3,369
24,406
(1,524)
30,143
1,185
-
9,734
(5)
255
1,031
9,478
(183)
10,914
10,581
NOT E 8: O TH ER F INA NCIAL A SSETS
Non Current
Investments in controlled entities at cost
Total
Consolidated
Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
-
-
-
-
30,585
30,585
25,326
25,326
NOT E 9: O T H ER A S S ET S
Current
Prepayments
Total
Consolidated
Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
760
760
1,517
1,517
296
296
1,169
1,169
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NOT E 10: PRO PERT Y, PLA NT & EQ UI PM ENT
Consolidated
Company
2007 / 2008
2006 / 2007
2007 / 2008
2006 / 2007
($000)
($000)
($000)
($000)
7,754
(590)
7,164
59,263
(16,741)
42,522
75
(71)
4
528
(280)
248
595
(279)
316
406
(221)
185
3,869
(2,917)
952
3,953
55,344
7,842
(415)
7,427
61,892
(13,216)
48,676
270
(254)
16
578
(264)
314
594
(271)
323
342
(125)
217
3,584
(2,616)
968
2,783
60,724
-
-
-
14,067
(7,257)
6,810
75
(71)
4
331
(167)
164
270
(114)
156
406
(221)
185
2,498
(1,937)
561
38
7,918
-
-
-
13,479
(5,968)
7,511
270
(254)
16
328
(145)
183
306
(130)
176
342
(125)
217
2,099
(1,695)
404
765
9,272
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
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NOT E 10: PRO PERT Y, PLA NT & EQ UI PM ENT (CONT IN U ED)
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
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($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)
Amortisation 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)
Disposals
Amortisation 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
7,427
82
(197)
(148)
7,164
48,676
-
1,345
(564)
(5,375)
-
(1,560)
42,522
16
-
-
(12)
4
314
-
11
(76)
(1)
248
323
-
91
(12)
(81)
(5)
316
217
127
(63)
(96)
185
968
-
500
(19)
(476)
(21)
952
8,357
53
(195)
(788)
7,427
57,522
6
384
(623)
(5,734)
(714)
(2,165)
48,676
715
(38)
(615)
(46)
16
232
46
133
(100)
3
314
836
(25)
71
(408)
(126)
(25)
323
197
100
-
(80)
217
2,206
(80)
218
(556)
(555)
(265)
968
-
-
-
-
-
7,511
-
588
-
(1,289)
-
-
6,810
16
-
-
(12)
4
183
-
3
(22)
-
164
176
-
12
(2)
(30)
-
156
217
127
(63)
(96)
185
404
-
399
-
(242)
-
561
-
-
-
-
-
17,347
(23)
(7,916)
-
(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
(89)
132
(22)
(205)
-
404
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NOTE 11: INTANGIBLE ASSETS
Consolidated
Company
Goodwill at cost
Less accumulated impairment
Patents, trademarks and licenses at cost
Less accumulated amortisation
Application software 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
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
Application Software
Balance at the beginning of the year
Reclassifications
Additions / (transfers)
Amortisation expense
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
2007 / 2008
($000)
2006 / 2007
($000)
9,588
(929)
8,659
1,297
(617)
680
1,074
(245)
829
4,865
(4,188)
677
10,845
9,327
(668)
8,659
716
39
(63)
(12)
680
169
-
827
(167)
829
1,495
-
-
(818)
-
677
10,313
(986)
9,327
1,281
(565)
716
250
(81)
169
4,865
(3,370)
1,495
11,707
9,491
(164)
9,327
669
120
(55)
(18)
716
-
250
-
(81)
169
2,326
356
54
(924)
(317)
1,495
2007 / 2008
($000)
4,127
(1,054)
3,073
1,097
(497)
600
886
(155)
731
4,865
(4,188)
677
5,081
2006 / 2007
($000)
4,127
(1,054)
3,073
1,057
(534)
523
89
(22)
67
4,865
(3,370)
1,495
5,158
3,073
-
3,073
523
39
38
-
600
67
-
797
(133)
731
1,495
-
-
(818)
-
677
3,073
-
3,073
514
120
(111)
-
523
-
89
-
(22)
67
2,326
39
54
(924)
-
1,495
NOT E 12: T RA DE & O T HER PA YAB L ES
Current
Trade payables
Sundry payables and accruals
Total
Consolidated
Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
6,560
4,089
10,649
6,751
4,353
11,104
2,163
2,019
4,182
1,268
1,597
2,865
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NOT E 13: BOR ROWING S
Current
Secured liabilities:
Bank overdrafts
Bank loans 2
Other loans
Finance lease liability
Hire purchase liability
Unsecured liabilities:
Bank loans
Other loans
Non Current
Secured liabilities:
Other loans
Finance lease liability
Hire purchase liability
Unsecured liabilities:
Other loans
Consolidated
Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
909
29,600
818
210
359
31,896
1,898
346
2,244
2,449
116
47
2,612
366
366
7,103
35,197
747
228
2,225
45,500
1,358
215
1,573
3,267
273
406
3,946
402
402
909
15,001
818
210
359
17,297
-
346
346
2,449
116
47
2,612
366
366
4,444
19,215
747
228
2,225
26,859
-
215
215
3,267
273
406
3,946
402
402
Total
37,118
51,421
20,621
31,422
Disclosed in the Financial Statements As
Current borrowings
Non current borrowings
34,140
2,978
47,073
4,348
17,643
2,978
27,074
4,348
The Group has a $15 million bank multi option facility in Australia and in China facilities with various banks totalling Chinese Renminbi (“RMB”)
114.5 million and a US $4.5 million facility.
At 30 June 2008 the $15 million multi option facility was fully drawn down, although the Group also held cash on deposit of $11.8 million with the
bank. In China the RMB facilities were drawn down to RMB 78.8 million leaving RMB 35.7 million unused and the US $ facility was drawn down to
US $4.3 million leaving US $0.2 million unused.
The $15 million multi option facility matures on 30 November 2008. The Chinese facilities all mature separately over the period 10 October 2008 to
13 March 2009.
Security - Liabilities are secured by:
•
•
•
Registered charge over all unencumbered assets in Australia, New Zealand, United States of America and Germany.
Mortgage over the buildings of Gale Pacific Special Textiles (Ningbo) Limited.
Fixed and floating charges over the assets of Gale Pacific Special Textiles (Ningbo) Limited.
2 Bank loans is after set off of $5,827,000 (2007 : Nil) on deposit held with the bank as an offset.
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NOT E 14: OTH E R F IN ANC IAL L IA BILI TI E S
Derivatives Carried at Fair Value
Current
Foreign currency forward contracts
Total
Disclosed in the Financial Statements As
Current other financial liabilities
N O T E 15: PRO V I SIO N S
Current
Employee benefits
Restructuring and termination costs
Factory make good costs
Non Current
Employee benefits
Total
Disclosed in the Financial Statements As
Current provisions
Non current provisions
(a) Aggregate employee benefits liability
(b) Number of employees at year end
Movements in Carrying Amounts
Movement in the carrying amounts for the following classes of provision between
the beginning and the end of the year
Restructuring and Termination Costs 3
Balance at the beginning of the year
Provisions recognised
Payments made
Reductions resulting from re-measurement
Net foreign currency movements arising from foreign operations
Carrying amount at the end of the year
Factory Make Good 4
Balance at the beginning of the year
Provisions recognised
Payments made
Reductions resulting from re-measurement
Carrying amount at the end of the year
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Consolidated
Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
28
28
28
31
31
31
28
28
28
31
31
31
Consolidated
Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
1,230
478
70
112
1,890
1,778
112
1,299
772
4,751
-
(3,595)
(56)
(622)
478
250
-
(150)
(30)
70
1,181
4,751
250
502
6,684
6,182
502
1,683
815
-
4,672
-
-
79
4,751
-
250
-
-
250
813
-
70
69
952
883
69
882
90
-
-
-
-
-
-
250
-
(150)
(30)
70
652
-
250
78
980
902
78
730
86
-
-
-
-
-
-
-
250
-
-
250
3 The provision for restructuring and termination costs represents the Directors’ best estimate of the remaining costs to be incurred by the New Zealand operation for the closure of its
manufacturing facility. The restructuring is expected to be completed by 28 February 2009.
4 The provision for factory make good represents the Directors’ best estimate of the remaining costs to be incurred in Australia for the make good of the site formerly occupied by the knitting
plant that has been relocated to China. The make good is expected to be completed by 28 February 2009.
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NOT E 16: CONT RIBUT ED EQU IT Y
Paid Up Capital
136,834,516 fully paid ordinary shares (2007: 96,834,516)
Movement in Share Capital
Shares issued at the beginning of the financial year
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
40,000,000 shares issued as part of a private placement and a Share Purchase Plan – 30 August 2007
Costs of capital raising (net of tax)
Total
Company
2007 / 2008
($000)
2006 / 2007
($000)
100,813
81,936
-
-
-
20,000
(1,123)
100,813
81,936
47,124
20,000
9,000
6,500
-
(688)
81,936
Convertible Notes
No.
No.
Convertible notes issued at the beginning of the financial period
4,270,271 notes converted to 10,941,177 shares – 5 July 2006
2,594,593 notes converted to 7,294,112 shares – 1 August 2006
Convertible notes issued at the end of the financial period
-
-
-
-
6,864,864
(4,270,271)
(2,594,593)
-
(a).
Movement in Share Capital
During 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 option and performance rights
schemes
including
for certain staff and executives,
executive directors, as approved by shareholders at an
annual general meeting. These schemes are 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.
The number of unissued ordinary shares under
the
performance rights scheme at the date of this report is
850,000. This includes 700,000 performance rights issued
during the year to senior executives. 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 issued in accordance with the Group’s
remuneration policy which:
•
•
•
Reward executives
performance;
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.
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NOT E 16: CONT RIBUT ED EQU IT Y (CONT IN U ED)
Options
Grant Date
Expiry Date
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.
Consolidated and Parent Entity - 2008
15 Dec 2004
16 Nov 2005
24 Oct 2006
Total
1 Dec 2008
1 Dec 2008
31 Dec 2008
Weighted average exercise price
Consolidated and Parent Entity - 2007
5 May 2004
15 Dec 2004
16 Nov 2005
24 Oct 2006
Total
1 Dec 2006
1 Dec 2008
1 Dec 2008
31 Dec 2008
Weighted average exercise price
$3.00
$1.52
$1.52
$1.50
$3.00
$1.52
$1.52
180,000
450,000
120,000
750,000
$1.88
50,000
240,000
580,000
-
870,000
$1.93
-
-
-
-
-
-
-
370,000
370,000
$1.52
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(50,000)
(60,000)
(130,000)
(250,000)
(490,000)
$1.70
180,000
450,000
120,000
750,000
$1.88
-
180,000
450,000
120,000
750,000
$1.88
60,000
-
-
60,000
$3.00
-
-
-
-
-
-
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%
-
-
-
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
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NOT E 16: CONT RIBUT ED EQU IT Y (CONT IN U ED)
Performance Rights
Grant Date
Expiry Date
Exercise Price
Consolidated and Parent Entity - 2008
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
16 Nov 2007
2 Feb 2017
16 Nov 2017
N/A
N/A
150,000
-
-
700,000
-
-
-
-
150,000
700,000
-
-
Performance Rights Valuation Assumptions
Grant date share price
Exercise price
Expected volatility
Expected Life
Tranche 1
Tranche 2
Dividend yield
Risk free interest rate
NOTE 17: RESERVES
Foreign currency translation reserve
Share based payment reserve
Enterprise reserve fund
Total
(a).
Foreign Currency Translation Reserve
Grant Date
16 November 2007
Grant Date
2 February 2007
$0.45
N/A
N/A
0.9 years
1.9 years
5.0%
N/A
$0.83
N/A
N/A
2.4 years
1.8%
N/A
Consolidated
Company
2007 / 2008
($000)
(11,289)
632
631
2006 / 2007
($000)
(7,668)
344
540
(10,026)
(6,784)
2007 / 2008
($000)
2006 / 2007
($000)
-
632
-
632
-
344
-
344
Consolidated
Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
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
(7,668)
(2,030)
(1,591)
-
(11,289)
(2,821)
(1,833)
(2,783)
(231)
(7,668)
-
-
-
-
-
-
-
-
-
-
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 Notes 1(c) and 1(n).
(b).
Employee Share Based Payment Reserve
Balance at the beginning of the year
Share based expenditure
Balance at the end of the year
Consolidated
Company
2007 / 2008
2006 / 2007
2007 / 2008
2006 / 2007
($000)
($000)
($000)
($000)
344
288
632
178
166
344
344
288
632
178
166
344
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NOTE 17: RESERVES (CONTINUED)
(c).
Enterprise Reserve Fund (Gale Pacific Special Textiles (Ningbo) Limited)
Balance at the beginning of the year
Statutory transfers from retained earnings
Balance at the end of the year
Consolidated
Company
2007 / 2008
2006 / 2007
2007 / 2008
2006 / 2007
($000)
($000)
($000)
($000)
540
91
631
540
-
540
-
-
-
-
-
-
Gale Pacific Special Textiles (Ningbo) Limited (“GPST”) is required by Chinese Company Law to maintain this reserve in its accounts. This
reserve is unavailable for distribution to shareholders but can be used by GPST to expand the business, make up losses or increase the
registered capital. GPST is required to allocate 10% of its annual profit after tax to this reserve until it reaches 50% of GPST’s registered
capital.
In the Group’s 2006 / 2007 accounts this reserve was incorrectly classified as a non current provision. This has been corrected for the 2007
/ 2008 reporting period and the 2006 / 2007 comparatives adjusted as follows.
Enterprise reserve fund (GPST)
Foreign currency translation reserve
(Adjustment to bring enterprise reserve fund into equity at historical foreign currency
translation rates)
2006 / 2007
Previously Stated
($000)
-
(7,624)
2006 / 2007
Adjustment
($000)
540
(44)
2006 / 2007
Restated
($000)
540
(7,668)
Non current provisions
998
(496)
502
NOT E 18: RETA IN ED EAR NINGS
Balance at the beginning of the year
Net profit / (loss) attributable to members of the parent entity
Transfers to reserves
Balance at the end of the year
NOT E 19: MINO RIT Y INTER EST S
Minority interest in controlled entities comprises:
Balance at the beginning of the year
Net loss attributable to minority interest
Balance at the end of the year
Consolidated
Company
2007 / 2008
2006 / 2007
2007 / 2008
2006 / 2007
($000)
(14,444)
2,505
(91)
($000)
1,916
(16,360)
-
(12,030)
(14,444)
($000)
(12,091)
2,307
-
(9,784)
($000)
(3,406)
(8,685)
-
(12,091)
Consolidated
Company
2007 / 2008
2006 / 2007
2007 / 2008
2006 / 2007
($000)
($000)
($000)
($000)
(11)
-
(11)
(11)
-
(11)
-
-
-
-
-
-
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NOT E 20: F RA NK ING ACCO UNT BALA NC E
Adjusted franking account balance
Company
2007 / 2008
($000)
2,300
2006 / 2007
($000)
1,213
NOT E 21: EA RN ING S PER SHA RE
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
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 profit
Earnings Used in the Calculation of Basic 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
Weighted Average Number of Shares Deemed to be Issued For No Consideration in Respect Of:
Employee options
Performance rights
Weighted average number of ordinary shares for the purposes of diluted earnings per share
Consolidated
2007 / 2008
(Cents Per Share)
2006 / 2007
(Cents Per Share)
1.92
-
1.92
1.90
-
1.90
Consolidated
2007 / 2008
($000)
2,505
-
2,505
Consolidated
2007 / 2008
(No. 000)
130,168
900
434
131,502
(16.58)
(0.49)
(17.07)
(16.58)
(0.49)
(17.07)
2006 / 2007
($000)
(16,360)
471
(15,889)
2006 / 2007
(No. 000)
95,852
-
-
95,852
For the comparative period, potential ordinary shares have not been included in the calculation of diluted EPS as losses means that they are anti-
dilutive in nature.
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NOT E 22: CA PITAL A ND L EA SING CO MMITMEN TS
(a).
Finance Leasing Commitments
Payable
Not longer than one year
Longer than one year and not longer than five years
Minimum future lease payments 5
Less future finance charges
Present value of minimum lease payments
Disclosed in the Financial Statements As
Current borrowings
Non current borrowings
(b).
Hire Purchase Commitments
Payable
Not longer than one year
Longer than one year and not longer than five years
Minimum future hire purchase payments 6
Less future finance charges
Present value of minimum hire purchase payments
Disclosed in the Financial Statements As
Current borrowings
Non current borrowings
(c).
Operating Lease Commitments
Consolidated
Company
Note
2007 / 2008
2006 / 2007
2007 / 2008
2006 / 2007
($000)
($000)
($000)
($000)
230
128
358
(32)
326
210
116
438
365
803
(302)
501
228
273
230
128
358
(32)
326
210
116
438
365
803
(302)
501
228
273
13
13
Consolidated
Company
Note
2007 / 2008
2006 / 2007
2007 / 2008
2006 / 2007
($000)
($000)
($000)
($000)
372
50
422
(16)
406
359
47
2,376
430
2,806
(175)
2,631
2,225
406
372
50
422
(16)
406
359
47
2,376
430
2,806
(175)
2,631
2,225
406
13
13
Consolidated
Company
Note
2007 / 2008
2006 / 2007
2007 / 2008
2006 / 2007
($000)
($000)
($000)
($000)
Non cancellable operating
capitalised in the accounts
leases contracted
for but not
Payable
Not longer than one year
Longer than one year and not longer than five years
Longer than five years
Total
2,172
5,158
-
7,330
3,009
9,256
752
13,017
1,078
2,947
-
4,025
1,596
6,828
-
8,424
The Group leases property and equipment under operating leases expiring in one to six 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.
5 Minimum future lease payments includes the aggregate of all lease payments and any guaranteed residual.
6 Minimum future hire purchase payments includes the aggregate of all lease payments and any guaranteed residual.
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NOT E 23: CA SH FLO W INFO RMATION
(a).
Reconciliation of Cash
Consolidated
Company
2007 / 2008
2006 / 2007
2007 / 2008
2006 / 2007
($000)
($000)
($000)
($000)
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
Total
18
3,514
13,062
(909)
15,685
13
3,806
3,823
(7,103)
539
1
493
11,823
(909)
11,408
1
1,173
2,480
(4,444)
(790)
(b).
Reconciliation of Cash Flow from Operations with Profit from Ordinary Activities
Profit / (loss) after income tax
Non Cash Flows in Profit
Profit / (loss) on disposal of fixed assets
Profit 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
Changes in tax balances processed directly in equity
Changes in tax balances due to foreign exchange movements
Changes in assets and liabilities due to the divestment of Jung
Changes in Assets and Liabilities
(Increase) / decrease in receivables
Decrease / (increase) in inventories
Decrease / (increase) in other assets
(Decrease) / increase in payables, accruals and other financial liabilities
Increase / (decrease) in tax balances
Net cash inflow provided by operations
Consolidated
Company
2007 / 2008
2006 / 2007
2007 / 2008
2006 / 2007
($000)
($000)
($000)
($000)
2,505
(16,360)
2,307
(8,685)
215
-
6,313
-
-
1,048
288
482
4
-
(189)
3,567
757
(5,252)
81
9,819
126
-
6,911
714
-
1,296
166
295
(15)
(15,914)
17,339
17,456
(20)
(6,185)
2,731
8,540
(5)
-
1,691
-
-
913
288
482
-
-
(299)
(333)
873
1,286
(310)
6,893
7
467
2,018
316
9,699
1,035
166
295
-
76
857
676
(804)
(733)
(3,120)
2,270
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NOT E 23: CA SH FLO W INFO RMATION (CO NT INUED)
(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 subsidiary was sold on 1 September 2006 and is reported in the comparatives of this financial report as a discontinued
operation. This sale has no impact in the current period.
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 from ordinary activities
Net cash inflow from investing activities
Effect of exchange rate changes on items nominated in foreign currencies
Net increase in cash generated by Jung
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
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Consolidated
2007 / 2008
2006 / 2007
($000)
($000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,212
(8,442)
(230)
24
(206)
(265)
-
(265)
(471)
1,400
15,674
(1,111)
15,963
83
231
314
(654)
75
(265)
-
(265)
12,416
3,191
83
15,690
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NOTE 24: DIRECTORS AND EXECUTIVES’ COMPEN SA TION
The key management personnel of the Group who held office during the year were:
Directors
H Boon (Chairman, Non Executive)
J Murphy (Non Executive)
G Richards (Non Executive)
P McDonald (Managing Director and Chief Executive Officer)
Executives
F Albertsmeier (Managing Director, Europe / Middle East / Africa)
P Cacioli (General Manager, Research & Development and Technical Services)
S Carroll (Managing Director, Australia)
J Cox (Chief Financial Officer)
M Denney (Managing Director, USA)
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 and performance rights under options and performance right schemes as disclosed
in Note 16 to the Financial Statements.
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NOTE 24: DIRECTORS AND EXECUTIVES’ COMPEN SA TION (CONTINUED)
2007/2008
Short-term Benefits
Post
Employm
ent
Share Based
Payments
Termin.
Benefits
Total
Performance Related
Key management
personnel
Salary &
fees
$
Bonus
$
Non-
monetary
$
F Albertsmeier (i)
307,357
41,091
52,420
Z Fakroddin (ii)
356,807
-
Super
Options
J Cox
P Cacioli
S Carroll
M Denney (iii)
E Xu (iv)
P Ducray (v)
252,290
40,000
246,903
25,000
261,373
-
246,336
33,051
242,284
19,397
-
-
-
-
7,503
9,830
C McCallum (vi)
108,528
42,930
-
189,692
10,469
33,962
Perf.
Rights
$
22,541
$
-
$
423,409
$
-
6,426
-
27,932
391,165
-
-
6,426
-
1,832
3,213
10,050
22,541
22,541
22,541
22,541
22,541
22,541
-
-
-
-
-
-
339,787
314,954
312,297
309,431
295,884
259,877
-
51,097
212,605
Total
%
15.0%
1.6%
18.4%
15.1%
9.3%
18.0%
14.8%
13.9%
24.9%
Options /
Rights
%
5.3%
1.6%
6.6%
7.2%
9.3%
7.3%
8.2%
9.9%
4.7%
TOTAL
2,211,570
211,938
103,715
67,423
27,947
157,787
79,029
2,859,409
2006/2007
Short-term Benefits
Post
Employm
ent
Share Based Payments
Termin.
Benefits
Total
Performance Related
Key management
personnel
Salary &
fees
$
Bonus
$
Non-
monetary
$
Super
Options
F Albertsmeier (i)
320,090
77,506
Z Fakroddin (ii)
189,459
-
214,472
15,000
229,358
25,000
169,477
190,748
-
-
33,479
105,064
30,873
-
28,771
-
M Denney (viii)
126,964
55,017
-
179,517
12,457
4,028
S Carroll
J Cox
P Ducray (v)
C McCallum (vi)
E Xu (vii)
P Cacioli (ix)
TOTAL
62,713
-
1,507
5,644
1,682,798
184,980
203,722
45,429
26,523
$
-
6,408
6,408
-
3,204
8,010
2,493
-
-
Perf.
Rights
$
-
-
-
-
-
-
-
-
-
-
Total
%
Options /
Rights
%
$
431,075
18.0%
300,931
285,896
275,000
201,452
198,758
198,495
2.1%
7.5%
9.1%
1.6%
4.0%
7.5%
181,981
30.2%
69,864
0.0%
2,143,452
0.0%
2.1%
2.2%
0.0%
1.6%
4.0%
1.3%
0.0%
0.0%
$
-
-
-
-
-
-
-
-
-
-
$
-
-
24,956
20,510
21,957
-
-
-
-
$
-
-
19,143
20,642
-
-
-
-
(i)
(ii)
(iii)
(iv)
(v)
(x)
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 Fakroddin departed his
role on 30 June 2008.
Mr Denney is based in the United States of America and remunerated in United States dollars converted to Australian dollars in the table
above.
Ms Xu is based in China and is remunerated in Chinese renminbi converted to Australian dollars in the table above.
Mr Ducray is based in China and remunerated in Chinese renminbi and United States dollars converted to Australian dollars in the table
above.
Mr McCallum is based in New Zealand and is remunerated in New Zealand dollars converted to Australian dollars in the table above. Mr
MaCallum was made redundant on 31 December 2007 following the completion of the restructuring of the New Zealand operations. His
remuneration details for the reporting period are to that date.
(xi) Ms Xu is based in China and is remunerated in Chinese renminbi and United States dollars converted to Australian dollars in the table
above.
(xii) 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 the United States of America and remunerated in United States dollars converted to
Australian dollars in the table above.
(xiii) Dr Cacioli was appointed General Manager, Research and Development and Technical Services on 1 March 2007 and therefore the details
of his remuneration for the reporting period are from that date.
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NOTE 24: DIRECTORS AND EXECUTIVES’ COMPEN SA TION (CONTINUED)
Compensation by Category
Short term employment benefits
Post employment benefits
Share based payments
Termination benefits
Total
Directors’ Equity Holdings: Fully Paid Ordinary Shares
Consolidated
Company
2007 / 2008
($000)
2006 / 2007
($000)
2007 / 2008
($000)
2006 / 2007
($000)
3,303
104
241
79
3,727
2,755
73
94
-
2,922
1,602
104
129
-
1,835
1,263
73
73
-
1,409
2007 / 2008
Executive Directors
P McDonald
Non Executive Directors
H Boon
J Murphy
G Richards
Executives
J Cox
Total
2006 / 2007
Executive Directors
P McDonald
Non Executive Directors
H Boon
G Richards
Executives
J Cox
Total
Balance
30 June 2007
No.
Received as
Remuneration
No.
Options Exercised
Net Change
No.
No.
Balance
30 June 2008
No.
334,714
73,000
-
78,851
10,000
496,565
-
-
-
-
-
-
-
-
-
-
-
-
100,000
434,714
190,513
-
50,882
148,923
490,318
263,513
-
129,733
158,923
986,883
Balance
30 June 2006
No.
Received as
Remuneration
No.
Options Exercised
Net Change
No.
No.
Balance
30 June 2007
No.
334,714
73,000
78,851
-
486,565
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000
10,000
334,714
73,000
78,851
10,000
496,565
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NOTE 24: DIRECTORS AND EXECUTIVES’ COMPEN SA TION (CONTINUED)
Directors’ and Executives’ Equity Holdings, Compensation Options and Performance Rights: Granted and Vested During the Year
2007 / 2008
Vested
Number
Granted
Number
Grant Date
Terms & Conditions for Each Grant
Exercise
Price
Expiry Date
First
Exercise
Date
Last
Exercise
Date
Value Per
Option /
Right at
Grant Date
Executive Directors
None
Non Executive Directors
None
Executives (Performance Rights)
F Albertsmeier
P Cacioli
S Carroll
J Cox
M Denney
P Ducray
E Xu
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,000
16/11/2007
75,000
16/11/2007
25,000
16/11/2007
75,000
16/11/2007
25,000
16/11/2007
75,000
16/11/2007
25,000
16/11/2007
75,000
16/11/2007
25,000
16/11/2007
75,000
16/11/2007
25,000
16/11/2007
75,000
16/11/2007
25,000
16/11/2007
75,000
16/11/2007
700,000
$0.43
$0.41
$0.43
$0.41
$0.43
$0.41
$0.43
$0.41
$0.43
$0.41
$0.43
$0.41
$0.43
$0.41
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
16/11/2017
30/09/2008
16/11/2017
16/11/2017
30/09/2009
16/11/2017
16/11/2017
30/09/2008
16/11/2017
16/11/2017
30/09/2009
16/11/2017
16/11/2017
30/09/2008
16/11/2017
16/11/2017
30/09/2009
16/11/2017
16/11/2017
30/09/2008
16/11/2017
16/11/2017
30/09/2009
16/11/2017
16/11/2017
30/09/2008
16/11/2017
16/11/2017
30/09/2009
16/11/2017
16/11/2017
30/09/2008
16/11/2017
16/11/2017
30/09/2009
16/11/2017
16/11/2017
30/09/2008
16/11/2017
16/11/2017
30/09/2009
16/11/2017
2006 / 2007
Vested
Number
Granted
Number
Grant Date
Executive Directors (Performance Rights)
Terms & Conditions for Each Grant
Exercise
Price
Expiry Date
First
Exercise
Date
Last
Exercise
Date
Value Per
Option /
Right at
Grant Date
P McDonald
-
150,000
02/02/2007
$0.79
Nil
02/02/2017
30/09/2009
02/02/2017
Non Executive Directors
None
Executives (Options)
E Xu
Total
-
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24/10/2006
$0.10
$1.52
31/12/2008
29/09/2008
31/12/2008
230,000
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NOTE 24: DIRECTORS AND EXECUTIVES’ COMPEN SA TION (CONTINUED)
Directors’ and Executives’ Equity Holdings Compensation Options and Performance Rights: Movements During the Year
2007 / 2008
Balance
1 July 2007
No.
Granted as
Compensation
No.
Exercised
Lapsed
No.
No.
Net Other
Change
No.
Balance
30 June 2008
No.
Balance Held
Nominally
No.
150,000
180,000
Executive Directors (Options)
P McDonald
Executive Directors (Performance Rights)
P McDonald
Non Executive Directors
None
Executives (Options)
S Carroll
Z Fakroddin
P Ducray
C McCallum (i)
E Xu
Executives (Performance Rights)
F Albertsmeier
S Carroll
P Cacioli
J Cox
M Denney
P Ducray
E Xu
Total
-
-
-
-
-
-
-
520,000
40,000
40,000
20,000
50,000
40,000
-
-
-
-
-
-
-
100,000
100,000
100,000
100,000
100,000
100,000
100,000
700,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
180,000
150,000
-
-
-
(50,000)
-
-
-
-
-
-
-
-
(50,000)
40,000
40,000
20,000
-
40,000
100,000
100,000
100,000
100,000
100,000
100,000
100,000
1,170,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2006 / 2007
Balance
1 July 2006
No.
Granted as
Compensation
No.
Exercised
Lapsed
No.
No.
Net Other
Change
No.
Balance
30 June 2008
No.
Balance Held
Nominally
No.
-
240,000
Executive Directors (Options)
P McDonald
Executive Directors (Performance Rights)
P McDonald
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
-
150,000
-
-
-
-
80,000
230,000
-
-
-
-
-
-
-
-
(60,000)
180,000
-
150,000
-
-
-
-
(90,000)
(150,000)
40,000
20,000
40,000
50,000
40,000
520,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i)
Mr McCallum was made redundant on 31 December 2007 following the completion of the restructuring of the New Zealand operations.
Remuneration Practices
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 30 June 2008. Bonuses are paid out in cash as determined at the discretion of the
Remuneration Committee.
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NOT E 25: RELAT ED PART Y TR AN SA CTIO N S
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 24.
(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. The provision for impairment, totalling $9,699,000, created as at 30 June 2007 was renewed at 30 June
2008 and considered adequate as at that date.
During the financial year, the following transactions occurred between entities in the wholly owned group:
•
•
•
•
•
Sale and purchase of goods totalling $32,119,000 (2007: $39,624,000)
Gale Pacific Limited received interest income from its subsidiaries totalling $3,044,000 (2007: $2,339,000)
Gale Pacific Limited made interest payments to its subsidiaries totalling $1,558,000 (2007: $1,337,000)
Plant and equipment was transferred totalling $7,335,000 (2007: $9,084,000)
Reimbursement of certain operating costs totalling $1,066,000 (2007: $1,577,000)
(b).
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
2007 / 2008
2006 / 2007
2007 / 2008
2006 / 2007
($000)
($000)
($000)
($000)
Current – accrued bonus and director fees
108
38
108
38
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NOT E 26: CONT ROLL ED ENT ITIES
Parent Entity
Gale Pacific Limited
Controlled Entities
Aquaspan Pty Ltd
Gale Europe GmbH Vertriebsgesellschaft
Gale Pacific (New Zealand) Limited
Gale Pacific Employees Superannuation Fund Pty Ltd
Gale Pacific FZE
Gale Pacific Special Textiles (Ningbo) Limited
Gale Pacific USA Inc
Country of Incorporation
Ownership Interest (%)
2007 / 2008
2006 / 2007
Australia
Australia
Germany
New Zealand
Australia
United Arab Emirates
China
United States of America
50%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
NOTE 27: SEGMENT REPORTING
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 in New Zealand.
Americas
Sales offices are located in Florida and custom blind 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.
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.
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NOT E 27: S EG ME NT R EPORT ING ( CONT IN U ED)
Segment Information Primary Reporting – Geographical Segments
Asia / Pacific
Americas
Europe / Middle
East / Africa
Discontinued
Business
Eliminations
Consolidation
($’000)
($’000)
($’000)
($’000)
($’000)
($’000)
30 June 2008
Revenue outside the economic entity
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
Inventory write down
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
Acquisition of non current assets
30 June 2007
Revenue outside the economic entity
Inter segment revenue
Total revenue
Segment operating profit / (loss)
Income tax (expense) / benefit
Operating profit / (loss) after tax
71,847
16,421
88,268
6,651
(1,683)
4,968
6,004
102
-
105,077
-
105,077
48,527
-
48,527
3,638
72,787
23,938
96,725
(4,298)
(492)
(4,790)
20,904
172
21,076
40
(40)
-
516
-
-
16,354
-
16,354
1,660
-
1,660
573
27,837
43
27,880
1,947
(737)
1,210
11,869
234
12,103
(3,222)
-
(3,222)
841
-
(1,581)
9,331
-
9,331
1,227
-
1,227
25
10,279
222
10,501
(10,472)
(1,609)
(12,081)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,212
-
8,212
(495)
24
(471)
Depreciation and amortisation
6,524
564
771
31
Individually Significant Items
Reimbursement of R & D expenditure
Impairment of non current 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
110
(1,031)
(440)
(4,672)
101,856
-
101,856
65,940
-
65,940
3,570
-
-
-
-
18,052
-
18,052
2,714
-
2,714
453
-
-
(3,899)
-
13,280
-
13,280
2,672
-
2,672
88
-
-
-
-
-
-
-
-
-
-
16
499
(16,827)
(16,328)
722
37
759
-
-
-
(842)
-
(842)
(126)
-
(126)
-
(499)
(24,203)
(24,702)
(314)
86
(228)
-
-
-
-
-
(1,564)
-
(1,564)
(89)
-
(89)
-
105,119
-
105,119
4,191
(1,686)
2,505
7,361
102
(1,581)
129,920
104
130,024
51,288
(10)
51,278
4,236
118,616
-
118,616
(13,632)
(2,728)
(16,360)
7,890
110
(1,031)
(4,339)
(4,672)
131,624
104
131,728
71,237
(206)
71,031
4,127
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NOT E 28: F IN ANC IAL INSTR UMENT S
(a).
Financial Instruments
Derivative financial instruments may be used by the Group to limit exposure to exchange rate risk associated with foreign currency
transactions and interest rate risk. Derivative financial instruments are recognised in the financial statements. Transactions to reduce
foreign currency and interest rate exposure are undertaken without the use of collateral as the Group deals with reputable institutions with
sound financial positions.
(b).
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.
(c).
Credit Risk
Exposure to credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at the reporting date to recognised financial
assets is the carrying amount of those assets, net of any provisions for doubtful debts of those assets.
Consolidated
Company
Note
As at
30 Jun 2008
As at
30 June 2007
As at
30 Jun 2008
As at
30 June 2007
The maximum exposure to credit risk at the reporting date was:
Investments in controlled entities
Amounts receivable from controlled entities
Trade and other receivables
Cash and cash equivalents
Total
8
6
6
5
The maximum exposure to credit risk for trade receivables at the
reporting date by geographic region was:
Asia Pacific
Americas
Europe / Middle East / Africa
Total
The ageing of trade receivables not impaired at the reporting
date was:
Not outside credit terms
Outside credit terms 0-30 days
Outside credit terms 31-120 days
Outside credit terms 121 days to one year
More than one year
Total
The ageing of impaired receivables at the reporting date was:
Outside credit terms 0-30 days
Outside credit terms 31-120 days
Outside credit terms 121 days to one year
More than one year
Total
-
-
19,552
16,594
36,146
7,647
6,266
4,960
18,873
13,215
3,283
1,816
411
148
-
-
19,363
7,642
27,005
7,399
7,190
4,036
18,625
13,692
3,301
1,057
155
420
18,873
18,625
-
14
-
230
244
-
-
-
-
-
30,585
41,641
5,856
12,317
90,379
25,326
42,244
5,557
3,654
76,781
5,526
5,012
-
-
-
-
5,526
5,012
2,779
1,264
1,231
252
-
5,526
-
-
-
-
-
3,564
1,189
259
-
-
5,012
-
-
-
-
-
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NOT E 28: F IN ANC IAL INSTR UMENT S (CON TINU ED)
(d).
Liquidity Risk
The following tables detail both the Group’s effective weighted average interest rates on classes of its financial liabilities at reporting date
and the contractual maturity of these financial liabilities. Contractual cash flows include both interest and principal cash flows, are
undiscounted and based on the earliest date on which the Group can be required to pay.
Consolidated
30 June 2008
Non Derivative Financial Liabilities
Bank overdrafts
Bank loans
Other loans
Finance lease liabilities
Hire purchase liabilities
Derivative Financial Liabilities
Note Weighted
Average
Effective
Interest
Rate
Carrying
Amount
Contractual
Cash Flows
Contractual Cash Flows Maturing In:
Less
Than 6
Months
6 To 12
Months
1 To 2
Years
2 To 5
Years
%
($000)
($000)
($000)
($000)
($000)
($000)
13
13
13
13
13
9.54%
909
946
946
-
5.07%
31,498
32,267
27,991
4,276
-
-
-
-
8.79%
3,979
4,568
7.82%
8.84%
326
406
358
422
736
172
352
736
1,393
1,703
58
19
63
32
65
19
Foreign currency forward contracts
14
-
28
28
28
-
-
-
Total
37,146
38,589
30,225
5,089
1,488
1,787
Company
30 June 2008
Non Derivative Financial Liabilities
Bank overdrafts
Bank loans
Other loans
Finance lease liabilities
Hire purchase liabilities
Derivative Financial Liabilities
Note Weighted
Average
Effective
Interest
Rate
Carrying
Amount
Contractual
Cash Flows
Contractual Cash Flows Maturing In:
Less
Than 6
Months
6 To 12
Months
1 To 2
Years
2 To 5
Years
%
($000)
($000)
($000)
($000)
($000)
($000)
13
13
13
13
13
9.54%
909
946
946
3.03%
15,001
15,368
15,368
-
-
-
-
-
-
8.79%
3,979
4,568
7.82%
8.84%
326
406
358
422
736
172
352
736
1,393
1,703
58
19
63
32
65
19
Foreign currency forward contracts
14
-
28
28
28
-
-
-
Total
20,649
21,690
17,602
813
1,488
1,787
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NOT E 28: F IN ANC IAL INSTR UMENT S (CON TINU ED)
Consolidated
30 June 2007
Non Derivative Financial Liabilities
Bank overdrafts
Bank loans
Other loans
Finance lease liabilities
Hire purchase liabilities
Derivative Financial Liabilities
Note Weighted
Average
Effective
Interest
Rate
Carrying
Amount
Contractual
Cash Flows
Contractual Cash Flows Maturing In:
Less
Than 6
Months
6 To 12
Months
1 To 2
Years
2 To 5
Years
%
($000)
($000)
($000)
($000)
($000)
($000)
13
13
13
13
13
10.22%
7,103
7,105
7,105
-
5.90%
36,555
36,798
32,991
3,807
8.80%
4,631
7.04%
501
5,552
543
666
106
666
152
8.77%
2,631
2,790
1,032
1,336
-
-
-
-
1,331
2,889
229
371
56
51
Foreign currency forward contracts
14
-
31
31
31
-
-
-
Total
51,452
52,819
41,931
5,961
1,931
2,996
Company
30 June 2007
Non Derivative Financial Liabilities
Bank overdrafts
Bank loans
Other loans
Finance lease liabilities
Hire purchase liabilities
Derivative Financial Liabilities
Note Weighted
Average
Effective
Interest
Rate
Carrying
Amount
Contractual
Cash Flows
Contractual Cash Flows Maturing In:
Less
Than 6
Months
6 To 12
Months
1 To 2
Years
2 To 5
Years
%
($000)
($000)
($000)
($000)
($000)
($000)
13
13
13
13
13
9.76%
4,444
4,445
4,445
5.65%
19,215
19,218
19,218
8.80%
4,631
7.04%
501
5,552
543
666
106
-
-
666
152
8.77%
2,631
2,790
1,032
1,336
-
-
-
-
1,331
2,889
229
371
56
51
Foreign currency forward contracts
14
-
31
31
31
-
-
-
Total
31,453
32,579
25,498
2,154
1,931
2,996
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NOT E 28: F IN ANC IAL INSTR UMENT S (CON TINU ED)
(e).
Market Risk
The Group’s activities expose it to the financial risks of changes in foreign currency exchange rates and interest rates.
Foreign Exchange Risk
The Group is mainly exposed to United States dollars, Euros and New Zealand dollars.
The following table details the Group’s sensitivity to a 10% increase or decrease in the Australian dollar. This analysis includes only
outstanding foreign currency denominated monetary items, including loans to foreign operations within the Group and details the profit
effect from each of these items of a 10% strengthening in the Australian dollar on the reporting date with all other variables held constant.
For a weakening in the Australian dollar there would be an equal and opposite impact on profit to the amount shown in the tables below.
30 June 2008
Financial Assets
Cash and cash equivalents
United States dollars
Euro
Trade receivables
United States dollars
Australian dollars
Amounts receivable from controlled entities
United States dollars
Euro
New Zealand dollars
Financial Liabilities
Trade payables
United States dollars
Euro
Borrowings
United States dollars
Euro
New Zealand dollars
Foreign currency forward contracts
United States dollars
Euro
Profit or (loss) impact
Currency Asset / (Liability) Breakdown
United States dollars
Euro
New Zealand dollars
Australian dollars
Profit or (loss) impact
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Carrying Value
($000)
Profit//(Loss)
AUD +/-10%
($000)
Carrying Value
($000)
Profit//(Loss)
AUD +/ -10%
($000)
313
167
6
1,060
-
-
-
783
164
13,189
7,996
150
688
591
(14,341)
(8,584)
(150)
1,060
313
167
6
-
23,056
24,173
4,055
783
164
13,189
7,996
150
688
591
8,715
15,589
3,905
-
(31)
(17)
(1)
114
(1,243)
(818)
46
78
16
1,319
800
15
(69)
(59)
150
53
(78)
61
114
150
(31)
(17)
(1)
-
(2,306)
(2,417)
(406)
78
16
1,319
800
15
(69)
(59)
(3,078)
(1,010)
(1,677)
(391)
-
(3,078)
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NOT E 28: F IN ANC IAL INSTR UMENT S (CON TINU ED)
30 June 2007
Carrying Value
Profit//(Loss)
Carrying Value
Consolidated
Company
($000)
AUD +/-10%
($000)
($000)
Profit//(Loss)
AUD +/ -10%
($000)
Financial Assets
Cash and cash equivalents
United States dollars
Euro
Trade receivables
Australian dollars
Amounts receivable from controlled entities
United States dollars
Euro
New Zealand dollars
Financial Liabilities
Trade payables
United States dollars
Euro
Borrowings
United States dollars
Euro
Foreign currency forward contracts
United States dollars
Euro
Profit or (loss) impact
Currency Asset / (Liability) Breakdown
United States dollars
Euro
New Zealand dollars
Australian dollars
Profit or (loss) impact
254
2
1,230
-
-
-
276
392
13,057
10,602
67
281
(13,146)
(11,272)
-
1,230
254
2
-
24,054
21,460
6,374
276
392
13,057
10,602
67
281
10,908
10,188
6,374
-
(26)
-
123
(1,317)
(759)
(117)
28
39
1,306
1,060
(7)
(28)
302
(16)
312
(117)
123
302
(26)
-
-
(2,405)
(2,146)
(637)
28
39
1,305
1,060
(7)
(28)
(2,817)
(1,105)
(1,075)
(637)
-
(2,817)
The following exchange rates to the Australian dollar applied during the year.
United States dollars
Euro
New Zealand dollars
As at
As at
Average Rate
30 Jun 2008
30 Jun 2007
2007 / 2008
2006 / 2007
0.9596
0.6065
1.2616
0.8456
0.6272
1.0954
0.8986
0.6084
1.1647
0.7743
0.5806
1.1138
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NOT E 28: F IN ANC IAL INSTR UMENT S (CON TINU ED)
Interest Rate Risk
The Group is exposed to interest rate risk as entities in the Group borrow and deposit funds at both fixed and floating interest rates.
Effective weighted average interest rates on classes of financial liabilities are disclosed under liquidity risk.
The following table details the Group’s sensitivity to a 1% increase or decrease in interest rates at reporting date with the change taking
place at the beginning of the following financial year and held constant throughout the reporting period. All other variables remain
constant. Disclosed in the tables below is the profit effect of a 1% increase in interest rates. For a 1% decrease in interest rates there
would be an equal and opposite impact on profit to the amount shown.
Consolidated
Company
30 June 2008
Carrying Value
Financial Assets
Cash & cash equivalents
Amounts receivable from controlled entities
Financial Liabilities
Borrowings
Profit or (loss) impact
($000)
16,576
-
21,666
Profit//(Loss)
+/-1%
($000)
166
-
(217)
(51)
Carrying Value
($000)
12,316
26,981
15,910
Consolidated
Company
30 June 2007
Carrying Value
Financial Assets
Cash & cash equivalents
Amounts receivable from controlled entities
Financial Liabilities
Trade payables
Borrowings
Profit or (loss) impact
(f).
Forward Exchange Contracts
($000)
6,833
-
759
31,879
Profit//(Loss)
+/-1%
($000)
70
-
(9)
(321)
(260)
Carrying Value
($000)
3,651
46,684
-
23,659
Profit//(Loss)
+/-1%
($000)
123
270
(159)
234
Profit//(Loss)
+/-1%
($000)
37
467
-
(236)
268
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 $28,000 (2007: $31,200).
The accounting policy in regard to forward exchange contracts is detailed in Note 1(m).
At balance date, the details of outstanding forward exchange contracts are:
Average Exchange Rate
Foreign Currency
Contract Value
2008
2007
2008
(FC000)
2007
(FC000)
2008
($000)
2007
($000)
2008
($000)
Fair Value
2007
($000)
Buy United States Dollars / Sell Australian Dollars
Less than 6 months
0.9310
0.7741
Buy European Euro / Sell Australian Dollars
Less than 6 months
0.5990
0.5742
Total
660
358
57
176
709
598
73
(21)
(6)
306
(7)
(28)
(25)
(31)
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NOT E 29: SU BSEQ UENT EVEN TS
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.
NOT E 30: CO MPAN Y D ETA IL S
The registered office of the Company is:
Gale Pacific Limited
145 Woodlands Drive
Braeside, Vic, 3195
Australia
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A D D I T I O N A L S E C U R I T I E S E X C H A N G E
I N F O R M A T I O N
Umbrellas
Coolaroo Umbrellas feature a unique knitted fabric specially
designed to breathe. This simple air-flow principle
keeps you cooler and more comfortable in hot weather
when you’re enjoying the outdoors.
Beach Umbrellas
Catch the shade no matter what the sun’s position with
the Coolaroo range of Beach Umbrellas. Simply tilt the head
to stay cool and protected. Features long life Coolaroo
fabric cover and powdercoated steel frame.
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N u m b e r o f H o ld ing s o f E q u it y S e cu r it i e s a s
a t 2 6 S ep t emb e r 2 00 8
Tw ent y L a rg est Ho ld ers of Q uoted Equ it y
S e cu r it ie s
The fully paid issued capital of the Company consisted of
136,834,516 ordinary fully paid shares held by 886 shareholders.
Each share entitles the holder to one vote.
Thirty nine holders hold 750,000 options and 850,000 performance
rights over ordinary shares. Options and performance rights do not
carry a right to vote.
Dist rib ution of Ho ld ers of Equ ity Secu rities
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
Ordinary Fully Paid Shares
Total
Holders
Units
% Issued
Capital
134
291
158
241
54,412
826,595
1,219,078
7,646,028
0.04
0.60
0.89
5.59
100,001 and over
62
127,088,403
92.88
Total
886
136,834,516
100.00
Dist rib ution of Ho ld ers of Equ ity Secu rities
Unmarketable Parcels as at
18 September 2007
Minimum
Parcel Size
Holders
Units
Minimum $500 parcel at
$0.25 per unit
2,000
204
156,919
Shareholder
No.
%
Thorney Holdings Pty Ltd
16,567,324
12.11
Gale Australia Pty Ltd
13,927,844
10.18
INVIA Custodian Pty Limited
IWPE Nominees Pty Ltd
UBS Nominees Pty Ltd
ANZ Nominees Limited
IWPE Nominees Pty Ltd
Investec Bank (Australia) Limited
MGB Equity Growth Pty Limited
National Nominees Limited
Equity Trustees Limited
Citicorp Nominees Pty Limited
Ruminator Pty Ltd
ANZ Nominees Limited
12,701,938
12,120,000
11,612,746
8,852,984
7,791,428
6,060,000
4,328,572
4,303,200
3,978,058
2,996,566
2,164,705
1,612,601
National Australia Trustees Limited
1,410,791
UBS Wealth Management Australia
Nominees Pty Ltd
Merrill Lynch (Australia) Nominees Pty
Limited
GFS Securities Pty Ltd
Beta Gamma Pty Ltd
1,382,494
1,367,227
1,154,638
1,000,000
LIPPO Securities Nominees (BVI) Ltd
1,000,000
9.28
8.86
8.49
6.47
5.69
4.43
3.16
3.14
2.91
2.19
1.58
1.18
1.03
1.01
1.00
0.84
0.73
0.73
Sub st ant ia l Sh ar eho ld e rs a s at 2 6 Se pt emb er
2 0 0 8
Top 20 Holders of Ordinary Fully Paid
Shares as at 8 September 2008
116,333,116
85.01
Shareholder
No.
%
Investec Wentworth Private Equity Limited
And Its Associated Entities
30,300,000
22.14
Thorney Holdings Pty Ltd
Gale Australia Pty Ltd
UBS Nominees Pty Ltd And Its Associated
Entities
29,536,560
13,927,844
13,846,188
21.59
10.18
10.12
Monterrey Investment Management Limited
9,979,561
7.3
Oth e r Inf orm at ion
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 Securities 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.
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Australia PO Box 892, Braeside, Victoria 3195 Ph: +61 3 9518 3399 Toll Free: 1800 331 521
New Zealand PO Box 15 118 Aranui, Christchurch Ph: + 64 3 373 9500 Toll Free: 0800 555 171
United States PO Box 951509, Lake Mary, Florida, 32795-1509 Phone +1 407 333 1038
Middle East PO Box 17696 Jebel Ali, Dubai, U.A.E. Ph: +971 4 881 7114
Europe GmbH Am Blücherflöz 6, 66538 Neunkirchen, Germany Ph.+ 49 6821 920 640
China No.777 Hengshan West Rd, Beilun, Ningbo 315800 Ph: +86 574 5626 8888
Gale Pacific Limited
ABN 80 082 263 778
For personal use only