Australian based.
Global business.
Annual Report 2015
For personal use only Contents
1
Company Introduction
2
Results at a Glance
3
Chairman’s Letter
4
Group Managing Director’s Letter
7
Operational Report
10 Board of Directors
11 Executive Leadership
12 Corporate Governance
13 Directors’ Report
31 Financial Report
Corporate Directory
Gale Pacific Limited
ABN 80 082 263 778
Directors
David Allman (Chairman)
Nick Pritchard (Group Managing Director)
Peter Landos (Non Executive Director)
John Murphy (Non Executive Director)
George Richards (Non Executive Director)
Company Secretary
Sophie Karzis
Registered Office
145 Woodlands Drive,
Braeside, Victoria, 3195
T + 613 9518 3333
Solicitors
Norton Gledhill
Level 23, 459 Collins Street, Melbourne, Victoria, 3000
T + 613 9614 8933
Auditors
Deloitte Touche Tohmatsu
550 Bourke Street, Melbourne, Victoria, 3000
T + 613 9671 7000
Share Registry
Computershare
Yarra Falls, 452 Johnston Street, Abbotsford, Victoria, 3067
T + 613 9415 4000
Website Address
www.galepacific.com
2015 Annual General Meeting
The Annual General Meeting will be held on Friday
30 October 2015.
The Notice of Meeting and Proxy Form are separate
items accompanying this 2015 Annual Report.
For personal use only Who We Are
GALE Pacific is a manufacturer and marketer
of commercial and DIY products that protect
and enhance environments around the world.
Based in Australia, we operate globally with
approximately half our revenue coming from
other markets.
Our products are marketed across
commercial and retail sectors, with
distribution into architectural, horticultural,
agricultural, mining, construction, and home
improvement channels. They are stocked by
many of the world’s largest retailers and also
have strong online distribution.
Key products include architectural shade
fabrics, exterior window shades, shade sails
and an array of specialised commercial
fabrics used for crop protection, irrigation,
water storage and screening.
Retail shade and screening products are
marketed under the Coolaroo brand.
Commercial products are marketed under the
GALE Pacific brand.
In Australia and New Zealand we also market
a range of interior window furnishings under
the ZONE Interiors brand and a range of glass
DIY pool fencing and balustrading, shower
screens and other glass products under the
EVERTON brand.
GALE Pacific is a world leader in specialised
textiles and associated products and is
recognised in our markets as an innovator
and long-term producer of premium quality
products.
The company is focused on strengthening
our global market position through product
innovation and brand strength.
GALE PACIFIC LIMITED 2015 ANNUAL REPORT 1
For personal use only Results at a glance
Sales $A million
H1 H2
Underlying NPAT $A million
H1 H2
2014
137.3
2015
148.0
150
100
50
0
2014
8.2
2015
6.9
10
8
6
4
2
0
Underlying EBITDA $A million
H1 H2
Gross operating cash fl ow $A million
H1 H2
2014
17.6
2015
18.2
20
15
10
5
0
15
10
5
0
-5
-10
as % of EBITDA
200
13.4
100
8.2
-4.0
-9.0
2014
2015
0
-100
-200
-300
-400
Net debt $A million
H1 H2
Sales by region $A ’000s
30
20
10
0
26.2
as % of
equity
16.7
30
20
10
0
13.6
11.2
2014
2015
82,742 Australasia
43,360 Americas
14,405 Middle East / North Africa
7,486 China Manufacturing and EurAsia
2 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only Chairman’s letter
Chairman’s Letter
David Allman
In August 2014 GALE Pacific announced a leadership
change with the appointment of Nick Pritchard as
Group Managing Director. Subsequently he announced
a strategy to increase the company’s profitability and restore
shareholder value.
At the half year we reported that we had made substantial
progress with implementing the strategy; however this progress
had not improved financial results at that stage. Pleasingly,
the second half financial results for FY2015 have verified that
the strategic plan is working, leading to increased revenue and
profitability, improved working capital management, continuing
reductions in the cost of servicing customers, and reduced
debt. Second half underlying EBITDA of $13.7 million was 33%
higher than the prior corresponding period, following a first half
when underlying EBITDA was down 38%. The strategic initiatives
we have undertaken have positioned the company to achieve
sustainable earnings growth as we focus on building long-term
shareholder value.
A final unfranked dividend of 1 cent per share will be paid to
shareholders on 1 December 2015.
The group has a strong balance sheet with net debt at 30 June
of $16.7 million which is less than underlying EBITDA, and
gearing (net debt divided by net debt plus shareholders funds)
of 15%.
Management and Staff
On behalf of the Directors, I would like to thank GALE Pacific
employees for their hard work and commitment to grow and
improve the business, particularly while implementing such
a significant change agenda. During the year we welcomed
several new members to the management team and are
confident that they will make a great contribution and help the
business to realise its considerable potential.
Financial Position
In FY2015 the group recorded sales of $148 million, an 8% year-
on-year increase. The USA and Middle East regions performed
particularly well with strong sales and earnings growth. While
the Australian business increased its sales, profitability was
well below an acceptable level, due to increased product costs
caused by the depreciation in the Australian dollar, the need
for increased marketing spend, and ongoing investment to
streamline and improve the company’s supply chain.
Underlying EBITDA for the year was $18.2 million, representing
a small improvement over 2014. Underlying Net Profit After
Tax (NPAT) was $6.9 million which is in line with our earnings
guidance of $6.5-$7.5 million in February.
Looking Forward
In FY2016 the company will continue to execute its strategy
and Directors believe the company to be well positioned,
with a new leadership team and clear plans to deliver solid
revenue and earnings growth. We expect the Australian region
to increase its profitability to a more acceptable level with
increased revenue and lower costs resulting from supply chain
improvements, reduced inventory and the absence of the one-
off investments required in FY2015.
Globally we see strong growth potential across both the retail
and commercial sectors and are encouraged by the product
category range wins which are being achieved in both channels.
After restructuring and product re-launch costs of $1.7 million,
statutory NPAT was $5.2 million compared with $8.2 million
in FY2014. Statutory earnings per share were 1.74 cents
compared with 2.77 cents in FY2014.
David Allman
Chairman
GALE PACIFIC LIMITED 2015 ANNUAL REPORT 3
For personal use only Chairman’s letter
Group Managing
Director’s Review
Nick Pritchard
In my first year leading GALE Pacific, I am very
pleased to be able to report considerable
progress in the transformation of the company
in line with our strategic plan, as well as strong second half
financial performance.
Whilst full year earnings were below the prior year, they
were in line with the guidance provided to the market in
February and the results for the second half demonstrate that
the transformation plan is working. In the second half the
company’s underlying EBIT was more than five times the first
half of FY2015 and 20% above the prior corresponding period.
During the second half we were also successful in significantly
reducing inventory across the group and achieving important
supply chain improvements. Inventory reductions were achieved
across all regions and, whilst there is still work to do on the
supply chain, our efforts are now starting to drive sizeable cost
reductions in warehousing, transport and product.
Building Momentum
In late August 2014 we announced a strategy to create a more
focused, more innovative, globally collaborative business geared
towards improving service and leveraging our global scale.
Whilst it will take time to realise the full benefits of this strategy,
it is pleasing to be able to report a number of achievements:
• Structure – We now have a more global organisational
structure, with a global supply chain model aimed primarily
at improving working capital management and leveraging the
company’s scale in procurement.
• Product Categories – We have defined our product category
strategy including plans to exit non-strategic categories and
focus on our core business.
• Innovation – We have established a strong pipeline of
innovative products in our core categories, which already
have translated into significant range wins with our largest
retail customer in Australia.
• Collaboration – A global executive leadership team has been
established with an operating cycle that supports sharing
ideas and marketing programs between regions.
• Service – Increases in key service level metrics have been
achieved, particularly in Australia, and we have started to
build a stronger customer service culture company-wide.
• Selling Regions – We have implemented a regional selling
model with the establishment of the EurAsia region, based
in Shanghai, and with other geographical changes aimed at
servicing overseas customers locally and at lower cost.
• Digital Strategy – Digital strategies for all brands have been
developed and new ZONE Interiors and EVERTON web sites
have been launched, with additional web sites imminent.
Efficiency and Effectiveness Projects
We also announced six projects to unlock GALE Pacific’s
capacity for growth and position the company for success. Each
of these projects was sizeable and expected to take some time
to complete, and it is pleasing to be able to report that the first
three have now been completed with good progress on the
remaining three.
• Brands – The company’s fourteen brands have been reduced to
five, with the goal of investing in a smaller number of brands and
making them more meaningful to consumers and customers.
• China Manufacturing Pricing Model – The company’s China
manufacturing operation has been established as a cost
centre rather than a profit centre, effective 1 July 2015.
4 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only Top left: Coolaroo
Butterfly gazebo
Top right: ZONE
Interiors window
furnishings
Bottom left:
EVERTON DIY
pool fencing
Bottom right:
GALE Pacific
horticultural
fabrics
In late August 2014 we announced
a strategy to create a more focused,
more innovative, globally collaborative
business geared towards improving
service and leveraging our global
scale.
This improves visibility on regional profits and transitions the
focus in China to manufacturing efficiency and service.
• New Product Development – Improved research and
development processes and a focus on fewer, but larger,
global projects have translated into a strong new product
pipeline and impressive product ranging wins.
• Extrusion Coating Technology Upgrade – We commissioned
a new operating system and scanning technology for the
company’s Australian-based extrusion coating plant. The
upgrade was implemented according to plan and already is
improving product quality and productivity.
• Global Supply Chain Model – This project, which will focus
on product forecasting, global procurement, manufacturing,
inventory management and supply chain reporting, is
in its early stages. Achievements so far have included
strengthened processes, improved supplier payment terms
and reduced inventory.
• I.T. Optimisation – In April we successfully implemented a
new ERP (I.T.) system in the Americas region. We continue to
build the company’s information technology capability and
expect these investments will drive productivity and service
improvement.
Health and Safety
It is very encouraging to be able to report a strong safety
performance across the business. During the year we
implemented increased standards of housekeeping and
safety and I am pleased with the commitment and ongoing
improvements across all facilities.
Looking Forward
We have made considerable progress with implementing our
strategy. We have laid important building blocks implementing
the right structure, building team capability, developing the
right brand and product strategies, creating the information
technology infrastructure, investing in our core manufacturing
competencies, building a stronger company culture, and more.
We have achieved these whilst systematically improving our
working capital position, reducing debt and delivering a solid
second half financial performance.
The next phase of the company’s transformation will focus on:
• Successful execution of the significant new business we
have won across product categories in Australia;
• International Market and Product Review – This project will
define, and establish entry plans for, key expansion markets.
It will also develop a strategy around the European region.
• Building a more robust global supply chain with
improvements in product forecasting, procurement,
manufacturing and inventory management;
GALE PACIFIC LIMITED 2015 ANNUAL REPORT 5
For personal use only Group Managing
Director’s Review
continued
Below: The
company has a
clear focus on its
core business.
Pictured below:
Coolaroo
cantilever market
umbrella.
• Advancing our new product development, particularly in the
area of commercial fabrics;
• Building strategies for accelerated commercial sector growth
in all regions;
• Developing a strong EurAsia selling region; and
• Continuing to optimise the company’s information technology
platform to reduce costs and improve service.
We are confident that GALE Pacific is well positioned to deliver
strong sales and earnings growth. As evidenced by our results
in the second half of FY2015, our people have responded to
the challenges faced throughout the year with professionalism
and I thank them for their commitment to improve the
company’s performance.
Thank you too to our shareholders who have supported GALE
Pacific through challenging times and a considerable change
agenda. We are building momentum and are confident of a very
bright future.
Nick Pritchard
Group Managing Director
For personal use only Operational Report
Sales
Underlying EBITDA
Underlying EBIT
Underlying profit before tax
Underlying profit after tax
Statutory profit/loss before tax
Statutory profit/loss after tax
Net cash provided by operating activities
Net debt
Diluted earnings per share
Dividends per share
FY2015
A$ million
Change
%
FY2014
A$ million
137.3
17.6
12.1
11.0
8.2
11.0
8.2
4.2
11.2
148.0
18.2
10.6
8.7
6.9
6.2
5.2
4.4
16.7
2.72 cents
2.65 cents
1.72 cents
1.0 cent
8
3
(13)
(21)
(16)
(43)
(37)
5
49
(37)
(62)
The group’s sales for the full year were $148.0 million, up 8
per cent on FY2014. Sales increased in all major markets with
strong seasonal sales in the Americas and the Middle East
regions underpinning the result.
In New Zealand both retail and commercial channels returned
to strong growth with positive performance across most
categories. New retail ranging was secured, positioning the
company for future growth.
Underlying EBITDA was $18.2 million, representing a 3%
increase over FY2014. Lower earnings by the Australian
business were fully offset by strong performance in the
Americas and Middle East operations as they continued to
grow. EBITDA in the second half increased by 33% over the
prior corresponding period, following a decrease of 38% in the
first half.
The region’s full year earnings were impacted by higher
inventory levels and other supply chain challenges, as well as by
transformation activities including restructuring, investments in
marketing, and exiting non-core categories. Earnings were also
affected by the depreciation of the Australian dollar. Wherever
possible, price increases were implemented to offset some of
the cost pressures.
Australasia
FY2014
A$ million
FY2015
A$ million
% change
Sales
Underlying EBITDA
79.9
4.7
82.7
3.2
4
(32)
Australian sales through retail channels continued to grow with
increased demand for shade cloth, portable shade structures,
pool fencing, mirrors and shower screens, although sales of
shade-related products were impacted by cooler summer weather.
Increased retail sales in Australia were partially offset by lower
commercial sales, caused primarily by the non-repeat of a
large commercial fabric export order in the prior year and by
weaker demand for grain protection fabrics due to weather.
Excluding the impact of the non-repeated export order,
underlying commercial sales grew 30% indicating considerable
improvement in the region’s commercial fabrics business.
A comprehensive brand and product category review was
completed during the second half and decisions were made to
exit brands with low consumer equity and non-core categories
including folding doors, pet beds and pet kennels.
Two major projects were completed successfully:
• The EVERTON pool fencing and balustrade range, formerly
branded Highgrove, was relaunched with more effective
and durable packaging, a website with a consumer-friendly
product selection facility and improved in-store
representation. All inventory in retail stores was converted
to the new EVERTON format during the year, in time for the
peak selling season. The conversion, a project of significant
scale and complexity, was executed according to plan. Point-
of-sale performance, which previously was declining, is now
positive and the company is in a position to capitalise on the
potential of this category.
• An underperforming range of Zone Hardware interior blinds
was also reviewed and replaced throughout the year by a
more fashionable range of ZONE Interiors branded products.
GALE PACIFIC LIMITED 2015 ANNUAL REPORT 7
For personal use only Slow-moving inventory in stores was replaced by an updated
and more stylish range, positioning the category for future
growth.
vehicle protection for automotive manufacturers. Further
investments in this fast-growing region, coupled with the
company’s new architectural fabric products, are expected to
result in ongoing growth.
Sales of GALE Pacific commercial knitted fabrics increased.
Considerable steps were taken to accelerate new product
development in both knitted and coated fabrics, and this will
remain a key area of focus as the company establishes its
technical leadership in commercial fabrics.
The company continued to make improvements across its
Australian and New Zealand supply chain, with the number of
warehouses reduced to simplify the supply chain and lower
costs. In the second half warehouse efficiencies and service
level improvements were achieved and progress was made in
reducing the number of suppliers and improving trading terms.
Americas
FY2014
A$ million
FY2015
A$ million
% change
Sales
Underlying EBITDA
36.1
3.3
43.4
5.0
20
51
Sales and profit grew strongly with sales increasing across
retail, online and commercial sectors. During the year the
region upgraded its ERP (I.T.) system successfully and also
extended its custom window shade manufacturing plant to
Florida to service customers more effectively and reduce
freight costs.
The region has assumed responsibility for South America as
part of the strategy to service global customers locally rather
than from Australia, and this is expected to lead to increased
sales in FY2016.
The company also invested in sales leadership for the
Americas commercial business. Currently this is small, but it
has considerable potential and significant progress is expected
in FY2016.
Middle East / North Africa
(formerly Middle East)
China Manufacturing and EurAsia
(formerly International)
FY2014
A$ million
FY2015
A$ million
% change
Sales
Underlying EBITDA
9.0
9.7
7.5
10.6
(17)
9
Sales to the EurAsia region declined as the company moved
from an Australian-based selling team to a selling team based
in this high potential region. Sales in Japan and Europe were
lower, but in the future will benefit from structural changes
implemented during the year and new leadership.
The company’s Chinese manufacturing operations, which
produce knitted and woven fabrics including a range of
value-added products, were affected by lower demand in
Australia and by initiatives to reduce global inventory. Efficiency
in the plant remained high, with strong performance in quality
and waste reduction and improvements in service metrics.
During the year the EurAsia region completed a review of its
markets and product portfolio which resulted in refocusing
on core product categories and restructuring its leadership,
with the appointment of a new General Manager for the
EurAsia zone, based in Shanghai. He has considerable
international business experience and will lead the company’s
entry into China as well as expansion into key European and
Asian markets.
Balance Sheet
Net debt at 30 June 2015 was $16.7 million, compared with
$26.2 million at 31 December 2014 and $11.2 million at
30 June 2014. The increase during the year reflected greater
investment in product development, regeneration of the China
manufacturing facilities, and integration of the Americas
operations onto the Company’s global ERP (I.T.) platform.
FY2014
A$ million
FY2015
A$ million
% change
Cash Generation and Working Capital
Sales
Underlying EBITDA
12.2
2.7
14.4
3.3
18
20
The company continued its strong performance in the region
driven by sales of architectural shade fabrics for use in large
scale shading projects, including public areas, car parks and
Group working capital increased year-on-year as a result of
unfavourable exchange rate translation, increased receivables
following higher year-end sales and higher inventory which
was due partly to recent Australian new product range wins.
Despite this, operating cash flow for the year was $4.4 million,
with positive operating cash generation of $13.4 million in
the second half. Strong sales performance in the Americas
8 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only and Middle East regions and continuing cost reductions in
Australasia were the key drivers of this performance.
In the second half of FY2015 the company reduced inventory
by $9.5 million despite exchange translation and revaluations,
driven by disciplined focus on inventory management, with an
increase in inventory turn and a decrease in aged inventory.
These improvements reflect the continuing benefits of the
company’s strategy to globalise the supply chain and increase
its information technology capabilities.
Reconciliation of Underlying Result to
Statutory Result
During the period, the company incurred non-recurring costs
related to restructuring and the re-launch of the company’s pool
fencing and balustrade ranges. The table below reconciles the
underlying results to the statutory results.
Underlying profit, EBITDA and EBIT are the Statutory profit,
EBITDA and EBIT respectively adjusted for non-recurring costs
related to restructuring and the re-launch of the company’s
pool fencing and balustrade ranges. The Company believes
that underlying profit, EBITDA and EBIT provide a better
understanding of its financial performance and allows for a
more relevant comparison of financial performance between
financial periods.
Underlying profit, EBITDA and EBIT are useful as they remove
significant items that are material items of revenue or expense
that are unrelated to the underlying performance of the
business thereby facilitating a more representative comparison
of financial performance between financial periods.
Underlying profit is presented with reference to the Australian
Securities and Investments Commission Regulatory Guide 230
“Disclosing non- IFRS financial information” issued in December
2011. The Company’s policy for reporting underlying profit
is consistent with this guidance. This information has not been
subject to audit or review by the external auditor.
Statutory
Restructuring costs
Product re-launch costs
Underlying
EBITDA
A$ million
EBIT
A$ million
Profit before tax
A$ million
Profit after tax
A$ million
15.7
0.3
2.2
18.2
8.0
0.3
2.2
10.6
6.2
0.3
2.2
8.7
5.2
0.2
1.5
6.9
Right: ZONE
Interiors window
furnishings
GALE PACIFIC LIMITED 2015 ANNUAL REPORT 9
For personal use only Board of Directors
David Allman
B.Sc
Chairman and
Non Executive Director
since November 2009
John Murphy
CA, FCPA, B.Comm, M.Comm
Non Executive Director
since August 2007
David was Managing Director of McPherson’s Limited from
1995 to 2009 and prior to that was Managing Director of
Cascade Group Limited for 7 years. Before this David held
senior positions with Elders IXL Limited and Castlemaine
Tooheys Limited. David holds a degree in engineering and prior
to obtaining general management positions held managerial
roles in production management, finance and marketing. David
is Chairman of Muir Engineering Pty Ltd.
David is the Chairman of the Company’s Nomination Committee
and is a member of the Audit and Risk and Remuneration
Committees.
John was the Managing Director of Investec Wentworth Private
Equity Limited from 2002 until 30 September 2011. Also
on that date John changed from being an executive to a non
executive director of Investec Bank (Australia) Limited. John
is currently a director of Ariadne Australia Limited and Vocus
Communications Limited.
John is the Chairman of the Company’s Remuneration
Committee and is a member of the Audit and Risk and
Nomination Committees.
Nick Pritchard
B.Bus (Marketing)
Group Managing Director
George Richards
CPA
Non Executive Director
since May 2004
Nick joined GALE Pacific in August 2013 as Managing Director –
Australia and New Zealand and was appointed Group Managing
Director in August 2014. Prior to joining GALE, Nick held senior
leadership positions at Newell Rubbermaid, most recently,
Vice-President/General Manager – Australia and New Zealand
where he led all business segments. Nick has considerable
local and international experience leading a highly profitable,
high growth organisation. Nick was formerly Marketing Manager
and Product Manager of GALE Pacific between 1996 and 2003
and developed the Coolaroo brand and many of the company’s
highly successful products.
George was the Chief Executive of Mitre 10 South West Ltd
during the 1990’s and was previously the Managing Director of
Cooper Tools, a market leader in hand tools manufacture and
distribution. George has had over 50 years experience in retail,
marketing, manufacturing and distribution. George is a board
member of The Alfred Foundation and an Associate Member of
the Australian Society of Accountants (CPA).
George is Chairman of the Company’s Audit and Risk
Committee and is a member of the Nomination and
Remuneration Committees.
Peter Landos
B.Econ., CA
Non Executive Director
since May 2014
Peter is the Chief Operating Officer of the Thorney Investment
Group of Companies with whom he has been since September
2000, having previously worked at Macquarie Bank Limited.
Peter has extensive business and corporate experience
specialising in advising boards and management in mergers and
acquisitions, divestments, business restructurings and capital
markets. Peter is also a Non Executive Chairman of Adacel
Technologies Limited.
Peter is a member of the Company’s Nomination, Audit and Risk
and Remuneration Committees.
10 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only Executive Leadership
Matt Parker
Chief Financial Officer
Bernie Wang
General Manager –
China Operations
Matt joined GALE Pacific in April 2015. Matt is an experienced
finance professional having held key finance roles at Ford
Motor Company Australia, Nissan Motor Company Australia and
Cadbury Schweppes. Prior to joining GALE, Matt was the CFO
of Paragon Care Ltd (ASX:PGC). Matt is a certified practising
accountant and holds a Bachelor’s Degree in Business and Arts
(Japanese). He is a registered member of CPA Australia and an
affiliate of the Securities Institute of Australia.
Bernie joined GALE Pacific in February 2009 and has 20 years
experience in the chemical fibre textile industry. Bernie started his career
with a large tyre cord manufacturer in China and also held roles in plant
management and technical leadership. Bernie then spent four years
with DuPont Fibre as Operations Manager and Maintenance Manager.
Before joining GALE, Bernie worked for 5 years for a German company
in China where he was responsible for the design and construction of
the factory and the establishment of manufacturing operations.
Anthony Richardson
General Manager –
Australia and
New Zealand
Bruno Marotta
General Manager –
Supply Chain
Anthony joined GALE Pacific in June 2012 and has more
than 20 years’ experience in Sales, Marketing & General
Management across the consumer goods, packaging and
consulting industries. He has held senior management roles
including General Manager – China for DuluxGroup along with
Marketing Director and the National Sales Manager role at
Yates. Anthony has a track record of driving successful and
positive change programs and a global perspective having lived
and worked in China, North America, the UK and Australia.
Martin Denney
General Manager –
Americas
Bruno joined GALE Pacific in October 2014 and has over 30
years’ experience in the supply chain arena. Bruno spent 18
years in senior supply chain roles at America Tool Company/
Newell Rubbermaid where his responsibilities included leading
warehouse facilities, logistics, procurement and customer
service functions across the Asia Pacific region.
Ali Haidar
General Manager –
Middle East &
North Africa
Martin joined GALE Pacific in June 2006 and 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. Martin has held senior management roles
including General Manager of Socomin, a branded food import
and distribution division of Pacific Dunlop Group. Other roles
include National Sales and Marketing Manager at Dennis
Family Corporation and Business Development Manager at
Adacel Technologies.
Ali Joined GALE Pacific in August 2004 and has 10 years’
experience in sales and marketing with a strong record of
business development and project management. Ali has a
successful record of growing the Middle East business.
Ted Varani
General Manager –
EurAsia
Ted joined GALE Pacific in April 2015. Originally from the USA, for
the past 20 years Ted has been involved in international sales,
cross-border management and entrepreneurialism based out
of the USA, Japan, France and China. Ted has been involved in
projects in the fields of predictive analytics, mobile apps, public
utilities, and medical devices, with a notable period of 9 years
within the Veolia Group where he served as worldwide Business
Development Manager as well as General Manager of a US $50M
Chinese subsidiary.
GALE PACIFIC LIMITED 2015 ANNUAL REPORT 11
For personal use only Corporate
Governance
The Company’s Directors and management are committed to conducting the Group’s business in an ethical manner and in
accordance with the highest standards of corporate governance. The Company has adopted and substantially complies with the ASX
Corporate Governance Principles and Recommendations (Third Edition) (Recommendations) to the extent appropriate to the size and
nature of the Group’s operations.
The Company has prepared a statement which sets out the corporate governance practices that were in operation throughout the
financial year for the Company, identifies any Recommendations that have not been followed, and provides reasons for not following
such Recommendations (Corporate Governance Statement).
In accordance with ASX Listing Rules 4.10.3 and 4.7.4, the Corporate Governance Statement will be available for review on GALE
Pacific’s website (www.galepacific.com), and will be lodged together with an Appendix 4G with ASX at the same time that this Annual
Report is lodged with ASX.
The Appendix 4G will particularise each Recommendation that needs to be reported against by GALE Pacific, and will provide
shareholders with information as to where relevant governance disclosures can be found.
The Company’s corporate governance policies and charters are all available on GALE Pacific’s website (www.galepacific.com).
12 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Directors’
Report
The Directors of Gale Pacific Limited (“the Company”) present their annual financial report for the Company and its controlled entities
(“the Group”) for the financial year ended 30 June 2015.
The Directors in office at any time during or since the end of the year to the date of this report are:
David Allman, B.Sc.
Chairman and Non Executive Director since November 2009
David was Managing Director of McPherson’s Limited from 1995 to 2009 and prior to that was Managing Director of Cascade Group
Limited for 7 years. Before this David held senior positions with Elders IXL Limited and Castlemaine Tooheys Limited. David holds a
degree in engineering and prior to obtaining general management positions held managerial roles in production management, finance
and marketing. David is Chairman of Muir Engineering Pty Ltd.
In the three years prior to 30 June 2015 Peter was also a director of McPherson’s Group Limited.
David is Chairman of the Company’s Nomination Committee and is a member of the Audit and Risk and Remuneration Committees.
Nick Pritchard, B Bus. (Marketing)
Group Managing Director appointed 22 August 2014
Nick joined GALE in August 2013 as Managing Director Australia and New Zealand and was appointed Group Managing Director on 22
August 2014. Prior to joining GALE, Nick held senior leadership positions at Newell Rubbermaid, most recently, Vice-President/General
Manager – Australia and New Zealand where he led all business segments for the Australia and New Zealand markets. Nick has
considerable local and international experience in brand development, business consolidation and leading a highly profitable, high
growth organisation. Nick was formerly Marketing Manager and Product Manager of GALE Pacific between 1996 and 2003 and
developed the Coolaroo brand and many of the company’s highly successful products.
No other directorships of listed companies were held by Nick at any time during the three years prior to 30 June 2015.
Peter Landos, B.Econ., CA
Non Executive Director since May 2014
Peter is the Chief Operating Officer of the Thorney Investment Group of Companies with whom he has been since September 2000,
having previously worked at Macquarie Bank Limited. Peter has extensive business and corporate experience specialising in advising
boards and management in mergers and acquisitions, divestments, business restructurings and capital markets. Peter is also a Non
Executive Chairman of Adacel Technologies Limited.
In the three years prior to 30 June 2015 Peter was also a director of McPherson’s Group Limited, Rattoon Holdings Limited and Adacel
Technologies Limited.
Peter is a member of the Company’s Nomination, Risk, Audit and Remuneration Committees.
13 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Directors’ Report
Continued
John Murphy, CA, FCPA, B.Comm, M.Comm
Non Executive Director since August 2007
John was the Managing Director of Investec Wentworth Private Equity Limited from 2002 until 30 September 2011. Also on that date
John changed from being an executive to a non executive director of Investec Bank (Australia) Limited. John is currently a director of
Ariadne Australia Limited and Vocus Communications Limited.
In the three years prior to 30 June 2015 John was also a director of Clearview Wealth Limited, Kresta Holdings Limited and Redflex
Holdings Limited.
John is the Chairman of the Company's Remuneration Committee and is a member of the Audit and Risk and Nomination Committees.
George Richards, CPA
Non Executive Director since May 2004
George was the Chief Executive of Mitre 10 South West Ltd during the 1990’s and was previously the Managing Director of Cooper
Tools, a market leader in hand tools manufacture and distribution. George has had over 50 years experience in retail, marketing,
manufacturing and distribution. George is a board member of The Alfred Foundation and an Associate Member of the Australian
Society of Accountants (CPA).
No other directorships of listed companies were held by George at any time during the three years prior to 30 June 2015.
George is Chairman of the Company’s Audit and Risk Committee and is a member of the Nomination and Remuneration Committees.
Ms Sophie Karzis, B Juris LLB
Company Secretary
Sophie was appointed as Company Secretary in June 2004. Sophie is a practising lawyer who holds roles at a number of public and
private companies.
State of Affairs
There were no significant changes in the state of affairs of the Group during the financial year.
Events Subsequent to Balance Date
Apart from the dividend declared as discussed above, no other matter or circumstance has arisen since 30 June 2015 that has
significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs
in future financial years.
Likely Developments
Disclosure of information regarding likely developments in the operations of the Group in future financial years has been made in part
in the Chairman’s Letter 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.
Environmental Regulation and Performance
The Group’s operations are not subject to any significant environmental regulations under the Commonwealth or State legislation. 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.
14 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Dividends
Dividends paid to members during the financial year were as follows:
Final ordinary dividend for the year ended 30 June 2014 of 1.35 cent per share paid on1 December 2014
4,016
7,883
In addition to the above dividends, on the 24 of August the Directors declared a dividend of 1 cent per share to the holders of fully
paid ordinary shares in respect of the year ended 30 June 2015, payable on 1 December 2015 to shareholders on the register at 17
November 2015. The final dividend will be unfranked. This dividend has not been included as a liability in these financial statements.
The total estimated dividend to be paid is $2,974,744.
For the full year, the dividend of 1 cent per share has been declared on earnings of 1.94 cents per share.
2014 / 2015
($000)
2013 / 2014
($000)
Share Based Payments
Performance Rights
The number of performance rights on issue at the date of this report is 2,364,138. No amount is payable on the vesting of a
performance right. Each performance right entitles the holder to one (1) ordinary share in GALE Pacific Limited in the event that the
performance right is exercised. Performance rights carry no rights to dividends and no voting rights.
2,690,965 performance rights were granted to executives and the Group Managing Director on 11 December 2014. The performance
rights will vest subject to a continuation of employment to 30 June 2017 and the satisfying of relevant performance hurdles based on
the Group’s diluted earnings per share over the three year period from 1 July 2014 to 30 June 2017. None of these performance
rights can vest until 30 June 2017 and expire on 1 December 2017.
As at 30 June 2015, 326,827 of these performance rights lapsed as the time based performance hurdle was not met. A further
3,700,000 performance rights lapsed during the year to 30 June 2015 either as the relevant personnel ceased employment with the
Company or because the previous Performance Rights were cancelled and replaced with the current Performance Rights.
The performance rights are subject to a continuation of employment for three years and then the satisfying of relevant performance
hurdles based on improvements in the Group’s diluted earnings per share over the three year period.
Further details of the options and performance rights movements during the reporting period are disclosed in the Remuneration
Report.
Indemnification of Officers and Auditors
During the financial year, the Company paid a premium in respect of a contract insuring the Directors of the Company, the Company
Secretary and all Executive Officers of the Company and of any related body corporate against a liability incurred as a Director,
Secretary or Executive Officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of
the nature of the liability and the amount of the premium.
The Company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the
Company or of any related body corporate against a liability incurred as an officer or auditor.
Directors’ Shareholdings
The following table sets out each Director’s relevant interest in shares, options and performance rights in shares of the Company as at
the date of this report.
Directors
D Allman
P Landos
J Murphy
N Pritchard
G Richards
P McDonald
Fully Paid Ordinary Shares
Options
Performance Rights
1,443,804
Nil
3,316,599
212,804
491,899
2,337,874 1
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
865,385
Nil
Nil
1 As at resignation date of 22 August 2014
15 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Directors’ Report
Continued
Directors’ Meetings
The table below sets out the attendance by Directors.
Directors’ Meetings
Audit and Risk Committee
Meetings
Remuneration Committee
Meetings
Nomination Committee
Meetings
Directors
D Allman
P Landos
J Murphy
G Richards
N Pritchard
P McDonald
Attended
No of
Meetings
Eligible to
Attend
12
12
12
12
9
3
10
11
12
11
9
2
No of
Meetings
Eligible to
Attend
2
2
2
2
N/A
N/A
Attended
2
2
2
2
N/A
N/A
No of
Meetings
Eligible to
Attend
2
2
2
2
N/A
N/A
Attended
2
1
2
2
N/A
N/A
No of
Meetings
Eligible to
Attend
1
1
1
1
N/A
N/A
Attended
1
1
1
1
N/A
N/A
The members of the Audit and Risk Committee are David Allman, Peter Landos, John Murphy and George Richards. The Chairman of
the Audit and Risk Committee is George Richards.
The members of the Remuneration Committee are David Allman, Peter Landos, John Murphy and George Richards. The Chairman of
the Remuneration Committee is John Murphy.
The members of the Nomination Committee are David Allman, Peter Landos, John Murphy and George Richards. The Chairman of the
Nomination Committee is David Allman.
Remuneration Report
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;
Benefits, including the provision of motor vehicles and incentive schemes, including performance rights; and
Performance rights, if the performance criteria and any Board discretion are satisfied, entitle an executive to be issued shares
in the Company at no cost to the executive. Shares are issued subsequently after the time all performance rights vesting
conditions are met
16 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Relationship between the remuneration policy and company performance
The table below set out summary information about the consolidated entity’s earnings and movements in shareholder wealth for the
five years to 30 June 2015:
Sales
Net profit before tax
Net profit after tax
Share price at start of year
Share price at end of year
Interim dividend
Final dividend
Basic earnings per share
Diluted earnings per share
Remuneration Practices
30 June 2015
30 June 2014
30 June 2013
30 June 2012
30 June 2011
147,993
6,221
5,170
23 cents
17 cents
-
1.0 cent
1.74 cents
1.72 cents
137,304
10,988
8,233
26 cents
23 cents
1.30 cents
1.35 cents
2.77 cents
2.72 cents
119,988
12,016
9,084
24 cents
26 cents
1.20 cents
1.35 cents
3.07 cents
3.00 cents
110,473
11,454
8,477
21 cents
24 cents
1.20 cents
1.20 cents
2.86 cents
2.45 cents
95,580
9,061
7,100
16 cents
21 cents
1.00 cents
1.00 cents
2.42 cents
2.20 cents
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, 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.
Remuneration Structure
In accordance with best practice corporate governance, the structure of Non Executive Directors and Senior Managers remuneration is
separate and distinct.
Non Executive Director Remuneration
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
The Company’s Constitution and the Australian Securities Exchange Listing Rules specify that the aggregate remuneration of Non
Executive Directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is
then divided between the Directors as agreed. The last determination was at the Annual General Meeting held on 26 October 2012
when shareholders’ approved the Company’s constitution which provides for an aggregate remuneration of $500,000 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.
Senior Manager and Executive Director Remuneration
Objective
The Group aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities
within the Group. The objective of the remuneration policy is:
Reward executives for Group and individual performance;
Align the interests of the executives with those of the shareholders; and
Ensure that total remuneration is competitive by market standards.
17 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Directors’ Report
Continued
Structure
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.
(a).
Share Based Payments
The Group maintains a performance rights scheme for certain staff and executives, including the Group Managing Director, as
approved by shareholders at an annual general meeting. These schemes are designed to reward key personnel when the
Group meets performance hurdles increasing the diluted earnings per share and relate to:
Improvement in earnings per share; and
Improvement in return to shareholders.
The number of unissued ordinary shares under the performance rights scheme at 30 June 2015 was 2,364,138. All of these
performance rights were granted on 11 December 2014 and will not vest until the time the Company’s 2017 Annual Report is
released to the ASX (on or around 20 September 2017). Each performance right entitles the holder to one (1) ordinary share
in Gale Pacific Limited and is subject to satisfying the relevant performance hurdles based on improvements in the Group’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 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.
(b).
Cash Bonuses
One year short term performance cash bonus payments are awarded in accordance with the company’s remuneration policy.
The budget targets for each business unit and the company overall is established each year by the Board. The performance
criteria include sales and earnings before interest and tax growth and working capital management. For corporate executives,
the performance criteria include growth in earnings before interest and tax and profit after tax.
Key Management Personnel of the Group Who Held Office During the Year
Directors
D Allman (Chairman Non Executive)
P Landos (Non Executive)
J Murphy (Non Executive)
G Richards (Non Executive)
N Pritchard (Group General Manager) (Appointed 22 August 2014)
P McDonald (Managing Director and Chief Executive Officer) (Resigned 22 August 2015)
Executives
M Parker (Chief Financial Officer)
A Richardson (General Manager Australia & New Zealand)
M Denney (General Manager – Americas))
B Wang (General Manager – China)
B Marotta (General Manager – Supply Chain)
A Haidar (General Manager – Middle East & North Africa)
T Varani (General Manager – EurAsia)
18 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
The following table discloses the remuneration of the Directors of the Company:
2014 / 2015
Short Term Benefits
Post
Employment
Share Based
Payments
Termination
Benefits
Total
Performance Related
Directors
Salary &
Fees
$
Bonus
$
Non
Monetary
$
Super
Rights
$
$
Executive Directors
N Pritchard 1
P McDonald 2
343,263
362,059
Non-Executive Directors
D Allman
G Richards
J Murphy
P Landos
Total
114,220
50,000
77,626
68,493
1,015,661
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,000
12,500
10,845
35,000
7,374
6,507
32,683
-
-
-
-
-
Total
Rights
$
%
%
400,946
8.2%
8.2%
$
-
235,813
610,372
-
-
-
-
125,065
85,000
85,000
75,000
-
-
-
-
-
-
-
-
-
-
97,226
32,683
235,813
1,381,383
2.3%
2.3%
2013 / 2014
Short Term Benefits
Post
Employment
Share Based
Payments
Termination
Benefits
Total
Performance Related
Directors
Salary &
Fees
$
Bonus
$
Non
Monetary
$
Executive Directors
P McDonald
495,500
Non-Executive Directors
D Allman
G Richards
J Murphy
P Landos
Total
114,416
51,314
77,803
11,442
750,475
-
-
-
-
-
-
-
-
-
-
-
-
Super
Rights
Total
Rights
$
25,000
10,584
33,686
7,197
1,058
77,525
$
-
-
-
-
-
-
$
$
%
%
-
-
-
-
-
-
520,500
125,000
85,000
85,000
12,500
828,000
-
-
-
-
-
-
-
-
-
-
1 Mr Pritchard commenced employment as Managing Director – Australia & New Zealand on 19 August 2013 and became a Director on 22 August 2014.
2 Mr McDonald resigned from the company on 22 August 2014.
19 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Directors’ Report
Continued
The following table discloses the remuneration of the Group’s key management personnel:
2014 / 2015
Short Term Benefits
Post
Employment
Share Based
Payments
Termination
Benefits
Total
Performance Related
Key
Management
Personnel
Salary &
Fees
$
Bonus
$
Non
Monetary
$
M Denney 1
319,933
94,381
18,202
101,053
158,513
185,235
-
-
-
-
-
-
Super
Rights
Total
Rights
$
-
5,805
16,057
22,502
$
12,985
-
10,919
$
%
%
-
-
-
445,501
24.1%
2.9%
106,858
-
-
185,489
5.8%
5.8%
-
39,795
247,532
-
-
A Richardson8
229,669
138,697
29,127
39,184
-
3,753
57,795
47,170
32,588
-
-
-
-
-
-
-
6,953
223,724
32,221
22,763
5,490
5,000
-
-
21,819
13,110
-
-
-
9,359
-
-
-
-
-
-
210,761
15.6%
1.8%
63,285
52,170
-
-
-
-
264,598
5.0%
5.0%
39,541
288,067
-
14.4%
10.8%
-
3.2%
2.6%
1,494,377
155,729
87,102
76,673
50,126
39,795
1,903,802
A Scott 2
B Marotta 3
H Abbey 4
A Haidar 5
M Parker 6
N Pritchard 7
E Varani9
B Wang10
Total
2013 / 2014
Short Term Benefits
Post
Employment
Share Based
Payments
Termination
Benefits
Total
Performance Related
Super
Rights
Total
Rights
Key
Management
Personnel
H Abbey
J Cox11
Salary &
Fees
$
186,205
158,966
Bonus
$
-
-
Non
Monetary
$
-
-
M Denney
292,099
76,484
13,135
A Scott
N Pritchard
B Wang
Total
183,302
286,173
-
-
-
-
216,800
53,522
14,351
1,323,545
130,006
27,486
63,247
$
17,224
8,333
-
16,956
20,734
-
$
-
-
-
-
-
-
-
$
-
203,429
50,000
217,299
%
-
-
-
-
-
-
381,718
20.0%
200,258
306,907
-
-
284,673
18.8%
50,000
1,594,284
%
-
-
-
-
-
-
1 Mr Denney is General Manager – Americas and is remunerated in United States dollars converted to Australian dollars in the table above.
2 Mr Scott was the General Manager International Sales and Marketing and was located in Australia. Mr Scott resigned from the company on 31 October 2015.
3 Mr Marotta is General Manager – Supply Chain. He commenced employment on 6 October 2014. He is located in Australia.
4 Mr Abbey was the Chief Financial Officer. He resigned from the company on 27 March 2015.
5 Mr Haidar is the General Manager – Middle East and North Africa and is based in Dubai and remunerated in United States dollars converted to Australian dollars in the table
above.
6 Mr Parker is the Chief Financial Officer. He commenced employment on 7 April 2015.
7 Mr Pritchard is the Group Managing Director and commenced employment as Managing Director – Australia & New Zealand on 19 August 2013 and became a Director on 22
August 2014.
8 Mr A Richardson is the General Manager, Australia and New Zealand and is located in Australia. He commenced in this role on 25 August 2014.
9 Mr E Varani is the General Manager – EurAsia. He commenced employment on 20 April 2015. He is based in the Shanghai and remunerated in United States dollars converted
to Australian dollars in the table above.
10 Mr Wang is the General Manager – China and is based in China and remunerated in Chinese renminbi converted to Australia dollars in the above table.
11 Mr Cox was the Chief Financial Officer and retired on 31 October 2013.
20 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Directors’ and Executives’ Equity Holdings:
Fully Paid Ordinary Shares
2014 / 2015
Executive Directors
N Pritchard
Non-Executive Directors
D Allman
J Murphy
G Richards
P Landos
Executives
M Parker
H Abbey
M Denney
A Scott
B Wang
Total
2013 / 2014
Executive Directors
P McDonald
Non Executive Directors
D Allman
J Murphy
G Richards
P Landos
Executives
J Cox
H Abbey
M Denney
N Pritchard
A Scott
B Wang
Total
Balance
30 June 2014
No.
Granted as
Compensation
No.
Received on
Exercise of Options
No.
Other
Movements
No.
Balance
30 June 2015
No.
-
1,000,000
2,816,599
491,899
-
-
-
800,000
-
1,500,000
6,608,498
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
212,804
212,804
443,804
500,000
-
-
-
-
-
-
-
-
1,443,804
3,316,599
491,899
-
-
-
800,000
-
1,500,000
7,765,106
Balance
30 June 2013
No.
Granted as
Compensation
No.
Received on
Exercise of Options
No.
Other
Movements
No.
Balance
30 June 2014
No.
2,337,874
1,000,000
3,684,579
491,899
-
1,448,472
-
800,000
-
-
1,500,000
11,262,824
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
245,000
-
-
-
(867,980)
-
-
2,337,874
1,000,000
2,816,599
491,899
-
(472,824)
975,648
-
-
-
-
-
-
800,000
-
245,000
1,500,000
245,000
(1,340,804)
10,167,020
Share Based Compensation
The terms and conditions of each grant of performance rights granted but not vested as at 30 June 2015 affecting remuneration in
the current or a future reporting period are as follows:
Grant Date
Value per performance rights at grant date
11 December 2014
0.1751
Each performance right entitles the holder to one (1) ordinary share in GALE Pacific in the event that the performance rights are
exercised. Performance rights carry no rights to dividends and no voting rights.
The performance rights granted on 11 December 2014 are subject to a continuation of employment to 30 June 2017 and then the
satisfying of relevant performance hurdles based on improvements in the Group’s diluted earnings per share over the three year
period from 1 July 2014 to 30 June 2017. None of these performance rights can vest until the Company releases its FY17 Annual
Report to the ASX (on or around 20 September 2017) and expire on 1 December 2017.
21 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Directors’ Report
Continued
Directors’ and Executives’ Equity Holdings, Compensation Options and Performance Rights:
Granted and Vested During the Year
2014 / 2015
Vested
Number
Granted
Number
Grant Date
Value Per
Option /
Right at
Grant Date
Executive Directors (Performance Rights)
Terms and Conditions for Each Grant
Exercise
Price
Expiry Date
First Exercise
Date
Last Exercise
Date
N Pritchard
-
865,385
11/12/2014
$0.1751
nil
1/12/2017
20/09/2017
20/09/2017
Non-Executive Directors
None
Management Personnel (Performance Rights)
Other
Management
Total
-
-
1,498,753
11/12/2014
$0.1751
nil
1/12/2017
20/09/2017
20/09/2017
2,364,138
2013 / 2014
Vested
Number
Granted
Number
Grant Date
Value Per
Option /
Right at
Grant Date
Terms and Conditions for Each Grant
Exercise
Price
Expiry Date
First Exercise
Date
Last Exercise
Date
Executive Directors (Performance Rights)
None
Non-Executive Directors
None
Executives (Performance Rights)
N Pritchard
-
750,000
03/10/2013
$0.1994
Nil
31/08/2023
31/08/2016
03/10/2023
Other Management Personnel (Performance Rights)
Other
Management
Total
-
-
550,000
03/10/2013
$0.1994
Nil
31/08/2023
31/08/2016
03/10/2023
1,300,000
Performance rights in the prior corresponding period were cancelled on the 10 October 2014.
22 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Directors’ and Executives’ Equity Holdings, Compensation Options and Performance Rights:
Granted and Vested During the Year
2014 / 2015
Vested
Number
Granted
Number
Grant Date
Value Per
Option /
Right at
Grant Date
Executive Directors (Performance Rights)
Terms and Conditions for Each Grant
Exercise
Price
Expiry Date
First Exercise
Date
Last Exercise
Date
N Pritchard
-
865,385
11/12/2014
$0.1751
nil
1/12/2017
20/09/2017
20/09/2017
Non-Executive Directors
None
Management Personnel (Performance Rights)
Other
Management
Total
-
-
1,498,753
11/12/2014
$0.1751
nil
1/12/2017
20/09/2017
20/09/2017
2,364,138
2013 / 2014
Vested
Number
Granted
Number
Grant Date
Value Per
Option /
Right at
Grant Date
Terms and Conditions for Each Grant
Exercise
Price
Expiry Date
First Exercise
Date
Last Exercise
Date
Executive Directors (Performance Rights)
None
Non-Executive Directors
None
Executives (Performance Rights)
N Pritchard
-
750,000
03/10/2013
$0.1994
Nil
31/08/2023
31/08/2016
03/10/2023
Other Management Personnel (Performance Rights)
Other
Management
Total
-
-
550,000
03/10/2013
$0.1994
Nil
31/08/2023
31/08/2016
03/10/2023
1,300,000
Performance rights in the prior corresponding period were cancelled on the 10 October 2014.
23 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Directors’ Report
Continued
Directors’ and Executives’ Equity Holdings Compensation Options and Performance Rights: Movements During the Year
2014 / 2015
Balance
1 July 2014
Granted as
Compensation
Exercised
Lapsed
Net Other
Change
Balance
30 June 2015
No.
No.
No.
No.
No.
No.
Balance
Held
Nominally
No.
Executive Directors (Performance Rights)
N Pritchard
562,500
865,385
P McDonald
600,000
-
Non-Executive Directors
None
Executives (Performance Rights)
M Denney
B Wang
A Scott
H Abbey
275,000
275,000
275,000
343,805
247,793
-
-
326,827
Other Management Personnel (Performance Rights)
Other
Management
1,712,500
907,155
Total
3,700,000
2,690,965
-
-
-
-
-
-
-
-
(562,500)
(600,000)
(275,000)
(275,000)
(275,000)
(326,827)
(1,712,500)
(4,026,827)
-
-
-
-
-
-
-
865,385
-
343,805
247,793
-
-
907,155
2,364,138
-
-
-
-
-
-
-
2013 / 2014
Balance
1 July 2013
Granted as
Compensation
Exercised
Lapsed
Net Other
Change
Balance
30 June 2014
No.
No.
No.
No.
No.
No.
Balance
Held
Nominally
No.
Executive Directors (Performance Rights)
P McDonald
900,000
-
(300,000)
Non Executive Directors
None
Executives (Performance Rights)
J Cox
562,500
N Pritchard
H Abbey
M Denney
B Wang
A Scott
-
-
412,500
412,500
657,500
-
750,000
-
-
-
-
-
-
-
-
-
(562,500)
(187,500)
-
(137,500)
(137,500)
(245,000)
(137,500)
Other Management Personnel (Performance Rights)
Other
Management
3,677,500
550,000
(490,000)
(2,025,000)
Total
6,622,500
1,300,000
(735,000)
(3,487,500)
-
-
-
-
-
-
-
-
-
600,000
-
562,500
-
275,000
275,000
275,000
1,712,500
3,700,000
-
-
-
-
-
-
-
-
-
Value of Lapsed
Options/Rights
$
112,163
88,500
40,563
40,563
40,563
-
331,230
653,580
Value of Lapsed
Options/Rights
$
(44,250)
(82,969)
(37,388)
-
(20,281)
(20,281)
(20,281)
(305,824)
(531,274)
24 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Employment Agreements
Executives serve under terms and conditions contained in a standard executive employment agreement, that allows for termination
under certain conditions with two to three months’ notice. The agreements include restraints of trade on the employee as well as
confidentiality and intellectual property agreements.
Indemnity and Insurance of Officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the
Company against a liability 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.
Indemnity and Insurance of Auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company
or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
Proceedings on Behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of
the Company, or to 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 part of those proceedings.
Non Audit Services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are
outlined in note 31 to the financial statements.
The Directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or
firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act
2001.
The Directors are of the opinion that the services as disclosed in note 30 to the financial statements do not compromise the external
auditor's independence requirements of the Corporations Act 2001 for the following reasons:
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the
auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics
for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or
auditing the auditor's own work, acting in a management or decision-making capacity for the Company, acting as advocate
for the Company or jointly sharing economic risks and rewards.
Officers of the Company who are Former Partners of Deloitte Touche Tohmastsu
There are no officers of the Company who are former partners of Deloitte Touche Tohmastsu.
25 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Directors’ Report
Continued
Rounding of Amounts
The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating
to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or
in certain cases, the nearest dollar.
Auditor's Independence Declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on the
following page.
Auditor
Deloitte Touche Tohmastsu continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the Directors;
David Allman
Chairman
26 August 2015
26 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
27 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
28 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
29 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Directors’ Declaration
In the Directors’ opinion:
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June 2015 and
of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
David Allman
Chairman
26 August 2015
30 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Financial
Report
Contents
32
Statement of Profit or Loss and Other Comprehensive Income
33
Statement of Financial Position
34
Statement of Changes in Equity
35
Statement of Cash Flows
36 Notes to the Financial Statements
71
Additional Securities Exchange Information
31 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2015
Revenue
Sale of goods
Other income
Expenses
Raw materials and consumables used
Employee benefits expense
Depreciation and amortisation expense
Marketing and advertising
Occupancy costs
Warehouse and related costs
Other expenses
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year attributable to the owners of Gale Pacific Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Net change in the fair value of cash flow hedges taken to equity, net of tax
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners of Gale Pacific Limited
Basic earnings per share
Diluted earnings per share
Note
Consolidated
2015
$'000
2014
$'000
147,993
137,304
2,554
845
(76,393)
(29,545)
(7,636)
(4,502)
(3,534)
(11,100)
(9,796)
(1,820)
(69,014)
(28,742)
(5,445)
(2,864)
(3,096)
(10,570)
(6,289)
(1,141)
6,221
10,988
(1,051)
(2,755)
5,170
8,233
1,462
11,447
(1,629)
(1,488)
12,909
(3,117)
18,079
5,116
Cents
Cents
1.74
1.72
2.77
2.72
5
6
6
7
26
25
38
38
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
32 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Statement of financial position
As at 30 June 2015
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Current tax assets
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
Note
Consolidated
2015
$'000
2014
$'000
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
17,769
27,081
39,229
1,363
3,147
819
89,408
34,872
25,311
60,183
13,058
19,751
34,851
-
1,721
2,765
72,146
30,469
22,983
53,452
149,591
125,598
12,887
33,641
-
2,179
1,820
50,527
783
397
96
1,276
13,309
23,584
709
1,071
1,959
40,632
690
550
90
1,330
51,803
41,962
97,788
83,636
71,485
1,598
24,705
71,485
(11,415)
23,566
97,788
83,636
Comparative deferred tax balances have been adjusted with the offset appearing in Retained Earnings. Please refer to note 22 of this report for further detail.
The above statement of financial position should be read in conjunction with the accompanying notes
33 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Statement of changes in equity
For the year ended 30 June 2015
Consolidated
Balance at 1 July 2013
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 24)
Share-based payments (note 39)
Amounts recognised directly in equity
Statutory transfer to reserves
Dividends paid (note 27)
Issued
capital
$'000
Reserves
$'000
Retained
profits
$'000
Total
equity
$'000
71,338
(8,079)
23,374
86,633
-
-
-
147
-
-
-
-
-
(3,117)
8,233
-
8,233
(3,117)
(3,117)
8,233
5,116
(147)
(87)
-
15
-
-
-
(143)
(15)
(7,883)
-
(87)
(143)
-
(7,883)
Balance at 30 June 2014
71,485
(11,415)
23,566
83,636
Consolidated
Balance at 1 July 2014
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share-based payments (note 39)
Statutory transfers from retained earnings
Dividends paid (note 27)
Issued
capital
$'000
Reserves
$'000
Retained
profits
$'000
Total
equity
$'000
71,485
(11,415)
23,566
83,636
-
-
-
-
-
-
-
12,909
5,170
-
5,170
12,909
12,909
5,170
18,079
89
15
-
-
(15)
(4,016)
89
-
(4,016)
Balance at 30 June 2015
71,485
1,598
24,705
97,788
The above statement of changes in equity should be read in conjunction with the accompanying notes
34 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Statement of cash flows
For the year ended 30 June 2015
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Other revenue
Interest and other finance costs paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Dividends paid
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Note
Consolidated
2015
$'000
2014
$'000
149,555
(142,685)
144,130
(134,711)
6,870
-
1,455
(2,430)
(1,522)
9,419
6
-
(1,140)
(4,116)
4,373
4,169
(3,953)
(2,572)
5
(1,426)
(2,003)
56
(6,520)
(3,373)
10,150
(4,016)
9,899
(7,883)
6,134
2,016
3,987
13,058
724
2,812
11,187
(941)
37
14
15
27
Cash and cash equivalents at the end of the financial year
8
17,769
13,058
The above statement of cash flows should be read in conjunction with the accompanying notes
35 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 1. General information
The financial report covers Gale Pacific Limited ('Company' or 'parent entity') and controlled entities as a consolidated entity (referred to as the 'Group'). The
financial statements are presented in Australian dollars, which is Gale Pacific Limited's functional and presentation currency.
Gale Pacific Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office is:
145 Woodlands Drive
Braeside, VIC 3195
A description of the nature of the Group's operations and its principal activities are included in the Directors' report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 24 August 2015. The Directors have the power to amend and
reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the
years presented, unless otherwise stated.
New, revised or amending Accounting Standards and Interpretations adopted
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board
('AASB') that are mandatory for the current reporting period. The adoption of these Accounting Standards and Interpretations did not have any significant impact
on the financial performance or position of the Group.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The following Accounting Standards and Interpretations are most relevant to the Group:
●
●
●
●
AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities;
AASB 2013-3 Amendments to AASB 136 - Recoverable Amount Disclosures for Non-Financial Assets;
AASB 2013-4 Amendments to Australian Accounting Standards - Novation of Derivatives and Continuation of Hedge Accounting; and
AASB 2014-1 Amendments to Australian Accounting Standards (Parts A to C).
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with
International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, derivative financial instruments as described in the accounting
policies.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the financial statements, are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary information about the parent
entity is disclosed in note 34.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Gale Pacific Limited as at 30 June 2015 and the results of all
subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is
accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling
interest acquired is recognised directly in equity attributable to the parent.
36 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 2. Significant accounting policies (continued)
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together
with any cumulative translation differences recognised in equity. The Group recognises the fair value of the consideration received and the fair value of any
investment retained together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to
the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.
Foreign currencies and translations
The consolidated financial statements are presented in Australian dollars, which is Gale Pacific Limited's functional and presentation currency. Where noted, the
financial statements of each Group entity are measured using its functional currency, which is the currency of the primary economic environment in which that
entity operates.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains
and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of
foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the
period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.
On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary
that includes a foreign operation, loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of significant influence over an
associate that includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to
profit or loss.
Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising on the acquisition of a foreign operation are treated as assets and
liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are
recognised in equity.
Monetary items forming net investment in foreign operations
The Group classifies monetary items of a non-current nature where settlement was not planned in the foreseeable future as part of the net investment in foreign
operations. All foreign exchange differences on these items are recognised in other comprehensive income through the foreign currency reserve in equity. As and
when settlements occur, the cumulative amount in the foreign currency translation reserve is then recognised in profit or loss.
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the Group and the revenue can be reliably measured. Revenue is measured at
the fair value of the consideration received or receivable.
Sale of goods
Sale of goods revenue is recognised at the point of sale, which is where the customer has taken delivery of the goods, the risks and rewards are transferred to
the customer and there is a valid sales contract. Amounts disclosed as revenue are net of sales returns and trade discounts.
Government grant
Where a government grant (including Strategic Investment Plan income ('SIP')) is received or receivable relating to development costs that have been expensed,
the grant is recognised as revenue. Where a grant is received or receivable relating to research and development costs that have been deferred, the grant is
deducted from the carrying amount of the deferred costs.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
All revenue is stated net of the amount of goods and services tax (GST).
Income tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement of comprehensive
income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s liability
for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are
settled, based on those tax rates that are enacted or substantively enacted, except for:
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business
combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be
controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
●
37 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 2. Significant accounting policies (continued)
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available
to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the
extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax
assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred
tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend
to settle simultaneously.
Gale Pacific Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation
regime, effective 1 June 2011. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax
amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to
members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising
from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other
entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge equals the current tax liability or benefit of each tax
consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in normal operating cycle; it is held primarily for the
purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it is due to be
settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the
reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
For the purposes of the statement of cash flows, cash includes cash on hand and at call, deposits with banks or financial institutions, investments in money
market instruments maturing within less than three months and net of bank overdrafts.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for
impairment.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount
directly. A provision for impairment of trade receivables is raised when there is objective evidence that the Group will not be able to collect all amounts due
according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may be impaired. The
amount of the impairment allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at
the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
Inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value on a 'first in first out' basis. Cost comprises of direct
materials and delivery costs, direct labour, import duties and other taxes, an appropriate proportion of variable and fixed overhead expenditure based on normal
operating capacity, and, where applicable, transfers from cash flow hedging reserves in equity. Costs of purchased inventory are determined after deducting
rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to
make the sale.
38 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 2. Significant accounting policies (continued)
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each
reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the
nature of the item being hedged.
Derivatives are classified as current or non-current depending on the expected period of realisation.
Cash flow hedges
Cash flow hedges are used to cover the Group's exposure to variability in cash flows that is attributable to particular risks associated with a recognised asset or
liability or a firm commitment which could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is recognised directly in equity,
whilst the ineffective portion is recognised in profit or loss. Amounts taken to equity are transferred out of equity and included in the measurement of the hedged
transaction when the forecast transaction occurs.
Cash flow hedges are tested for effectiveness on a regular basis both retrospectively and prospectively to ensure that each hedge is highly effective and
continues to be designated as a cash flow hedge. If the forecast transaction is no longer expected to occur, the amounts recognised in equity are transferred to
profit or loss.
If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if the hedge becomes ineffective and is no longer a
designated hedge, the amounts previously recognised in equity remain in equity until the forecast transaction occurs.
Hedges of a net investment
Hedges of a net investment in a foreign operation include monetary items that are considered part of the net investment. Gains or losses on the hedging
instrument relating to the effective portion of the hedge are recognised directly in equity whilst gains or losses relating to the ineffective portion are recognised in
profit or loss. On disposal of the foreign operation, the cumulative value of any such gains or losses recognised directly in equity is transferred to profit or loss.
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to
the acquisition of the items.
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 useful lives of the improvements. Depreciation rates are reviewed annually for appropriateness. When changes are made, adjustments
are reflected in current and future periods only.
Buildings
Leasehold improvements
Plant and equipment
Office equipment
45 years
Over lease term
2-15 years
2-5 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or the estimated useful life of the assets,
whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the
carrying amount and the disposal proceeds are taken to profit or loss.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the
fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to the
ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease
payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest
on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there
is no reasonable certainty that the Group will obtain ownership at the end of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.
39 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 2. Significant accounting policies (continued)
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition.
Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost
less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in
profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the
intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life
are accounted for prospectively by changing the amortisation method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or
changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken
to profit or loss and are not subsequently reversed.
Patents, trademarks and licenses
Significant costs associated with patents and trademarks are deferred and amortised on a straight-line basis over the period of their expected benefit, being their
finite life of 20 years.
Application software
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life of
five years.
Impairment of Assets
At each reporting date, the consolidated entity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of
the impairment loss (if any). Where the asset does not generate cashflows that are independent from other assets, the consolidated entity estimates the
recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which
the estimates of future cash flows have not been adjusted. In assessing fair value less costs to sell, recognised valuation methodologies are applied, utilising
current and forecast financial information as appropriate, benchmarked against relevant market data.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An
impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a
revaluation decrease.
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently
if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-
term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at
amortised cost using the effective interest method.
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is probable the Group will be required to
settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time
value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage
of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled within 12 months of the reporting
date are measured at the amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration
is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using
market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash
outflows.
40 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 2. Significant accounting policies (continued)
Share-based payments
Equity-settled share-based compensation benefits are provided to certain employees including Executive Directors. Equity-settled transactions are awards of
performance rights over shares, that are provided to employees in exchange for the rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial option pricing
model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine
whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to
profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired
portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts
already recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of
whether or not that market condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised,
over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not
within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining
vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new
replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that
the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best
interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the
use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making
the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level
of input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is
deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset
or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a
comparison, where applicable, with external sources of data.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the
acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling
interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed
as incurred to profit or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in
accordance with the contractual terms, economic conditions, the Group's operating or accounting policies and other pertinent conditions in existence at the
acquisition-date.
41 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 2. Significant accounting policies (continued)
Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the acquiree at the acquisition-date fair value
and the difference between the fair value and the previous carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the contingent
consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent
settlement is accounted for within equity.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also
recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at
the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the
information possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Gale Pacific Limited, excluding any costs of servicing equity other than
ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued
during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest
and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this
case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax
authority is included in other receivables or other payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or
payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Comparatives
Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures.
Rounding of amounts
The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts
in this report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the
Group for the annual reporting period ended 30 June 2015. The Group's assessment of the impact of these new or amended Accounting Standards and
Interpretations, most relevant to the Group, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all previous versions of AASB 9 and
completes the project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. AASB 9 introduces new classification and measurement models
for financial assets. A financial asset shall be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to collect
contractual cash flows, which arise on specified dates and solely principal and interest. All other financial instrument assets are to be classified and measured at
fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are
not held-for-trading) in other comprehensive income ('OCI'). For financial liabilities, the standard requires the portion of the change in fair value that relates to the
entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to
more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements will use an 'expected credit loss'
('ECL') model to recognise an allowance. Impairment will be measured under a 12-month ECL method unless the credit risk on a financial instrument has
increased significantly since initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional new disclosures. The Group
will adopt this standard from 1 July 2018 but the impact of its adoption is yet to be assessed by the Group.
42 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 2. Significant accounting policies (continued)
AASB 15 Revenue from Contracts with Customers
This standard is currently applicable to annual reporting periods beginning on or after 1 January 2017. Exposure Draft (ED 263) 'Effective Date of AASB 15'
proposes to defer the application date by one year (1 January 2018). The standard provides a single standard for revenue recognition. The core principle of the
standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied) to be
identified, together with the separate performance obligations within the contract; determine the transaction price, adjusted for the time value of money
excluding credit risk; allocation of the transaction price to the separate performance obligations on a basis of relative stand-alone selling price of each distinct
good or service, or estimation approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit
risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be satisfied when the customer
obtains control of the goods. For services, the performance obligation is satisfied when the service has been provided, typically for promises to transfer services
to customers. For performance obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue should
be recognised as the performance obligation is satisfied. Contracts with customers will be presented in an entity's statement of financial position as a contract
liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Sufficient quantitative
and qualitative disclosure is required to enable users to understand the contracts with customers; the significant judgements made in applying the guidance to
those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. The Group expects to adopt this standard from 1 July
2017 but the impact of its adoption is yet to be assessed.
Other accounting standards issued are not considered to have a significant impact on the financial statements of the Group. These standards (and their
operative dates) include:
● AASB 14 Regulatory Deferral Accounts (from 1 January 2016);
● AASB 2014-1 Amendments to Australian Accounting Standards (Part D from 1 January 2016 and Part E from 1 January
2018);
● AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint
Operations (from 1 January 2016);
● AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation
and Amortisation (from 1 January 2016);
● AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15 (from 1 January 2017);
● AASB 2014-6 Amendments to Australian Accounting Standards – Agriculture: Bearer Plants (from 1 January 2016);
● AASB 2014-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) (from 1 January
2018);
● AASB 2014-8 Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) – Application of
AASB 9 (December 2009) and AASB 9 (December 2010) (from 1 January 2015);
● AASB 2014-9 Amendments to Australian Accounting Standards – Equity Method in Separate Financial Statements
(from 1 January 2016);
● AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture (from 1 January 2016);
● AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting
Standards 2012–2014 Cycle (from 1 January 2016);
● AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101 (from
1 January 2016);
● AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality
(from 1 July 2015);
● 2015-4 Amendments to Australian Accounting Standards – Financial Reporting Requirements for Australian Groups with
a Foreign Parent (from 1 July 2015); and
● AASB 2015-5 Amendments to Australian Accounting Standards – Investment Entities: Applying the Consolidation
Exception (from 1 January 2016).
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the
financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and
expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future
events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related
actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities (refer to the respective notes) within the next financial year are discussed below.
Goodwill
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible
assets have suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash-generating units have been
determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost
of capital and growth rates of the estimated future cash flows.
Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There
are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. Where the final
tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which
such determination is made.
43 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future taxable amounts will be available to
utilise those temporary differences and losses.
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into four operating segments identified by geographic location and identity of the service line manager. These operating segments are
based on the internal reports that are reviewed and used by the Chief Executive Officer (who is identified as the Chief Operating Decision Makers ('CODM')) in
assessing performance and in determining the allocation of resources. There is no aggregation of operating segments.
The Group operates predominantly in one business segment, being branded shading, screening and home improvement products.
The CODM reviews revenue and segment results. The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the
financial statements.
Discrete financial information about each of these segments is reported on a monthly basis.
The operating segments are as follows:
Australasia
China and Rest of the World ('ROW') -
Export Sales
Americas
Middle East
Manufacturing and distribution facilities are located in Australia, and distribution facilities are located in New Zealand.
Sales offices are located in all states in Australia and in New Zealand.
Manufacturing facilities are located in Beilun, China which supply to the Group’s sales and marketing operations
throughout the world
Sales offices are located in Florida and custom blind assembly and distribution facilities are located in California which
service the North American region.
A sales office and distribution facility is located in the United Arab Emirates to service this market.
Intersegment transactions, receivables, payables and loans
Intersegment transactions were made at market rates.
Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest
are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation.
Major customers
During the year ended 30 June 2015 approximately 35% (2014: 36%) of the Group's external revenue was derived from sales to one (2014: one) customer in the
Australasian region.
44 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 4. Operating segments (continued)
Australasia
Consolidated - 2015
$'000
China
Manufacturing
& EurAsia
$'000
Americas
$'000
Middle
East/Nort
h Africa
$'000
Corporate
Intersegment
/Eliminations
$'000
$'000
Total
$'000
Revenue
Sales to external customers
Intersegment sales
Total sales revenue
Total revenue
Segment EBITDA
Depreciation and
amortisation
Finance costs
Profit/(loss) before income
tax expense
Income tax expense
Profit after income tax
expense
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
82,742
2,768
85,510
85,510
7,486
43,084
43,360
44
50,570
43,404
50,570
43,404
14,405
16
14,421
14,421
-
-
-
(45,912)
147,993
-
-
(45,912)
147,993
-
(45,912)
147,993
1,013
10,572
4,952
3,288
(3,349)
(799)
15,677
(1,002)
(5,345)
(761)
(2)
(526)
(7,636)
-
(849)
(368)
(119)
(1,390)
906
(1,820)
10
4,378
3,823
3,167
(5,264)
107
6,221
(1,051)
5,170
50,698
41,165
31,721
10,588
17,165
(1,747)
149,591
149,591
7,154
13,278
4,522
736
26,114
-
51,803
51,803
45 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 4. Operating segments (continued)
Australasia
Consolidated - 2014
$'000
China
Manufacturing
& EurAsia
$'000
Americas
$'000
Middle
East/Nort
h Africa
$'000
Corporate
Intersegment
/Eliminations
$'000
$'000
Total
$'000
79,931
2,103
82,034
82,034
9,057
41,708
36,098
(125)
50,765
35,973
50,765
35,973
12,218
9
12,227
12,227
-
-
-
(43,695)
137,304
-
-
(43,695)
137,304
-
(43,695)
137,304
4,749
9,743
3,272
2,749
(3,028)
82
17,567
(766)
(3,872)
(521)
(1)
(285)
-
(5,445)
-
(529)
(252)
7
(980)
620
(1,134)
3,983
5,342
2,499
2,755
(4,293)
702
10,988
45,955
35,250
21,719
7,168
16,137
(649)
8,689
7,176
3,606
549
22,050
(108)
(2,755)
8,233
125,598
125,598
41,962
41,962
Revenue
Sales to external customers
Intersegment sales
Total sales revenue
Total revenue
Segment EBITDA
Depreciation and
amortisation
Finance costs & Interest
revenue
Profit/(loss) before income
tax expense
Income tax expense
Profit after income tax
expense
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
Note 5. Other income
Net foreign exchange gain
Other income (including manufactured product recycling income)
Interest income
Other income
Consolidated
2015
$'000
2014
$'000
1,099
1,455
-
2,554
327
512
6
845
46 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 6. Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Buildings
Leasehold improvements
Plant and equipment
Office equipment
Motor vehicles
Total depreciation
Amortisation
Patents, trademarks and licenses
Application software
Total amortisation
Total depreciation and amortisation
Finance costs
Interest and finance charges paid/payable
Rental expense relating to operating leases
Minimum rent payments
Share-based payments expense
Share-based payments expense
Employee benefits expense (Including superannuation)
Employee benefits expense (Including superannuation)
Write off of assets
Inventories
Consolidated
2015
$'000
2014
$'000
245
55
6,143
383
29
260
30
4,520
315
31
6,855
5,156
31
750
781
34
255
289
7,636
5,445
1,820
1,140
3,029
2,929
89
(87)
29,476
28,242
968
(461)
47 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 7. Income tax expense
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Increase/(decrease) in deferred tax liabilities (note 22)
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non allowable/(non assessable) items
Adjustment recognised for prior periods
Difference in overseas tax rates
Income tax expense
Amounts credited directly to equity
Deferred tax liabilities (note 22)
Note 8. Current assets - cash and cash equivalents
Cash on hand
Cash at bank
Cash on deposit
48 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
Consolidated
2015
$'000
2014
$'000
2,027
(763)
(213)
2,381
484
(110)
1,051
2,755
(763)
484
6,221
10,988
1,866
3,296
1,132
413
2,998
(213)
(1,734)
3,709
(110)
(844)
1,051
2,755
Consolidated
2015
$'000
2014
$'000
610
(659)
Consolidated
2015
$'000
2014
$'000
17
17,619
133
12
12,872
174
17,769
13,058
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 9. Current assets - trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
Other receivables
Refer to note 28 for further information on financial instruments
Note 10. Current assets - inventories
Raw materials - at cost
Work in progress - at cost
Finished goods - at cost
Less: Provision for impairment
Note 11. Current assets - derivative financial instruments
Consolidated
2015
$'000
2014
$'000
26,987
(97)
26,890
19,384
(64)
19,320
191
431
27,081
19,751
Consolidated
2015
$'000
2014
$'000
4,445
6,943
675
1,604
35,454
(1,345)
34,109
27,032
(728)
26,304
39,229
34,851
Consolidated
2015
$'000
2014
$'000
Forward foreign exchange contracts - cash flow hedges
1,363
-
Refer to note 29 for further information on fair value measurement.
Note 12. Current assets - Current tax assets
Income tax refund due - Australia
Note 13. Current assets - other current assets
Prepayments
Consolidated
2015
$'000
2014
$'000
3,147
1,721
Consolidated
2015
$'000
2014
$'000
819
2,765
49 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 14. Non-current assets - property, plant and equipment
Buildings - at cost
Less: Accumulated depreciation
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Motor vehicles - at cost
Less: Accumulated depreciation
Office equipment - at cost
Less: Accumulated depreciation
Captial work-in-progress (Cap.WIP) - at cost
Consolidated
2015
$'000
2014
$'000
9,489
(2,315)
7,174
720
(504)
216
77,438
(51,452)
25,986
484
(322)
162
3,358
(2,679)
679
9,489
(2,070)
7,419
561
(439)
122
69,024
(46,774)
22,250
230
(137)
93
2,235
(1,812)
423
655
162
34,872
30,469
Reconciliations
Reconciliations of the movements in property, plant and equipment at the beginning and end of the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2013
Additions
Disposals
Exchange differences
Capital Work in Progress
Transfers in/(out)
Depreciation expense
Balance at 30 June 2014
Additions
Disposals
Exchange differences
Capital Work in Progress
Transfers in/(out)
Depreciation expense
Balance at 30 June 2015
Buildings
$'000
Leasehold
improvements
$'000
Plant and
equipment
$'000
Office
equipment
$'000
Vehicles and
Cap.WIP
$'000
Total
$'000
7,726
54
-
(101)
-
-
(260)
7,419
-
-
-
-
-
(245)
7,174
67
85
-
-
-
-
(30)
122
129
-
20
-
-
(55)
216
25,738
871
(96)
(175)
-
432
(4,520)
22,250
3,255
(4)
6,460
-
641
(6,143)
26,459
816
422
(3)
(45)
-
(452)
(315)
423
569
(1)
71
-
(473)
(383)
206
138
15
(47)
(2)
162
20
(31)
255
-
-
104
655
(168)
(29)
34,485
1,447
(146)
(323)
162
-
(5,156)
30,469
3,953
(5)
6,655
655
-
(6,855)
817
34,872
50 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 15. Non-current assets - intangibles
Goodwill - at cost
Less: Impairment
Patents, trademarks and licenses - at cost
Less: Accumulated amortisation
Application software - at cost
Less: Accumulated amortisation
Consolidated
2015
$'000
2014
$'000
21,516
(1,054)
20,462
1,674
(1,172)
502
6,538
(2,191)
4,347
21,032
(1,054)
19,978
1,449
(1,099)
350
2,910
(255)
2,655
25,311
22,983
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2013
Additions
Additions through business combinations
Disposals
Exchange differences
Amortisation expense
Balance at 30 June 2014
Additions
Exchange differences
Amortisation expense
Balance at 30 June 2015
Patents,
trademarks
and licenses
$'000
Application
software
$'000
Goodwill
$'000
Total
$'000
19,933
-
85
-
(40)
-
19,978
-
484
-
20,462
333
60
-
(10)
1
(34)
350
55
128
(31)
502
967
1,943
-
-
-
(255)
2,655
2,517
(75)
(750)
21,233
2,003
85
(10)
(39)
(289)
22,983
2,572
537
(781)
4,347
25,311
Impairment testing for goodwill
As required under accounting standard AASB 136' Impairment of Assets', Gale Pacific Limited performs an impairment assessment when there is an indication or
trigger of a possible impairment of its non-current assets. In addition, at least annually Gale Pacific Limited performs an impairment assessment of goodwill and
indefinite life intangible assets, regardless of whether an impairment indicator has been identified. The annual review of goodwill and indefinite life intangible
assets was performed at 30 June 2015.
Impairment testing approach
Impairment testing compares the carrying value of a cash generating unit with its recoverable amount based on its value in use (present value of future cash
flows). This represents a change from the fair value less costs to dispose using EBITDA multiples method used at 30 June 2014. Value in use is calculated based
on the present value of cash flow projections over a 5 year period with the period extending beyond 5 years extrapolated using an estimated revenue growth rate
of 2.5%. Years one to three are based on budgets and forecasts, with years four onwards extrapolated at the rate of 2.5%. The cash flows are discounted using
the weighted average cost of capital with mid-year discounting.
51 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 15. Non-current assets – intangibles (continued)
Goodwill acquired through business combinations have been allocated to the following cash generating units (CGU):
Goodwill
Australasia
USA (2014/2015 US$2,077,000 : 2013/2014 US$ 2,077,000)
China
Consolidated
2015
$'000
2014
$'000
17,455
2,660
347
17,455
2,176
347
20,462
19,978
Australasia
In assessing the recoverable amount of the Australasian CGU, management made a number of significant assumptions including assumptions regarding foreign
exchange rates, and risk adjustments to future cash flows. Management considered information available from industry analysts and other sources in relation to
key assumptions used. Management considers that it has taken a conservative view of the market conditions and business operations. Recent improvements
and the future impact of planned improvements have not yet been incorporated into the value in use model. Management expects a future uplift in performance
through these changes and the overall performance of the CGU. As at 30 June 2015, the recoverable amount of the CGU has been estimated by management to
exceed the carrying amount of assets by $8,501,000 and therefore no impairment is required.
The following assumptions were used in the value in use calculations in the latest model:
Revenue growth rate
WACC (post tax)
2016
2017
2018
2019
2020
Terminal value
Impact of possible changes in key assumptions:
Revenue growth rate assumption
23%
6%
5%
2.5%
2.5%
2.5%
11%
11%
11%
11%
11%
11%
The growth rate in 2016 includes confirmed new business the company has been awarded across product categories in Australia.
In a sensitivity analysis, Management estimates that a 20% reduction on FY2016 revenue growth, from 23% to 3% (but assuming no changes to base case
revenue growth assumptions thereafter) would cause a reduction in enterprise value of $8,501,000, and equate to the carrying value of the CGU. The impact on
enterprise value excludes any compensating adjustments to operating expenses.
Further sensitivity analysis conducted by management implies that the achievement of a flat revenue growth rate of 5% from FY16 to FY20 (but 2.5% growth
assumed in the terminal value) would cause a reduction in enterprise value of $8,501,000, and equate to the carrying value of the CGU. The impact on
enterprise value excludes any compensating adjustments to operating expenses.
Discount Rate assumption In a sensitivity analysis,
Management estimates that a 150 basis point increase in the WACC rate to 12.5% over the model period would cause a reduction in enterprise value of
$8,501,000, and equate to the carrying value of the CGU.
52 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 15. Non-current assets - intangibles (continued)
EBITDA Margin assumption
In a sensitivity analysis, Management estimates that a reduction of 0.8% in the average EBITDA margin achieved over the projection period (and in the terminal
value) would cause a reduction in enterprise value of $8,501,000, and equate to the carrying value of the CGU. The value in use model assumes an incremental
1% improvement in gross profit margins over the projection period. Management anticipates that, based on current initiatives, the gross margin percentages will
improve over the value in use cash flow projection period as the current year includes several one off costs.
Working Capital assumption
Key components affecting working capital include inventory on hand, debtor day collections and accounts payable days. Management believes the assumptions
used in the cash flow projection period are conservative based on historic performance and measures to improve inventory positions going forward. A sensitivity
adversely impacting working capital based on increased inventory balances by 28% would cause a reduction in enterprise value of $8,501,000, and equate to
the carrying value of the CGU.
Combined Scenario (EBITDA margin, working capital, and growth rate):
An assessment of combining the impact of the following key variables:
● Revenue growth in year one equivalent to 90% of that forecast (i.e. 21% versus 23%)
● Average EBITDA margin reduction of 0.5% over projected cash flows
● Working capital movements increasing by 5% Results in a potential reduction in enterprise value of $6,226,950.
Results in a potential reduction in enterprise value of $6,226,950. In the event of this combined scenario occurring, management expects that action would be
taken to mitigate the impact of one or more variables.
Goodwill acquired through business combinations have been allocated to the following cash generating units (CGU):
USA
In assessing the recoverable amount of the USA CGU, management made a number of significant assumptions including assumptions regarding foreign
exchange rates, and risk adjustments to future cash flows. Management considered information available from industry analysts and other sources in relation to
key assumptions used. Management considers that it has taken a conservative view of the market conditions and business operations.
Management believes that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the carrying amount
to exceed the recoverable amount of the CGU.
China
In assessing the recoverable amount of the China CGU, management made a number of significant assumptions including assumptions regarding foreign
exchange rates, and risk adjustments to future cash flows. Management considered information available from industry analysts and other sources in relation to
key assumptions used. Management considers that it has taken a conservative view of the market conditions and business operations.
Management believes that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the carrying amount
to exceed the recoverable amount of the CGU.
Note 16. Current liabilities - trade and other payables
Trade payables
Sundry payables and accruals
Refer to note 28 for further information on financial instruments.
Consolidated
2015
$'000
2014
$'000
6,375
6,512
6,931
6,378
12,887
13,309
53 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 17. Current liabilities - borrowings
Secured Bank loans
Commercial bills payable
Unsecured bank loans
Other loans
Refer to note 28 for further information on financial instruments.
Note 18. Current liabilities - derivative financial instruments
Consolidated
2015
$'000
2014
$'000
8,337
24,500
-
804
1,757
20,550
692
585
33,641
23,584
Consolidated
2015
$'000
2014
$'000
Forward foreign exchange contracts - cash flow hedges
-
709
Refer to note 28 for further information on financial instruments.
Refer to note 29 for further information on fair value measurement.
Note 19. Current liabilities - Current tax liabilities
Provision for income tax
Consolidated
2015
$'000
2014
$'000
2,179
1,071
54 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 20. Current liabilities - provisions
Employee benefits
Warranties
Consolidated
2015
$'000
2014
$'000
1,758
62
1,909
50
1,820
1,959
Warranties
The provision represents the estimated warranty claims in respect of products sold which are still under warranty at the reporting date. The provision is estimated
based on historical warranty claim information, sales levels and any recent trends that may suggest future claims could differ from historical amounts.
Movements in provisions
Movements in each class of provision during the current financial year, other than employee benefits, are set out below:
Carrying amount at the start of the year
Additional Provisions recognisied
Provisions written back
Carrying amount at the start of the year
Note 21. Non-current liabilities - borrowings
Other loans
Refer to note 28 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Bank loans
Commercial bills payable
Consolidated
2015
$'000
2014
$'000
50
12
-
62
228
169
(347)
50
Consolidated
2015
$'000
2014
$'000
783
690
Consolidated
2015
$'000
2014
$'000
8,337
24,500
1,757
20,550
32,837
22,307
Assets pledged as security
The bank overdraft and loans (Commercial Bills Payable) are secured by a fixed and floating charge (or equivalent foreign charge) over all the asset(s) and
undertaking(s), including uncalled capital of each of the group members, with the exception of any entities incorporated in the People’s Republic of China.
55 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 22. Non-current liabilities - deferred tax
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Property, plant and equipment
Foreign exchange
Capitalised costs
Provisions
Impairment of receivables
Other financial liabilities
Employee benefits
Other
Deferred tax liability
Movements:
Opening balance
Credited/(charged) to profit or loss (note 7)
Charged to equity (note 7)
Closing balance
Consolidated
2015
$'000
2014
$'000
(156)
1,327
354
31
(3)
(269)
(498)
(389)
397
550
(763)
610
397
84
974
700
32
(2)
(164)
(692)
(382)
550
725
484
(659)
550
An adjustment was made in respect of periods prior to 30 June 2013 to reduce the deferred tax liabilities by $3.469 million. This adjustment was made to
correct prior year accounting of investments in foreign operations for which a deferred tax liability existed. The investment that the deferred tax related to was
disposed of prior to 30 June 2013. The adjustment reduced the deferred tax liability and increased retained profits as of 1 July 2013.
Note 23. Non-current liabilities - provisions
Employee benefits
Note 24. Equity - issued capital
Consolidated
2015
$'000
2014
$'000
96
90
Ordinary shares - fully paid
297,474,396
297,474,396
71,485
71,485
Consolidated
2015
Shares
2014
Shares
2015
$'000
2014
$'000
Movements in ordinary share capital
Details
Balance
Issue of shares under Performance Rights Plan
Balance
Balance
56 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
Date
1 July 2013
5 July 2013
Shares
$'000
296,739,396
735,000
71,338
147
30 June 2014
297,474,396
71,485
30 June 2015
297,474,396
71,485
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 24. Equity - issued capital (continued)
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts
paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and
benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. This is achieved through monitoring of historical and
forecast performance and cash flows.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debt.
The capital risk management policy remains unchanged from the 2014 Annual Report.
Note 25. Equity - reserves
Foreign currency reserve
Hedging reserve - cash flow hedges
Share-based payments reserve
Enterprise reserve fund
Consolidated
2015
$'000
2014
$'000
(1,333)
954
575
1,402
(12,780)
(508)
486
1,387
1,598
(11,415)
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars. It is also
used to recognise gains and losses on hedges of the net investments in foreign operations.
Hedging reserve - cash flow hedges
The reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is determined to be an effective hedge.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and Directors as part of their remuneration, and other parties as part of their
compensation for services.
Enterprise reserve fund
Gale Pacific Special Textiles (Ningbo) Limited and Gale Pacific Trading (Ningbo) Limited are required by Chinese Company Law to maintain this reserve in its
financial statements. This reserve is unavailable for distribution to shareholders but can be used to expand the entity's business, make up losses or increase the
registered capital. Both companies are required to allocate 10% of their annual profit after tax to this reserve until it reaches 50% of the registered capital.
57 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Foreign
currency
$'000
Hedging
$'000
Share-based
payments
$'000
Enterprise
reserve fund
$'000
Total
$'000
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 25. Equity – reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2013
Foreign currency translation
Movement in hedge
Income tax
Share-based payment
Transfer to share capital
Statutory transfers from retained earnings
Balance at 30 June 2014
Foreign currency translation *
Movement in hedge
Income tax
Share-based payment
Statutory transfers from retained earnings
(11,292)
(1,488)
-
-
-
-
-
(12,780)
11,447
-
-
-
-
1,121
-
(2,288)
659
-
-
-
(508)
-
2,072
(610)
-
-
Balance at 30 June 2015
(1,333)
954
*
Refer to note 40 for details of monetary items identified as a net investment in a foreign operation
Note 26. Equity - retained profits
Retained profits at the beginning of the financial year (refer note 22)
Profit after income tax expense for the year
Dividends paid (note 28) (note 28) (note 28) (note 27)
Amounts recognised directly in equity / deferred tax adjustment (note 23)
Statutory transfers to enterprise reserve fund
Retained profits at the end of the financial year
Note 27. Equity - dividends
Dividends
Dividends paid during the financial year were as follows:
Final dividend for the year ended 30 June 2014 of 1.35 cents per ordinary share (Franked to 0%)
Final dividend for the year ended 30 June 2013 of 1.35 cents per ordinary share (Franked to 80%)
Interim dividend for the year ended 30 June 2014 1.30 cents per ordinary share (Franked to 75%)
720
-
-
-
(87)
(147)
-
486
-
-
-
89
-
575
1,372
-
-
-
-
-
15
1,387
-
-
-
-
15
(8,079)
(1,488)
(2,288)
659
(87)
(147)
15
(11,415)
11,447
2,072
(610)
89
15
1,402
1,598
Consolidated
2015
$'000
2014
$'000
23,566
5,170
(4,016)
-
(15)
23,374
8,233
(7,883)
(143)
(15)
24,705
23,566
Consolidated
2015
$'000
2014
$'000
4,016
-
-
-
4,016
3,867
4,016
7,883
On the 24th of August the Directors declared a dividend of 1 cent per share to the holders of fully paid ordinary shares in respect of the year ended 30 June
2015, payable on 1 December 2015 to shareholders on the register at 17 November 2015. The final dividend will be unfranked. This dividend has not been
included as a liability in these financial statements. The total estimated dividend to be paid is $2,974,744.
58 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 27. Equity - dividends (continued)
Franking credits
Consolidated
2015
$'000
2014
$'000
Franking credits available for subsequent financial years based on a tax rate of 30%
197
579
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
●
●
●
franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date
Note 28. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity
risk.
The Group’s financial risk management processes and procedures seek to minimise the potential adverse effects on the Group’s financial performance that may
occur due to the unpredictability of financial markets. Risk management policies are reviewed regularly to reflect changes in market conditions and the Group’s
activities
Derivative financial instruments are used by the Group to limit exposure to exchange rate risk associated with foreign currency transactions. Derivative financial
instruments are recognised in the financial statements. Transactions to reduce foreign currency exposure are undertaken without the use of collateral as the
Group only deals with reputable institutions with sound financial positions. The Group does not enter into or trade financial instruments, including derivative
financial instruments, for speculative purposes.
Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations.
The Group enters into foreign exchange contracts to buy and sell specified amounts of foreign currency in the future at stipulated exchange rates. The objective
of entering into forward exchange contracts is to protect the Group against exchange rate movements for both contracted and anticipated future sales and
purchases undertaken in foreign currencies. There was no cash flow hedge ineffectiveness during the reporting period.
The Group adopts hedge accounting and classifies forward exchange contracts as cash flow hedges where these contracts are hedging highly probable
forecasted transactions and they are timed to mature when the cash flow from the underlying transaction is scheduled to occur. Cash flows are expected to occur
during the next financial year. Changes in fair value on forward exchange contracts designated as cash flow hedges are taken directly to equity.
Forward exchange contracts that are not designated as cash flow hedges have any changes in fair value recognised in profit or loss in the period the changes
occur.
59 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 28. Financial instruments (continued)
The maturity, settlement amounts and the average contractual exchange rates of the Group's outstanding forward foreign exchange contracts at the reporting
date were as follows:
Buy US dollars/sell Australian dollars
Maturity:
Less than 6 months
6 - 12 months
Buy US dollars/sell Chinese renminbi
Maturity:
Less than 6 months
Sell Australian dollars
2015
$'000
2014
$'000
Average exchange rates
2014
2015
15,867
4,732
14,682
2,337
0.8225
0.7819
0.8943
0.8985
-
16,756
-
6.2256
The carrying amount of the Group's foreign currency denominated financial assets and financial liabilities at the reporting date were as follows:
Consolidated
US dollars
Euros
New Zealand dollars
Chinese renminbi
UAE dirham
Assets
Liabilities
2015
$'000
2014
$'000
2015
$'000
2014
$'000
24,483
-
454
478
1,129
17,204
-
529
532
513
790
-
126
2,381
-
671
86
139
3,889
130
26,544
18,778
3,297
4,915
The Group had net assets denominated in foreign currencies of $23,246,000 (assets of $26,544,000 less liabilities of $3,297,000 as at 30 June 2015 (2014:
$13,863,000 (assets of $18,778,000 less liabilities of $4,915,000)). Based on this exposure, had the Australian dollars strengthened by 10% / weakened by
10% (2014: strengthened by 10% / weakened by10%) against these foreign currencies with all other variables held constant, the Group's profit before tax for the
year would have been $80,000 higher (2014: $261,000 lower/$261,00 higher) and equity would have been $2,326,000 higher (2014: $1,386,000 higher). The
percentage change is the expected overall volatility of the significant currencies, which is based on management's assessment of reasonable possible
fluctuations taking into consideration movements over the last 12 months each year and the spot rate at each reporting date.
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group is exposed to interest rate risk as entities in the Group borrow and deposit funds at both fixed and variable interest rates. Effective weighted average
interest rates on classes of financial liabilities are disclosed under liquidity risk. The Group does not have material long term borrowings and does not use interest
rate swaps to manage the risk of interest rate changes.
60 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 28. Financial instruments (continued)
As at the reporting date, the Group had the following variable rate bank balances and borrowings outstanding:
Consolidated
Cash and cash equivalents
Bank loans
Commercial bills payable
Other loans
Net exposure to cash flow interest rate risk
2015
2014
Weighted average
interest rate
%
Balance
$'000
Weighted average
interest rate
%
Balance
$'000
-%
4.89%
2.89%
6.96%
17,752
(8,337)
(24,500)
(1,587)
(16,672)
-%
4.89%
3.77%
6.96%
13,046
(1,757)
(20,550)
(1,967)
(11,228)
An analysis by remaining contractual maturities in shown in 'liquidity and interest rate risk management' below.
An official increase/decrease in interest rates of 100 (2014: 100) basis points would have an adverse/favourable effect on profit before tax of $345,000 (2014:
$230,000) per annum. The percentage change is based on the expected volatility of interest rates using market data and analysts forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Before accepting any new
customer, the Group uses internal resources and criteria to assess the potential customer’s credit quality and defines credit limits by customer. The maximum
exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as
disclosed in the statement of financial position and notes to the financial statements. The Group does not hold any collateral.
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
Trade receivables by geographic region
Australasia
China
Americas
Middle East
Consolidated
2015
$'000
2014
$'000
6,410
788
13,875
5,816
5,481
999
9,524
3,316
26,889
19,320
Impairment of receivables
The Group has recognised a loss of $33,000 (2014: $103,000) in profit or loss in respect of impairment of receivables for the year ended 30 June 2015.
The ageing of the impaired receivables provided for above are as follows:
Over 6 months overdue
Consolidated
2015
$'000
2014
$'000
97
64
61 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 28. Financial instruments (continued)
Movements in the provision for impairment of receivables are as follows:
Opening balance
Additional provisions recognised
Net foreign currency movements arising from foreign operations
Receivables written off during the year as uncollectable
Unused amounts reversed
Closing balance
Consolidated
2015
$'000
2014
$'000
64
33
-
-
-
97
366
-
1
(66)
(237)
64
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to $7,746,000 as at 30 June 2015 ($1,720,000 as at 30 June
2014).
The ageing of the past due but not impaired receivables are as follows:
Outside credit terms 0-30 days
Outside credit terms 31-120 days
Outside credit terms 121 days to one year
More than one year
Consolidated
2015
$'000
2014
$'000
4,429
2,758
559
-
997
585
32
106
7,746
1,720
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure,
as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash
flows and matching the maturity profiles of financial assets and liabilities.
62 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 28. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the
undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest
and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of
financial position.
Consolidated - 2015
Non-derivatives
Non-interest bearing
Trade payables
Sundry payables and accruals
Interest-bearing - variable
Bank loans
Other loans
Total non-derivatives
Consolidated - 2014
Non-derivatives
Non-interest bearing
Trade payables
Sundry payables and accruals
Interest-bearing - variable
Bank loans
Other loans
Total non-derivatives
Derivatives
Forward foreign exchange contracts net
settled
Total derivatives
Weighted average
interest rate
%
1 year or less
$'000
Between 1 and 2
years
$'000
Between 2 and 5
years
$'000
Over 5 years
$'000
-%
-%
6,375
6,594
3.40%
6.90%
32,963
804
46,736
-
-
-
532
532
-
-
-
251
251
Weighted average
interest rate
%
1 year or less
$'000
Between 1 and 2
years
$'000
Between 2 and 5
years
$'000
Over 5 years
$'000
-%
-%
6,931
6,378
3.77%
6.96%
23,000
585
36,894
-%
709
709
-
-
-
530
530
-
-
-
-
-
159
159
-
-
Remaining
contractual
maturities
$'000
6,375
6,594
32,963
1,587
47,519
Remaining
contractual
maturities
$'000
6,931
6,378
23,000
1,274
37,583
709
709
-
-
-
-
-
-
-
-
-
-
-
-
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
63 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 29. Fair value measurement
Fair value hierarchy
The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input
that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3: Unobservable inputs for the asset or liability
Consolidated - 2015
Assets
Forward foreign exchange contracts
Total assets
Consolidated - 2014
Liabilities
Forward foreign exchange contracts
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Level 1
$'000
-
-
-
-
1,363
1,363
Level 2
$'000
Level 3
$'000
709
709
-
-
-
-
1,363
1,363
Total
$'000
709
709
There were no transfers between levels during the financial year.
The net fair value of assets and liabilities approximates their carrying value. No financial assets or financial liabilities are readily traded on organised markets in
standardised form other than forward exchange contracts
Note 30. Key management personnel disclosures
Compensation
The aggregate compensation made to Directors and other members of key management personnel of the Group is set out below:
Consolidated
2015
$
2014
$
2,731,434
195,334
275,608
82,809
2,231,512
140,772
50,000
-
3,285,185
2,422,284
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
64 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 31. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmastsu, the auditor of the Company:
Audit services - Deloitte Touche Tohmastsu
Audit or review of the financial statements
Other services - Deloitte Touche Tohmastsu
Other services (including tax services)
Note 32. Commitments
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Property, plant and equipment
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Consolidated
2015
$
2014
$
270,750
259,000
21,000
-
291,750
259,000
Consolidated
2015
$'000
2014
$'000
-
456
2,484
1,915
2,476
1,395
4,399
3,871
The above lease commitments relate to property leases. The Group has no rights to purchase the properties at the end of the lease term.
Note 33. Related party transactions
Parent entity
Gale Pacific Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 35.
Key management personnel
Disclosures relating to key management personnel are set out in note 30 and the remuneration report in the Directors' report.
Transactions with related parties
Sale and purchase of goods totalling $45,912,000 (2014: $43,695,000)
-
- Gale Pacific Limited received interest income from its subsidiaries totalling $1,045,000 (2014: $732,000)
- Gale Pacific Limited made no interest payments to its subsidiaries (2014: $1,000)
-
Reimbursement of certain operating costs totalling $390,000 (2014: $430,000)
65 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 33. Related party transactions (continued)
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current payables:
Accrued Director fees and superannuation contributions
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 34. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Hedging reserve - cash flow hedges
Share-based payments reserve
Retained profits
Total equity
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2015 and 30 June 2014.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2015 and 30 June 2014.
66 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
Consolidated
2015
$
2014
$
2,493
15,417
Parent
2015
$'000
2014
$'000
(2,960)
46
9,949
(1,490)
Parent
2015
$'000
2014
$'000
43,113
38,141
113,510
109,706
27,391
30,103
27,391
30,142
71,485
954
575
13,105
71,485
465
486
7,128
86,119
79,564
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 34. Parent entity information (continued)
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2015 and 30 June 2014.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the following:
●
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the
investment.
Note 35. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy
described in note 2:
Name
Gale Pacific (New Zealand) Limited
Gale Pacific FZE
Gale Pacific Special Textiles (Ningbo) Limited
Gale Pacific Trading (Ningbo) Limited
Gale Pacific USA, Inc.
Zone Hardware Pty Ltd
Riva Window Fashions Pty Ltd
Note 36. Events after the reporting period
Principal place of business /
Country of incorporation
New Zealand
United Arab Emirates
China
China
USA
Australia
Australia
Ownership interest
2015
%
2014
%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Apart from the dividend declared as disclosed in note 27, no other matter or circumstance has arisen since 30 June 2015 that has significantly affected, or may
significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
67 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 37. Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Share-based payments
Net gain on disposal of non-current assets
Other revenue - non-cash
Finance costs - non-cash
Foreign currency differences
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in inventories
Increase in income tax refund due
Increase in derivative assets
Decrease in prepayments
Decrease/(increase) in other operating assets
Increase/(decrease) in trade and other payables
Increase in derivative liabilities
Increase/(decrease) in provision for income tax
Decrease in deferred tax liabilities
Decrease in employee benefits
Increase in other provisions
Decrease in other operating liabilities
Consolidated
2015
$'000
2014
$'000
5,170
8,233
7,017
89
-
(1,099)
-
2,678
(6,231)
(4,378)
(1,426)
(1,363)
1,946
817
(422)
753
1,108
(153)
(145)
12
-
5,447
(87)
(1)
-
(1,627)
-
(926)
(7,140)
-
-
-
(1,632)
3,952
-
(2,004)
-
-
-
(46)
Net cash from operating activities
4,373
4,169
Note 38. Earnings per share
Consolidated
2015
$'000
2014
$'000
Profit after income tax attributable to the owners of Gale Pacific Limited
5,170
8,233
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
Performance rights
Number
Number
297,474,396
297,464,396
2,352,479
5,599,212
Weighted average number of ordinary shares used in calculating diluted earnings per share
299,826,875
303,063,608
Basic earnings per share
Diluted earnings per share
Cents
Cents
1.74
1.72
2.77
2.72
68 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 39. Share-based payments
The Group maintains a performance rights scheme for certain staff and executives, including executive directors, as approved by shareholders at an annual
general meeting. The scheme is designed to reward key personnel when the Group meets performance hurdles relating to:
● Improvement in earnings per share; and
● Improvement in return to shareholders.
The number of unissued ordinary shares under the performance rights scheme at the reporting date is 2,364,138 (2014: 3,700,000). Each performance right
entitles the holder one ordinary share in the Company 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 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.
Set out below are summaries of performance rights granted under the plan:
2015
Grant date
Expiry date
30/06/2014
01/01/2010
25/08/2014
10/10/2014
11/12/2014
30/06/2014
01/01/2010
25/08/2014
10/10/2014
01/12/2017
2014
Grant date
Expiry date
18/08/2010
20/09/2012
26/11/2012
03/10/2013
30/06/2020
20/09/2022
20/09/2022
03/10/2023
Exercise
price
Balance at
the start of
the year
Granted
Exercised
$0.15
$0.20
$0.00
$0.18
$0.18
3,700,000
-
-
-
-
3,700,000
-
-
-
-
2,690,965
2,690,965
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
-
-
-
-
(600,000)
(3,100,000)
(326,827)
(4,026,827)
3,700,000
-
(600,000)
(3,100,000)
2,364,138
2,364,138
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
$0.00
$0.15
$0.15
$0.20
735,000
4,987,500
900,000
-
6,622,500
-
-
-
1,300,000
1,300,000
(735,000)
-
-
-
(735,000)
-
(2,862,500)
(300,000)
(325,000)
(3,487,500)
-
2,125,000
600,000
975,000
3,700,000
There were no performance rights exercisable at the end of the financial year (2014: none).
Note 40. Monetary items identified as a net investment in a foreign operation
In 2006/2007, the Group reclassified a portion of the Company’s related party balances as net investments in foreign operations, being monetary items of a non-
current nature where settlement was not planned in the foreseeable future, with all foreign exchange differences on these items recognised in other
comprehensive income through the foreign currency reserve in equity.
In 2008/2009, the net investment in Gale Europe GmbH was written off following the closure of the European full service operation; a portion of the net
investment in Gale Pacific Special Textiles (Ningbo) Limited was converted to equity and additional balances in Gale Pacific (New Zealand) Limited and Gale
Pacific USA, Inc. were reclassified as net investments in foreign operations.
In 2014/2015, the balances relating to the portion of the net investment in Gale Pacific Special Textiles (Ningbo) Limited was de-classified as it was deemed that
settlement of these balances was planned in the foreseeable future by the Group.
Details of the monetary items classified as net investments in a foreign operations are as follows:
69 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2015
Note 40. Monetary items identified as a net investment in a foreign operation (continued)
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
Related party receivable to the Company from Gale Pacific USA, Inc.
Monetary items identified as a net investment in a foreign operation
Consolidated
2015
$'000
2014
$'000
-
6,800
9,473
6,842
6,800
9,473
16,273
23,115
The foreign exchange gain arising during the financial year on monetary items forming part of the net investment in related party, recognised in foreign currency
translation reserve amounted to $11,447,000 (2014: loss of $1,488,000). Refer to note 26.
It is impracticable to estimate the foreign exchange gains or losses in future periods because movements in foreign exchange rates cannot be accurately
predicted.
70 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Additional
Securities
Exchange
Information
In accordance with ASX Listing Rule 4.10, the Company
provides the following
information to shareholders not
elsewhere disclosed in this Annual Report. The information
provided is current as at 17 August 2015 (Reporting Date).
Corporate Governance Statement
The Company has prepared a Corporate Governance
Statement which sets out the corporate governance practices
that were in operation throughout the financial year for the
Company. In accordance with ASX Listing Rule 4.10.3, the
Corporate Governance Statement will be available for review
on Gale Pacific’s website (www.galepacific.com), and will be
lodged with ASX at the same time that this Annual Report is
lodged with ASX.
71 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Additional Securities Exchange Information
Continued
Number of Holdings of Equity Securities
As at the Reporting Date, the number of holders in each class of equity securities on issue in Gale Pacific is as follows:
The fully paid issued capital of the Company consisted of 297,474,396 ordinary fully paid shares held by 1,472 shareholders. Each
share entitles the holder to one vote.
8 holders have been granted 2,364,138 performance rights over ordinary shares. Performance rights do not carry a right to vote.
Voting Rights of Equity Securities
The only class of equity securities on issue in the Company which carry voting rights is ordinary shares.
As at the Reporting Date, there were 1,472 holders of a total of 297,474,396 ordinary shares of the Company. The voting rights
attaching to the ordinary shares, set out in Article 54 of the Company’s Articles of Association are:
“Subject to any rights or restrictions for the time being attached to any class or classes of shares:
at meetings of members or classes of members each member is entitled to vote in person or by proxy or attorney; and
on a show of hands every person present who is a member has one vote, and on a poll every person present in person or by
proxy or attorney has one vote for each ordinary share he holds.”
Distribution of Holders of Equity Securities
Unmarketable Parcels
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Ordinary Fully Paid Shares
Total
Holders
Units
% of Issued
Capital
31,339
818,990
1,877,450
25,500,694
0.01
0.28
0.63
8.57
114
265
229
645
215
The number of holders of less than a marketable parcel of
ordinary shares as at the Reporting Date is as follows:
Unmarketable Parcels
as at
17 August 2015
Minimum $500 parcel
at $0.175 per unit
Minimum
Parcel Size
Holders
Units
2,858
235
264,321
269,245,923
90.51
Substantial Shareholders
Total
1,468
297,474,396
100.00
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Performance Rights
Total
Holders
Units
% of
Performance
Rights
0
0
0
3
5
8
0
0
0
270,898
2,093,240
0.00
0.00
0.00
11.46
88.54
2,364,138
100.00
As at the Reporting Date, the names of the substantial
holders of Gale Pacific and the number of equity securities in
which those substantial holders and their associates have a
relevant interest, as disclosed in substantial holding notices
given to Gale Pacific, are as follows:
Shareholder
No.
%
THORNEY HOLDINGS PTY LTD
79,702,646
26.79%
WINDHAGER HANDELS GESMBH
41,925,781
14.09%
INVESTEC BANK (AUSTRALIA)
LIMITED
19,794,793
6.65%
72 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
Twenty Largest Holders of Quoted Equity
Securities
Stock Exchange Listing
The Company only has one class of quoted securities, being
ordinary shares. The names of the 20 largest holders of
ordinary shares, and the number of ordinary shares and
percentage of capital held by each holder is as follows:
Shareholder
HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED
No.
%
72,553,816
24.39
WINDHAGER HANDELS GESMBH
41,925,781
14.09
Gale Pacific’s ordinary shares are quoted on the Australian
Securities Exchange (ASX issuer code: GAP)
Voluntary Escrow
There are no securities on issue in Gale Pacific that are
subject to voluntary escrow.
INVESTEC INVESTMENTS (UK)
LIMITED
GALE AUSTRALIA PTY LTD
J P MORGAN NOMINEES AUSTRALIA
LIMITED
UBS NOMINEES PTY LTD
GERNIS HOLDINGS PTY LIMITED
INVESTEC AUSTRALIA LIMITED
CONTEMPLATOR PTY LTD
AUST EXECUTOR TRUSTEES LTD
MR GEOFFREY DUNCAN NASH
STITCHING PTY LTD
14,182,685
13,997,844
11,497,418
7,718,384
7,409,665
5,612,108
4,691,433
4.77
4.71
3.87
2.59
2.49
1.89
1.58
Unquoted Equity Securities
The number of each class of unquoted equity securities on
issue, and the number of their holders, are as follows:
Class of Equity
Securities
Number of unquoted
Equity Securities
Number of holders
3,990,000
1.34
Shares
Options
3,327,428
1.12
Convertible Notes
0
0
0
3,050,000
1.03
Performance Rights
2,364,138
0
0
0
8
There are no persons who hold 20% or more of equity
securities in each unquoted class other than under an
employee incentive scheme.
On Market Buyback
The Company is not currently conducting an on-market buy-
back.
0.84
0.82
0.80
0.77
0.74
0.67
0.65
0.61
207,492,053
69.75
Item 7 Issues of Securities
HAROLDSWICK CORPORATION PTY
LTD
2,500,000
CHILLEN PTY LIMITED (TALLEN)
2,431,317
GFS SECURITIES PTY LTD
GALLIUM PTY LTD
W DONNELLY SERVICES PTY LTD
VENN MILNER SUPERANNUATION
PTY LTD
ATKONE PTY LTD
APM ENTERPRISES PTY LTD
TOTAL: TOP 20 HOLDERS OF ORDINARY
FULLY PAID SHARES AS AT 17 AUGUST
2015
2,380,935
2,279,359
2,207,485
2,000,000
1,919,796
1,816,599
TOTAL: REMAINING HOLDERS BALANCE
89,982,343
30.25
Other Information
The name of the Company Secretary is Ms Sophie Karzis. The
address of the principal registered office in Australia, and the
principal administrative office
is 145 Woodlands Drive,
Braeside, 3195, Victoria, Australia, telephone is (03) 9518
3333. The Company is listed on the Australian Securities
Exchange. The home exchange is Melbourne. Registers of
securities are held by Computershare Investor Services Pty
Limited, Yarra Falls, 452 Johnston Street, Abbotsford,
Victoria, 3067, Australia, local call is 1300 850 505,
international call is + 613 9415 4000.
There are no issues of securities approved for the purposes of
item 7 of section 611 of the Corporations Act which have not
yet been completed.
73 GALE PACIFIC LIMITED 2015 ANNUAL REPORT
For personal use only
www.galepacific.com
For personal use only