Annual Report 2017
For personal use only
Corporate Directory
GALE Pacific Limited
ABN 80 082 263 778
Principal Places of Business
Australia
Solicitors
Norton Gledhill
Directors
David Allman (Chairman)
Nick Pritchard (Group Managing
Director)
Peter Landos (Non Executive Director)
John Murphy (Non Executive Director)
Company Secretary
Sophie Karzis
Registered Office
145 Woodlands Drive
Braeside, VIC, 3195
T +61 3 9518 3333
Website Address
www.galepacific.com
145 Woodlands Drive
Braeside, VIC, 3195
Tel: +61 3 9518 3333
New Zealand
Unit 9, 39 Apollo Drive
Rosedale, Auckland, 0632
Tel: +64 9 479 9119
China
777 Hengshan West Road
Beilun, Ningbo, 315800
Tel: +86 574 5626 8888
USA
Level 23, 459 Collins Street
Melbourne, VIC, 3000
T + 613 9614 8933
Auditors
Deloitte Touche Tohmatsu
550 Bourke Street
Melbourne, VIC, 3000
T + 61 3 9671 7000
Stock Exchange Listing
Gale Pacific Limited shares are
listed on the Australian Securities
Exchange (ASX code: GAP)
Suite 1704, 285 West Central Parkway
Altamonte Springs, Florida 32714
Tel: +1 407 333 1038
Share Registry
Computershare
UAE
PO Box 17696, Jebel Ali, Dubai
Tel: +971 4 881 7114
Yarra Falls, 452 Johnston Street
Abbotsford, VIC, 3067
T + 61 3 9415 4000
Contents
IFC Corporate Directory
1 Company Introduction
2 Results at a Glance
3 Chairman’s Letter
6
Group Managing Director’s Review
9 Operational Report
12 Board of Directors & Chief
Financial Officer
14 Executive Leadership
15 Corporate Governance
16 Directors’ Report
29 Financial Report
2017 Annual
General Meeting
The Annual General Meeting will be held
on Friday 27 October 2017.
The Notice of Meeting and Proxy Form
are separate items accompanying this
2017 Annual Report.
02
GALE PACIFIC LIMITED
2017 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.
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.
01
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only Results at a glance
Over the past three years, we have achieved compound
annual revenue growth of 8.5% and compound underlying
earnings growth of 10%, while transforming the company
into a focused technical textiles business.
Revenue $A million
Operating Cash Flow $A million
200
150
100
50
0
137.3
148.0
76.4
60.9
2014
80.6
67.4
2015
173.2
175.3
90.8
92.7
82.4
2016
82.6
2017
20%
15%
10%
5%
0%
13.4
16.3
20.5
1.5
(0.7)
20
10
0
-10
-20
8.2
(4.0)
(9.0)
2014
2015
2016
2017
H1
H2
Growth
H1
H2
as a % of EBITDA
NPAT $A million
Net Debt $A million
200
100
0
-100
-200
40%
30%
20%
10%
0%
26.2
20.0
16.7
13.6
11.2
13.7
8.2
30
25
20
15
10
5
0
-5
2014
2015
2016
2017
H1
H2
as a % of Equity
(1.3)
-10%
Sales by Region
$A million ‘000s
Australasia $92,350
Middle East/North Africa
$12,775
Americas $61,963
Eurasia $6,177
12
10
8
6
4
2
0
8.2
4.7
3.5
2014
10.2
10.1*
6.9*
5.8
1.1
7.0
3.2
2015
2016
H1
H2
*Underlying
6.8
3.4
2017
EBITDA $A million
25
20
15
10
5
0
17.6
18.2*
22.3
21.4*
10.3
7.3
2014
13.7
4.5
2015
14.1
13.5
8.2
2016
7.9
2017
H1
H2
*Underlying
02
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Chairman’s letter
GALE Pacific has produced solid financial
results for FY2017 while continuing
to make excellent progress with the
key strategic transformation initiatives
previously announced.
Sales revenue of $175.3 million was marginally ahead of prior
25 September 2017. With a vastly improved balance sheet
year while underlying pre-tax profit of $13.5 million was in line
position, we initiated an on-market share buyback as an
with prior year. Strong operating cash flow was a particular
additional capital management tool as we continue our focus
highlight and reflects continuing improvement in supply chain
on improving shareholder returns.
Our People
Under Nick Pritchard’s leadership, the management team has
managed the difficult transformation process extremely well.
They have been well supported by all our employees and, on
behalf of the board, I would like to express our gratitude for
their contribution.
Looking Ahead
The company is now in a good position to execute its growth
strategy and we see potential in all selling regions, particularly
the Americas. Investment in manufacturing capacity will be
required to support this growth, and this is underway, together
with a developing pipeline of exciting new products.
David Allman
Chairman
25 August 2017
management and working capital control. The transformation
phase of the company is now largely complete and, with a
very strong balance sheet, we are well-positioned to take
advantage of exciting organic and other growth opportunities.
Investment in Growth Initiatives
During the period, further growth in the commercial channel
was, in part, constrained by the production capacity of our
Melbourne-based coating equipment. We see the commercial
channel as a significant growth opportunity and consequently
have decided to invest in additional coating capacity. This
investment in a new coater, which has been ordered and
will be commissioned early in the 2019 financial year, will
deliver increased capacity, flexibility and capability for our
commercial customers.
Exit of Non-core Businesses
During the period, much of the focus in the Australia/ New
Zealand business was on the efficient exit of non-core
products, principally the company’s glass business. The exit
of non-core products was largely completed during the period
and, in that regard, the Board made the decision to write off
the goodwill and other items on the balance sheet related to
these non-core products, resulting in a non-cash expense of
$18.4 million.
Shareholder Returns and
Capital Management
The board has declared a final dividend for FY 2017 of
1.0 cent per share which takes the total payout for the year
to 2.0 cents per share. This is a 14% increase on the prior
year payout and represents 58% of underlying earnings per
share of 3.4 cents. The record date for the final dividend is
03
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
GALE Pacific: Geared for Growth
Our vision is to be the leading provider of innovative and practical
products that protect and enhance the environments and lifestyles
of our customers.
04
GALE PACIFIC LIMITED
2017 ANNUAL REPORT
For personal use only
Our values
Integrity
We do what is right. We are honest
and ethical, worthy of the trust of
others. It is the price of entry to
our team.
Respect
Respect guides the way we operate
at all levels – with consumers,
customers, suppliers, investors,
the community and our own team.
Collaboration
We believe in the power of working
together in a collaborative way.
Every function and every role is
as important as each other.
People
People are the heart and soul of our business.
We continually strive to provide a safe,
supportive and engaging environment for our
team to achieve their full potential.
Community
We are proud to be part of the communities
we operate in globally. We are committed to
supporting local causes and operating in an
environmentally responsible manner at all times.
Innovation
Creative thinking inspires innovation in
everything we do. We seek and value ideas
from our team that improve our products and
provide meaningful benefits to our consumers
and customers.
Our strengths
How we plan to grow
• Innovation and Technology
• Premium Brands and Marketing
• Our People and Culture
• Our World Class Manufacturing
• Financial Discipline
•
Accelerating the development of our Americas business,
focusing on shading and screening, whilst simultaneously
entering the market for commercial coated fabrics
•
Extending our market-leading shading, screening and
technical fabrics businesses in Australia and New Zealand
•
Accelerating the growth in our Middle East and North Africa
markets, focusing on commercial shading
•
Investing in differentiated technologies and technical
partnerships that support the development of innovative
products driven by consumer need.
GALE PACIFIC LIMITED
05
2017 ANNUAL REPORT 05
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Group Managing
Director’s Review
Over the last three years we have been transforming
GALE Pacific into a focused, innovative, global,
collaborative, and more service-driven business.
Whilst there is still much to do, the transformation phase is
largely complete.
Our Strategy
Our strategy since August 2014 has been about growth;
We have created an efficient facility footprint, upgrading our
but first we had to create a business platform capable of
core facilities to a higher standard and closing four others.
supporting and sustaining it.
Our brand portfolio has been rationalised, enabling us to
The fundamental elements of our growth strategy
invest more in a smaller number of brands and make them
remain unchanged.
more meaningful to our consumers and customers.
We have focused on our core business and have largely
completed the exit of non-core products. Typically, these
non-core products were outside our core competence, of
lower value and margin, and in categories where innovation
is difficult. They created complexity and cost and, in many
cases, considerable distraction.
Focus
Our plan is to focus on a small number of geographic
markets to build larger, faster-growing and more sustainable
businesses. We have concentrated our efforts on the USA and
Canada, Australia and New Zealand, and a small number of
countries in the Middle East, Europe and Asia where there is
demand for high quality shade-related products.
On 30 June, the most significant of these exits occurred with
the sale of our pool fencing, balustrade and mirrors business.
We continue to rationalise our product ranges to focus on
products where we can innovate, and where our customers
Whilst undertaking this transformation, over the last three
and consumers value superior performance and quality.
years we have achieved compound annual revenue growth
of 8.5% and underlying earnings growth of 10%. We have
built a robust balance sheet underpinned by significant
improvements in inventory and working capital. At year end,
we closed with net cash of $1.3 million.
During the year, despite significant economic challenges in
the MENA (Middle East and North Africa) region and lower
retail sales in Australia/New Zealand due to category exits and
Masters’ closure, sales revenues were $175 million, up 1% on
the prior year.
NPAT, on an underlying basis, was $10.1 million, flat on the
prior year primarily due to lower sales in MENA, our most
profitable region.
Our Vision
Our goal is to become experts and global leaders in the
innovation, development, manufacture, marketing and
distribution of shade solutions and high performance
technical textiles.
We are well on our way to achieving this goal, and everything
we do is geared towards it.
Our manufacturing has also been rationalised to focus on
processes where we have capability and a globally competitive
cost position.
Innovation
Our goal is to deliver meaningful innovation in our core
categories. Over the last three years, we have focused our
development activities and progressively increased our
investment in research and development.
Whilst investing in additional internal resources, simultaneously
we have built external technical partnerships that are helping
to accelerate our new product development and assist in
developing our manufacturing facilities’ technical capability.
We are beginning to see the results of this strategy and plan
to increase steadily our investment in this important area.
Collaborative
We are working hard at becoming a trusted supplier to our
customers around the world. Our strategy involves working
closely and effectively with existing customers and building
stronger relationships with a smaller number of strategic supplier
partners which are critical to our success.
06
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only Right: Warehousing
operations, Melbourne,
Australia
Far right: Investing in
additional extrusion coating
capacity to accelerate
commercial sector growth.
We have made good progress in this area and have achieved
capacity, and allow us to develop additional domestic and
improvements in quality and service, as well as cost reductions.
export markets for new and existing products.
Service-Driven
During the year, we achieved further improvements in our
service performance across most regions. At our China
manufacturing operations, we reduced lead times and
• Americas Region – We are excited about the potential for
our products in North America. In 2017, we accelerated
our growth in this region, and developed the right sales
and marketing organisation for the future.
increased order fill rates. Our strategy to manufacture
Our strategy is to build a strong retail shade category,
North American requirements earlier resulted in higher
under our Coolaroo brand, in retail and online markets. In
inventory at the end of December, but translated into service
2017, we were successful in trialling many new products
improvements and manufacturing cost reductions as planned.
and categories with our retail customers and secured
Despite productivity improvements, continued growth in the
additional customer ranging and trials for 2018.
commercial sector provided challenges for our production
• New USA Warehouse – In 2017, we undertook a detailed
capacity. Consequently, we have committed to further
review of our Americas region supply chain requirements
investment to increase output at our Melbourne facility.
to support our aggressive growth plan there.
Health and Safety
Underpinning our strategy is an unwavering commitment to
the health and safety of our employees.
Our safety performance in all regions improved during the year,
with no major incidents or injuries. We have made tremendous
progress in building a consistent safety culture across all parts
of our business, but know that we can never rest on our laurels
in this critical area. We have increased our investment in
training our leaders and employees in key safety skills.
Looking Forward
Key elements of our 2018 plan include:
• Fabrics Technology – Continuing our transition towards
leadership in technical fabrics through further innovation
in our core product categories and a final ‘clean up’ of
non-core product categories.
• Coating Manufacturing Capacity – We foresee
considerable growth opportunities in the commercial coated
fabrics market globally. As such, we have committed to
invest $8 million in the purchase of a new, state-of-the-art
production line for advanced coated fabrics.
This coating line will be installed at our Melbourne
facility and will support the development of our coated
fabrics business, currently constrained by manufacturing
Following that review, we leased a new, larger warehouse
in Fontana, California, enabling the business to service our
Americas customers from a single distribution facility. We
took control of this facility in August 2017 and will spend
the next few months setting it up in readiness for it to
become operational in December.
The new warehouse is expected to enable us to achieve
service, cost and other improvements.
• China Manufacturing Operations – In the last three
years, we have made considerable improvements to
our manufacturing facility in Ningbo, China. These have
included upgrading buildings, amenities, dormitories, and
production equipment, all factors which have contributed
to a more cost-efficient operation and one delivering
improved service and margins.
In 2018, we will invest in further enhancements, including
new plant and equipment, to support our growth, improve
quality and service, and reduce costs. In addition, our
China manufacturing operations will transition to our
global I.T. system.
We will also close our weaving facility in China and extend
our sourcing arrangement with one of our key weaving
suppliers, enabling us to increase the efficiency of our
China manufacturing.
07
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Group Managing Director’s Review continued
• Middle East North Africa – despite the considerable
Subject to economic conditions, we expect that 2017/18 net
economic and political challenges in 2017, we remain
profit after tax will be higher than the 2016/17 underlying
optimistic about the potential of this region. During the
equivalent of $10.1 million.
year, we invested in additional sales resources and in
2018 will invest further to provide our team with the
resources to pursue the opportunities identified.
We are confident that we will see this region recover and
return to growth during the year.
Outlook
Market conditions during the year are expected to be similar
In line with previous years, second half earnings are expected
to be considerably greater than those of the first half.
Our People
We have a wonderful team of people around the world.
Some of these employees have joined our business recently
as we have undertaken the transformational journey. Many
are long-term employees who have committed to GALE
to those experienced in the prior year.
Pacific over an extended period – in some cases more than
In the Middle East, uncertainty remains, though we anticipate
thirty years.
a gradual improvement in market conditions that impacted
I am proud of what our team has achieved, and would like
negatively throughout last year.
to thank them for their efforts as we work hard to build our
In Australia and New Zealand, we will see revenue decline,
company’s performance.
a result of the exit of the non-core categories, primarily
I would also like to thank our customers for their support of
glass products. These exits will not impact profitability.
GALE Pacific, and our suppliers for the important role they
Core product categories are expected to continue to grow
play in our success.
and solid customer ranging in the retail shade category has
been confirmed.
Finally, I would like to thank our shareholders for their
support. We are working hard to make GALE Pacific worthy of
We expect the Americas region to accelerate its growth
your investment.
trajectory, driven by growth in retail shade sails and window
shades. Seasonal commitments from North American
retailers look very promising at this early stage.
Major investments will include the new warehouse in the USA,
in-store racking to support new ranging that has been secured
in North America, China manufacturing facility upgrades, and
new production equipment to support growth. In Australia, we
will commence preparations for the new extrusion coating line
at the Melbourne facility.
Nick Pritchard
Group Managing Director
25 August, 2017
08
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only Operational Report
Revenue
Underlying EBITDA
Underlying EBIT
Underlying profit before tax
Underlying profit after tax
Statutory profit before tax
Statutory profit after tax
Net cash provided by operating activities
Net cash/(debt)
Underlying basic earnings per share (cents)
Final dividend per share (cents)
Dividends per share
Please see page 11 for reconciliation from underlying earnings to statutory earnings.
Australia/New Zealand
Revenue
Underlying EBITDA
Underlying PBT
FY2017
A$ million
FY2016
A$ million
Change
%
175.3
173.2
21.4
15.1
13.5
10.1
(4.9)
(8.0)
19.7
1.3
3.39
1.00
2.00
22.3
15.1
13.5
10.2
13.5
10.2
17.8
(8.2)
3.44
1.00
1.75
1%
(4)%
–
–
(1)%
(136)%
(178)%
10%
116%
(1)%
–
14%
FY2017
A$ million
FY2016
A$ million
Change
%
92.4
2.9
1.9
97.5
3.6
2.6
(5)%
(18)%
(25)%
Sales to the commercial channel grew strongly, with increases in most product categories, although these were limited by
capacity constraints during the peak period. Further investment in the coating operations improved output and quality, but
production remained insufficient to capitalise on the full potential.
To take advantage of growth opportunities in the commercial coated fabrics market, the decision has been taken to invest
$8 million in a new, state-of-the-art coating production line. This will be installed at the Melbourne facility and will allow the
development of additional domestic and export markets for new and existing products.
In the retail sector, sales declined due to the discontinuation of non-core products and the exit of Masters from the home
improvement market, which caused short-term deflation and diverted consumers from GALE Pacific’s retail partners. Retailers’
sales of the company’s products, however, increased. The year’s result follows strong performance in FY2016 when there was
substantial new business in the portable shade category.
The business continued to improve the efficiency of its supply chain, reduced inventory substantially, increased inventory turns,
enhanced service and reduced operational costs.
Americas
Revenue
EBITDA
PBT
FY2017
A$ million
FY2016
A$ million
Change
%
62.0
6.5
4.4
53.6
4.9
3.2
16%
33%
39%
Sales grew strongly in the retail channel, including online. The new retail business secured in the prior year was serviced
efficiently and customers’ sales were positive. Major retailers extended trials of the company’s window shades and shade sails,
and new ranging and trials are being extended to new geographic markets and more products in FY2018.
09
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only Following a detailed review of the Americas supply chain and to support growth, a new, larger warehouse has been leased in
Fontana, California so customers can be serviced from a single distribution facility. This will become operational in December
2017 and will meet the business’ medium-term requirements and enable it to make service and cost improvements.
The opportunity for growth in the Americas is significant, and with the business now focused on the shade category and
commercial fabrics, we see considerable potential in both the retail and commercial sectors. To take advantage of this, new
leadership was appointed to lead the commercial business expansion in the region from July 2017.
Middle East/North Africa
Revenue
EBITDA
PBT
FY2017
A$ million
FY2016
A$ million
Change
%
12.8
2.5
2.3
15.4
3.2
3.1
(17)%
(22)%
(24)%
Despite the scale of the opportunities in this region, market conditions remained subdued with a number of projects being
postponed. The company remains confident in its ability to be successful with these projects and is positive about opportunities in
the region; additional sales resources were recruited during the year, and further investment is planned in FY2018.
China Manufacturing & Eurasia
Revenue
Intersegment Sales (eliminated when consolidating group results)
EBITDA
PBT
FY2017
A$ million
FY2016
A$ million
Change
%
8.2
49.8
11.5
8.0
6.8
58.4
12.6
7.0
21%
(15)%
(9)%
13%
Sales in the Eurasia region increased, driven by demand for commercial fabrics. New distributors were appointed in focus markets
and low-volume, low-margin retail products were exited.
Facility and plant upgrades continued at the China manufacturing operations, and refurbishment of the extrusion plant was
completed, setting a new internal benchmark. Service and delivery performance improved.
As part of the strategy to focus on cost, quality and service, the business invested in building lean manufacturing capability
and upgrading other management roles. Further investment in new plant and equipment is planned for FY2018, and the China
manufacturing operations will transition to the company’s global IT system. The weaving facility will also be closed and the
sourcing arrangement with a key weaving supplier will be extended to increase manufacturing efficiency.
Balance Sheet and Cash Generation
GALE Pacific’s balance sheet is now well positioned to increase investment in the company’s core business. Operating cash
flow of $19.7 million was a new record for the company, exceeding the prior year record by 10%. Total group inventory declined
by 15%, despite unfavourable exchange rate movements, with inventory days reduced by 22 days. The business also improved
receivable collections and payment terms with key suppliers which, combined with inventory reductions, drove overall cash
conversion improvement. The core business, in particular in the Americas and our commercial sectors in all markets, continue to
contribute strong operating cash generation. We continue to see improved productivity in our manufacturing operations in China
with improved supplier terms and inventory efficiency.
The company made a non-cash write-off of goodwill and other related items of $18.4 million, which will have no impact on future
trading or banking covenants. After non-cash items, after tax (loss) is $(8.0) million. The write-off is one-off and relates largely to
historical goodwill dating back to 2012. The businesses affected are considered non-core and do not form part of the company’s
strategy moving forward.
10
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only Reconciliation of Underlying Results to Statutory Results for FY2017
In FY2017, the company made a non-cash, non-recurring write-off of goodwill and other related items of $18.4 million pre-tax
and $18.1 million after tax respectively. The following table reconciles the underlying results to the statutory results.
EBITDA
A$ million
EBIT
A$ million
Profit before
tax
A$ million
Profit after tax
A$ million
Basic earnings
per share
cents
Statutory
Goodwill write-off and associated costs
Underlying
3.0
18.4
21.4
(3.3)
18.4
15.1
(4.9)
18.4
13.5
(8.0)
18.1
10.1
(2.71)
6.10
3.39
Underlying profit, EBITDA and EBIT are the statutory profit, EBITDA and EBIT respectively adjusted for non-cash, non-recurring
impairment of goodwill and other related items. The company believes that underlying profit, EBITDA and EBIT provide a
better understanding of its financial performance and allow 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. The directors had the consistency of the application of the policy reviewed by the external auditor.
11
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only Board of Directors & Chief Financial Officer
From left: Nick Pritchard, John Murphy, Peter Landos, David Allman and Matt Parker.
David Allman, B.Sc.
Chairman and Non Executive Director since November 2009.
Nick Pritchard, B Bus. (Marketing)
Group Managing Director appointed 22 August 2014. Nick
David was Managing Director of McPherson’s Limited from
was appointed to the position of Group Managing Director
1995 to 2009 and prior to that was Managing Director of
in August 2014. Prior to joining GALE Pacific, he held senior
Cascade Group Limited for seven years. Before this, he held
leadership positions at Newell Brands (Newell Rubbermaid)
senior positions with Elders IXL Limited and Castlemaine
for 11 years, most recently Vice-President/General Manager –
Tooheys Limited. David holds a degree in engineering and,
Australia & New Zealand, where he led all business segments.
prior to obtaining general management positions, held
Nick has considerable local and international experience
managerial roles in production management, finance and
leading a highly profitable, high growth organisation.
marketing. He is Chairman of Catalyst Education Pty Ltd. In
the three years prior to 30 June 2017, he was also a director
of McPherson’s Group Limited and 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.
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 which 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 on mergers
and acquisitions, divestments, business restructurings
and capital markets. He is also Non Executive Chairman
of Adacel Technologies Limited. In the three years prior to
12
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only 30 June 2017, Peter was also a director of McPherson’s
Group Limited and Rattoon Holdings Limited.
Peter is a member of the Company’s Nomination, Audit and
Risk and Remuneration Committees.
Sophie Karzis, B Juris LLB
Company Secretary since June 2004. Sophie is a practising
lawyer with over 15 years’ experience as a corporate and
commercial lawyer, company secretary and general counsel
for a number of private and public companies. Sophie is
John Murphy, CA, FCPA, B.Comm, M.Comm
Non Executive Director since August 2007. John was the
principal of Corporate Counsel, a corporate law practice with
a focus on equity capital markets, mergers and acquisitions,
Managing Director of Investec Wentworth Private Equity
corporate governance for ASX-listed entities, as well as the
Limited (“IWPE”) from 2002 until 2012, when he changed
more general aspects of corporate and commercial law. She
from being an executive to a non-executive director of
is currently the company secretary of a number of ASX-listed
Investec Bank (Australia) Limited. He is currently the
and unlisted entities, and is a member of the Law Institute of
Managing Director of private equity firm Adexum Capital
Victoria as well as the Governance Institute of Australia.
Limited. John has extensive director experience having sat
on the boards of the 28 investments made by IWPE and
Adexum over the last 15 years. John is currently a director
of Ariadne Australia Limited and, in the three years prior to
30 June 2017, he was also a director of Clearview Wealth
Limited, Kresta Holdings Limited, Redflex Holdings Limited
and Vocus Communications Limited.
John is the Chairman of the Company’s Remuneration
Committee, the Audit and Risk Committee and is a member of
the Nomination Committee.
Above left: Caption text to go
here, text to go here.
Above right: Caption text to go
here, text to go here.
13
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only Executive Leadership
Nick Pritchard
Group Managing Director
Nick re-joined GALE Pacific in
August 2013 following 11 years
in senior leadership positions at
Newell Rubbermaid (IRWIN Tools,
Rubbermaid, Waterman, Parker,
Sharpie, PaperMate, DYMO, Liquid
Australian retailer with 58 stores across Australia employing
over 2,000 staff. At Harris Scarfe, Vicki led the human
resources function, as well as group payroll, for seven years.
Prior to Harris Scarfe, she held roles of increasing seniority at
Skilled Group, Apis Consulting Group, Bristol-Myers Squibb,
Coles Myer and Myer Grace Brothers. She holds a Bachelor’s
Degree in Business Administration (HR Management) from
Monash University.
Paper). He led the GALE Australia/New Zealand business
until August 2014 when he was appointed Group Managing
Director. Nick was formerly Marketing Manager and Product
Manager of GALE Pacific between 1996 and 2003. He
developed the Coolaroo brand and many of the company’s
highly successful products, including DIY shade sails and
window shades. Nick is a registered member of the Australian
Insitute of Company Directors.
Matt Parker
Chief Financial Officer
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 Pacific, he 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.
Bruno Marotta
General Manager – Supply Chain
Bruno joined GALE Pacific in
October 2014 and has over
30 years’ experience in the supply
chain arena. He spent 18 years
in senior supply chain roles at
American Tool Company/Newell
Rubbermaid where his responsibilities included leading
warehouse facilities, logistics, procurement and customer
service functions across the Asia Pacific region.
Vicki Klunyck
General Manager – People
& Culture
Vicki joined GALE Pacific in
February 2017. She is an
accomplished HR professional
with experience in national and
Asia-Pacific roles in publicly listed
Cliff XinHua Zhang
General Manager – Manufacturing
Cliff joined GALE Pacific in May
2016. He is an experienced
manufacturing leader having
held senior manufacturing and
product quality roles at Bosch
Power Tools over 13 years,
and operations, logistics and production roles at Andrews
Telecommunications, Honeywell CATIC Engine Co. and
Solectron Technology Co., Ltd., a U.S.-based manufacturer
of electronics products. Cliff has a Bachelor of Science
(Mechanical Engineering), from Nanjing University of Science
& Technology, China.
Ali Haidar
General Manager – Middle East
North Africa
Ali joined GALE Pacific in
August 2004 and has 12 years’
experience in sales and marketing
with a strong record of business
development in the region. He
has led GALE Pacific’s profitable growth in the Middle East
and was recently given responsibility to lead the company’s
focused expansion in the Middle East/North Africa region.
Mark Nicholls
General Manager – Eurasia
Mark joined GALE Pacific in
June 2016. He has tremendous
experience in the UK, Europe,
Asia, South Africa and Israel,
with knowledge of both retail
and commercial sectors and
experience of appointing new distributors, managing large,
multi-country retailers, etc. Mark’s most recent role was
Business Development Manager (UK/Ireland) for FISKARS
and prior to that held Business Development Manager and
International Sales Manager roles for Trisport (a division of
Pride Sports), Newell Rubbermaid and SANDVIK.
entities and emerging/high growth entrepreneurial companies.
Previously, she was employed by Harris Scarfe, a leading
14
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For 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).
15
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only Directors’ Report
The Directors of Gale Pacific Limited (“the Company”)
In addition to the above dividends, on the 25 of August
present their annual financial report for the Company and its
2017 the Directors declared a dividend of 1 cent per share
controlled entities (“the Group”) for the financial year ended
to the holders of fully paid ordinary shares in respect of the
30 June 2017.
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
year ended 30 June 2017, payable on 2 October 2017 to
shareholders on the register at 25 September 2017. 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 $2,972,000.
For the full year, the dividend of 2.0 cents per share has
been declared on earnings of (2.71) cents per share
Apart from the dividend declared as discussed above, no
(underlying 3.39).
other matter or circumstance has arisen since 30 June 2017
that has significantly affected, or may significantly affect the
Group’s operations, the results of those operations, or the
Group’s state of affairs in future financial years.
Likely Developments
Disclosure of information regarding likely developments in the
operations of the Group in future financial years has been
made in part in the Chairman’s Letter of this Annual Report.
Environmental Regulation
and Performance
The Group’s operations are not subject to any significant
Share Based Payments
Performance Rights
The number of performance rights on issue at the date of this
report is 4,757,802. No amount is payable on the vesting of a
performance right. Each performance right entitles the holder
to one (1) ordinary share in GALE Pacific Limited in the event
that the performance right is exercised. Performance rights
carry no rights to dividends and no voting rights.
1,569,000 performance rights were granted to executives
and the Group Managing Director on 21 September 2016.
The performance rights will vest subject to a continuation of
employment to 30 June 2019 and the satisfying of relevant
environmental regulations under the Commonwealth or State
performance hurdles based on the Group’s diluted earnings
legislation. The Directors believe that the Group has adequate
per share over the three year period from 1 July 2016 to
systems in place for the management of its environmental
30 June 2019. None of these performance rights can vest
requirements and is not aware of any breach of those
environmental requirements as they apply to the Group.
Dividends
Dividends paid to members during the financial year were
as follows:
2016/2017
($’000)
until 30 June 2019 and expire on 1 December 2019.
As at 30 June 2017, 413,603 performance rights lapsed
during the year to 30 June 2017 as the relevant personnel
ceased employment with the Company.
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.
Final ordinary dividend for the year ended
30 June 2016 of 1.00 cent per share paid
Further details of the options and performance rights
movements during the reporting period are disclosed in the
on 3 October 2016 (unfranked)
1.0 cent
Remuneration Report.
Interim ordinary dividend for the half year
ended 31 December 2016 of 1.00 cents
per share paid on 3 April 2017 (unfranked)
1.0 cent
16
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only 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
Fully Paid
Ordinary
Shares
2,400,000
–
4,416,599
212,804
Options
Performance
Rights
–
–
–
–
–
–
–
2,356,385
Directors’ Meetings
The table below sets out the attendance by Directors.
Directors’ Meetings
Audit and Risk Committee
Meetings
Remuneration Committee
Meetings
Nomination Committee
Meetings
No of
Meetings
Eligible to
Attend
Attended
No of
Meetings
Eligible to
Attend
Attended
No of
Meetings
Eligible to
Attend
Attended
No of
Meetings
Eligible to
Attend
Attended
13
13
13
13
12
12
13
13
4
4
4
–
4
3
4
–
1
1
1
–
1
1
1
–
1
1
1
–
1
1
1
–
Directors
D Allman
P Landos
J Murphy
N Pritchard
As at the date of this report, the Company has an Audit & Risk Committee, a Remuneration Committee and a Nomination
Committee of the Board of Directors.
The members of the Audit and Risk Committee are John Murphy, David Allman and Peter Landos. The Chairman of the Audit and
Risk Committee is John Murphy.
The members of the Remuneration Committee are John Murphy, David Allman and Peter Landos. The Chairman of the
Remuneration Committee is John Murphy.
The members of the Nomination Committee are David Allman, Peter Landos and John Murphy. 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.
17
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only 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
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 2017:
30 June 2017
30 June 2016
30 June 2015
30 June 2014
30 June 2013
Sales
175,265
173,191
147,993
137,304
119,988
Underlying profit before tax*
Underlying profit after tax*
Net profit before tax
Net profit after tax
13,546
10,078
13,509
10,228
(4,861)
13,509
(8,044)
10,228
8,707
6,911
6,221
5,170
10,988
12,016
8,233
9,094
10,988
12,016
8,233
9,094
Share price at start of year
36 cents
17 cents
23 cents
26 cents
24 cents
Share price at end of year
40 cents
36 cents
17 cents
23 cents
26 cents
Interim dividend
Final dividend
1.00 cent
0.75 cents
–
1.30 cents
1.20 cents
1.00 cent
1.00 cents
1.00 cent
1.35 cents
1.35 cents
Basic earnings per share
(2.71) cents
3.44 cents
1.74 cents
2.77 cents
3.07 cents
Diluted earnings per share
(2.71) cents
3.40 cents
1.72 cents
2.72 cents
3.00 cents
*Reconciliation from underlying earnings to statutory earnings 2017 is on page 11.
Remuneration Practices
The Group policy for determining the nature and amount of
Remuneration Structure
In accordance with best practice corporate governance, the
emoluments of Board members and Senior Executives is as
structure of Non Executive Directors and Senior Managers
follows. The remuneration structure for Executive Officers,
remuneration is separate and distinct.
including Executive Directors, is based on a number of factors
including length of service, particular experience of the
Non Executive Director Remuneration
individual concerned, and overall performance of the Group.
Objective
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.
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.
Payment of bonuses, and other incentive payments are
Structure
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.
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
18
GALE PACIFIC LIMITED2017 ANNUAL REPORT02Directors’ Report continuedFor personal use only annum. The amount of the aggregate remuneration and the
as the relevant personnel ceased employment with the
manner in which it is apportioned is reviewed periodically.
company. Each performance right entitles the holder
The Board considers fees paid to Non Executive Directors of
to one (1) ordinary share in Gale Pacific Limited and is
comparable companies when undertaking this review process.
subject to satisfying the relevant performance hurdles
Each Non Executive Director receives a fee for being
a Director of the Company and does not participate in
based on improvements in the Group’s diluted earnings
per share.
performance based remuneration.
Actual results will be normalised by the board as
Senior Manager and Executive
Director Remuneration
Objective
considered necessary (at the boards absolute discretion)
so that it reflects underlying profit.
Options and performance rights issued to executives
during the year were issued in accordance with the
The Group aims to reward executives with a level and mix
Group’s remuneration policy which:
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.
Structure
• 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
In determining the level and make up of executive
remuneration policy. The budget targets for each business
remuneration, the Remuneration Committee reviews reports
unit and the company overall is established each year
detailing market levels of remuneration for comparable roles.
by the Board. The performance criteria include sales
Remuneration consists of fixed and variable elements.
and earnings before interest and tax growth and working
(a) Share Based Payments
capital management. For corporate executives, the
performance criteria include growth in earnings before tax
The Group maintains a performance rights scheme
and cash flow management.
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:
Actual results will be normalised by the board as
considered necessary (at the boards absolute discretion)
so that it reflects underlying profit.
Key Management Personnel of the Group Who Held
Office During the Year
•
•
Improvement in earnings per share; and
Directors
Improvement in return to shareholders.
D Allman (Chairman Non Executive)
The number of unissued ordinary shares under the
performance rights scheme at 30 June 2017 was
P Landos (Non Executive)
J Murphy (Non Executive)
4,757,802. 1,325,802 of these shares were granted on
N Pritchard (Group Managing Director)
11 December 2014 and will not vest until the time of the
company’s 2017 annual report is released on the ASX
Executives
(on or around 1st October 2017). 1,863,000 of these
M Parker (Chief Financial Officer)
shares were granted on 9 October 2015 and will not vest
C Fuller (General Manager Australia & New Zealand)
until the time of the company’s 2018 annual report is
L Klebenow (General Manager – Americas)
released on the ASX (on or around 1st October 2018).
C Zhang (General Manager – China)
A further 1,569,000 of these shares were granted on
B Marotta (General Manager – Supply Chain)
21 September 2016 and will not vest until the time of the
A Haidar (General Manager – Middle East & North Africa)
company’s 2019 annual report is released on the ASX
T Varani (General Manager – EurAsia)
(on or around 1 October 2019). In the period between
1 July 2016 and 30 June 2017, 413,603 shares lapsed
19
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
The following table discloses the remuneration of the Directors of the Company:
2016/2017
Short Term Benefits
Post
Employ-
ment
Share
Based
Payments
Termina-
tion
Benefits
Total
Performance Related
Salary &
Fees
$
Bonus
$
Non
Monetary
$
Super
$
Rights
$
$
$
Total %
Rights %
Directors
Executive Directors
N Pritchard
451,500
230,590
Non–Executive Directors
D Allman
J Murphy
P Landos
Total
99,673
85,312
74,581
–
–
–
711,066
230,590
–
–
–
–
–
30,000
101,344
–
813,434
41%
12%
31,742
8,979
7,259
–
–
–
–
–
–
131,415
94,291
81,840
77,980
101,344
– 1,120,980
30%
9%
2015/2016
Short Term Benefits
Post
Employ-
ment
Share
Based
Payments
Termina-
tion
Benefits
Total
Performance Related
Salary &
Fees
$
Bonus
$
Non
Monetary
$
Super
$
Rights
$
$
$
Total %
Rights %
Directors
Executive Directors
N Pritchard
420,000
Non–Executive Directors
D Allman
G Richards1
J Murphy
P Landos
Total
92,720
16,667
83,508
68,493
681,388
1. Mr Richards retired 29 September 2015.
–
–
–
–
–
–
–
–
–
–
–
–
30,000
111,611
–
561,611
20%
20%
32,280
5,833
8,158
6,507
–
–
–
–
82,778
111,611
–
–
–
–
–
125,000
22,500
91,666
75,000
875,777
13%
13%
20
GALE PACIFIC LIMITED2017 ANNUAL REPORT02Directors’ Report continuedFor personal use only The following table discloses the remuneration of the Group’s key management personnel:
2016/2017
Key
Management
Personnel
Short Term Benefits
Post
Employ-
ment
Share
Based
Payments
Termina-
tion
Benefits
Total
Performance Related
Salary &
Fees
$
Bonus
$
Non
Monetary
$
Super
$
Rights
$
$
$
Total %
Rights %
L Klebenow1
367,586
–
20,563
–
47,341
M Parker2
B Marotta3
E Varani4
A Haidar5
C Fuller6
C Zhang7
M Denney8
S Elding9
V Klunyk10
263,750
107,609
235,749 100,530
–
–
25,056
35,593
22,396
31,385
196,116
42,898
66,822
191,849
40,678
43,536
–
–
–
25,599
216,157
13,951
–
19,791
–
157,705
–
92,085
62,769
–
–
–
–
33,080
–
–
–
–
–
8,281
5,963
18,410
–
–
–
–
–
–
–
–
–
–
435,489
432,009
390,060
305,836
301,662
249,899
209,195
165,991 165,991
–
–
100,366
68,732
11%
33%
34%
14%
22%
6%
9%
0%
0%
0%
Total
1,783,766 305,666
164,000
81,487
158,329
165,991 2,659,238
17%
11%
8%
8%
0%
8%
0%
9%
0%
0%
0%
6%
2015/2016
Key
Management
Personnel
B Wang11
M Denney
M Parker
B Marotta
E Varani
A Haidar
S Elding
A Richardson12
C Fuller
C Zhang
L Klebenow
Short Term Benefits
Post
Employ-
ment
Share
Based
Payments
Termina-
tion
Benefits
Total
Performance Related
Salary &
Fees
$
Bonus
$
Non
Monetary
$
Super
$
Rights
$
109,377
102,529
14,911
365,836
106,597
29,138
514
–
–
–
245,000
228,883
240,490
178,890
131,553
79,514
70,192
23,923
21,061
–
–
–
–
–
–
–
–
–
–
–
23,275
18,260
21,744
36,945
6,195
46,036
–
–
11,184
17,219
–
–
–
11,186
–
12,497
13,583
7,554
6,668
694
–
–
–
–
–
$
$
Total %
Rights %
287,082
514,413
6%
13%
4%
7%
9%
6%
13%
4%
7%
9%
–
–
–
–
–
–
–
–
–
–
501,571
286,535
287,572
257,869
242,144
157,633
87,068
76,860
35,803
21,061
Total
1,694,719
209,126
107,465
72,947
97,191
287,082 2,468,530
4%
4%
1. Mr Klebenow was the General Manager – Americas, remunerated in United States dollars converted to Australian dollars in the table above. Mr Klebenow departed on
7 August 2017.
2. Mr Parker is the Chief Financial Officer. He is located in Australia and remunerated in Australian dollars.
3. Mr Marotta is General Manager – Supply Chain. He is located in Australia and remunerated in Australian dollars.
4. Mr Varani is the General Manager – EurAsia. He is based in Shanghai and remunerated in United States dollars converted to Australian dollars in the table above.
5. Mr Haidar is the General Manager – Middle East and North Africa and is based in Dubai. He is remunerated in United States dollars converted to Australian dollars in the
table above.
6. Mr Fuller was the General Manager – Australia and New Zealand. Mr Fuller resigned 27 April 2017.
7. Mr Zhang is the General Manager – China and is based in China and remunerated in Chinese renminbi converted to Australian dollars in the above table.
8. Mr Denney was the General Manager – Americas, remunerated in United States dollars converted to Australian dollars in the table above. Mr Denney resigned 10 May 2016.
9. Ms Elding was the Manager – People and Culture. Ms Elding resigned 3 March 2017.
10. Ms Klunyk is the General Manager – People and Culture. She is located in Australia and remunerated in Australian dollars. Ms Klunyk commenced 23 February 2017.
11. Mr Wang was the General Manager – China, remunerated in Chinese renminbi converted to Australian dollars in the above table. Mr Wang resigned 21 October 2015.
12. Mr A Richardson was the General Manager, Australia and New Zealand located in Australia. Mr Richardson resigned 16 October 2015.
21
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only Directors’ and Executives’ Equity Holdings: Fully Paid Ordinary Shares
Balance
30 June 2016
No.
Granted as
Compensation
No.
Received on
Exercise of
Options
No.
Other
Movements
No.
Balance
30 June 2017
No.
212,804
4,416,599
2,400,000
–
7,029,403
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
212,804
4,416,599
2,400,000
–
7,029,403
Balance
30 June 2015
No.
Granted as
Compensation
No.
Received on
Exercise of
Options
No.
Other
Movements
No.
Balance
30 June 2016
No.
212,804
3,316,599
1,443,804
491,899
800,000
1,500,000
7,765,106
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
212,804
1,100,000
4,416,599
956,196
2,400,000
–
491,899
(300,000)
500,000
(1,500,000)
–
256,196
8,021,302
2016/2017
Executive Directors
N Pritchard
Non–Executive Directors
J Murphy
D Allman
Executives
None
Total
2015/2016
Executive Directors
N Pritchard
Non-Executive Directors
J Murphy
D Allman
G Richards1
Executives
M Denney2
B Wang3
Total
1. Mr Richards retired 29 September 2015
2. Mr Denney resigned 10 May 2016
3. Mr Wang resigned 21 October 2015
Share Based Compensation
The terms and conditions of each grant of performance rights granted but not vested as at 30 June 2016 affecting remuneration
in the current or a future reporting period are as follows:
Grant Date
Value per performance rights at grant date
35 cents
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 20th September 2017) and expire on 1 December 2017.
22
GALE PACIFIC LIMITED2017 ANNUAL REPORT02Directors’ Report continuedFor personal use only The performance rights granted on 9th of October 2015 are subject to the continuation of employment to 30 June 2018 and
then the satisfying of relevant performance hurdles based on improvements in the Groups diluted earnings per share over the
three year period from 1 July 2015 to 30 June 2018. None of these rights can vest until the company releases its FY18 annual
report to the ASX (on or around 20th September 2018) and expire on 1 December 2018.
The performance rights granted on 21st of October 2016 are subject to the continuation of employment to 30 June 2019 and
then the satisfying of relevant performance hurdles based on improvements in the Groups diluted earnings per share over the
three year period from 1 July 2016 to 30 June 2019. None of these rights can vest until the company releases its FY19 annual
report to the ASX (on or around 20th September 2018) and expire on 1 December 2019.
Directors’ and Executives’ Equity Holdings, Compensation Options and Performance Rights: Granted and
Vested during the year
2016/2017
Vested
Number
Granted
Number
Grant Date
Executive Directors (Performance Rights)
Terms and Conditions for Each Grant
Value Per
Option/Right
at Grant
Date
Exercise
Price
Expiry Date
First
Exercise
Date
Last Exercise
Date
N Pritchard
–
578,000
21/09/16
0.3507
Nil
01/12/19
01/10/19
01/10/19
Non–Executive Directors
None
Management Personnel (Performance Rights)
Other Management
Total
–
–
991,000
21/09/16
0.3507
Nil
01/12/19
01/10/19
01/10/19
1,569,000
2015/2016
Vested
Number
Granted
Number
Grant Date
Executive Directors (Performance Rights)
Terms and Conditions for Each Grant
Value Per
Option/Right
at Grant
Date
Exercise
Price
Expiry Date
First
Exercise
Date
Last Exercise
Date
N Pritchard
–
913,000 09/10/2015
$0.2143
Nil 01/12/2018 01/10/2018 01/10/2018
Non-Executive Directors
None
Management Personnel (Performance Rights)
Other Management
Total
–
–
2,109,000 09/10/2015
$0.2143
Nil 01/12/2018 01/10/2018 01/10/2018
3,022,000
23
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only Directors’ and Executives’ Equity Holdings Compensation Options and Performance Rights: Movements
during the year
Exercised
No.
Lapsed
No.
Net Other
Change
No.
Balance
30 June 2017
No.
Balance Held
Nominally
No.
Balance
1 July 2016
No.
Granted as
Compen-
sation
No.
2016/2017
Executive Directors (Performance Rights)
N Pritchard
1,778,385
578,000
Non-Executive Directors
None
Executives (Performance Rights)
B Marotta
588,122
179,000
M Parker
320,000
203,000
A Haidar
281,364
146,000
S Elding
E Varani
Cliff Zhang
Lindsay Klebenow
217,603
196,000
–
–
–
–
105,000
270,000
Other Management Personnel (Performance Rights)
Other
Management
220,931
88,000
Total
3,602,405
1,569,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(217,603)
(196,000)
–
–
–
(413,603)
–
2,356,385
–
–
–
–
–
–
–
–
–
767,122
523,000
427,364
–
–
105,000
270,000
308,931
4,757,802
–
–
–
–
–
–
–
–
–
–
Exercised
No.
Lapsed
No.
Net Other
Change
No.
Balance
30 June
2016
No.
Balance Held
Nominally
No.
Balance
1 July 2015
No.
Granted as
Compen-
sation
No.
2015/2016
Executive Directors (Performance Rights)
N Pritchard
865,385
913,000
Non-Executive Directors
None
Executives (Performance Rights)
B Marotta
289,122
299,000
M Parker
A Haidar
S Elding
E Varani
B Wang
–
320,000
99,364
182,000
99,603
118,000
–
196,000
247,793
367,000
M Denney
343,805
478,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(614,793)
(821,805)
Other Management Personnel (Performance Rights)
Other
Management
419,066
149,000
Total
2,364,138
3,022,000
–
–
(347,135)
(1,783,733)
24
–
1,778,385
–
–
–
–
–
–
–
–
–
588,122
320,000
281,364
217,603
196,000
–
–
220,931
3,602,405
–
–
–
–
–
–
–
–
–
–
Value of
Lapsed
Options/
Rights
$
–
–
–
–
44,528
44,989
–
–
–
89,516
Value of
Lapsed
Options/
Rights
$
–
–
–
–
–
–
122,025
162,621
60,791
345,437
GALE PACIFIC LIMITED2017 ANNUAL REPORT02Directors’ Report continuedFor 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
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
months’ notice. The agreements include restraints of trade
objectivity of the auditor; and
on the employee as well as confidentiality and intellectual
• none of the services undermine the general principles
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
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
Corporations Act 2001. The contract of insurance prohibits
of Deloitte Touche Tohmastsu.
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
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
the auditor.
nearest dollar.
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
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
to which the Company is a party for the purpose of taking
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.
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
25
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Auditor’s Independence Declaration
Deloitte Touche Tohmatsu
ABN 74 490 121 060
550 Bourke Street
Melbourne VIC 3000
GPO Box 78
Melbourne VIC 3001 Australia
Tel: +61 (0) 3 9671 7000
Fax: +61 (0) 3 9671 7001
www.deloitte.com.au
The Board of Directors
Gale Pacific Limited
145 Woodlands Drive
BRAESIDE VIC 3195
25 August 2017
Dear Board Members
Gale Pacific Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide
the following declaration of independence to the directors of Gale Pacific Limited.
As lead audit partner for the audit of the financial statements of Gale Pacific Limited for
the financial year ended 30 June 2017, I declare that to the best of my knowledge and
belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Stephen Roche
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
26
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Independent Auditor’s Report
Deloitte Touche Tohmatsu
ABN 74 490 121 060
550 Bourke Street
Melbourne VIC 3000
GPO Box 78
Melbourne VIC 3001 Australia
Tel: +61 (0) 3 9671 7000
Fax: +61 (0) 3 9671 7001
www.deloitte.com.au
Independent Auditor’s Report
to the members of Gale Pacific Limited
Report on the Financial Report
Opinion
We have audited the financial report of Gale Pacific Limited (the “Company”) and its subsidiaries (the
“Group”), which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies, and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
financial performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the Directors’ of the Company, would be in the same terms if given to the Directors’
as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
27
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report for the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter
Carrying value of intangible assets
As at 30 June 2017 the Group recognised a
impairment of goodwill
$17.5 million
relating
the Australasian CGU
predominantly associated with current
forecasts not supporting the carrying value
as disclosed in note 13.
to
The evaluation of the recoverable amount
of goodwill and other assets requires
significant judgement in determining the
key assumptions supporting the expected
future cash flows of the business and the
utilisation of the relevant assets including:
discount rate
revenue growth rates
EBITDA margin
How the scope of our audit responded to the
Key Audit Matter
Our procedures included, but were not limited to:
obtaining an understanding of management’s
process associated with the preparation of the
valuation models used
the
recoverable amount of the Australia CGU;
to assess
in conjunction with our valuation experts,
assessing and challenging:
o
o
o
the
and
the identification of CGUs including the
allocation of indefinite life intangible
assets and property, plant and
equipment
associated
identification and allocation of cash
flows for the purposes of assessing the
the cash
recoverable amount of
generating units;
the key assumptions for long-term
growth rates in the forecast cash flows
by comparing them to historical results,
economic and industry forecasts; and
the discount rate applied.
evaluating management’s assessment of the
sensitivity to a change in key assumptions
that either individually or collectively would be
required for assets to be impaired and
considering the likelihood of such a movement
in those key assumptions arising; and
re-calculating the mathematical accuracy of
the cash flow models, agreeing forecast cash
flows to the latest Board approved forecasts
and assessing the historical accuracy of
forecasting by Gale.
We also assessed the appropriateness of the
disclosures in note 13 to the financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
include the financial report and our auditor’s report thereon.
28
GALE PACIFIC LIMITED2017 ANNUAL REPORT02Independent Auditor’s Report continuedFor personal use only
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If,
based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due
to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting
intentional omissions,
involve collusion,
fraud may
from error, as
misrepresentations, or the override of internal control.
forgery,
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
29
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group’s audit. We remain
solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 17 to 24 of the Directors’ Report for the
year ended 30 June 2017.
In our opinion, the Remuneration Report of Gale Pacific Limited, for the year ended 30 June 2017,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Stephen Roche
Partner
Chartered Accountants
Melbourne, 25 August 2017
30
GALE PACIFIC LIMITED2017 ANNUAL REPORT02Independent Auditor’s Report continuedFor personal use only
Gale Pacific Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2017
Revenue
Sale of goods
Other income
Expenses
Raw materials and consumables used
Employee benefits expense
Depreciation and amortisation expense
Impairment of assets - goodwill
Marketing and advertising
Occupancy costs
Warehouse and related costs
Other expenses
Finance costs
Profit/(loss) before income tax expense
Income tax expense
Profit/(loss) after income tax expense for the year attributable to the owners
of Gale Pacific Limited
Other comprehensive income
Consolidated
Note
2017
$'000
2016
$'000
5
6
6
6
7
175,265
173,191
1,067
5,234
(96,972)
(27,442)
(6,368)
(17,455)
(2,145)
(5,175)
(12,107)
(12,004)
(1,525)
(96,863)
(28,511)
(7,180)
-
(3,200)
(5,160)
(11,178)
(11,203)
(1,621)
(4,861)
13,509
(3,183)
(3,281)
(8,044)
10,228
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
19
19
665
(3,173)
(1,949)
(1,523)
Other comprehensive income for the year, net of tax
(2,508)
(3,472)
Total comprehensive income for the year attributable to the owners of Gale
Pacific Limited
Basic earnings per share
Diluted earnings per share
(10,552)
6,756
Cents
Cents
8
8
(2.71)
(2.71)
3.44
3.40
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
16
31
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Statement of financial position
As at 30 June 2017
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Total current assets
Non-current assets
Prepayments
Property, plant and equipment
Intangibles
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Derivative financial instrument - cash flow hedges
Current tax liabilities
Employee benefits
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
Consolidated
Note
2017
$'000
2016
$'000
9
10
11
12
13
7
14
15
7
16
17
7
18
19
24,974
29,497
37,449
1,419
93,339
58
26,955
7,283
4,274
38,570
24,563
30,226
44,577
969
100,335
357
30,414
25,210
4,068
60,049
131,909
160,384
19,451
7,268
471
863
1,718
286
30,057
16,400
1,946
109
18,455
19,598
13,192
1,421
2,771
1,832
318
39,132
19,523
2,000
106
21,629
48,512
60,761
83,397
99,623
71,365
(2,591)
14,623
71,485
(988)
29,126
83,397
99,623
The above statement of financial position should be read in conjunction with the accompanying notes
17
32
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Statement of changes in equity
For the year ended 30 June 2017
Consolidated
Balance at 1 July 2015
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 29)
Statutory transfers from retained earnings
Other
Dividends paid (note 20)
Issued
Capital
$'000
Reserves
(Note 19)
$'000
Retained
Profits
$'000
Total equity
$'000
71,485
1,598
24,705
97,788
-
-
-
-
-
-
-
-
(3,472)
10,228
-
10,228
(3,472)
(3,472)
10,228
6,756
187
699
-
-
-
(699)
98
(5,206)
187
-
98
(5,206)
Balance at 30 June 2016
71,485
(988)
29,126
99,623
Consolidated
Balance at 1 July 2016
Loss 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 29)
Transfer to Enterprise Reserve Fund
Share Buy Back
Other
Dividends paid (note 20)
Issued
Capital
$'000
Reserves
(Note 19)
$'000
Retained
Profits
$'000
Total equity
$'000
71,485
(988)
29,126
99,623
-
-
-
-
-
(120)
-
-
-
(2,508)
(8,044)
-
(8,044)
(2,508)
(2,508)
(8,044)
(10,552)
303
602
-
-
-
-
(602)
-
93
(5,950)
303
-
(120)
93
(5,950)
Balance at 30 June 2017
71,365
(2,591)
14,623
83,397
The above statement of changes in equity should be read in conjunction with the accompanying notes
18
33
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Statement of cash flows
For the year ended 30 June 2017
Cash flows from operating activities
Profit/(loss) before income tax expense for the year
Adjustments for:
Depreciation and amortisation
Impairment of assets
Share-based payments
Foreign currency gain
Interest and other finance costs paid
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
Increase in derivative assets
Increase in prepayments
Decrease in other operating assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in derivative liabilities
Increase/(decrease) in employee benefits
Increase/(decrease) in other provisions
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
Payments for share buy-backs
Other
Dividends paid
Repayment of borrowings
Net cash used in 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
Consolidated
Note
2017
$'000
2016
$'000
(4,861)
13,509
6,368
17,454
303
(1,391)
1,525
19,398
728
7,128
-
(151)
1
(147)
(285)
(111)
(32)
26,529
(1,525)
(5,351)
7,180
-
187
(151)
1,621
22,346
(3,145)
(5,348)
(586)
(507)
-
6,711
1,421
84
256
21,232
(1,621)
(1,797)
19,653
17,814
(3,785)
(523)
292
(3,841)
(712)
343
(4,016)
(4,210)
933
(120)
93
(5,950)
(9,980)
25,386
-
(112)
(5,206)
(27,095)
(15,024)
(7,027)
613
24,563
(202)
6,577
17,769
217
12
13
20
Cash and cash equivalents at the end of the financial year
9
24,974
24,563
The above statement of cash flows should be read in conjunction with the accompanying notes
19
34
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
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 and principal place of business is:
145 Woodlands Drive
Braeside, VIC 3195
A description of the nature of the Group's operations is included in the directors' report, which is not part of the financial
statements.
The entity’s principal activities are the manufacture of branded screening and shading products for domestic, commercial
and industrial applications
The financial statements were authorised for issue, in accordance with a resolution of directors, on 25 August 2017. 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 either in the respective
notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended 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 or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Statement of Compliance
These financial statements are general purpose financial statements which have been prepared in accordance with the
Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the law. The
financial statements comprise the consolidated financial statements of the Group.
For the purposes of preparing the consolidated financial statements, the Company is a for-profit entity.
Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards
ensures that the financial statements and notes of the company and the Group comply with International Financial
Reporting Standards (‘IFRS’).
Basis of Preparation
The consolidated financial statements have been prepared on the basis of historical cost, except for certain financial
instruments that are measured at revalued amounts or fair values at the end of each reporting period, as explained in the
accounting policies below.
Historical cost is generally based on the fair values of the consideration given in exchange for goods and services. All
amounts are presented in Australian dollars, unless otherwise noted.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Gale Pacific Limited as at
30 June 2017 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 consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that control ceases.
20
35
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 2. Significant accounting policies (continued)
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.
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.
Foreign currencies and translations
Foreign currency transactions
Foreign currency transactions are translated into the entity's functional currency 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), the cumulative amount in the foreign currency translation reserve in respect of that operation is then
recognised in profit or loss
Monetary items forming net investment in foreign operations
The Group classifies monetary items of a non-current nature where settlement is 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.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
21
36
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 2. Significant accounting policies (continued)
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
Group's 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 the Group's 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.
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 in other comprehensive income through the cash flow hedges
reserve 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.
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.
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. The Group has no finance leases.
Impairment of assets
Goodwill, other intangible assets that have an indefinite useful life, and assets not yet ready for use as intended by
management, 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. Where the asset
does not generate independent cash flows, the Group estimates the recoverable amount of the cash generating unit
('CGU') to which the asset belongs.
Recoverable amount is the higher of fair value less cost of disposal 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 cost of disposal, recognised valuation methodologies are applied,
utilising current and forecast financial information as appropriate, benchmarked against relevant market data.
22
37
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 2. Significant accounting policies (continued)
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 wholly within 12 months of the reporting date is measured at the amounts expected to be paid when the liabilities
are settled.
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.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this
report have been rounded off in accordance with that Instrument to the nearest thousand dollars, or in certain cases, the
nearest dollar.
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.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using the Binomial model taking into
account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions
relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities
within the next annual reporting period but may impact profit or loss and equity.
Provision for impairment of inventories
The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the
provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that
affect inventory obsolescence.
Goodwill
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether
goodwill has 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.
An impairment loss of $17.455 million relating to goodwill in the Australasia CGU was recognised in the 2017 financial
year, due to current forecasts not supporting the carrying value. This primarily relates to the goodwill acquired with the
previous business acquisitions (Zone Hardware Pty Ltd, Riva Window Fashions Pty Ltd and Highgrove Pty Ltd).
23
38
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 3. Critical accounting judgements, estimates and assumptions (continued)
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.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences and tax losses only if the Group considers it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
Derivative financial instruments
Forward foreign exchange contracts, designated as cash flow hedges, are measured at fair value. Reliance is placed on
Gale Pacific Limited
future cash flows and judgement is made on a regular basis, through prospective and retrospective testing, including at
Notes to the financial statements
the reporting date, that the hedges are still highly effective.
30 June 2017
Note 4. Operating segments
Note 4. Operating segments
Identification of reportable 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
The Group is organised into four operating segments identified by geographic location and identity of the service line
manager, together with Corporate. These operating segments are based on the internal reports that are reviewed and
manager, together with Corporate. These operating segments are based on the internal reports that are reviewed and used
used by the Group Managing Director (who is identified as the Chief Operating Decision Maker ('CODM')) in assessing
by the Group Managing Director (who is identified as the Chief Operating Decision Maker ('CODM')) in assessing
performance and in determining the allocation of resources. There is no aggregation of operating segments.
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
The Group operates predominantly in one business segment, being branded shading, screening and home improvement
products.
products.
The CODM reviews revenue and segment earnings, before interest, tax, depreciation and amortisation ('EBITDA'). The
The CODM reviews revenue and segment earnings, before interest, tax, depreciation and amortisation ('EBITDA'). The
accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial
accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial
statements.
statements.
Discrete financial information about each of these segments is reported on a monthly basis.
Discrete financial information about each of these segments is reported on a monthly basis.
The operating segments are as follows:
The operating segments are as follows:
Australasia
Australasia
China Manuf. and EurAsia
China Manuf. and EurAsia
Americas
Americas
Middle East and North Africa
Middle East and North Africa
('MENA')
('MENA')
Manufacturing and distribution facilities are located in Australia, and distribution facilities
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
are located in New Zealand. Sales offices are located in all states in Australia and in New
Zealand.
Zealand.
Manufacturing facilities are located in Beilun, China which supply to the Group’s sales and
Manufacturing facilities are located in Beilun, China which supply to the Group’s sales and
marketing operations throughout the world.
marketing operations throughout the world.
Sales offices are located in Florida and custom blind assembly and distribution facilities
Sales offices are located in Florida and custom blind assembly and distribution facilities
are located in California which service the North American region.
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
A sales office and distribution facility is located in the United Arab Emirates to service this
market.
market.
The 'Other Segments' represents Corporate and Intersegment eliminations.
The 'Other Segments' represents Corporate and Intersegment eliminations.
Major customers
Major customers
During the year ended 30 June 2017 approximately 32% (2016: 36%) of the Group's external revenue was derived from
During the year ended 30 June 2017 approximately 32% (2016: 36%) of the Group's external revenue was derived from
sales to one (2016: one) customer in the Australasian region.
sales to one (2016: one) customer in the Australasian region.
24
39
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 4. Operating segments (continued)
Operating segment information
Consolidated - 2017
Revenue
Sales to external customers
Intersegment sales
Total revenue
Segment EBITDA*
Goodwill Impairment
Other Related Items
Depreciation and amortisation
Finance costs
Loss before income tax
expense
Income tax expense
Loss after income tax
expense
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
China Manuf.
and
EurAsia
$'000
Australasia
$'000
America
$'000
MENA
$'000
Other
segments
$'000
Total
$'000
92,350
2,644
94,994
8,177
49,761
57,938
61,963
14
61,977
2,924
(17,455)
(952)
(808)
(180)
11,513
-
-
(3,454)
6,542
-
-
(1,559)
(109) (594)
12,775
-
12,775
2,457
-
-
(3)
(130)
-
(52,419)
(52,419)
(1,997)
-
-
(544)
(512)
(16,471)
7,950
4,389
2,324
3,053
30,465
33,637
41,117
12,074
14,616
10,997
9,074
6,232
745
21,464
175,265
-
175,265
21,439
(17,455)
(952)
(6,368)
(1,525)
(4,861)
(3,183)
(8,044)
131,909
131,909
48,512
48,512
* Reported in line with information provided to the CODM.
40
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Gale Pacific Limited
Notes to the financial statements
Note 4. Operating segments (continued)
30 June 2017
Note 4. Operating segments (continued)
China Manuf.
and
EurAsia
China Manuf.
$'000
and
EurAsia
$'000
Australasia
$'000
Australasia
$'000
97,470
3,077
100,547
97,470
3,077
3,578
100,547
6,766
58,451
65,217
6,766
58,451
12,620
65,217
3,578
(813)
(190)
12,620
(4,547)
(1,037)
Americas
$'000
Americas
$'000
53,603
37
53,640
53,603
37
4,920
53,640
4,920
(1,321)
(452)
MENA
$'000
MENA
$'000
15,352
20
15,372
15,352
20
3,148
15,372
Other
segments
$'000
Other
segments
$'000
-
(61,585)
(61,585)
-
(61,585)
(1,956)
(61,585)
3,148
(3)
(1,956)
(496)
(88) 146
2,575
7,036
3,147
3,057
(2,306)
(813)
(190)
(4,547)
(1,037)
(1,321)
(452)
(3)
(88)
(496)
146
58,544
58,544
36,089
36,089
32,203
32,203
10,738
10,738
22,810
22,810
15,168
15,168
13,109
13,109
5,680
5,680
674
674
26,130
26,130
Consolidated - 2016
Revenue
Consolidated - 2016
Sales to external customers
Intersegment sales
Revenue
Total revenue
Sales to external customers
Intersegment sales
Segment EBITDA
Total revenue
Depreciation and amortisation
Finance costs
Segment EBITDA
Profit before income tax
Depreciation and amortisation
expense
Finance costs
Income tax expense
Profit before income tax
Profit after income tax
expense
expense
Income tax expense
Segment results include:
Profit after income tax
Depreciation and amortisation
expense
Finance costs
Assets
Assets
Segment assets
Segment assets
Total assets
Total assets
Liabilities
Liabilities
Segment liabilities
Segment liabilities
Total liabilities
Total liabilities
Total
$'000
Total
$'000
173,191
-
173,191
173,191
-
22,310
173,191
(7,180)
(1,621)
22,310
(7,180)
13,509
(1,621)
(3,281)
13,509
10,228
(3,281)
(7,180)
10,228
(1,621)
160,384
160,384
160,384
160,384
60,761
60,761
60,761
60,761
Accounting policy for operating segments
Accounting policy for operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the CODM. The CODM is responsible for the allocation of resources to operating
basis as the internal reports provided to the CODM. The CODM is responsible for the allocation of resources to operating
segments and assessing their performance.
segments and assessing their performance.
Note 5. Other income
Net foreign exchange gain
Other income (including sales of scrap material from manufacturing)
Other income
Consolidated
2017
$'000
2016
$'000
-
1,067
4,219
1,015
1,067
5,234
26
41
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 6. Expenses
Profit/(loss) before income tax includes the following specific expenses:
Depreciation
Property, plant and equipment (note 12)
Amortisation
Intangible assets (note 13)
Total depreciation and amortisation
Employee benefit expense
Employment costs and benefits
Share-based payment expense
Total employee benefit expense
Finance costs
Interest and finance charges paid/payable
Rental expense relating to operating leases
Minimum lease payments
Note 7. Income tax
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:
Decrease/(increase) in deferred tax assets
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit/(loss) before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Impairment of goodwill
Non allowable/(non assessable) items
Adjustment recognised for prior periods
Difference in overseas tax rates
Income tax expense
27
42
Consolidated
2017
$'000
2016
$'000
5,328
6,165
1,040
1,015
6,368
7,180
27,139
303
28,324
187
27,442
28,511
1,525
1,621
4,487
4,505
Consolidated
2017
$'000
2016
$'000
2,659
435
89
3,719
(325)
(113)
3,183
3,281
435
(325)
(4,861)
13,509
(1,458)
4,053
5,236
38
3,816
89
(722)
-
340
4,393
(113)
(999)
3,183
3,281
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 7. Income tax (continued)
Amounts charged/(credited) directly to equity
Deferred tax assets
Deferred tax asset
Deferred taxes comprises temporary differences attributable to:
Amounts recognised in P&L:
Tax losses
Property, plant and equipment
Foreign exchange
Capitalised costs
Provisions
Impairment of receivables
Other financial liabilities
Employee benefits
Franking Deficit Credit
Other
Deferred tax asset
Movements:
Opening balance
Credited/(charged) to profit or loss
Credited/(charged) to equity
Transfer from current tax liability
Closing balance
Provision for income tax
Provision for income tax
Consolidated
2017
$'000
2016
$'000
285
(835)
Consolidated
2017
$'000
2016
$'000
1,872
(546)
(817)
(1,107)
(224)
14
394
452
1,590
700
1,450
(642)
(1,183)
(957)
(223)
14
304
717
1,590
998
2,328
2,068
2,068
(435)
(285)
980
(397)
325
835
1,305
2,328
2,068
Consolidated
2017
$'000
2016
$'000
863
2,771
The 2017 tax asset of $2,328,000 (2016: $2,068,000) is comprised of $4,742,000 in deferred tax assets (2016:
$4,068,000) and $1,946,000 ($2,000,000) in deferred tax liabilities, reflecting various tax positions in different
jurisdictions.
Accounting policy for income tax
The tax currently payable is based on taxable profit for the financial year. Taxable profit differs from profit as reported in
the 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.
28
43
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 7. Income tax (continued)
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.
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. 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.
Note 8. Earnings per share
Consolidated
2017
$'000
2016
$'000
Profit/(loss) after income tax attributable to the owners of Gale Pacific Limited
(8,044)
10,228
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
297,162,696 297,474,396
Performance rights
-
3,768,003
Weighted average number of ordinary shares used in calculating diluted earnings per share 297,162,696 301,242,399
Number
Number
Basic earnings per share
Diluted earnings per share
Accounting policy for earnings per share
29
44
Cents
Cents
(2.71)
(2.71)
3.44
3.40
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 8. Earnings per share (continued)
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.
Note 9. Current assets - cash and cash equivalents
Cash on hand
Cash at bank
Cash on deposit
Consolidated
2017
$'000
2016
$'000
3
24,838
133
12
24,413
138
24,974
24,563
Accounting policy for 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.
Note 10. Current assets - trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
Other receivables
Consolidated
2017
$'000
2016
$'000
29,346
(111)
29,235
29,649
(80)
29,569
262
657
29,497
30,226
The Group has recognised a loss of $42,000 (2016: $66,000) in profit or loss in respect of impairment of receivables for
the year ended 30 June 2017.
The ageing of the impaired receivables provided for above are as follows:
Over 6 months overdue
Consolidated
2017
$'000
2016
$'000
111
80
30
45
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 10. Current assets - trade and other receivables (continued)
Movements in the provision for impairment of receivables are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Closing balance
Consolidated
2017
$'000
2016
$'000
80
42
(11)
111
97
66
(83)
80
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to $6,184,000 as at 30
June 2017 ($6,763,000 as at 30 June 2016).
The Group did not consider a credit risk on the aggregate balances after reviewing the credit terms of customers based
on recent collection practices.
The ageing of trade receivables not impaired at the reporting date was:
Outside credit terms 0-30 days
Outside credit terms 31-120 days
Outside credit terms 121 days to one year
More than one year
Consolidated
2017
$'000
2016
$'000
2,906
1,720
1,172
386
3,522
1,954
1,083
204
6,184
6,763
Accounting policy for 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.
31
46
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 11. Current assets - inventories
Raw materials - at cost
Work in progress - at cost
Finished goods - at cost
Less: Provision for impairment
Consolidated
2017
$'000
2016
$'000
3,710
5,723
4,778
4,508
30,443
(1,482)
28,961
35,283
(937)
34,346
37,449
44,577
Accounting policy for 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.
Note 12. Non-current assets - property, plant and equipment
Buildings and leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Motor vehicles - at cost
Less: Accumulated depreciation
Capital work-in-progress - at cost
Consolidated
2017
$'000
2016
$'000
14,961
(5,409)
9,552
100,130
(83,470)
16,660
304
(204)
100
643
14,125
(5,162)
8,963
102,949
(82,199)
20,750
374
(247)
127
574
26,955
30,414
32
47
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 12. Non-current assets - property, plant and equipment (continued)
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 2015
Additions
Disposals
Exchange differences
Transfers in/(out)
Depreciation expense
Balance at 30 June 2016
Additions
Disposals
Exchange differences
Transfers in/(out)
Depreciation expense
Buildings and
leasehold
improvement
s
$'000
Plant and
Motor
Capital work-
equipment
$'000
vehicles
$'000
in-progress
$'000
Total
$'000
7,390
871
-
(262)
1,327
(363)
8,963
67
-
(443)
1,419
(454)
26,665
2,197
(334)
(1,507)
(496)
(5,775)
20,750
1,167
(285)
(934)
819
(4,856)
162
-
(9)
1
-
(27)
127
-
(7)
(2)
-
(18)
100
655
773
-
(23)
(831)
-
574
2,551
-
(32)
(2,451)
-
34,872
3,841
(343)
(1,791)
-
(6,165)
30,414
3,785
(292)
(1,411)
(213)
(5,328)
642
26,955
Balance at 30 June 2017
9,552
16,661
Accounting policy for property, plant and equipment
Property, 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.
Depreciation is calculated on a straight line basis to write off the net cost of each item of property, plant and equipment
over their estimated useful lives as follows:
Buildings
Leasehold improvements
Plant and equipment
Motor vehicles
45 years
Over lease term
2-15 years
2-5 years
Depreciation commences from the time the asset is held ready for use. The residual values, useful lives and depreciation
methods are reviewed, and adjusted if appropriate, at each reporting date. When changes are made, adjustments are
reflected in current and future periods only.
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.
33
48
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 13. Non-current assets - intangibles
Goodwill - at cost
Less: Impairment
Development - at cost
Less: Accumulated amortisation
Patents, trademarks and licenses - at cost
Less: Accumulated amortisation
Application software - at cost
Less: Accumulated amortisation
Consolidated
2017
$'000
2016
$'000
21,512
(18,508)
3,004
1,070
(20)
1,050
1,632
(1,260)
372
6,955
(4,098)
2,857
21,607
(1,054)
20,553
565
-
565
1,562
(1,210)
352
6,917
(3,177)
3,740
7,283
25,210
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 2015
Additions
Exchange differences
Transfers in/(out)
Amortisation expense
Balance at 30 June 2016
Additions
Exchange differences
Impairment of assets
Transfers in/(out)
Amortisation expense
Patents,
trademarks
Goodwill Development and licenses
$'000
$'000
$'000
Application
software
$'000
Total
$'000
20,462
-
91
-
-
20,553
-
(94)
(17,455)
-
-
-
565
-
-
-
565
505
-
-
-
(20)
502
-
4
(121)
(33)
352
18
(5)
-
53
(46)
372
4,347
147
107
121
(982)
3,740
-
(69)
-
160
(974)
25,311
712
202
-
(1,015)
25,210
523
(168)
(17,455)
213
(1,040)
2,857
7,283
Balance at 30 June 2017
3,004
1,050
Impairment testing for goodwill
In accordance with the accounting policies, the Group performs an annual impairment assessment of goodwill. An
impairment loss of $17.455 million relating to goodwill in the Australasia CGU was recognised in the 2017 financial year,
primarily due to the cessation of the Glass business and current forecasts not supporting the carrying value. This
primarily relates to the goodwill acquired with the previous business acquisitions (Zone Hardware Pty Ltd, Riva Window
Fashions Pty Ltd and Highgrove Pty Ltd). (2016: no impairment).
34
49
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 13. Non-current assets - intangibles (continued)
Impairment testing approach
Impairment testing compares the carrying value of a CGU with its recoverable amount, based on value-in-use. Value-in-
use was calculated based on the present value of cash flow projections over a five year period with the period extending
beyond five years extrapolated using estimated revenue growth rates between of 2.5%. Years one to three are based on
budgets and forecasts, with years four onwards extrapolated at the rate of 4%. These growth rates are based on
management's expectations, industry knowledge and other features specific to the CGU. Cash flows are discounted
using the weighted average cost of capital with mid-year discounting.
Goodwill acquired through business combinations have been allocated to the following cash generating units (CGU):
Goodwill
Australasia
USA (2016/2017: US$2,077,000; 2015/2016: US$ 2,077,000)
China
Consolidated
2017
$'000
2016
$'000
-
2,657
347
17,455
2,751
347
3,004
20,553
Australasia
In assessing the recoverable amount of the Australasian CGU, management considered information available from
industry analysts and other sources in relation to the key assumptions used. Management considers that it has taken a
conservative view of the market conditions and business operations.
The following assumptions were used in the value-in-use calculations in the model for Australasia:
Discount Factor
The discount factor used in the model is 10.5% (2016: 10.5%)
Revenue growth rate assumption
Average actual revenue growth rate from 2014 to 2017 was 5%. The values assigned in the assumptions for 2018 to
2022 is an average of 1% which is lower than historical values. This average is influenced by the one time effect of the
cessation of the glass business at the end of FY 2017. Management believe this is achievable based on historical trends
and the plans to continue to invest in product development. A 1% plus or minus change in the revenue growth rate will
have a ~$1m effect on the recoverable amount.
EBITDA margin assumption
Margin achieved in the period immediately before the budget period, increasing for expected efficiency improvements.
Management expect efficiency improvements averaging 0.6% per year to be achievable for years 2018 to 2022.
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.
USA
In assessing the recoverable amount of the USA CGU, management made a number of significant assumptions including
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 believe that any reasonably possible further change in the key assumptions on which recoverable amount
is based would not cause the USA CGU's carrying amount to exceed its recoverable amount.
35
50
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 13. Non-current assets - intangibles (continued)
Accounting policy for 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.
Research and development
Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is
probable that the project will be a success considering its commercial and technical feasibility; the Group is able to use or
sell the asset; the Group has sufficient resources; and intent to complete the development and its costs can be measured
reliably. Capitalised development costs are amortised on a straight-line basis over the period of their expected benefit.
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 useful 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 useful life of 5 years.
Note 14. Current liabilities - trade and other payables
Trade payables
Sundry payables and accruals
Consolidated
2017
$'000
2016
$'000
12,647
6,804
10,161
9,437
19,451
19,598
Refer to note 22 for further information on financial instruments.
Accounting policy for 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.
36
51
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 15. Current liabilities - borrowings
Bank loans
Other loans
Refer to note 22 for further information on financial instruments.
Note 16. Current liabilities - provisions
Warranties
Consolidated
2017
$'000
2016
$'000
7,025
243
12,691
501
7,268
13,192
Consolidated
2017
$'000
2016
$'000
286
318
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.
Consolidated - 2017
Carrying amount at the start of the year
Additional provision recognised
Claims
Carrying amount at the end of the year
Warranties
$'000
318
429
(461)
286
Accounting policy for 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 in profit or loss.
Note 17. Non-current liabilities - borrowings
Consolidated
2017
$'000
2016
$'000
16,400
-
19,280
243
16,400
19,523
Bank loans
Other loans
Refer to note 22 for further information on financial instruments.
37
52
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 17. Non-current liabilities - borrowings (continued)
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Bank loans
Consolidated
2017
$'000
2016
$'000
23,425
31,971
Assets pledged as security
The bank loans are secured by a fixed and floating charge (or equivalent foreign charge) over all the assets and
undertakings, including uncalled capital of each entity in the Group.
Accounting policy for 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.
Note 18. Equity - issued capital
Consolidated
2017
Shares
2016
Shares
2017
$'000
2016
$'000
Ordinary shares - fully paid
297,162,696 297,474,396
71,365
71,485
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
On February 16th 2017, an on-market share buy-back was announced. It will run from 3 March 2017 to 2 March 2018. Up
until June 30 2017, 311,700 shares have been bought by the Company.
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.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is
calculated as total borrowings less cash and cash equivalents.
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.
Accounting policy for 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.
38
53
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 19. Equity - reserves
Foreign currency reserve
Hedging reserve - cash flow hedges
Share-based payments reserve
Enterprise reserve fund
Consolidated
2017
$'000
2016
$'000
(6,029)
(330)
1,065
2,703
(2,856)
(995)
762
2,101
(2,591)
(988)
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.
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 2015
Foreign currency translation *
Movement in hedge
Income tax
Share-based payment
Statutory transfers from retained earnings
Balance at 30 June 2016
Foreign currency translation *
Movement in hedge
Income tax
Share-based payment
Statutory transfers from retained earnings
Balance at 30 June 2017
Foreign
currency
$'000
Hedging
$'000
Share-based Enterprise
payments
$'000
reserve fund
$'000
Total
$'000
(1,333)
(1,523)
-
-
-
-
(2,856)
(3,173)
-
-
-
-
(6,029)
954
-
(2,784)
835
-
-
(995)
-
950
(285)
-
-
(330)
575
-
-
-
187
-
762
-
-
-
303
-
1,402
-
-
-
-
699
2,101
-
-
-
-
602
1,598
(1,523)
(2,784)
835
187
699
(988)
(3,173)
950
(285)
303
602
1,065
2,703
(2,591)
*
Refer to note 21 for details of monetary items identified as a net investment in a foreign operation
39
54
GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 20. Equity - dividends
Dividends paid during the financial year were as follows:
Final dividend for the year ended 30 June 2015 of 1.00 cents per ordinary share
(unfranked)
Interim dividend for the year ended 30 June 2016 of 0.75 cents per ordinary share
(unfranked)
Final Dividend for the year ended 30 June 2016 of 1.00 cents per ordinary share
(unfranked)
Interim Dividend for the year ended 30 June 2017 of 1.00 cents per ordinary share
(unfranked)
Consolidated
2017
$'000
2016
$'000
-
-
2,975
2,231
2,975
2,975
-
-
5,950
5,206
For the full year, the dividends of [2.00] cents per ordinary share have been declared on earnings of [3.18] cents per
share.
Accounting policy for dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
Note 21. Monetary items identified as a net investment in a foreign operation
Consolidated
2017
$'000
2016
$'000
Related party receivable to the Company from Gale Pacific (New Zealand) Limited
4,613
5,049
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 is detailed in note 19.
Note 22. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market 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. 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.
40
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GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 22. Financial instruments (continued)
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.
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 Euros/sell Australian Dollars
Maturity:
Less than 6 months
6 - 12 months
Sell Australian dollars
Average exchange rates
2017
$'000
2016
$'000
2017
2016
10,814
2,694
28,831
8,371
0.7398
0.7424
0.7096
0.7168
1,149
1,167
-
-
0.6789
0.6681
-
-
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
New Zealand dollars
Chinese renminbi
UAE dirham
Assets
Liabilities
2017
$'000
2016
$'000
2017
$'000
2016
$'000
29,327
936
7,940
1,265
20,514
1,564
6,489
890
5,423
285
-
-
4,043
229
1,668
-
39,468
29,457
5,708
5,940
The Group had net assets denominated in foreign currencies of $33,760,000 (assets of $39,468,000 less liabilities of
$5,708,000 as at 30 June 2017 (2016: $23,519,000 (assets of $29,457,000 less liabilities of $5,940,000)). Based on this
exposure, had the Australian dollars strengthened by 10% / weakened by 10% (2016: strengthened by 10% / weakened
by 10%) against these foreign currencies with all other variables held constant, the Group's profit before tax for the year
would have been $904,000 higher/lower (2016: $308,000 lower/ higher) and equity would have been $1,840,000
higher/lower (2016: $1,746,000 higher/lower). 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.
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GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 22. 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
Other loans
Net exposure to cash flow interest rate risk
2017
2016
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$'000
Balance
$'000
-
3.20%
6.96%
24,974
(23,425)
(243)
1,306
-
3.65%
6.96%
24,563
(31,971)
(744)
(8,152)
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 (2016: 100) basis points would have an adverse/favourable effect on
profit before tax of $237,000 (2016: $327,000) 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.
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.
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 - 2017
Non-derivatives
Non-interest bearing
Trade payables
Sundry payables and accruals
Interest-bearing - variable
Bank loans
Other loans
Total non-derivatives
Weighted
average
interest rate 1 year or less
%
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years Over 5 years
$'000
$'000
Remaining
contractual
maturities
$'000
-
-
17,157
-
17,157
-
-
-
-
-
-
-
-
-
-
12,647
6,667
24,407
260
43,981
-
-
3.20%
6.96%
12,647
6,667
7,250
260
26,824
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GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 22. Financial instruments (continued)
Consolidated - 2016
Non-derivatives
Non-interest bearing
Trade payables
Sundry payables and accruals
Interest-bearing - variable
Bank loans
Other loans
Total non-derivatives
Weighted
average
interest rate 1 year or less
%
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years Over 5 years
$'000
$'000
Remaining
contractual
maturities
$'000
-
-
3.65%
6.96%
10,161
9,437
13,858
553
34,009
-
-
-
-
3,584
260
3,844
17,597
-
17,597
-
-
-
-
-
10,161
9,437
35,039
813
55,450
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Note 23. 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 - 2017
Liabilities
Forward foreign exchange contracts
Total liabilities
Consolidated - 2016
Liabilities
Forward foreign exchange contracts
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Level 1
$'000
-
-
-
-
471
471
Level 2
$'000
Level 3
$'000
1,421
1,421
-
-
-
-
471
471
Total
$'000
1,421
1,421
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.
Valuation techniques for fair value measurements categorised within level 2 and level 3
Derivative financial instruments have been valued using quoted market rates. This valuation technique maximises the
use of observable market data where it is available and relies as little as possible on entity specific estimates.
Accounting policy for 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.
43
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GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 23. Fair value measurement (continued)
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.
Note 24. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Consolidated
2017
$'000
2016
$'000
4,688
13,563
3,142
4,560
18,251
7,702
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 25. Related party transactions
Parent entity
Gale Pacific Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 28.
Key management personnel
Disclosures relating to key management personnel are set out in note 26 and the remuneration report included in the
directors' report.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
44
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GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 26. 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:
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
Note 27. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/(loss) 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
Consolidated
2017
$
2016
$
3,195,087
159,467
165,991
259,673
2,692,699
155,724
287,082
208,802
3,780,218
3,344,307
Parent
2017
$'000
2016
$'000
(13,134)
4,706
(12,469)
2,757
Parent
2017
$'000
2016
$'000
34,766
55,880
108,014
135,241
15,460
21,208
31,969
40,837
71,365
(330)
1,065
3,945
71,485
(995)
762
23,152
76,045
94,404
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 2017 and 30 June 2016.
Please note comparative year has been changed to reflect consolidation entries between group entities.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2017 and 30 June 2016.
45
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GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 27. 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 2017 and 30 June 2016.
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.
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 28. 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 29. Share-based payments
Principal place of business /
Country of incorporation
New Zealand
United Arab Emirates
China
China
USA
Australia
Australia
Ownership interest
2016
2017
%
%
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%
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.
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 Group’s diluted earnings per share.
Performance rights issued to executives during the financial 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.
Refer to note 6 for the amount expensed to profit or loss during the financial year.
A share option plan has been established by the Group and approved by shareholders at a general meeting, whereby the
Group may, at the discretion of the Nomination and Remuneration Committee, grant options over ordinary shares in the
Company to certain key management personnel of the Group. The options are issued for nil consideration and are
granted in accordance with performance guidelines established by the Nomination and Remuneration Committee.
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GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 29. Share-based payments (continued)
Set out below are summaries of performance rights granted under the plan:
2017
Grant date
Expiry date
11/12/2014
09/10/2015
21/09/2016
01/12/2017
01/12/2018
01/12/2019
2016
Grant date
Expiry date
11/12/2014
09/10/2015
01/12/2017
01/12/2018
Grant
price
Balance at
the start of
the year
Granted
Exercised
$0.18
$0.23
$0.35
1,425,405
2,177,000
-
3,602,405
-
-
1,569,000
1,569,000
Grant
price
Balance at
the start of
the year
Granted
Exercised
$0.18
$0.23
2,364,138
-
2,364,138
-
3,022,000
3,022,000
Expired/
forfeited/
other
Balance at
the end of
the year
(99,603)
(314,000)
-
(413,603)
1,325,802
1,863,000
1,569,000
4,757,802
Expired/
forfeited/
other
Balance at
the end of
the year
(938,733)
(845,000)
(1,783,733)
1,425,405
2,177,000
3,602,405
-
-
-
-
-
-
-
Accounting policy for 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 is measured at fair value on grant date. Fair value is independently determined
using 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.
The weighted average fair value of the share options granted during the financial year is $0.35 (2016: $0.23).
Expected volatility is based on the historical share price volatility over the past 3 years. To allow for the effects of early
exercise, it was assumed that executives and senior employees would exercise the options after vesting date when the
share price is two and a half times the exercise price.
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.
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GALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 29. Share-based payments (continued)
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.
Note 30. 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)
Consolidated
2017
$
2016
$
247,150
223,250
147,217
57,484
394,367
280,734
Note 31. 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 2017. 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 AASB 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduces new classification and measurement models for financial assets and makes minor
amendments for financial liabilities. 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' model to recognise an allowance. The Group will adopt this standard from 1 July 2018 but it is not
expected to significantly impact the financial statements on the basis that the main financial assets recognised represent
cash and cash equivalent and trade receivables that do not carry a significant financing component and involve a single
cash flow representing the repayment of principal, which in the case of trade receivables is the transaction price. Both
asset classes will continue to be measured at face value. Other financial asset classes are not material to the Group.
Financial liabilities of the Group are not impacted as the Group does not carry them at fair value.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 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 Group will adopt this standard from 1 July 2018
but it is not expected to significantly impact the financial statements on the basis that most of the Group's revenue is
recognised at the time of transfer of units to customer which represents the satisfaction of the primary performance
obligation.
48
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GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2017
Note 31. New Accounting Standards and Interpretations not yet mandatory or early adopted (continued)
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard will eliminate
the classifications of operating leases and finance leases for lessees. Subject to exceptions (short-term leases of 12
months or less and leases of low-value assets), a 'right-of-use' asset will be capitalised in the statement of financial
position, measured as the present value of the unavoidable future lease payments to be made over the lease term. A
liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives
received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line
operating lease expense recognition will be replaced with a depreciation charge for the leased asset and an interest
expense on the recognised lease liability. In the earlier periods of the lease, the expenses associated with the lease
under AASB 16 will be higher when compared to lease expenses under AASB 117 ‘Leases’. However EBITDA results will
be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16.
For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The Group will adopt
this standard from 1 July 2019 but the impact of its adoption is yet to be assessed by the Group.
Other amending accounting standards
Other amending accounting standards issued are not considered to have a significant impact on the financial statements
of the Group as their amendments provide either clarification of existing accounting treatment or editorial amendments.
Note 32. Events after the reporting period
No matter or circumstance has arisen since 30 June 2017 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.
49
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GALE PACIFIC LIMITED2017 ANNUAL REPORT02For 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 14 August 2017 (Reporting Date).
Corporate Governance Statement
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).
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 297,162,696 ordinary fully paid shares held by 1,573 shareholders.
Each share entitles the holder to one vote.
• 10 holders have been granted 4,757,802 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 1,573 holders of a total of 297,162,696 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:
At a general meeting of the Company, every holder of ordinary shares present in person or by proxy, attorney or representative has
one vote on a show of hands and on a poll, one vote for each ordinary share held. On a poll, every member (or his or her proxy,
attorney or representative) is entitled to vote for each fully paid share held and in respect of each partly paid share, is entitled to
a fraction of a vote equivalent to the proportion which the amount paid up (not credited) on that partly paid share bears to the
total amounts paid and payable (excluding amounts credited) on that share. Amounts paid in advance of a call are ignored when
calculating the proportion.
65
GALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only Distribution of Holders of Equity Securities
The distribution of holder of equity securities on issue in the Company as at the Reporting Date is as follows:
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Ordinary Fully Paid Shares
Total Holders
Units
% of Issued
Capital
120
339
232
691
28,323
1,020,695
1,846,989
25,602,152
0.01
0.34
0.62
8.62
191
268,664,537
90.41
1,573
297,162,696
100.00
Performance Rights
Total Holders
Units
% of
Performance
Rights
0
0
0
0
10
10
0
0
0
0
4,757,802
4,757,802
0.00
0.00
0.00
0.00
100.00
100.00
Unmarketable Parcels
The number of holders of less than a marketable parcel of ordinary shares based on the closing market price as at the Reporting
Date is as follows:
Unmarketable Parcels as at 14 August 2017
Minimum
Parcel Size
Holders
Units
Minimum $500 parcel at $0.38 per unit
1,316
139
50,251
Substantial Shareholders
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
Class of
securities
ORDINARY
No.
%
THORNEY HOLDINGS PTY LTD
SHARES
79,702,646
26.82%
WINDHAGER HOLDING AG
SHARES
41,925,781
14.11%
JP MORGAN NOMINEES AUSTRALIA LIMITED
SHARES
21,308,955
7.17%
ORDINARY
ORDINARY
6666
GALE PACIFIC LIMITED2017 ANNUAL REPORT02Additional Securities Exchange Information continuedGALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only Twenty Largest Holders of Quoted Equity Securities
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:
No.
%
Shareholder
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
WINDHAGER HOLDING AG
J P MORGAN NOMINEES AUSTRALIA LIMITED
GALE AUSTRALIA PTY LTD
UBS NOMINEES PTY LTD
GERNIS HOLDINGS PTY LIMITED
CONTEMPLATOR PTY LTD
BFA SUPER PTY LTD
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
STITCHING PTY LTD
CHILLEN PTY LIMITED (TALLEN)
BOND STREET CUSTODIANS LIMITED
GALLIUM PTY LTD
BNP PARIBAS NOMS PTY LTD
W DONNELLY SERVICES PTY LTD
VENN MILNER SUPERANNUATION PTY LTD
CITICORP NOMINEES PTY LIMITED
APM ENTERPRISES PTY LTD
GDL INVESTMENTS PTY LIMITED
TOTAL: TOP 20 HOLDERS OF ORDINARY FULLY PAID SHARES AS AT 14 AUGUST 2017
212,782,270
TOTAL: REMAINING HOLDERS BALANCE
84,380,426
Voluntary Escrow
There are no securities on issue in Gale Pacific that are subject to voluntary escrow.
84,116,584
41,925,781
21,308,955
13,997,844
7,718,384
7,409,665
4,691,433
3,327,428
3,284,882
3,279,598
3,050,000
2,431,317
2,400,000
2,279,359
2,163,617
2,010,000
2,000,000
1,853,260
1,816,599
1,717,564
28.31
14.11
7.17
4.71
2.60
2.49
1.58
1.12
1.11
1.10
1.03
0.82
0.81
0.77
0.73
0.68
0.67
0.62
0.61
0.58
71.60
28.40
6767
GALE PACIFIC LIMITED2017 ANNUAL REPORTGALE PACIFIC LIMITED2017 ANNUAL REPORTFor personal use only 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
Shares
Options
Convertible Notes
Performance Rights
Number of
unquoted
Equity
Securities
Number of
holders
0
0
0
4,757,802
0
0
0
10
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 currently conducting an on-market buy-back. It was announced to the market on 16 February 2017 and covers
the period 3 March 2017 to 2 March 2018. The maximum number of shares the Company proposes to acquire under the on-
market buy-back is approximately up to 30 million, or up to 10% of the lowest number of ordinary shares on issue during the
previous 12 months. Accordingly, the on-market buy-back will not require shareholder approval. To date, 311,700 shares have
been bought back under the buyback.
Issues of Securities
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.
Securities purchased on-market
No securities were purchased on-market during the reporting period under or for the purposes of an employee incentive
scheme or to satisfy the entitlements of the holders of options or other rights to acquire securities granted under an employee
incentive scheme.
Stock Exchange Listing
Gale Pacific’s ordinary shares are quoted on the Australian Securities Exchange (ASX issuer code: GAP)
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.
6868
GALE PACIFIC LIMITED2017 ANNUAL REPORT02Additional Securities Exchange Information continuedGALE PACIFIC LIMITED2017 ANNUAL REPORT02For personal use only Designed and produced by FCR
www.fcr.com.au
For personal use only www.galepacific.com.au
For personal use only