ANNUAL REPORT
2018
For personal use only Table of Contents
Company Introduction
Results at a Glance
Chairman’s Letter
Group Managing Director’s Review
Operational Report
Executive Leadership
Corporate Governance
Directors’ Report
Financial Report
3
4
4
6
9
16
18
19
34
Corporate Directory
GALE Pacific Limited
ABN 80 082 263 778
Directors
David Allman (Chairman)
Nick Pritchard (Group Managing Director)
Peter Landos (Non-Executive Director)
Donna McMaster (Non-Executive Director)
John Murphy (Non-Executive Director)
Tom Stianos (Non-Executive Director)
Company Secretary
Sophie Karzis
Registered Office
145 Woodlands Drive, Braeside, Victoria, 3195
T + 61 3 9518 3333
Auditors
Deloitte Touche Tohmatsu
550 Bourke Street, Melbourne, Victoria, 3000
T + 61 3 9671 7000
Stock Exchange Listing
GALE Pacific Limited shares are listed on the Australian Securities
Exchange (ASX code: GAP)
Share Registry
Computershare
Yarra Falls, 452 Johnston Street, Abbotsford, Victoria, 3067
T + 61 3 9415 4000
Website Address
www.galepacific.com
2018 Annual General Meeting
The Annual General Meeting will be held on Friday 26 October
2018.
The Notice of Meeting and Proxy Form are separate items
accompanying this 2018 Annual Report.
GALE Pacific | 2018 Annual ReportFor personal use only Who We Are
GALE Pacific is a world leader in specialised textiles and
associated products. We are recognised in our markets as an
innovator and long-term producer of premium quality products.
Based in Australia, we operate globally with more than half our
revenues and profits coming from markets outside Australia.
Our products are marketed across commercial and retail sectors;
with distribution into architectural, agricultural, horticultural,
mining, construction, as well as home improvement, club and
e-commerce channels. They are stocked by many of the world’s
largest retailers.
Key products include shade and screening fabrics, exterior
window shades, shade sails and an array of specialised
commercial fabrics used for architectural shade, crop protection,
water containment and screening. Retail shade and screening
products are marketed under the Coolaroo brand. Commercial
products are marketed under the GALE Pacific brand.
We are focused on growth through product innovation, customer
development, selective geographic expansion, and brand
building.
Page 3
For personal use only Results at a Glance
Revenue $A million
Operating Cash Flow $A million
NPAT $A million
Net Debt $A million
EBITDA $A million
Sales by Region $A million
GALE Pacific | 2018 Annual ReportFor personal use only Chairmans’ Letter
The financial results for FY2018 were somewhat disappointing
and below our expectations at the beginning of the year. Profit
before tax of $12.5 million was 8% below prior year while
earnings per share of 3.35 cents was 1% below prior year.
The results were affected by a number of adverse external
factors, particularly raw material cost increases, exacerbated by
currency movements which increased our product costs in China,
and weather conditions impacting key markets in Australia and
the USA. Management responded to these challenges with a
white hot focus on cost reduction, productivity improvements and
pricing initiatives. However there was no reduction in investment
in resources required to support future growth.
BOARD CHANGES
During the year two new directors joined the Board. Tom Stianos
commenced on 17 October 2017 and has now taken on the
role of Chairman of the Remuneration Committee and Donna
McMaster commenced on 29 March 2018. Both of these new
directors are already making a considerable contribution. John
Murphy has resigned from the Board effective 15 August 2018
after 11 years as a director. John was Chairman of the Remunera-
tion Committee for a number of years and has been Chairman of
the Audit and Risk Committee since 30 October 2015. We thank
John for his contribution and wish him well for the future. Peter
Landos who has been a director for four years has assumed the
role of Chairman of the Audit and Risk Committee.
During the year the company’s infrastructure has been consid-
erably improved, particularly in warehousing and IT systems,
while additional resources have been allocated to new product
development creating a pipeline of exciting products for future
launch in targeted growth markets with the focus continuing to be
North American retail and the commercial sector in Australia and
other specific regions. Opportunities for growth in the commercial
sector will be considerably increased following commissioning of
the new coating line in early calendar 2019.
David Allman
Chairman
16 August 2018
The FY 2018 year was challenging but the management team,
under Nick Pritchard’s leadership, dealt with the headwinds in
an admirably professional way so that the impact on current year
earnings was minimised, while good progress continued to be
made in the execution of key strategies so that the company is
well positioned for future growth. On behalf of the Board I would
like to thank the management team and all our employees for
their contribution.
SHAREHOLDER RETURNS AND CAPITAL
MANAGEMENT
The Board has declared a final dividend for FY 2018 of 1.0 cent
per share which takes the total payout for the year to 2.0 cents
per share representing a 60% payout ratio. The share buyback,
as an additional capital management tool, remains in place
reflecting the very strong balance sheet.
Page 5
For personal use only Group Managing
Director’s Review
During the year we made strong progress in the execution of
our strategy; and our transformation into a faster growing, more
profitable, innovative global fabrics technology business.
We managed to achieve many important milestones despite
being confronted with several significant economic and market
conditions.
We have confidence that our team, infrastructure and new
product pipeline position the company well for growth.
Over recent years we have been focused on building a
platform capable of delivering and sustaining growth. We have
substantially rationalised the company’s product portfolio and
brands, enabling a greater investment in Coolaroo and GALE
product brands. Warehouses have been rationalised, all global
facilities upgraded, IT, safety and other systems strengthened.
These investments have created production capacity and support
the company’s aspirational growth plans.
We have added important skills to the team, broadening the
teams’ capability, and have seen an environment driven by a
positive and engaged team.
Innovation is key to achieving sustained outcomes for the
group. In early 2018 we launched our new Global Innovation
Organisation, more closely linking Marketing, Research &
Development, Product Engineering and Quality functions. We
have further established critical technical alliances to support
our innovation agenda. We have invested in additional research
and development resources and have created a strong pipeline of
genuinely innovative products.
Over the year we executed two major projects, seamlessly and
without disruption to the business. As shared previously we see
the USA market as attractive for its massive growth potential
in our categories. In December 2017, to support our growth
ambitions reflective of this opportunity, we opened our new USA
warehouse. The larger warehouse dramatically improves our
ability to meet service requirements, particularly during peak
periods. The second major project completed was in July 2018
when we went live with our new ERP system in China. Today all
parts of our business are on a single IT platform. This step will
strengthen our processes and has improved visibility of the China
manufacturing performance.
Last year we announced plans to invest $8 million in a state-of-
the-art production line for advanced coated fabrics. Preperations
are currently underway at our Melbourne facility and the line
is expected to become fully operational in March 2019. This
investment will deliver unconstrained selling capacity and support
the strategy of expanding our coated products business globally.
These investments are adding to our track record of building and
delivering on major projects. Importantly, they are aligned to
our clearly defined corporate strategy to deliver sustainable and
superior returns to our shareholders.
Our Vision
Our goal remains to become experts and global leaders in
shade products and high-performance technical textiles in the
commercial sector.
Our Strategy
The fundamental elements of our growth strategy remain
unchanged.
○ Accelerating the growth of our Americas business, focusing
on shading and screening, whilst simultaneously entering
the market for commercial coated fabrics;
○ Extending our market-leading shading and screening
business in Australia and New Zealand;
○ Growing our commercial fabrics businesses in Australia,
and a small number of focus markets outside of Australia;
and
○ Investing in differentiated technologies and technical
partnerships that support the development of innovative
products driven by consumer needs.
Group Performance
Throughout the year we experienced raw material price increases
that materially impacted product costs. The cost of our key raw
materials increased by more than 20%, with our primary product
input, resin, reaching a ten-year high in Australian dollar terms.
Further, unfavourable currency movements negatively impacted
our Chinese manufacturing cost base.
We also experienced additional challenges from abnormal
seasonal factors. Specifically, over the year, hurricanes in Texas
and Florida, a weak Australian grain harvest, and unseasonal cool
weather at the start of the USA season, combined to challenge
our ability to increase sales. Additionally, we saw further impact
from recessionary conditions in the Middle East.
In managing these challenges, we focused on strategies to
improve our operating efficiencies and, where possible, passed
on price increases. Despite these challenges we continued to
invest in our core business in line with our strategic plans, to
underpin future growth.
In the USA we have continued with our investment in the sales
and marketing team, and in our facilities. With USA growth
remaining a strategic priority, these investments will give us the
greatest opportunity to capitalise on the potential. Over the year
we were successful in securing window shade business at a large
national home centre retailer, with the planned rollout over this
year resulting in a window shade set in all stores nationally by
December 2018.
In Australia, the sales results were impacted primarily by the
exiting of the glass business in June 2017, with the weak
grain harvest also impacting. The retail business grew, with
encouraging growth in core product categories. We continued our
focus on operational efficiencies, following a period of complexity
and cost associated with the former non-core products.
GALE Pacific | 2018 Annual ReportFor personal use only The Middle East market continued to be a challenging region
throughout the year. Encouragingly, demand remained strong for
our products; though payments slowed. With careful attention to
trading terms, growth was impacted.
Our Eurasia business, whilst small, is very important to the
group, providing growth potential. We saw strong performance in
commercial fabric sales in Europe; and see this driving continued
improved profitability for the region.
Health and Safety
We have an unwavering commitment to the health and safety
of our employees, and anybody attending our facilities. During
the year our strong performance continued to improve and,
pleasingly, we can report another year free of major injury. Our
hazard reporting culture continues to strengthen, and we are
seeing the benefits of increased investments in safety leadership
and training. Our Lost Time Injury Frequency Rate compares
well versus industry benchmarks; yet we will never become
complacent. Our audit activity, safety leadership, and broader
employee training, will further intensify this year.
Looking Forward
We now have a business that is considerably more focused and
better positioned to grow.
Key elements of our 2019 plan include:
○ Coating Manufacturing Capacity – effectively commis-
sioning our new $8 million coating line in early 2019.
This new line will support the development of the coated
products business and has capabilities that complement
our existing line.
○ Product Innovation – we are particularly focused on new
product development in the commercial fabrics area, as
well as in our core retail shade categories. We have many
exciting developments underway with work continuing
towards commercialisation of these in the coming periods.
○ Americas Region – effectively rolling out new programs
and gaining expanded ranging with existing and new
customers is key to success in this market. We see great
opportunity in the USA to lead the shade category, as well
as build a larger commercial fabrics business.
○ China Manufacturing Operations – consolidating two
existing manufacturing facilities into a single site, to drive
further efficiency and quality improvements.
World Class Employee Engagement
This year we conducted our second global Employee Engagement
Survey with 87% of our employees taking the opportunity to
participate. The survey revealed that our engagement levels are
10% above a global benchmark representing more than 400
like-sized organisations and 400,000 individual participants
across industries and geography.
Engagement levels were higher than the benchmark on 14 out of
the 17 measured engagement metrics.
Thank You
I would like to thank all GALE Pacific employees for their
tremendous contribution this year. They have been critical to
the transformation of our business and positioning us for future
success.
I would like to thank our customers for their support of GALE
Pacific, and our suppliers for the important role they play
partnering with us to achieve our strategy.
I would also like thank Chairman David Allman and the Board for
their ongoing support and counsel.
Finally, I would like to thank our shareholders, longstanding and
new. We are working hard to reward your support.
Nick Pritchard
Group Managing Director
16 August 2018
GALE Pacific employees at the new Fontana, California,
manufacturing and warehousing facility, opened December 2017
Page 7
For personal use only Our Values
Together with our employees, we established six important values that provide an important framework for
how we operate worldwide.
GALE Pacific | 2018 Annual ReportFor personal use only Operational Report
Revenue from continuing businesses
Underlying EBITDA
Underlying EBIT
Underlying profit before tax
Underlying profit after tax
Statutory revenue
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 (unfranked) (cents)
Dividends per share (unfranked) (cents)
Please see page 13 for reconciliation from underlying earnings to statutory earnings.
FY2018
A$ million
FY2017
A$ million
Change
%
160.5
19.9
14.0
12.5
9.8
160.5
12.5
9.8
8.9
(6.7)
3.35
1.00
2.00
162.0
21.4
15.1
13.5
10.1
175.3
(4.9)
(8.0)
19.7
1.3
3.39
1.00
2.00
(1)
(7)
(7)
(8)
(3)
(8)
357
222
(55)
(615)
(1)
0
0
Page 9
For personal use only Operational Report continued
Australia/New Zealand
Revenue from continuing businesses
Statutory revenue
Underlying EBITDA
Underlying PBT
FY2018
A$ million
FY2017
A$ million
Change
%
75.4
75.4
4.2
3.5
79.1
92.4
2.9
1.9
(5)
(18)
45
82
The Australia/New Zealand region delivered a strong profit increase, driven principally by retail sales in core shade and screening
categories growing 7%, operating margins increasing; a result of improved product mix following the exit of non-core products, and
strategic investments to right size the cost base following their exit.
Commercial sales declined overall due to lower demand for grain cover fabrics due to the weak grain season, though continued growth
in non-grain related categories attests to the strength and performance of the underlying business.
Many of the new product developments in the commercial sector are being driven by a closer working relationship with our key
customers and, in many cases, their customers. These new products, at different stages of launch readiness, are extremely exciting
and, though Australian-led, will also create selling opportunities abroad.
The product portfolio, largely cleansed of non-core products now, enabled substantial operational and other efficiencies. Inventory
levels at year end were higher; a result of higher than expected grain fabric holdings due to the low yield grain harvest in 2017, and an
earlier inventory build to better support the 2018 retail season.
Americas
Revenue
EBITDA
PBT
FY2018
A$ million
FY2017
A$ million
Change
%
64.3
6.1
3.7
62.0
6.5
4.4
4
(6)
(15)
The Americas business increased sale 6% in local currency terms, with strong sales-out performance achieved across the major
retailers, including a contribution from the largest e-commerce retailer. During the year the business was awarded a significant new
ranging win at a large home improvement channel customer. Rollout of this expanded new program commenced in June 2018 and is
scheduled to be completed by the end of the calendar year.
Performance during the period was negatively affected by the impact of the hurricanes at the end of the 2017 northern hemisphere
summer which impacted replenishment orders in key selling states, whilst unseasonal cool weather at the beginning of the 2018
summer season saw subdued early sales out, conservative customer inventory management and sizeable late-season order
cancellations, by some major retailers. These factors, along with increases in raw material costs, contributed to a margin contraction
in the period. That being said, we are optimistic about the sell-through being achieved as the summer season has progressed and are
encouraged by the environment for raw material costs stabilising.
FY 2018 was a year to gear the business for sustained growth. Aligned with our plan to aggressively grow our Americas region,
we made additional investments in people, primarily sales and marketing resources, and in relocating our custom window shade
manufacturing and warehousing operations to a larger facility in Fontana, California. This investment had a short-term impact on
operating margin.
The improved logistics infrastructure supported service level improvements with a vastly improved ability to effectively manage peak
season demand. Custom blind manufacturing lead times also reduced to less than five working days from more than 15 working days
in the prior year, driven by the strategy to focus on customer service, and our expanded operating scale.
GALE Pacific | 2018 Annual ReportFor personal use only Middle East/North Africa
Revenue
EBITDA
PBT
FY2018
A$ million
FY2017
A$ million
Change
%
12.7
2.7
2.4
12.8
2.5
2.3
(1)
8
5
At constant currency the Middle East North Africa region increased revenue by 2%, with operating margin improvement due to product
mix changes, and lower quality and supply chain related costs. Throughout the year we saw increasing support for the newly launched
Commercial Heavy architectural shade fabric, designed specifically for larger structures, as well as ongoing growth in our core
commercial fabric ranges.
Market conditions in the region remain restrained resulting from interruptions in planned government stimulus initiatives that drove
project delays and lower cash flows. The business maintained a conservative posture as it relates to market conditions.
China Manufacturing & Eurasia
Revenue
Intersegment Sales (eliminated when consolidating group results)
EBITDA
PBT
FY2018
A$ million
FY2017
A$ million
Change
%
8.1
52.6
4.8
1.4
8.2
49.8
11.5
8.0
(1)
6
(58)
(82)
Despite higher volumes and intersegment sales, adverse price movements in key raw materials, and an unfavourable appreciation in
the Chinese Renminbi, against the Australian and US dollars, contributed to lower profit performance.
Whilst the business is continuing to deliver lower labour and overhead costs driven by core process efficiencies, improved IT systems,
and stronger procurement, the sudden movement in raw materials and currency drove short-term margin reduction.
Our wholly-owned China manufacturing operations continue to undertake a significant transformation. Throughout the year we made
major improvements including the exit of our weaving and powder coating operations which we considered to be non-core. Our
facility upgrade works continued, and we are well advanced in the consolidation of our two currently separate cutting and assembly
operations into a single site. These are major works, and combined with other plant, equipment and facility upgrades, will help to drive
further cost reductions and service improvements.
Eurasia region operating margins increased throughout 2018 despite currency and raw material headwinds. A strategic pivoting of
the business away from high product count, low margin business, towards more profitable customers and product ranges drove the
positive result, as did strong commercial fabric sales to southern Europe.
The Extrusion Team at GALE’s wholly-owned
manufacturing facility in Beilun, China
Page 11
For personal use only Operational Report continued
Balance Sheet and Cash Generation
Operating cash flow for the period closed the year at just under $9 million which was $11 million lower than the prior corresponding
period. Increases in group inventory and receivables were the key contributor to the result.
The inventory result was impacted by currency, though the primary explanation was due to carryover raw materials and finished
product inventory from the weaker than expected grain season in Australia, an unseasonal slow start to the spring/summer seasons
and unexpected USA retail customer destocking activities. The delay in USA customer orders also contributed to a higher receivable
at balance date. That, combined with modest increases in year over year retail sales, and a change in customer mix, will generate
positive cash flows in July and August 2018.
Through ongoing supplier consolidation and the strategy to leverage our global scale, the business continues to see improved payment
terms translating to improved payables performance. Lower tax payments were primarily due to a lower tax payable in China; a result
of unfavourable raw material and currency movements reducing operating margins, and changes to the USA’s corporate tax regime.
The business maintains a conservative balance sheet with net debt closing at just under $7 million. Increased investments in working
capital, detailed above, along with strategic investments in plant, equipment, and information technology contributed to the movement
back to net debt at June 30. Higher than prior year borrowings, and a stable cash balance, is in preparation for staged payments of
the investment in the coating operations scheduled in H1 FY 2019. Low interest-bearing finance was also leveraged to protect against
short term currency exposure in working capital.
Reporting Operating Segments
To continuously improve the transparency of GALE Pacific’s segment reporting, in FY 2019 GALE Pacific Limited will move to an
activity-based allocation method of reporting. Intersegment sales/margin and central costs will be allocated to the external revenue
generating segments where the final economic benefit is derived. This enhanced method of reporting will be used by the Group
Managing Director (who is identified as the Chief Operating Decision Maker (‘CODM’), to target product costing, product line profitability
analysis, customer profitability analysis, and service pricing structures.
From July 1st 2018, the Group will be organised into five operating segments identified by external revenue generating geographic
locations. These operating segments will be based on the internal reports that are reviewed and used by the CODM in assessing
performance and in determining the allocation of resources. A reconciliation between fully allocated segments and statutory segments
can be found below. Statutory segments will be presented in the segment note of the annual report.
Under the improved reporting regime, in FY 2019 comparative FY 2018 fully allocated segments will be restated to reflect the following:
Statutory Segment
3,500
3,749
Australasia
Americas
Profit Before Tax $A 000’s
MENA
2,438
Eurasia
Corporate /
Other
Group
1,432
1,365
12,484
Activity Based Allocations
(380)
4,565
1,245
79
(5,509)
-
Fully Allocated Profit Before Tax
3,120
8,314
3,683
1,511
(4,144)
12,484
GALE Pacific | 2018 Annual ReportFor personal use only
Reconciliation of Underlying Results to Statutory Results for FY2017
In FY2017, the company made a non-cash, non-recurring impairment of goodwill and other related items of $18.4 million pre-tax, and
$18.1 million after tax, respectively. The following table reconciles the underlying results to the statutory results:
EBITDA
EBIT
Profit before tax
Profit after tax
A$ million
A$ million
A$ million
A$ million
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
Basic earnings
per share
cents
(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.
During the year, further investments were made in sales and marketing resources in the USA.
Pictured here are the USA Product Management and Marketing Communication teams.
Page 13
For personal use only Board of Directors, Company Secretary
& Chief Financial Officer
Left to right: David Allman, Nick Pritchard, Donna McMaster, Sophie Karzis, John Murphy, Tom Stianos, Matt Parker, Peter Landos
GALE Pacific | 2018 Annual ReportFor personal use only David Allman, B.Sc.
Chairman and Non Executive Director since November 2009.
John Murphy, CA, FCPA, B.Comm, M.Comm
Non-Executive Director since August 2007.
David was Managing Director of McPherson’s Limited from
1995 to 2009 and prior to that, Managing Director of Cascade
Group Limited. David also held senior positions with Elders IXL
Limited and Castlemaine Tooheys Limited. David holds a degree
in engineering, and prior to obtaining general management
positions, held managerial roles in production management,
finance and marketing. David is Chairman of Careers Training
Group Pty Ltd.
David is the Chairman of the Company’s Nomination Committee
and is a member of the Remuneration Committee.
Nick Pritchard, B Bus. (Marketing)
Group Managing Director appointed 22 August 2014.
Nick was appointed to the position of Group Managing Director
in August 2014. Prior to joining GALE Pacific, he held senior
leadership positions at Newell Brands (Newell Rubbermaid) for 11
years, most recently Vice-President/General Manager – Australia
& New Zealand, where he led all business segments. Nick has
considerable local and international experience in consumer
goods markets across both retail and commercial sectors.
Peter Landos, B.Econ., CA
Non Executive Director since May 2014.
Peter is the Chief Operating Officer of the Thorney Investment
Group of Companies with whom he has been since September
2000, having previously worked at Macquarie Bank Limited. Peter
has extensive business and corporate experience specialising in
advising boards and management in mergers and acquisitions,
divestments, business restructurings and capital markets. Peter
is also a Non Executive Chairman of Adacel Technologies Limited.
Peter is a member of the Company’s Nomination and Audit and
Risk Committees.
John was the Managing Director of Investec Wentworth Private
Equity Limited from 2002 until September, 2011. On that date
John changed from being an executive to a non-executive director
of Investec Bank (Australia) Limited. John is currently also a
director of Ariadne Australia Limited.
John is the Chairman of the Company's Audit & Risk Committee
and is a member of the Nomination and Remuneration
Committees.
Tom Stianos, B.App.Sc., FAICD
Non-Executive Director since October 2017.
Tom is an experienced director who is currently Chairman of
Empired (ASX: EPD), a non-executive director of Inabox (ASX:
IAB), and the Chairman of Escient. He has extensive experience in
executive/senior positions particularly in sales growth and is well
versed in listed company board processes, corporate governance
and delivering performance as well as compliance.
Tom is the Chairman of the Remuneration Committee and is
a member of the Company’s Nomination and Audit and Risk
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
General Manager of Corporate Counsel, a corporate law practice
with a focus on equity capital markets, mergers and acquisitions,
corporate governance for ASX-listed entities, as well as the more
general aspects of corporate and commercial law. She is currently
the company secretary of a number of ASX-listed and unlisted
entities, and is a member of the Law Institute of Victoria as well
as the Governance Institute of Australia.
Donna McMaster, GAICD
Non-Executive Director since March 2018.
Matt Parker
Chief Financial Officer
Donna has extensive experience in senior executive and strategic
roles within public and private retail companies, with a proven
track record in developing proprietary brands, and spearheading
brand acquisitions and licence agreements. Donna serves on
multiple Boards and is currently the Chair of a Victorian School
Education Board, Chair & Non Executive Director of YMCA E-Store
Pty Ltd & a Non-Executive Director of Dandenong Market Pty Ltd.
Donna is a member of the Company’s Nomination and
Remuneration Committees.
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.
Page 15
For 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 Brands (IRWIN Tools, Rubbermaid, Waterman, Parker, Sharpie, PaperMate, DYMO,
Liquid 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, window shades
and pet beds. Nick has a Bachelor of Business (Marketing) and 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, Matt was the CFO of Paragon Care
Ltd (ASX:PGC). Matt is a certified practising accountant and holds a Bachelor’s Degree in
Business and Arts (Japanese). He is a registered member of CPA Australia and an affiliate of
the Securities Institute of Australia.
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
Brands where his responsibilities included leading warehouse facilities, logistics, procurement
and customer service functions across the Asia Pacific region.
XinHua (Cliff) Zhang
General Manager – China 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. Cliff holds a Bachelor of Science (Mechanical
Engineering), from Nanjing University of Science & Technology, China.
GALE Pacific | 2018 Annual ReportFor personal use only John Paul Marcantonio
General Manager – Americas
John Paul joined GALE Pacific in October 2017. He has extensive experience working
across both retail and commercial sectors. Over the last fifteen years he has built an
impressive career at Newell Brands. He held many senior roles including Senior Product
Manager; Regional Marketing Director (Australia & New Zealand) Global Marketing
Director, and Global Director of Marketing. In his most recent role at Newell, John Paul was
Global Vice-President of Marketing for the Food & Beverage segment of the Rubbermaid
Consumer brand.
Ali Haidar
General Manager – Middle East North Africa
Ali joined GALE Pacific in August 2004 and has 13 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 expansion in the Middle East/North Africa region.
Mark Nicholls
General Manager – Eurasia
Mark joined GALE Pacific in June 2016. He has considerable experience in the UK, Europe,
Asia, South Africa and Israel. Mark has knowledge across retail and commercial sectors
and experience appointing and managing distributors, and large, multi-country retailers.
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 Brands and SANDVIK.
Andrew Nasarczyk
Senior Manager - Research & Development
Andrew joined GALE Pacific in July 2002, moving into the company through the acquisition
of Visy Industrial Textiles. Andrew has held various Production and Technical roles within
GALE Pacific, including a 3-year secondment to GALE’s manufacturing plant in China.
During his time at GALE, Andrew has introduced numerous technical improvements and
led key product innovations working closely with technical partners and customers. Andrew
was recently a Standards Committee member for the update to Australia’s Synthetic Shade
Standard. Andrew has a Bachelor of Engineering (Polymers).
Page 17
For personal use only Corporate
Governance
The Company’s Directors and management are committed to
conducting the Group’s business in an ethical manner and in
accordance with the highest standards of corporate governance.
The Company has adopted and substantially complies with the
ASX Corporate Governance Principles and Recommendations
(Third Edition) (Recommendations) to the extent appropriate to
the size and nature of the Group’s operations.
The Company has prepared a statement which sets out
the corporate governance practices that were in operation
throughout the financial year for the Company, identifies any
Recommendations that have not been followed, and provides
reasons for not following such Recommendations (Corporate
Governance Statement).
In accordance with ASX Listing Rules 4.10.3 and 4.7.4, the
Corporate Governance Statement will be available for review on
GALE Pacific’s website (www.galepacific.com), and will be lodged
together with an Appendix 4G with ASX at the same time that this
Annual Report is lodged with ASX.
The Appendix 4G will particularise each Recommendation that
needs to be reported against by GALE Pacific, and will provide
shareholders with information as to where relevant governance
disclosures can be found.
The Company’s corporate governance policies and charters are
all available on GALE Pacific’s website (www.galepacific.com).
Custom Window Shade Manufacturing -
Orlando, USA
GALE Pacific | 2018 Annual ReportFor personal use only Directors’ Report
The Directors of Gale Pacific Limited (“the Company”) present
their annual financial report for the Company and its controlled
entities (“the Group”) for the financial year ended 30 June 2018.
State of Affairs
There were no significant changes in the state of affairs of the
Group during the financial year.
30 June 2018, payable on 4 October 2018 to shareholders on
the register at 27 September 2018. 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 $2,866,000. Including the final dividend of 1.0 cents per
share declared above, a dividend of 2.0 cents is on earnings of
3.35 cents per share.
Events Subsequent to Balance Date
Apart from the dividend declared, no other matter or
circumstance has arisen since 30 June 2018 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
environmental regulations under the Commonwealth or State
legislation. The Directors believe that the Group has adequate
systems in place for the management of its environmental
requirements and is not aware of any breach of those
environmental requirements as they apply to the Group.
Dividends
Dividends paid to members during the financial year were as
follows:
Final ordinary dividend for the year
ending 30 June 2017 (paid 2 October
2017) (unfranked)
Interim ordinary dividend for the half
year ended 31 December 2017 (paid 3
April 2018) (unfranked)
2017/2018
1.00 cent
1.00 cent
In addition to the above dividends, on the 16 of August 2018
the Directors declared a dividend of 1 cent per share to the
holders of fully paid ordinary shares in respect of the year ended
Share Based Payments
Performance Rights
The number of performance rights on issue at the date of this
report is 4,936,000. 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.
1,918,000 performance rights were granted to executives
and the Group Managing Director on 22 November 2017.
The performance rights will vest subject to a continuation
of employment to 30 June 2020 and satisfying of relevant
performance hurdles based on the Group’s diluted earnings per
share over the three year period from 1 July 2017 to 30 June
2020. None of these performance rights can vest until 30 June
2020 and expire on 1 December 2020.
As at 30 June 2018, 414,000 performance rights lapsed during
the year to 30 June 2018 as the relevant personnel ceased
employment with the Company.
On the 28th of September 2017, 1,325,802 performance rights
vested. The vesting of those performance rights were subject to a
continuation of employment for three years and the satisfactory
achievement of performance hurdles based on improvements
in the Group’s diluted earnings per share over the three period
between July 2014 and June 30 2017.
The performance rights are subject to a continuation of
employment for three years and then the satisfying of relevant
performance hurdles based on improvements in the Group’s
diluted earnings per share over the three year period.
Further details of the options and performance rights movements
during the reporting period are disclosed in the Remuneration
Report.
Page 19
For personal use only Directors’ Report continued
Directors’ Shareholdings
Directors
D Allman
P Landos
D McMaster
J Murphy
N Pritchard
T Stianos
Directors’ Meetings
Fully Paid
Ordinary Shares
2,400,000
Nil
Nil
4,416,599
521,593
100,000
Options
Performance
Rights
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2,097,000
N/A
Directors’
Meetings
Audit & Risk
Committee Meetings
Remunerations
Committee Meetings
Nomination
Committee Meetings
No of
Meetings
Eligible to
Attend
13
Attended
13
No of
Meetings
Eligible to
Attend
3
13
5
13
13
10
12
5
13
13
10
4
N/A
4
N/A
3
Attended
3
3
N/A
4
N/A
3
No of
Meetings
Eligible to
Attend
3
3
1
3
N/A
2
Attended
3
2
1
3
N/A
2
No of
Meetings
Eligible to
Attend
1
1
N/A
1
N/A
1
Attended
1
1
N/A
1
N/A
1
Directors
D Allman
P Landos
D McMaster
J Murphy *
N Pritchard
T Stianos
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.
Throughout the reporting period of this report the members of the Audit & Risk Committee are John Murphy, Peter Landos and Tom
Stianos. The Chairman of the Audit & Risk Committee is John Murphy.
Throughout the reporting period of this report the members of the Remuneration Committee are Tom Stianos, David Allman, Donna
McMaster and John Murphy. The current Chairman of the Remuneration Committee is Tom Stianos who was appointed during FY18 on
17 October 2017. Prior to this the Chairman was John Murphy.
Throughout the reporting period of this report the members of the Nomination Committee are David Allman, Peter Landos, Donna
McMaster, John Murphy and Tom Stianos. The Chairman of the Nomination Committee is David Allman.
* On the 15 August 2018, Non Executive Director John Murphy retired from the Board of Directors, Audit and Risk, Remuneration and
Nomination Committees. Upon his retirement, the role of the company’s Audit and Risk committee will be assumed by Director Peter
Landos.
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.
GALE Pacific | 2018 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 sets out summary information about the consolidated entity’s earnings and movements in shareholder wealth for the
five years to 30 June 2018:
Sales
Net profit before tax
Net profit after tax
Share price at start of year
Share price at end of year
Interim dividend
Final dividend
30 June 2018
30 June 2017
30 June 2016
30 June 2015
30 June 2014
160,456
175,265
173,191
147,993
137,304
12,483
9,806
40 cents
35.5 cents
(4,861)
(8,044)
36 cents
40 cents
13,509
10,228
17 cents
36 cents
6,221
5,170
23 cents
17 cents
10,988
8,233
26 cents
23 cents
1.00 cents
1.00 cent
0.75 cents
-
1.30 cents
1.00 cents
1.00cent
1.00 cents
1.00 cent
1.35 cents
Basic earnings per share
3.35 cents
(2.71) cents
3.44 cents
1.74 cents
2.77 cents
Diluted earnings per share
3.29 cents
(2.71) cents
3.40 cents
1.72 cents
2.72 cents
Remuneration Practices
Non Executive Director Remuneration
The Group policy for determining the nature and amount of
emoluments of Board members and Senior Executives is as
follows. The remuneration structure for Executive Officers,
including Executive Directors, is based on a number of factors
including length of service, particular experience of the individual
concerned, and overall performance of the Group. The contracts
of service between the Group and Executive Directors and
Executives are on a continuing basis, the terms of which are not
expected to change in the immediate future. Upon retirement
Executive Directors and Executives are paid employee benefit
entitlements accrued to date of retirement. Payment of bonuses,
and other incentive payments are made at the discretion of the
Remuneration Committee to Key Executives of the Group based
predominantly on an objective review of the Group’s financial
performance, the individuals’ achievement of stated financial and
non financial targets and any other factors the Committee deems
relevant. Non Executive Directors receive a fee for being Directors
of the Company and do not participate in performance based
remuneration.
Remuneration Structure
In accordance with best practice corporate governance, the
structure of Non Executive Directors and Senior Managers
remuneration is separate and distinct.
Objective
The Board seeks to set remuneration at a level which provides
the Company with the ability to attract and retain directors of
relevant experience and skill, whilst incurring costs which are
acceptable to shareholders.
Structure
The Company’s Constitution and the Australian Securities
Exchange Listing Rules specify that the aggregate remuneration
of Non Executive Directors shall be determined from time to
time by a general meeting. An amount not exceeding the amount
determined is then divided between the Directors as agreed. The
last determination was at the Annual General Meeting held on
26 October 2012 when shareholders’ approved the Company’s
constitution which provides for an aggregate remuneration
of $500,000 per annum. The amount of the aggregate
remuneration and the manner in which it is apportioned is
reviewed periodically. The Board considers fees paid to Non
Executive Directors of comparable companies when undertaking
this review process.
Each Non Executive Director receives a fee for being a Director
of the Company and does not participate in performance based
remuneration.
Page 21
For personal use only Directors’ Report continued
(b) Cash Bonuses
One year short term performance cash bonus payments are
awarded in accordance with the company’s remuneration policy.
The budget targets for each business unit and the company
overall is established each year by the Board. The performance
criteria include sales and earnings before interest and tax growth
and working capital management. For corporate executives, the
performance criteria include growth in earnings before interest
and tax and profit after tax.
Key Management Personnel of the Group Who Held
Office During the Year
Directors
D Allman (Chairman Non Executive)
P Landos (Non Executive)
D McMaster (Non Executive)
J Murphy (Non Executive)
N Pritchard (Group Managing Director)
T Stianos (Non Executive)
Executives
A Haidar (General Manager – Middle East & North Africa)
J P Marcantonio (General Manager – Americas)
B Marotta (General Manager – Supply Chain)
M Nicholls (General Manager – Eurasia)
M Parker (Chief Financial Officer)
C Zhang (General Manager – China)
Senior Manager and Executive Director
Remuneration
Objective
The Group aims to reward executives with a level and mix
of remuneration commensurate with their position and
responsibilities within the Group. The objective of the
remuneration policy is:
○ Reward executives for Group and individual performance;
○ Align the interests of the executives with those of the
shareholders; and
○ Ensure that total remuneration is competitive by market
standards.
Structure
In determining the level and make up of executive remuneration,
the Remuneration Committee reviews reports detailing market
levels of remuneration for comparable roles. Remuneration
consists of fixed and variable elements.
(a) Share Based Payments
The Group maintains a performance rights scheme for certain
staff and executives, including the Group Managing Director, as
approved by shareholders at an annual general meeting. These
schemes are designed to reward key personnel when the Group
meets performance hurdles increasing the diluted earnings per
share and relate to:
○ Improvement in earnings per share; and
○ Improvement in return to shareholders.
The number of unissued ordinary shares under the performance
rights scheme at 30 June 2018 was 4,936,000. 1,863,000 of
these shares were granted on 9 October 2015 and will not vest
until the time of the company’s 2018 annual report is released
on the ASX (on or around 1st October 2018). 1,299,000 of these
shares were granted on 21 September 2016 and will not vest
until the time of the company’s 2019 annual report is released
on the ASX (on or around 1 October 2019). A further 1,918,000
of these shares were granted on 22 November 2017 and will
not vest until the time of the company’s 2020 annual report is
released on the ASX (on or around 1 October 2020). In the period
between 1 July 2017 and 30 June 2018, 414,000 shares lapsed
as the relevant personnel ceased employment with the company.
On the 28th of September 2017, 1,325,802 performance rights
vested due to satisfactory performance and time hurdles being
delivered. The vested rights were in relation to the period of July
1 2014 to June 30 2017. Each performance right entitles the
holder to one (1) ordinary share in Gale Pacific Limited and is
subject to satisfying the relevant performance hurdles based on
improvements in the Group’s diluted earnings per share. Options
and performance rights issued to executives during the year were
issued in accordance with the Group’s remuneration policy which:
○ Reward executives for Group and individual performance;
○ Align the interests of the executives with those of the
shareholders; and
○ Ensure that total remuneration is competitive by market
standards.
GALE Pacific | 2018 Annual ReportFor personal use only The following table discloses the remuneration of the Directors of the Company:
2017/2018
Short Term Benefits
Post
Employe-
ment
Share
Based
Payments
Termi-
nation
Benefits
Salary &
Fees
$
Bonus
$
Directors
Executive Directors
N Pritchard
492,273
127,050
Non Executive Directors
D Allman
J Murphy
P Landos
T Stianos
D McMaster
Total
115,460
108,342
77,626
55,293
19,885
-
-
-
-
-
868,878
127,050
Non Mon-
etary
Super
Rights
Total
Performance Related
Total
Rights
$
$
$
$
$
%
%
-
-
-
-
-
-
-
25,000
48,635
21,712
9,450
6,146
5,252
1,889
-
-
-
-
-
69,449
48,635
-
-
-
-
-
-
-
692,958
25%
7%
137,172
117,792
83,771
60,545
21,774
1,114,012
2016/2017
Short Term Benefits
Post
Employe-
ment
Share
Based
Payments
Termi-
nation
Benefits
Salary &
Fees
$
Bonus
$
Directors
Executive Directors
Non Mon-
etary
Super
Rights
Total
Performance Related
Total
Rights
$
$
$
$
$
%
%
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
168,182
31,742
8,979
7,259
-
-
-
77,980
168,182
-
-
-
-
-
880,272
45%
19%
131,415
94,291
81,840
1,187,818
During the year, new plant and equipment was
commissioned at the company’s wholly-owned
manufacturing facility in China
Page 23
For personal use only Directors’ Report continued
The following table discloses the remuneration of the Group’s key management personnel:
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
Post
Employe-
ment
Share
Based
Payments
Termi-
nation
Benefits
2017/2018
Short Term Benefits
Key Management
Personnel
J P Marcantonio 11
Salary &
Fees
$
424,959
Bonus
$
77,391
Non Mon-
etary
$
9,693
283,954
59,400
242,501
52,368
237,918
22,673
194,725
-
-
-
-
-
M Parker
B Marotta
A Haidar
M Nicholls 12
C Zhang
V Klunyk
Super
$
8,527
25,000
23,037
-
Rights
$
-
17,026
16,430
8,191
9,028
-
164,263
41,684
33,760
-
(5,130)
159,836
12,956
15,567
-
-
-
L Klebenow
46,808
-
-
(13,192)
142,658
Total
1,754,964 266,472
43,454
81,159
23,326
142,658
2,312,032
Total
Performance Related
Total
Rights
$
520,570
385,380
334,336
268,782
203,753
234,578
188,359
176,273
%
15%
20%
21%
11%
0%
16%
7%
(7)%
%
0%
4%
5%
3%
0%
(2)%
0%
(7)%
2016/2017
Short Term Benefits
Post
Employe-
ment
Share
Based
Payments
Termi-
nation
Benefits
Key Management
Personnel
L Klebenow 1
M Parker 2
B Marotta 3
E Varani 4
A Haidar 5
C Fuller 6
C Zhang 7
M Denney 8
S Elding 9
V Klunyk 10
Total
Salary &
Fees
$
367,586
Bonus
$
-
Non Mon-
etary
$
20,563
263,750
107,609
235,749
100,530
-
-
Super
$
-
25,056
22,396
196,116
42,898
191,849
40,678
66,822
43,536
-
-
Rights
$
13,192
38,165
54,967
(11,184)
30,013
216,157
13,951
-
19,791
-
157,705
-
92,085
62,769
-
-
-
-
33,080
-
-
-
-
-
5,130
-
165,991
8,281
5,963
(17,351)
-
-
-
1,783,767 305,666
164,000
81,487
112,932
165,991
2,613,843
Total
Performance Related
Total
Rights
$
401,341
434,580
413,642
294,652
306,076
249,899
195,915
165,991
83,015
68,732
%
3%
34%
38%
11%
23%
6%
3%
0%
%
3%
9%
13%
(4)%
10%
0%
3%
0%
(21)%
0%
(21)%
0%
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. Mr Varani resigned 10 July 2017.
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 S Elding was the Manager - People and Culture. She is located in Australia and remunerated in Australian dollars. Ms Elding resigned 3 March 2017.
10 Ms Klunyk was the General Manager – People and Culture. She is located in Australia and remunerated in Australian dollars. Ms Klunyk resigned 23 May 2018.
11 J P Marcantonio is the General Manager - Americas, remunerated in United States dollars converted to Australian dollars in the table above.
12 M Nicholls is the General Manager – EurAsia. He is based in United Kingdom and remunerated in Pounds converted to Australian dollars in the table above.
GALE Pacific | 2018 Annual ReportFor personal use only Directors’ and Executives’ Equity Holdings: Fully Paid Ordinary Shares
Balance
30 June 2017
No.
Granted as
Compensation
No.
Received on
Exercise of Options
No.
Other
Movements
No.
Balance
30 June 2018
No.
2017/2018
Executive Directors
N Pritchard
212,804
865,385
Non Executive Directors
D Allman
J Murphy
T Stianos
Executives
B Marotta
A Haidar
Total
2,400,000
4,416,599
-
-
235,000
7,264,403
-
-
-
289,122
99,364
1,253,871
-
-
-
-
-
-
-
(556,596)
521,593
-
-
100,000
-
-
(456,596)
2,400,000
4,416,599
100,000
289,122
334,364
8,061,678
Balance
30 June 2016
No.
Granted as
Compensation
No.
Received on
Exercise of Options
No.
Other
Movements
No.
Balance
30 June 2017
No.
2016/2017
Executive Directors
N Pritchard
212,804
Non Executive Directors
D Allman
J Murphy
Executives
A Haidar
Total
2,400,000
4,416,599
235,000
7,264,403
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
212,804
2,400,000
4,416,599
235,000
7,264,403
Share Based Compensation
The terms and conditions of each grant of performance rights granted but not vested as at 30 June 2018 affecting remuneration in the
current or a future reporting period are as follows:
Grant Date
Value per performance rights at grant date
31 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 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 2019) and expire on 1 December 2019.
The performance rights granted on 22nd of November 2017 are subject to the continuation of employment to 30 June 2020 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 2017 to 30 June 2020. None of these rights can vest until the company releases its FY20 annual report to the ASX
(on or around 20th September 2020) and expire on 1 December 2020.
Page 25
For personal use only Directors’ Report continued
Directors’ and Executives’ Equity Holdings, Compensation Options and Performance Rights:
Granted and Vested During the Year
2017/2018
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
-
606,000
22/11/17
0.3087
Nil
01/12/20
01/10/20
01/10/20
Non Executive Directors
None
Management Personnel (Performance Rights)
Other Management
-
1,312,000 22/11/17
0.3087
Nil
01/12/20
01/10/20
01/10/20
Total
1,918,000
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
-
991,000
21/09/16
0.3507
Nil
01/12/19
01/10/19
01/10/19
Total
1,569,000
GALE Pacific | 2018 Annual ReportFor personal use only Directors’ and Executives’ Equity Holdings, Compensation Options and Performance Rights:
Movements During the Year
Balance
1 July 2017
No.
Granted as
Compensa-
tion
No.
2017/2018
Executive Directors (Performance Rights)
Exercised
No.
Lapsed
No.
Net Other
Change
No.
Balance
30 June
2018
No.
Balance
Held
Nominally
No.
Value of
Lapsed
Options/
Rights
$
N Pritchard
2,356,385
606,000
(865,385)
Non Executive Directors
None
Executives (Performance Rights)
B Marotta
M Parker
A Haidar
L Klebenow
C Zhang
J P Marcantonio
V Klunyk
Mark Nicholls
767,122
523,000
427,364
270,000
105,000
-
-
-
187,000
(289,122)
212,000
144,000
-
104,000
270,000
144,000
113,000
-
(99,364)
-
-
-
-
-
Other Management Personnel (Performance Rights)
Other Management
308,931
138,000
(71,931)
-
-
-
-
(270,000)
-
-
(144,000)
-
-
Total
4,757,802
1,918,000
(1,325,802)
(414,000)
-
-
-
-
-
-
-
-
-
-
-
2,097,000
665,000
735,000
472,000
-
209,000
270,000
-
113,000
375,000
4,936,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance
1 July 2016
No.
Granted as
Compensa-
tion
No.
2016/2017
Executive Directors (Performance Rights)
Exercised
No.
Lapsed
No.
Net Other
Change
No.
Balance
30 June
2017
No.
Balance
Held
Nominally
No.
Value of
Lapsed
Options/
Rights
$
N Pritchard
1,778,385
578,000
Non Executive Directors
None
Executives (Performance Rights)
B Marotta
M Parker
A Haidar
S Elding
E Varani
C Zhang
L Klebenow
588,122
320,000
281,364
217,603
196,000
179,000
203,000
146,000
-
-
-
-
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44,528
44,989
-
-
-
89,516
Page 27
For personal use only Directors’ Report continued
The Directors are of the opinion that the services as disclosed
in note 30 to the financial statements do not compromise
the external auditor’s independence requirements of the
Corporations Act 2001 for the following reasons:
○ all non-audit services have been reviewed and approved to
ensure that they do not impact the integrity and objectivity
of the auditor; and
○ none of the services undermine the general principles
relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by the
Accounting Professional and Ethical Standards Board,
including reviewing or auditing the auditor’s own work,
acting in a management or decision-making capacity for
the Company, acting as advocate for the Company or jointly
sharing economic risks and rewards.
Officers of the Company who are Former Partners of Deloitte
Touche Tohmastsu
There are no officers of the Company who are former partners of
Deloitte Touche Tohmastsu.
Rounding of Amounts
The Company is of a kind referred to in Class Order 98/100,
issued by the Australian Securities and Investments Commission,
relating to ‘rounding-off’. Amounts in this report have been
rounded off in accordance with that Class Order to the nearest
thousand dollars, or in certain cases, the nearest dollar.
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required
under section 307C of the Corporations Act 2001 is set out on
the following page.
Auditor
Deloitte Touche Tohmastsu continues in office in accordance with
section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of Directors,
pursuant to section 298(2)(a) of the Corporations Act 2001.
Employment Agreements
Executives serve under terms and conditions contained in a
standard executive employment agreement, that allows for
termination under certain conditions with two to three months’
notice. The agreements include restraints of trade on the
employee as well as confidentiality and intellectual property
agreements.
Indemnity and Insurance of Officers
The Company has indemnified the directors and executives of
the Company for costs incurred, in their capacity as a director or
executive, for which they may be held personally liable, except
where there is a lack of good faith.
During the financial year, the Company paid a premium in
respect of a contract to insure the directors and executives of
the Company against a liability to the extent permitted by the
Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the
premium.
Indemnity and Insurance of Auditor
The Company has not, during or since the end of the financial
year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the
auditor.
During the financial year, the Company has not paid a premium in
respect of a contract to insure the auditor of the Company or any
related entity.
Proceedings on Behalf of the Company
No person has applied to the Court under section 237 of the
Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the
Company is a party for the purpose of taking responsibility on
behalf of the Company for all or part of those proceedings.
Non Audit Services
Details of the amounts paid or payable to the auditor for
non-audit services provided during the financial year by the
auditor are outlined in note 31 to the financial statements.
The Directors are satisfied that the provision of non-audit
services during the financial year, by the auditor (or by another
person or firm on the auditor’s behalf), is compatible with the
general standard of independence for auditors imposed by the
Corporations Act 2001.
GALE Pacific | 2018 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
16 August 2018
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 2018, 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
Member of Deloitte Touche Tohmatsu Limited
Liability limited by a scheme approved under Professional Standards Legislation.
Page 29
For personal use only Independent Auditors 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 2018, 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 2018 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.
Member of Deloitte Touche Tohmatsu Limited
Liability limited by a scheme approved under Professional Standards Legislation.
GALE Pacific | 2018 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
Recoverability of trade receivables
in Middle East and North Africa
As at 30 June 2018, the carrying amounts
of Middle East and North Africa (“MENA”)
trade receivable was AU$8.55 million with
AU$0.47 million of the outstanding balance
aged over 365 days as disclosed in Note 10.
The balance of provision for impairment of
receivables in MENA accounts for 46% of
trade receivables greater than 365 days.
The determination as to whether the
receivables are collectable requires a high
judgment and
level of management
estimates, whereby
the management
considers specific factors including the age
the balances, historical payment
of
relevant
patterns
information
the
creditworthiness of the counterparties.
other
concerning
and
any
How the scope of our audit responded to the
Key Audit Matter
Our procedures included, but were not limited to:
•
•
the
the
aging
analysis
• Obtaining an understanding on how the
provision for impairment of receivables is
estimated by management and assessing
management’s process in determining the
estimated future cash flows of accounts
receivables;
Engaging our Dubai audit team to assist with
assessment procedures in the context of
their knowledge of
local market
conditions;
Evaluating
and
subsequent settlement of the accounts
receivable, on a sample basis, to the source
documents including invoices and bank
statements;
Assessing the reasonableness of provision
for impairment of receivables with reference
to the credit history including default or
delay in payments, settlement records,
subsequent settlements and aging analysis
of the accounts receivables on a sample
basis; and
Evaluating the historical accuracy of the
management’s assessment of impairment
for receivables on a sample basis by
examining the actual write-offs, the reversal
of previous recorded provision and new
provision recorded in the current year in
respect of accounts receivables at the end of
the previous financial year.
•
•
We also assessed the appropriateness of the
disclosures included in Note 10 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 2018, but does not
include the financial report and our auditor’s report thereon.
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,
Page 31
For personal use only
Independent Auditors Report continued
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
from error, as
intentional omissions,
involve collusion,
fraud may
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.
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.
GALE Pacific | 2018 Annual ReportFor personal use only
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 19 to 28 of the Directors’ Report for the
year ended 30 June 2018.
In our opinion, the Remuneration Report of Gale Pacific Limited, for the year ended 30 June 2018,
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, 16 August 2018
Page 33
For personal use only Directors’ Report
Directors’ Declaration
In the Directors’ opinion:
○ the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations
Regulations 2001 and other mandatory professional reporting requirements;
○ the attached financial statements and notes comply with International Financial Reporting Standards as issued by the Interna-
tional Accounting Standards Board as described in note 2 to the financial statements;
○ the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June 2018 and of
its performance for the financial year ended on that date; and
○ there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
David Allman
Chairman
16 August 2018
GALE Pacific | 2018 Annual ReportFor personal use only Gale Pacific Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2018
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
2018
$'000
2017
$'000
5
6
6
6
7
160,456
175,265
1,317
1,067
(86,516)
(26,329)
(5,934)
-
(1,601)
(5,450)
(10,919)
(11,068)
(1,472)
(96,972)
(27,442)
(6,368)
(17,455)
(2,145)
(5,175)
(12,107)
(12,004)
(1,525)
12,484
(4,861)
(2,677)
(3,183)
9,807
(8,044)
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
503
3,655
665
(3,173)
Other comprehensive income for the year, net of tax
4,158
(2,508)
Total comprehensive income for the year attributable to the owners of Gale
Pacific Limited
Basic earnings per share
Diluted earnings per share
13,965
(10,552)
Cents
Cents
8
8
3.35
3.29
(2.71)
(2.71)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
Page 35
For personal use only Gale Pacific Limited
Statement of financial position
As at 30 June 2018
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
2018
$'000
2017
$'000
9
10
11
12
13
7
14
15
7
16
17
7
18
19
22,991
33,862
46,736
1,493
105,082
58
30,123
7,364
2,468
40,013
24,974
29,497
37,449
1,419
93,339
58
26,955
7,283
4,274
38,570
145,095
131,909
23,153
16,195
480
171
1,825
475
42,299
13,520
1,679
117
15,316
19,451
7,268
471
863
1,718
286
30,057
16,400
1,946
109
18,455
57,615
48,512
87,480
83,397
67,641
1,752
18,087
71,365
(2,591)
14,623
87,480
83,397
The above statement of financial position should be read in conjunction with the accompanying notes
GALE Pacific | 2018 Annual ReportFor personal use only Gale Pacific Limited
Statement of changes in equity
For the year ended 30 June 2018
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
Consolidated
Balance at 1 July 2017
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)
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
71,365
(2,591)
14,623
83,397
-
-
-
-
-
(3,724)
-
-
-
4,158
9,807
-
9,807
4,158
4,158
9,807
13,965
80
105
-
-
-
-
(105)
-
(382)
(5,856)
80
-
(3,724)
(382)
(5,856)
Balance at 30 June 2018
67,641
1,752
18,087
87,480
The above statement of changes in equity should be read in conjunction with the accompanying notes
Page 37
For personal use only Gale Pacific Limited
Statement of cash flows
For the year ended 30 June 2018
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
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
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/(decrease) 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
2018
$'000
2017
$'000
12,484
(4,861)
5,934
-
80
1,464
1,472
6,368
17,454
303
(1,391)
1,525
21,434
19,398
(4,365)
(9,287)
(74)
-
3,702
512
115
189
12,226
(1,472)
(1,830)
728
7,128
(151)
1
(147)
(285)
(111)
(32)
26,529
(1,525)
(5,351)
8,924
19,653
(7,137)
(655)
246
(3,785)
(523)
292
(7,546)
(4,016)
9,326
(3,724)
(382)
(5,856)
(3,279)
933
(120)
93
(5,950)
(9,980)
(3,915)
(15,024)
(2,537)
24,974
554
613
24,563
(202)
12
13
20
Cash and cash equivalents at the end of the financial year
9
22,991
24,974
The above statement of cash flows should be read in conjunction with the accompanying notes
GALE Pacific | 2018 Annual ReportFor personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
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 17 August 2018. 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 2018 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.
Page 39
For personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
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.
GALE Pacific | 2018 Annual ReportFor personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
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.
Page 41
For personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
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 receivables
The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of
provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection
rates and specific knowledge of the individual debtor's financial position.
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).
GALE Pacific | 2018 Annual ReportFor personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
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
Cash Flow Hedges
Forward foreign exchange contracts, designated as cash flow hedges, are measured at fair value. Reliance is placed on
future cash flows and judgement is made on a regular basis, through prospective and retrospective testing, including at
the reporting date, that the hedges are still highly effective.
Fair Value Hedges
Forward foreign exchange contracts, designated as fair value hedges, are measured as such. Changes in the fair value
of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together
with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging instrument
expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. The fair value adjustment
to the carrying amount of the hedged item arising from the hedged risk is amortised to profit or loss from that date
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into four operating segments identified by geographic location and identity of the service line
manager, together with Corporate. These operating segments are based on the internal reports that are reviewed and
used 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.
The Group operates predominantly in one business segment, being branded shading, screening and home improvement
products.
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
statements.
Discrete financial information about each of these segments is reported on a monthly basis.
The operating segments are as follows:
Australasia
China Manuf. and EurAsia
Americas
Middle East and North Africa
('MENA')
Manufacturing and distribution facilities are located in Australia, and distribution facilities
are located in New Zealand. Sales offices are located in all states in Australia and in New
Zealand.
Manufacturing facilities are located in Beilun, China which supply to the Group’s sales and
marketing operations throughout the world.
Sales offices are located in Florida and custom blind assembly and distribution facilities
are located in California which service the North American region.
A sales office and distribution facility is located in the United Arab Emirates to service this
market.
The 'Other Segments' represents Corporate and Intersegment eliminations.
Major customers
During the year ended 30 June 2018 approximately 29% (2017: 32%) of the Group's external revenue was derived from
sales to one (2017: one) customer in the Australasian region.
Page 43
For personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 4. Operating segments (continued)
Operating segment information
Consolidated - 2018
Revenue
Sales to external customers
Intersegment sales
Total revenue
Segment EBITDA
Depreciation and amortisation
Finance costs
Profit before income tax
expense
Income tax expense
Profit after income tax
expense
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
Consolidated - 2017
Revenue
Sales to external customers
Intersegment sales
Total revenue
Segment EBITDA (Underlying)
Goodwill Impairment
Other Related Items
Depreciation and amortisation
Finance costs
Profit/(loss) before income
tax expense
Income tax expense
Loss after income tax
expense
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
19,890
(5,934)
(1,472)
12,484
(2,677)
9,807
145,095
145,095
57,615
57,615
Australasia
$'000
Americas
$'000
MENA
$'000
China Manuf.
and
EurAsia
$'000
Other
segments
$'000
Total
$'000
75,432
747
76,179
4,213
(588)
(125)
3,500
64,253
18
64,271
6,142
(1,611)
(782)
3,749
12,698
61
12,759
2,654
(3)
(213)
2,438
8,073
52,623
60,696
4,845
(3,119)
(294)
1,432
2,036
(613)
(58)
1,365
-
(53,449)
(53,449)
160,456
-
160,456
29,107
50,043
13,961
33,341
18,643
9,944
12,891
531
13,968
20,281
Australasia
$'000
Americas
$'000
MENA
$'000
China Manuf.
and
EurAsia
$'000
Other
segments
$'000
Total
$'000
92,350
2,644
94,994
2,924
(17,455)
(952)
(808)
(180)
61,963
14
61,977
6,542
-
-
(1,559)
(594)
(16,471)
4,389
12,775
-
12,775
2,457
-
-
(3)
(130)
2,324
8,177
49,761
57,938
11,513
-
-
(3,454)
(109)
-
(52,419)
(52,419)
(1,997)
-
-
(544)
(512)
7,950
(3,053)
30,465
41,117
12,074
33,637
14,616
10,997
6,232
745
9,074
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
GALE Pacific | 2018 Annual ReportFor personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 4. Operating segments (continued)
Accounting policy for operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the CODM. The CODM is responsible for the allocation of resources to operating
segments and assessing their performance.
Note 5. Other income
Other income (including sales of scrap material from manufacturing)
1,317
1,067
Note 6. Expenses
Consolidated
2018
$'000
2017
$'000
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
Consolidated
2018
$'000
2017
$'000
4,805
5,328
1,129
1,040
5,934
6,368
26,249
80
27,139
303
26,329
27,442
1,472
1,525
4,886
4,487
Page 45
For personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
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 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
Amounts charged directly to equity
Deferred tax assets
Consolidated
2018
$'000
2017
$'000
2,929
281
(533)
2,659
435
89
2,677
3,183
281
435
12,484
(4,861)
3,745
(1,458)
-
153
3,898
(533)
(688)
5,236
38
3,816
89
(722)
2,677
3,183
Consolidated
2018
$'000
2017
$'000
216
285
GALE Pacific | 2018 Annual ReportFor personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 7. Income tax (continued)
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
Charged to profit or loss
Charged to equity
Transfer from current tax liability
Closing balance
Provision for income tax
Provision for income tax
Consolidated
2018
$'000
2017
$'000
830
(635)
(735)
(895)
(224)
15
227
469
1,590
147
1,872
(546)
(817)
(1,107)
(224)
14
394
452
1,590
700
789
2,328
2,328
(281)
(216)
(1,042)
2,068
(435)
(285)
980
789
2,328
Consolidated
2018
$'000
2017
$'000
171
863
The 2018 tax asset of $789,000 (2017: $2,328,000) is comprised of $2,468,000 in deferred tax assets (2017: $4,742,000)
and $1,679,000 (2017: $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.
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.
Page 47
For personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 7. Income tax (continued)
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
2018
$'000
2017
$'000
Profit/(loss) after income tax attributable to the owners of Gale Pacific Limited
9,807
(8,044)
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
293,054,259 297,162,696
Performance rights
4,716,521
-
Weighted average number of ordinary shares used in calculating diluted earnings per share 297,770,780 297,162,696
Number
Number
Basic earnings per share
Diluted earnings per share
Accounting policy for earnings per share
Cents
Cents
3.35
3.29
(2.71)
(2.71)
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.
GALE Pacific | 2018 Annual ReportFor personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 9. Current assets - cash and cash equivalents
Cash on hand
Cash at bank
Cash on deposit
Consolidated
2018
$'000
2017
$'000
2
22,851
138
3
24,838
133
22,991
24,974
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
2018
$'000
2017
$'000
33,954
(277)
33,677
29,346
(111)
29,235
185
262
33,862
29,497
The Group has recognised a loss of $172,000 (2017: $42,000) in profit or loss in respect of impairment of receivables for
the year ended 30 June 2018.
The ageing of the impaired receivables provided for above are as follows:
Over 6 months overdue
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
2018
$'000
2017
$'000
277
111
Consolidated
2018
$'000
2017
$'000
111
172
(6)
277
80
42
(11)
111
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to $7,898,000 as at 30
June 2018 ($6,184,000 as at 30 June 2017).
The Group did not consider a credit risk on the aggregate balances after reviewing the credit terms of customers based
on recent collection practices.
Page 49
For personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 10. Current assets - trade and other receivables (continued)
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
2018
$'000
2017
$'000
3,562
2,189
1,903
244
2,906
1,720
1,172
386
7,898
6,184
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.
Note 11. Current assets - inventories
Raw materials - at cost
Work in progress - at cost
Finished goods - at cost
Less: Provision for impairment
Consolidated
2018
$'000
2017
$'000
6,084
3,710
5,487
4,778
37,046
(1,881)
35,165
30,443
(1,482)
28,961
46,736
37,449
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.
GALE Pacific | 2018 Annual ReportFor personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
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
2018
$'000
2017
$'000
16,197
(6,119)
10,078
104,516
(88,251)
16,265
311
(214)
97
3,683
14,961
(5,409)
9,552
100,130
(83,470)
16,660
304
(204)
100
643
30,123
26,955
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 2016
Additions
Disposals
Exchange differences
Transfers in/(out)
Depreciation expense
Balance at 30 June 2017
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
8,963
67
-
(443)
1,419
(454)
9,552
481
-
515
86
(556)
20,750
1,167
(285)
(934)
819
(4,856)
16,661
2,131
(236)
853
1,101
(4,245)
127
-
(7)
(2)
-
(18)
100
-
-
1
-
(4)
97
574
2,551
-
(32)
(2,451)
-
642
4,525
(10)
117
(1,591)
-
30,414
3,785
(292)
(1,411)
(213)
(5,328)
26,955
7,137
(246)
1,486
(404)
(4,805)
3,683
30,123
Balance at 30 June 2018
10,078
16,265
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
Page 51
For personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 12. Non-current assets - property, plant and equipment (continued)
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.
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
2018
$'000
2017
$'000
21,620
(18,508)
3,112
21,512
(18,508)
3,004
1,713
(47)
1,666
1,648
(1,321)
327
7,490
(5,231)
2,259
1,070
(20)
1,050
1,632
(1,260)
372
6,955
(4,098)
2,857
7,364
7,283
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 2016
Additions
Exchange differences
Impairment of assets
Transfers in/(out)
Amortisation expense
Balance at 30 June 2017
Additions
Exchange differences
Transfers in/(out)
Amortisation expense
Patents,
trademarks
Goodwill Development and licenses
$'000
$'000
$'000
Application
software
$'000
Total
$'000
20,553
-
(94)
(17,455)
-
-
3,004
-
108
-
-
565
505
-
-
-
(20)
1,050
643
-
-
(27)
352
18
(5)
-
53
(46)
372
-
4
-
(49)
327
3,740
-
(69)
-
160
(974)
2,857
12
39
404
(1,053)
25,210
523
(168)
(17,455)
213
(1,040)
7,283
655
151
404
(1,129)
2,259
7,364
Balance at 30 June 2018
3,112
1,666
GALE Pacific | 2018 Annual ReportFor personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 13. Non-current assets - intangibles (continued)
Impairment testing for goodwill
In accordance with the accounting policies, the Group performs an annual impairment assessment of goodwill. The
review did not result in an impairment charge being recognised by the Group for the year ended 30 June 2018 (2017:
$17.455 million impairment loss).
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 rate 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
USA (2017/2018: US$2,077,000; 2016/2017: US$ 2,077,000)
China
Consolidated
2018
$'000
2017
$'000
2,765
347
2,657
347
3,112
3,004
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.
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.
Page 53
For personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 13. Non-current assets - intangibles (continued)
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
2018
$'000
2017
$'000
17,066
6,087
12,647
6,804
23,153
19,451
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.
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
2018
$'000
2017
$'000
16,195
-
7,025
243
16,195
7,268
Consolidated
2018
$'000
2017
$'000
475
286
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 - 2018
Carrying amount at the start of the year
Additional provision recognised
Claims
Carrying amount at the end of the year
Warranties
$'000
286
631
(442)
475
GALE Pacific | 2018 Annual ReportFor personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 16. Current liabilities - provisions (continued)
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
Total Bank loans
Refer to note 22 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Total Bank loans
Consolidated
2018
$'000
2017
$'000
13,520
16,400
Consolidated
2018
$'000
2017
$'000
29,715
23,425
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
2018
Shares
2017
Shares
2018
$'000
2017
$'000
Ordinary shares - fully paid
288,181,757 297,162,696
67,641
71,365
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 ran from 3 March 2017 to 2 March 2018. Up
until June 30 2017, 311,700 shares were bought by the Company. On March 6th 2018 an on-market share buy-back was
announced. It will run from 19th March 2018 to 18th March 2019. Between the period of July 1st 2017 and June 30 2018,
10,306,741 shares were bought by the Company.
Page 55
For personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 18. Equity - issued capital (continued)
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.
Note 19. Equity - reserves
Foreign currency reserve
Hedging reserve - cash flow hedges
Share-based payments reserve
Enterprise reserve fund
Consolidated
2018
$'000
2017
$'000
(2,374)
173
1,145
2,808
(6,029)
(330)
1,065
2,703
1,752
(2,591)
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.
GALE Pacific | 2018 Annual ReportFor personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 19. Equity - reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2016
Foreign currency translation *
Movement in hedge
Income tax
Share-based payment
Statutory transfers from retained earnings
Balance at 30 June 2017
Foreign currency translation *
Movement in hedge
Income tax
Share-based payment
Statutory transfers from retained earnings
Balance at 30 June 2018
Foreign
currency
$'000
Hedging
$'000
Share-based Enterprise
payments
$'000
reserve fund
$'000
Total
$'000
(2,856)
(3,173)
-
-
-
-
(6,029)
3,655
-
-
-
-
(2,374)
(995)
-
950
(285)
-
-
(330)
-
719
(216)
-
-
173
762
-
-
-
303
-
1,065
-
-
-
80
-
2,101
-
-
-
-
602
2,703
-
-
-
-
105
(988)
(3,173)
950
(285)
303
602
(2,591)
3,655
719
(216)
80
105
1,145
2,808
1,752
*
Refer to note 21 for details of monetary items identified as a net investment in a foreign operation
Note 20. Equity - dividends
Dividends paid during the financial year were as follows:
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)
Final Dividend for the year ended 30 June 2017 of 1.00 cents per ordinary share
(unfranked)
Interim Dividend for the year ended 30 June 2018 of 1.00 cents per ordinary share
(unfranked)
Consolidated
2018
$'000
2017
$'000
-
-
2,975
2,975
2,968
2,888
-
-
5,856
5,950
On 17 August 2018 the Directors declared a dividend of 1 cent per share to the holders of fully paid ordinary shares in
respect of the year ended 30 June 2018. This dividend has not been included as a liability in these financial statements.
Including the final dividend with respect to 30 June 2018, for the full year, the dividends of [2.00] cents per ordinary share
have been declared on earnings of [3.35] 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.
Page 57
For personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 21. Monetary items identified as a net investment in a foreign operation
Consolidated
2018
$'000
2017
$'000
Related party receivable to the Company from Gale Pacific Special Textiles (Ningbo)
Limited
Related party receivable to the Company from Gale Pacific (New Zealand) Limited
9,474
4,593
-
4,613
Monetary items identified as a net investment in a foreign operation
14,067
4,613
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.
The Group adopts hedge accounting and classifies applicable 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 Group adopts fair value hedge accounting on forward exchange contracts that are designated and qualify as fair
value hedges. Forward exchange contracts are recognised in the profit and loss immediately, together with any changes
in the fair value of the hedged asset or liability that are attributable to the hedged risk.
GALE Pacific | 2018 Annual ReportFor personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 22. Financial instruments (continued)
The maturity, settlement amounts and the average contractual exchange rates of the Group's outstanding forward foreign
exchange contracts at the reporting date were as follows:
Buy US dollars/sell Australian dollars
Maturity:
Less than 6 months
6 - 12 months
Buy Euros/sell Australian Dollars
Maturity:
Less than 6 months
6 - 12 months
Buy Chinese Yuan/sell US Dollars
Maturity:
Less than 6 months
Sell Australian dollars
Average exchange rates
2018
$'000
2017
$'000
2018
2017
7,805
655
10,814
2,694
0.7687
0.7631
0.7398
0.7424
4,127
325
1,149
1,167
0.6234
0.6063
0.6789
0.6681
Sell US dollars
Average exchange rates
2018
$'000
2017
$'000
2018
2017
16,000
-
6.3943
-
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
2018
$'000
2017
$'000
2018
$'000
2017
$'000
32,250
411
5,564
2,195
29,327
936
7,940
1,265
18,072
318
-
-
5,423
285
-
-
40,420
39,468
18,390
5,708
The Group had net assets denominated in foreign currencies of $22,030,000 (assets of $40,420,000 less liabilities of
$18,390,000 as at 30 June 2018 (2017: $33,760,000 (assets of $39,468,000 less liabilities of $5,708,000)). Based on this
exposure, had the Australian dollar strengthened by 10% / weakened by 10% (2017: 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 $184,000 higher/lower (2017: $904,000 lower/ higher) and equity would have been $1,786,000
higher/lower (2017: $1,840,000 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 use interest rate swaps to manage the risk of interest rate changes.
Page 59
For personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
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
2018
2017
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$'000
Balance
$'000
-
3.74%
-
22,991
(29,715)
-
(6,724)
-
3.20%
6.96%
24,974
(23,425)
(243)
1,306
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 (2017: 100) basis points would have an adverse/favourable effect on
profit before tax of $297,000 (2017: $237,000) 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 - 2018
Non-derivatives
Non-interest bearing
Trade payables
Sundry payables and accruals
Interest-bearing - fixed rate
Bank 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
-
-
17,066
6,087
-
-
3.74%
16,799
39,952
14,652
14,652
-
-
-
-
-
-
-
-
17,066
6,087
31,451
54,604
GALE Pacific | 2018 Annual ReportFor personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 22. Financial instruments (continued)
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
-
-
3.20%
6.96%
12,647
6,667
7,250
260
26,824
-
-
17,157
-
17,157
-
-
-
-
-
-
-
-
-
-
12,647
6,667
24,407
260
43,981
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 - 2018
Liabilities
Forward foreign exchange contracts
Total liabilities
Consolidated - 2017
Liabilities
Forward foreign exchange contracts
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Level 1
$'000
-
-
-
-
480
480
Level 2
$'000
Level 3
$'000
471
471
-
-
-
-
480
480
Total
$'000
471
471
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.
Page 61
For personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
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
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Property, plant and equipment
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Consolidated
2018
$'000
2017
$'000
4,451
-
4,682
10,633
4,688
13,563
15,315
18,251
The above capital commitment relates to the purchase of the new coating line located in Australia.
The above operating 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.
GALE Pacific | 2018 Annual ReportFor personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
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
***** Warning - Current Period compensation does not match the remuneration report *****
***** Warning - Prior Period compensation does not match the remuneration report *****
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
2018
$
2017
$
3,060,818
150,607
142,658
71,961
3,195,089
159,467
165,991
281,114
3,426,044
3,801,661
Parent
2018
$'000
2017
$'000
7,401
(13,134)
7,904
(12,469)
Parent
2018
$'000
2017
$'000
28,301
34,766
103,940
108,014
16,189
15,460
29,826
31,969
67,641
173
1,145
5,155
71,365
(330)
1,065
3,945
74,114
76,045
Page 63
For personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 27. Parent entity information (continued)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity has guarantees in relation to the debts of its subsidiaries in fixed and floating charges (or equivalent
foreign charge) over all the assets and undertakings, including uncalled capital of each entity in the Group as at 30 June
2018 and 30 June 2017.
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 2018 and 30 June 2017.
Capital commitments - Property, plant and equipment
The parent entity has capital commitments for plant and equipment in relation to the new coating line located in Australia
to the value of $4,451,000 as at 30 June 2018. The detail of which is in note 24 of this report. The parent entity had no
capital commitments for property, plant and equipment as at 30 June 2017.
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
Principal place of business /
Country of incorporation
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
New Zealand
United Arab Emirates
China
China
USA
Australia
Australia
Note 29. Share-based payments
Ownership interest
2017
2018
%
%
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.
GALE Pacific | 2018 Annual ReportFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 29. Share-based payments (continued)
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.
Set out below are summaries of performance rights granted under the plan:
2018
Grant date
Expiry date
11/12/2014
09/10/2015
21/09/2016
22/11/2017
01/12/2017
01/12/2018
01/12/2019
01/12/2020
2017
Grant date
Expiry date
11/12/2014
09/10/2015
21/09/2016
01/12/2017
01/12/2018
01/12/2019
Grant
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
$0.18
$0.23
$0.35
$0.31
1,325,802
1,863,000
1,569,000
-
4,757,802
-
-
-
1,918,000
1,918,000
(1,325,802)
-
-
-
(1,325,802)
-
-
(270,000)
(144,000)
(414,000)
-
1,863,000
1,299,000
1,774,000
4,936,000
Grant
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
$0.18
$0.23
$0.35
1,425,405
2,177,000
-
3,602,405
-
-
1,569,000
1,569,000
-
-
-
-
(99,603)
(314,000)
-
(413,603)
1,325,802
1,863,000
1,569,000
4,757,802
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 $0.31 (2017: $0.35).
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.
Page 65
For personal use only Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 29. Share-based payments (continued)
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as
a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is
forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
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
2018
$
2017
$
267,532
247,150
113,138
147,217
380,670
394,367
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 2018. 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 replaces AASB 139 Financial Instruments: Recognition and Measurement. AASB 9 includes revised
guidance on the classification and measurement of financial instruments, including a new expected credit loss model for
calculation of impairment on financial assets and new general hedge accounting requirements. It also carries forward
guidance on recognition and derecognition of financial instruments from AASB 139.
Assessment of Impact
The Group has assessed the new standard and based on its financial assets and liabilities, the key impact of the
standard on the Group will be in relation to trade debtors and the assessment of the provision for doubtful debtors under
the expected credit loss model. The expected credit loss model requires an entity to account for expected credit losses
and changes in those expected credit losses at each reporting date to reflect changes. The Group has assessed the
impact of applying the expected credit loss model and has concluded that the provision for impairment of trade
receivables will increase upon the adoption of AASB 9 on 1 July 2018 due to the earlier recognition of credit losses.
Additional disclosures regarding expected credit losses will also be required.
Transition
The Group will apply the standard to items not de-recognised at 1 July 2018 with the cumulative effect of initial
application being recognised as an adjustment to the opening balance of retained earnings.
GALE Pacific | 2018 Annual ReportFor personal use only
Gale Pacific Limited
Notes to the financial statements
30 June 2018
Note 31. New Accounting Standards and Interpretations not yet mandatory or early adopted (continued)
AASB 15 Revenue from Contracts with Customers
AASB 15 establishes a single comprehensive five-step model for entities to use in accounting for revenue arising from
contracts with customers. AASB 15 will supersede the current revenue recognition guidance including AASB 118
Revenue, AASB 111 Construction Contracts and the related interpretations when it becomes effective.
The five steps in the model are:
• Identify the contract with a customer.
• Identify the performance obligations in the contract.
• Determine the transaction price.
• Allocate the transaction price to the performance obligations in the contract.
• Recognise revenue when (or as) the entity satisfies a performance obligation.
Assessment of Impact
The Group has assessed the impact of adopting AASB 15 on its key revenue streams and notes the following impacts:
Rebates and discounts payable to customers: The Group provides both fixed and variable rebates and discounts to its
customers. As the consideration payable to these customers does not relate to distinct goods or services provided to the
customer, it is required to be recorded as a reduction of revenue. This will result in some rebates requiring reclassification
from cost of goods sold to revenue. AASB 15 will not impact the measurement of the Group’s rebates and discounts.
Return of goods: AASB 15 requires the Group to factor into the transaction price an estimate of probable returns from
franchisees and wholesale customers. The Group’s existing treatment of returns will not be impacted as a result of the
new standard.
Additional disclosures of the following information by revenue stream will be required:
• The nature, amount, timing and uncertainty of revenue and cash flows.
• The performance obligations and the determination and allocation of the transaction price to performance obligations.
• Significant judgements applied in implementing the five-step model.
Transition
The Group will apply the standard to contracts that are not completed at 1 July 2018, with the cumulative effect of initial
application being recognised as an adjustment to the opening balance of retained earnings. This adjustment is not
expected to be material.
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 2018 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.
Page 67
For personal use only
Additional Securities Exchange
Information
In accordance with ASX Listing Rule 4.10, the Company provides the following information to shareholders not elsewhere disclosed in
this Annual Report. The information provided is current as at 6 August 2018 (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 Pacif-
ic’s website (https://www.galepacific.com/investor-info/corporate-governance) 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 (https://www.galepacific.com/
investor-info/corporate-governance).
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:
Class of Equity Securities
Fully paid ordinary shares
Performance rights expiring 1 December 2018
Performance rights expiring 1 December 2019
Performance rights expiring 1 December 2020
Number of Holders
1,648
5
6
8
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 1,648 holders of a total of 288,179,007 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 propor-
tion.
GALE Pacific | 2018 Annual ReportFor personal use only Distribution of Holders of Equities Securities
The distribution of holder of equity securities on issue in the Company as at the Reporting Date is as follows:
Ordinary Fully Paid Shares
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
Total Holders
122
334
276
727
189
1,648
Units
26,506
1,014,252
2,214,551
26,600,886
258,322,812
288,179,007
% of Issued Capital
0.01%
0.35%
0.77%
9.23%
89.64%
100.00%
Performance Rights
Holders Expiring
Holders Expiring
Holders Expiring
1 December 2018
1 December 2019
1 December 2020
0
0
0
0
5
5
0
0
0
1
5
6
0
0
0
0
8
8
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 6 August 2018
Minimum Parcel Size
Minimum parcel at $0.345 per unit
1,450
Holders
147
Units
57,598
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
Thorney Holdings Proprietary Limited
Windhager Holding AG
No . of Ordinary Full Paid Shares
79,702,646
43,225,781
%
27.66%
15.00%
Page 69
For personal use only Additional Securities Exchange
Information continued
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
HSBC Custody Nominees (Australia) Limited
Windhager Holding AG
JP Morgan Nominees Australia Limited
Gale Australia Pty Ltd
UBS Nominees Pty Ltd
National Nominees Limited
Contemplator Pty Ltd
BNP Paribas Noms Pty Ltd
BFA Super Pty Ltd
BNP Paribas Nominees Pty Ltd
Stitching Pty Ltd
APM Enterprises Pty Ltd
Chillen Pty Limited (Tallen)
W Donnelly Services Pty Ltd
Bond Street Custodians Limited
Gallium Pty Ltd
Venn Milner Superannuation Pty Ltd
Tuwele Pty Limited
Haroldswick Corporation Pty Ltd
GFS Securities Pty Ltd
No .
77,000,198
43,225,781
25,235,114
13,997,844
7,718,384
4,851,506
4,691,433
3,883,260
3,327,428
3,302,728
3,050,000
2,916,599
2,431,317
2,412,000
2,400,000
2,279,359
2,000,000
1,500,000
1,492,537
1,154,853
%
26.72%
15.00%
8.76%
4.86%
2.68%
1.68%
1.63%
1.35%
1.15%
1.15%
1.06%
1.01%
0.84%
0.84%
0.83%
0.79%
0.69%
0.52%
0.52%
0.40%
TOTAL: TOP 20 HOLDERS OF ORDINARY FULLY PAID SHARES AS AT 6 AUGUST 2018
TOTAL: REMAINING HOLDERS BALANCE
208,870,341
79,308,666
72.48%
27.52%
Voluntary Escrow
There are no securities on issue in GALE Pacific that are subject to voluntary escrow.
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
Performance Rights
Number of Unquoted Equity Securities
Number of Holders
4,936,000
8
There are no persons who hold 20% or more of equity securities in each unquoted class other than under an employee incentive
scheme.
GALE Pacific | 2018 Annual ReportFor personal use only On Market Buyback
The Company is currently conducting an on-market buy-back. It was announced to the market on 6 March 2018 and covers the period
19 March 2018 to 18 March 2019. The maximum number of shares the Company proposes to acquire under the on-market buy-back
is approximately up to 28,888,975, 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, 710,752 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
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