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2019
ANNUAL
REPORT
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
5
6
9
16
18
19
34
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, sun umbrellas, 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.
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)
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
2019 Annual General Meeting
The Annual General Meeting will be held on Friday, 25 October
2019.
The Notice of Meeting and Proxy Form are separate items
accompanying this 2019 Annual Report.
GALE Pacific Limited | 2019 Annual Report
Results at a Glance
Revenue $A million
Revenue $A million
Operating Cash Flow $A million
Operating cashflow $A million
200
150
100
50
0
173.2
175.3
148.8
*
149.2
*
90.8
92.7
84.5
64.3
2018
81.4
67.8
2019
82.6
2017
82.4
2016
H1
30
25
20
15
10
5
0
-5
-10
-15
-20
1.5
16.3
20.5
12.4
22.6
(0.7)
(3.4)
(7.2)
2016
2017
2018
2019
H2
Revenue excluding glass
* Reflects AASB 15 Update
H1
H2
as a % of EBITDA
NPAT $A million
NPAT $A million
Net Debt $A million
Net Debt $A million
12
10
8
6
4
2
0
10.2
10.1
*
9.8
9.2
7
3.2
2016
6.8
3.4
2017
7.7
2.1
2018
7.7
1.5
2019
H1
H2 * Underlying
35
30
25
20
15
10
5
0
-5
20.0
13.7
8.2
24.7
11.4
6.7
10.9
(1.3)
2016
2017
2018
2019
H1
H2
as a % of Equity
250%
200%
150%
100%
50%
0%
-50%
-100%
-150%
-200%
35%
30%
25%
20%
15%
10%
5%
0%
-5%
EBITDA $A million
EBITDA $A million
25
20
15
10
5
0
22.3
14.1
8.2
2016
21.4
*
13.5
7.9
2017
19.9
14.5
5.4
2018
19.3
14.1
5.2
2019
Sales by Region $A million
7.4
58.0
Australasia
Middle East/North Africa
Americas
Eurasia
71.0
H1
H2
* Underlying
12.9
Page 4
Chairman’s
Letter
David Allman
The FY2019 year was challenging on a number of
fronts but the management team led by Nick Pritchard
continued with the execution of key strategies while
dealing with the day to day challenges in a highly
professional way. 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 2019 of
1.0 cents per share which takes the total payout for the
year to 2.0 cents per share representing a 62% payout
ratio. The share buyback, as an additional capital
management tool remains in place reflecting the low
debt level and strong cash flow generation.
David Allman
Chairman
19 August 2019
The financial results for FY2019 were somewhat
disappointing with net profit after tax of $9.2 million
declining 6% from prior year and earnings per share
of 3.21 cents declining by 4%. However, importantly,
cash flow generation was particularly strong with
operating cash flow of $15.3 million representing 167%
of net profit after tax. Net debt at 30 June 2019 of
$10.9 million represents a conservative 56% of FY2019
EBITDA.
The results were adversely affected by difficult trading
conditions in Australia, across both the retail and
commercial sectors, and also in the Middle East.
During the year considerable progress continued to be
made in positioning GALE Pacific as a global leader
in shade products and high-performance technical
products in the commercial sector. Important capital
expenditure projects were completed including the
commissioning of the new coating line in Melbourne
and a number of efficiency and capacity enhancing
projects at our manufacturing facility in China. Capital
expenditure during the year totalled $11.4 million, well
above previous years, and our major capital projects
are now complete.
The 17% revenue growth achieved in the American
business during FY19 was very encouraging and we
continue to invest resources in the region to drive
further growth. Increased penetration of the American
retail market and the development of a wider range of
technically advanced commercial products are seen
as the main drivers of future growth. Opportunities
for growth in the commercial sector are considerably
increased following the commissioning of the new
coating line.
Page 5
Group Managing
Director’s Review
Nick Pritchard
When talking with our team, I stress that good
businesses are built on strong foundations.
Following several years of difficult transformation effort,
I am confident that the requisite foundations are now
in place to support a stronger, healthier, and more
sustainable business.
Our vision from the outset was to create a business
that was clear about where it had competitive
advantage, was clear about where it could operate
successfully, and was clear on how it would win.
Along the way we have done much heavy lifting. Safe
environments, strong and capable global leadership,
effective systems and processes, suitable facilities,
sufficient manufacturing capacity, professional supplier
and customer partnerships, and the right values and
culture, were all considered foundation stones of a
business that could support and sustain growth.
We have achieved this now.
With the commissioning of our new coating line in
Melbourne earlier this year, and various improvements
at our China manufacturing facilities over the last
twelve months, our major capital investment programs
are now complete.
The installation of the new Melbourne coating line
more than doubles our coated products production
capacity and provides complementary capability to
our existing line. It now supports our ability to sell
coated products outside of Australia, as well as more
effectively serve our Australian customers, particularly
during peak periods. At various times over the last
several years we have been constrained by our
manufacturing capacity limiting our ability to take our
unique coated products to international markets and,
at times, limiting our Australian customers’ ability to
grow. With the additional capacity now on-stream we
are excited about the ability to expand internationally
and provide an improved level of service and new
product development to our existing customers.
At our China manufacturing facility, GALE Pacific
Special Textiles, we have seen the most significant
change. A facility transformation including
site consolidations, a move to a significantly
upgraded warehouse facility, new equipment, idle
equipment being brought back into production,
quality improvements, and meaningful efficiency
improvements. With the creation of the GALE Living
Centre, following the refurbishment of our dormitory
accommodation for employees boarding at GPST,
the whole facility is barely recognisable from when we
began our journey.
Perhaps more important than the facility upgrade is
the transformation in the culture of our manufacturing
facilities in China, and Australia, with an intense focus
on safety, quality, cost and service.
Whilst we were managing many of these
transformational initiatives in parallel, our strategy
also involved us managing and servicing our existing
customers more professionally, earning respect and
trust, and investing in the programs that would drive
growth for us in the future.
Investments were made in research and development,
with additional internal resources, as well as
developing alliances with technical partners that could
help to bring our ideas to market more quickly, and
with those with technologies we could adapt to our
own products.
It is pleasing to see some of these developments
coming to fruition now. During the year we launched
our most innovative new product program for
many years with the launch of the new Commercial
DualShade 350 architectural shade fabric range. This
patented new fabric has been launched in all markets
with outstanding feedback from customers. We are
looking forward to seeing the new projects as its use
accelerates around the world.
Page 6
GALE Pacific Limited | 2019 Annual Report
Commercial DualShade 350 is the first of many
breakthrough new products in the pipeline with other
key launches expected in FY2020.
Our strategy to invest to grow the North American
market began to pay dividends in FY2019 with the
Americas region experiencing strong growth and now
being our largest geographic region. The trade war
between China and the USA is making managing this
region more difficult, yet we remain very positive about
the potential to grow in both retail and commercial
channels in the USA. The retail opportunity is
tremendous, and our strategy remains to broaden our
ranging beyond window shades, to a broader mix of
DIY shade products, in line with what we do in markets
such as Australia, New Zealand and South Africa.
There is opportunity with our existing customers, as
well as with new customers.
We invested ahead of the growth in the USA and we
will continue to invest in that region to take advantage
of the opportunity we see there.
Commercial growth opportunities exist in Australia,
and beyond, and our strategy is unchanged. We seek
to take our most innovative coated products, including
some new products, to our international markets; as
well as grow our commercial business domestically.
We believe our new product road, combined with our
manufacturing capability in both China and Australia,
effectively supports this plan.
Our supply model involves a combination of
manufactured and sourced products. We believe
that manufacturing our own products provides
a competitive advantage, but that position only
holds true if we have the lowest cost manufacturing
for an equivalent quality product. At each of our
manufacturing facilities we are laser focused on
reducing waste, improving quality, managing labour
effectively and, where possible, improving automation
with relatively short payback periods. Our plants
are continuing to deliver efficiencies, and service
improvements, but this is an endless task; something
we must continue to pursue with vigour.
GROUP PERFORMANCE
The FY2019 year was a challenging one with the
impact of record high raw material costs impacting first
half margins, recessionary conditions in key Middle
East markets impeding sales, and weaker economic
and drought conditions significantly impacting our
Australian business.
Offsetting these declines was encouraging growth
in the Americas region, driven by new ranging and
additional distribution points with our major customers.
We now have distribution of Coolaroo shade products
in more than 4,000 stores in the USA, as well as
substantial online distribution.
Importantly, we executed the additional product
ranging well. Our manufacturing operations provided
strong service support, and our new California
warehouse coped particularly well shipping large
volumes of product within short delivery windows.
This would not have been possible with our previous
distribution infrastructure.
Our Eurasian business performed strongly growing
sales 12%, with margins improving as a result of an
improved product mix including more branded and
higher margin products. Distribution was expanded,
particularly in South East Asia and the United
Kingdom, and we have received positive take-up of
our new products which is encouraging.
The Middle East North Africa region is experiencing
ongoing challenges and we saw sales declines in
our two key markets, Saudi Arabia and the United
Arab Emirates, largely as a result of weaker day to
day business and slower payments from customers.
Outside of Saudi Arabia and the UAE, emerging
markets including Oman, Qatar, Kuwait and India grew
strongly. This region will benefit from the new products
recently launched, as well as those in the pipeline. We
continued to adopt a conservative approach to the
issuing of credit and believe this strategy to be prudent
whilst weakened economic conditions persist.
OUR VISION
Our vision remains unchanged. We strive to become
experts and global leaders in shade products,
and high-performance technical products in the
commercial sector. Everything we do is in line with this
goal.
Over the course of the last several years we have
cleansed our product portfolio of the products we
considered did not fit with that vision. We have exited
around $30 million of non-core products and replaced
that by nearly as much growth in core product
categories.
We’ve done this through distribution expansion in
some regions, particularly in the USA; though we
are still yet to see the benefits of the real product
innovation we have been working so hard on.
Page 7
Group Managing
Director’s Review continued
It’s pleasing to see this effort now translating to the
commercialisation of some of these programs, and
the excitement within the business about these new
product innovations, is palpable. Whilst some of
these may begin as commercial sector innovations
our strategy is to transfer them into retail product
opportunities as quickly as possible.
OUR STRATEGY
The key elements of our strategy remain largely
unchanged, though, with most of our key infrastructure
projects now complete, attention turns squarely
to delivering sales growth, accelerating product
innovation, and continuing to deliver operational
efficiencies.
Key elements of our 2020 plan include:
• Americas Region - continuing to develop the
DIY shade category with retail and eCommerce
customers, expanding our range beyond window
shades to a broader range of DIY shade products.
Increasing the number of distribution points,
increasing the number of products ranged with
existing customers, and building consumer
awareness of our brands and products.
• Growing the Commercial Business Globally
- maximising the selling opportunity created by
our new products, together with the additional
manufacturing capacity for coated fabrics, by
expanding into new geographic markets and new
selling channels. Increasing the geographic and
channel diversity to have a reduced reliance upon
the seasonal Australian grain business.
• Australia & New Zealand Retail Business
- growing our core products through retail and
eCommerce channels via additional product
ranging, new products, and working closely with
our customers on their multi-channel distribution
strategies.
• Product Innovation - continuing to deliver
meaningful innovation in core product categories
through the exploration of new materials and the
adoption of technologies that complement our own
core competencies.
• Operational Efficiencies - continuing to
drive operational efficiencies including quality
improvements, waste reduction, improved labour
utilisation, and improved service at all facilities.
Page 8
HEALTH AND SAFETY
We continue to have an unwavering commitment to
the health and safety of our employees. During the
year our strong safety performance continued and,
pleasingly, we can report another year free of major
injury.
We continued to see strong improvements in hazard
reporting which we believe is a strong indicator of a
positive safety culture. We implemented new online
reporting tools across all regions and this translated to
more effective and increased reporting at all facilities.
We continued to invest in safety-related infrastructure
and safety training across all facilities, including safety
management training for all leaders.
Our Lost Time Injury Frequency Rate, and All Injury
Frequency Rate, compare favourably versus industry
benchmarks.
In the coming year we will invest further in broader
employee wellness and support initiatives in all regions.
LOOKING FORWARD
Whilst there will always be a lot to do, our attentions
will largely move from facility upgrades, capacity
improvement projects, organisational restructuring,
major IT upgrades, and other transformational work;
more squarely towards sales, product innovation and
delivering further operational efficiencies.
In terms of the product innovation, we will not
be constrained by our origins of High-Density
Polyethylene and Polypropylene materials. We believe
there are opportunities in exploring new materials for
specific market applications and expect developments
in the future that move us into more technical
materials, and more technical applications.
We have some exciting technical partnerships in place,
we are clear on where we’re going and what we need
to do, and believe we have the right team in place to
execute our strategy.
THANK YOU
I would like to thank our customers for their support of
GALE Pacific, our products, and our people.
I would also like to thank our suppliers who have
played, and will always play, such a key part of our
success.
Thank you also to our employees, in every role, in
every location. Ultimately businesses are about people
and you are all making a great contribution. Thank you
sincerely for your efforts.
I would also like to thank Chairman David Allman and
the Board for their ongoing support and counsel.
Lastly, thank you to our shareholders for their ongoing
interest and support as we have undertaken such
substantial change, and embark upon making GALE
Pacific not just a good company, but a great company.
Nick Pritchard
Group Managing Director
19 August 2019
New state-of-the-art coating facility in Melbourne, Australia
Page 9
Page 9
GALE Pacific Limited | 2019 Annual Report Our Values
Together with our employees, we established six
important values that provide an important framework
for how we operate worldwide.
Page 10
Operational Report
Results for the full year to:
30 June 2019
A$ million
30 June 2018
A$ million
Change
%
Net Revenue
EBITDA
EBIT
Profit before tax
Profit after tax
Net cash provided by operating activities
Net cash / (debt)
Basic earnings per share (cents)
Final dividend per share (cents)
Dividends per share (cents)
149.2
19.3
13.1
11.2
9.2
15.3
(10.9)
3.21
1.00
2.00
148.8
19.9
14.0
12.5
9.8
8.9
(6.7)
3.35
1.00
2.00
0
(3)
(6)
(10)
(6)
72
(62)
(4)
0
0
New Aquacon™ 345 coated material was fabricated into a dam cover for Wilmar Sugar in Queensland
Page 11
Page 11
GALE Pacific Limited | 2019 Annual Report GALE Pacific Limited | 2019 Annual Report
Operational Report continued
AMERICAS
Results for the full year to:
Net Revenue
EBITDA
FY2020
A$ million
FY2019
A$ million
Change
%
71.0
13.8
60.5
12.5
17
11
FY19 was a successful year with strong growth in the Retail/eCommerce channel primarily driven by the expanded
programs with major home centre customers. Additional store distribution was achieved, as well as additional
products within those stores. These expanded programs were well executed, and our new warehouse facility in
California helped to ensure strong service performance throughout the year. Our ability to deliver high volumes of
product, in short delivery windows, has considerably improved, providing confidence in our ability to support future
growth.
Retail product sales-out performance with major customers was strong. We now have product distribution in more
than 4,000 stores nationally.
Our strategy of expanding our largely window shade business to a broader range of shade products (shade cloth,
shade sails and portable shade items) continues. We are being given increased opportunities to present these
programs to retail and eCommerce accounts.
With respect to import tariffs due to the USA/China trade war, some product categories were affected during the year,
with the new threat of higher tariffs on other parts of our range. We are addressing this by a combination of pricing
and manufacturing efficiency initiatives.
AUSTRALIA / NEW ZEALAND
Results for the full year to:
Net Revenue
EBITDA
FY2020
A$ million
FY2019
A$ million
Change
%
58.0
2.8
68.8
5.4
(16)
(49)
Sales performance was impacted by weaker conditions within the retail sector and led to a reduction of inventory
within the stores of our largest customer. The result was also impacted by exiting further non-core categories,
including insect screening and frames. These are commoditised products, fall outside our core competence and focus,
and are misaligned with our strategy.
Sales out performance was weaker overall, although strong sales out growth in key shade categories was pleasing.
The commercial sector business was impacted by worsening drought conditions. The eastern seaboard grain
harvests, from where the bulk of our grain cover business is driven, was particularly impacted. Harvest yields across
Queensland and New South Wales were reported as being down nearly 70% on the prior year which had been down
substantially on the year before.
Considering the severe drought conditions, our strategy included focusing on water retention fabrics (dam liners, water
tank liners and evaporation covers) as efforts to collect and retain water intensified. New fabrics were introduced and
selling efforts were increased. Growth in these products was achieved, but this was not enough to offset the further
decline in grain cover products.
Costs were carefully managed with a focus on rightsizing the business and managing expenses to match sales.
Page 12
MIDDLE EAST/NORTH AFRICA
Results for the full year to:
Net Revenue
EBITDA
FY2020
A$ million
FY2019
A$ million
Change
%
12.9
4.0
13.0
4.4
0
(10)
The region’s economic challenges continued with Saudi Arabia and the United Arab Emirates particularly impacted.
Some large-scale projects continued, but the day to day business in these key markets declined. Strong growth was
achieved in secondary markets including Kuwait, Qatar, Oman and India, but was not enough to offset the decline in
Saudi Arabia, where sales fell by more than 30% on the prior year.
During the year we saw further evidence of slower payments from customers, leading to the adoption of an
increasingly cautious approach to the issuing of credit. This approach impacted sales, though we believe the strategy
to be prudent whilst weakened economic conditions persist. We continue to consider the risk of bad debts to be
minimal.
EURASIA
Results for the full year to:
Net Revenue
EBITDA
FY2020
A$ million
FY2019
A$ million
Change
%
7.4
2.3
6.6
1.6
12
45
Sales growth of 12% drove EBITDA growth of 45%, due largely to the continued strategic move away from unbranded,
lower margin retail products to branded, higher margin commercial products.
New distribution partners were appointed in Asia, and in the UK, in line with the strategy to expand distribution in this
small, but profitable region.
Page 13
Operational Report continued
MANUFACTURING PERFORMANCE
Performance at our China manufacturing operations was strong with further productivity, quality and service improve-
ments. Key to this performance was the completion of important projects including the consolidation of two manufac-
turing sites into one, the establishment of a new and improved warehouse facility, the refurbishment of the employee
accommodation facility, and the introduction of various automation initiatives to improve labour efficiency.
The investment brought previously idle, or underutilised, equipment back into production and achieved faster start-ups
of new products than in previous years.
In Australia, the new extrusion coating/laminating line was commissioned and is now in production. The new line more
than doubles production capacity and, with complementary capability to our existing line, enables matching of product
to the most suitable production line. We are pleased with the project management supporting this new line and the
effective commissioning provides further evidence of our ability to manage large-scale, complex projects.
BALANCE SHEET AND CASH GENERATION
Strong operating cash flow of $15.3 million was up $6.4 million (72%) on prior year and represents 167% of net profit
after tax.
The improvement versus last year was primarily driven by inventory movements. Inventory increased slightly year on
year, attributable to currency movements, with underlying inventory values lower than the prior corresponding period.
The reduction in trade and other receivables was primarily driven by the execution of our plan in the Americas. This
allowed the business to deliver stock to our major retail customers earlier in the spring/summer season, driving growth
and improving our cash collections in FY2019. Trade Payables decreased year on year due to lower imports in ANZ
and bringing forward production in China to support the Americas growth strategy.
Net debt of $10.9 million at 30 June 2019 is up A$4.2 million on the prior corresponding period driven primarily by the
investment in the new Australian coating line.
Page 14
GALE Pacific Limited | 2019 Annual Report
Showcasing products at international trade shows - SuperExpo on the Gold Coast, Australia (above) and IFAI in Dallas, USA (below)
Page 15
Board of Directors
David Allman,
B.Sc.
Nick Pritchard,
B Bus. (Marketing)
Donna McMaster,
GAICD
Chairman and Non Executive
Director since November 2009.
Group Managing Director appointed
22 August 2014.
Non-Executive Director since March
2018.
David was Managing Director of
McPherson’s Limited from 1995 to
2009 and prior to that was Managing
Director of Cascade Group Limited
for seven years. Before this David
held senior positions with Elders IXL
Limited and Castlemaine Tooheys
Limited. David holds a degree in
engineering and prior to obtaining
general management positions
held managerial roles in production
management, finance and marketing.
David is Chairman of Catalyst
Education Pty Ltd.
David is the Chairman of the
Company’s Nomination Committee
and is a member of the Remuneration
and Audit and Risk Committees.
Nick was appointed to the position
of Group Managing Director in
August 2014. Prior to joining GALE
Pacific, Nick 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.
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 Deputy Chair & Non
Executive Director of YMCA Service
Pty Ltd where she is also Chair of the
HR & Governance Committee & is a
Non-Executive Director of Dandenong
Market Pty Ltd.
Donna is a member of the Company’s
Nomination and Remuneration
Committees.
Peter Landos,
B.Econ., CA
Non Executive Director since May
2014.
Peter is the Chief Operating Officer
of the Thorney Investment Group
of Companies, which he joined in
2000. Prior to joining Thorney, Peter
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 a non-executive director of
Adacel Technologies Limited, and a
non-executive director of Rural Press
Pty Ltd.
Peter is the Chairman of the Audit
and Risk Committee and is a member
of the Company’s Nomination
Committee.
Tom Stianos,
B.App.Sc., FAICD
Non-Executive Director since
October 2017.
Tom has extensive experience as
a non-executive director of listed
companies including many years as
Managing Director. Tom is currently
Chairman of Empired (ASX:EPD)
and Chairman of Escient. Tom was
previously a non-executive director
of Inabox Group (ASX:IAB), CEO of
SMS Management & Technology
(ASX:SMX), and Director of the
Australian Information Industry
Association.
Tom is the Chairman of the
Remuneration Committee and
is a member of the Company’s
Nomination and Audit and Risk
Committees.
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.
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 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.
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.
Page 18
GALE Pacific Limited | 2019 Annual Report 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).
Bruno Marotta
Senior Manager – Global Procurement & Logistics
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.
Ali Haidar
General Manager – Middle East North Africa
Ali joined GALE Pacific in August 2004 and has 15+ 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
broader 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.
Page 19
GALE Pacific Limited | 2019 Annual Report 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 (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).
Custom Window Shade Manufacturing - Orlando, USA
Page 20
GALE Pacific Limited | 2019 Annual Report 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 2019.
STATE OF AFFAIRS
There were no significant changes in the state of affairs of the
Group during the financial year.
EVENTS SUBSEQUENT TO BALANCE
DATE
Apart from the dividend declared, no other matter or
circumstance has arisen since 30 June 2019 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 2018 (paid 4 October
2018)
Interim ordinary dividend for the half year
ended 31 December 2018 (paid 9 April
2019)
2018/2019
1.00 cent
1.00 cent
In addition to the above dividends, on the 19 of August
2019 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 2019, payable on 8 October 2019 to
shareholders on the register at 24 September 2019. 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 $2,850,000.
For the full year, the dividend of $0.02 cents per share has been
declared on earnings of 3.21 cents per share.
SHARE BASED PAYMENTS
Performance Rights
The number of performance rights on issue at the date of this
report is 4,894,000. 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.
1,821,000 performance rights were granted to executives
and the Group Managing Director on 29 October 2018. The
performance rights will vest subject to a continuation of
employment to 30 June 2021 and the satisfying of relevant
performance hurdles based on the Group’s diluted earnings
per share over the three year period from 1 July 2018 to 30
June 2021. None of these performance rights can vest until 30
June 2021 and expire on 1 December 2021.
On the 1st of October 2018, 1,863,000 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 year period between July 2015 and June 30 2018.
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 21
GALE Pacific Limited | 2019 Annual Report GALE Pacific Limited | 2019 Annual Report
Directors’ Report continued
DIRECTORS’ SHAREHOLDINGS
Directors
D Allman
P Landos
D McMaster
N Pritchard
T Stianos
Fully Paid
Ordinary Shares
3,000,000
Nil
Nil
1,434,593
200,000
Options
Performance
Rights
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
DIRECTORS’ MEETINGS
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
2
13
13
2
13
13
12
13
1
13
13
3
N/A
1
N/A
3
Attended
2
3
N/A
1
N/A
3
No of
Meetings
Eligible to
Attend
2
N/A
2
N/A
N/A
2
Attended
2
N/A
2
N/A
N/A
2
No of
Meetings
Eligible to
Attend
1
1
N/A
N/A
N/A
1
Attended
1
1
N/A
N/A
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.
As at the date of this report the members of the Audit & Risk Committee are Peter Landos, Tom Stianos and David Allman. The
Chairman of the Audit & Risk Committee is Peter Landos.
As at the date of this report the members of the Remuneration Committee are Tom Stianos, David Allman and Donna McMaster.
The current Chairman of the Remuneration Committee is Tom Stianos.
As at the date of this report the members of the Nomination Committee are David Allman, Peter Landos, Donna McMaster, 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 was 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.
Page 22
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 2019:
Sales
Net profit before tax
Net profit after tax
30 June 2019
30 June 2018
30 June 2017
30 June 2016
30 June 2015
149,217*
148,811*
175,265
173,191
147,993
11,208
9,198
12,484
9,807
(4,861)
(8,044)
13,509
10,228
6,221
5,170
Share price at start of year
35.5 cents
40.0 cents
36.0 cents
17.0 cents
23.0 cents
Share price at end of year
32.0 cents
35.5 cents
40.0 cents
36.0 cents
17.0 cents
Interim dividend
Final dividend
1.00 cent
1.00 cent
1.00 cent
0.75 cents
-
1.00 cent
1.00 cent
1.00 cent
1.00 cent
1.00 cent
Basic earnings per share
3.21 cents
3.35 cents
(2.71) cents
3.44 cents
1.74 cents
Diluted earnings per share
3.16 cents
3.29 cents
(2.71) cents
3.40 cents
1.72 cents
* Sales in 2019 and 2018 reflect the adoption of the accounting standard AASB 15 Revenue from Contracts with Customers
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 23
Directors’ Report continued
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
(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
•
Ensure that total remuneration is competitive by market
standards.
Directors
Structure
D Allman (Chairman Non Executive)
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.
P Landos (Non Executive)
D McMaster (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 (Senior Manager – Global Procurement &
Logistics)
M Nicholls (General Manager – Eurasia)
M Parker (Chief Financial Officer)
C Zhang (General Manager – China)
(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 2019 was 4,894,000.
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).
1,774,000 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).
1,821,000 of these shares were granted on 13 November 2018
and will not vest until the time of the company’s 2021 annual
report is released on the ASX (on or around 1 October 2021).
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.
Page 24
GALE Pacific Limited | 2019 Annual Report
The following table discloses the remuneration of the Directors of the Company:
2018/2019
Short Term Benefits
Post
Employe-
ment
Share
Based
Payments
Termi-
nation
Benefits
Salary &
Fees
$
Bonus
$
Directors
Executive Directors
N Pritchard
524,717
Non Executive Directors
D Allman
T Stianos
P Landos
D McMaster
J Murphy
Total
121,048
87,884
84,444
77,169
3,570
898,832
-
-
-
-
-
-
-
Non
Monetary
Super
Rights
Total
Performance Related
Total
Rights
$
$
$
$
$
%
%
-
-
-
-
-
-
-
25,000
4,101
19,752
8,566
7,989
7,331
1,265
-
-
-
-
-
69,903
4,101
-
-
-
-
-
-
-
553,818
1%
1%
140,800
96,450
92,433
84,500
4,835
972,836
2017/2018
Short Term Benefits
Post
Employe-
ment
Share
Based
Payments
Termi-
nation
Benefits
Non Mon-
etary
Super
Rights
Total
Performance Related
Total
Rights
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
$
$
$
$
$
%
%
-
-
-
-
-
-
-
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
Shade fabric rolls in the Braeside warehouse and production facility
Page 25
GALE Pacific Limited | 2019 Annual Report
Directors’ Report continued
The following table discloses the remuneration of the Group’s key management personnel:
2018/2019
Short Term Benefits
Post
Employe-
ment
Share
Based
Payments
Termi-
nation
Benefits
Key Management
Personnel
J P Marcantonio 1
M Parker 2
A Haidar 4
C Zhang 6
M Nicholls 5
B Marotta 3
Total
Salary &
Fees
$
397,523
308,194
257,099
197,053
201,231
198,998
Bonus
$
-
-
-
Non Mon-
etary
$
12,304
-
-
34,109
15,764
-
21,515
-
-
1,560,099
49,873
33,819
Super
$
19,642
25,000
-
-
16,138
18,905
79,685
Rights
$
1,887
1,448
1,039
724
706
-
5,805
Total
Performance Related
Total
Rights
$
-
-
-
-
-
-
-
$
431,356
334,643
258,138
253,402
233,839
217,903
1,729,281
%
0%
0%
0%
14%
7%
0%
%
0%
0%
0%
0%
0%
0%
2017/2018
Short Term Benefits
Post
Employe-
ment
Share
Based
Payments
Termi-
nation
Benefits
Key Management
Personnel
J P Marcantonio 1
M Parker 2
B Marotta 3
A Haidar 4
M Nicholls 5
C Zhang 6
V Klunyk 7
L Klebenow 8
Total
Salary &
Fees
$
424,959
283,954
242,501
237,918
194,725
164,263
159,836
46,808
Bonus
$
77,391
59,400
52,368
22,673
-
41,684
12,956
-
Non Mon-
etary
$
9,693
-
-
-
-
Super
$
8,527
25,000
23,037
-
9,028
Rights
$
-
17,026
16,430
8,191
-
33,760
-
(5,130)
15,567
-
-
-
$
-
-
-
-
-
-
-
1,754,964
266,472
43,454
81,159
23,326
142,658
2,312,032
-
(13,192)
142,658
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)%
1 J P Marcantonio is the General Manager - Americas, remunerated in United States dollars converted to Australian dollars in the table above.
2 Mr Parker was the Chief Financial Officer. He is located in Australia and remunerated in Australian dollars. Mr Parker resigned 26 July 2019.
3 Mr Marotta is Senior Manager – Global Procurement & Logistics. He is located in Australia and remunerated in Australian dollars.
4 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.
5 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.
6 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.
7 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.
8 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.
Page 26
DIRECTORS’ AND EXECUTIVES’ EQUITY HOLDINGS: FULLY PAID ORDINARY
SHARES
2018/2019
Executive Directors
N Pritchard
Non Executive Directors
D Allman
J Murphy *
T Stianos
Executives
M Parker
B Marotta
A Haidar
Total
Balance
30 June 2018
No.
Granted as
Compensation
No.
Received on
Exercise of Options
No.
Other
Movements
No.
Balance
30 June 2019
No.
521,593
913,000
2,400,000
4,416,599
100,000
-
289,122
334,364
8,061,678
-
-
-
320,000
299,000
182,000
1,714,000
-
-
-
-
-
-
-
-
-
1,434,593
600,000
(4,416,599)
100,000
(92,743)
-
-
3,000,000
-
200,000
227,257
588,122
516,364
(3,809,342)
5,966,336
* On the 15 August 2018, Non Executive Director John Murphy retired from the Board of Directors, Audit and Risk, Remuneration
and Nomination Committees.
2017/2018
Executive Directors
N Pritchard
Non Executive Directors
D Allman
J Murphy
T Stianos
Executives
B Marotta
A Haidar
Total
Balance
30 June 2017
No.
Granted as
Compensation
No.
Received on
Exercise of Options
No.
Other
Movements
No.
Balance
30 June 2018
No.
212,804
865,385
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
SHARE BASED COMPENSATION
The terms and conditions of each grant of performance rights granted but not vested as at 30 June 2019 affecting remuneration in
the current or a future reporting period are as follows:
Grant Date
Value per performance rights at grant date
35 cents
Each performance right entitles the holder to one (1) ordinary share in GALE Pacific in the event that the performance rights are
exercised. Performance rights carry no rights to dividends and no voting rights.
The performance rights granted on 21 September 2016 are subject to a continuation of employment to 30 June 2019 and then the
satisfying of relevant performance hurdles based on improvements in the Group’s diluted earnings per share over the three year
period from 1 July 2016 to 30 June 2019. None of these performance 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 22 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.
The performance rights granted on 13 of November 2018 are subject to the continuation of employment to 30 June 2021 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 2019 to 30 June 2021. None of these rights can vest until the company releases its FY21 annual report to
the ASX (on or around 20th September 2021) and expire on 1 December 2021.
Page 27
Directors’ Report continued
DIRECTORS’ AND EXECUTIVES’ EQUITY HOLDINGS, COMPENSATION OPTIONS
AND PERFORMANCE RIGHTS: GRANTED AND VESTED DURING THE YEAR
2018/2019
Vested
Number
Granted
Number
Grant
Date
Value Per
Exercise
Expiry
First Exercise
Last
Option/Right
Price
Date
Date
Exercise
Executive Directors (Performance Rights)
N Pritchard
-
691,000
13/11/18
0.3504
Nil
01/12/21
01/10/21
01/10/21
Terms and Conditions for Each Grant
Non Executive Directors
None
Management Personnel (Performance Rights)
Other Management
-
1,130,000
13/11/18
0.3504
Nil
01/12/21
01/10/21
01/10/21
Total
1,821,000
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
Shade sails created from the patented new Commercial DualShade 350 fabric, showing their unique colour changing property
Page 28
GALE Pacific Limited | 2019 Annual Report
DIRECTORS’ AND EXECUTIVES’ EQUITY HOLDINGS, COMPENSATION OPTIONS
AND PERFORMANCE RIGHTS: MOVEMENTS DURING THE YEAR
Exercised
No.
Lapsed
No.
Net Other
Change
No.
Balance
30 June
2019
No.
Balance
Held
Nominally
No.
Value of
Lapsed
Options/
Rights
$
Balance
1 July 2018
No.
Granted as
Compensa-
tion
No.
2018/2019
Executive Directors (Performance Rights)
N Pritchard
2,097,000
691,000
Non Executive Directors
None
Executives (Performance Rights)
M Parker
735,000
J P Marcantonio
A Haidar
B Marotta
C Zhang
M Nicholls
270,000
472,000
665,000
209,000
113,000
244,000
318,000
175,000
-
122,000
119,000
Other Management Personnel (Performance Rights)
Other Management
375,000
152,000
(913,000)
(320,000)
-
(182,000)
(299,000)
-
-
(149,000)
Total
4,936,000
1,821,000
(1,863,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,875,000
659,000
588,000
465,000
366,000
331,000
232,000
378,000
4,894,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Exercised
No.
Lapsed
No.
Net Other
Change
No.
Balance
30 June
2018
No.
Balance
Held
Nominally
No.
Value of
Lapsed
Options/
Rights
$
Balance
1 July 2017
No.
Granted as
Compensa-
tion
No.
2017/2018
Executive Directors (Performance Rights)
N Pritchard
2,356,385
606,000
Non Executive Directors
None
Executives (Performance Rights)
B Marotta
767,122
M Parker
A Haidar
L Klebenow
C Zhang
J P Marcantonio
V Klunyk
M Nicholls
523,000
427,364
270,000
105,000
-
-
-
187,000
212,000
144,000
-
104,000
270,000
144,000
113,000
Other Management Personnel (Performance Rights)
Other Management
138,000
308,931
(865,385)
(289,122)
-
(99,364)
-
-
-
-
-
(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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page 29
GALE Pacific Limited | 2019 Annual Report
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.
Page 30
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
19 August 2019
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 2019, 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
Genevra Cavallo
Partner
Chartered Accountants
Member of Deloitte Asia Pacific Limited and the Deloitte Network
Liability limited by a scheme approved under Professional Standards Legislation.
Page 31
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 2019, the
consolidated statement of profit or loss and other 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 2019 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 Asia Pacific Limited and the Deloitte Network
Liability limited by a scheme approved under Professional Standards Legislation.
Page 32
GALE Pacific Limited | 2019 Annual Report
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
How the scope of our audit responded to the
Key Audit Matter
Our procedures included, but were not limited to:
• Obtaining an understanding on how the
As at 30 June 2019, the carrying amounts
of Middle East and North Africa (“MENA”)
trade receivable totalled AU$10.26 million
with AU$0.92 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 39% of trade receivables
greater than 365 days.
The determination as to whether the
receivables are collectable requires a high
level of management judgment and
estimates, whereby the management
considers specific factors including the age
of the balances, historical payment
patterns and any other relevant
information concerning the
creditworthiness of the counterparties.
•
•
•
•
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 Deloitte Dubai to assist with
assessment procedures in the context of
their knowledge of the local market
conditions;
Evaluating the aging analysis 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
assessing 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 2019, 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.
Page 33
GALE Pacific Limited | 2019 Annual Report
Independent Auditors Report
-continued
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If,
based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due
to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting
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.
Page 34
Independent Auditors Report
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group’s audit. We remain
solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 22 to 29 of the Directors’ Report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of Gale Pacific Limited, for the year ended 30 June 2019,
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
Genevra Cavallo
Partner
Chartered Accountants
Melbourne, 19 August 2019
Page 35
Directors’ Declaration
Directors’ Declaration
In the Directors’ opinion:
○ the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corpora-
tions 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 2019 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
19 August 2019
Page 36
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2019
Revenue
Sale of goods
Other income
Expenses
Raw materials and consumables used
Employee benefits expense
Depreciation and amortisation expense
Marketing and advertising
Occupancy costs
Warehouse and related costs
Other expenses
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year attributable to the owners of Gale
Pacific Limited
Other comprehensive income
Consolidated
Note
2019
$'000
2018
$'000
5
6
6
6
7
149,217
148,811
1,353
1,240
(69,604)
(33,668)
(6,218)
(2,251)
(6,498)
(9,628)
(9,653)
(1,842)
(69,140)
(32,304)
(5,934)
(1,601)
(5,450)
(10,598)
(11,068)
(1,472)
11,208
12,484
(2,010)
(2,677)
9,198
9,807
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
(106)
1,887
503
3,655
Other comprehensive income for the year, net of tax
1,781
4,158
Total comprehensive income for the year attributable to the owners of Gale
Pacific Limited
Basic earnings per share
Diluted earnings per share
10,979
13,965
Cents
Cents
8
8
3.21
3.16
3.35
3.29
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
Page 37
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Statement of financial position
As at 30 June 2019
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
2019
$'000
2018
$'000
9
10
11
12
13
7
14
15
7
16
17
7
18
19
29,846
28,152
46,196
2,124
106,318
-
35,492
8,392
4,345
48,229
22,991
33,862
46,736
1,493
105,082
58
30,123
7,364
2,468
40,013
154,547
145,095
15,958
25,793
127
2,169
3,230
457
47,734
14,956
1,473
187
16,616
21,794
16,195
480
171
3,184
475
42,299
13,520
1,679
117
15,316
64,350
57,615
90,197
87,480
65,097
4,070
21,030
67,641
1,752
18,087
90,197
87,480
The above statement of financial position should be read in conjunction with the accompanying notes
Page 38
Gale Pacific Limited
Statement of changes in equity
For the year ended 30 June 2019
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 (note 18)
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
4,158
80
105
-
-
-
9,807
-
9,807
4,158
9,807
13,965
-
(105)
-
(382)
(5,856)
80
-
(3,724)
(382)
(5,856)
Balance at 30 June 2018
67,641
1,752
18,087
87,480
Consolidated
Balance at 1 July 2018
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 (note 18)
Other
Dividends paid (note 20)
Issued
Capital
$'000
Reserves
(Note 19)
$'000
Retained
Profits
$'000
Total equity
$'000
67,641
1,752
18,087
87,480
-
-
-
-
-
(2,544)
-
-
-
1,781
1,781
11
526
-
-
-
9,198
-
9,198
1,781
9,198
10,979
-
(526)
-
(7)
(5,722)
11
-
(2,544)
(7)
(5,722)
Balance at 30 June 2019
65,097
4,070
21,030
90,197
The above statement of changes in equity should be read in conjunction with the accompanying notes
Page 39
Gale Pacific Limited
Statement of cash flows
For the year ended 30 June 2019
Cash flows from operating activities
Profit before income tax expense for the year
Adjustments for:
Depreciation and amortisation
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
Increase/(decrease) in trade and other payables
Increase/(decrease) in derivative liabilities
Increase 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 from/(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
2019
$'000
2018
$'000
11,208
12,484
6,218
11
518
1,842
5,934
80
1,464
1,472
19,797
21,434
5,710
540
(573)
(5,836)
(459)
116
(18)
19,277
(1,842)
(2,095)
(4,365)
(9,287)
(74)
3,702
512
115
189
12,226
(1,472)
(1,830)
15,340
8,924
(11,454)
(763)
244
(7,137)
(655)
246
(11,973)
(7,546)
13,946
(2,544)
(7)
(5,722)
(2,912)
9,326
(3,724)
(382)
(5,856)
(3,279)
2,761
(3,915)
6,128
22,991
727
(2,537)
24,974
554
12
13
17
18
20
17
Cash and cash equivalents at the end of the financial year
9
29,846
22,991
The above statement of cash flows should be read in conjunction with the accompanying notes
Page 40
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
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 19 August 2019. 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.
Page 41
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
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.
The Group has adopted AASB 15 Revenue from Contract with Customers.
AASB 15 Revenue from Contracts with Customers
AASB 15 established a single comprehensive five-step model for entities to use in accounting for revenue arising from
contracts with customers. AASB 15 superseded prior revenue recognition guidance including AASB 118 Revenue, AASB
111 Construction Contracts.
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 assessed the impact of adopting AASB 15 on its key revenue streams and notes the following impacts:
Sale of goods: Revenue from the sale of goods is recognised at the point in time when the customer obtains control of
the goods, which is generally at the time of delivery. The Group's existing treatment of sale of goods was not impacted as
a result of the new standard.
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 resulted in some rebates requiring reclassification
from cost of goods sold to revenue. AASB 15 did impact the measurement of the Group’s rebates and discounts. The
comparative year was restated consistent with current period disclosure.
Other revenue: Revenue from other revenue is recognised when it is received or when the right to receive payment is
established. The Group's existing treatment of other revenue was not impacted as a result of the new standard.
Return of goods: AASB 15 required 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 was not be impacted as a result of the
new standard.
Other than the disclosure impacts above, there has been no change to the revenue accounting policy.
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 assessed the new standard and based on its financial assets and liabilities, the key impact of the standard on
the Group was 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 did not materially
change based upon the adoption of AASB 9 on 1 July 2018.
Comparatives
Where necessary, the comparative statement of profit or loss and other comprehensive income has been reclassified and
repositioned for consistency with the current period disclosures.
Page 42
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
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 2019 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.
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.
Page 43
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
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
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in
exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the
contract with a customer; identifies the performance obligations in the contract; determines the transaction price which
takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the
separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to
be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the
transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as
discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events.
Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of
variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is
highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The
measurement constraint continues until the uncertainty associated with the variable consideration is subsequently
resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability.
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which
is generally at the time of delivery.
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.
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.
Page 44
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
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.
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.
Page 45
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
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.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected
credit loss rate for each group. These assumptions include recent sales experience and historical collection rates.
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.
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.
Page 46
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 3. Critical accounting judgements, estimates and assumptions (continued)
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 market 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.
To continuously improve the transparency of GALE Pacific’s management reporting, in FY 2019 GALE Pacific Limited
initiated an activity-based allocation method of reporting. Intersegment sales/margin and central costs have allocated to
external revenue generating segments where the final economic benefit is derived. This enhanced method of reporting is
being 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 was 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.
As a result the comparative disclosure has been restated
The operating segments are as follows:
Australasia
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.
Sales distribution based in China and Australasia, servicing European and Asian
countries.
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 2019 approximately 38% (2018: 29%) of the Group's external revenue was derived from
sales to two customers (2018: One), one customer located in the Australasian region and one customer located in the
Americas region.
Page 47
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 4. Operating segments (continued)
Operating segment information
Consolidated - 2019
Revenue
Sales to external customers
Total revenue
Segment EBITDA
Depreciation and amortisation
Finance costs
Profit/(loss) before income
tax expense
Income tax expense
Profit after income tax
expense
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
Consolidated - 2018
Revenue
Sales to external customers
Total revenue
Segment EBITDA
Depreciation and amortisation
Finance costs
Profit/(loss) before income
tax expense
Income tax expense
Profit after income tax
expense
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
Australasia
$'000
Americas
$'000
MENA
$'000
EurAsia
$'000
Other
Segments
$'000
Total
$'000
57,988
57,988
2,792
(1,227)
(458)
70,954
70,954
13,849
(4,184)
(1,146)
1,107
8,519
12,922
12,922
3,975
(343)
(140)
3,492
7,353
7,353
2,310
(433)
(98)
(3,658)
(31)
-
1,779
(3,689)
-
-
149,217
149,217
36,095
45,937
16,994
35,601
19,920
6,806
19,507
617
12,712
24,708
Australasia
$'000
Americas
$'000
MENA
$'000
EurAsia
$'000
Other
Segments
$'000
Total
$'000
68,789
68,789
5,448
(1,789)
(539)
60,494
60,494
12,525
(3,467)
(744)
3,120
8,314
12,956
12,956
4,438
(617)
(138)
3,683
6,572
6,572
1,589
(27)
(51)
(4,110)
(34)
-
1,511
(4,144)
-
-
148,811
148,811
19,268
(6,218)
(1,842)
11,208
(2,010)
9,198
154,547
154,547
64,350
64,350
19,890
(5,934)
(1,472)
12,484
(2,677)
9,807
145,095
145,095
57,615
57,615
29,107
50,043
13,961
33,341
18,643
9,944
12,891
531
13,968
20,281
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.
Page 48
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 5. Other income
Other income (including sales of scrap material from manufacturing)
1,353
1,240
Note 6. Expenses
Consolidated
2019
$'000
2018
$'000
Profit 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
2019
$'000
2018
$'000
4,869
4,805
1,349
1,129
6,218
5,934
33,668
11
32,304
80
33,679
32,384
1,842
1,472
5,890
4,886
Page 49
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 7. Income tax
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Decrease/(increase) in deferred tax assets
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non allowable/(non assessable) items
Adjustment recognised for prior periods
Difference in overseas tax rates
Income tax expense
Amounts charged/(credited) directly to equity
Deferred tax assets
Consolidated
2019
$'000
2018
$'000
2,414
(933)
529
2,929
281
(533)
2,010
2,677
(933)
281
11,208
12,484
3,362
3,745
(741)
153
2,621
529
(1,140)
3,898
(533)
(688)
2,010
2,677
Consolidated
2019
$'000
2018
$'000
(574)
216
Page 50
Gale Pacific Limited
Notes to the financial statements
30 June 2019
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
Credited/(charged) to profit or loss
Credited/(charged) to equity
Transfer from current tax liability
Closing balance
Provision for income tax
Provision for income tax
Consolidated
2019
$'000
2018
$'000
1,718
(1,218)
(669)
(733)
(174)
6
1,581
469
1,590
302
830
(635)
(735)
(895)
(224)
15
227
469
1,590
147
2,872
789
789
933
574
576
2,328
(281)
(216)
(1,042)
2,872
789
Consolidated
2019
$'000
2018
$'000
2,169
171
The 2019 deferred tax asset of $2,872,000 (2018: $789,000) is comprised of $4,345,000 in deferred tax assets (2018:
$2,468,000) and $1,473,000 (2018: $1,679,000) 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 51
Gale Pacific Limited
Notes to the financial statements
30 June 2019
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
2019
$'000
2018
$'000
Profit after income tax attributable to the owners of Gale Pacific Limited
9,198
9,807
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
286,763,316 293,054,259
Performance rights
4,765,008
4,716,521
Weighted average number of ordinary shares used in calculating diluted earnings per share 291,528,324 297,770,780
Number
Number
Basic earnings per share
Diluted earnings per share
Accounting policy for earnings per share
Cents
Cents
3.21
3.16
3.35
3.29
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.
Page 52
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 9. Current assets - cash and cash equivalents
Cash on hand
Cash at bank
Cash on deposit
Consolidated
2019
$'000
2018
$'000
2
29,844
-
2
22,851
138
29,846
22,991
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: Allowance for expected credit losses
Other receivables
Consolidated
2019
$'000
2018
$'000
28,431
(406)
28,025
33,954
(277)
33,677
127
185
28,152
33,862
The Group has recognised a loss of $178,000 (2018: $172,000) in profit or loss in respect of impairment of receivables
for the year ended 30 June 2019.
Over 6 months overdue
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Closing balance
Consolidated
2019
$'000
2018
$'000
406
277
Consolidated
2019
$'000
2018
$'000
277
178
(49)
406
111
172
(6)
277
Past due but not impaired
Customers with balances past due but without provision for impairment of the receivables amount to $8,933,000 as at 30
June 2019 ($7,898,000 as at 30 June 2018)
Page 53
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 10. Current assets - trade and other receivables (continued)
Group did not consider a credit risk on the aggregate balances after reviewing the credit terms of customers based on
recent collection practices.
The ageing of trade receivables not impaired at the reporting date was:
Consolidated
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
2019
$'000
2018
$'000
1,721
3,392
3,260
560
3,562
2,189
1,903
244
8,933
7,898
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.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
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.
Note 11. Current assets - inventories
Raw materials - at cost
Work in progress - at cost
Finished goods - at cost
Less: Provision for impairment
Consolidated
2019
$'000
2018
$'000
6,967
6,084
2,151
5,487
39,062
(1,984)
37,078
37,046
(1,881)
35,165
46,196
46,736
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.
Page 54
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 11. Current assets - inventories (continued)
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
Note 12. Non-current assets - property, plant and equipment
Buildings and leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Motor vehicles - at cost
Less: Accumulated depreciation
Capital work-in-progress - at cost
Consolidated
2019
$'000
2018
$'000
17,663
(6,735)
10,928
107,979
(92,074)
15,905
312
(218)
94
16,197
(6,119)
10,078
104,516
(88,251)
16,265
311
(214)
97
8,565
3,683
35,492
30,123
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 2017
Additions
Disposals
Exchange differences
Transfers in/(out)
Depreciation expense
Balance at 30 June 2018
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
9,552
481
-
515
86
(556)
10,078
201
-
136
1,212
(699)
16,661
2,131
(236)
853
1,101
(4,245)
16,265
2,044
(244)
297
1,710
(4,167)
100
-
-
1
-
(4)
97
-
-
-
-
(3)
94
642
4,525
(10)
117
(1,591)
-
3,683
9,209
-
13
(4,340)
-
26,955
7,137
(246)
1,486
(404)
(4,805)
30,123
11,454
(244)
446
(1,418)
(4,869)
8,565
35,492
Balance at 30 June 2019
10,928
15,905
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.
Page 55
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 12. Non-current assets - property, plant and equipment (continued)
Depreciation is calculated on a straight line basis to write off the net cost of each item of property, plant and equipment
over their estimated useful lives as follows:
Buildings
Leasehold improvements
Plant and equipment
Motor vehicles
45 years
Over lease term
2-15 years
2-5 years
Depreciation commences from the time the asset is held ready for use. The residual values, useful lives and depreciation
methods are reviewed, and adjusted if appropriate, at each reporting date. When changes are made, adjustments are
reflected in current and future periods only.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or
the estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to
the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Note 13. Non-current assets - intangibles
Consolidated
2019
$'000
2018
$'000
11,222
(7,961)
3,261
2,452
(95)
2,357
1,629
(1,324)
305
9,143
(6,674)
2,469
21,620
(18,508)
3,112
1,713
(47)
1,666
1,648
(1,321)
327
7,490
(5,231)
2,259
8,392
7,364
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
Page 56
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 13. Non-current assets - intangibles (continued)
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 2017
Additions
Exchange differences
Transfers in/(out)
Amortisation expense
Balance at 30 June 2018
Additions
Exchange differences
Transfers in/(out)
Amortisation expense
Balance at 30 June 2019
Patents,
trademarks
Goodwill Development and licenses
$'000
$'000
$'000
Application
software
$'000
Total
$'000
3,004
-
108
-
-
3,112
-
149
-
-
3,261
1,050
643
-
-
(27)
1,666
739
-
-
(48)
2,357
372
-
4
-
(49)
327
1
1
9
(33)
305
2,857
12
39
404
(1,053)
2,259
23
46
1,409
(1,268)
7,283
655
151
404
(1,129)
7,364
763
196
1,418
(1,349)
2,469
8,392
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 2019.
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 (2018/2019: US$2,077,000; 2017/2018: US$ 2,077,000)
China
Consolidated
2019
$'000
2018
$'000
2,914
347
2,765
347
3,261
3,112
USA / China
In assessing the recoverable amount of the USA/China CGUs, management made a number of 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 or China CGU's carrying amount to exceed its recoverable amount.
Page 57
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 13. Non-current assets - intangibles (continued)
Accounting policy for intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value
at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss
arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and
the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed
annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the
amortisation method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at
cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not
subsequently reversed.
Research and development
Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is
probable that the project will be a success considering its commercial and technical feasibility; the Group is able to use or
sell the asset; the Group has sufficient resources; and intent to complete the development and its costs can be measured
reliably. Capitalised development costs are amortised on a straight-line basis over the period of their expected benefit.
Patents, trademarks and licenses
Significant costs associated with patents and trademarks are deferred and amortised on a straight-line basis over the
period of their expected benefit, being their finite useful life of 20 years.
Application software
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their
expected benefit, being their finite useful life of 5 years.
Note 14. Current liabilities - trade and other payables
Trade payables
Sundry payables and accruals
Consolidated
2019
$'000
2018
$'000
10,762
5,196
15,859
5,935
15,958
21,794
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
Consolidated
2019
$'000
2018
$'000
25,793
16,195
Bank loans
Refer to note 22 for further information on financial instruments.
Page 58
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 16. Current liabilities - provisions
Warranties
Consolidated
2019
$'000
2018
$'000
457
475
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 - 2019
Carrying amount at the start of the year
Additional provisions recognised
Claims
Carrying amount at the end of the year
Warranties
$'000
475
664
(682)
457
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
2019
$'000
2018
$'000
14,956
13,520
Consolidated
2019
$'000
2018
$'000
40,749
29,715
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.
Page 59
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 18. Equity - issued capital
Consolidated
2019
Shares
2018
Shares
2019
$'000
2018
$'000
Ordinary shares - fully paid
282,217,475 288,181,757
65,097
67,641
Movements in ordinary share capital
Opening Balance
Shares Issued
Shares Buy Back
Closing Balance
Consolidated Consolidated Consolidated Consolidated
2019
Shares
2018
Shares
2019
$'000
2018
$'000
288,181,757 297,162,696
1,325,802
(10,306,741)
1,863,000
(7,827,282)
67,641
-
(2,544)
71,365
-
(3,724)
282,217,475 288,181,757
65,097
67,641
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 March 6th 2018 an on-market share buy-back was announced. It ran from 19th March 2018 to 18th March 2019. At
the end of this program, a total of 5,720,089 shares were bought by the company. On March 28th 2019 an on-market
buy-back was announced. It will run from 15th April 2019 to 14th April 2020. Up until 30th June 2019 a total of 2,815,195
shares were bought back by the company.
Capital risk management
The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital. This is achieved through monitoring of historical and forecast performance and cash flows.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is
calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
Accounting policy for issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Page 60
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 19. Equity - reserves
Foreign currency reserve
Hedging reserve - cash flow hedges
Share-based payments reserve
Enterprise reserve fund
Consolidated
2019
$'000
2018
$'000
(486)
67
1,156
3,333
(2,374)
173
1,145
2,808
4,070
1,752
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign
operations.
Hedging reserve - cash flow hedges
The reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is
determined to be an effective hedge.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Enterprise reserve fund
Gale Pacific Special Textiles (Ningbo) Limited and Gale Pacific Trading (Ningbo) Limited are required by Chinese
Company Law to maintain this reserve in its financial statements. This reserve is unavailable for distribution to
shareholders but can be used to expand the entity's business, make up losses or increase the registered capital. Both
companies are required to allocate 10% of their annual profit after tax to this reserve until it reaches 50% of the registered
capital.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Foreign
currency
$'000
Hedging
$'000
Share-based Enterprise
payments
$'000
reserve fund
$'000
Total
$'000
Consolidated
Balance at 1 July 2017
Foreign currency translation *
Movement in hedge
Income tax
Share-based payment
Statutory transfers from retained earnings
Balance at 30 June 2018
Foreign currency translation *
Movement in hedge
Income tax
Share-based payment
Statutory transfers from retained earnings
Balance at 30 June 2019
(6,029)
3,655
-
-
-
-
(2,374)
1,887
-
-
-
-
(487)
(330)
-
719
(216)
-
-
173
-
(152)
46
-
-
67
1,065
-
-
-
80
-
1,145
-
-
-
11
-
1,156
2,703
-
-
-
-
105
2,808
-
-
-
-
526
3,334
*
Refer to note 21 for details of monetary items identified as a net investment in a foreign operation
(2,591)
3,655
719
(216)
80
105
1,752
1,887
(152)
46
11
526
4,070
Page 61
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 20. Equity - dividends
Dividends paid during the financial year were as follows:
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)
Final Dividend for the year ended 30 June 2018 of 1.00 cents per ordinary share
(unfranked)
Interim Dividend for the year ended 30 June 2019 of 1.00 cents per ordinary share
(unfranked)
Consolidated
2019
$'000
2018
$'000
-
-
2,872
2,850
2,968
2,888
-
-
5,722
5,856
On 19 August 2019 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 2019. This dividend has not been included as a liability in these financial statements.
Including the final dividend with respect to 30 June 2019, for the full year, the dividends of 2.00 cents per ordinary share
have been declared on earnings of 3.21 cents per share.
Accounting policy for dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
Note 21. Monetary items identified as a net investment in a foreign operation
Consolidated
2019
$'000
2018
$'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
10,124
4,038
9,474
4,593
Monetary items identified as a net investment in a foreign operation
14,162
14,067
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.
Page 62
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 22. Financial instruments (continued)
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.
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
2019
$'000
2018
$'000
2019
2018
12,063
719
7,805
655
0.7129
0.6950
0.7687
0.7631
-
-
4,127
325
-
-
0.6234
0.6063
Sell US dollars
Average exchange rates
2019
$'000
2018
$'000
2019
2018
17,000
16,000
6.7838
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
2019
$'000
2018
$'000
2019
$'000
2018
$'000
34,683
303
5,457
2,825
32,250
411
5,564
2,195
20,042
191
-
-
18,072
318
-
-
43,268
40,420
20,233
18,390
Page 63
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 22. Financial instruments (continued)
The Group had net assets denominated in foreign currencies of $23,035,000 (assets of $43,268,000 less liabilities of
$20,233,000 as at 30 June 2019 (2018: $22,030,000 (assets of $40,420,000 less liabilities of $18,390,000)). Based on
this exposure, had the Australian dollar strengthened by 10% / weakened by 10% (2018: 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 $492,000 higher/lower (2018: $184,000 lower/ higher) and equity would have been $1,782,000
higher/lower (2018: $1,786,000 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.
As at the reporting date, the Group had the following variable rate bank balances and borrowings outstanding:
Consolidated
Cash and cash equivalents
Bank loans
Net exposure to cash flow interest rate risk
2019
2018
Weighted
average
interest rate
%
-
3.47%
Weighted
average
interest rate
%
-
3.74%
Balance
$'000
29,846
(40,749)
(10,903)
Balance
$'000
22,991
(29,715)
(6,724)
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 (2018: 100) basis points would have an adverse/favourable effect on
profit before tax of $407,500 (2018: $297,000) per annum. The percentage change is based on the expected volatility of
interest rates using market data and analysts forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. Before accepting any new customer, the Group uses internal resources and criteria to assess the potential
customer’s credit quality and defines credit limits by customer. The maximum exposure to credit risk at the reporting date
to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed
in the statement of financial position and notes to the financial statements. The Group does not hold any collateral.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables
through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered
representative across all customers of the Group based on recent sales experience, historical collection rates and
forward-looking information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year.
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.
Page 64
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 22. Financial instruments (continued)
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 - 2019
Non-derivatives
Non-interest bearing
Trade payables
Sundry payables and accruals
Interest-bearing - fixed rate
Bank loans
Total non-derivatives
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
-
-
10,762
5,196
-
-
3.47%
25,793
41,751
14,956
14,956
-
-
-
-
-
-
-
-
10,762
5,196
40,749
56,707
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
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 - 2019
Liabilities
Forward foreign exchange contracts
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
127
127
-
-
127
127
Page 65
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 23. Fair value measurement (continued)
Consolidated - 2018
Liabilities
Forward foreign exchange contracts
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
480
480
-
-
480
480
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.
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
2019
$'000
2018
$'000
-
4,451
4,901
8,396
4,682
10,633
13,297
15,315
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.
Page 66
Gale Pacific Limited
Notes to the financial statements
30 June 2019
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.
Note 26. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set
out below:
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
Note 27. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit after income tax
Total comprehensive income
Consolidated
2019
$
2018
$
2,542,623
145,790
-
9,906
3,060,818
150,607
142,658
71,961
2,698,319
3,426,044
Parent
2019
$'000
2018
$'000
5,201
7,401
5,095
7,904
Page 67
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 27. Parent entity information (continued)
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
Parent
2019
$'000
2018
$'000
19,507
28,301
101,978
103,940
16,104
16,189
31,247
29,826
65,097
67
1,156
4,411
67,641
173
1,145
5,155
70,731
74,114
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
2019 and 30 June 2018.
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 2019 and 30 June 2018.
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
Ownership interest
2018
2019
%
%
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%
Page 68
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 29. Share-based payments
The Group maintains a performance rights scheme for certain staff and executives, including executive directors, as
approved by shareholders at an annual general meeting. The scheme is designed to reward key personnel when the
Group meets performance hurdles relating to:
● Improvement in earnings per share; and
● Improvement in return to shareholders.
Each performance right entitles the holder one ordinary share in the Company when exercised and is subject to the
satisfying of relevant performance hurdles based on improvements in the Group’s diluted earnings per share.
Performance rights issued to executives during the financial year were issued in accordance with the Group’s
remuneration policy which:
● Reward executives for Group and individual performance;
● Align the interests of the executives with those of the shareholders; and
● Ensure that total remuneration is competitive by market standards.
Refer to note 6 for the amount expensed to profit or loss during the financial year.
A share option plan has been established by the Group and approved by shareholders at a general meeting, whereby the
Group may, at the discretion of the Nomination and Remuneration Committee, grant options over ordinary shares in the
Company to certain key management personnel of the Group. The options are issued for nil consideration and are
granted in accordance with performance guidelines established by the Nomination and Remuneration Committee.
Set out below are summaries of performance rights granted under the plan:
2019
Grant date
Expiry date
09/10/2015
21/09/2016
22/11/2017
13/11/2018
01/12/2018
01/12/2019
01/12/2020
30/06/2021
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
Grant
price
$0.23
$0.35
$0.31
$0.35
Grant
price
$0.18
$0.23
$0.35
$0.31
Balance at
the start of
the year
1,863,000
1,299,000
1,774,000
1,821,000
6,757,000
Balance at
the start of
the year
1,325,802
1,863,000
1,569,000
-
4,757,802
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
-
(1,863,000)
-
-
-
(1,863,000)
-
-
-
-
-
-
1,299,000
1,774,000
1,821,000
4,894,000
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
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
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.
Page 69
GALE Pacific Limited | 2019 Annual Report
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 29. Share-based payments (continued)
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market
conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other
conditions are satisfied.
The weighted average fair value of the share options granted during the financial year is $0.35 (2018: $0.31).
Expected volatility is based on the historical share price volatility over the past 3 years. To allow for the effects of early
exercise, it was assumed that executives and senior employees would exercise the options after vesting date when the
share price is two and a half times the exercise price.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as
a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is
forfeited.
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
2019
$
2018
$
259,953
267,532
155,452
113,138
415,405
380,670
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 2019. 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.
Page 70
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 31. New Accounting Standards and Interpretations not yet mandatory or early adopted (continued)
AASB 16 Leases
General impact of application of AASB 16 Leases AASB 16 provides a comprehensive model for the identification of
lease arrangements and their treatment in the financial statements for both lessors and lessees. AASB 16 will supersede
the current lease guidance including IAS 17 Leases and the related Interpretations when it becomes effective for
accounting periods beginning on or after 1 January 2019. The date of initial application of AASB 16 for the Group will be
1 July 2019[AB1].
The Group has chosen the modified retrospective application of AASB 16 in accordance with IFRS 16:C5(a).
Consequently, the Group will restate the comparative information.
In contrast to lessee accounting, AASB 16 substantially carries forward the lessor accounting requirements in IAS 17.
Impact of the new definition of a lease
The Group will make use of the practical expedient available on transition to AASB 16 not to reassess whether a contract
is or contains a lease. Accordingly, the definition of a lease in accordance with IAS 17 and IFRIC 4 will continue to apply
to those leases entered or modified before 1 July 2019
The change in definition of a lease mainly relates to the concept of control. AASB 16 distinguishes between leases and
service contracts on the basis of whether the use of an identified asset is controlled by the customer. Control is
considered to exist if the customer has:
– The right to obtain substantially all of the economic benefits from the use of an identified asset; and
– The right to direct the use of that asset.
The Group will apply the definition of a lease and related guidance set out in AASB 16 to all lease contracts entered into
or modified on or after 1 July 2019 (whether it is a lessor or a lessee in the lease contract). In preparation for the first
time
application of AASB 16, the Group has carried out an implementation project. The project has shown that the new
definition in AASB 16 will not significantly change the scope of contracts that meet the definition of a lease for the Group.
‑
Page 71
Gale Pacific Limited
Notes to the financial statements
30 June 2019
Note 31. New Accounting Standards and Interpretations not yet mandatory or early adopted (continued)
Impact on Lessee Accounting
Operating leases
balance sheet.
AASB 16 will change how the Group accounts for leases previously classified as operating leases under IAS 17, which
were off
On initial application of AASB 16, for all leases (except as noted below), the Group will:
‑
a) Recognise right
at the present value of the future lease payments;
b) Recognise depreciation of right
or loss;
c) Separate the total amount of cash paid into a principal portion (presented within financing activities) and interest
(presented within operating activities) in the consolidated cash flow statement.
use assets and lease liabilities in the consolidated statement of financial position, initially measured
use assets and interest on lease liabilities in the consolidated statement of profit
of
of
‑
‑
‑
‑
use assets and
Lease incentives (e.g. rent
lease liabilities whereas under IAS 17 they resulted in the recognition of a lease liability incentive, amortised as
a reduction of rental expenses on a straight
free period) will be recognised as part of the measurement of the right
line basis.
of
‑
‑
‑
Under AASB 16, right
This will replace the previous requirement to recognise a provision for onerous lease contracts.
use assets will be tested for impairment in accordance with IAS 36 Impairment of Assets.
of
‑
‑
‑
For short
office furniture), the Group will opt to recognise a lease expense on a straight
term leases (lease term of 12 months or less) and leases of low
value assets (such as personal computers and
line basis as permitted by AASB 16.
‑
‑
As at 30 June 2019, the Group has non
cancellable operating lease commitments of $4,901,000.
‑
term leases and
A preliminary assessment indicates that 22 of these arrangements relate to leases other than short
leases of low
use asset of $23,905,000 and a corresponding
lease liability of $23,602,000 in respect of all these leases. The impact on profit or loss is to decrease Other expenses by
$4,653,000 to increase depreciation by $4,476,000 and to increase interest expense by $833,000.
value assets, and hence the Group will recognise a right
of
‑
‑
‑
‑
‑
The preliminary assessment indicates that 1 of these arrangements relate to short
assets.
‑
term leases and leases of low
value
‑
Under IAS 17, all lease payments on operating leases are presented as part of cash flows from operating activities.
The impact of the changes under AASB 16 would be to increase the cash generated by operating activities by
$4,653,000 and to increase net cash used in financing activities by the same amount.
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 2019 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 72
Page 72
GALE Pacific Limited | 2019 Annual Report
GALE Pacific Limited | 2019 Annual Report
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 15 July 2019 (Reporting Date).
CORPORATE GOVERNANCE STATEMENT
The Company’s Directors and management are committed to conducting the Group’s business in an ethical manner and in
accordance with the highest standards of corporate governance. The Company has adopted and substantially complies with the
ASX Corporate Governance Principles and Recommendations (Third Edition) (Recommendations) to the extent appropriate to the
size and nature of the Group’s operations.
The Company has prepared a statement which sets out the corporate governance practices that were in operation throughout the
financial year for the Company, identifies any Recommendations that have not been followed, and provides reasons for not following
such Recommendations (Corporate Governance Statement).
In accordance with ASX Listing Rules 4.10.3 and 4.7.4, the Corporate Governance Statement will be available for review on
Gale Pacific’s website (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 2019
Performance rights expiring 1 December 2020
Performance rights expiring 1 December 2021
Number of Holders
1,809
6
8
7
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 1,809 holders of a total of 282,217,475 ordinary shares of the Company. The voting rights
attaching to the ordinary shares, set out in Article 54 of the Company’s Articles of Association are:
At a general meeting of the Company, every holder of ordinary shares present in person or by proxy, attorney or representative has
one vote on a show of hands and on a poll, one vote for each ordinary share held. On a poll, every member (or his or her proxy,
attorney or representative) is entitled to vote for each fully paid share held and in respect of each partly paid share, is entitled to
a fraction of a vote equivalent to the proportion which the amount paid up (not credited) on that partly paid share bears to the
total amounts paid and payable (excluding amounts credited) on that share. Amounts paid in advance of a call are ignored when
calculating the proportion.
Page 73
Page 73
GALE Pacific Limited | 2019 Annual Report
Additional Securities Exchange
Information continued
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:
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Ordinary Fully Paid Shares
Total Holders
115
365
301
812
216
1,809
Units
25,019
1,106,131
2,442,598
30,241,753
248,401,974
282,217,475
% of Issued Capital
0.01%
0.39%
0.86%
10.72%
88.02%
100.00%
Performance Rights
Holders Expiring
Holders Expiring
Holders Expiring
1 December 2019
1 December 2020
1 December 2021
0
0
0
1
5
6
0
0
0
0
8
8
0
0
0
0
7
7
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 15 July 2019
Minimum Parcel Size
Minimum $500 parcel at $0.3200 per unit
1,563
Holders
158
Units
84,067
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
78,800,399
43,225,781
%
27.92%
15.32%
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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
Gale Australia Pty Ltd
BNP Paribas Noms (NZ) Ltd
J P Morgan Nominees Australia Pty Limited
UBS Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd
Contemplator Pty Ltd
BFA Super Pty Ltd
BNP Paribas Noms Pty Ltd
Stitching Pty Ltd
Bond Street Custodians Limited
National Nominees Limited
Chillen Pty Limited (Tallen)
Venn Milner Superannuation Pty Ltd
Haroldswick Corporation Pty Ltd
Mr Nicholas Pritchard
GFS Securities Pty Ltd
Dalesam Pty Ltd
Alsumary Pty Ltd
Mr David Corley
TOTAL: TOP 20 HOLDERS OF ORDINARY FULLY PAID SHARES AS AT 15 JULY
2019
TOTAL: REMAINING HOLDERS BALANCE
VOLUNTARY ESCROW
There are no securities on issue in GALE Pacific that are subject to voluntary escrow.
No .
73,141,838
43,225,781
13,997,844
13,829,969
9,015,427
6,816,137
5,174,779
4,691,433
3,327,428
3,109,564
3,050,000
3,000,000
2,667,183
2,431,317
2,000,000
1,492,537
1,221,789
1,154,853
1,150,000
1,000,000
1,000,000
196,497,879
85,719,596
%
25.92
15.32
4.96
4.90
3.19
2.42
1.83
1.66
1.18
1.10
1.08
1.06
0.95
0.86
0.71
0.53
0.43
0.41
0.41
0.35
0.35
69.63%
30.37%
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
4,894,000
8
There are no persons who hold 20% or more of equity securities in each unquoted class other than under an employee incentive
scheme.
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Additional Securities Exchange
Information continued
ON MARKET BUYBACK
The Company is currently conducting an on-market buy-back. It was announced to the market on 28 March 2019 and covers the
period 15 April 2019 to 14 April 2020. The maximum number of shares the Company proposes to acquire under the on-market
buy-back is approximately up to 28,503,267, 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, 2,815,195 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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www.galepacific.com