More annual reports from GALE Pacific:
2023 ReportPeers and competitors of GALE Pacific:
Albany InternationalA N N U A L R E P O R T
2 0 2 1
A B O U T G A L E
PA C I F I C
GA LE PAC IFI C IS A M ARKET-L EA DI NG MANUFACTURER OF TECHN ICAL
FA BR IC S USE D FO R C ON SUM E R AND CO MMERCIAL A PPLICATION S A ROUND
TH E WORLD.
Founded in Melbourne, Australia in 1951, today GALE
has operations in Australia, New Zealand, the United
States, China, and Dubai and employs more than 600
people worldwide. GALE’s products are sold across
Australia, Asia, the Americas, Europe, the Middle East,
and a growing number of additional markets.
GALE’s products are recognised for their innovative
technology, quality, durability, and reliability. The
company’s consumer products, marketed under the
Coolaroo® brand, include outdoor roller shades, shade
sails, shade and garden fabrics, shade structures
and pet beds. They can be found at market leading
retailers around the world, both in-store and online.
The company’s commercial products, marketed under
the GALE Pacific Commercial® brand, include knitted,
coated, and advanced polymer fabrics used across the
agricultural, horticultural, aquacultural, architectural,
construction, mining, and packaging industries.
GALE’s core strategy is to accelerate its growth as
a world-class global fabrics technology business
through product innovation, category expansion,
expanded distribution in existing and new markets,
and improved operational efficiency and flexibility.
CONTENTS
1
2
4
12
14
15
2021 highlights
Chairman’s letter
Chief Executive Officer & Managing
Director’s review
Business overview
Board of directors
Executive leadership
18
28
29
33
34
73
77
Directors’ report
Auditor’s independence declaration
Independent auditor’s report
Directors’ declaration
Financial report
Additional securities exchange information
Corporate directory
A NNUAL GENERA L ME E TING
Gale Pacific will hold its 2021 Annual General Meeting on Friday 19 November, 2021.
Details will be provided in the Notice of Meeting.
1
2 0 2 1 H I G H L I G H T S
$205.2m
R E VE NUE
Up from $156.3m
$17.2m
PROF IT BE FORE TA X
Up from $4.8m
$19.0m
EBI T
Up from $7.0m
$12.3m
NPAT
Up from $3.7m
$1.5m
NE T CAS H
Up from net debt of ($15.3)m
4.48c
EARNINGS PER SHARE
Up from 1.34c
$28.2m
EB IT DA
Up from $18.7m
$34.6m
NET CASH FLOW
from operating activities
4.0c
TOTAL DIVIDENDS
Up from 1.0c
REVENUE $m
PROFIT BEFORE TAX $m
2019
2020
2021
$149.2m
$156.3m
2019
$11.2m
2020
$4.8m
$205.2m
2021
$17.2m
OP ERAT ING CASH F LOW $m
NE T DEBT/ CASH $m
2019
$15.3m
2020
$7.2m
2021
$34.6m
2019
2020
2021
($10.9m)
($15.3m)
$1.5m
* All figures compare FY21 to FY20 unless otherwise indicated
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | C H A I R M A N ’ S
L E T T E R
David Allman
2
The twelve months to end June 2021 was an
extraordinary period greatly impacted by the
COVID-19 pandemic. The health and safety of our
employees and other stakeholders has been our
top priority during this period.
It is pleasing to report that, despite all the
difficulties associated with the pandemic, our
management team produced excellent financial
outcomes, while continuing with our strategy
of building GALE into a growing global fabrics
technology business.
During FY21, revenue increased by 31% to
$205 million and earnings per share increased by
234% to 4.5 cents. Cash generation was especially
noteworthy, with net cash from operating activities
of $34.6 million. This produced a net cash balance
of $1.5 million at 30 June 2021.
This strong financial performance enabled the
payment of 4 cents per share unfranked in
dividends for the year, compared with the prior
year’s 1 cent.
The much-improved results were due to
substantial increases in revenue in both our
key markets of the USA and Australia. This was
driven by our continuing strategy of investing in
product development and distribution expansion,
coupled with a large Australian grain harvest
leading to record demand for our coated fabrics in
that market.
Despite very challenging working conditions
due to coronavirus restrictions, our operations
and supply teams expanded production and
generated operating efficiencies, which enabled
us to successfully serve an increased level of
demand. They managed to successfully deal
with the challenges of cost inflation and capacity
constraints and maintained a high level of
customer service.
The management team, and all our employees,
successfully dealt with a historically testing
environment while prioritising the provision of a
safe working environment. I would like to thank all
our employees for their commitment and resilience
during a very difficult time.
Our main growth opportunity is to expand our
presence in the large Americas market. In pursuit
of this objective, we have centralised a number
of key management functions in the USA. The
Managing Director, John Paul Marcantonio has
been based in the USA since his appointment to
the role in November 2019.
D ESP IT E A LL THE DIF FICU LTI E S AS SO C IAT ED
WI TH THE PA NDE MIC, O UR M A NAG EME NT T EA M
PR OD UCED EXCELLE NT FINA NC I AL O U TC OM ES .
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 3
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In pursuing growth in the Americas and other
markets we are adding resources which will result
in significant additional expenses in the short term,
but which are necessary to support achievement
of our growth objectives. While it is already clear
that FY22 will see a much more difficult trading
environment, we are continuing to pursue these
objectives and to invest for the long term, with the
aim of building a larger and stronger company.
David Allman
Chairman
E A R N I N G S P E R S H A R E
4.5c
Up from 1.3 cents
DIVID END S
4.0c
Up from 1.0 cents
C H I E F E X E C U T I V E
O F F I C E R & M A N A G I N G
D I R E C T O R ’ S R E V I E W
John Paul
Marcantonio
4
FY21 was a breakout year for the company
as we continued building GALE Pacific into
a faster-growing, world-class, global fabrics
technology business. Our global team delivered
record revenue with accelerated profit delivery
while improving operating cash, enabling the
company to end the year in a net cash position.
Our strategy to grow the company through product
innovation, category growth, improved operations
and expanding into new markets remained
consistent. Our growth plans are built on a strong
foundation of vertically integrated manufacturing
core competencies in knitted and coated technical
fabrics and our investments to accelerate growth
have delivered results this year, particularly in our
anchor markets of Australia and the United States.
Our consumer and commercial products are
recognised for their innovative technology, quality,
durability, and reliability in the markets they serve.
Our primary consumer brand, Coolaroo®, is a
market leader in outdoor roller shades, shade sails,
shade and garden fabrics, shade structures and
pet beds sold through major retailers, both in-store
and online, around the world.
In the commercial sector, the GALE Pacific®
Commercial Fabrics brand is known for market
leading, advanced polymer fabrics used across
the agricultural, horticultural, aquacultural,
architectural, construction, mining and
packaging industries.
We’ve expanded our core categories by
developing and launching new products,
increasing distribution and accelerating demand
across both consumer and commercial markets.
We continue to improve our global supply chain to
enable our growth plans, better matching capacity
to market demand, focusing on service, efficiency
and flexibility.
The markets that we serve today provide long-term
growth opportunities for our company and we are
investing to realise that potential. These include
investments to realise profitable growth and
operational improvement initiatives in Australia and
in management, selling and marketing capability
and capacity in the United States.
GROUP RE SULTS
Global revenue was $205.2 million for the year
ended 30 June 2021, an increase of 31.3% and a
record for the company. Three of our four selling
regions in which we operate increased sales,
with revenue growth across our core markets
of Australia and the Americas totalling over
$50 million.
G LOB AL R EVEN UE WAS $205 .2 M ILL ION F O R T HE
YEAR EN DED 3 0 JUNE 202 1, A N INC R E AS E OF
3 1.3 % AND A R EC ORD F OR TH E C OMPAN Y.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 5
NET CASH FRO M
OPERAT ING ACT IV IT IE S
$34.6m
Up from
$7.2m
380%
INC RE ASE
Incremental new and promotional product
placements, the addition of new customers and
increased sell-through of our core consumer
categories due to increased consumer demand
were key drivers across the retail sector. While we
are proud of the efforts and accomplishments of
our team and the growth achieved, a portion of the
revenue uplift can be attributed to a positive shift in
consumer spending on home improvement during
periods of lockdown and government stimulus,
particularly in Australia and the United States.
Our brands and products resonated well with
our target consumers and commercial end-users
throughout the year. Over this and previous years,
investments in and improvement initiatives across
our manufacturing facilities and global supply chain
positioned us well to capitalise on these robust
market conditions.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 6
CHIEF EX ECUT IVE OF FICER &
MANAGI NG DIR E CTOR’ S RE V I E W (CON TINUED)
This strong revenue growth and increased scale
resulted in earnings before interest, tax, depreciation
and amortisation of $28.2 million, an increase of 51% on
the previous year.
Profit before tax was $17.2 million, up 258% on prior
year, and includes a provision of $6.6 million for the full
impairment of personal protective equipment inventory.
and broad market supply chain complexity, particularly
in international shipping.
In Australia, our Braeside coating production team
delivered record levels of manufactured product while
developing productivity, capacity utilisation, quality
and operator development initiatives, with further
improvements planned for FY22 and the years to follow.
Net profit after tax was $12.3 million, up 232% on
prior year.
STRONG BALANCE SHEET A ND
CASH FLOW
There was material improvement in net cash from
operating activities to $34.6 million compared to
$7.2 million in the previous year.
This allowed our company to pay down a significant
portion of its debt and resulted in a net cash position of
$1.5 million at 30 June 2021, compared to net debt of
$15.3 million at 30 June 2020.
Our strong balance sheet provides a sound platform
and the financial flexibility to fund and accelerate our
global growth ambitions over the coming years.
IM PROVED MANUFACTURING,
OP E RAT IONS AND SUPP LY
C HAIN
Our global supply chain and manufacturing operations
are an important enabler of our growth strategy. Our
team did a great job of improving our operations while
servicing record demand increases in the face of
historically complex operating challenges this year.
At our China facility, our operations team expanded
production capacity, improved manufacturing lead
times, and maintained a high level of quality and
service in the face of significant demand increases
We continued to invest in equipment to improve
production capacity, efficiency, and quality despite the
challenges faced, building for the future.
Our strategy to prioritise customer service in the face
of these global supply chain challenges proved largely
effective despite significant input cost headwinds and
shipping capacity constraints.
REGIONAL RESULTS
AMERICAS
Revenue in the Americas was a record $96.2 million, up
31% (FY20: $73.3 million). First-half revenue increased
111% to $37.0 million (1H FY20: $17.5 million) while
second-half revenue increased 6% to $59.2 million
(2H FY20: $55.8 million), both new half-year records for
the company in the region.
Our core consumer ranges, new products and
incremental promotional lines resonated strongly
with consumers, as evidenced by in-store and online
sell-in and sell-through increases across the region.
Comparative growth rates for sell-through increased
significantly throughout the first three quarters and
then moderated in quarter four as the company cycled
the initial positive demand impacts of COVID-19
restrictions and government stimulus in the prior
corresponding period.
Our team also delivered strong growth for our
commercial architectural shade fabric ranges following
the launch of our new flame-retardant product range,
OUR TEAM D ID A G R EAT JOB OF I MPR OVI NG O UR OP E RAT ION S
WHILE SERV ICI NG R EC ORD DE MA ND I NC R EASE S I N TH E FAC E OF
HISTO RICALLY C OMPLE X OPER ATI NG C HA LL ENG ES TH IS YEA R .
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 7
the addition of new customers and increased
market demand for shade applications.
We expanded operational capacity in the
region across customer service, custom roller
shade manufacturing and distribution, including
direct-to-consumer shipments, to service the
increased demand. Supply chain complexity,
including international shipping capacity
constraints and overall input cost inflation,
increased while import tariffs for goods made in
China persisted throughout the year.
AUSTR ALIA AND NE W ZE ALAND
ANZ revenue grew 42% to $92.0 million in FY21
(FY20: $64.6 million) across end markets and
categories. First-half revenue of $62.4 million
was up 70% (1H FY20: $36.8 million), driven
by increased demand for our market-leading
commercial coated fabrics used in grain handling
applications and strong growth across consumer
categories in retail. Growth was more moderate in
the second half, with sales up 7% to $29.6 million
(2H FY20: $27.8 million).
Consumer spending on home improvement
projects and products on the back of COVID-19
restrictions and government stimulus drove
significant and sustained increases in sell-through
rates throughout the first three quarters,
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 8
CHIEF EX ECUT IVE OF FICER &
MANAGI NG DIR E CTOR’ S RE V I E W (CON TINUED)
with quarter four sell-through returning to more
moderate levels.
A significant number of new products, leading to
incremental ranging, and promotional items across
core consumer categories were launched in the year,
a key driver of the result. Our team partnered with
Cancer Council Australia for an exclusive endorsement
partnership for shade products across core retail and
commercial product ranges and brands, brought to life
both in-store and online.
Our teams implemented manufacturing, procurement
and retail store servicing efficiency initiatives while
developing further improvement projects in regional
distribution and transportation to optimise costs
and improve quality, service and delivery over the
coming years.
MIDD LE E AST AND NO RTH A FRI CA
Revenue in the Middle East and North Africa region
was $8.6 million, a decrease of 18% on the previous
year. Challenging economic and broad market trading
conditions persisted during the first three quarters
as pandemic-related restrictions continued to affect
demand region-wide.
We experienced some improvement in the fourth
quarter as the company returned to growth compared
to the previous corresponding quarter.
Though overall debtors decreased and efforts to reduce
long-dated debtors showed signs of improvement
exiting the year, challenges persisted, with the
company’s tightened policy continuing to impact
trading. We remain committed to supporting our trading
partners throughout the region.
EURASIA
Eurasia regional revenue grew 5% to $8.4 million.
Growth accelerated in the second half, driven by
increased demand for our differentiated commercial
fabrics ranges and select consumer product ranges, in
line with our strategy in the region.
Our team delivered growth across most trading
countries due to increased demand for commercial
shade structures and consumer demand increases on
the back of COVID-19 restrictions.
Capacity constraints and cost escalations in
international shipping created operational complexity
throughout the year for both the company and its
trading partners.
PRODUCT INNOVATION
New product innovation is an essential component
of our growth strategy. Our team has made steady
progress in developing and launching new products
in our core categories over the last three years across
consumer and commercial categories in Australia and
the United States.
An example of this innovation is our flame retardant
architectural shade fabrics ranges, developed and
tested to meet or exceed the most stringent fire safety
standards in the world.
Over 30 colours and three ranges provide the fabric
weights, performance requirements and colour
selection necessary for any shade project.
These FR fabrics are now available across our well-
known and trusted architectural shade fabric brands
including Commercial NinetyFive, Commercial
DualShade and Commercial Heavy.
WE PART N E RE D W ITH CAN CER COUNCIL AUSTRALIA FOR A N
EXC LUSI VE EN DORSE M E NT PARTNERSHIP FOR SHADE PRODUCTS
ACR OSS R E TAIL AN D CO M MERCIAL P RODUCT RANGES AN D
BR AN DS, B RO UGHT TO L IF E I N-STORE AND ONLINE.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 9
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We are working diligently to achieve our full potential
as a team and as a company. I am encouraged by all
we have accomplished in the face of our collective and
individual challenges this year.
Our team demonstrated resilience and adaptability
despite the complexity posed by the pandemic.
By developing and refining our work practices,
we continued to operate and evolve our business
though challenged by pandemic-related restrictions
across markets.
Continually finding ways to persevere, our team
developed new, more effective ways of working while
maintaining largely uninterrupted, safe and healthy
operations worldwide throughout the year.
Because of their collective efforts and contributions, our
company maintained a high level of customer service in
a historically challenging and dynamic environment.
I want to thank the entire GALE Pacific team for their
commitment, collaboration, hard work and care
throughout a complex and challenging year.
10
CHIEF EX ECUT IVE OF FICER &
MANAGI NG DIR E CTOR’ S RE V I E W (CON TINUED)
OU TLOOK
The acceleration in results delivery and progress
against our strategy in FY21 was encouraging and
placed the company in a solid position entering FY22,
a year in which we will see a much more challenging
trading environment.
We expect that the significant, positive demand forces
across both consumer and commercial end markets
will moderate and normalise to a meaningful degree in
FY22 compared to FY21.
We also expect the complex, unpredictable environment
for global supply chains and the inflationary
environment for international shipping, transportation,
materials, and labour to continue in FY22, with input
costs expected to increase materially as a result. We
will implement price increases to offset a portion of
the expected cost inflation progressively throughout
the year.
While it is still unclear to what degree demand levels will
normalise and input costs will inflate, we will continue
to invest in building the company for the future. Though
this increased expenditure will have a near-term impact
on earnings, it will better enable our company to realize
the full potential of our existing products and new
ranges over the coming years.
Our strategy to grow GALE Pacific through product
innovation, category growth, improved operations and
expanding into new markets will remain consistent.
Given the long-term potential for our business in the
Americas, we have taken the strategic decision to invest
in management, selling and marketing capability in the
United States in the coming year.
We are investing to accelerate profitable growth
initiatives and to improve our operations in Australia
across consumer and commercial categories and
customers. Further distribution expansion and market
development opportunities are ahead of us in the MENA
and Eurasia regions over the coming years.
I want to again thank our team for their hard work,
dedication, and commitment to building our company
through this challenging period and thank our
customers, suppliers, and all other external stakeholders
for their continued partnership. I also want to thank
our Board for their counsel, input, alignment, and
commitment to our operating plans and company
strategy over many years.
John Paul Marcantonio
Chief Executive Officer
& Managing Director
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 11
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B U S I N E S S
O V E R V I E W
GAL E PAC IFIC I S
A FAST-GROWING ,
WO RLD-CLASS G LOB AL
FA B RICS T E C HNO LOGY
B US INE SS .
12
THE AMERICAS
Revenue in the Americas was a record as GALE’s core
consumer ranges, new products, and incremental promotional
lines delivered significant in-store and online sell-in and
sell-through increases across the region. The Americas region
offers long-term growth potential for the company and we are
investing in management, selling, and marketing capability and
capacity to realize this opportunity over the coming years.
AUSTRALIA & NEW ZEALAND
First-half revenue of $62.4 million was up 70%, driven by
increased demand for GALE’s commercial coated fabrics
used in grain handling and strong growth across consumer
categories. Growth was more moderate in the second half
with sales up 6.5% to $29.6 million. Over the coming years,
we will continue to invest in profitable growth and operational
improvement initiatives across our consumer and commercial
businesses in our home market.
MIDDLE EAST & NORTH A FRICA
Challenging trading persisted throughout the first three quarters,
with improvement versus prior year in the fourth quarter. Though
overall debtors decreased and long-dated debtors showed
signs of improvement exiting the year, challenges persisted.
GALE remains committed to supporting its trading partners in
the region.
EURASIA
Growth accelerated in the second half due to increased
demand for commercial shade structures and consumer
demand increases on the back of COVID-19 restrictions. Further
distribution expansion and market development opportunities
are ahead of us in the Eurasia region over the coming years.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | We are a market leading manufacturer and innovator of technical fabrics
used for consumer and commercial applications around the world.
Our products are used in various industries, such as architectural,
agricultural, mining, construction and home improvement.
13
REVENUE
by region
EBI TDA
by region
ANZ $92.0m
Americas $96.2m
MENA $8.6m
Eurasia $8.0m
ANZ $14.4m
Americas $13.5m
MENA $2.2m
Eurasia $2.7m
$205.2m
RE V EN UE
Up from $156.3m
Orlando, USA
Dubai, UAE
Ningbo, China
Auckland, New Zealand
Los Angeles, USA
Perth, Australia
Melbourne, Australia
Brisbane, Australia
M A P L E G E N D :
Head office
Sales office
Warehouse
Manufacturing
2021 ANNUAL REPORT | GALE PACIFIC LIMITED |
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BOARD OF DIRECTORS
DAVID ALLMAN , B.SC.
CHA IRMAN AND NON EX ECUTI VE D IR ECTO R S INCE
NOVEMBER 2009
David was Managing Director of McPherson’s Limited from 1995 to 2009 and prior
to that was Managing Director of Cascade Group Limited for 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.
During the last three years David has been Chairman of Catalyst Education Pty Ltd and
Chairman of Direct Couriers Group Pty Ltd.
David is the Chairman of the Company’s Nomination Committee and is a member of
the Remuneration and Audit and Risk Committees.
PETER LANDOS , B.ECON., CA
NON EXEC UTIVE DIRECTOR SI NCE M AY 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 various
entities within the Australian Community Media Group including Rural Press Pty Ltd.
Peter is the Chairman of the Audit and Risk Committee and is a member of the
Company’s Nomination Committee.
DONNA MCMASTER , GAICD
NON-EXE CUTIVE DIRE CTOR S IN CE MARCH 2018
Donna has extensive experience in senior executive and strategic roles within public
and private retail companies, with a proven track record in retail, brand and product
development, marketing and communications.
Donna serves on multiple Boards and is currently Board Chair & Non-Executive
Director of Dandenong Market Pty Ltd, Deputy Chair & Non-Executive Director of
YMCA Service Pty Ltd where she is also Chair of the HR & Governance Committee & is
a Board Advisor with Leading Edge Retail.
Donna is a member of the Company’s Nomination and Remuneration Committees.
TOM STIANOS , B.APP.SC., FAICD
NON-EX ECUTIVE D IRECTOR S IN CE OCTOBER 2 017
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.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | E X E CUTIVE LEADERSHIP
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JOHN PAUL MA RCA NTONIO
CE O AND MA NAGIN G DIRE CTO R
John Paul joined GALE Pacific in October 2017 as the General Manager of the
Americas business. He was appointed Chief Executive Officer in November 2019 and
was appointed as Managing Director in August 2020. John Paul has broad experience
working across both consumer and commercial product sectors globally. Prior to
joining GALE Pacific, John Paul built his career at Newell Brands in roles of increasing
responsibility and scope in marketing, sales and management over fifteen years.
John Paul lived and worked in Melbourne, Australia as the Regional Marketing Director
of Newell Brands’ APAC hardware business and has held multiple global product and
brand marketing leadership positions over his tenure.
DOMENIC ROMANELLI
CH IE F FINANCIAL OFF ICE R
Domenic joined GALE Pacific in September 2019. Domenic is an experienced finance
professional, having previously held key senior finance roles with Orica Limited (VP
Finance – Australia, Pacific & Indonesia, and General Manager– Finance), Minova
International (Global CFO), Smorgon Steel Group (Group Financial Controller), BHP
and Deloitte. In addition, Domenic has held the position of Director and Treasurer at
the Melbourne Racing Club. Domenic holds a Bachelor of Science degree (Applied
Mathematics and Accounting). Domenic is also a registered member of the Institute of
Chartered Accountants, Financial Services Institute of Australia, and a graduate and
member of the Australian Institute of Company Directors.
CLIFF XINHUA ZHANG
GE NERAL MANAG ER | M AN UFACTUR ING
Cliff joined GALE Pacific in May 2016. He is an experienced manufacturing leader
having held senior manufacturing and product quality roles at Bosch Power
Tools over 13 years, and operations, logistics and production roles at Andrews
Telecommunications, Honeywell CATIC Engine Co. and Solectron Technology Co.,
Ltd., a U.S.-based manufacturer of electronics products. Cliff has a Bachelor of Science
(Mechanical Engineering), from Nanjing University of Science & Technology, China.
ANDREW NASARC ZYK
SENI OR MA NAGER | RES EARC H & D EVELO PM E NT
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 he’s time at GALE, Andrew has been commended
by industry peers for his technical and market knowledge. Andrew was recently a
Standards Committee member for the update to Australia’s Synthetic Shade Standard.
Andrew has a Bachelor of Engineering (Polymers).
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 16
E X E C U T I V E L E A D E R S H I P ( C O N T I N U E D )
TROY MORTLEMAN
GE NERAL MANAGER | AUSTRALIA & N EW Z EALAND
Troy joined GALE Pacific in January 2020. Over the last 14 years he has built an
impressive career at previously NZX listed Methven Ltd (MVN) as the Chief Operating
Officer of Methven Australia. Troy held many senior roles of increasing responsibility
in sales and general management and has experience across both retail & commercial
channels of distribution for both consumer & commercial durables categories. Troy has
a proven track record of concurrently building growing businesses while developing
and leading highly functioning teams. Troy holds a Master of Business Administration
from Deakin University and is a Graduate Member of the Australian Institute of
Company Directors.
ALI HAIDAR
GE NERAL MANAGER | M IDDLE E AST NO RTH AFRI CA
Ali joined GALE Pacific in August 2004 and has 16 years experience in sales and
marketing with a strong record of business development in the region. He has
led GALE Pacific’s profitable growth in the Middle East and was recently given
responsibility to lead the company’s focused expansion in the Middle East/North
Africa region.
MARK NICHOLLS
GE NERAL MANAGER | EURASI A
Mark joined GALE Pacific in June 2016. He has tremendous experience in the UK,
Europe, Asia, South Africa and Israel, with knowledge of both retail and commercial
sectors and experience of appointing new distributors, managing large, multi-country
retailers, etc. Mark’s most recent role was Business Development Manager (UK/Ireland)
for FISKARS and prior to that held Business Development Manager and International
Sales Manager roles for Trisport (a division of Pride Sports), Newell Rubbermaid
and SANDVIK.
MATT RUSSELL
CHI EF HUMA N RE SOURCES O FFI CER
Matt joined GALE Pacific in January 2021 as the Chief Human Resources Officer and
leader of the Global Health & Safety Environmental function for GALE Pacific. Matt
has extensive experience leading the Human Resources function for both public and
private-equity global businesses in the consumer and commercial durable goods
space. Prior to joining GALE Pacific, Matt was the global Human Resources leader for
several business units of Newell Brands, most recently the Rubbermaid/Rubbermaid
Commercial Business Unit. During his tenure with Newell Brands, Matt lived in Hong
Kong where he served as the Vice President, Human Resources for Asia Pacific. In
all, Matt spent 15 years with Newell Brands in Human Resources roles of increasing
responsibility and scope.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 17
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 complies with the ASX Corporate
Governance Principles and Recommendations (Fourth
Edition) (Recommendations).
The Company has prepared a statement which sets
out the corporate governance practices that were in
operation throughout the financial year for the Company
(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).
CORPORATE GOVERNANCE2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 18
D IRECTORS’ REPORT
The directors present their report, together with the
consolidated financial statements, of Gale Pacific
Limited (referred to hereafter as the ‘Company’ or
‘Parent entity’) and its controlled entities (together
the ‘Group’) for the year ended 30 June 2021 and the
independent Auditor’s report thereon.
C HANGES IN STATE O F A FFA IRS
Throughout the COVID-19 pandemic GALE Pacific’s
primary concern has been ensuring the health and
safety of its employees around the world. The Company
continued to enact flexible, ‘work from home where
able’ policies ahead of government requirements in
all regions and maintained strict facility specific safety
and hygiene protocols across all global locations. All
distribution and manufacturing facilities continue to
operate according to best available practice to maintain
healthy and safe workplaces for all stakeholders
including team members, suppliers, contractors,
customers, and consumers while the Company
continues its essential business operations. We also
successfully adapted our global supply chain to meet
the opportunity presented by sharp increases in
demand and managed well the challenges posed by
worldwide shipping and transportation constraints,
material and labor inflation, and the continued
complexity posed by the COVID-19 pandemic.
P RINC IPAL ACTIVITIES
During the financial year, the principal continuing
activities of the Group consisted of marketing, sales,
manufacture and distribution of branded screening,
architectural shading, commercial agricultural
/ horticultural fabric products to domestic and
global markets.
RE VIEW OF OPERATIONS
The profit for the Group after providing for income
tax amounted to $12,327,000 (30 June 2020: profit
of $3,719,000).
EVENTS SUBSEQUENT TO
BALANCE DATE
Apart from the dividend declared, no other matter or
circumstance has arisen since 30 June 2021 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.
ENVIRONMENTAL REGULATIO N
AND PERF ORMANC E
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.
DIV IDENDS
Dividends paid to members during the financial year
were as follows:
2020/2021
Final Dividend for the year ending
30 June 2020 (paid 16 October 2020)
1.00 cent
Interim Dividend for the 6 months ended
31 Dec 2020 (paid 9 April 2021)
2.00 cents
In addition to the above dividends, on the
24 August 2021 the Directors declared a dividend of
2.00 cents per share to the holders of fully paid ordinary
shares in respect of the year ended 30 June 2021,
payable on 15 October 2021 to shareholders on the
register at 3 September 2021. 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 $5,500,000.
For the full year, dividends of 4.00 cents per share have
been declared on earnings of 4.48 cents per share.
DIRECTORS’ REPORT (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 19
SH A RE BASED PAYMENTS
PER FORMANCE RIG HTS
The number of performance rights on issue at the date of this report is 17,907,971 (2020: 2,876,971). 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.
14,000,000 performance rights were granted to the CEO and Managing Director on 23 December 2020. The
performance rights will vest subject to employment conditions and achieving a TSR growth of at least 25%
(vesting of 25%) and TSR growth of 260% (vesting of 100%) over the performance period between 1 July 2020 to
30 June 2023.
1,987,000 performance rights were granted to executives on 30 October 2020. The performance rights will vest
subject to a continuation of employment to 30 June 2023 and the satisfying of relevant performance hurdles based
on the Group’s diluted earnings per share over the three-year period from 1 July 2020 to 30 June 2023. None of
these performance rights can vest until 30 June 2023 and expire on 1 December 2023.
On the 30 June 2020, 956,000 performance rights lapsed due to not meeting the performance conditions. The
vesting of those performance rights was 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 1 July 2017 and 30 June 2020.
Further details of the options and performance rights movements during the reporting period are disclosed in the
Remuneration Report.
DI R ECTORS’ SHAREHOLDINGS
The following table sets out each Director’s relevant interest in shares, options and performance rights in shares of
the Company as at the date of this report.
Directors
D Allman
P Landos
D McMaster
T Stianos
J P Marcantonio
Fully Paid
Ordinary Shares
Options
Performance
Rights
4,500,000
–
50,000
600,000
–
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
14,318,0001
1 In accordance with the early achievement criteria of the three-year incentive scheme in place for the CEO & Managing Director,
TSR hurdles for the period 1 January 2021 to 30 June 2021 have been satisfied and accordingly 6,770,400 performance rights
will convert to ordinary fully paid shares subject to all of the other requirements under the incentive scheme being met.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 20
DIRE C TORS’ MEETINGS
The table below sets out the attendance by Directors.
Board of Directors’
Meetings
Audit and Risk
Committee Meetings
Remuneration
Committee Meetings
Nomination
Committee Meetings
No. of
Meetings
Eligible to
Attend
Attended
No. of
Meetings
Eligible to
Attend
Attended
No. of
Meetings
Eligible to
Attend
Attended
No. of
Meetings
Eligible to
Attend
Attended
11
11
11
11
10
11
11
11
11
10
4
4
–
4
4
4
4
–
4
4
1
–
1
1
1
1
–
1
1
1
1
1
1
1
–
1
1
1
1
–
Directors
D Allman
P Landos
D McMaster
T Stianos
JP Marcantonio
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.
RE MUNERATION REPORT
This report contains the remuneration arrangements in
place for Directors and Executives of the Group.
The Remuneration Committee reviews the
remuneration packages of all Directors and
Executive Officers on an annual basis and makes
recommendations to the Board. Remuneration
packages are reviewed with due regard to performance
and other relevant factors, and advice is sought from
external advisors in relation to their structure.
The Group’s remuneration policy is based on the
following principles:
■ Provide competitive rewards to attract high quality
executives;
■ Provide an equity incentive for senior executives
that will provide an incentive to executives to align
their interests with those of the Group and its
shareholders; and
■ Ensure that rewards are referenced to relevant
employment market conditions.
Remuneration packages contain the following
key elements:
■ Primary benefits – salary/fees;
■ Benefits, including the provision of motor vehicles
and incentive schemes, including performance
rights; and
■ Performance rights, if the performance criteria
and any Board discretion are satisfied, entitle an
executive to be issued shares in the Company
at no cost to the executive. Shares are issued
subsequently after the time all performance rights
vesting conditions are met
DIRECTORS’ REPORT (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 21
Relationship between the remuneration policy and Company performance
The table below set out summary information about the consolidated entity’s earnings and movements in
shareholder wealth for the five years to 30 June 2021:
30 June 2021 30 June 2020 30 June 2019 30 June 2018 30 June 2017
Sales (‘000s)
205,223
156,338
149,217
148,811
175,265*
Net profit before tax (‘000s)
Net profit after tax (‘000s)
17,220
12,327
4,757
3,719
11,208
9,198
12,484
9,807
(4,861)
(8,044)
Share price at start of year
16.0 cents
32.0 cents
35.5 cents
40.0 cents
36.0 cents
Share price at end of year
41.0 cents
16.0 cents
32.0 cents
35.5 cents
40.0 cents
Interim dividend
Final dividend
2.00 cents
0.0 cent
2.00 cents
1.00 cent
1.00 cent
1.00 cent
1.00 cent
1.00 cent
1.00 cent
1.00 cent
Basic earnings per share
4.48 cents
1.34 cents
3.21 cents
3.35 cents
(2.71) cents
Diluted earnings per share
4.21 cents
1.32 cents
3.16 cents
3.29 cents
(2.71) cents
* Sales in 2017 does not reflect the adoption of the accounting standard AASB 15 Revenue from Contracts with Customers.
Remuneration Practices
Non-executive directors 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 Practices
In accordance with best practice corporate governance,
the structure of Non Executive Directors and Senior
Managers remuneration is separate and distinct.
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.
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 25 October 2019 when
shareholders approved the Company’s constitution
which provides for an aggregate remuneration of
$600,000 per annum. The amount of the aggregate
remuneration and the manner in which it is apportioned
is reviewed periodically. The Board considers fees paid
to Non Executive Directors of comparable companies
when undertaking this review process.
Each non executive director receives a fee for being
a director of the Company and does not participate in
performance based remuneration.
Senior manager and executive director
remuneration
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:
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 22
■ Reward executives for Group and individual
performance;
■ Align the interests of the executives with those of
the shareholders; and
■ Ensure that total remuneration is competitive by
market standards.
In determining the level and make up of executive
remuneration, the Remuneration Committee reviews
reports detailing market levels of remuneration for
comparable roles. Remuneration consists of fixed and
variable elements.
The executive remuneration packages contain the
following key elements:
■ Primary benefits – salary/fees;
■ 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.
■ Share based payments, if the performance criteria
and any Board discretion are satisfied, entitle an
executive or senior manager to be issued shares in
the Company at no cost to them. Shares are issued
subsequently after the time all performance rights
vesting conditions are met.
The combination of these comprises the senior
manager and executive ‘s total remuneration.
Share-based payments
The Group maintains a performance rights scheme
for certain staff and executives, including the Group
Managing Director and Chief Executive Officer, 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 performance rights on issue at
30 June 2021 was 17,907,971. 886,000 of these
performance rights 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). 1,034,971 of these performance rights
were granted on 16 January 2020 and will not vest
until the time of the Company’s 2022 annual report is
released on the ASX (on or around 1 October 2022).
1,987,000 of these performance rights were granted on
30 October 2020 and 14,000,000 of these performance
rights were granted on 23 December 2020 and
both will not vest until the time of the Company’s
2023 annual report is released on the ASX (on or
around 1 October 2023). Each performance right has
$nil exercise price and 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.
KEY MAN AGEME NT PERSONNEL OF THE
GROUP WHO HELD OF FICE DURI NG
THE YEAR
Directors
D Allman (Chairman Non Executive)
P Landos (Non Executive)
D McMaster (Non Executive)
T Stianos (Non Executive)
J P Marcantonio (CEO and Managing Director) –
Effective 14 August 2020
Executives
A Haidar (General Manager – Middle East &
North Africa)
T Mortleman (General Manager – Australia &
New Zealand)
M Nicholls (General Manager – EurAsia)
D Romanelli (Chief Financial Officer)
C Zhang (General Manager – China Manufacturing)
DIRECTORS’ REPORT (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 23
The following table discloses the remuneration of the Directors of the Company:
Short-Term Benefits
Salary &
Fees
$
Non-
Monetary
$
Bonus
$
Post
Employ-
ment
Share
Based
Payments
Super
$
Rights
$
Term-
ination
Benefits
$
Performance
Related
Total
$
Total
%
Rights
%
Directors
2020 / 2021
Executive Directors
J P Marcantonio
599,910
Non-Executive Directors
D Allman
P Landos
T Stianos
D McMaster
Total
2019/2020
117,756
95,388
87,123
77,169
977,346
Executive Directors
N Pritchard
221,755
Non-Executive Directors
D Allman
P Landos
T Stianos
D McMaster
Total
117,756
95,388
87,123
77,169
599,191
–
–
–
–
–
–
–
–
–
–
–
–
17,566
20,137 991,830
– 1,629,444
61%
61%
–
–
–
19,752
7,375
8,277
–
–
–
–
17,566
7,331
–
62,872 991,830
– 137,508
– 102,763
–
95,400
–
84,500
– 2,049,615
–
–
–
–
–
–
–
48%
–
48%
–
–
–
–
–
–
10,417
(4,101)
90,643 318,713
(1)%
(1)%
19,752
7,375
8,277
7,331
53,151
–
–
–
– 137,508
– 102,763
–
95,400
–
84,500
(4,101) 90,643 738,883
–
–
–
–
–
–
–
–
–
–
–
The following table discloses the remuneration of the Group’s key management personnel:
Short-Term Benefits
Salary &
Fees
$
Non-
Monetary
$
Bonus
$
Post
Employ-
ment
Share
Based
Payments
Super
$
Rights
$
Term-
ination
Benefits
$
Performance
Related
Total
$
Total
%
Rights
%
Key
Management
Personnel
2020 / 2021
M Nicholls
C Zhang
A Haidar
D Romanelli
T Mortleman
Total
2019/2020
206,922
73,124
–
16,934
75,429
209,173
42,851
9,457
255,025
33,624
319,725 186,730
–
–
–
77,301
– 107,016
30,374
66,525
279,125 121,857
1,269,970 458,186
–
9,457
14,489
26,517
73,825 340,760
J P Marcantonio
548,431
27,482
23,643
25,952
(1,887)
M Nicholls
C Zhang
A Haidar
D Romanelli
T Mortleman
M Parker
Total
232,264
47,710
–
17,228
212,350
59,014
14,628
279,339
242,308
130,448
–
7,415
5,093
–
–
–
24,209
–
1,669,349 146,714
–
38,271
–
–
23,019
12,393
2,083
80,676
3,285
3,347
4,434
7,975
–
(1,448)
15,705
13,074
37,918
13,074 1,963,788
– 372,409
– 338,781
– 395,665
– 603,353
– 441,988
– 2,152,197
– 623,621
– 300,487
– 289,338
– 283,773
– 280,717
– 147,934
40%
35%
36%
42%
31%
37%
4%
17%
22%
2%
5%
3%
(4)%
8%
20%
23%
27%
11%
3%
16%
0%
1%
1%
2%
3%
–
(4)%
1%
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 24
DIRECTORS’ AND EX E CUT IV ES ’ E QUIT Y HOLD IN GS :
Fully Paid Ordinary Shares
Balance at the
start of the year
No.
Granted as
Compensation
No,
Received on
Exercise of
Options
No.
Other1
Movements
No.
Balance at the
end of the year
No.
2020/2021
Executive Directors
J P Marcantonio
Non Executive Directors
D Allman
T Stianos
D McMaster
Executives
A Haidar
D Romanelli
Total
2019/2020
Executive Directors
N Pritchard
Non Executive Directors
D Allman
T Stianos
D McMaster
Executives
M Parker
A Haidar
D Romanelli
Total
–
4,500,000
600,000
50,000
516,364
263,000
5,929,364
1,434,593
3,000,000
200,000
–
227,257
516,364
–
5,378,214
1 Includes shares traded on the stock market
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,500,000
600,000
50,000
10,000
192,190
202,190
526,364
455,190
6,131,554
(1,434,593)
–
1,500,000
4,500,000
400,000
50,000
600,000
50,000
(227,257)
–
263,000
551,150
–
516,364
263,000
5,929,364
DIRECTORS’ REPORT (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 25
SH A RE BASED COMPENSATION
Each performance right entitles the holder to one
ordinary share in the Company 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 13 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
Group’s diluted earnings per share over the three year
period from 1 July 2018 to 30 June 2021. None of these
rights can vest until the Company releases its FY21
annual report to the ASX (on or around 1st October
2021) and expire on 1 December 2021.
The performance rights granted on 16 January 2020
are subject to the continuation of employment to
30 June 2022 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 2020 to 30 June 2022. None
of these rights can vest until the Company releases
its FY22 annual report to the ASX (on or around
1st October 2022) and expire on 1 December 2022.
The performance rights granted on 30 October 2020 to
the senior executives are subject to the continuation of
employment to 30 June 2023 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 2021 to 30 June 2023.
In addition to the time requirement of continuous 3 year
employment, the diluted EPS needs to increase by greater
than 3.0% over the relevant 3-year performance period. The
number of Rights vesting will be determined proportionately,
on a straight-line basis, between 3.0% and 10.0%.
The performance rights granted on 23 December 2020
to the CEO and Managing Director are subject to
employment conditions and satisfying of relevant
performance hurdles based on TSR over the three year
period from 1 July 2021 to 30 June 2023. Further details
can be found in note 31.
None of these rights can vest until the Company
releases its FY23 annual report to the ASX (on
or around 1st October 2023) and expire on
1 December 2023.
DIRECTORS’ AND E X ECUT IVE S ’ E Q UI T Y HOL DIN GS , COM PEN SATION OP TION S AN D
PER FORMANCE RIG HTS:
Vested
Number
Granted
Number
Grant
Date
Value Per
Option/
Right at
Grant Date
Terms and Conditions for Each Grant
Exercise
Price
Expiry
Date
First
Exercise
Date
Last
Exercise
Date
2020/2021
– 14,000,000 23/12/20
Executive Directors (Performance Rights)
J P Marcantonio
Non Executive Directors
None
Management Personnel (Performance Rights)
Key Management
Other Management
Total
2019/2020
– 1,504,000
483,000
–
– 15,987,000
–
–
30/10/20
30/10/20
–
–
Executive Directors (Performance Rights)
None
Non-Executive Directors
None
Management Personnel (Performance Rights)
Key Management
Other Management
Total
849,306
–
–
185,665
– 1,034,971
–
–
16/01/20
16/01/20
0.1800
Nil
1/12/23 01/10/23 01/10/23
0.1600
0.1600
Nil
Nil
1/12/23 01/10/23 01/10/23
1/12/23 01/10/23 01/10/23
0.2642
0.2642
Nil
Nil
1/12/22 01/10/22 01/10/22
1/12/22 01/10/22 01/10/22
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 26
DIRECTORS’ AND EX E CUT IV ES ’ E QUIT Y HOLD IN GS COM PEN SAT ION OPT ION S AN D
PE RF O RMANC E RIG HTS:
Movements During the Year
Balance at
the start of
the year
No.
Granted
as Comp-
ensation
No,
Exercised
No.
Lapsed
No.
Net Other
Change
No.
Balance at
the end of
the year
No.
Balance
Held
Nominally
No.
Value of
Lapsed
Options/
Rights
$
2020/2021
Executive Directors (Performance Rights)
J P Marcantonio
588,000 14,000,000
–
(270,000)
– 14,318,000
Non Executive Directors
None
–
–
Executives (Performance Rights)
T Mortleman
A Haidar
Cliff Zhang
M Nicholls
–
361,000
535,088
285,000
386,737
226,000
389,585
218,000
D Romanelli
314,896
414,000
–
–
–
–
–
–
–
–
(144,000)
(104,000)
(113,000)
–
–
–
–
–
–
–
–
361,000
676,088
508,737
494,585
728,896
Other Management Personnel (Performance Rights)
Other
Management
662,665
483,000
Total
2,876,971 15,987,000
2019/2020
Executive Directors (Performance Rights)
–
–
(325,000)
(956,000)
–
820,665
– 17,907,971
–
–
–
N Pritchard
1,875,000
Non Executive Directors
None
–
Executives (Performance Rights)
M Parker
A Haidar
659,000
465,000
216,088
Cliff Zhang
331,000
160,737
J P Marcantonio
588,000
–
M Nicholls
D Romanelli
232,000
157,585
–
314,896
–
–
–
–
(578,000) (1,297,000)
–
–
–
–
–
–
–
–
–
(203,000)
(456,000)
(146,000)
(105,000)
–
–
–
–
–
–
–
–
535,088
386,737
588,000
389,585
314,896
Other Management Personnel (Performance Rights)
Other
Management
744,000
185,665
–
(267,000)
–
662,665
Total
4,894,000 1,034,971
– (1,299,000) (1,753,000) 2,876,971
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
DIRECTORS’ REPORT (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 27
EMPLOYM ENT AND SE RVICE
AG REE MENTS
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 O F
OF FICERS
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 O F
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 BE HALF O F T HE
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.
behalf), is compatible with the general standard of
independence for auditors imposed by the Corporations
Act 2001.
The directors are of the opinion that the services as
disclosed in note 32 to the consolidated 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 COM PANY WHO
ARE F ORMER PARTN ERS OF DELOITT E
TOUCHE TOHMATSU
There are no officers of the Company who are former
partners of Deloitte Touche Tohmatsu.
ROUN DING OF AMOUNTS
The Company is of a kind referred to in Class Order
106/191, issued by the Australian Securities and
Investments Commission, relating to ‘rounding off’.
Amounts in this report have been rounded off in
accordance with that Class Order to the nearest
thousand dollars, or in certain cases, the nearest dollar.
AUDITOR’S INDEP ENDEN CE
DE CLARATION
A copy of the auditor’s independence declaration as
required under section 307C of the Corporations Act
2001 is set out immediately after this directors’ report.
NON-AUDIT SERVI CE S
AUDITOR
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 32 to the consolidated
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
Deloitte Touche Tohmatsu 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.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 28
Deloitte Touche Tohmatsu
ABN 74 490 121 060
477 Collins Street
Melbourne, VIC, 3000
Australia
Phone: +61 3 9671 7000
www.deloitte.com.au
24 August 2021
The Board of Directors
Gale Pacific Limited
145 Woodlands Drive
Braeside VIC 3195
Dear Board Members
GGaallee PPaacciiffiicc LLiimmiitteedd
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 2021, 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
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
15
AUDITOR’S INDEPENDENCE DECLARATION2021 ANNUAL REPORT | GALE PACIFIC LIMITED |
I N D E P E N D E N T A U D I T O R ’ S R E P O R T T O T H E
M E M B E R S O F G A L E PA C I F I C L I M I T E D
29
Deloitte Touche Tohmatsu
ABN 74 490 121 060
477 Collins Street
Melbourne, VIC, 3000
Australia
Phone: +61 3 9671 7000
www.deloitte.com.au
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt ttoo tthhee mmeemmbbeerrss ooff GGaallee PPaacciiffiicc LLiimmiitteedd
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
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 2021, the consolidated statement
of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
• Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance
for the year then ended; and
• 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 & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (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.
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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
16
2021 ANNUAL REPORT | GALE PACIFIC LIMITED |
30
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2
I N D E P E N D E N T A U D I T O R ’ S R E P O R T T O T H E
M E M B E R S O F G A L E PA C I F I C L I M I T E D
KKeeyy AAuuddiitt MMaatttteerr
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt MMaatttteerr
RReeccoovveerraabbiilliittyy ooff ttrraaddee rreecceeiivvaabblleess
MMiiddddllee EEaasstt aanndd NNoorrtthh AAffrriiccaa
iinn
Our procedures included, but were not limited to:
Refer to Note 10 Current assets – trade and
other receivables.
As at 30 June 2021, the carrying amounts of
Middle East and North Africa (“MENA”)
trade receivables totalled AU$7.7 million
with AU$2.1 million of the outstanding
balance aged over 365 days as disclosed in
Note 10. The balance of the expected
credit loss allowance over impairment of
receivables in MENA accounts for 73% of
trade receivables greater than 365 days.
The allowance determination as to whether
the receivables are collectable requires a
high level of management judgment and
estimates, whereby
management
considers specific factors including the age
the balances, historical payment
of
relevant
patterns
information
the
creditworthiness of the counterparties.
other
concerning
and
any
• Obtaining an understanding of how the allowance for
impairment of MENA receivables
is estimated by
management and assessing management’s process in
determining the estimated future cash flows of MENA
receivables;
•
•
•
Evaluating on a sample basis, the aging analysis and
subsequent settlement of the MENA receivables to the
invoices and bank
including
source documents
statements;
the
reasonableness of allowance
Assessing
for
impairment of MENA receivables with reference to the
credit history including default or delay in payments,
settlement records, subsequent settlements and aging
analysis of the MENA receivables; and
Evaluating the historical accuracy of management’s
assessment of allowance for MENA receivables by
assessing the actual write-offs, the reversal of previous
recorded allowances and new allowances recorded in
the current year in respect of MENA receivables.
We also assessed the appropriateness of disclosures included in
Note 10 of the Financial Report relating to receivables.
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 2021 but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If, 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.
17
31
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2
0
2
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 skepticism 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 fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• 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’s to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion.
18
32
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, actions taken to eliminate threats or safeguards
applied.
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.
RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 20 to 26 of the Directors’ Report for the year
ended 30 June 2021.
In our opinion, the Remuneration Report of Gale Pacific Limited, for the year ended 30 June 2021, 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, 24 August 2021
19
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GALE PACIFIC LIMITED (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED |
D I R E C T O R S ’ D E C L A R AT I O N
33
In the opinion of the Directors of Gale Pacific Limited (the Company):
■ the attached consolidated financial statements and notes comply with the Corporations Act 2001, the
Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements;
■ the attached consolidated financial statements and notes (page 34 to page 72) comply with International
Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 2
to the financial statements;
■ the attached consolidated financial statements and notes give a true and fair view of the Group’s financial
position as at 30 June 2021 and of its performance for the financial year ended on that date; and
■ there are reasonable grounds to believe that the Group 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.
On behalf of the directors
David Allman
Chairman
24 August 2021
Melbourne
John Paul Marcantonio
Chief Executive Officer and Managing Director
2021 ANNUAL REPORT | GALE PACIFIC LIMITED |
34
Revenue
Sale of goods
Other income
Expenses
Raw materials and consumables used
Employee benefits expense
Depreciation and amortisation expense
Marketing and advertising
Occupancy costs
Warehouse and related costs
Other expenses
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year attributable to the owners
of Gale Pacific Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Net change in the fair value of cash flow hedges taken to equity,
net of tax
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners of
Gale Pacific Limited
Basic earnings per share
Diluted earnings per share
Consolidated
Note
2021
$’000
2020
$’000
5
6
6
6
6
7
205,223
156,338
1,935
1,255
(107,520)
(77,121)
(40,254)
(34,951)
(9,198)
(11,780)
(1,949)
(2,679)
(2,283)
(2,949)
(13,326)
(10,289)
(13,215)
(11,269)
(1,797)
17,220
(4,893)
(2,194)
4,757
(1,038)
12,327
3,719
22
22
263
(1,210)
(947)
(212)
(505)
(717)
11,380
3,002
Cents
Cents
8
8
4.48
4.21
1.34
1.32
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFor the year ended 30 June 2021 2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 35
Consolidated
Note
2021
$’000
2020
$’000
9
10
11
26
12
13
14
7
15
16
18
26
7
17
19
20
7
21
22
30,407
41,471
46,547
515
3,421
122,361
30,705
8,142
20,314
6,889
66,050
188,411
29,507
19,364
3,764
–
1,156
6,174
501
60,466
9,575
18,579
6,702
170
35,026
95,492
92,919
63,068
4,459
25,392
92,919
27,811
39,603
48,699
–
2,221
118,334
32,354
8,119
21,780
11,100
73,353
191,687
23,144
23,274
3,830
595
1,023
4,179
144
56,189
19,824
19,338
7,765
205
47,132
103,321
88,366
63,068
3,992
21,306
88,366
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instrument – cash flow hedges
Prepayments
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Right-of-use assets
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Derivative financial instrument – cash flow hedges
Current tax liabilities
Employee benefits
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Deferred tax
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAs at 30 June 2021 2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 36
Consolidated
Balance at 1 July 2019
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 31)
Transfer to Enterprise Reserve Fund
Share Buy Back (note 21)
Other
Dividends paid (note 23)
Balance at 30 June 2020
Consolidated
Balance at 1 July 2020
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 31)
Transfer to Enterprise Reserve Fund
Dividends paid (note 23)
Balance at 30 June 2021
Issued
Capital
$’000
Reserves
(Note 22)
$’000
Retained
Profits
$’000
Total
Equity
$’000
65,097
4,070
–
–
–
–
–
(2,029)
–
–
–
(717)
(717)
16
623
–
–
–
21,030
3,719
–
3,719
–
(623)
–
2
90,197
3,719
(717)
3,002
16
–
(2,029)
2
(2,822)
(2,822)
63,068
3,992
21,306
88,366
Issued
Capital
$’000
Reserves
(Note 22)
$’000
Retained
Profits
$’000
Total
Equity
$’000
63,068
3,992
–
–
–
–
–
–
–
(947)
(947)
1,435
(21)
–
21,306
12,327
88,366
12,327
–
(947)
12,327
11,380
–
21
1,435
–
(8,262)
(8,262)
63,068
4,459
25,392
92,919
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the year ended 30 June 2021 2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 37
Consolidated
Note
2021
$’000
2020
$’000
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:
Increase in trade and other receivables
Decrease/(increase) in inventories
Increase in derivative assets
Increase in prepayments
Increase 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
Proceeds/(repayment) of leases
Payments for share buy-backs
Dividends paid
Repayment of borrowings
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
12
13
19
18,20
21
23
19
17,220
4,757
9,198
1,435
1,461
1,797
11,780
16
(793)
2,194
31,111
17,954
(1,868)
(11,451)
2,152
(515)
(1,200)
6,363
(333)
1,960
357
(2,503)
–
(97)
7,470
256
684
(313)
38,027
12,000
(1,797)
(1,612)
34,618
(2,194)
(2,647)
7,159
(3,002)
(3,087)
(855)
96
(813)
240
(3,761)
(3,660)
–
(4,182)
–
(8,262)
(14,159)
(26,603)
4,254
27,811
(1,658)
9,144
(3,401)
(2,029)
(2,822)
(6,793)
(5,901)
(2,402)
29,846
367
Cash and cash equivalents at the end of the financial year
9
30,407
27,811
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
CONSOLIDATED STATEMENT OF CASH FLOWSFor the year ended 30 June 2021 2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 38
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N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L
S TAT E M E N T S
NOT E 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 consolidated 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:
BASIS OF PREPARAT ION
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.
145 Woodlands Drive
Braeside, VIC 3195
Australia
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 marketing, sales,
manufacture and distribution of branded screening,
architectural shading, commercial agricultural
/ horticultural fabric products to domestic and
global markets.
The financial statements were authorised for issue,
in accordance with a resolution of directors, on
24 August 2021. The directors have the power to amend
and reissue the financial statements.
STATE MENT O F C OMPLI ANC E
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’).
NOTE 2. SIGNIF ICANT
ACCOUNTING POLICIES
The principal accounting policies adopted in the
preparation of the consolidated 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.
NE W OR AMEN DE D ACCOUNT IN G
STANDARDS AND IN TE RPRETATIONS
ADOPT ED
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.
New and revised Standards and amendments thereof
and Interpretations effective for the current year that are
relevant to the Group include:
AASB 2018-6 AM ENDM EN TS TO
AUSTRALIAN ACCOUNTIN G STANDARDS –
DE FIN ITION OF A BUSINESS
This Standard makes amendments to AASB 3 Business
Combinations (August 2015). These amendments arise
from the issuance of International Financial Reporting
Standard Definition of a Business (Amendments to IFRS
3) by the International Accounting Standards Board
(IASB) in October 2018.
The Group has assessed the impact of AASB 2018-6
Amendments and determined there is no impact to the
financial statements.
39
AASB 2018-7 A MENDME NTS TO
AUSTR ALIAN ACC OUNTING STANDAR D S –
DEF INITION OF MATE RIAL
The Standard principally amends AASB 101 and AASB
108. The amendments refine the definition of material
in AASB 101. The amendments clarify the definition of
material and its application by improving the wording
and aligning the definition across AASB Standards and
other publications. The amendment also includes some
supporting requirements in AASB 101 in the definition to
give it more prominence and clarifies the explanation
accompanying the definition of material.
The Group has assessed the impact of AASB 2018-7
Amendments and determined there is no impact to the
financial statements.
AASB 2019-1 AME NDMENTS TO
AUSTR ALIAN ACC OUNTING STANDAR D S
– R E FERENCES TO T HE CONCE PT UAL
FRA MEWORK
This Standard makes amendments to the Australian
Accounting Standards, Interpretations and other
pronouncements listed on pages 6 to 7 of the Standard.
These amendments arise from the issuance of the
Conceptual Framework for Financial Reporting and the
International Financial Reporting Standard Amendments
to References to the Conceptual Framework in IFRS
Standards by the International Accounting Standards
Board (IASB) in March 2018.
The Group has assessed the impact of AASB 2019-1
Amendments and determined there is no impact to the
financial statements.
AASB 2019-3 AME NDMENTS TO
AUSTR ALIAN ACC OUNTING STANDAR D S –
INTER EST RATE BENC HMARK R EF ORM
This Standard makes amendments to AASB 7 Financial
Instruments: Disclosures (August 2015), AASB 9
Financial Instruments (August 2015) and AASB 139
Financial Instruments: Recognition and Measurement
(August 2015).
These amendments arise from the issuance of
International Financial Reporting Standard Interest Rate
Benchmark Reform (Amendments to IFRS 9, IAS 39 and
IFRS 7) by the International Accounting Standards Board
(IASB) in September 2019.
The Group has assessed the impact of AASB 2019-3
Amendments and determined there is no impact to the
financial statements.
AASB 2019-5 AME NDME NTS TO
AUSTRALIAN ACCOUNTIN G STANDARDS
– DISCLOSURE OF THE EF FE CT OF N EW
IFRS STANDARD S N OT YET ISSUE D IN
AUSTRALIA
This Standard makes amendments to AASB 1054
Australian Additional Disclosures (May 2011).
The AASB decided to add an additional disclosure
requirement to AASB 1054 on the potential effect on an
entity’s financial statements of issued IFRS Standards
that have not yet been issued by the AASB. This is
to ensure that IFRS compliance can be maintained
automatically when for-profit publicly accountable
entities comply with Australian Accounting Standards.
The Group has assessed the impact of AASB 2019-5
Amendments and determined there is no impact to the
financial statements.
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.
PRIN CIPLES OF CON SOLIDAT ION
The consolidated financial statements incorporate
the assets and liabilities of all subsidiaries of Gale
Pacific Limited as at 30 June 2021 and the results of all
subsidiaries for the year then ended.
Subsidiaries are all those entities over which the
Company has control. The Company 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
Company. They are de-consolidated from the date that
control ceases.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 40
NOT E 2. SIGNIFICANT ACCOUNTING P OLIC IE S (CON TINUED)
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.
FO REIG N C URRE NCIES A ND
TRANSLATIONS
Foreign currency transactions
Foreign currency transactions are translated into the
entity’s functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement
of such transactions and from the translation at
financial year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are
recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are
translated into Australian dollars using the exchange
rates at the reporting date. The revenues and expenses
of foreign operations are translated into Australian
dollars using the average exchange rates, which
approximate the rates at the dates of the transactions,
for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through
the foreign currency reserve in equity.
On the disposal of a foreign operation (i.e. a disposal of
the Group’s entire interest in a foreign operation, or a
disposal involving loss of control over a subsidiary that
includes a foreign operation, loss of joint control over a
jointly controlled entity that includes a foreign operation,
or loss of significant influence over an associate that
includes a foreign operation), the cumulative amount
in the foreign currency translation reserve in respect of
that operation is then recognised in profit or loss.
Monetary items forming net investment in
foreign operations
The Group classifies monetary items of a non-current
nature where settlement is not planned in the
foreseeable future as part of the net investment in
foreign operations. All foreign exchange differences
on these items are recognised in other comprehensive
income through the foreign currency reserve in equity.
As and when settlements occur, the cumulative amount
in the foreign currency translation reserve is then
recognised in profit or loss.
REVENUE RECOGNITION
The Group recognises revenue as follows:
Sale of goods
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’
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 41
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.
Revenue from the sale of goods is recognised at
the point in time when the performance obligation is
satisfied and customer obtains control of the goods,
which is generally at the time of delivery.
Other income
Other income is recognised when it is received or when
the right to receive payment is established.
CURRENT AND NO N-C URRE NT
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.
DER IVATIVE FINANC IAL I NST R UME NTS
Derivatives are initially recognised at fair value on
the date a derivative contract is entered into and are
subsequently remeasured to their fair value at each
reporting date. The accounting for subsequent changes
in fair value depends on whether the derivative is
designated as a hedging instrument, and if so, the
nature of the item being hedged.
Derivatives are classified as current or non-current
depending on the expected period of realisation.
Cash flow hedges
Cash flow hedges are used to cover the Group’s
exposure to variability in cash flows that is attributable
to particular risks associated with a recognised asset
or liability or a firm commitment which could affect
profit or loss. The effective portion of the gain or loss
on the hedging instrument is recognised in other
comprehensive income through the cash flow hedges
reserve in equity, whilst the ineffective portion is
recognised in profit or loss. Amounts taken to equity
are transferred out of equity and included in the
measurement of the hedged transaction when the
forecast transaction occurs.
Cash flow hedges are tested for effectiveness on a
regular basis both retrospectively and prospectively
to ensure that each hedge is highly effective and
continues to be designated as a cash flow hedge. If the
forecast transaction is no longer expected to occur, the
amounts recognised in equity are transferred to profit
or loss.
If the hedging instrument is sold, terminated,
expires, exercised without replacement or rollover,
or if the hedge becomes ineffective and is no
longer a designated hedge, the amounts previously
recognised in equity remain in equity until the forecast
transaction occurs.
IMPAIRM EN T 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.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 42
NOT E 2. SIGNIFICANT
ACC OU NTING POLICIES
(CONTINU ED)
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.
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 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. The Group primarily
uses the value-in-use methodology to estimate the
recoverable amount for impairment testing purposes.
EMP LOYEE BENE FITS
Short-term employee benefits
Liabilities for wages and salaries, including
non-monetary benefits, annual leave and long service
leave expected to be settled wholly within 12 months of
the reporting date is measured at the amounts expected
to be paid when the liabilities are settled.
Long-term employee benefits
The liability for annual leave and long service leave not
expected to be settled within 12 months of the reporting
date are measured as the present value of expected
future payments to be made in respect of services
provided by employees up to the reporting date using
the projected unit credit method. Consideration is given
to expected future wage and salary levels, experience
of employee departures and periods of service.
Expected future payments are discounted using market
yields at the reporting date on corporate bonds with
terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation
plans are expensed in the period in which they
are incurred.
ROUNDING O F AMOUN TS
The Company is of a kind referred to in ASIC
Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191, issued by the Australian Securities
NOTE 3. CRITICAL ACC OU NTIN G
JUDGEMENTS, ESTIMATES AN D
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. There are no critical accounting
judgements, estimates and assumptions that are likely
to affect the current or future financial years.
The preparation of the consolidated 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.
In addition, the known and potential impacts of the
COVID-19 pandemic in the near future have been
taken into consideration when determining significant
estimates and judgements. We are not aware, as at the
date of this report, of a material uncertainty arising from
COVID-19 that casts significant doubt on the ability of
Gale Pacific Limited to continue as a going concern.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 43
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 a combination of Monte Carlo simulation model
and Dividend Discount model taking into account the
terms and conditions upon which the instruments were
granted, expected volatility, expected dividend yield and
risk-free rate assumptions. 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.
Cash Flow Hedges
Forward foreign exchange contracts, designated as
cash flow hedges, are measured at fair value. Reliance
is placed on future cash flows and judgement is
made on a regular basis, through prospective and
retrospective testing, including at the reporting date,
that the hedges are still highly effective.
Fair Value Hedges
Forward foreign exchange contracts, designated as fair
value hedges, are measured as such. Changes in the
fair value of derivatives that are designated and qualify
as fair value hedges are recognised in profit or loss
immediately, together with any changes in the fair value
of the hedged asset or liability that are attributable to
the hedged risk.
Hedge accounting is discontinued when the Group
revokes the hedging relationship, when the hedging
instrument expires or is sold, terminated, or exercised,
or when it no longer qualifies for hedge accounting.
The fair value adjustment to the carrying amount of the
hedged item arising from the hedged risk is amortised
to profit or loss from that date.
NOTE 4. OPERATING SEGMENTS
Identification of reportable operating segments
The Group is organised into four operating segments
identified by geographic location, 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.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 44
NOT E 4. OPERATING SEGME NTS (CON TINUED)
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 the
Group’s management reporting GALE Pacific Limited
follows an activity-based allocation method of reporting.
Intersegment sales/margin and central costs are allocated
to external revenue generating segments where the final
economic benefit is derived. This enhanced method of
reporting is being used by the CODM, to target product
costing, product line profitability analysis, customer
profitability analysis, and service pricing structures.
EurAsia: Sales distribution based in China and
Australasia, servicing European and Asian countries.
Americas: Sales office is located in Florida. Custom
blind assembly and distribution facilities are located
in both California and Florida which service the North
American region.
Middle East and North Africa (‘MENA’): 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. The results from our
manufacturing operations in China are allocated to
the operating segments where the sales originate,
whilst its assets and liabilities are included within the
EurAsia segment.
The operating segments are as follows:
Major customers
Australasia: 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.
During the year ended 30 June 2021 approximately
35% (2020: 35%) of the Group’s external revenue was
derived from sales to two customers (2020: Two), one
customer located in the Australasian region and one
customer located in the Americas region.
Operating segment information
Consolidated – 2021
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
91,971
91,971
14,397
(3,828)
(698)
96,219
96,219
13,515
(4,822)
(1,002)
8,603
8,603
2,208
(239)
(48)
8,430
8,430
2,722
(309)
(50)
–
–
205,223
205,223
(4,626)
28,216
–
–
(9,198)
(1,798)
9,871
7,691
1,921
2,363
(4,626)
17,220
(4,893)
12,327
39,689
73,694
11,008
41,531
22,489
188,411
24,464
32,464
633
17,899
20,032
188,411
95,492
95,492
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 45
Consolidated – 2020
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
64,554
64,554
5,397
(4,465)
(752)
73,337
73,337
11,827
(6,389)
(1,243)
10,469
10,469
2,161
(514)
(89)
7,978
7,978
2,656
(412)
(64)
–
–
156,338
156,338
(3,310)
18,731
-
(11,780)
(46)
(2,194)
180
4,195
1,558
2,180
(3,356)
4,757
(1,038)
3,719
45,575
74,139
15,871
36,185
19,917
191,687
191,687
23,814
32,481
639
15,072
31,315
103,321
103,321
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.
N OTE 5. OT HER INCOME
Other income
Consolidated
2021
$’000
2020
$’000
1,935
1,255
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 46
NOT E 6. EXPENSES
Profit before income tax includes the following specific expenses:
Raw materials and consumables used
Provision for personal protective equipment (note 11)
6,574
–
Consolidated
2021
$’000
2020
$’000
Depreciation
Property, plant and equipment (note 12)
Right-of-use assets (note 14)
Total depreciation
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 on borrowings
Interest and finance charges paid/payable on lease liabilities
Finance costs expensed
Leases
Variable lease payments
4,423
4,207
5,908
4,651
8,630
10,559
568
1,221
9,198
11,780
38,819
34,935
1,435
16
40,254
34,951
1,013
784
1,797
1,326
868
2,194
1,648
2,016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | N OTE 7. INCOME TAX
Income tax expense
Current tax
Deferred tax – origination and reversal of temporary differences
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
Difference in overseas tax rates
Income tax expense
Amounts charged/(credited) directly to equity
Deferred tax assets
47
Consolidated
2021
$’000
2020
$’000
1,503
3,390
4,893
1,401
(363)
1,038
3,390
(363)
17,220
5,166
4,757
1,427
117
5,283
(390)
4,893
151
1,578
(540)
1,038
Consolidated
2021
$’000
2020
$’000
112
(91)
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 48
NOT E 7. INCOME TAX (C ONTIN UED)
Net deferred tax asset
Deferred taxes comprises temporary differences attributable to:
Amounts recognised in P&L:
Tax losses
Tax offsets
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
2021
$’000
2020
$’000
–
–
(885)
(1,249)
(774)
1,667
174
303
974
–
(23)
187
3,335
(3,390)
(112)
354
187
561
1,143
(936)
(458)
(444)
850
–
116
503
1,617
383
3,335
2,872
363
91
9
3,335
Consolidated
2021
$’000
2020
$’000
1,156
1,023
The 2021 net deferred tax asset of $187,000 (2020: $3,335,000) is comprised of $6,889,000 in deferred tax assets
(2020: $11,100,000) and $6,702,000 (2020: $7,765,000) in deferred tax liabilities, reflecting various tax positions in
different jurisdictions.
As at 30 June 2021, the Group has $nil unused tax losses (2020: $1,871,000) and $nil deferred tax with respect to
any such losses (2020: $561,000) in the consolidated financial statements.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 49
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:
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.
■ 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.
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.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised
deferred tax assets are reviewed at each reporting
date. Deferred tax assets recognised are reduced to the
extent that it is no longer probable that future taxable
profits will be available for the carrying amount to be
recovered. Previously unrecognised deferred tax assets
are recognised to the extent that it is probable that there
are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where
there is a legally enforceable right to offset current tax
N OTE 8. E ARNINGS PER SHARE
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.
Profit after income tax attributable to the owners of Gale Pacific Limited
Consolidated
2021
$’000
12,327
2020
$’000
3,719
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings
per share
275,391,310 277,684,598
Adjustments for calculation of diluted earnings per share: Performance rights
17,608,820
3,537,653
Weighted average number of ordinary shares used in calculating diluted
earnings per share
293,000,130 281,222,251
Basic earnings per share
Diluted earnings per share
Cents
Cents
4.48
4.21
1.34
1.32
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 50
NOT E 8. EAR NINGS PER SHARE (CON TINUED)
ACCO UNTIN G PO LI CY FO R E A RNIN GS P ER S HAR E
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.
NOT E 9. CURRENT ASSETS – CAS H AND CAS H EQUI VALE NTS
Cash on hand
Cash at bank
Consolidated
2021
$’000
5
30,402
30,407
2020
$’000
7
27,804
27,811
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.
NOT E 1 0. CURRENT ASSETS – TRADE AND OTHER REC EI VA BL ES
Trade receivables
Less: Allowance for expected credit losses
Other receivables
Consolidated
2021
$’000
2020
$’000
42,545
40,644
(1,621)
(1,199)
40,924
39,445
547
158
41,471
39,603
Allowance for expected credit losses
The Group has recognised an additional expected credit loss allowance of $465,000 (2020: $884,000) in profit or
loss in respect of impairment of receivables for the year ended 30 June 2021.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 51
Trade receivables and allowances for expected credit losses
The following table details the risk profile of trade receivables based on the Group’s provision matrix.
Trade receivables
Not Outside of Credit Terms
Outside Credit Terms 0-30 Days
Outside Credit Terms 31-120 Days
Outside Credit Terms 121 Days to one year
More than One Year
Allowance for expected credit losses
Outside Credit Terms 31-120 Days
Outside Credit Terms 121 Days to one year
More than One Year
Consolidated
2021
$’000
2020
$’000
30,620
27,893
6,257
1,854
1,589
2,225
42,545
(2)
(30)
(1,589)
(1,621)
4,295
2,983
3,567
1,906
40,644
(27)
(12)
(1,160)
(1,199)
As per management’s assessment the allowance for expected credit losses on Not Outside of Credit Terms and
Outside Credit Terms 0-30 Days is not material and not recognised.
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional allowances recognised
Receivables written off during the year as uncollectable
Closing balance
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.
The Group always measures the loss allowance for
trade receivables at an amount equal to lifetime ECL.
The average credit terms vary between 30 to 60
days which depend on the sales region and the type
of customer. The expected credit losses on trade
receivables are estimated using a provision matrix by
reference to past default experience of the debtor and
an analysis of the debtor’s current financial position,
adjusted for factors that are specific to the debtors,
general economic conditions of the industry in which
the debtors operate and an assessment of both the
Consolidated
2021
$’000
1,199
465
(43)
1,621
2020
$’000
406
884
(91)
1,199
current as well as the forecast direction of conditions
at the reporting date. The Group has recognised a loss
allowance of 71% (2020: 60%) against all receivables
over 365 days past due because historical experience
has indicated that these receivables are generally not
recoverable. The Group has significantly increased
the expected loss rates for trade receivables from
the prior year based on its judgement of the impact
of current economic conditions and the forecast
direction of travel at the reporting date. There has been
no change in the estimation techniques during the
current reporting period. The Group writes off a trade
receivable when there is information indicating that
the debtor is in severe financial difficulty and there is
no realistic prospect of recovery, e.g. when the debtor
has been placed under liquidation or has entered into
bankruptcy proceedings.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 52
NOT E 1 1. CURRENT ASSETS – INVENTOR IES
Raw materials
Work in progress
Finished goods
Less: Provision for impairment
Consolidated
2021
$’000
8,177
2,958
2020
$’000
5,948
2,717
44,958
43,251
(9,546)
(3,217)
35,412
40,034
46,547
48,699
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
‘weighted average cost’ basis. Cost comprises of direct materials and delivery costs, direct labour, import duties
and other taxes, an appropriate proportion of variable and fixed overhead expenditure based on normal operating
capacity, and, where applicable, transfers from cash flow hedging reserves in equity. Costs of purchased inventory
are determined after deducting rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
NOT E 1 2. NON-CURRE NT ASS ETS – P ROP ERTY, P LA NT
A ND E QUIPMENT
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
2021
$’000
2020
$’000
17,399
17,708
(7,701)
9,698
(7,243)
10,465
114,584
113,402
(94,712)
(92,024)
19,872
21,378
305
(142)
163
972
248
(130)
118
393
30,705
32,354
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 53
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
Buildings and
leasehold
improvements
$’000
Plant and
equipment
$’000
Motor
vehicles
$’000
Balance at 1 July 2019
10,928
15,905
Additions
Disposals
Exchange differences
Transfers in/(out)
Depreciation expense
Balance at 30 June 2020
Additions
Disposals
Exchange differences
Transfers in/(out)
Depreciation expense
Balance at 30 June 2021
9
–
(52)
511
(931)
10,465
25
–
(26)
236
(1,002)
9,698
552
(230)
3
10,121
(4,973)
21,378
73
(96)
(102)
2,028
(3,409)
19,872
94
38
(10)
–
–
(4)
118
52
–
–
5
(12)
163
Capital
work-in-
progress
$’000
8,565
2,488
–
26
(10,686)
–
393
2,852
–
(4)
(2,269)
–
972
Total
$’000
35,492
3,087
(240)
(23)
(54)
(5,908)
32,354
3,002
(96)
(132)
–
(4,423)
30,705
Accounting policy for property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical
cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight line basis to allocate cost on a systematic basis for each item of property,
plant and equipment over their estimated useful lives as follows:
Buildings
45 years
Leasehold improvements
Over lease term
Plant and equipment
2-15 years
Motor vehicles
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 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.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 54
NOT E 1 3. NON-CURRENT ASS ETS – I NTANGI BLES
Goodwill – at cost
Less: Impairment
Development – at cost
Less: Accumulated amortisation
Patents, trademarks and licenses – at cost
Less: Accumulated amortisation
Application software – at cost
Less: Accumulated amortisation
Consolidated
2021
$’000
2020
$’000
11,027
11,286
(7,961)
3,066
4,074
(404)
3,670
1,652
(1,410)
242
8,966
(7,802)
1,164
8,142
(7,961)
3,325
3,242
(191)
3,051
1,658
(1,381)
277
9,264
(7,798)
1,466
8,119
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 2019
Additions
Exchange differences
Transfers in/(out)
Amortisation expense
Balance at 30 June 2020
Additions
Exchange differences
Amortisation expense
Balance at 30 June 2021
Goodwill
$’000
Development
$’000
Patents,
trademarks
and licenses
$’000
3,261
–
64
–
–
3,325
–
(259)
–
3,066
2,357
790
–
–
(96)
3,051
837
(4)
(214)
3,670
305
24
–
–
(52)
277
18
(1)
(52)
242
Application
software
$’000
Total
$’000
2,469
8,392
–
17
53
(1,073)
1,466
–
–
(302)
1,164
814
81
53
(1,221)
8,119
855
(264)
(568)
8,142
Goodwill acquired through business combinations have been allocated to the following cash generating units (CGU):
Goodwill
USA (2021: US$2,077,000; 2020: US$2,077,000)
China
Consolidated
2021
$’000
2020
$’000
2,719
347
3,066
2,978
347
3,325
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 55
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 2021.
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 a terminal growth rate of 2.0%.
USA
In assessing the recoverable amount of the USA CGU,
management considered information available from
industry analysts and other sources in relation to the
key assumptions used. Management considers that it
has taken an appropriate view of the market conditions
and business operations.
The following assumptions were used in the
value-in-use calculations in the model for USA:
Discount Rate
The discount rate used in the model is 8.5% (2020: 10%).
EBITDA assumptions
EBITDA for FY2022 is based on the Board approved
budget, with FY2023 to FY2026 increasing by an average
of 5.0% per annum, which is in line with the management’s
growth strategies for the short to medium term.
Management believe this is achievable based on historical
trends and the plans to continue to invest in product
development and expansion within the Americas region.
Sensitivity Analysis
Management have conducted an analysis of the
sensitivity of the impairment test to reasonably possible
changes in the key assumptions used to determine the
recoverable amount of the CGU. This sensitivity analysis
highlights that the recoverable amount is sensitive to
the achievement of short term EBITDA and a decline of
2% of the EBITDA to terminal year for each year would
reduce the headroom in the CGU to nil but would not
result in an impairment charge.
CHINA
In assessing the recoverable amount of the China CGU,
management made a number of significant assumptions
including assumptions regarding foreign exchange rates,
and risk adjustments to future cash flows. Management
considered information available from industry analysts
and other sources in relation to key assumptions used.
Management considers that it has taken a conservative
view of the market conditions and business operations.
Management believes that any reasonably possible
change in the key assumptions on which recoverable
amount is based would not cause the carrying amount
to exceed the recoverable amount of the CGU.
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.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 56
NOT E 1 3. NON-CURRENT ASS ETS – I NTANGI BLES (CON TINUED)
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.
NOT E 1 4. NON-CURR ENT ASSE TS – RI GHT- OF - US E AS SETS
Land and buildings – right-of-use
Less: Accumulated depreciation
Reconciliations
Consolidated
2021
$’000
27,664
(7,350)
20,314
2020
$’000
26,371
(4,591)
21,780
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 2019
Balance on initial adoption of AASB16 on 1 July 2019
Additions
Exchange differences
Depreciation expense
Balance at 30 June 2020
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2021
Land and buildings
– right-of-use
$’000
–
24,323
2,246
(138)
(4,651)
21,780
4,784
(1,427)
(616)
(4,207)
20,314
Total
$’000
–
24,323
2,246
(138)
(4,651)
21,780
4,784
(1,427)
(616)
(4,207)
20,314
Accounting policy for right-of-use assets
A right-of-use asset is recognised at the commencement
date of a lease. The right-of-use asset is measured at cost,
which comprises the initial amount of the lease liability,
adjusted for, as applicable, any lease payments made at or
before the commencement date net of any lease incentives
received, any initial direct costs incurred, and, except where
included in the cost of inventories, an estimate of costs
expected to be incurred for dismantling and removing the
underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-
line basis over the unexpired period of the lease
or the estimated useful life of the asset, whichever
is the shorter. Where the Group expects to obtain
ownership of the leased asset at the end of the lease
term, the depreciation is over its estimated useful
life. Right-of-use assets are subject to impairment or
adjusted for any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use
asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of
low-value assets. Lease payments on these assets are
expensed to profit or loss as incurred.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 57
N OTE 15. C URRENT LIABILITIE S – TR ADE AND OTH ER PAYA BL ES
Trade payables
Sundry payables and accruals – Customer rebates
Sundry payables and accruals – Other
Consolidated
2021
$’000
2020
$’000
17,927
14,390
8,054
3,526
5,836
2,918
29,507
23,144
Refer to note 25 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.
N OTE 16. C URRENT LIABILITIE S – BORROWINGS
Bank loans
Refer to note 25 for further information on financial instruments.
N OTE 17. CURRENT LIABILITIE S – PROVI SI ONS
Warranties
Warranties
Consolidated
2021
$’000
2020
$’000
19,364
23,274
Consolidated
2021
$’000
2020
$’000
501
144
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.
Warranty movements
Carrying amount at the start of the year
Additional provisions recognised
Claims
Consolidated
2021
$’000
2020
$’000
144
708
(351)
501
457
312
(625)
144
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 58
NOT E 1 7. CUR RENT LIABILITIES – P ROVI SI ONS (CON TINUED)
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.
NOT E 1 8. CURRENT LIABILIT IES – LEAS E LI AB ILI TI ES
Lease liability
Refer to note 25 for further information on financial instruments.
NOT E 1 9. NON-CURR ENT LIAB I LITI ES – BORROWI NGS
Total Bank loans
Refer to note 25 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Total Bank loans
Assets pledged as security
Consolidated
2021
$’000
2020
$’000
3,764
3,830
Consolidated
2021
$’000
2020
$’000
9,575
19,824
Consolidated
2021
$’000
2020
$’000
28,939
43,098
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 59
N OTE 20. NON-CURRENT LIA BI LI TIES – LEAS E LI AB ILI TI ES
Lease liability – 1 to 5 years
Lease liability – greater than 5 years
Consolidated
2021
$’000
2020
$’000
17,977
15,757
602
3,581
18,579
19,338
Refer to note 25 for further information on financial instruments.
Accounting policy for lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at
the present value of the lease payments to be made over the term of the lease, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Lease
payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend
on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase
option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties.
The variable lease payments that do not depend on an index or a rate are expensed in the period in which they
are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate
used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability
is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying
amount of the right-of-use asset is fully written down.
N OTE 21 . EQUITY – ISSUED CAP ITAL
Consolidated
2021
Shares
2020
Shares
2021
$’000
2020
$’000
Ordinary shares – fully paid
275,391,310
275,391,310
63,068
63,068
Movements in ordinary share capital
Consolidated
2021
Shares
2020
Shares
275,391,310
282,217,475
–
(6,826,165)
2021
$’000
63,068
–
275,391,310 275,391,310
63,068
2020
$’000
65,097
(2,029)
63,068
Opening Balance
Shares Buy Back
Closing Balance
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.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 60
NOT E 21. EQUITY – ISSUED CA PI TA L (CONTINUED)
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
No new buy-back scheme was effective for the financial
year ended 30 June 2021.
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.
NOT E 22. EQUITY – RESERVES
Foreign currency reserve
Hedging reserve – cash flow hedges
Share-based payments reserve
Enterprise reserve fund
Consolidated
2021
$’000
(2,201)
118
2,607
3,935
4,459
2020
$’000
(991)
(145)
1,172
3,956
3,992
Foreign currency reserve
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.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 61
Total
$’000
4,070
(504)
(303)
91
16
622
3,992
(1,210)
342
(79)
1,435
(21)
4,459
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2019
Foreign currency translation*
Movement in hedge
Income tax
Share-based payment
Statutory transfers from
retained earnings
Balance at 30 June 2020
Foreign currency translation*
Movement in hedge
Income tax
Share-based payment
Statutory transfers from
retained earnings
Foreign
currency
$’000
(487)
(504)
–
–
–
–
(991)
(1,210)
–
–
–
–
Hedging
$’000
Share-based
payments
$’000
Enterprise
reserve fund
$’000
67
–
(303)
91
–
–
(145)
–
342
(79)
–
–
1,156
3,334
–
–
–
16
–
1,172
–
–
–
1,435
–
2,607
–
–
–
–
622
3,956
–
–
–
–
(21)
3,935
Balance at 30 June 2021
(2,201)
118
* Refer to note 24 for details of monetary items identified as a net investment in a foreign operation
N OTE 23 . EQUITY – DIVIDENDS
Dividends paid during the financial year were as follows:
Final Dividend for the year ended 30 June 2019 of 1.00 cent per ordinary
share (unfranked)
Final Dividend for the year ended 30 June 2020 of 1.00 cent per ordinary
share (unfranked)
Interim Dividend for the year ended 30 June 2021 of 2.00 cents per ordinary
share (unfranked)
Consolidated
2021
$’000
2020
$’000
–
2,822
2,754
5,508
8,262
–
–
2,822
On 24 August 2021 the Directors declared a dividend of 2.00 cents per share to the holders of fully paid ordinary
shares in respect of the year ended 30 June 2021. This dividend has not been included as a liability in these
financial statements. Including the final dividend with respect to 30 June 2021, for the full year, the dividends of
4.00 cents per ordinary share have been declared on earnings of 4.48 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.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 62
NOT E 24. MONETARY ITEMS IDENTI F IE D AS A NET I NVESTM EN T
IN A F OREIGN OPERATION
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
Monetary items identified as a net investment in a foreign operation
Consolidated
2021
$’000
2020
$’000
9,444
3,828
10,345
3,905
13,272
14,250
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 22.
NOT E 25. FINANCIA L
INST RUMENTS
FINANCIAL RI SK MA NAGE ME NT
OBJEC TIVES
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.
MAR KET RISK
Foreign currency risk
The Group undertakes certain transactions
denominated in foreign currency and is exposed
to foreign currency risk through foreign exchange
rate fluctuations.
The Group enters into foreign exchange contracts to
buy and sell specified amounts of foreign currency in
the future at stipulated exchange rates. The objective of
entering into forward exchange contracts is to protect
the Group against exchange rate movements for both
contracted and anticipated future sales and purchases
undertaken in foreign currencies. There was no cash
flow hedge ineffectiveness during the reporting period.
The Group adopts hedge accounting and classifies
applicable forward exchange contracts as cash flow
hedges where these contracts are hedging highly
probable forecasted transactions and they are timed
to mature when the cash flow from the underlying
transaction is scheduled to occur. Cash flows are
expected to occur during the next financial year.
The Group adopts fair value hedge accounting on
forward exchange contracts that are designated
and qualify as fair value hedges. Forward exchange
contracts are recognised in the profit and loss
immediately, together with any changes in the fair value
of the hedged asset or liability that are attributable to
the hedged risk.
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:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 63
Buy US dollars/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 rate
2021
$’000
2020
$’000
2021
2020
8,313
1,362
9,828
1,508
0.7638
0.7710
0.6715
0.6632
Sell US dollars
Average exchange rate
2021
$’000
2020
$’000
2021
2020
33,000
23,000
6.5112
7.0093
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
The Group had net assets denominated in foreign
currencies of $36,082,000 (assets of $62,454,000 less
liabilities of $26,372,000 as at 30 June 2021 (2020:
$25,861,000 (assets of $54,618,000 less liabilities
of $28,757,000)). Based on this exposure, had the
Australian dollar strengthened by 10% / weakened by
10% (2020: 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 $285,000 lower/higher (2020:
$322,000 higher/lower) and equity would have been
$2,952,000 higher/lower (2020: $2,601,000 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.
Assets
Liabilities
2021
$’000
2020
$’000
2021
$’000
2020
$’000
60,370
52,903
26,097
28,603
746
489
849
583
272
860
275
–
–
154
–
–
62,454
54,618
26,372
28,757
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:
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 64
NOT E 25. FINANCIA L INSTRU MENTS (CONTINUED)
2021
2020
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$’000
Balance
$’000
–
30,407
–
27,811
2.19%
(28,912)
2.49%
(43,036)
(15,225)
Consolidated
Cash and cash equivalents
Bank loans
Net exposure to cash flow interest rate risk
1,495
Liquidity risk
Liquidity risk is the risk that the Group will not be able
to meet its financial obligations as they fall due. The
Group’s approach to managing liquidity is to ensure, as
far as possible, that it will always have sufficient liquidity
to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable
losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by maintaining
adequate cash reserves and available borrowing
facilities by continuously monitoring actual and forecast
cash flows and matching the maturity profiles of
financial assets and liabilities.
Remaining contractual maturities
The following tables detail the Group’s remaining
contractual maturity for its financial instrument
liabilities. The tables have been drawn up based on the
undiscounted cash flows of financial liabilities based
on the earliest date on which the financial liabilities are
required to be paid. The tables include both interest
and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may
differ from their carrying amount in the statement of
financial position.
An analysis by remaining contractual maturities is shown
in ‘liquidity and interest rate risk management’ below.
An official increase/decrease in interest rates of
100 (2020: 100) basis points would have an adverse/
favourable effect on profit before tax of $289,116 (2020:
$430,250) 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 65
Consolidated – 2021
Non-derivatives
Non-interest bearing
Trade payables
Sundry payables and
accruals
Interest-bearing –
variable
Bank loans
Lease liability
Total non-derivatives
Weighted
average
interest rate
%
1 year or
less
$’000
Between 1
and 2 years
$’000
Between 2
and 5 years
$’000
Over 5
years
$’000
Remaining
contractual
liabilities
$’000
–
–
2.19%
3.49%
17,927
11,580
19,364
3,764
52,635
–
–
9,575
–
9,575
–
–
–
17,977
17,977
–
–
–
602
602
17,927
11,580
28,939
22,343
80,789
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed above.
N OTE 26. FAIR VALUE MEASUREME NT
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 – 2021
Assets
Forward foreign exchange contracts
Total assets
Consolidated – 2020
Liabilities
Forward foreign exchange contracts
Total liabilities
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
–
–
515
515
–
–
515
515
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
–
–
595
595
–
–
595
595
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.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 66
NOT E 26. FAIR VALUE MEASUREMENT (CONTINUED)
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.
NOT E 27. RELATED PA RTY TRANSAC TIONS
Parent entity
Gale Pacific Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 30.
Key management personnel
Disclosures relating to key management personnel are set out in note 28 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 67
N OTE 28. KEY MANAGEMENT P ERSO NNEL DI S CLOS URES
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
N OTE 29. PAR ENT ENTITY INF ORMATI ON
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Hedging reserve – cash flow hedges
Share-based payments reserve
Retained profits
Total equity
Consolidated
2021
$
2020
$
2,732,525 2,453,525
136,696
133,827
–
103,717
1,332,590
11,604
4,201,811 2,702,673
Parent
2021
$’000
10,610
10,873
2020
$’000
2,550
2,338
Parent
2021
$’000
2020
$’000
22,846
25,758
116,201
123,030
21,688
43,922
21,584
54,796
63,068
63,068
117
2,606
6,488
(145)
1,172
4,139
72,279
68,234
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 68
NOT E 29. PARENT ENT ITY INFOR MATI ON (CONTINUED)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity has guarantees in relation to the debts of its subsidiaries in fixed and floating charges (or
equivalent foreign charge) over all the assets and undertakings, including uncalled capital of each entity in the
Group as at 30 June 2021 and 30 June 2020.
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 2021 and 30 June 2020.
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.
NOT E 30. INTERESTS IN SUBSI DIAR IE S
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
New Zealand
Gale Pacific FZE
United Arab Emirates
Gale Pacific Special Textiles (Ningbo) Limited
Gale Pacific Trading (Ningbo) Limited
Gale Pacific USA, Inc.
Zone Hardware Pty Ltd
Riva Window Fashions Pty Ltd
China
China
USA
Australia
Australia
Ownership interest
2021
%
100%
100%
100%
100%
100%
100%
100%
2020
%
100%
100%
100%
100%
100%
100%
100%
NOT E 31. SHAR E-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:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 69
■ 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:
2021
Grant date
Expiry date
Grant price
22/11/2017
13/11/2018
01/12/2020
01/12/2021
16/01/2020
01/12/2022
30/10/2020
01/12/2023
23/12/2020
01/12/2023
$0.31
$0.35
$0.26
$0.16
$0.18
2020
Balance at
the start of
the year
956,000
886,000
1,034,971
Granted
Exercised
–
–
–
–
1,987,000
– 14,000,000
2,876,971 15,987,000
Expired/
forfeited/
other
Balance at
the end of
the year
(956,000)
–
–
–
–
886,000
1,034,971
1,987,000
– 14,000,000
(956,000) 17,907,971
–
–
–
–
–
–
Grant date
Expiry date
Grant price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
21/09/2016
01/12/2019
22/11/2017
13/11/2018
01/12/2020
01/12/2021
$0.35
1,299,000
$0.31
1,774,000
$0.35
1,821,000
–
–
–
16/01/2020
01/12/2022
$0.26
–
1,034,971
4,894,000 1,034,971
– (1,299,000)
–
–
–
(818,000)
956,000
(935,000)
886,000
1,034,971
–
–
– (3,052,000) 2,876,971
The performance rights granted on the 30 October 2020 to the senior executives are subject to performance
conditions and time hurdles as outlined below.
Performance condition – The number of Rights issued that will vest will be determined proportionately from zero
Rights vesting if a 3.0% increase in EPS is achieved over the 3-year performance period to 100% of the Rights
vesting if a 10.0% (or higher) increase in EPS is achieved.
Time hurdle – The vesting of your Rights is also dependent upon the employee remaining in continuous
employment with the Company until 30 September 2023.
The performance rights granted on 23 December 2020 to the CEO (also the Managing Director of the Group) are
subject to employment conditions and satisfying of relevant performance hurdles based on total shareholder return
(TSR) over the three-year period from 1 July 2021 to 30 June 2023.
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 70
NOT E 31. SHARE-BASED PAYMENTS (CONTINUED)
The percentage of the Performance Rights that will vest
will be determined in accordance with the table below.
have vested will be issued immediately prior to the
completion of the change of control event.
TSR
Percentage of Performance Rights
that vest
Below Threshold
TSR of below 25%: Nil
At Threshold
TSR of 25%: 25% (i.e., 3.5 million
Performance Rights)
Above Threshold
Each additional whole 1% TSR
above 25% will add 0.32% to
proportion of Performance Rights
vesting to a maximum of 100%
of Performance Rights vesting at
260% TSR or above
Any early achievement of the TSR thresholds will be
taken into account at the end of the Performance
Period. In particular, if the required TSR increase of
25% or above is achieved in any financial half year
prior to 1 January 2023 (Early Achievement), the TSR
performance condition will deemed to be satisfied as at
the end of the Performance Period to the same extent
as if the increase in the TSR had occurred over the
full Performance Period (even if there is a subsequent
decline in the TSR).
For the purpose of testing the TSR performance
condition at the end of the Performance Period, the
highest TSR increase over the Performance Period or
any single financial half year prior to 1 January 2023
will be used (i.e., TSR increases in respect of different
periods, and any vesting of Performance Rights
referrable to such increases, will not be cumulative).
If there is a change of control, the TSR performance
condition will be immediately tested and calculated on
the basis of an end price determined with reference
to the change of control event (the Change of Control
Price) and Performance Rights may vest accordingly.
Vesting of Performance Rights is generally also
conditional upon Mr Marcantonio remaining employed
by the Company for the Performance Period. Underlying
shares for performance rights that have vested will
be issued after the end of the Performance Period
unless there is a change of control event, in which
case underlying shares for performance rights that
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 Monte Carlo simulation option
pricing model that takes into account the exercise price,
the term of the option, the impact of dilution, the share
price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the
risk free interest rate for the term of the option, together
with non-vesting conditions that do not determine
whether the Group receives the services that entitle the
employees to receive payment. No account is taken of
any other vesting conditions.
The cost of equity-settled transactions are recognised
as an expense with a corresponding increase in equity
over the vesting period. The cumulative charge to profit
or loss is calculated based on the grant date fair value
of the award, the best estimate of the number of awards
that are likely to vest and the expired portion of the
vesting period. The amount recognised in profit or loss
for the period is the cumulative amount calculated at
each reporting date less amounts already recognised in
previous periods.
Market conditions are taken into consideration in
determining fair value. Therefore any awards subject to
market conditions are considered to vest irrespective
of whether or not that market condition has been met,
provided all other conditions are satisfied.
The weighted average fair value of the share options
granted during the financial year is $0.18 (2020: $0.26).
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 71
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.
N OTE 32. REMUNERATION OF AUDITORS
During the financial year the following fees were paid or payable for services provided by Deloitte Touche
Tohmatsu, the auditor of the Company:
Audit services – Deloitte Touche Tohmatsu
Audit or review of the financial statements
Other services – Deloitte Touche Tohmatsu
Other services (including tax services)
Consolidated
2021
$
2020
$
331,865
320,640
282,953
302,309
614,818
622,949
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 72
NOT E 33. NEW ACCOUNTING STA NDA RDS AND I NTERP RETATIO N S
NOT YET MANDATO RY O R EA RLY ADOP TED
At the date of authorisation of the consolidated financial statements, other Standards and Interpretations in issue
but not yet effective were listed below.
Standard/amendment
Effective for annual reporting
periods beginning on or after
AASB 17 Insurance Contracts and AASB 2020-5 Amendments to Australian
Accounting Standards – Insurance Contracts
1 January 2023
AASB 2014-10 Amendments to Australian Accounting Standards – Sale
or Contribution of Assets between an Investor and its Associate or Joint
Venture, AASB 2015-10 Amendments to Australian Accounting Standards
– Effective Date of Amendments to AASB 10 and AASB 128 and AASB
2017-5 Amendments to Australian Accounting Standards – Effective Date of
Amendments to AASB 10 and AASB 128 and Editorial Corrections
AASB 2020-1 Amendments to Australian Accounting Standards –
Classification of Liabilities as Current or Non-Current and AASB 2020-6
Amendments to Australian Accounting Standards – Classification of Liabilities
as Current or Non-current – Deferral of Effective Date
AASB 2020-3 Amendments to Australian Accounting Standards – Annual
Improvements 2018-2020 and Other Amendments
AASB 2020-8 Amendments to Australian Accounting Standards – Interest
Rate Benchmark Reform – Phase 2
AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure
of Accounting Policies and Definition of Accounting Estimates
1 January 2022
(Editorial corrections in
AASB 2017-5 applied from
1 January 2018
1 January 2022
1 January 2022
1 June 2021
1 January 2023
In addition, at the date of authorisation of the financial statements no IASB Standards and IFRIC Interpretations were
on issue but not yet effective, but for which Australian equivalent Standards and Interpretations have not yet been
issued. The Directors of the Group do not anticipate that the adoption of above amendments will have a material
impact in future periods on the financial statements of the Group.
NOT E 34. EVENTS AF TER THE R EPO RTI NG P ERI OD
There has not arisen in the interval between the end of the financial year and the date of this report any item,
transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect
significantly the operations of the Group, the results of those operations, or the state of affairs of the Company in
future financial years. The Group notes the ongoing COVID-19 lockdowns that have been implemented subsequent
to reporting date across a number of states. The impact of these lockdowns do not have a material impact on these
consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | A D D I T I O N A L S E C U R I T I E S E X C H A N G E
I N F O R M AT I O N
73
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 24 September 2021
(Reporting Date).
CO RPO RAT E 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 complies
with the ASX Corporate Governance Principles and Recommendations (Fourth Edition) (Recommendations).
The Company has prepared a statement which sets out the corporate governance practices that were in operation
throughout the financial year for the Company (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).
N UM BER OF HOLDINGS OF EQ UITY S ECURI TI ES
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 2021
Performance rights expiring 1 December 2022
Performance rights expiring 1 December 2023
Number of
holders
1,665
5
2
8
VOTING RIGHTS OF EQUITY SE CURI TIE S
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 1,665 holders of a total of 275,391,310 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.”
2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 74
DISTRIBUTION OF HOLDERS OF E QUI TY S ECU RITI ES
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
129
396
226
687
227
Units
25,494
1,182,778
1,808,729
25,303,323
247,070,986
1,665 275,391,310
Performance Rights
% of Issued
Capital
0.01
0.43
0.66
9.19
89.72
100
Holders of
performance
rights expiring
1 December 2021
Holders of
performance
rights expiring
1 December 2022
Holders of
performance
rights expiring
1 December 2023
–
–
–
–
5
5
–
–
–
–
2
2
–
–
–
–
8
8
UNM ARKETABLE PAR CELS
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 24/09/2022
Minimum
Parcel Size
Holders
Units
Minimum $500 parcel at $0.4200 per unit
1,191
140
37,706
ADDITIONAL SECURITIES EXCHANGE INFORMATION (CONTINUED)2021 ANNUAL REPORT | GALE PACIFIC LIMITED | 75
SU BSTANTIAL SHAREHOLDER S
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
Castle Point Funds Management
Gale Australia Pty Ltd
No. of Ordinary
Fully Paid Shares
78,800,399
44,358,481
17,131,603
12,997,844
%
28.61
16.11
6.22
4.72
T WE NT Y LARGEST HOLDERS OF QUOT ED EQUI TY S EC URI TI ES
The Company only has one class of quoted securities, being ordinary shares. The names of the 20 largest holders
of ordinary shares, and the number of ordinary shares and percentage of capital held by each holder is as follows:
Shareholder
THORNEY HOLDINGS PTY LTD
WINDHAGER HOLDING AG
NATIONAL NOMINEES LIMITED
GALE AUSTRALIA PTY LTD
UBS NOMINEES PTY LTD
MR KENNETH JOSEPH HALL
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