G W A
I N T E R N A T I O N A L L I M I T E D A N N U A L R E P O R T 2 0 0 3
G W A
I N T E R N A T I O N A L L I M I T E D
The Annual General Meeting of
GWA International Limited will
be held in The Grand Ballroom,
Stamford Plaza Brisbane, Cnr
Edward and Margaret Streets
Brisbane on Thursday
30 October 2003 commencing
at 10:30am. A formal notice
of meeting and proxy form
is enclosed with this report.
ABN 15 055 964 380
Performance Highlights
Chairman’s Review
Managing Director’s Review
of Operations
Board of Directors
Corporate Governance
Directors’ Report
Financial Statements
Other Statutory Information
Corporate Directory
Head Office Locations
1
2
4
10
11
17
23
63
66
67
P E R F O R M A N C E H I G H L I G H T S
Excellent performance which reflects the strong
domestic construction activity
Net operating profit after tax increased
by 17.9% to $55 million
Operating businesses with strong brand names
and market positions
Earnings per share increased by 17.9%
to 19.8 cents
Well-positioned for future growth through
operating cash flows and funding capacity
for acquisitions
Revenues increased by 8.2% to $666.5 million
Fully franked final dividend of 8 cents,
compared to 7.5 cents in the prior year
Total fully franked dividend for the year of
18 cents (which includes a special dividend of
2.5 cents paid in April 2003)
Financial Summary
Year Ended June
1999
$’000
2000
$’000
2001
$’000
2002
$’000
2003
$’000
%
Change
Operating Revenue
524,095
607,897
570,072
615,843
666,525
Earnings before depreciation,
interest and tax
(%)
Depreciation and amortisation
Earnings before interest & tax
(%)
Interest
Operating profit before tax
(%)
Tax expense
(%)
100,624
109,448
103,137
108,527
118,978
19.2
18.0
18.1
17.6
17.9
24,110
76,514
14.6
10,977
65,537
12.5
22,681
34.6
26,450
82,998
13.7
12,042
70,956
11.7
29,555
41.7
26,924
76,213
13.4
13,305
62,908
11.0
21,457
34.1
28,812
79,715
12.9
13,070
66,645
10.8
19,995
30.0
28,034
90,944
13.6
12,368
78,576
11.8
23,569
30.0
Operating profit after tax
42,856
41,401
41,451
46,650
55,007
Net cash flow provided from
operating activities before
debt cost and tax
93,195
98,569
78,719
116,807
128,200
Capital expenditure
Research and development
Net debt
29,913
4,608
204,158
30,144
5,558
201,571
24,550
5,228
237,759
32,976
5,064
229,435
24,392
5,770
207,678
Shareholders’ equity
381,524
387,473
386,058
387,849
413,787
Other ratios
Return on average
shareholders’ equity (%)
Interest cover (times)
Net debt: equity (%)
12.7
7.0
54
10.8
6.9
52
10.7
5.7
62
12.1
6.1
59
13.7
7.4
50
8.2
9.6
-2.7
14.1
-5.4
17.9
17.9
17.9
9.8
-26.0
13.9
-9.5
6.7
13.2
1
C H A I R M A N ’ S R E V I E W
The Group’s trading results, coupled with
its strong operating cash flow and cash
position, provide the opportunity to continue
GWA International’s growth in paying fully
franked dividends.
Dividends
In April 2003, the Interim Dividend of 7.5
cents per share was paid together with
a further Special Dividend of 2.5 cents
per share. The final dividend, payable
in October 2003, will be increased
to 8 cents per share fully franked.
Our intentions are to continue to increase
the total dividend with further growth
in profits and to discontinue the special
dividends.
2002/03 Year Results
I am very pleased to report that GWA
International Limited in the 2002/03 financial
year surpassed the previous year’s record
result with profit after tax rising 17.9%
to $55.0 million, on the back of a 8.2%
rise in sales revenue to $660 million.
This excellent result demonstrates the
outstanding performance over many years
of Geoff McGrath and his management
team. Mr McGrath retired from his position
as Managing Director in May 2003,
completing more than 40 years’ service
with the Group’s businesses.
Under Mr McGrath’s stewardship, GWA
International has prospered with long term
growth in profits, cash dividends and share
price and we thank him for his great service
to the Group.
In May, your directors appointed the very
experienced manager Peter Crowley as
Managing Director and he will build
on Mr McGrath’s achievements in creating
significant shareholder value in the
long term.
I am delighted to advise that the Group
will continue to have access to the
experience and skills of Mr McGrath,
who will now act as an advisor to the
Board on a retainer.
Profit after tax
Dividends –
Interim
Special
Final
Total
2002/03
$000’s
$55,007
20,835
6,945
22,224
50,004
2001/02
$000’s
$46,650
19,435
6,941
20,835
47,211
2000/01
$000’s
$41,451
18,021
6,931
19,407
44,359
2
Corporate Governance
GWA International Limited has the benefit
of a stable Board of Directors, who bring
together complementary skills and strong
experience, as well as a deep knowledge
of the Group’s businesses.
The Board supports the Principles of Good
Corporate Governance and Best Practice
Recommendations of the ASX Corporate
Governance Council which were released
on 31 March 2003. I would like to highlight
to shareholders that these recommendations
already form the basis of the Group’s
corporate governance policies and
procedures which have been in place for
many years, and ensure that the highest
standards of corporate governance
is achieved by the Group.
The Board is committed to the continual
review and updating of the Group’s corporate
governance practices to ensure that GWA
International continues to comply with best
practice. For more detailed information on
the corporate governance practices of the
Group, I refer you to our Corporate
Governance Statement.
Strategic Direction
GWA International is committed to growing
shareholder value. This objective will be
achieved by continuing to invest in people,
products and technology to maximize the
Group’s performance and create value
building opportunities for our business.
The Group’s priority is to acquire another
major domestic business division
and to also pursue bolt-on acquisition
opportunities to add value to existing
businesses and support our expansion
into new markets.
The Company has access to significant
additional borrowings for acquisitions and
Directors intend to reopen the Dividend
Reinvestment and Share Purchase plans
when a major acquisition is undertaken.
Future
Your Board and management remain
committed to creating shareholder value.
We believe there are significant
opportunities both with the existing
businesses and via acquisition
to achieve this objective.
B Thornton
Chairman
3
M A N A G I N G D I R E C T O R ’ S R E V I E W O F O P E R A T I O N S
The primary objective of the Company is to create
and sustain shareholder wealth in the long term
through continuing our investment in, and sound
management of, the Group’s business.
In the pursuit of creating sustainable growth
in value for shareholders, the Group has built
through investment and acquisition,
a diversified portfolio of strong businesses
operating principally within Australia.
During the 2002/03 year a high level of activity
was sustained across all of the Group’s
businesses to deliver a net profit after tax
of $55.0 million up 17.9% on last year and on sales
revenue of $659.6 million up 8.2% on last year.
The strong overall sales performance was
underpinned by $546.6 million worth of sales
to the building fixtures and fittings segment,
where the Group’s Caroma, Dorf Clark,
Gainsborough and Dux businesses have long
established and strong market positions.
Our commercial furniture business, Sebel,
also achieved good revenue and profit growth
for the year.
There were predictions at the beginning
of the 2002/03 year that domestic housing activity
would decline during the year. However, with
continued low interest rates, housing activity
actually increased over the year as illustrated by
the graph below, titled Work Done on Housing.
Business Segment
$000’s
Building Fixtures
& Fittings
Commercial
Furniture
Other
Segment Result
2003
%
2002
Segment Sales Revenue
2003
%
2002
95,801
+10.3%
86,889
546,614
+9.8%
497,736
6,246
+21.8%
5,127
70,146
+11.4%
62,943
(23,471)
(25,371)
42,829
-12.3%
48,856
Profit before tax
78,576
+17.9%
66,645
Income tax expense
(23,569)
(19,995)
Profit after tax
55,007
+17.9%
46,650
Work Done on Housing, Australia
Chain volume measures, base 2000/01, seasonally adjusted
$ billion
12
10
8
6
4
2
0
Jun
2000
Sep
Dec
Mar
2001
Jun
Sep
Dec
Mar
2002
Jun
Sep
Dec
estimates
Mar
2003
Jun
New housing
Renovations
Total
Source: ABS, 5206.0 & 8752.0, HIA estimates
4
Return on Average
Equity
Earnings per share
2002/03
13.7%
2001/02
12.0%
2000/01
10.7%
19.8 cents
16.8 cents
15.0 cents
In the housing market, the products of the
Group’s businesses are installed near completion
and therefore lag the rest of the sector.
Construction approvals and starts in the 2002/03
year were higher than in 2001/02, while the home
renovation market also rose strongly by an
estimated 15% over the prior year.
Non-residential construction was also strong
throughout the period.
Growth in domestic demand was the principal
driver for our strong 14.5% increase in profit
before borrowing costs and tax for the year to
$93.4 million.
This profit growth has boosted the Company’s
return on equity and earnings per share for
the year.
new market opportunities and the introduction of
a wider range of products.
The profitability of the Dux business has
continued to grow through good management,
with improved product quality and a stronger
product range. This business is continuing
to strengthen and there is further opportunity for
profit growth.
Sebel, the Group’s commercial furniture
business, is also benefiting from strong
domestic demand, particularly in education and
stadia, as well as commercial renovation. Sebel
is also the Group’s largest exporter - relative to
sales. Sebel’s management is continuing to
improve the business’s strong sales and profit
growth.
The Dorf Clark business improved significantly
on last year’s disappointing full year performance,
surpassing our expectations in 2002/03.
Successful new product introductions
and operational savings raised the underlying
profitability of this business, which have
flowed through to the current year.
Rover, the Group’s mower business, suffered
from a severe drought year in the domestic
market. Whilst profit was down on the prior
year, Rover’s management achieved growth in
exports, which enabled the business to record
a sound profit result, excellent cash flow
and return on investment.
Caroma, incorporating the Starion and Stylus
brands, also achieved profit growth, being
driven by domestic market demand and assisted
by an excellent manufacturing performance
during the year. However, a poor performance
in the Stylus operations and the adverse impact
of exchange rates in the North America market,
reduced Caroma’s overall increase in profit
for the year. The Stylus business has been
restructured to a lower operating cost base,
while the manufacturing and supply performance
has lifted. A significantly improved profit
contribution is expected from Stylus in the 2003/04
year. Caroma has achieved good sales growth
in North America during the 2002/03 year however
the benefit of this growth has been lost with
the increasing value of the Australian dollar.
Gainsborough’s management is building a
stronger business with a higher level of
underlying profitability through the targeting of
Overall the Group’s trading performance was an
outstanding result in a strong domestic market,
demonstrating the strength of the Group’s
businesses, brands and management.
This overall result is very pleasing, however our
opportunities were not fully realised. Over the
year, $8.8 million was provided for in additional
stock provisions with the actual write off of
stocks in the year being $3.1 million.
The additional provisioning was across the
Group’s businesses and reflects the increasingly
complex supply chain and more volatile market
change at the product level. These effects have
most impact at Dorf Clark, Gainsborough and
Caroma. Improved management of demand
forecasting and the supply chain is expected to
reduce stock provisioning below this level in the
2003/04 year.
5
Payments for
Property Plant &
Equipment $000’s
2002/03
2001/02
2000/01
1999/2000
1998/99
$24,392
$32,976
$24,550
$30,144
$29,913
In overseas operations, the New Zealand market
is cyclical and is expected to maintain demand
in the short term. Wisa is expected to perform
better with market demand similar to the 2002/03
year and North America and other markets allied
to the US dollar exchange rate are expected
to reduce contribution in the 2003/04 year.
GWA International has further opportunity
to grow profitability both from its existing
businesses and from future acquisitions.
Longer Term Outlook
GWA International has built a portfolio of strong
businesses in building fixtures and fittings.
Sebel commercial furniture and Rover Mowers
have different demand drivers, providing
diversified earnings.
In the building fixtures and fittings segment, all
businesses have significant market shares and
established brand names such as Caroma,
Fowler, Stylus, Dorf, Clark, Gainsborough, Dux
and Irwell.
The major drivers of the building fixtures and
fittings segment are new dwellings, commercial
construction, renovations and replacement.
The longer term trends influencing construction
activity include a potential fall in the number of
persons per dwelling which has generated a
demand for new dwellings above that required
by population growth. This trend reflects smaller
families and an ageing population.
The real value of work done on new housing has
grown strongly with people building bigger and
better quality homes. The average size of
houses being built today is 240 square metres,
26% larger than the 1994 average.
Investments for Future Performance
Each of the Group’s businesses invests in brands,
new products, business systems, and the
development of our staff.
Expenditures related to brand equity including
advertising, promotion and displays are treated
as incurred expenses.
The level of capital expenditure can vary year to
year with major investment projects, particularly
with respect to new technologies as is reflected
in the above table.
Expenditure in 2003/04 is being focused
on new systems to improve business
performance across all businesses.
The introduction of systems and measures
to improve productivity across the group
will result in heightened staff training, as well
as marketing and supply chain management.
Outlook for 2003/04 Year
In the domestic market, the Group’s Building
Fixtures and Fittings businesses will benefit
from continuing high levels of construction
activity and renovations which will reduce the
impact of an expected decline in dwelling
completions. The Caroma, Dorf Clark and Dux
businesses each have internal profit growth
opportunities to build profitability further on the
excellent performance in 2002/03. Gainsborough
will feel the greatest impact from a fall in
demand from new dwellings, however this
business also has opportunities for growth in
other areas.
The longer term outlook for the domestic
construction market is sound with the underlying
demand for new housing now estimated
at 162,000 dwellings a year. The Sebel business
is expected to grow profit further across its
wide range of products and markets and the
Rover business requires only an average
domestic climatic season to boost profitability in
the 2003/04 year if the currency appreciation is
maintained.
6
New Housing v Housing Renovations, Australia
Value of work done, chain volume measures, base 2000/01
Trend: 3.2% growth pa
Trend: 4.6% growth pa
Source: ABS, 5206.0 & 8752.0
$ billion
28
24
20
16
12
8
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
New housing
Renovations
Over the past 14 years the housing renovations
market has grown at an average rate of about
4.6% a year, which is faster than the growth in
work done in new housing and faster than the
3.5% a year growth in the Australian economy.
The reasons for this growth in renovations
include:
Transaction costs associated with moving
house are high, with better value derived
for owners through extending or renovating
their existing homes
45% of Australia’s dwellings are over 40 years
old and many are in need of renovation
Many people prefer to stay in the area they
know and like rather than move
Improvements in the style and quality
of building materials, products and fittings
available, make renovation an attractive
proposition
Renovations are an increasingly important
driver of demand for the Group’s products.
More bathrooms and kitchens are installed
each year through renovations than in the
construction of new homes.
The Australian market places in which the
Group’s businesses operate are open and
competitive.
The Group is a significant domestic
manufacturer and is also a major importer
of components and finished goods. Our cost
competitiveness is impacted by sustained
movements in currency exchange rates. Over
the last two years the Australian dollar has
appreciated against the US dollar from around
50 cents in early 2001 to around 65 cents in July
2003 - returning to the levels of mid-1999.
Financial Condition
The Company’s share capital consists of
ordinary shares of which 277,802,995 were on
issue at balance date. During the year 160,000
additional shares were issued under the
Employee Share Plan at the market price at the
time of issue of $2.31. Shareholder funds
increased over the year to $413.8 million
inclusive of this issue of employee shares and
retained earnings.
The Company’s Dividend Reinvestment and
Share Purchase plans were suspended with
effect from February 2000. Share options have
not been issued by the Company.
The cash flow from the Group’s businesses is
expected to continue to provide the operational
funding requirements of the Company and
further capital funding requirements may arise
with future acquisitions.
The Company’s debt funding and facilities are
provided by major banks under a Master
Financing Agreement as described in Note 17 of
the Financial Statements. At balance date, bank
loans were made up of:
Australian Currency $285.0 million
11.18 million
Euro
The euro loan is a currency hedge with respect
to the Group’s investment in the Wisa business.
7
The total Australian currency borrowing at balance date $285 million
(of which the following amounts were fixed at balance date)
Amount
$200 million
$100 million
$50 million
Period
Rate
July 2003 to October 2004
@ 4.98%
October 2004 to March 2005
@ 4.84%
March 2005 to March 2006
@ 4.63%
These debt and other facilities are extended
annually under 2 year and 3 year evergreen
arrangements.
Properties are leased by the Group’s businesses
principally for distribution and sales offices. The
future commitments for lease payments are set
out in Note 24.
GWA International and specific controlled
entities, incorporating the Group’s Australian
operating businesses, are parties to a Deed of
Cross Guarantee under which the parties to the
Deed guarantee the debts of the other.
The company has not given any securities over
its assets.
The Group’s businesses undertake hedges with
respect to material foreign currency
transactions and the position at balance date is
set out in Note 33(a) (iv). The principal hedges
are with respect to imported components and
products, and sales revenue in New Zealand.
The company has entered into interest rate
swaps to manage the interest rate risk on
Australian currency borrowings as detailed in
Note 33(a) (iv).
The company’s cash flow from operating
activities for the 2002/03 year of $91.4 million has
funded the Group’s capital expenditures and
dividends for the year and cash at the end of the
year has increased by $22.6 million. The Group’s
cash is held predominantly in Australian dollars.
GWA International is well placed to increase its
borrowings to fund new acquisition
opportunities as they arise, with net debt to
equity ratio of 50.2% and interest cover, as
defined in the Master Financing Agreement of
9 times.
The company has not undertaken a debt rating,
however, an indicative debt rating is near BBB.
All of the Group’s debt funding and facilities are
negotiated and reported centrally. Individual
businesses operate their currency hedging and
other requirements, including bank guarantees
under these central facilities.
Sources of further equity include reinstatement
of the Dividend Reinvestment and Share
Purchase Plan and retained earnings. These
Plans have been well supported by shareholders
in the past and the Group expects a similar level
of support should the Plans be reinstated.
With respect to the Employee Share Plan, at
balance date, there were 3.30 million shares on
issue under this Plan, with the loan of
$4.3 million having been reduced by
$1.067 million during the year through dividends
and payments.
During the 2002/03 year, there has been a
significant appreciation of the Australian dollar
against the US dollar, particularly in the second
half of the year. This movement in currency rate
will lower the cost of the Group’s US dollar
denominated purchases and reduce the
Australian dollar value of US dollar denominated
overseas sales.
8
Exchange Rate Movements
of $US and Euro since June 1999 are set out in the table below:
July 2003
Dec 2002
June 2002
June 2001
June 2000
June 1999
US$
Euro
.6680
.5902
.5598
.5290
.5595
.5599
.5076
.6037
.6022
.6363
.6572
.6418
The net effect on the Group of these two items
is positive. The relative cost of competitiveness
of the Group’s Australian manufacturing
operations has declined relative to competitors
where product cost is tied to the US dollar.
Any effect of this shift on market pricing will
flow through during the 2003/04 year.
Summary
The GWA International Group performed well
in the 2002/03 year with record profit and sales
results. All businesses, other than Rover which
had severely adverse seasonal conditions,
contributed profit results above the prior year.
Long term prospects in the domestic construction
market are sound, with increasing renovations
expected to underpin growth in domestic demand
for the Group’s products.
From our strong financial position, further
growth through acquisition is being sought with
the priority being a large domestic business.
The Group’s earnings, cash flow and current low
gearing will support increased borrowings.
The Company is committed to creating and
sustaining shareholder wealth and a sound
performance in the 2003/04 year is expected
with 2002/03’s level of demand continuing well
into the 2003/04 year. We are confident that the
Group’s businesses have opportunities to further
improve their profitability over time.
P C Crowley
Managing Director
9
B O A R D O F D I R E C T O R S
B Thornton KSJ FCA FAICD FAIM
Chairman, Elected to the Board 1992
Expertise: Chartered accountant, corporate
and financial management
Special Responsibilities: Chairman, Chairman
of Nomination Committee, member of
Remuneration Committee and member
of Audit Committee.
Mr Thornton joined the GWA Group in 1974
as Finance Director and was appointed Chief
Executive in 1981. In 1986, he was appointed
Executive Chairman and, following the
privatisation of the GWA Group in 1989 and the
Public Float of the Manufacturing Division as
GWA International Limited in 1993, he became
non-executive Chairman. He is also Chairman of
the Brisbane Airport Corporation Limited
and a Director of Stockland Trust Group.
He is Chairman of the Brisbane Advisory Board
of the Salvation Army and Deputy Chancellor
of Bond University Limited.
Previous appointments include: Director -
Suncorp-Metway Ltd, Queensland Cement &
Lime Ltd, Power Brewing Ltd, Ports Corporation
of Queensland, Commissioner -Queensland
Commission of Audit
J J Kennedy AO CBE DUniv (QUT) FCA FCPA
Deputy Chairman, Elected to the Board 1992
Expertise: Chairman and Director of a number
of public and statutory corporations
Special Responsibilities: Deputy Chairman,
Chairman of Audit Committee and member
of Nomination Committee.
Mr Kennedy is a Director of Qantas Airways
Limited, Macquarie Goodman Funds Management
Limited, Suncorp-Metway Limited, Australian
Stock Exchange Limited and member of Blake
Dawson Waldron National Advisory Board.
P C Crowley BA BEcon FAICD
Appointed Managing Director on 6 May 2003
Expertise: Broad manufacturing experience
in Australia and overseas.
2001: Managing Director and Chief Executive,
Austrim Nylex Limited, a diversified industrial
company; 1999: Executive Director, Cement and
Lime, The Rubgy Group PLC UK Public company
with extensive international cement operations.
During this period also served as a director
of Adelaide Brighton Limited; 1997: Chief
Executive, Cockburn Cement Limited
(a subsidiary of The Rugby Group PLC).
Perth based Cockburn Cement Limited was
Western Australia’s largest cement producer
and Australia’s biggest lime producer; 1982:
Various roles with Queensland Cement Limited
and its parent company Holderbank culminating
in General Management responsibilities within
Australia and South East Asia.
D R Barry FAIM
Non-Executive Director, Elected to the Board 1992
Expertise: Importation, distribution and retailing
Special Responsibilities: Non-Executive Director
and member of Remuneration Committee.
Mr Barry joined the GWA Group as a Director
in 1979. During his involvement with the
GWA Group, he was responsible for importation,
wholesaling and retailing. In 1992, Mr Barry was
appointed a Non-Executive Director of GWA
International Limited.
R M Anderson
Non-Executive Director, Elected to the Board 1992
Expertise: Property investment and transport
logistics
Special Responsibilities: Non-Executive Director
Mr Anderson has more than 48 years experience
with the GWA Group, having joined the
organisation in 1955. His expertise covers
management, transport logistics, investment
and property matters. Mr Anderson was
appointed as a Director of the GWA Group in
1979, and joined the Board of GWA International
Limited as a Non-Executive Director in 1992.
M D E Kriewaldt BA LLB
Non-Executive Director, Elected to the Board 1992
Expertise: Lawyer and Director of a number
of public and other corporations
Special Responsibilities: Chairman of
Remuneration Committee, member of Audit
Committee and member of Nomination
Committee.
Mr Kriewaldt is a Consultant to the law firm
Allens Arthur Robinson and to Aon, insurance
brokers. He formerly practised in a wide range
of areas including banking and finance,
insurance, insolvency and receivership and
intellectual property. Mr Kriewaldt is Chairman
of Opera Queensland Ltd and a Director
of Campbell Brothers Ltd, Oil Search Limited,
Suncorp-Metway Ltd and Australian Major
Performing Arts Group.
1 0
C O R P O R A T E G O V E R N A N C E
The Board of Directors is responsible for the corporate governance of GWA International
Limited. Corporate governance is a part only of the role of the Board. Corporate governance
is about the Board undertaking an active monitoring of the company’s activities and
ensuring that integrity prevails within the company. The governance principles adopted
by the Board are designed to achieve this.
The Board has had its practices and procedures in place prior to listing and constantly
reassesses them in the light of experience (in the company and in other organisations)
and contemporary views on good governance practices. The Board adopts those it considers
to be superior and which will lead to better outcomes for this company’s shareholders,
whilst endevouring to avoid those which are based on unsound principles or represent
temporary fads. The Board’s current practices conform with the Principles of Good
Corporate Governance and Best Practice Recommendations (“the Recommendations”)
released by the ASX Corporate Governance Council on 31 March 2003.
During the year, a detailed review was performed of the current corporate governance
practices of the company to compare them with the Recommendations. The Board has
determined that the current corporate governance practices of the company are in
accordance with the Recommendations, and that there are no departures from the
Recommendations which should be disclosed to shareholders.
The company’s website address is www.gwail.com.au
1. Role of the Board
The Board is responsible for the long-term
growth and profitability of the company. The
Board charts the direction of the company and
monitors Executive and Senior Management
performance on behalf of shareholders. To
achieve this, the Board is engaged in the
following activities:
Final approval of corporate strategies
and performance objectives developed
by Senior Management, with Board input
Approval and monitoring of financial and
other reporting
Monitoring of Executive and Senior
Management performance, including
the implementation of corporate strategies,
and ensuring appropriate resources
are available
Appointment and monitoring of performance
of the Managing Director
Liaison with company auditors through the
Audit Committee
Ensuring that the company has appropriate
systems of risk management and internal
control, reporting mechanisms and
delegation authority limits in place
Approval and monitoring of the progress
of major capital expenditure, capital
management, and acquisitions
and divestments
Any other matters required to be dealt with
by the Board from time to time depending
upon circumstances of the company
Other matters referred to in the Board
Committee Charters
The Board operates under a charter that details
the functions and responsibilities of the Board.
The charter has been reviewed this year to
ensure that the company is complying with
the Recommendations of the ASX Corporate
Governance Council. The Board is currently
reviewing its policies and practices in this area,
as it does regularly, and will publish its revised
Board charter on the company’s website when
this review is concluded.
2. Board Meetings
The Board meets at least 11 times each year
for scheduled meetings and may, on other
occasions, meet to deal with specific matters
that require attention between scheduled
meetings. Visits are regularly made to the
company’s business operations to enhance
the Board’s understanding of operations and
strategies. Together with the Board Committees,
the directors use the Board meetings
to challenge and fully understand the business
and operational issues.
1 1
3. Composition of the Board
The Board presently comprises six directors,
five of whom, including the Chairman and Deputy
Chairman, are non-executive directors and one,
the Managing Director, is an executive director.
Profiles of the directors are set out on page 10
of the Annual Report. The profiles outline
the skills, experience and expertise of each
Board member.
Composition of the Board is determined by the
Board and, where appropriate, external advice
is sought. The following principles and guidelines
are adhered to:
The Board should maintain a majority
of non-executive directors
The Board should maintain a majority
of independent directors
The Chairperson should be an independent
non-executive director
The role of Chairperson and Managing
Director should not be exercised by the
same individual
Non-executive directors should not be
involved in management of the day
to day operations of the company
All Board members should have financial
expertise and relevant experience in the
industries in which the company operates
4. Independence of the Board
The company has reviewed the independence
of the Board in light of the Recommendations
of the ASX Corporate Governance Council.
In applying the definition of independence
as outlined in the Recommendations, it has been
determined that the Board members of GWA
International Limited are independent.
The Board considers that directors must
be independent from management in order
to ensure that the judgement of the Board is not
influenced. During the year, a new Managing
Director of the company, Mr Peter Crowley,
was appointed on the retirement
of Mr Geoff McGrath.
The Board is responsible for ensuring that the
actions of individual directors in the Boardroom
is that of independent persons. The Board
distinguishes between the concept of
independence and issues of conflict of interest
or material personal interest which may arise from
time to time - refer Conflicts of Interest below.
The current Board members have been in office
for many years, as disclosed in the Directors
Report (excluding Mr Crowley who was appointed
on 6 May 2003). The Board does not consider
that the independence of a director can be
assessed by reference to an arbitrary and
set period of time. The Board has overseen
the growth and development of the company
over the past 10 years and in the Board’s view
derives benefits from having long serving
directors with detailed knowledge of the
company’s operations. The Board considers
this a significant factor in their effectiveness
and performance in their roles as directors
of the company.
In regard to the future retirement plans of
individual directors, the Board will consider
the maintenance of corporate memory
and the appropriate balance of skills required
to maintain an efficient and effective Board.
5. Conflicts of Interest
The directors are required to disclose to the
Board any relationships from which a conflict
might arise. A director who has a material
personal interest in a matter is required to
absent himself from any meeting of the Board
or Board Committee, whenever the matter
is considered. In addition, the director does
not receive any Board papers or other documents
in which there is a reference to the matter.
This process is applied to business or trading
relationships, dealings with the directors,
dealings with companies with common directors
or dealings with any significant shareholders
of the company.
The materiality thresholds used for the
determination of independence and issues
of conflict of interest have been considered
from the point of view of the company and
directors. For the company, a relationship
which accounts for 5% or more of its revenue
is considered material. For a director,
a relationship which accounts for 5% or more
of the total income of a director is considered
material. Directors’ fees are not subject
to this test.
6. Access to Independent Advice
Directors and the Board Committees have
the right in connection with their duties and
responsibilities to seek independent advice
at the company’s expense. Prior written approval
of the Chairman is required, but this will not
be unreasonably withheld. Where appropriate,
directors share such advice with the
other directors.
1 2
7. Board Committees
The Board has a number of standing Board
Committees to assist in carrying out its duties.
All members of Board Committees are
independent non-executive directors.
The standing Board Committees are:
Audit Committee
During the year, the Accounts and Audit
Committee was renamed to the Audit Committee.
The Audit Committee consists of the following
independent non-executive directors:
J J Kennedy (Chairman) AO, CBE, DUniv (QUT), FCA, FCPA
M D E Kriewaldt BA LLB FAICD
B Thornton KSJ FCA FAICD FAIM
The Audit Committee meets as required and
on several occasions throughout the year.
For attendance details of the Audit Committee,
refer to the Directors’ Report.
The composition of the Audit Committee
is based on the following principles:
The Audit committee should consist of non-
executive directors only
The Audit Committee should maintain
a majority of independent directors
The Chairperson must be independent,
and not Chairperson of the Board
The Audit Committee should consist
of at least three members
The Audit Committee should include members
who are financially literate with at least
one member who has financial expertise
The Audit Committee was established in 1993
governed by a charter which outlines the
Committee’s role and responsibilities,
composition, structure and membership
requirements. The charter has been reviewed
this year to ensure that the company is complying
with the Recommendations of the ASX Corporate
Governance Council. The Board is currently
reviewing its policies and practices in this area,
as it does regularly, and will publish its revised
Audit Committee charter on the company’s
website when this review is concluded.
The main responsibilities of the Audit Committee
include:
Assess the management process to support
the external reporting
Assess whether the external reporting
is adequate to meet the information needs
for shareholders
Recommendations on the appointment
and removal of the external auditor
Review and monitor the performance
and independence of the external audit
Review of financial statements and external
financial reporting
Review of tax planning and tax compliance
systems and processes
Review and monitor risk management and
internal compliance and control systems
Assess the performance and objectivity
of the internal assurance and
compliance process
Reporting to the Board on the Committee’s
role and responsibilities covering
all the functions in its charter
Nomination Committee
During the year the Chairman’s Committee
was renamed to the Nomination Committee.
The Nomination Committee consists of the
following independent non-executive directors:
B Thornton (Chairman) KSJ FCA FAICD FAIM
J J Kennedy AO, CBE, DUniv (QUT), FCA, FCPA
M D E Kriewaldt BA LLB FAICD
The Nomination Committee meets as required
and on several occasions throughout the year.
For attendance details of the Nomination
Committee, refer to the Directors’ Report.
The composition of the Nomination Committee
is based on the following principles:
The Nomination Committee should consist
of non-executive directors only
The Nomination Committee should maintain
a majority of independent directors
The Nomination Committee should consist
of a minimum of three members
The Chairperson should be the Chairperson
of the Board or another independent director
1 3
The Nomination Committee operates under
a charter that details the role and responsibilities,
composition, structure and membership
requirements. The charter has been reviewed
this year to ensure that the company is complying
with the Recommendations of the ASX Corporate
Governance Council. The Board is currently
reviewing its policies and practices in this area,
as it does regularly, and will publish its revised
Nomination Committee charter on the company’s
website when this review is concluded.
The main responsibilities of the Committee
include:
Assessment of the necessary and desirable
competencies of Board members
Review of the Board succession plans
Evaluation of the performance
and contributions of Board members
Recommendations for the appointment
and removal of directors
Review of the remuneration framework
for directors
Reporting to the Board on the Committee’s
role and responsibilities covering
all the functions in its charter
During the year, the Nomination Committee
conducted an evaluation of the performance
of Board members in accordance with the
responsibilities of the Committee. Each Board
member was required to complete a detailed
performance questionnaire, the results of which
were collated and analysed by the Board.
There were no issues to report to shareholders
from this process.
Remuneration Committee
The Remuneration Committee consists of the
following independent non-executive directors:
M D E Kriewaldt (Chairman) BA LLB FAICD
B Thornton KSJ FCA FAICD FAIM
D R Barry FAIM
The Remuneration Committee meets as required
and on several occasions throughout the year.
For attendance details of the Remuneration
Committee, refer to the Directors Report.
The composition of the Remuneration
Committee is based on the following principles:
The Remuneration Committee should consist
of non-executive directors only
The Remuneration Committee should
maintain a majority of independent directors
The Remuneration Committee should consist
of a minimum of three members
The Chairperson of the Remuneration
Committee should be an independent non-
executive director
The Remuneration Committee operates under a
charter that details the role and responsibilities,
composition, structure and membership
requirements. The charter has been reviewed
this year to ensure that the company is complying
with the Recommendations of the ASX Corporate
Governance Council. The Board is currently
reviewing its policies and practices in this area,
as it does regularly, and will publish its revised
Remuneration Committee charter on the
company’s website when this review
is concluded.
The main responsibilities of the Committee
include:
Review of the company’s remuneration
and incentive policies
Review of Executive and Senior Management
remuneration packages
Review of the company’s recruitment,
retention and termination policies
and procedures for Senior Management
Review of the company superannuation
arrangements
Reporting to the Board on the Committee’s
role and responsibilities covering
all the functions in its charter
In performing its responsibilities,
the Remuneration Committee receives
appropriate advice from external consultants
and other advisers as required.
8. Code of Conduct
The company conducts its business with
the highest standards of personal and corporate
integrity. The company has adopted the principles
as set out in the booklet Corporate Practice
and Conduct published by the Business Council
of Australia.
1 4
If the above proposal is approved by shareholders,
the retirement allowance which is currently
accrued to each director will continue to be
held on behalf of that director. At 30 June 2003,
the total retirement allowance accrued
to the non-executive directors of the company
was $1,214,700.
11. Share and Option Schemes
The company does not have a Share Option
Scheme and has therefore not issued share
options to employees.
The company has operated an Employee
Share Plan since listing in 1993 as part
of the remuneration and incentive arrangements
for Executives and Senior Management.
Full details of the operation of the Employee
Share Plan are described in Note 19
of the Financial Statements.
12. Audit and Auditor Independence
The Board recognises the importance of a truly
independent audit firm to ensure that the audit
function delivers, for the benefit of the Board
and all other stakeholders, an unbiased
confirmation of both the financial statements
and the state of affairs of the company.
During each year, the Audit Committee examines
the non-audit roles performed by the audit firm
and other potential audit service providers
to satisfy itself that the auditor’s independence
will not be compromised and that alternate
providers are available if considered desirable.
Whilst the value of the non-audit services could,
in extreme cases, compromise audit
independence, more important is to ensure
that the auditor is not passing an audit opinion
on the non-audit work of its own firm.
Both the Audit Committee and the auditor
confirm to the Board the continuing
independence of the audit function.
During the year, the Board also conducted
a review of the rotation of the audit partner
and audit firm focusing on the independence
and competency of the audit firm, rather than
automatic rotation of the audit firm.
A code of conduct is incorporated as part
of all new employees induction training.
The code of conduct states the values and
policies of the company and complements
the company’s risk management practices.
During the year, a review has been performed
of the code of conduct to ensure compliance
with best practice and to promote the ethical
behaviour of all employees.
9. Risk Management
The Board is responsible for ensuring that
adequate measures are in place to manage risk.
The Board has delegated this responsibility
to the Audit Committee which reports regularly
to the Board on all risk management matters.
The Board has implemented a risk management
program that is supported by policies and
procedures to enable the businesses to identify
and assess risk and respond appropriately.
The company regularly reviews and monitors
risks and related management controls
and techniques.
The Board is responsible for ensuring that
adequate measures are undertaken to manage
compliance. To facilitate compliance,
an appropriate range of legal and regulatory
requirements are incorporated in corporate
policies. These policies are subject to review
on an annual basis.
10. Remuneration Policies
The Remuneration Committee is responsible
for reviewing and determining the remuneration
and incentive arrangements of Executives
and Senior Management of the company.
The remuneration and incentive arrangements
have been structured to ensure that performance
is fairly rewarded and to retain a high quality
Executive and Senior Management team.
For details of the company’s remuneration policies
and disclosures, refer to the Directors’ Report.
Subject to shareholders approval at the Annual
General Meeting on 30 October 2003, the current
Board retirement allowance arrangements,
which were approved by shareholders at the
Annual General Meeting on 28 October 1998,
will be terminated. The effect of this proposal
is that no retirement benefits will be available
for any new non-executive directors of the
company, other than statutory superannuation.
This proposal complies with guidelines for
non-executive remuneration, as outlined
in the Recommendations of the ASX Corporate
Governance Council.
1 5
The audit firm of Ernst & Young was appointed
as a result of a comprehensive tender conducted
for the year ended 30 June 1995 for audit
and other services. Mr Banham has assumed
the role of audit partner from 1 July 2003,
from Mr Eddy, the audit partner
for the previous years.
The Board is not aware of any matter during
the year which has affected the independence
of Ernst & Young as auditors of the company
13. Communication with Shareholders
The company is committed to ensuring
shareholders and the financial markets
are provided with full, open and timely
information about its activities.
This is achieved by the following:
Complying with continuous disclosure
obligations contained in the ASX Listing
Rules and the Corporations Act 2001 in
Australia. The company has for many years
included continuous disclosure as a
permanent item on the agenda for Board
meetings. The company’s continuous
disclosure policy has been reviewed this
year to ensure that the company is
complying with the Recommendation of the
ASX Corporate Governance Council. The
Board is currently reviewing its policies and
practices in this area, as it does regularly,
and will publish its revised continuous
disclosure policy on the company’s website
when this review is concluded.
Ensuring that all stakeholders have the
opportunity to receive externally available
information issued by the company. During
the year, the company has developed
a website (www.gwail.com.au) to enhance
communication with shareholders.
All company announcements and information
released to the market are located
on the website and may be accessed
by shareholders. There is also a corporate
governance section on the website which
outlines the practices of the company
and various other company information.
The attendance at the Annual General
Meeting by the external auditor to answer
questions from shareholders about the
conduct of the audit and the preparation
and content of the audit report.
1 6
D I R E C T O R S ’
R E P O R T A S A T 3 0 J U N E 2 0 0 3
Your Directors present their report on the
consolidated entity of GWA International Limited
and the entities it controlled during the year
ended 30 June 2003.
Directors
The following persons were directors of the
company during the whole of the financial year
and up to the date of this report:
B THORNTON, Chairman and Independent
Non-Executive Director
J J KENNEDY, Deputy Chairman and
Independent Non-Executive Director
D R BARRY, Independent Non-Executive Director
R M ANDERSON, Independent Non-Executive
Director
M D E KRIEWALDT, Independent Non-Executive
Director
G J McGrath was Managing Director from the
beginning of the financial year until 6 May 2003
when he retired. P C Crowley was appointed
Managing Director on 6 May 2003.
Directors’ qualifications, experience and
responsibilities are shown on page 10.
Corporate Structure
Australia. GWA International Limited has
prepared a consolidated financial report
incorporating the entities that it controlled
during the financial year, which are outlined in
Note 27 of the Financial Statements.
Principal Activities
The principal activities during the year
within the consolidated entity were the
research, design, manufacturing, importing, and
marketing of household consumer products as
well as the distribution of these various
products through a range of distribution
channels in Australia and overseas.
There have been no significant changes in the
nature of these activities during the year.
Employees
The consolidated entity employed 2,646
employees as at 30 June 2003 (last year
2,757 employees).
The Group recognises the productivity benefits
from investing in its employees to improve
motivation and individual skills. The Group
remains committed to ensuring that staff are
provided access to appropriate training and
development programs.
GWA International Limited is a company limited
by shares that is incorporated and domiciled in
All entities in the consolidated entity are active
equal opportunity employers.
Interest in shares of the company and related body corporate
At the date of this report, the interest of Directors in shares of the company were:
Director
B Thornton
J J Kennedy
P C Crowley
D R Barry
R M Anderson
M D E Kriewaldt
Ordinary Shares
Interest (see notes below)
Nil
5,000
Nil
3,126,061
Nil
100,000
Note 1
Note 2
Note 2
Note 1: Beneficially and legally owned.
Note 2: The relevant interest is the power to exercise control over the disposal of the shares
and the power to control the right to vote.
Note 3: Note 26 to the Financial Statements sets out the number of shares held directly, indirectly or
beneficially by Directors or their related entities at balance date, this being 46,705,306 shares.
1 7
Consolidated Results
Consolidated results of the economic entity for the financial year were as follows:
Consolidated Results ($000’s)
Segment Revenues
Segment Results
2003
$’000
2002
$’000
Building fixtures and fittings
549,716
501,381
Commercial furniture
Unallocated
Eliminations
Total
73,427
45,637
(2,255)
65,577
50,540
(1,655)
666,525
615,843
2003
$’000
95,801
6,246
2002
$’000
86,889
5,127
(23,471)
(25,371)
-
78,576
-
66,645
Consolidated results after tax
55,007
46,650
Review of Operations and State of Affairs
Risk Management
A review of the consolidated entities’ operations
and the results of those operations for the
financial year is provided in the Chairman’s
Review and the Managing Director’s Review of
Operations which are located on pages 2 and 4
of the Annual Report.
In the opinion of the Directors, there were no
significant changes in the State of Affairs of the
consolidated entity during the financial year.
The Group takes a pro-active approach to risk
management. The Board has the responsibility
for ensuring that risks, and also opportunities,
are identified on a timely basis so that the
Group’s objectives and activities are
aligned with the risks and opportunities
identified by the Board.
The Board has a number of risk management
mechanisms in place, including the following:
Earnings Per Share
Basic earnings per share
2003
19.8
2002
16.8
Dividends
Final dividend recommended
on ordinary shares 8 cents
per fully paid ordinary share
fully franked at 30% corporate
tax rate (last year 7.5 cents
at 30% corporate tax rate)
2003
$’000
2002
$’000
22,224
20,823
A special dividend of 2.5 cents per share fully
franked at a corporate tax rate of 30% was
paid with the interim dividend on 1 April 2003.
At 30 June 2003, the balance of franking
credits was $19.987M.
Board approval of the Group Strategic Plan
which includes strategy statements,
designed to meet stakeholder needs and
manage risk.
Implementation and monitoring of operating
plans and budgets approved by the Board,
and the establishment and monitoring of key
performance indicators of both a financial
and non-financial nature.
Regular review of corporate policies and
procedures to ensure that legal and regulatory
requirements are effectively addressed.
Consideration of periodic reports on
environmental and occupational health and
safety matters.
Review of the coverage and adequacy of
the Group’s insurance policies.
Management of financial risks is discharged
by the Board at each meeting by considering
such matters as liquidity, interest rate and
currency risks and credit policies.
1 8
Significant Events after Balance Date
On 2 September 2003, the Directors of GWA
International Limited declared a final dividend
on ordinary shares in respect of the 2003
financial year. The total amount of the dividend
is $22.224M, which represents a fully franked
dividend of 8.0 cents per share. The dividend
has not been provided for in the 30 June 2003
financial statements.
To the best of our knowledge, since balance
date, no other matters have arisen which will, or
may, significantly affect the operation or results
of the economic entity in later years.
Likely Developments and Expected Results
Likely developments and expected results of the
operations of the consolidated entity are
provided in the Managing Director’s Review of
Operations (page 4).
In the next financial year, the consolidated entity
will continue to pursue its policies of increasing
profitability and market share of all its
businesses. Strategies have been formulated
which focus on maintaining growth and
ensuring that the consolidated entity generates
the best possible returns from its businesses.
Further information on likely developments and
expected results of the operations of the
consolidated entity have not been included in
this Report because the Directors believe it
would be likely to result in unreasonable
prejudice to the company.
Environmental Regulation
and Performance
The consolidated entity holds licenses issued by
Environmental Protection Authorities which
specify limits for discharges to the environment
which arise from the operations of entities
which it controls from time to time.
These licenses regulate the management of
discharge to air, storm water run-off, transport
of waste and removal associated with the
manufacturing operations in factories
throughout Australia and the Netherlands.
Where appropriate, an independent review of
compliance with license conditions is made by
external advisors.
Storage and treatment of hazardous materials
within particular operations are monitored by
the company in conjunction with external
consultants. Prior to any discharge to sewers,
effluent is treated and monitored to ensure strict
observance with license conditions.
The directors are not aware of any breaches of
the consolidated entity’s license conditions
during the financial year.
Indemnification and Insurance of Directors
and Officers
During the financial year, the company has paid
premiums of $96,825 in respect of directors’ and
officers’ liability (including employment
practices) and supplementary legal expense
insurance contracts insuring against certain
liabilities (subject to exclusions) for all officers
of the company and its controlled entities
including the directors named in the report, the
Company Secretary, and all persons concerned
or taking part in the management of the
company and its controlled entities. The amount
is included in the directors and executives
remuneration shown in Notes 21 and 26 of the
consolidated financial statements.
The insurance is for costs and expenses
incurred in defending proceedings brought
against the directors and officers and all
persons acting in their capacity or taking part in
the management of the company and its
controlled entities.
1 9
Directors’ and Other Officers’ Emoluments
Remuneration Policy
The Remuneration Committee of the board of
directors is responsible for determining and
reviewing compensation arrangements for the
Managing Director and the executive team. The
Remuneration Committee assesses the
appropriateness of the nature of amounts of
emoluments of such officers on a periodic basis
by reference to the relevant employment
conditions, with the overall objective of ensuring
maximum stakeholder benefits from the
retention of the high quality executive team.
Such officers receive their emoluments in a
variety of forms including cash and fringe
benefits including motor vehicles.
To assist in achieving these objectives, the
Remuneration Committee links the nature and
amount of the Managing Director and officers
emoluments to the company’s financial and
operating performance. Senior executives have
the opportunity to qualify for participation in the
Executive Performance Plan which specifies
criteria to be met relating to profitability, return
on assets and earnings per share. Under the
plan there are two incentives, one based on
yearly performance and one based on discrete
three year periods. All performance plan
payments are subject to maximum amounts.
As a further incentive measure, employees of
the company may be invited to participate in the
GWA International Limited Employee Share Plan
(“Share Plan”). Under the Share Plan,
employees are issued shares in the company at
market value, which are repaid through
dividends, or in full upon an employee ceasing
employment with the company. Further details
regarding the Share Plan are provided in Note
19 to the financial statements.
Details of the nature and amount of each
emolument of each Director of the company and
each of the five executive officers of the
company and the consolidated entity receiving
the highest emoluments for the financial year
are as follows :
Emoluments of the Directors of GWA International Limited
Annual Emoluments
Base
Pay
$
172,500
86,250
B Thornton
J J Kennedy
2002/03
1 Year
Plan
$
2002/05
3 Year
Plan
$
Benefits
Other Termination
& Similar
Payments
$
$
Super
annuation
Total
$
$
-
-
-
-
250
250
-
-
15,525
188,275
7,763
94,263
G J McGrath
750,910
297,500
412,500
227,112
1,317,000
79,403
3,084,425
P C Crowley
268,073
200,000
D R Barry
R M Anderson
M D E Kriewaldt
59,450
57,500
69,000
-
-
-
-
-
-
-
23,169
250
250
250
-
-
-
-
14,641
505,883
5,351
5,175
5,675
65,051
62,925
74,925
Notes:
The retirement benefit for Mr McGrath includes an amount of $850,000 which Directors have
determined in recognition of Mr McGrath’s 43 years’ service to the Group’s businesses.
The bonus paid to Mr McGrath in relation to the 2002/05 three-year plan is on a pro rata basis.
The amount of $200,000 was provided in the 2001/02 year and the balance in 2002/03.
2 0
Emoluments of the Five Most Highly Paid Executives of the Company
and the Consolidated Entities
Base
Pay
$
208,600
Bonuses
$
-
Other
Benefits
$
Termination
& Similar
Payments
$
Super
annuation
Total
$
$
78,789
331,650
21,100
640,139
302,163
84,600
106,087
269,772
80,400
99,333
354,708
-
75,273
238,977
70,500
111,963
-
-
-
-
-
492,851
27,377
476,882
35,471
465,452
23,898
445,337
K G Schroder
Company Secretary
E J Harrison
Chief Financial Officer
S R Wright
Group Operations Manager
T Doyle
General Manager Caroma
J Pearce
General Manager Dorf Clark
Emoluments to Executives
The bonuses relate to the yearly incentive
payable based on the 2002/03 year results.
Amounts with respect to the 3 year incentive
plan (1 July 2001 to 30 June 2004) have been
provided for in the 2002/03 year and prior year,
but are not included in executive remuneration as
the incentive is not yet determined and therefore
the amounts provided are not due and payable.
Directors’ Meetings
Mr McGrath retired as Managing Director on
6 May 2003. Mr Crowley was appointed
Managing Director on 6 May 2003.
As at the date of this report, the company
had an Audit Committee, a Remuneration
Committee and Nomination Committee of the
board of directors.
The members of the Audit Committee are
Mr J J Kennedy (Chairman), Mr B Thornton and
Mr M D E Kriewaldt. The members of the
Remuneration Committee are
Mr M D E Kriewaldt (Chairman), Mr B Thornton
and Mr D R Barry The members of the
Nomination Committee are Mr B Thornton
(Chairman), Mr J J Kennedy and
Mr M D E Kriewaldt.
Directors’ Meetings
The number of meetings of Directors (including meetings of committees of Directors) held
during the year and the number of meetings attended by each Director were as follows:
Directors’
Meetings
Meetings of Committees
Remuneration
Nomination
Audit
Number of Meetings held:
Number of Meetings attended:
B Thornton
J J Kennedy
G J McGrath
P C Crowley
D R Barry
R M Anderson
M D E Kriewaldt
11
11
11
10
3
11
11
11
3
3
3
-
-
-
-
3
2
2
-
-
-
2
-
2
4
4
4
-
-
-
-
4
2 1
Rounding
The company is of a kind referred to in Class
Order 98/0100 issued by Australian Securities
Investment Commission relating to the rounding
of amounts in the Directors’ Report.
Amounts in the Directors’ Report have been
rounded off in accordance with that Class Order
to the nearest thousand dollars or, in certain
cases, to the nearest dollar.
Corporate Governance
In recognising the need for the highest
standards of corporate behaviour and
accountability, the Board’s current practices
conform with the Principles of Good Corporate
Governance and Best Practice
Recommendations released by the ASX
Corporate Governance Council on 31 March
2003. The company’s Corporate Governance
Statement is located on page 11 of the
Annual Report.
Auditor
Ernst & Young continues in office in accordance
with section 327 of the Australian Corporations
Regulations 2003.
Ernst & Young have confirmed to the Directors
that their independence as auditor has not
been compromised.
This report is made in accordance with a
resolution of the directors.
Signed in accordance with a resolution of the
Directors
B Thornton
Chairman
P C Crowley
Managing Director
Brisbane 2 September 2003
2 2
F I N A N C I A L S T A T E M E N T S
Statement of Financial Performance
24
Statement of Financial Position
25
Statement of Cash Flows
26
Notes to the Financial Statements
27
Directors’ Declaration
61
Independent Audit Report
62
Other Statutory Information
63
Corporate Directory
66
Head Office Locations
67
2 3
S T A T E M E N T O F F I N A N C I A L P E R F O R M A N C E
For the year ended 30 June 2003
Revenues from Ordinary Activities
Expenses related to ordinary activities
Borrowing costs related to ordinary activities
Profit from Ordinary Activities before Income Tax
Expense
Consolidated
Chief Entity
2003
$’000
2002
$’000
2003
$’000
2002
$’000
666,525
615,843
29,974
47,984
(573,093)
(14,856)
(534,258)
(14,940)
(6)
(684)
(8)
(673)
Notes
2
3(a)
3(b)
78,576
66,645
29,284
47,303
Income Tax Expense Relating to Ordinary Activities
4(a)
(23,569)
(19,995)
(377)
(368)
Net Profit Attributable to Members of GWA
International Limited
Net exchange difference on translation of financial
statements of foreign controlled entities
Total Changes in Equity other than those resulting from
Transactions with Owners as Owners
Basic earnings per share (cents per share)
Franked dividends per share (cents per share)
20
20
31
5
55,007
46,650
28,907
46,935
(1,646)
1,507
-
-
53,361
48,157
28,907
46,935
19.8
18.0
16.8
17.0
Note: The final dividend of 8c per share has not been provided for at 30 June 2003 under the new requirements of AASB 1044.
2 4
S T A T E M E N T O F F I N A N C I A L P O S I T I O N
As at 30 June 2003
Consolidated
Chief Entity
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
Current Assets
Cash assets
Receivables
Inventories
Other-Prepayments
Total Current Assets
Non-Current Assets
Receivables
Other Financial Assets
Property, plant and equipment
Brand names and other intellectual property
Goodwill
Deferred tax assets
Total Non-Current Assets
Total Assets
Current Liabilities
Payables
Interest bearing liabilities
Current tax liabilities
Provisions
Total Current Liabilities
Non-Current Liabilities
Interest bearing liabilities
Non-interest bearing liabilities
Deferred tax liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Retained profits
Total Equity
Contingent liabilities
Commitments for expenditure
88,505
83,977
66,817
81,309
117,638
114,308
2,884
4,570
-
495
-
-
-
564
-
-
293,004
267,004
495
564
4,367
5,773
400,541
371,130
-
-
325,646
325,646
166,152
172,174
356,212
357,327
1,775
2,675
22,105
16,791
-
-
-
-
-
-
-
-
550,611
554,740
726,187
696,776
843,615
821,744
726,682
697,340
67,372
58,756
-
16,127
33,735
-
13,448
49,775
117,234
121,979
-
28
377
-
405
-
12
395
20,823
21,230
296,183
296,252
11,750
11,750
-
-
367,663
318,980
1,179
1,532
15,232
14,132
-
-
-
-
312,594
311,916
379,413
330,730
429,828
433,895
379,818
351,960
413,787
387,849
346,864
345,380
345,493
345,124
345,493
345,124
(114)
1,532
-
68,408
41,193
1,371
-
256
413,787
387,849
346,864
345,380
6
7
8
9
10
11
12
13
4
14
15
4
16
17
17
4
18
19
20
20
23
24
2 5
S T A T E M E N T O F C A S H F L O W S
For the year ended 30 June 2003
Cash flows from operating activities
Receipts from customers
Consolidated
Chief Entity
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
806,110
732,637
1,874
1,835
Payments to suppliers and employees
(677,910)
(615,830)
-
-
Dividends received
Interest received
Borrowing costs
Income tax paid
-
-
28,100
46,150
2(b)
2,488
1,870
(13,281)
(17,007)
(26,000)
(14,624)
-
(690)
(395)
-
(682)
(376)
Net cash from operating activities
30
91,407
87,046
28,889
46,927
Cash flows from investing activities
Payments for property, plant and equipment
(24,392)
(32,976)
Proceeds from sale of property, plant and equipment
2(b)
1,849
2,296
Payment for acquisition of business
Net cash used in investing activities
Cash flows from financing activities
Repayment of borrowings
Proceeds from borrowings
Proceeds from issue of shares
Employee share plan loans
Repayment of employee share plan loans
-
(1,267)
(22,543)
(31,947)
-
508
370
(370)
1,067
(3,336)
-
861
(861)
662
-
-
-
-
-
-
-
-
-
-
-
-
370
(370)
1,067
861
(861)
662
Dividends paid
(48,615)
(45,811)
(48,615)
(45,811)
Proceeds from loans from related parties
Loan repaid by other parties
Loans to other parties
Loans to related parties
-
778
-
-
-
546
(1,617)
-
18,643
45,883
-
-
-
-
-
(47,649)
Net cash used in financing activities
(46,262)
(49,556)
(28,905)
(46,915)
Net increase/(decrease) in cash held
Cash/(Overdraft) at the beginning of the financial period
Effects of exchange rate changes on cash
22,602
66,817
(914)
5,543
60,770
504
Cash/(Overdraft) at the end of the financial period
6 & 15
88,505
66,817
(16)
(12)
-
(28)
12
(24)
-
(12)
Financing arrangements
17
2 6
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
As at 30 June 2003
Notes
Contents
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE FROM ORDINARY ACTIVITIES
EXPENSES FROM ORDINARY ACTIVITIES
INCOME TAX
DIVIDENDS
CURRENT ASSETS
Cash Assets
Receivables
Inventories
NON-CURRENT ASSETS
Receivables
Investments
Property, Plant and Equipment
Brand Names and Other Intellectual Property
Goodwill
CURRENT LIABILITIES
Payables
Interest Bearing Liabilities
Provisions
NON-CURRENT LIABILITIES
Interest Bearing Liabilities
Non-interest Bearing Liabilities
Provisions
EQUITY
Contributed Equity
Reserves and Retained Profits
REMUNERATION OF EXECUTIVES
REMUNERATION OF AUDITORS
CONTINGENT LIABILITIES
COMMITMENTS FOR EXPENDITURE
SUPERANNUATION COMMITMENTS
RELATED PARTIES
INVESTMENT IN CONTROLLED ENTITIES
DEED OF CROSS GUARANTEE
SEGMENT REPORTING
RECONCILIATION OF PROFIT FROM ORDINARY ACTIVITIES AFTER INCOME TAX
TO NET CASH FROM OPERATING ACTIVITIES
EARNINGS PER SHARE
EVENTS OCCURRING AFTER BALANCE DATE
FINANCIAL INSTRUMENTS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
2 7
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial report is a general purpose financial report which has been prepared in accordance with the
requirements of the Corporations Act 2001 which includes applicable Accounting Standards. Other mandatory
professional reporting requirements (Urgent Issues Group Consensus Views) have also been complied with.
The financial statements have been prepared in accordance with the historical cost convention.
(a) Changes in Accounting Policy
The accounting policies adopted are consistent with those of the previous year except for the accounting policies
with respect to the provision for dividends.
(i) Provision for dividends
The consolidated entity has adopted the new Accounting Standard AASB 1044 “Provisions, Contingent Liabilities
and Contingent Assets” which has resulted in a change in the accounting for the dividends provision. Previously,
the consolidated entity recognised a provision for dividend based on the amount that was proposed or declared
after the reporting date. In accordance with the requirements of the new Standard, a provision for dividends
will only be recognised at the reporting date where the dividends have been declared, determined or publicly
recommended prior to the reporting date. The effect of the revised policy has been to increase consolidated
retained profits and decrease provisions at the beginning of the year by $20,823,000 (refer to note 20(b)).
In accordance with the new Standard, no provision for dividend has been recognised for the year ended
30 June 2003.
(b) Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by GWA
International Limited (“the chief entity”) as at 30 June 2003 and the results of all controlled entities for the year
then ended. GWA International Limited and its controlled entities together are referred to in this financial report as
the economic entity. The effects of all transactions between entities in the economic entity are eliminated in full.
Where control of an entity is obtained during a financial year, its results are included in the consolidated
statement of financial performance from the date on which control commences. Where control of an entity ceases
during a financial year its results are included for that part of the year during which control existed.
(c) Income Tax
Tax effect accounting procedures are followed whereby the income tax expense in the net profit is matched with
the accounting profit after allowing for permanent differences. The future income tax benefit relating to tax losses
is not carried forward as an asset unless the benefit can be regarded as being virtually certain of realisation.
Income tax on net cumulative timing differences is set aside to the deferred income tax and future income tax
benefit accounts at the rates which are expected to apply when those timing differences reverse. No provision is
made for additional taxes which could become payable if certain reserves of the foreign controlled entities were
to be distributed as it is not expected that any substantial amount will be distributed from those reserves in the
foreseeable future.
The income tax expense for the year is calculated using the 30% tax rate (2002:30%).
(d) Foreign Currency Translation
Foreign currency transactions are initially translated into Australian currency at the rate of exchange at the
date of the transaction. At balance date amounts payable and receivable in foreign currencies are translated to
Australian currency at rates of exchange current at that date. Resulting exchange differences are recognised in
determining the profit and loss for the year.
Specific Commitment
Forward exchange contracts of generally less than 12 months are entered into to hedge the purchase of
components, trading stock and major plant and equipment. Gains or costs arising on entry into a hedge
transaction and subsequent exchange gains and losses resulting from those transactions up to the date of
purchase are deferred and included in the measurement of the purchase cost.
Foreign Controlled Entities
The foreign controlled entities are self-sustaining and exchange differences arising on translation are taken
directly to the foreign currency translation reserve.
2 8
(e) Acquisition of Assets
The cost method of accounting is used for all acquisitions of assets regardless of whether shares or other assets
are acquired. Cost is determined as the fair value of the assets given up at the date of acquisition plus costs
incidental to the acquisition.
(f)
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost comprises direct materials, direct labour
and an appropriate proportion of variable and fixed manufacturing overhead expenditure for work in progress and
finished goods. Costs are assigned to individual items of stock, mainly on the basis of weighted average costs.
(g) Recoverable Amount
Non-current assets are not carried at an amount above their recoverable amount and where carrying values
exceed this recoverable amount assets are written down. In determining recoverable amount, the expected net
cash flows have been discounted to their present value using a market determined risk adjusted discount rate.
(h) Investments
Interests in companies, other than controlled entities and investments in listed companies, are shown as
investments at cost, and dividend income is recognised in the statement of financial performance when received.
(i) Leasehold Improvements
The cost of improvements to or on leasehold properties is capitalised and amortised over the unexpired period of
the lease or the estimated useful life of the improvement, whichever is the shorter.
(j) Leased Non-Current Assets
A distinction is made between finance leases which effectively transfer from the lessor to the lessee substantially
all the risks and benefits incidental to the ownership of non-current assets (finance leases), and operating leases
under which the lessor effectively retains substantially all such risks and benefits of ownership.
Where a non-current asset is acquired by means of a finance lease, the asset is established at its fair value at the
inception of the lease. The liability is established at the same amount. Lease payments are allocated between the
principal component and the interest expense.
Operating lease payments are representative of the pattern of benefits derived from the leased assets and
accordingly are recognised in profit from ordinary activities in equal installments over the lease term.
(k) Non-Current Assets Constructed by the Economic Entity
The cost of non-current assets constructed by the economic entity includes the cost of all materials used in the
construction, direct labour on the project and an appropriate proportion of variable and fixed overhead including
borrowing costs.
(l) Depreciation
Depreciation is calculated on a straight line basis to write off the cost of each item of property, plant and
equipment over its expected useful life. Estimates of remaining useful lives are made on a regular basis for all
assets.
Major depreciation periods are:
Freehold Buildings
Plant & Equipment
Motor Vehicles
2003
40 years
3 - 10 years
5 years
2002
40 years
3 - 10 years
5 years
Major spares purchased specifically for particular plant are included in the cost of plant and are depreciated
accordingly.
(m) Brand Names and Other Intellectual Property
Brand names and other intellectual property includes brand names and trademarks. Expenditure incurred in
developing, maintaining or enhancing brand names is written off against profit from ordinary activities in the year
in which it is incurred.
The brand names are not amortised as the directors believe that their useful lives are of such duration that the
amortisation charge, if any, would not be material. The carrying value of these brand names and other intellectual
property is reviewed each year to ensure that it is not in excess of their recoverable amount.
2 9
(n) Maintenance and Repairs
Maintenance, repair costs and minor renewals are recognised as expenses as incurred.
(o) Service Warranties
Provision is made, out of revenue, for the estimated liability on all products still under warranty at balance date.
This provision is estimated having regard to service warranty experience on each class of products.
(p) Cash
For the purposes of the statements of cash flows, cash includes cash on hand and in banks and money market
investments readily convertible to cash, net of outstanding bank overdrafts.
Goods and Services tax received from customers is included in cash flows from customers while Goods and
Services tax paid on supplies, acquisitions and plant and equipment is included in payments to suppliers and
employees.
Goods and Services tax is not included in revenue or expenses and is included in receivables and payables.
(q) Employee Benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the
reporting date. These benefits include wages and salaries, annual leave, sick leave and long service leave.
Liabilities arising in respect of wages and salaries, annual leave, sick leave and any other employee benefits
expected to be settled within twelve months of the reporting date are measured at their nominal amounts expected
to be paid in the year following the reporting date. All other employee benefit liabilities are measured at the present
value of the estimated future cash outflows to be made in respect of services provided by employees up to the
reporting date. In determining the present value of future outflows, the interest rates attaching to government
guaranteed securities which have terms to maturity approximating the terms of the related liability are used.
Employee benefit expenses and revenues arising in respect of the following categories:
(cid:127) wages and salaries, annual leave, long service leave, sick leave and other leave entitlements; and
(cid:127)
other types of employee benefits,
are recognised against profits in their respective categories.
(r) Earnings per Share
Basic earnings per share is determined by dividing the profit from ordinary activities by the weighted average
number of ordinary shares outstanding during the financial year.
(s) Financial Instruments
The economic entity has non-current borrowings and operates internationally, giving rise to significant exposure
to market risks from changes in interest rates and foreign exchange rates. Derivative financial instruments are
utilised by the economic entity to reduce those risks, as explained in this note.
Interest Rate Related Derivatives
An entity within the economic entity enters into various types of interest rate contracts with the major banks
in managing its floating interest rate risk on a portion of its non-current borrowings. Gains and losses on these
contracts are accounted for on the same basis as the underlying borrowing they are hedging.
Exchange Rate Related Derivatives
Entities within the economic entity enter into various types of foreign exchange contracts with the major banks
in managing its foreign exchange risk with purchases of raw materials and finished goods for resale. Gains or
costs arising on entry into a hedge transaction are included in the measurement of the purchase cost. Subsequent
exchange gains and losses resulting from those transactions up to the date of purchase are deferred and included
in the measurement of the purchase cost, where the hedge is of a specified commitment. Where the hedge
is general in nature, exchange gains and losses are included in the statement of financial performance
when they arise.
3 0
(t) Goodwill
Goodwill represents the excess of the purchase consideration over the fair value of the identifiable net assets
acquired at the time of acquisition of shares in the controlled entity. Goodwill is amortised on a straight line basis
over the shorter of 20 years and the minimum period during which the benefits are expected to arise. The goodwill
purchased with the Gainsborough Hardware Industries Limited acquisition was first amortised in the 1995/96 year
on a straight line basis over a period of 10 years. The goodwill purchased with the acquisition of the exclusive
import and distribution rights to Hansa tapware products has been fully amortised on a straight line basis over a
period of 5 years. Amortisation periods are reviewed at each balance date. No goodwill was acquired during the
year ended 30 June 2003.
(u) Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the
revenue can be reliably measured. The following specific recognition criteria must also be met before revenue
is recognised:
Sale of Goods
Control of the goods has passed to the buyer.
Rendering of Services
Where the contract outcome can be reliably measured, control of a right to be compensated for the services
has been attained and the stage of completion can be reliably measured. Stage of completion is measured by
reference to the labour hours incurred to date as a percentage of total estimated labour hours for each contract.
Where the contract outcome cannot be reliably measured, revenue is recognised only to the extent that costs
have been incurred.
Interest
Control of a right to receive consideration for the provision of, or investment in, assets has been attained.
Dividends
Control of a right to receive consideration for the investment in assets is attained, dividend income is recognised
in the statement of financial performance when received.
(v) Revenue Measurement
The measurement of revenue from the sale of goods is sales revenue net of trade discounts and volume rebates.
3 1
Consolidated
Chief Entity
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
2. REVENUE FROM ORDINARY ACTIVITIES
(a) Revenues from Operating Activities
- Sale of goods
1 (v)
659,589
609,535
-
-
(b) Revenues from Non-operating Activities
- Dividends received/receivable – controlled entities
- Interest received/receivable – other corporations
- Proceeds from the sale of property, plant and equipment
- Foreign exchange gains
- Unit Trust Distribution
- Other
Total Revenues from Non-Operating Activities
-
2,488
1,849
1,220
-
1,379
6,936
-
28,100
46,150
1,870
2,296
1,419
-
723
-
-
-
-
-
-
1,874
1,834
-
-
6,308
29,974
47,984
Total Revenues from Ordinary Activities
666,525
615,843
29,974
47,984
3. EXPENSES FROM ORDINARY ACTIVITIES
(a) Expenses related to Ordinary Activities
- Cost of Sales
- Selling and distribution
- Administration
- Other
Total Expenses related to Ordinary Activities
(b) Borrowing costs
Interest expense
- Controlled entities
- Other Corporations
Total borrowing costs expensed
368,211
338,115
125,408
119,498
72,986
68,431
6,488
8,214
573,093
534,258
-
14,856
14,856
-
14,940
14,940
-
-
6
-
6
684
-
684
-
-
8
-
8
673
-
673
Profit from Ordinary Activities before Income
Tax Expense
78,576
66,645
29,284
47,303
Income Tax Expense Relating to Ordinary Activities
4(a)
(23,569)
(19,995)
(377)
(368)
Net profit Attributable to Members
of GWA International Limited
55,007
46,650
28,907
46,935
Retained earnings at beginning of year
20(b)
41,193
41,770
256
548
Adjustment arising from the adoption of revised
accounting standard AASB 1044 “Provisions, Contingent
Liabilities and Contingent Assets”
1 (a) (i)
20,823
-
20,823
-
Total available for appropriation
117,023
88,420
49,986
47,483
Dividends provided for or paid
20(b)
(48,615)
(47,227)
(48,615)
(47,227)
Retained Earnings
68,408
41,193
1,371
256
3 2
3. EXPENSES FROM ORDINARY ACTIVITIES (Continued)
(c) Losses/(Gains)
Net Loss/(Gain) on sale of property, plant and equipment
Net Foreign exchange (Gain)/Loss – other
– realised
– unrealised
(d) Other Expenses
Amortisation – Goodwill
Depreciation of Non Current Assets
- Freehold Buildings
- Plant and Equipment
- Motor Vehicles
Total Depreciation and Amortisation Expense
Other charges against assets
- Write down of inventories
- Provision for doubtful debts and bad debts written off
Total other charges/(credits) against assets
Other provisions
- Service warranties
- Employee benefits and on costs
- Insurances (inc Workers Compensation)
- Other
Total other provisions
Rental expense relating to operating leases
- Properties
- Plant
Research and development
Consolidated
Chief Entity
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
1,059
(355)
221
142
(84)
(136)
900
931
1,137
1,137
23,255
24,021
2,742
2,723
28,034
28,812
8,766
902
9,668
2,584
839
3,423
3,586
2,955
15,547
13,796
2,885
4,926
2,846
6,762
26,944
26,359
7,446
688
6,889
665
5,770
5,064
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3 3
Consolidated
Chief Entity
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
4.
INCOME TAX
(a) Reconciliation of income tax expense
Profit from ordinary activities before income tax
78,576
66,645
29,284
47,303
Prima facie tax on profit from ordinary activities
(30%, 2002 - 30%)
Tax effect of permanent differences:
Non deductible building depreciation and allowances
Non allowable expenditure
Goodwill amortisation
Research and development allowance
Finalisation tax rate change
Rebateable dividends
23,573
19,994
8,785
14,191
134
1,246
270
(34)
-
-
170
1,327
270
-
(32)
22
22
-
-
-
-
-
-
-
-
-
(8,430)
(13,845)
Income tax adjusted for permanent differences
25,189
21,729
377
368
Effect of different rates of tax on overseas income
96
324
Under/(over) provision in previous year
(1,716)
(2,058)
-
-
-
-
Income tax expense attributable to ordinary activities
23,569
19,995
377
368
(b) Deferred tax assets and liabilities
Current tax payable
Provision for deferred income tax – non-current
Future income tax benefit – non-current
(c) No part of the future income tax benefit shown
in (b) is attributable to tax losses.
16,127
13,448
377
395
1,179
1,532
22,105
16,791
-
-
-
-
3 4
5. DIVIDENDS
Ordinary
Franked dividend paid
-
-
-
Final dividend 2002 under provided
Interim (7.5c per share, 2002: 7.0c)
Special (2.5c per share, 2002: 2.5c)
Franked dividend proposed
-
Final (2002: 7.5c)
Consolidated
Chief Entity
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
12
-
12
-
20,835
19,435
20,835
19,435
6,945
6,941
6,945
6,941
-
20,823
-
20,823
Total dividends provided or paid
27,792
47,199
27,792
47,199
Dividends proposed and not recognised as a liability
Final dividend (8c per share) – 100% franked
22,224
-
22,224
-
The franked portions of the proposed dividends will
be franked out of existing franking credits.
The amount of retained profits that could be distributed as
dividends and be franked out of existing franking credits
and out of franking credits arising from the payment
of income tax for the year ending 30 June 2003 after
deducting franking credits applicable
to proposed dividends:
-
-
-
Franking account balance as at the end of the
financial year stated at 30% (2002: 30%)
Franking credits that will arise from the payment
of the income tax payable after the end of the
financial year
Franking debits that will arise from the payment
of dividends after the end of the financial year
The amount of franking credits, at 30% which represent
dividends able to be franked and available for the
subsequent financial year (2002: 30%)
The tax rate at which dividends paid have been franked is
30% (2002: 30%).
The final dividend proposed will be franked at 30% when
paid in October 2003.
As of 1 July 2002, the new imputation system requires
a company’s franking credits to be expressed on a tax-
paid basis. The franking account surplus existing at
30 June 2002 has been restated to a tax paid amount by
multiplying the class C franking surplus by 30/70.
19,987
15,579
14,550
11,977
-
(8,924)
34,537
18,632
3 5
6. CASH ASSETS
Cash at bank and on hand
Deposits at call
7. RECEIVABLES (CURRENT)
Trade debtors
Provision for doubtful debts
Other debtors
Unsecured other loans
- Employee share plan
Included in unsecured other loans - employee share plan,
are loans to Directors (refer note 26).
Movement in provision for doubtful debts
Balance at beginning of the year
- Effect of exchange rate changes
on opening balance
- Bad debts previously provided for written-
off during the year
- Bad and doubtful debts provided
for during the year
Balance at the end of the year
8.
INVENTORIES
Raw materials - at cost
Provision for diminution in value
Finished goods - at cost
Provision for diminution in value
Work in progress - at cost
Consolidated
Chief Entity
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
41,889
46,616
88,505
44,406
22,411
66,817
85,851
82,079
(3,908)
(3,420)
81,943
78,659
1,539
2,086
-
-
-
-
-
-
-
-
-
-
-
-
-
-
495
564
83,977
81,309
495
495
564
564
3,420
3,740
(29)
25
(351)
(735)
-
-
-
-
-
-
868
3,908
390
3,420
-
-
-
-
26,793
25,774
(3,832)
(1,736)
22,961
24,038
91,093
82,939
(9,357)
(5,753)
81,736
77,186
12,941
13,084
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total inventories at lower of cost and net realisable value
117,638
114,308
Movement in Provisions
Inventory Provisions
Opening balance
Additional provisions
Stock written off against provision
Closing balance
7,489
8,766
7,841
2,584
(3,066)
(2,936)
13,189
7,489
3 6
Consolidated
Chief Entity
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
9. RECEIVABLES (NON-CURRENT)
Amount owing by controlled entities
-
-
396,730
366,691
Unsecured other loans
- Employee share plan
- Other
Included in unsecured other loans - employee share plan,
are loans to Directors of controlled entities (refer note 26).
10. INVESTMENTS
Unlisted investments
3,811
556
4,367
4,439
1,334
5,773
3,811
4,439
-
-
400,541
371,130
Shares in controlled entities - at cost (refer note 27)
-
-
-
325,646
325,646
-
325,646
325,646
11. PROPERTY, PLANT AND EQUIPMENT
Freehold land at cost
29,119
29,124
-
-
Freehold buildings at cost
Less accumulated depreciation
Plant and equipment at cost
Less accumulated depreciation
Motor vehicles at cost
Less accumulated depreciation
Total Written Down Amount
Recent Valuations
41,471
41,595
(7,675)
(6,675)
33,796
34,920
225,461
222,337
(131,158)
(123,675)
94,303
98,662
13,999
14,247
(5,065)
(4,779)
8,934
9,468
166,152
172,174
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Land and buildings are progressively, and independently
assessed over a three-year period. As at 30 June 2003 the
Directors have received independent valuations on land
and buildings which have not been valued within the last
three years. The most recent valuations for all land and
buildings are as follows (note valuations have not been
recognised):
- Freehold Land
- Buildings
47,550
37,220
43,000
37,000
-
-
-
-
3 7
Consolidated
Chief Entity
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
11. PROPERTY, PLANT AND EQUIPMENT (Continued)
Reconciliations
Freehold land
Carrying amount at beginning
29,124
29,116
Additions
Disposals
Depreciation
Net foreign currency movements arising from self-
sustaining foreign operation
Freehold buildings
Carrying amount at beginning
Additions/Improvements
Disposals
Depreciation
Net foreign currency movements arising from self-
sustaining foreign operation
Plant and Equipment
Carrying amount at beginning
Additions
Disposals
Depreciation
Net foreign currency movements arising from self-
sustaining foreign operation
Motor Vehicles
Carrying amount at beginning
Additions
Disposals
Depreciation
Net foreign currency movements arising from self-
sustaining foreign operation
-
-
-
(5)
-
-
-
8
29,119
29,124
34,920
35,516
75
-
451
-
(1,137)
(1,137)
(62)
90
33,796
34,920
98,662
20,437
(1,304)
95,140
28,157
(885)
(23,255)
(24,021)
(237)
271
94,303
98,662
9,468
3,880
(1,664)
(2,742)
(8)
8,934
9,519
4,368
(1,731)
(2,723)
35
9,468
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total Written Down Amount
166,152
172,174
-
-
3 8
12. BRAND NAMES AND OTHER INTELLECTUAL PROPERTY
As at 30 June 2003 Brand Names and Other Intellectual Property of $356.2 million (2002: $357.3 million) are being
carried at cost (2002: at cost). PricewaterhouseCoopers Securities Limited provided GWA International Limited
with an opinion dated 26 August 2003, in their opinion, the fair market value of the Brand Names and other
Intellectual Property was not less than its carrying value of $356.2 million as at 30 June 2003 (2002: $357.3 million)
and the directors would be justified in continuing to carry it at that amount.
The Directors are of the opinion that no events have occurred that would diminish the above carrying value.
Consolidated
Chief Entity
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
13. GOODWILL
Goodwill
Accumulated amortisation
14. PAYABLES
Trade creditors
Other creditors
8,975
10,587
(7,200)
(7,912)
1,775
2,675
59,516
55,582
7,856
3,174
67,372
58,756
-
-
-
-
-
-
-
-
-
-
-
-
-
28
12
15. INTEREST BEARING LIABILITIES (CURRENT)
Unsecured bank overdraft
16. PROVISIONS (CURRENT)
Dividends
Employee benefits and on costs
Warranty
Insurances (including Workers Compensation)
Other
-
-
18,632
4,633
2,993
7,477
20,823
16,391
4,369
1,848
6,344
33,735
49,775
-
-
-
-
-
-
20,823
-
-
-
-
20,823
3 9
17. NON-CURRENT LIABILITIES
Interest bearing liabilities
Unsecured
Bank loans
Loans from controlled entities
Total Interest Bearing Liabilities
Non interest bearing liabilities
Unsecured loans from controlled entities
Total Non Interest Bearing Liabilities
Consolidated
Chief Entity
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
296,183
296,252
-
-
296,183
296,252
-
11,750
11,750
-
11,750
11,750
-
-
-
-
367,663
318,980
367,663
318,980
Financing Arrangements
GWA International Limited, GWA Finance Pty Limited, a wholly owned controlled entity of GWA International
Limited and each other controlled entity of GWA International Limited have entered into a Master Financing
Agreement with a number of banks.
This document provides for the following:
(1) GWA Finance Pty Limited and certain other operating controlled entities to borrow and enter into certain risk
and hedging facilities;
(2) Individual banks to provide facilities direct to GWA Finance Pty Limited and certain other operating controlled
entities of GWA International Limited by joining the Master Financing Agreement and being bound by the
common covenants and conditions contained therein.
Unrestricted access was available at balance date to the
following lines of credit:
Total facilities
Bank overdrafts
Other bank facilities
Used at balance date
Bank overdrafts
Other bank facilities
Unused at balance date
Bank overdrafts
Other bank facilities
6,000
8,926
-
-
312,542
353,148
-
-
318,542
362,074
-
-
-
-
-
-
296,183
317,412
-
-
296,183
317,412
-
-
6,000
16,359
22,359
8,926
-
-
35,736
-
-
44,662
-
-
4 0
18. PROVISIONS (NON-CURRENT)
Employee benefits and on costs
Warranty
Other
Total Employee benefits and on costs
Movement in total provisions (Current and Non-current)
(i) Employee benefits and on costs
Opening Balance
Additional provisions
Provisions utilised
Closing Balance
(ii) Warranty
Opening Balance
Additional provisions
Provisions utilised
Closing Balance
(iii) Insurances (including Workers Compensation)
Opening Balance
Additional provisions
Provisions utilised
Closing Balance
(iv) Other:
Opening Balance
Additional provisions
Provisions utilised
Closing Balance
Consolidated
Chief Entity
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
10,446
2,424
2,362
15,232
29,078
9,322
2,354
2,456
14,132
25,713
25,713
15,547
23,432
13,796
(12,182)
(11,515)
29,078
25,713
6,723
3,586
(3,252)
7,057
1,848
2,885
(1,740)
2,993
8,800
4,926
(3,887)
9,839
6,940
2,955
(3,172)
6,723
609
2,846
(1,607)
1,848
6,129
6,762
(4,091)
8,800
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4 1
Consolidated
Chief Entity
2003
$’000
2002
$’000
2003
$’000
2002
$’000
19. CONTRIBUTED EQUITY
(a) Issued and fully paid up capital
277,802,995 (2002: 277,642,995) ordinary shares fully paid
345,493
345,124
345,493
345,124
Movements in issued paid up capital
Ordinary shares
Balance at 1 July 2002
Issue of shares to employees at $2.31 per share
(2002: $2.18)
Balance at 30 June 2003
Terms and Conditions of Contributed Equity
2003
Number
2003
$’000
2002
Number
2002
$’000
277,642,995
345,124 277,247,995
344,263
160,000
369 395,000
861
277,802,995
345,493 277,642,995
345,124
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to
participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up
on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.
(b) Dividend Reinvestment Plan and Share Purchase Plan
Suspended
On the 8 February 2000 the Directors suspended the Dividend Reinvestment Plan and the Share Purchase Plan.
(c) Employee Share Plan
The employee share plan was established to assist in the retention and motivation of employees. All permanent
employees of the Company, who are invited to participate, may participate in the Plan.
The maximum number of shares subject to the plan at any time may not exceed 5% of the nominal amount of all
Ordinary Shares on issue. The Plan does not provide for the issue of options and no options have been issued by
the company.
The prices of shares issued under the Plan are the market price at the time of issue, which are repaid through
dividends, or in full upon an employee ceasing employment with the company. During the 2002/03 year,
160,000 (2002: 395,000) ordinary shares were issued at a price of $2.31 (2002: $2.18), a total market value of $369,600
(2002: $861,100).
As at 30 June 2003, loans are issued for 3,300,000 (2002: 3,762,500) shares and the remaining balances of these
loans were $4,305,865 (2002: $5,003,090).
During the 2002/03 year, dividends of $607,187 (2002: $622,212) were paid against the loans and a further $459,637
(2002: $40,273) were paid by employees against these loans.
There are no entitlements to further issues at balance date.
(d) Options
No options have been issued at any time.
4 2
20. RESERVES AND RETAINED PROFITS
(a) Foreign Currency Translation Reserve
(i) Nature and purpose of reserve
The foreign currency translation reserve is used to record
exchange differences arising from the translation of the
financial statements of self-sustaining foreign operations
(ii) Movements in reserve
Balance at beginning of year
Net exchange gain/(loss) on translation of foreign
controlled entities
Balance at end of year
(b) Retained Profits
Balance at beginning of year
Net Profit attributable to members
Adjustment arising from adoption of revised accounting
standard AASB1044 “Provisions, Contingent Liabilities and
Contingent Assets”
Total available for appropriation
Dividends provided for or paid
Balance at end of year
Consolidated
Chief Entity
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
1,532
25
(1,646)
(114)
1,507
1,532
-
-
-
-
-
-
41,193
55,007
41,770
46,650
256
548
28,907
46,935
20,823
-
117,023
88,420
20,823
49,986
-
47,483
(48,615)
(47,227)
(48,615)
(47,227)
68,408
41,193
1,371
256
Consolidated
Chief Entity
Notes
2003
$
2002
$
2003
$
2002
$
21. REMUNERATION OF EXECUTIVES
Remuneration received or due and receivable by Executive
Officers of the consolidated entity whose remuneration is
$100,000 or more from entities in the consolidated entity or
a related party, in connection with the management of the
affairs of the entities in the consolidated entity whether as an
Executive Officer or otherwise:
Remuneration received or due and receivable by Executive
Officers of the Company whose remuneration is $100,000 or
more, from the Company or any related party, in connection
with the management of the affairs of the Company or any
related party, whether as an Executive Officer or otherwise:
17,228,813 12,335,405
7,686,361
5,346,750
4 3
21. REMUNERATION OF EXECUTIVES (Continued)
The number of Executive Officers (including the Executive
Director of the economic entity and the Company) whose
remuneration falls within the following bands:
$’000
$’000
Economic Entity
Chief Entity
2003
2002
2003
2002
110
120
130
140
150
160
170
180
190
200
210
220
230
240
250
260
270
290
300
310
320
330
340
350
360
370
390
400
410
430
440
450
460
470
490
500
640
1,160
3,080
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
120
130
140
150
160
170
180
190
200
210
220
230
240
250
260
270
280
300
310
320
330
340
350
360
370
380
400
410
420
440
450
460
470
480
500
510
650
1,170
3,090
2
1
2
2
5
1
4
2
6
3
1
2
3
2
1
1
2
1
-
-
2
1
2
1
-
1
1
1
-
-
1
-
1
1
1
1
1
-
1
-
5
3
1
1
3
3
8
3
-
1
2
2
-
1
1
-
1
1
3
2
-
-
-
1
2
-
-
1
1
-
1
-
-
-
1
-
1
-
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
1
1
-
-
-
1
-
-
1
-
1
1
1
1
1
-
1
-
-
-
-
-
-
1
1
-
-
-
-
-
-
-
-
-
-
1
2
1
-
-
-
-
2
-
-
1
1
-
1
-
-
-
1
-
1
-
4 4
Consolidated
Chief Entity
Notes
2003
$
2002
$
2003
$
2002
$
258,100
199,000
8,400
10,000
68,420
104,310
66,000
12,650
11,500
211,135
28,150
25,800
-
-
-
-
-
-
-
-
432,170
552,895
8,400
10,000
90,424
73,860
-
-
522,594
626,755
8,400
10,000
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
22. REMUNERATION OF AUDITORS
Amounts received or due and receivable by the auditors
of GWA International Limited for:
-
-
an audit or review of the financial report of the entity
and any other entity in the consolidated entity
other services in relation to the entity and any other
entity in the consolidated entity
Tax advisory and compliance
Acquisition due diligence services
Superannuation advice and assistance
Other
Amounts received or due and receivable by auditors other
than the auditors of GWA International Limited for:
-
an audit or review of the financial report of subsidiary
entities
23. CONTINGENT LIABILITIES
Details and estimates of maximum amounts of contingent
liabilities, classified in accordance with the party from
whom the liability could arise and for which no provisions
are included in the accounts, are as follows:
Bank guarantees
618
404
-
-
Cross guarantee by GWA International Limited as
described in Note 28. All these companies have assets in
excess of liabilities.
A claim for damages, arising from alleged breach of
contract and related matters, against Sebel Furniture
Limited, was litigated in the Federal Court in April/June
2002. In a decision handed down on 12 March 2003 this
claim was dismissed. The decision was not appealed and
Sebel’s recovery of costs of $604,000 has been brought to
account in the 2002/03 financial statements.
The previous freight carrier for Dux has lodged an action
in the Industrial Relations Commission of NSW with
claims totalling $3.6M. Dux is defending the claim. No
provision has been made in the financial report for the
claimed compensation.
4 5
Consolidated
Chief Entity
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
24. COMMITMENTS FOR EXPENDITURE
(a) Capital expenditure commitments
Total capital expenditure contracted for at balance date but
not provided for in the accounts payable:
Not later than one year
(b) Lease expenditure commitments
Operating lease (non-cancelable) expenditure contracted for
at balance date:
Not later than one year
Later than one year but not later than 5 years
Later than 5 years
3,886
4,240
6,830
15,382
1,080
6,174
8,751
1,069
Aggregate lease expenditure contracted for at balance date
23,292
15,994
Aggregate expenditure commitments comprise:
Amounts not provided for:
- rental commitments
Total not provided for
Aggregate lease expenditure contracted for at balance date
23,292
15,994
23,292
23,292
15,994
15,994
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25. SUPERANNUATION COMMITMENTS
GWA International Limited has been the sponsor, and principal employer, of the members of the two
superannuation funds, GWAIL Group Retirement Fund and GWAIL Superannuation Fund.
During the previous year GWA International Limited reviewed its superannuation arrangements and resolved to
terminate its role as sponsor and principal employer of the two Funds.
GWAIL Group Retirement Fund
The Defined Benefits categories of the GWAIL Group Retirement Fund were discontinued effective 30 June 2002.
Members have transferred their benefits to other superannuation funds including ING Corporate Super Master
Trust.
As at 30 June 2003 all members had transferred from the fund. The total remaining assets are $121,494.00.
These assets are held in cash. This is expected to be sufficient to meet the remaining liabilities of contributions
surcharge and administration costs.
4 6
26. RELATED PARTIES
Directors
The names of persons who were directors of GWA International Limited at any time during the financial year are
as follows:
B Thornton
J J Kennedy
G J McGrath (Retired 6th May 2003)
D R Barry
R M Anderson
M D Kriewaldt
P C Crowley (Appointed Managing Director 6th May 2003)
Remuneration of Directors
Income paid or payable, or otherwise made available, in
respect of the financial year to all Directors of each entity
in the consolidated entity, directly or indirectly, by entities
of which they are Directors or any related party:
Income paid or payable, or otherwise made available,
in respect of the financial year, to all Directors of GWA
International Limited, directly or indirectly, from the entity
or any related party:
Directors of Entities in
the Economic Entity
Directors of the
Chief Entity
2003
$
2002
$
2003
$
2002
$
4,075,745
1,765,824
-
-
-
-
4,075,745
1,765,824
The number of Directors of GWA International Limited whose income (including superannuation contributions)
falls within the following bands is:
$’000
$’000
50
60
70
80
90
160
180
500
1,160
3,080
-
-
-
-
-
-
-
-
-
60
70
80
90
100
170
190
510
1,170
3,090
Directors of the Chief Entity
2003
2002
-
2
1
-
1
-
1
1
-
1
2
1
-
1
-
1
1
-
1
-
4 7
26. RELATED PARTIES (Continued)
Loans to Directors
Loan repayments received:
Employee Share Plan
G.J. McGrath
K.G. Schroder
Aggregate loans given during year
Loan balances:
Unsecured loans
Directors of chief entity
Directors of controlled entities
Interest revenue on loans
Consolidated
Chief Entity
Notes
2003
$
2002
$
2003
$
2002
$
25,594
32,375
24,131
30,525
-
-
25,594
24,131
-
-
-
-
242,368
267,962
242,368
267,962
107,025
139,400
-
-
349,393
407,362
242,368
267,962
-
-
-
-
The Employee Share Plan loans are interest free and repayable over 15 years or earlier in certain circumstances.
Dividends paid on the shares acquired under the Plan are applied against the balance of the loan outstanding. An
appropriate holding lock applies to the shares issued under the Plan until the loan has been repaid in full.
There are no other unsecured Directors Loans outstanding at balance date.
Loans to Directors are included in the loans disclosed in Notes 7 and 9.
Transactions of Directors and Director Related Entities concerning Shares
Aggregate numbers of shares of GWA International Limited transacted by Directors of the consolidated entity or
their Director related entities from the Company were as follows:
Acquired:
Ordinary shares
Disposed:
Ordinary shares
Director retired
Director related entities:
2003
2002
0
0
(45,000)
(500,000)
(754,275)
(10,000)
Ordinary shares – Acquired control or significant influence over the entity
Ordinary shares – Released control or significant influence over the entity
1,108,000
(404,000)
195,000
(51,000)
The Dividend Re-Investment and Share Purchase Plan have been suspended.
Aggregate number of shares of GWA International Limited held directly, indirectly or beneficially by Directors or
their related entities at balance date:
Ordinary shares
2003
2002
46,705,306
46,800,581
4 8
26. RELATED PARTIES (Continued)
Transactions with Directors & Director Related Entities
Mr B Thornton is a director of Great Western Corporation Pty Ltd. Certain entities in the economic entity have
purchased and sold components and tooling from and to Great Western Corporation Pty Ltd on normal commercial
terms and conditions during the year for a net purchase consideration of $485,197 (2002: $425,600). At reporting
date $99,471 (2002: $64,790) formed part of trade creditors.
An entity in the economic entity has sold products to Directors & Director related entities on normal commercial
terms and conditions during the year, these transactions were domestic in nature.
Transactions Concerning Wholly Owned Group
The wholly owned Group consists of GWA International Limited and its wholly owned controlled entities, such
ownership interests being set out in Note 27.
Transactions between GWA International Limited and wholly owned controlled entities during the year ended 30
June 2003 consisted of:
(1) loans advanced by and to GWA International Limited;
(2) loans repaid to and by GWA International Limited;
(3) the payment of dividends to GWA International Limited; and
(4) the payment of interest by GWA International Limited.
The above transactions included an interest charge at commercial rates with no fixed repayment terms for certain
intercompany loans.
Aggregate amounts included in the determination of profit from ordinary activities before income tax that resulted
from transactions with wholly owned controlled entities were as follows:
Dividend revenue
Trust revenue
Interest expense
Chief Entity
2003
$’000
28,100
1,874
684
2002
$’000
46,150
1,834
673
Aggregate amounts receivable from and payable to wholly owned controlled entities at balance date were
as follows:
Non-current receivables
Non-current borrowings
Controlling entities
2003
$’000
396,730
379,413
2002
$’000
366,691
330,730
The ultimate controlling entity and the ultimate Australian controlling entity in the wholly owned group is GWA
International Limited.
Ownership Interests in Related Parties
Interests held in controlled entities are set out in Note 27.
4 9
27. INVESTMENT IN CONTROLLED ENTITIES
(a) Name o f Entity
Chief Entity
GWA International Limited
Controlled Entities
GWA Group Limited
Gainsborough Hardware Industries Limited
Gainsborough Hardware Limited
Caroma Holdings Limited
GWA (North America) Pty Ltd
Sebel Furniture Inc
Caroma Industries Limited
G Subs Pty Ltd
Sebel Furniture (Hong Kong) Ltd
GWA International (Hong Kong) Limited
Stylus Pty Ltd
Stylus Industries Pty Limited
Fowler Manufacturing Pty Ltd
Starion Tapware Pty Ltd
Dorf Clark Industries Ltd
Dorf Industries (NZ) Ltd
McIlwraith Davey Pty Ltd
Stylus Sales Limited
Caroma Industries Europe BV
Wisa Beheer BV
Wisa BV
Wisa Systems BV
Wisa GmbH
Stokis Kon Fav. Van Metaalwerken NV
Wisa France SA
Caroma International Pty Ltd
Caroma USA Inc
Caroma Canada Industries Ltd
Caroma Industries (UK) Ltd
Canereb Pty Ltd
Dux Manufacturing Limited
GWA Taps Manufacturing Limited
Lake Nakara Pty Ltd
Mainrule Pty Ltd
Warapave Pty Ltd
Rover Mowers (NZ) Limited
Caroma Industries (NZ) Limited
GWAIL (NZ) Ltd
Rover Mowers Limited
Industrial Mowers (Australia) Limited
Olliveri Pty Ltd
Sebel Service & Installations Pty Ltd
Sebel Properties Pty Ltd
Sebel Furniture Limited (NZ)
Sebel Furniture Limited
Sebel Furniture (SEA) Pte Ltd
Sebel Sales Pty Limited
Caroma Singapore Pte Limited
GWA Finance Pty Limited
Hetset (No. 5) Pty Ltd
Bankstown Unit Trust
Country of
Incorporation
Class of
Shares
2003
%
2002
%
Parties
to Cross
Guarantee
Aust
Ord
(ii)
(ii)
(iii)
(ii)
(ii)
(iii)
(ii)
(ii)
(i)
(i)
(ii)
(ii)
(ii)
(ii)
(ii)
(ii)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(ii)
(iii)
(iii)
(i)
(iv)
(ii)
(ii)
(iv)
(iv)
(iv)
(ii)
(ii)
(ii)
(ii)
(ii)
(ii)
(i)
(ii)
(i)
(ii)
(ii)
Aust
Aust
UK
Aust
Aust
USA
Aust
Aust
HK
HK
Aust
Aust
Aust
Aust
Aust
NZ
Aust
NZ
Netherlands
Netherlands
Netherlands
Netherlands
Germany
Netherlands
France
Aust
USA
Canada
UK
Aust
Aust
Aust
Aust
Aust
Aust
NZ
NZ
NZ
Aust
Aust
Aust
Aust
Aust
NZ
Aust
Sing
Aust
Sing
Aust
Aust
Aust
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Units
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Y
Y
Y
N
Y
Y
N
Y
Y
N
N
Y
Y
Y
Y
Y
N
Y
N
N
N
N
N
N
N
N
Y
N
N
N
N
Y
Y
N
N
N
N
N
N
Y
Y
Y
Y
Y
N
Y
N
Y
N
Y
Y
Y
5 0
27. INVESTMENT IN CONTROLLED ENTITIES (Continued)
All controlled entities are controlled by GWA International Limited.
(i) Controlled entities which are audited by other member firms of Ernst & Young International.
(ii) Pursuant to Class Order 98/1418, relief has been granted to these controlled entities of GWA International
Limited from the Corporations Act 2001 requirements for preparation, audit and publication of a
financial report.
(iii) There is no requirement to prepare a financial report for these overseas companies and accordingly separate
audits were not performed.
(iv) In accordance with the Corporations Act 2001 the Directors have elected not to prepare or have audited a
financial report for the controlled entity as the entity meets the definition of a small proprietary company.
(b) Controlled Entities
GW Nominees Pty Ltd and GWAIL ESF Nominees Pty Ltd which are the trustee companies of the GWA
International Limited Group Retirement Fund and the GWA International Limited Superannuation Fund respectively,
are wholly owned by a controlled entity of GWA International Limited. As superannuation trustees, these entities
are not controlled entities for the purpose of accounting standard AASB 1024 “Consolidated Accounts” and are
therefore not consolidated with the group of companies comprising GWA International Limited and its
controlled entities.
28. DEED OF CROSS GUARANTEE
GWA International Limited, and specific controlled entities (as set out in Note 27) having their place of
incorporation in Australia, are parties to a deed of cross guarantee which has been lodged with and approved by
the Australian Securities and Investments Commission. Under the deed of cross guarantee each of the parties to
the deed guarantees the debts of the other.
Pursuant to Class Order 98/1418, relief has been granted to the companies in the closed group from the
Corporations Act 2001 requirements for preparation, audit and lodgement of their financial reports.
The consolidated statement of financial performance and statement of financial position of the entities which are
parties to the Deed of Cross Guarantee (Closed Group) are as follows:
Consolidated Statement of Financial Performance
Profit from ordinary activities before income tax
Income tax attributable to ordinary activities
Profit from ordinary activities after income tax
Retained profits at the beginning of the financial year
Adjustment arising from the adoption of revised accounting standard
AASB 1044 “Provisions, Contingent Liabilities and Contingent Assets”
Total available for appropriation
Dividends provided for or paid
Retained profits at the end of the financial year
2003
$’000
2002
$’000
79,733
(23,070)
56,663
27,180
20,823
104,666
(48,615)
56,051
62,687
(18,456)
44,231
30,176
74,407
(47,227)
27,180
5 1
28. DEED OF CROSS GUARANTEE (Continued)
Consolidated Statement of Financial Position
Current assets
Cash assets
Receivables
Inventories
Other
Total current assets
Non-current assets
Receivables
Investments
Property, plant and equipment
Intercompanies
Brand names and other intellectual property
Goodwill
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Payables
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Deferred tax liability
Provisions
Intercompanies
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed Equity
Reserves
Retained profits
Total equity
2003
$’000
2002
$’000
77,086
75,786
58,434
73,931
109,074
104,180
2,719
4,431
264,665
240,976
4,367
16,280
135,462
47,720
331,685
1,775
20,919
558,208
822,873
64,283
14,321
31,225
5,773
16,280
140,539
46,040
331,685
2,675
16,499
559,491
800,467
55,200
11,438
48,942
109,829
115,580
296,183
296,252
1,028
15,230
-
312,441
422,270
400,603
1,402
14,130
1,723
313,507
429,087
371,380
345,493
345,124
(941)
56,051
(924)
27,180
400,603
371,380
5 2
29. SEGMENT REPORTING
(a) Primary Reporting – Business Segments
Revenue
External Sales
Intersegment Sales
Total Sales Revenue
Other Revenue
Total Segment Revenue
Segment Result
Income Tax Expense
Net Profit
Total Assets
Total Liabilities
Building Fixtures
and Fittings
Commercial
Furniture
Unallocated Intersegment
Eliminations
Total
Consolidated
2003
$’000
2003
$’000
2003
$’000
2003
$’000
2003
$’000
546,614
-
546,614
3,102
549,716
70,146
2,255
72,401
1,026
73,427
42,829
-
42,829
2,808
45,637
-
659,589
(2,255)
(2,255)
-
-
659,589
6,936
(2,255)
666,525
95,801
6,246
(23,471)
645,877
90,037
56,927
7,113
140,811
332,678
Other segment information:
Acquisition of property, plant and equipment,
intangible assets and other non-current assets
Depreciation and Amortisation Expenses
Non-cash expenses other than depreciation
and amortisation
Revenue
External Sales
Intersegment Sales
Total Sales Revenue
Other Revenue
19,454
22,962
-
2002
$’000
497,736
-
497,736
3,645
3,942
3,344
-
2002
$’000
62,943
1,655
64,598
979
Total Segment Revenue
501,381
65,577
996
1,728
-
2002
$’000
48,856
-
48,856
1,684
50,540
Segment Result
Income Tax Expense
Net Profit
Total Assets
Total Liabilities
Other segment information:
Acquisition of property, plant and equipment,
intangible assets and other non-current assets
Depreciation and Amortisation Expense
Non-cash expenses other than depreciation
and amortisation
86,889
5,127
(25,371)
647,935
72,998
57,864
10,278
115,945
350,619
27,052
23,707
4,249
3,368
1,675
1,737
-
-
-
-
-
-
-
-
-
2002
$’000
78,576
(23,569)
55,007
843,615
429,828
24,392
28,034
-
2002
$’000
-
609,535
(1,655)
(1,655)
-
-
609,535
6,308
(1,655)
615,843
-
-
-
-
-
-
66,645
(19,995)
46,650
821,744
433,895
32,976
28,812
-
5 3
29. SEGMENT REPORTING (Contined)
Notes to and forming part of Segment Reporting:
(i) The above industry segments derive revenue from sales of the following products:
Building Fixtures & Fittings
Sanitaryware
Building Hardware Products
Baths, Shower Screens & Spas
Household Accessories, Sinks & Tapware
Hot Water Products
Commercial Furniture
Education products
Hospitality products
Stadia seating
Unallocated
Domestic & Ride-on Mowers
Corporate Administration & Treasury
(ii) Intersegment pricing is on an arms length basis
(b) Secondary Reporting – Geographical Segments
Segment revenue from sales to external customers
Other Revenue
Segment Assets
Australia Unallocated
Total
Consolidated
2003
$’000
568,560
5,339
782,157
2003
$’000
91,029
1,597
61,458
2003
$’000
659,589
6,936
843,615
Acquisition of Property Plant & Equipment, Intangibles & Other Non
Current Segment Assets
23,017
1,375
24,392
Segment revenue from sales to external customers
Other Revenue
Segment Assets
Acquisition of Property Plant & Equipment, Intangibles & Other Non
Current Segment Assets
2002
$’000
519,920
4,216
760,200
2002
$’000
89,615
2,092
61,544
2002
$’000
609,535
6,308
821,744
31,277
1,699
32,976
5 4
Consolidated
Chief Entity
Notes
2003
$’000
2002
$’000
2003
$’000
2002
$’000
30. RECONCILIATION OF PROFIT FROM ORDINARY
ACTIVITIES AFTER INCOME TAX TO NET
CASH FROM OPERATING ACTIVITIES
Profit from ordinary activities after income tax
Depreciation and amortisation
Net (profit)/loss on sale of non-current assets
Net exchange differences
Provisions
(Increase)/decrease in assets
(Increase)/decrease in inventories
(Increase)/decrease in trade debtors
(Increase)/decrease in future income tax benefit
(Increase)/decrease in other assets
Increase/(decrease) in liabilities
Increase/(decrease) in accounts payable and bills
payable
Increase/(decrease) in provision for income tax payable
Increase/(decrease) in provision for deferred tax
55,007
28,034
1,059
177
5,883
(3,330)
(3,284)
(5,314)
2,233
46,650
28,812
142
230
5,911
4,419
(3,663)
(1,863)
(2,428)
8,616
2,679
(353)
1,471
7,694
(329)
28,907
46,935
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(18)
-
(8)
-
Net cash flow from operating activities
91,407
87,046
28,889
46,927
31. EARNINGS PER SHARE
Basic earnings per share
Profit used to determine earnings per share
Consolidated
2003
19.8c
2002
16.8c
55,007,000
$46,650,000
Weighted average number of ordinary shares outstanding during the year used in
the calculation of basic earnings per share
277,778,009
277,637,584
The company has only ordinary shares on issue and there is no other class of
securities that could dilute earnings per share.
32. EVENTS OCCURRING AFTER BALANCE DATE
On 2nd September 2003 the Directors of GWA International Limited declared a final dividend on ordinary shares in
respect of the 2003 financial year. The total amount of the dividend is $22,224,240 which represents a fully franked
dividend of 8.0 cents per share. The dividend has not been provided for in the 30 June 2003 financial statements.
To the best of our knowledge, since balance date, no other matters have arisen which will, or may, significantly
affect the operation or results of the economic entity in later years.
5 5
33. FINANCIAL INSTRUMENTS
(a) Terms, Conditions and Accounting Policies
The economic entity’s accounting policies, including the terms and conditions of each class of financial asset,
financial liability and equity instrument, both recognised and unrecognised at the balance date, are as follows:
Recognised Financial
Instruments
(i) Financial assets
Receivables – trade
Short-term deposits
(ii) Financial liabilities
Bank overdrafts
Bank loans
Trade creditors and
accruals
Notes
Accounting Policies
Terms and Conditions
7
6
15
17
14
Trade receivables are carried at
nominal amounts due less any
provision for doubtful debts. A
provision for doubtful debts is
recognised when collection of the
full nominal amount is no longer
probable.
Short-term deposits are stated at
face value. Interest is recognised in
the profit and loss when earned.
Credit sales are predominantly on 30
day terms.
Short-term deposits have an average
maturity of 24 hours and effective
interest rates of 4.70% to 4.20% (2002:
4.15% to 4.95%).
The bank overdrafts are carried
at the principal amount. Interest
is recognised as an expense as it
accrues.
Interest is charged at the bank’s
benchmark rate plus a margin. No
security has been given for bank
overdrafts.
The bank loans are carried at
the principal amount. Interest is
recognised as an expense as it
accrues.
The bank loans have a maximum three
year rolling maturity. Interest is charged
at the market rate plus a margin. No
security has been given for bank loans.
Liabilities are recognised for
amounts to be paid in the future
for goods and services received,
whether or not billed to the
economic entity.
Trade liabilities are normally settled on
30 day terms.
Dividends payable
5 & 16 Dividends payable are recognised
when declared by the Company.
In accordance with the new Accounting
Standard AASB 1044 “Provisions,
Contingent Liabilities and Contingent
Assets” no dividend has been
recognised at 30 June 2003 (2002: 7.5
cents per ordinary share). The extent
to which the dividends are franked,
details of the franking account balance
at the balance date and franking credits
available for the subsequent financial
year are disclosed in Note 5.
(iii) Equity
Ordinary shares
19
Ordinary share capital is recognised
at the fair value of the consideration
received by the Company.
5 6
33. FINANCIAL INSTRUMENTS (Continued)
Recognised Financial
Instruments
(iv) Derivatives
Forward exchange
contracts
Notes
Accounting Policies
Terms and Conditions
The economic entity enters into
forward exchange contracts where
it agrees to buy or sell specified
amounts of foreign currencies
in the future at a predetermined
exchange rate. The objective is to
match the contract with anticipated
future cash flows from sales and
purchases in foreign currencies,
to protect the company against
the possibility of loss from future
exchange rate fluctuations. The
forward exchange contracts
are usually for no longer than 12
months. Exchange gains or losses
on forward exchange contracts
are recognised to the profit and
loss except those relating to
hedges of specified commitments
which are deferred and included
in the measurement of the sale or
purchase.
At balance date the company had
entered into the following forward
exchange contracts relating to specified
commitments and agreed to:
Buy/Sell
2003
BUY YEN
BUY CHF
BUY EURO
BUY USD
SELL NZD
SELL EURO
SELL USD
2002
BUY CHF
BUY EUR
BUY USD
SELL NZD
SELL USD
Foreign
Currency
Amount
Effective
Rate
YEN 31M
CHF 0.4M
EURO 0.5M
USD 4.03M
NZD 13.7M
EURO 0.03M
USD 1.99M
CHF 0.06M
EUR 0.29M
USD 8.41M
NZD 6.70M
USD 0.75M
77.0
0.795
0.5568
0.6143
1.091
0.577
0.6167
.8710
.5855
.5372
1.210
.5478
Unrecognised Financial Instruments
Interest rate swaps
GWA International Limited enters
into interest rate swap agreements
that are used to convert the
variable interest rate of its short-
term borrowing to medium-term
fixed interest rates. The swaps are
entered into with the objective of
reducing the risk of rising interest
rates. It is the Company’s policy
not to recognise interest rate
swaps in the financial statements.
Net receipts and payments are
recognised as an adjustment to
interest expense.
At balance date, the company had
the following interest rate swap
agreements:
Swap Term
Remaining
Notional
Amount
Effective
Rate
2003
Aug 03
Oct 04
Mar05 #
May 06 *
A$ 50M
A$100M
A$ 50M
A$ 50M
5.31%
5.13%
5.04%
4.63%
# Bank has an option for a further 18 months
* Bank has an option for a further 12 months
2002
Aug 03
Oct 04
A$50M
A$100M
5.31%
5.13%
5 7
33. FINANCIAL INSTRUMENTS (Continued)
(b) Interest Rate Risk
The economic entity’s exposure to interest rate risks and the effective interest rates of financial assets and
financial liabilities, both recognised and unrecognised at the balance date, are as follows:
e
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T
33. FINANCIAL INSTRUMENTS (Continued)
(c) Net Fair Values
The aggregate net fair values of financial assets and financial liabilities, both recognised and unrecognised, at the
balance date, are as follows:
Financial assets
Cash and Deposits at Call
Receivables – trade
Total financial assets
Financial liabilities
Bank loans
Trade creditors
Dividends payable
Interest rate swaps – (Gain) / Loss
Forward exchange contracts – (Gain) / Loss
Total Financial liabilities
Total carrying amount
as per the Statement of
Financial Position
Aggregate net fair
value (i)
2003
$’000
2002
$’000
2003
$’000
2002
$’000
88,505
85,851
66,817
82,079
88,505
85,851
66,817
82,079
174,356
148,896
174,356
148,896
296,183
296,252
296,183
296,252
59,516
-
-
-
55,582
20,823
N/A
N/A
59,516
-
703
(429)
55,582
20,823
(790)
921
355,699
372,657
355,973
372,788
(i) The following methods and assumptions are used to determine the net fair values of financial assets and
liabilities
Recognised Financial Instruments
Cash and Deposits at Call: The carrying amount approximates fair value because of their short-term to maturity.
Trade receivables and creditors: The carrying amount approximates fair value.
Dividends payable: The carrying amount approximates fair value.
Long-term borrowings: The carrying amount of long-term borrowings approximate fair value because their
incremental borrowing rates were rolled over no later than 5th August 2003. The current rate would be the same
as the current incremental rate applicable to the borrowings.
Forward exchange contracts: The carrying amount of forward exchange contracts is determined as the
recognised gain or loss at balance date calculated by reference to current forward exchange rates for contracts
with similar maturity profiles.
Unrecognised Financial Instruments
Interest rate swap agreements: The fair values of interest rate swap contracts is determined as the difference in
present value of the future interest cash flows.
(d) Credit Risk Exposures
The economic entity’s maximum exposure to credit risk at balance date in relation to each class of recognised
financial assets, other than derivatives, is the carrying amount of those assets as indicated in the Statement of
Financial Position.
In relation to derivative financial instruments, whether recognised or unrecognised, credit risk arises from the
potential failure of counterparties to meet their obligations under the contract or arrangement. The economic
entity’s maximum credit risk exposure in relation to these is as follows:
(i) forward exchange contracts - the full amount of the foreign currency it will be required to pay or purchase
when settling the forward exchange contract, should the counterparty not pay the currency it is committed to
deliver to the Company. At balance date the net gain amount was $429,000 (2002 net loss: $921,000);
(ii) interest rate swap contract - which is limited to the net fair value of the swap agreement at balance date,
being a net loss of $703,000 (2002 net gain: $790,000).
5 9
33. FINANCIAL INSTRUMENTS (Continued)
Concentrations of Credit Risk
The entity minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with
a large number of customers within the specified industries. However, the majority of customers are concentrated
in Australia. Refer also to Note 29 - Segment Reporting.
Concentrations of credit risk on trade receivables arise in the following industries:
Industry
Buildings, Fixtures & Fittings
Commercial Furniture
Unallocated
Maximum credit risk exposure* for each concentration
Consolidated
Percentage of total trade debtors (%)
2003
83%
9%
8%
2002
81%
12%
7%
100%
100%
$000
2003
70,744
7,951
7,156
85,851
2002
66,368
9,682
6,029
82,079
Credit risk in trade receivables is managed in the following ways:
–
payment terms are predominantly 30 days;
– a risk assessment process is used for customers over $50,000; and
– credit insurance is obtained for major customers.
* The maximum credit risk exposure does not take into account the value of any collateral or other security held, in the event other entities / parties fail
to perform their obligations under the financial instruments in question.
(e) Hedging Instruments
(i) Interest rate swaps
GWA International Limited has entered into interest rate swap contracts to hedge against fluctuations in interest
rates on its borrowing facilities.
6 0
D I R E C T O R S ’
D E C L A R A T I O N
In accordance with a resolution of the directors of GWA International Limited, we state that:
1.
In the opinion of the directors:
(a) the financial statements and notes of the Company and of the consolidated entity are in accordance with
the Corporations Act 2001, including :
(i) giving a true and fair view of the Company’s and consolidated entity’s financial position as at
30 June 2003 and of their performance for the year ended on that date; and
(ii) complying with Accounting Standards and Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
2.
In the opinion of the Directors, as at the date of this declaration, there are reasonable grounds to believe
that the members of the Closed Group identified in Note 28 will be able to meet any obligations or liabilities to
which they are or may become subject to, by virtue of the Deed of Cross Guarantee.
On behalf of the Board
B Thornton
Director
P C Crowley
Director
Brisbane
2 September 2003
6 1
I N D E P E N D E N T A U D I T R E P O R T
To the members of GWA International Limited
Scope
The financial report and directors responsibility
The financial report comprises the statement of financial position, statement of financial performance, statement
of cash flows, accompanying notes to the financial statements, and the directors’ declaration for GWA
International Limited (the company) and the consolidated entity, for the year ended 30 June 2003. The consolidated
entity comprises both the company and the entities it controlled during that year.
The directors of the company are responsible for preparing a financial report that gives a true and fair view of the
financial position and performance of the company and the consolidated entity, and that complies with Accounting
Standards in Australia, in accordance with the Corporations Act 2001. This includes responsibility for the
maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud
and error, and for the accounting policies and accounting estimates inherent in the financial report.
Audit approach
We conducted an independent audit of the financial report in order to express an opinion on it to the members
of the company. Our audit was conducted in accordance with Australian Auditing Standards in order to provide
reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit
is influenced by factors such as the use of professional judgment, selective testing, the inherent limitations of
internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot
guarantee that all material misstatements have been detected.
We performed procedures to assess whether in all material respects the financial report presents fairly, in
accordance with the Corporations Act 2001, including compliance with Accounting Standards in Australia, and
other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding
of the company’s and the consolidated entity’s financial position, and of its performance as represented by the
results of its operations and cash flows.
We formed our audit opinion on the basis of these procedures, which included:
(cid:127)
(cid:127)
examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the
financial report, and
assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of
significant accounting estimates made by the directors.
While we considered the effectiveness of management’s internal controls over financial reporting when determining
the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.
We performed procedures to assess whether the substance of business transactions was accurately reflected in the
financial report. These and our other procedures did not include consideration or judgment of the appropriateness or
reasonableness of the business plans or strategies adopted by the directors and management of the company.
Independence
We are independent of the company, and have met the independence requirements of Australian professional
ethical pronouncements and the Corporations Act 2001. In addition to our audit of the financial report, we were
engaged to undertake the services disclosed in the notes to the financial statements. The provision of these
services has not impaired our independence.
Audit opinion
In our opinion, the financial report of GWA International Limited is in accordance with:
(a) the Corporations Act 2001, including:
(i) giving a true and fair view of the financial position of GWA International Limited and the consolidated
entity at 30 June 2003 and of their performance for the year ended on that date; and
(ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
(b) other mandatory financial reporting requirements in Australia.
Ernst & Young
Brisbane
2 September 2003
T C Eddy
Partner
6 2
O T H E R S T A T U T O R Y
I N F O R M A T I O N
as at 22 August 2003
Statement of shareholding
In accordance with the Australian Stock Exchange listing rules, the Directors that, as at 22 August 2003,
the share capital in the Company was held as follows:
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 50,000
50,001 – 100,000
100,001 and over
Total
Ordinary
Shareholders
1,472
6,361
3,055
1,658
74
128
12,748
Ordinary
Shares
970,990
19,388,706
22,953,798
30,833,519
5,223,331
198,432,651
277,802,995
%
0.3
7.0
8.3
11.1
1.9
71.4
100.0
The number of shareholders with less than a marketable parcel of shares 170.
Voting Rights
The voting rights attaching to the ordinary shares are on a show of hands of every shareholder who is
present in person, or by proxy, attorney or representative shall have one vote and on a poll every
shareholder who is present in person or by proxy attorney or representative shall have one vote for
each share held by him/her.
Substantial Shareholders
The following information is extracted from the Company’s register of substantial shareholders
as at 22 August 2003:
Shareholder
Number of shares % of shares on Issue
Commonwealth Bank Group
39,968,736
14.39
Dividends
Dividends are determined by the Board, having
regard to the financial circumstances of the
company.
The final dividend of 8 cents per share will
be paid on 1 October 2003. The dividend will
be 100% franked for Australian tax purposes
at the corporate tax rate of 30%.
Shareholder Information
Annual General Meeting
The Annual General Meeting of GWA International
Limited will be held in The Grand Ballroom,
Stamford Plaza Brisbane, Cnr Edward and
Margaret Streets Brisbane on Thursday
30 October 2003 commencing at 10:30am.
A formal notice of meeting and proxy form
are enclosed with this report.
Shareholder enquiries
Shareholders with enquiries about their
shareholding or dividend payments should
telephone the company’s share registry,
Computershare Investor Services Pty Ltd,
on (07) 3237 2100 or write to GPO Box 523
Brisbane 4001.
6 3
20 Largest shareholders as at 22 August 2003
Shareholder
HGT Investments Pty Ltd
Citicorp Nominees Pty Limited
(CFS WSLE Imputation Fund A/C)
Erand Pty Ltd
KFA Investments Pty Ltd
CJZ Investments Pty Ltd
Citicorp Nominees Pty Limited
(CFS WSLE Aust Share Fund A/C)
JMB Investments Pty Ltd
Ashberg Pty Ltd
RBC Global Services Australia
(Pipooled A/C)
Theme (No 3) Pty Ltd
National Nominees Limited
Australian Foundation Investment Company Ltd
(Investment Portfolio A/C)
Citicorp Nominees Pty Limited
(CFS Imputation Fund A/C)
Citicorp Nominees Pty Limited
(CFS WSLE Industrial Share A/C)
RBC Global Services Australia Nominees Pty Limited
(Bkcust A/C)
ITA Investments Pty Ltd
Mr Stanley Gordon Sharp and Mrs Evelyn Vacy Sharp
Commonwealth Custodial Services Limited
Mr Michael John McFadyen
(Michael McFadyen A/C)
J P Morgan Nominees Australia Limited
Total
Number of fully paid % fully paid ordinary
shares on issue
ordinary shares
13,598,152
11,068,495
9,898,229
9,863,817
9,700,651
8,612,110
8,254,585
8,198,000
7,851,568
7,139,080
6,664,777
6,612,136
6,417,173
6,135,719
5,472,319
5,152,338
4,498,533
4,438,771
3,826,895
4.89
3.98
3.56
3.55
3.49
3.10
2.97
2.95
2.83
2.57
2.40
2.38
2.31
2.21
1.97
1.85
1.62
1.60
1.38
3,580,351
146,983,699
1.29
52.90
6 4
Direct credit of dividends into bank
accounts
Dividends may be paid directly to a bank,
building society or credit union account
in Australia.
Payments are electronically credited
on the dividend payment date and confirmed
by mail payment advice.
We encourage shareholders to avail themselves
of this service. Direct credit application forms can
be obtained from the company’s share registry.
Tax file number information
The company is obliged to record tax file number
or exemption details provided by shareholders.
Change of address
Shareholders who have changed their address
should immediately notify the company’s share
registry in writing.
Consolidation of shareholdings
Shareholders who wish to consolidate their
separate shareholdings into one holding should
notify the company’s share registry in writing.
Dividend Reinvestment Plan and Share
Purchase Plan
Both Plans were suspended on 8 February 2000.
Past support from shareholders has provided
sufficient funds to meet the growth needs
of the company. Directors keep this position
under review.
Stock Exchange listing
The Company’s shares are listed on the
Australian Stock Exchange.
Recent dividends
Date Paid
1 April 2000
1 April 2000
2 October 2000
1 April 2001
1 April 2001
1 October 2001
1 April 2002
1 April 2002
1 October 2002
1 April 2003
1 April 2003
1 October 2003
Type
Interim
Special
Final
Interim
Special
Final
Special
Interim
Final
Interim
Special
Final
Cents per
share
Franking
%
Corporate Tax
Rate %
6.5
5.0
6.5
6.5
2.5
7.0
2.5
7.0
7.5
7.5
2.5
8.0
100
100
100
100
100
100
100
100
100
100
100
100
36
36
34
34
34
30
30
30
30
30
30
30
6 5
C O R P O R A T E D I R E C T O R Y
Directors
B Thornton, Chairman
Share registry
Computershare Investor Services Pty Ltd
J J Kennedy, Deputy Chairman
GPO Box 523
P C Crowley, Managing Director
Brisbane QLD 4000
D R Barry, Non-Executive Director
Telephone 61 7 3237 2100
R M Anderson, Non-Executive Director
Facsimile 61 7 3229 9860
M D E Kriewaldt, Non-Executive Director
Toll Free 1800 684 187
Group bankers
BNP Paribas
Citibank Limited
Commonwealth Bank of Australia
National Australia Bank
Company Secretary
R J Thornton
Chief Financial Officer
E J Harrison
Registered Office
Level 14
10 Market Street
Brisbane QLD 4000
Telephone 61 7 3109 6000
Facsimile 61 7 3236 0522
Auditors
Ernst & Young
Waterfront Place
1 Eagle Street
Brisbane QLD 4000
Telephone 61 7 3011 3333
Facsimile 61 7 3011 3334
Shareholder Timetable 2003
30 June
2 September
18 September
26 September
1 October
28 October
30 October
Financial year end
Year end result and final dividend announcement
Record date for determining final dividend entitlement
Notice of Meeting and Proxy Form and Annual Report
mailed to shareholders
Final dividend paid
Proxy returns close 5pm Brisbane
Annual General Meeting
6 6
GWA INTERNATIONAL LIMITED
DUX MANUFACTURING LIMITED
H E A D O F F I C E L O C A T I O N S
Collins Road
Moss Vale NSW 2577
Telephone 02 4868 3177
Facsimile 02 4868 2014
Website www.dux.com.au
GAINSBOROUGH HARDWARE
INDUSTRIES LIMITED
190 Whitehorse Road
Blackburn Vic 3130
Telephone 03 9877 1555
Facsimile 03 9894 1599
Website
www.gainsboroughhardware.com.au
ROVER MOWERS LIMITED
155 Fison Avenue West
Eagle Farm Qld 4009
Telephone 07 3213 0222
Facsimile 07 3868 1010
Website www.rovermowers.com.au
SEBEL FURNITURE LIMITED
96 Canterbury Road
Bankstown NSW 2200
Telephone 02 9780 2222
Facsimile 02 9793 3152
Website www.sebelfurniture.com.au
Level 14
10 Market Street
Brisbane Qld 4000
Telephone 07 3109 6000
Facsimile 07 3236 0522
Website www.gwail.com.au
CAROMA INDUSTRIES LIMITED
Level 3, 159 Coronation Drive
Milton Qld 4064
Telephone 07 3109 6000
Facsimile 07 3217 5277
Websites www.caroma.com.au
www.fowler.com.au
www.starion-industries.com
Wisa B.V.
Driepoortenweg 5
6827 BP Arnhem
Netherlands
Telephone 0011 31 26 3629020
Facsimile 0015 31 26 3614550
Website www.wisa-sanitair.com
Stylus Pty Ltd
111 – 121 Warren Road
Smithfield NSW 2164
Telephone 02 8787 0500
Facsimile 02 9892 1884
Website www.stylus.com.au
DORF CLARK INDUSTRIES LIMITED
194 Milperra Road
Revesby NSW 2212
Telephone 02 9792 0100
Facsimile 02 9773 3101
Websites www.dorf.com.au
www.clark.com.au
6 7