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GWA INTERNATIONAL LIMITED
ABN 15 055 964 380
Level 14 10 Mar ke t St reet Brisbane Queensland 4000 AUSTRALI A
Telepho ne : 61 7 3 109 6000 Facsimile: 61 7 3236 0522
We bsite: w ww.gwail.com.au
INNOVATION = FUTURE GROWTH
2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED ABN 15 055 964 380
2005/2006 ANNUAL REPORT
GWA International Limited listed on the Australian Stock
Exchange in May 1993 and is one of Australia’s largest designers,
manufacturers, importers and distributors of household consumer
products. The company has more than 2,000 employees with
manufacturing facilities throughout Australia and in Europe.
GWA International Limited currently comprises five business
divisions, Caroma Dorf, Dux, Gainsborough, Rover and Sebel,
all of which are well-established businesses with strong brand
names and market positions.
GWA International Limited has grown significantly since listing as
a result of the strong operating performance of the businesses and
successful acquisitions. The company remains committed to growing
shareholder wealth through maximising business performance
and the pursuit of further appropriate domestic acquisitions.
Mission Statement
GWA International Limited’s primary objective is to grow
shareholder wealth. This objective will be achieved by continuing
to invest in people, products and technology to sustain and build
premium profitability of the businesses over time.
The company will focus on the research, development and release
of innovative and environmentally friendly products to maximise
market opportunities, and to assist in reducing domestic water
consumption and greenhouse gas emissions.
GWA International Limited is committed to acquiring another
major domestic business division, and to also pursue bolt-on
acquisitions that add value to existing businesses, and that
support expansion into new markets.
Caroma Dorf is Australia’s
foremost designer,
manufacturer, importer and
distributor of domestic and
commercial bathroom and
kitchen products, including
sanitaryware, tapware,
accessories, bathware,
stainless steel sinks and
laundry tubs. Caroma Dorf is
at the forefront of product
innovation and is the market
leader in water efficient
sanitaryware and tapware.
Dux is an Australian
designer, manufacturer,
importer and distributor of
a range of hot water systems.
The range includes mains
pressure gas and electric
storage, continuous flow gas,
electric and gas boosted solar
and heat pump products.
Gainsborough is a leading
Australian designer,
manufacturer, importer
and distributor of a
comprehensive range of
domestic and commercial
door hardware and fittings,
including security products.
Rover is one of Australia’s
leading designers,
manufacturers and
distributors of domestic
and commercial lawn and
garden care equipment.
Sebel is at the forefront
of Australian design,
manufacture and distribution
of quality commercial
furniture and seating.
Contents
> Performance Highlights
> Chairman’s Review
> Managing Director’ Review of Operations
> Strategic Direction and Business Divisions
> Environmental Product Innovations
> Board of Directors
> Corporate Governance Statement
> Directors’ Report
> Financial Statements
> Other Statutory Information
> Shareholder Information
> Corporate Directory
1
2
4
10
12
14
15
22
29
77
79
inside back cover
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
> Performance Highlights
> Net profit after tax of $56.9 million
> Earnings per share of 20.4 cents
> Fully franked dividend of 21.5 cents (including 3.5 cents in special dividends)
> Return on shareholders’ equity of 13.8%
Five Year Financial Summary
2001/02
$’000
2002/03
$’000
2003/04
$’000
2004/05
$’000
2005/06
$’000
Revenue
615,843
666,525
677,393
626,866
619,989
109,934
120,426
131,564
130,067
117,617
Earnings before interest, tax, depreciation,
amortisation and reorganisation costs
(%)
Depreciation and amortisation
Earnings before interest, tax and reorganisation costs
(%)
Interest (net)
Trading profit before tax
(%)
Tax expense
(%)
Trading profit after tax
Reorganisation costs after tax
Net profit after tax
Net cash flow provided from operating activities
before debt cost and tax
Capital expenditure
Research and development
Net debt
Shareholders’ equity
Other Ratios and Statistics
Return on shareholders’ equity
Interest cover
Net debt/equity
Earnings per share
Ordinary dividend per share
Special dividend per share
Total dividend per share
Franking
Ordinary dividend payout ratio
Share price (30 June)
Dividend yield (total dividend)
17.9
28,812
81,122
13.2
14,477
66,645
10.8
19,995
30.0
46,650
-
18.1
28,034
92,392
13.9
13,816
78,576
11.8
23,569
30.0
55,007
-
19.4
30,549
101,015
14.9
12,614
88,401
13.1
26,348
29.8
62,053
-
20.7
26,714
103,353
16.5
11,137
92,216
14.7
28,328
30.7
63,888
-
46,650
55,007
62,053
63,888
116,807
128,200
162,104
130,157
32,976
5,064
229,435
387,849
24,392
5,770
207,678
413,787
20,579
5,485
159,451
428,510
21,331
6,488
161,706
409,546
(%)
(times)
(%)
(cents)
(cents)
(cents)
(cents)
(%)
(%)
($)
(%)
12.0
5.6
59.2
16.8
14.5
2.5
17.0
100
86.3
2.35
7.2
13.3
6.7
50.2
19.8
15.5
2.5
18.0
100
78.3
2.70
6.7
14.5
8.0
37.2
22.3
18.0
2.5
20.5
100
80.7
2.95
6.9
15.6
9.3
39.5
23.0
18.0
4.5
22.5
100
78.3
2.92
7.7
19.0
22,420
95,197
15.4
11,490
83,707
13.5
23,628
28.2
60,079
3,227
56,852
98,234
30,966
5,775
141,000
411,968
13.8
8.3
34.2
20.4
18.0
3.5
21.5
100
88.2
3.11
6.9
Number of employees
(No.)
2,757
2,646
2,565
2,474
2,226
Notes: EBIT for financial years 2002 to 2004 has been calculated in accordance with previous Australian GAAP. EBIT for financial
years 2005 and 2006 has been calculated in accordance with Australian equivalents to IFRS (AIFRS). For impact on EBIT of
transition to AIFRS, see note 32 to the Financial Statements
Performance Highlights
1
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
> Chairman’s Review
The 2005/06 financial year was
a challenging year for the Group,
with a softening dwelling
construction and renovation
market across Australia, record raw
material prices and the scale of
business transformation activities
undertaken over the year.
The profit after tax for the period
of $56.9 million, reduced by the
business transformation costs, was
an 11.0% decrease on the prior year’s
record performance. This was a
commendable result in these market
circumstances, and reflects the
strength and quality of the Group’s
businesses. The performance for the
year was achieved on sales revenue
of $620.0 million. Earnings per share
for the 2005/06 year was 20.4 cents
per share, with earnings per share
from trading of 21.6 cents per share.
I congratulate management and staff
on their efforts and commitment
in achieving this result in the
challenging market conditions whilst
undertaking the extensive business
reorganisation initiatives.
As outlined in the Group’s half year
result release in February, the Group
has taken the opportunity in the
softening market conditions to
reorganise its businesses and reduce
operating costs. During the year,
the Group announced the closure of
the Dorf tapware factory at Penrith,
the closure of the Caroma vitreous
china sanitaryware factory at Coburg
and the integration of the Caroma
and Dorf Clark divisions, with the
head office located in Sydney. The
current reorganisation activities are
an on-going process aimed at
improving financial performance,
primarily through the accessing
of supply markets, which offer
opportunities to build
competitiveness and access
growth. It will ensure that the Group
is well prepared for the next upturn
in the dwelling construction and
renovation market.
Together with the reorganisation
activities, the Group has
implemented a significant capital
expenditure program during the
2005/06 year. The major expenditure
was aimed at improving the
domestic manufacturing capacity
and distribution capabilities of the
Caroma Dorf division, and will enable
domestic manufacturing to remain
competitive over the long-term.
As part of the business
reorganisation, the Group has
continued to invest in its people
through the Talent Identification
and Management Program designed
by Monash University. The Board
views this program as essential in
developing current and potential
managers in the organisation,
and ensuring that management has
the necessary skills to meet the
changing needs of the businesses.
> Dividends
The Board recognises the
importance of dividends to the
Group’s shareholders, and aims
to increase ordinary dividends in
line with trading profitability.
On 15 August 2006, the directors
announced a fully franked final
dividend for the 2005/06 year of
11.5 cents per share, which
comprises an ordinary dividend of
8.0 cents per share and a special
dividend of 3.5 cents per share.
Barry Thornton
Chairman
Together with the interim dividend of
10.0 cents per share paid in April, this
brings the total fully franked dividend
for the 2005/06 year to 21.5 cents per
share, which represents an after tax
yield of 6.9% based on the closing
share price at 30 June 2006.
The declaration of a further special
dividend for the 2005/06 year
continues the Group’s track record
in distributing surplus cash and
franking credits to shareholders. Over
the past 5 years, the company has
distributed 15.5 cents in fully franked
special dividends to shareholders.
The Board will give consideration to
further special dividends and other
capital management initiatives in the
2006/07 year as a means of
distributing surplus cash and
franking credits to shareholders.
The Group’s Dividend Reinvestment
and Share Purchase Plans remain
suspended, however the Board
will consider re-opening these
plans when a major acquisition
is undertaken.
> Corporate Governance
The corporate governance practices
of the Group were implemented by
the Board, and have been in place
since listing in 1993. The Board
continues to review and monitor
the corporate governance practices
of the Group to ensure that current
best practice is maintained.
The Board comprises long serving
and experienced directors with
a detailed understanding of the
Group’s businesses. This knowledge
and experience has been a key factor
in the success of the Group since
listing, and there is a need for
2
Chairman’s Review
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Barry Thornton
Chairman
Earnings Per Share
cents
Dividend Per Share
cents
25
20
15
10
5
0
25
20
15
10
5
0
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Return on Shareholders’ Equity
%
16
12
8
4
0
01/02 02/03 03/04 04/05 05/06
01/02 02/03 03/04 04/05 05/06
01/02 02/03 03/04 04/05 05/06
Ordinary Dividend
Special Dividend
The declaration of a further special dividend for the 2005/06
year continues the Group’s track record in distributing surplus
cash and franking credits to shareholders.
> Product Innovation
One of the Group’s overarching
strategies is the continued focus on
the development of innovative and
environmentally friendly products,
such as Caroma Smartflush which is
a new range of reduced flush water
efficient sanitaryware. The Group’s
emphasis on product innovation
enables the businesses to satisfy
relevant regulatory requirements,
meet market opportunities to grow
profitability, and assist in reducing
domestic water consumption and
greenhouse gas emissions.
The Group continues to work
with all levels of Government in
developing solutions for managing
the country’s precious water
resources. In this regard, the recent
introduction by the Queensland
Government of a rebate scheme
for installing dual flush toilets and
water efficient tapware in domestic
Queensland households is
a significant initiative of the
Government to assist with the
water shortage problem. This
initiative provides further market
opportunities for the Caroma Dorf
business, the market leader in water
efficient sanitaryware and tapware.
For details of the Group’s product
innovations, I refer you to page 12
of the Annual Report.
> Strategic Direction
Whilst the 2005/06 year has been
a challenging period, I am confident
that the changes occurring in the
Group will grow shareholder wealth
in the long-term. The Group will
be well prepared for the next upturn
in the dwelling construction and
renovation market. In the interim,
the Group will continue to
maximise profitability through
the reorganisation of the
businesses, the reduction in
operating costs and the focus on
product innovation which is a key
competitive advantage.
In regard to potential acquisitions,
the Group continued the search for
appropriate domestic acquisitions
during the year. A number of
potential acquisition opportunities
were evaluated, but none of the
opportunities met the Group’s
acquisition criteria. The Group will
continue the search for appropriate
domestic acquisitions that are
synergistic with the existing building
fixtures and fittings businesses,
and that will enable the Group to
grow shareholder wealth.
In closing, I would again like to
thank management and staff for their
efforts during the 2005/06 year. We
have many talented and loyal staff in
the organisation who are committed
to the Group’s future success.
Whilst many challenges and
opportunities lie ahead for the Group,
the reorganisation activities will
enable the Group to meet these
challenges and opportunities, and
grow profitability into the future.
I confirm that the generation of
shareholder wealth remains the
primary objective of the Board.
B Thornton
Chairman
Chairman’s Review
3
a stable and experienced Board
during the current reorganisation
activities in the Group.
The Board has developed
succession plans for the future
retirement of individual directors.
In accordance with the Board
succession plans, the Board will give
consideration to the appointment
of an additional director during
the 2006/07 year.
In the important area of risk
management, the Group continues
to focus on improving the
identification and management of
risk in the organisation. During the
year, an Executive Risk Committee
was established to drive this process,
and the Committee reports directly
to the Audit Committee on risk
management matters. I am confident
that management have put in place
an efficient and effective risk
management system for the Group,
which ensures that risk management
is embedded in all aspects of the
Group’s operations.
For details of the Group’s corporate
governance practices, I refer you to
the Corporate Governance Statement
on page 15 of the Annual Report.
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
> Managing Director’s
Review of Operations
integration of the Caroma and Dorf
Clark businesses, now known as
Caroma Dorf. This initiative is creating
opportunities to deliver improved
value offerings and extend market
reach, thereby strengthening the
market competitiveness of this
business.
> Sound Trading Profit
for 2005/06 Year
Peter Crowley
Managing Director
conditions. An excellent second half
sales performance largely recovered
the decline in sales for the first half
which were down 4.9% on the prior
period. In particular, the building
fixtures and fittings businesses of
Caroma Dorf, Dux and Gainsborough
competed strongly for the available
market and full year sales revenue for
this segment of $523.1 million was a
pleasing performance, near the prior
year’s sales of $523.9 million.
Sales revenue for the Group of
$620.0 million, down 1% on the prior
year, was a good performance for
the year given the domestic market
Profit after tax for the year of
$56.9 million is after the costs of
business restructuring and net of the
related gains on property sales.
> Restructuring Costs
Profit before Interest and Tax
Borrowing Costs and
Interest Income
Profit before Tax
Income Tax Expense
Profit after Tax
> Segment Sales and Profit
Trading
$000’s
Re-Organisation
$000’s
95,197 Costs:
(21,963)
Property gain: 16,019
Total
$000’s
89,253
(11,490)
83,707
(23,628)
60,079
(11,490)
(5,944)
77,763
2,717
(20,911)
(3,227)
56,852
Business Segment
Segment Sales
Segment Profit
2006
$’000
2005
$’000
2006
$’000
2005
$’000
Building fixtures and fittings
523,100
523,850
102,858
105,535
Commercial furniture
Other
Total
Reorganisation expenses
Profit before interest and tax
56,738
40,151
61,608
4,655
5,781
41,408
(12,316)
(7,963)
619,989
626,866
95,197
103,353
(5,944)
-
89,253
103,353
The 2005/06 year has been
an important period for the Group
with an extensive set of business
transformation initiatives effected
during the year and a sound
trading performance in difficult
market conditions. The business
transformation initiatives have
incurred $22 million in expenses
for the year, offset by gains
on related property sales
of $16 million.
The trading performance for the
year was principally impacted by
lower demand from the Group’s
domestic markets. This lower activity
added pressure to market pricing
which was also eroded following
the clearance of stocks by the
market prior to the introduction of
the Water Efficiency Labelling
Standards (WELS) requirements.
The major factor affecting demand
for the company’s products was
the decline in dwelling construction
with increasing interest rates and
lower home affordability levels
which delayed any recovery in
dwelling commencements.
The continuing development of
international supply markets created
the opportunity for Dorf to reorganise
the supply of tapware products
previously assembled and packed
in Australia. Dorf’s Penrith tapware
facility was closed during the year
with the costs being accounted
for in the first half. A profit on sale of
the property was realised in the
second half of the year. Caroma and
Sebel have also actioned
opportunities to reorganise supply.
Other business improvement
initiatives include the progressive
Managing Director’s Review of Operations
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
INNOVATION = FUTURE GROWTH
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Trading Profit after Tax
$ million
70
60
50
40
30
20
10
0
01/02 02/03 03/04 04/05 05/06
Sales revenue for the Group of $620 million was
a good performance for the year given the domestic
market conditions.
Trading results and net restructuring
costs are listed in the table on page 4.
These reorganisation costs were
incurred in the closure of the Penrith
tapware and Coburg sanitaryware
factories, the closure of the metals
and timber manufacturing facilities
of Sebel and the head office
integration of the Caroma and
Dorf Clark businesses.
Property gains were realised on the
sale of the Penrith and Bankstown
properties during the year.
Trading earnings after tax for the
Group of $60.1 million were down 6%
on the prior year. The Group’s core
Building Fixtures and Fittings segment
performed strongly with trading
earnings of $102.9 million being
2.5% down on the prior year’s
record result.
> Cash Flow
Trading cash flow, before
reorganisation costs, of $70.7 million
was a very strong performance
in the market conditions. Working
assets increased by $7.5 million
on the prior period through higher
debtors and lower payables.
Business reorganisation yielded
a positive cash position with the
cash expenditures being $10.6 million
and the proceeds from sale of
properties contributing proceeds
of $33.5 million in the period. The
proceeds from the sale of the Coburg
property received in July 2005 also
contributed to the cash flow result.
Over the 2005/06 year, cash assets
increased by $21.6 million to
$156.5 million.
In the investing cash expenditures of
$30.2 million, the major items were
the new warehouse and plant at
Caroma’s Wetherill Park facility.
> Operating Performance
The Group’s 2005/06 trading
earnings before interest and tax
of $95.2 million was a sound result
at the trading level which was down
7.9%. The costs expended in
business reorganisation have
strengthened the competitiveness
of the business and these initiatives
will contribute to future performance.
Particularly pleasing was the trading
performance of the Group’s core
building fixtures and fittings
businesses which was achieved
while extensive business
reorganisation was undertaken in
the period and in very difficult market
conditions, particularly in NSW.
Each of the divisions in this segment
have undertaken initiatives in the
2005/06 year aimed at building their
competitiveness and market reach.
The Caroma and Dorf Clark divisions
are being progressively integrated
under a single management structure
which was established during the
year. The Caroma division performed
well over the year and, with the
benefit of a strong last quarter,
recorded sales and profit only
marginally below the prior year.
Dorf Clark’s results were impacted
by lowering tapware margins as the
market cleared stocks ahead of the
introduction of the WELS legislation.
Dux hot water contributed another
good result with sales and profit near
the prior year results. This business
has developed products to meet
market demand changes flowing
from energy conservation legislation.
Whilst significant business
establishment costs were incurred
in the 2005/06 year in this area,
trading performance was maintained.
The Gainsborough business traded
above expectations maintaining the
level of sales and contributing an
increased profit for the year. This
continues Gainsborough’s history
of profit growth.
For the 2005/06 year, the Building
Fixtures and Fittings segments
which is comprised of these
businesses, contributed 84% of the
Group’s revenue. These businesses
have opportunities to build their
market competitiveness further
in the near term.
Rover’s profit contribution reduced
significantly in the 2005/06 year,
principally on lower industry margins.
Sales were only slightly below
the prior year on a good sales
performance but selling prices
were reduced as low cost imports
increased in the domestic mower
market. This business is transforming
to meet the challenges of its
changing industry structure.
Sebel’s trading contribution for
the year was impacted by lower
sales with the overall result being
increased by the gain on sale
of the Bankstown property net of
reorganisation costs. The trading
result was down 20% on the prior
year. The decline in sales was due
mainly to lower domestic education
sales reflecting lower capital
Managing Director’s Review of Operations
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
INNOVATION = FUTURE GROWTH
Caroma has continued to develop its relationship
with overseas sanitaryware suppliers and is
assessing opportunities for strategic associations
with international companies.
spending by that sector particularly in
New South Wales. Education related
spending is expected to recover
in 2006/07. The sustained high
AUD exchange rate has constrained
Sebel’s export sales growth and
initiatives are being assessed to
improve competitiveness in their
international markets.
> Investment in Future
Performance
Divisional
During the course of the 2005/06
year, the Group’s business divisions
have taken significant steps in
their progressive transformation
to realise the new opportunities
resulting from their changing
and developing markets.
Business Transformation
Each of the businesses continue
to assess the opportunities offered
by developing international supply
markets. In the 2005/06 year,
Dorf reorganised its supply of
those tapware products which
were assembled and packaged
in Australia to overseas sourcing
thereby reducing product costs,
improving supply lead times and
reducing investment in the business.
The costs of this restructuring
were recovered by the gain on
disposal of the Penrith property.
Caroma has continued to develop
its relationship with overseas
sanitaryware suppliers and is
assessing opportunities for strategic
associations with international
Managing Director’s Review of Operations
companies. During the year
Caroma rationalised its domestic
sanitaryware manufacturing with
the closure of the Coburg factory.
The upgrading of the Wetherill Park
sanitaryware factory has progressed
to plan. The companion project at
this site, a new warehouse has been
completed and is in use, generating
savings in lease and distribution
costs. The cost competitiveness of
Caroma’s domestic manufacturing
has been significantly improved with
these initiatives. Caroma is also in
an improved cost competitive and
supply position to service its
international markets. Offshore
supply is now in place to service
these markets.
Sebel has reorganised the supply
of metal and timber furniture to
international suppliers with low
input costs and scale of operations
to maintain cost competitiveness.
Sales to Sebel’s international
markets will also benefit from this
sourcing of product.
GWA Trading (Shanghai) Co Ltd,
the Group’s business in China
is now well established and is
assisting our Australian and
international operations in the
development of effective strategic
partnerships with suppliers in the
Asia Pacific region.
Each of the Group’s businesses
continues to assess opportunities
for business reorganisation aimed
at improving cost competitiveness
and adding to the value of product
and service offerings to the
Group’s markets.
> Corporate
The Group is continuing to invest
in key initiatives in information
technology, people development
and employee health and safety.
> Information Technology
Following on the successful
implementation of the Movex
Enterprise Resource Planning
system at Dux in 2005, an expanded
implementation team has been
assembled for the Movex roll out
in Caroma Dorf. The initial planning
and preparation phases of the
implementation program have been
completed and the system is
planned to be progressively installed
across the business commencing
in the second half of the 2006/07
year. The Movex system is a critical
component in enabling the
business to meet the challenges
of increasingly complex and
integrated supply chains. The system
will also provide the capability
to reduce transaction costs and
build value in the Group’s trading
relationships into the future.
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Costs incurred to date on the Caroma
Dorf implementation of $737,000
were capitalised in the 2005/06 year.
> Talent Identification and
Development
The collaboration with Monash
University has progressed
significantly through the 2005/06
year with extensive assessment
and feedback for employees across
the Group’s businesses.
Development programs are being
established for participating staff.
This program is designed to identify,
develop, mentor and encourage
our talented people to ensure the
sustainability of our business and
the on-going creation of shareholder
wealth. Costs incurred and expensed
on this program in the 2005/06 year
were $280,000.
> Employee Health
and Safety
During the year, the Group has
implemented a new information
technology system to record, monitor
and assess workplace health and
safety issues, risks and mitigation
plans. This new system incorporates
the Group’s already well defined
policy framework.
The Group has established a risk
management and mitigation strategy
for asbestos in the workplace and
during the year the asbestos roof
at the Wetherill Park facility was
completely replaced at a cost
of $2.5 million. Of this amount
$1.16 million related to the removal
During the year, the Group has implemented
a new information technology system to record,
monitor and assess workplace health and safety
issues, risks and mitigation plans.
of the asbestos sheeting and
was expensed.
> Environmental
In the 2005/06 year, the Group has
commenced a program to realise
improved energy efficiency in
association with a tertiary institution.
The Group has ongoing activities at
each business aimed at minimising
waste and hazardous materials.
> Outlook for the
2006/07 Year
I expect the new year to present a
challenging trading environment,
however, the Group’s businesses are
improving their market
competitiveness and are creating
growth opportunities.
Recent, and expected further
increases in interest rates together
with the continued low level of
housing affordability are expected to
defer the recovery of domestic
dwelling construction. Oil and metal
price driven inflation may also result
in a further contraction of domestic
renovation activity. Consequently,
demand from the domestic market
is expected to decline further in the
2006/07 year.
I am confident that the Group’s
businesses will progressively realise
the benefits of the business
transformation initiatives effected
to date and our aim is to achieve a
trading EBIT for the Group above the
$95.2 million achieved in 2005/06.
Further business reorganisation
initiatives may result in costs which
reduce the Group’s 2006/07
consolidated profit and such costs
will add to business performance in
future years.
> Longer Term Outlook
GWA International Limited’s earnings
are predominantly generated from
the Building Fixtures and Fittings
segment businesses which
contribute 84% of Group sales
revenue. The principal drivers of
demand for the segment’s products
are domestic construction,
commercial building projects,
renovation and replacement activity.
Managing Director’s Review of Operations
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
INNOVATION = FUTURE GROWTH
At 30 June 2006, the company had cash assets of $156.5 million,
an increase of $21.6 million over the financial year.
especially when domestic market
demand has been high.
I expect the Group to build its
international markets over time
utilising its overseas supply partners
and creating profitable growth
opportunities into the future.
Over the longer term, I expect our
current portfolio of businesses may
change through acquisition and
divestment as markets and supply
chains continue to create new
opportunities for strategic
partnerships and association.
The GWA Group is in a very strong
financial position to acquire
businesses complementary to our
core activities and to invest further in
our existing businesses.
I am confident that the current
portfolio of businesses have
sufficient growth opportunities for
the company to continue to grow
shareholder wealth.
> Financial Condition
At 30 June 2006, the company had
cash assets of $156.5 million, an
increase of $21.6 million over the
financial year.
Cash flow from operating activities
for the year of $60 million includes
the cash expenditures on business
reorganisation of $10.6 million which
will contribute to future profits.
Over the year, $31 million was
expended on new investments,
these being principally the new
warehouse and production
technology at the Wetherill Park site.
These investments will also add to
future profitability. The sale of the
Penrith and Bankstown properties,
receipt of proceeds from the Coburg
property sold in the prior year and
plant sales contributed investing cash
inflows of $46.4 million over the
financial year.
Dividends paid in cash during the
year were $55.66 million with part of
this amount reducing the employee
share plan loans.
The company’s operating cash flow
is expected to continue to exceed
the operational funding requirements
of the business and contribute
further funds for investment. The
cash assets of $156.5 million at
balance date provide the funding
for a significant business acquisition
when the opportunity arises.
Debt funding and other financing
facilities are provided to the
company under a Master Financing
Agreement. At balance date,
bank loans were made up of:
> Australian Currency $285 million
> Euro
€7.3 million
These loans and other facilities are
extended annually under 2 year and
3 year evergreen arrangements.
The Euro loan is a currency hedge
with respect to the Group’s
investment in the Wisa business.
At balance date the Group held Euro
currency of 2.6 million as a hedge
with respect to equipment for the
Wetherill Park factory project. The
major part of this amount was
expended in July 2006. Other cash
assets are held predominantly in
Recent trends driving the number
and value of dwellings constructed
have included population growth,
lower family sizes and larger houses.
Renovation activity is expected
to continue to grow as the stock
of existing homes age further.
Commercial construction activity
is limited to national economic
growth levels.
Over the long-term, growth is
expected to continue in line with
overall population and economic
growth. However activity will be
subject to economic cycles.
The benefits of supply reorganisation
across the Group’s businesses
are improved product cost
competitiveness, improved supply
flexibility and reduced exchange
risk in international markets. The
volatility of the Australian currency
has been a significant disadvantage
over time in the development and
maintenance of profitable export
markets for the Group’s businesses.
The small scale of the domestic
production relative to overseas
market volumes has also restricted
supply to international markets
Managing Director’s Review of Operations
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
The 2005/06 year has been a year of sound
performance and strategic progress for the company.
been comfortably met throughout
the 2005/06 year and the Group
has the capability to increase
borrowings significantly, within
the ratio undertakings, to fund
acquisition opportunities of scale.
In addition to further borrowing the
company has the option to raise
further equity funds by reinstating
the Dividend Reinvestment and
Share Purchase Plans.
The company did not issue any
further employee shares during the
year. At balance date the number
of shares on issue under this plan
was 3.1 million and the loan amount
was $6.2 million, a reduction of
$1.8 million on the opening balance
made up of dividends and loan
repayments.
In the year, the company has not
issued any further shares and no
share options have been issued
by the company.
The further steps taken in the
reorganisation of supply of
components and products over
the year has increased the Group’s
imports and reduced the Group’s
relative exposure to import
competition to further increases
in the domestic currency rate. The
Group’s major currency exposures
are to the US dollar and Euro
currencies. Movements in these
currency rates over this financial
year and the prior year are set out
in the table below.
> Summary
The 2005/06 year has been a year
of sound performance and strategic
progress for the company. I am very
pleased with the Group’s trading
performance for the year and
particularly so with Caroma Dorf,
Gainsborough and Dux. The excellent
trading performance for the fourth
quarter which underpinned the
sound full year result is an indication
of the progress made in transforming
the businesses and the opportunities
being created through improved
cost competitiveness and
expanded reach.
The company’s management and
staff achieved record results in recent
years assisted by domestic market
growth and are now maintaining
a sound trading performance in
difficult market conditions whilst
undertaking the significant changes
necessary for the businesses
to meet the challenges and realise
the opportunities of their
developing markets.
I congratulate our management and
staff on their performance and
achievements in the 2005/06 year.
Australian currency placed on deposit
for terms up to 90 days.
At balance date, the company
held interest rate swaps totalling
$125 million at rates between 5.50%
and 5.67% with expiry dates from
August 2007 to September 2008.
Each of the contract swap rates is
below the relevant market rate for
the Group’s domestic borrowings at
balance date and represents a hedge
of near 75% of the Group’s net
interest bearing debt.
The Group’s businesses have
entered into foreign currency hedges
at balance date as set out in the
Financial Statements. These hedges
are for the purchase of components
and finished products and sales
in overseas currencies.
The ratio undertakings under the
Master Financing Agreement have
1 Aus Dollar
Jun
Sep
Dec
Mar
Jun
US$
Euro
- 2005/06
0.7637
0.7615
0.7337
0.7159
0.7433
- 2004/05
0.6889
0.7147
0.7790
0.7719
0.7637
- 2005/06
0.6315
0.6326
0.6175
0.5889
0.5841
- 2004/05
0.5702
0.5794
0.5717
0.5973
0.6315
P C Crowley
Managing Director
Managing Director’s Review of Operations
9
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
> Strategic Direction
and Business Divisions
Business
Divisions
Main Products
and Services
Brand
Names
Websites
>
>
>
>
>
> Vitreous china toilet suites, urinals,
bidets, basins, plastic cisterns,
bathroom accessories and fittings.
Acrylic and pressed steel spas, baths
and shower trays. Tapware and
accessories, stainless steel sinks and
laundry tubs
> Owned: Caroma, Fowler,
Stylus, Wisa, Clark,
Radiant, Myttons, Epure,
Dorf, Caroma Taps,
Irwell, Donson
> Exclusive: Hansa, Keuco,
Schell, KWC, Virtu
> www.caroma.com.au
> www.caroma.smartflush.com.au
> www.fowler.com.au
> www.stylus.com.au
> www.wisa-sanitair.com
> www.starion-industries.com
> www.dorf-clark.com.au
> Dux is an Australian designer,
manufacturer, importer and
distributor of a range of hot water
systems. The range includes mains
pressure gas and electric storage,
continuous flow gas, electric and gas
boosted solar and heat pump products
> Owned: Dux, EcoSmart
> www.dux.com.au
> www.ecosmart.com.au
> A comprehensive range of door
> Owned: Gainsborough,
> www.gainsboroughhardware.com.au
hardware comprising door handles
(knobs and levers), door locks, door
closers, hinges and other metal door
accessories
(Architectural Hardware,
Stronghold Series,
Contractor Series, Aspect
Series), Trilock
> Range of walk-behind and ride-on
> Owned: Rover
> www.rovermowers.com.au
mower equipment, garden chip and
shred products and spare parts
> Sebel produces a broad range of
> Owned: Sebel
> www.sebel.com.au
commercial furniture suited to its
target markets. The range includes
dining seating and tables, outdoor
furniture, mass seating for stadia and
public areas, casual corporate
markets, and tables, desks and chairs
for the education market.
10
Strategic Direction and Business Divisions
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
INNOVATION = FUTURE GROWTH
GWA International Limited’s primary objective is to grow
shareholder wealth. This objective will be achieved by continuing to
invest in people, products and technology to sustain and build
premium profitability of the businesses over time.
Operating
Locations
Major
Markets
Strategic
Direction
> Australia,
> New dwellings, renovation,
> Caroma Dorf will maintain leadership in the domestic market
New Zealand,
China,
North America,
Europe
replacement and commercial
markets in Australia, New Zealand
and selected international markets
through its focus on the development and release of innovative
and environmentally friendly products, and will expand its
international business through new product development and
promotion of leading brands
> Australia,
overseas
distributors
> Dux participates actively in the
new home and replacement
markets. However, the primary
market for hot water systems is
the replacement or breakdown
market
> Dux will continue to focus on improving business performance
by developing new environmentally friendly products to meet
emerging market requirements and regulations,
strengthening key customer relationships, and reducing costs
through both improved plant performance and sourcing of
components
> Australia,
New Zealand,
export markets
> Domestic home builders, DIY and
building projects, commercial
buildings and multi-dwelling
developments
> Gainsborough’s strategic direction encompasses the
development of additional door hardware products to suit
domestic buildings, continued development of commercial
markets and development of export markets
> Australia,
> Domestic, commercial, lawn care
> Rover will continue to target market growth segments in
New Zealand,
overseas
distributors
and garden products and
equipment, marketed in over
35 countries
Australia and overseas
> Australia,
> Entertainment, hospitality,
New Zealand,
Hong Kong,
United
Kingdom
healthcare, public seating, sports
stadia, corporate and educational
markets. Sells direct to builders,
developers, clubs and hotels
> As well as its strong emphasis on new product development,
Sebel will continue to pursue traditional markets using its
strong brand name and good customer service to drive sales
through increased market share. Current export markets will
also be expanded, with the division pursuing opportunities in
education and stadia markets overseas
Strategic Direction and Business Divisions
11
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
> Environmental
Product Innovations
> Research and Development
Caroma Dorf has recently opened a
new “state of the art” R&D Centre,
situated in the company’s head office
at Epping in Sydney. The centre
employs a team of fifteen
professionals, involved in industrial
and ceramic design, engineering
design using advanced computer
aided design technology to develop
world-class products. Other GWA
subsidiaries such as Dux and Sebel
also conduct their own in-house
R&D programs.
With the knowledge that both
the local and international markets
place ever increasing demand on
environmentally friendly products,
GWA has for several years focussed
its R&D on developing world-class
designs that pioneer ways to save
water and energy, reduce greenhouse
gases or deliver other environmentally
sustainable benefits.
Caroma Dorf has focused its R&D
efforts in extending its highly
successful Smartflush® dual flush
sanitaryware and W.E.T.® (Water
Efficient Tapware) technology into
most product ranges on offer to the
market. Concurrently, extensive R&D
work has been undertaken by the
company to ensure that all products
are in compliance with the Federal
Government’s WELS (Water Efficiency
Labelling and Standards Scheme)
that by legislation, commenced on
1 July 2006.
Caroma Dorf has recently
launched two new urinals that are
the undisputed leaders in water
saving technology.
The Caroma Cube 0.8 litre
Smartflush® Urinal is Australia’s first
6-star rated urinal and uses up to
60% less water compared to standard
2 litre single stall models.
The Caroma H2Zero Cube Urinal
transforms the way you think about
waterless urinals and heralds a major
breakthrough in waterless technology.
This product is the first truly viable
and sustainable high performance
waterless option.
Dux hot water systems have been
providing the Australian and
International markets with quality
heating systems since 1915.
Caroma Dorf has focused its R&D efforts in extending
its highly successful Smartflush® dual flush sanitaryware
and W.E.T.® (Water Efficient Tapware) technology into
most product ranges on offer to the market.
The priority for R&D has been on
developing a range of environmentally
friendly products, and there has
been intensive development focus
throughout the year on solar products
and heat pumps.
The focus was needed due to rapidly
changing political environments that
are mandating both solar and ever
increasing levels of energy efficiency.
To achieve the required increases
in energy efficiency and to also
not allow a drop in customer
satisfaction, Dux has developed
a range of highly sophisticated energy
management systems unparalleled
in the industry.
These systems typify a transition
from “dumb” control to “intelligent”
management of energy.
The approach and products produced
have set Dux as a market leader in
this field, and as an innovator.
The first product onto the market
taking this intelligent approach has
been the Sunpro 305. The Sunpro has
been met with eager acceptance by
the builder and new home markets
and represents an innovative and
technological advance.
This energy management technology
is now being applied across the full
range of Dux products (electricity, gas
and heat pump) lifting the perception
of the brand in the market.
12
Environmental Product Innovations
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
SUNPRO 305 >
< H2ZERO WATERLESS
URINAL
The Caroma H2Zero Cube Urinal transforms the way
you think about waterless urinals and heralds a major
breakthrough in waterless technology.
> Caroma Smartflush®
With the country experiencing some
of the harshest drought conditions
and water shortages in many years,
Governments, water authorities
and the community are looking at
long-term solutions to conserve
water and protect the Australian
environment.
Widely recognised as a market leader
in the development of water efficient
products, Caroma Dorf has become
among the first to embrace WELS,
the Federal Government’s new
Water Efficiency Labelling and
Standards Scheme, which sets out
a national water efficiency rating
and labelling criteria to a range of
water-using products.
As water restrictions and the
WELS scheme are to become a
permanent part of our future, the
Caroma Smartflush® toilet system
becomes a very valuable asset for
those households and businesses
attempting to meet water
conservation guidelines and
preserve this valuable resource.
The Smartflush® dual flush
technology has considerably reduced
the amount of water used each time
the toilet is flushed. Older style,
single flush toilets use up to 11 litres
of water with every flush. Converting
to the Caroma Smartflush®, which
only uses . litres for a full flush and
3 litres for a half flush, will save the
average household an estimated
3,000 litres of water each year.
All Caroma Smartflush® toilet
suites carry a WELS star rating,
while Caroma /3 litre dual flush
toilet suites are 3 star rated for
water efficiency.
The Caroma Smartflush® system
has also been recognised for its
environmental qualities through
the following awards:
> ‘200 Product of the Year’ at the
GreenPlumbers Awards
> ‘Australian Design Award’
> Housing Industry Association’s
‘200 National GreenSmart Product
of the Year’ Award
> Engineers’ Australia ‘Award for
Excellence in Engineering Design
(Highly Commended)’
> ‘Powerhouse Museum Selection
Award’
> Dorf Water Efficient
Tapware (W.E.T.®)
Dorf W.E.T.® products are also
contributing to a sustainable future
by saving water, energy and the
environment. A WELS 3 star rating
has been achieved for tapware,
mixers and showers.
Engineered to regulate the flow of
water, whilst still providing optimum
performance, the W.E.T.® range of
products can be used in the kitchen,
bathroom and the laundry.
If used throughout the home,
it is estimated that the average
household will:
> Save the equivalent of up to one
swimming pool worth of water
per year
> Use less energy as there is less
water to heat
> Reduce greenhouse gas emissions
as less energy is used
> Cut up to $320 off annual household
expenses
> Dux Solar Hot
Water Systems
Dux has continued to develop its range
of environmental products under the
‘Sunpro’ brand.
The Sunpro 30 product has become
the benchmark in the Victorian
housing market as it combines
the simplicity of a conventional gas
storage unit with solar collectors and
a patented ‘Hot Logic’ controller.
This product provides a relatively
low capital cost product that meets
the stringent requirements of the
SEAV whilst ensuring consumers
have sufficient hot water, even
on cloudy days.
The Sunpro Gas Boosted solar
products remain at the forefront
of the market and continue to provide
solutions at the performance end
of the market. These products have
gained wide acceptance in Victoria,
New South Wales and Queensland,
where legislation is driving the market
towards higher efficiency products.
Sunpro Electric Boosted solar products
are gaining ground in Queensland,
along with the new heat pump
technology, Airoheat, which reduces
demand for electricity compared
with conventional water heaters.
In South Australia, Electric Boosted
solar heaters have established a niche
in the market and are assisting to
reduce demand for energy compared
with conventional electric hot
water heaters.
Another innovative environmental
product developed by Dux is Readyhot,
a new water reticulation pump which
reduces water being wasted. Readyhot
won the HIA Greensmart Award in
Western Australia and is now a
national finalist.
Dux remains at the forefront of
environmental product development
and will continue to differentiate from
competitors by taking this leading
role in the market.
Environmental Product Innovations
13
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
INNOVATION = FUTURE GROWTH
> P C Crowley BA BEcon FAICD
> R M Anderson
Non-Executive Director
Elected to the Board 1992
Expertise: Property investment and
transport logistics
Mr Anderson was appointed a director of
GWA Limited in 1979 after joining the Group
in 1955 where he gained wide experience
in management, investment and
property matters.
Mr Anderson was appointed a
Non-Executive Director of GWA International
Limited in 1992.
> G J McGrath MIIE
Non-Executive Director
Elected to the Board 2004
Expertise: Manufacturing and general
management
Special Responsibilities:
Member of Remuneration Committee
2003: Mr McGrath retired as Managing
Director of GWA International Limited on
6 May 2003, and continued his involvement
with the Group as an adviser to the Board;
1992: Mr McGrath was appointed Managing
Director of GWA International Limited;
1982: After the takeover of UPL Group
by GWA Limited, Mr McGrath was
appointed Managing Director of the
GWA Manufacturing Group companies
comprising Caroma, Sebel and
Rover Mowers.
During the past three years, Mr McGrath
has served as a director of the following
other listed companies, and the period in
which the directorships have been held:
> Campbell Brothers Limited*+ since 2003
> Fletcher Building Limited* since 2003
> Company Secretary
R J Thornton CA B Com LLB (Hons) LLM FTIA
Appointed 4 July 2003
Expertise: Chartered Accountant,
taxation and finance
Mr Thornton joined GWA International
Limited in 2002 as Group Taxation Manager
and Treasurer. He is experienced in
accounting, taxation and finance through
positions at Coopers & Lybrand, Citibank and
Ernst & Young in Australia and overseas.
Managing Director
Appointed 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 Rugby Group PLC, a 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), Western Australia’s largest cement
producer and Australia’s largest 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.
During the past three years, Mr Crowley has
served as a director of the following other
listed company, and the period in which the
directorship was held:
> Austrim Nylex Limited 2001-2003
> D R Barry FAIM
Non-Executive Director
Elected to the Board 1992
Expertise: Importation, distribution
and retailing
Special Responsibilities:
Member of Remuneration Committee
Mr Barry was appointed a director of
GWA Limited in 1979, and was primarily
responsible for one of its major divisions
involved in importation, wholesaling
and retailing.
Mr Barry was appointed a Non-Executive
Director of GWA International Limited
in 1992.
> M D E Kriewaldt BA LLB FAICD
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 provides advice 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 Limited.
During the past three years, Mr Kriewaldt
has served as a director of the following
other listed companies, and the period in
which the directorships have been held:
> Campbell Brothers Limited* since 2001
> Oil Search Limited* since 2002
> Suncorp-Metway Limited* since 1996
> Peptech Limited* since 2003
> Thin Technologies Limited 2003
> Board
of Directors
> B Thornton KSJ FCA FAICD FAIM FCIS
Chairman and Non-Executive Director
Elected to the Board 1992
Expertise: Chartered Accountant,
corporate and financial management
Special Responsibilities:
Chairman of the Board, Chairman of
Nomination Committee and member
of Audit Committee
Mr Thornton joined GWA Limited in 1974 as
Finance Director and was appointed Chief
Executive in 1981. In 1986, he was
appointed Executive Chairman and,
following the privatisation of GWA Limited 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
member of the Brisbane Advisory Board of
the Salvation Army.
During the past three years, Mr Thornton
has served as a director of the following
other listed company, and the period in
which the directorship was held:
> Stockland Corporation Limited 1995-2004
> J J Kennedy AO CBE DUniv (QUT) FCA FCPA
Deputy Chairman and
Non-Executive Director
Elected to the Board 1992
Expertise: Chartered Accountant and
director of a number of public and other
corporations
Special Responsibilities:
Deputy Chairman of the Board,
Chairman of Audit Committee and
member of Nomination Committee
During the past three years, Mr Kennedy
has served as a director of the following
other listed companies, and the period in
which the directorships have been held:
> Suncorp-Metway Limited* since 1997
> Australian Stock Exchange Limited*
since 1990
> Macquarie Goodman Funds
Management Limited : 1994 – 2004
> Qantas Airways Limited resigned June 2006
* denotes current directorship
+ denotes Chairman
1
Board of Directors
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
The Board of Directors is responsible for the
corporate governance of GWA International Limited
(“the company”) which is an essential part 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 outcome.
> Corporate Governance
Statement for the year ended 30 June 200
The corporate governance practices
of the company have been in place
since listing and are constantly
reassessed in the light of experience
(within the company and in other
organisations), contemporary views
and best practice guidelines on good
corporate governance practices.
The Board adopts practices it
considers to be superior and which
will lead to better outcomes for the
company’s shareholders, whilst
endeavouring to avoid those which
are based on unsound principles or
represent temporary fads.
The Board supports the Principles
of Good Corporate Governance and
Best Practice Recommendations
(“the recommendations”) released
by the ASX Corporate Governance
Council. The Board confirms that
the current corporate governance
practices of the company meet
or exceed the recommendations,
except for Recommendation 2.2
which provides that the chairperson
should be an independent director.
The Chairman of the company,
Mr Barry Thornton, would not be
considered an independent director
in accordance with the definition
of independence outlined in the
recommendations, as he is
associated with a substantial
shareholder. This matter is outlined
in more detail below – refer
Independence of Directors.
As part of its responsibilities, the
Board has ensured that management
has put in place a comprehensive
system of risk management and
internal controls. These are outlined
in more detail below – refer Risk
Management and Internal Controls.
The Board continues to review
and monitor the company’s risk
management and internal control
practices to ensure that best
practice is maintained.
For further information on the
corporate governance practices
of the company, please refer
to the corporate website at
www.gwail.com.au in the Corporate
Governance section.
1. Role of the Board
The Board is responsible for the
long-term growth and profitability of
the company. The Board charts the
strategic 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
the performance of the Managing
Director
> Liaison with the company’s External
Auditor through the Audit Committee
> Ensuring that the company has
appropriate systems of risk
management and internal controls,
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 is regularly reviewed to
ensure it remains consistent with
the Board’s objectives and
responsibilities. The Board charter
has been posted on the company’s
website in the Corporate
Governance section.
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. Together with the Board
Committees, the directors use the
Board meetings to challenge and
fully understand the business and
its operational issues. To assist with
the Board’s understanding of the
businesses, the Board regularly
conducts Board meetings at the
factories, followed by management
presentations and factory tours.
The General Managers of the
business divisions are required to
regularly attend and present at
Corporate Governance Statement
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INNOVATION = FUTURE GROWTH
the Board meetings on corporate
strategies and performance. A Group
strategy meeting is held annually,
which enables the Board to review
corporate strategies and performance
with the General Managers of the
business divisions. This ensures that
the Board is effectively carrying out
its duty of approving corporate
strategies and performance
objectives.
The Chief Financial Officer is required
to attend Board meetings and
present the Finance Department
Monthly Report, and to answer
questions from the directors on
financial performance, accounting,
risk management and treasury
matters.
The Company Secretary is
responsible for the completion and
dispatch of the agenda and Board
papers for each meeting. The
Company Secretary prepares the
draft minutes for each meeting,
which are tabled at the next Board
meeting for review and approval. The
Company Secretary is accountable to
the Board, through the Chairman, on
all corporate governance matters.
3. Composition of the Board
The Board presently comprises 7
directors, 6 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 14 of the Annual Report. The
profiles outline the skills, experience
and expertise of each Board member.
The composition of the Board is
determined by the Nomination
Committee and, where appropriate,
external advice is sought. The
following principles and guidelines
are adhered to:
> 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
Re-Election of Directors
In accordance with the company’s
constitution, at each Annual General
Meeting, a number of directors will
face re-election. One third of the
Board (excluding the Managing
Director and any director not
specifically required to stand for
re-election) must stand for
re-election. In addition, no director
(other than the Managing Director)
may hold office for more than
three years without standing for
re-election, and any director
appointed by the Board since the
last Annual General Meeting must
stand for re-election at the next
Annual General Meeting. All
retiring directors are eligible
for re-election.
4. Independence of Directors
The Board considers that directors
must be independent from
management and free of any
business or other relationship that
could interfere, or reasonably be
perceived to interfere, with the
exercise of their unfettered and
independent judgment. In applying
the definition of independence
outlined in the recommendations
of the ASX Corporate Governance
Council, it has been determined that
the majority of the Board members
of GWA International Limited are
independent.
The following directors are
considered by the Board to constitute
the independent directors of the
company:
> The Board should maintain a majority
> Mr Jim Kennedy,
of non-executive directors
> The Board should maintain a majority
of independent directors
> The Chairperson should be a
non-executive director
> The role of Chairperson and
Managing Director should not be
exercised by the same individual
Deputy Chairman and
Non-Executive Director
> Mr Martin Kriewaldt,
Non-Executive Director
> Mr David Barry,
Non-Executive Director
> Mr Robert Anderson,
Non- Executive Director
The Board is responsible for ensuring
that the action 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.
In recognising the importance of the
independence of directors and the
immediate disclosure of conflicts of
interest, the Board has included both
matters as permanent items on the
agenda at Board meetings. Any
independence or conflict of interest
issues arising during the relevant
period must be disclosed to the
Chairman prior to each Board
meeting. The disclosure is recorded
in the Register of Directors’ Interests
and in the Board minutes.
(i) Mr Barry Thornton – Chairman and
Non-Executive Director
As indicated above, the Chairman,
Mr Barry Thornton, would not be
considered an independent director
based on the definition of
independence outlined in the
recommendations of the ASX
Corporate Governance Council.
This is on the basis that Mr Thornton
is associated with a substantial
shareholder. In the Board’s view,
Mr Thornton’s association with a
substantial shareholder in no way
prevents Mr Thornton from exercising
independent judgment in carrying
out his duties as Chairman of the
Board. Mr Thornton is a long serving
Chairman and has overseen the
efficient and effective conduct of
the Board’s functions since listing
in 1993.
In the event that any independence
or conflict of interest issue arises
with respect to Mr Thornton’s
association with a substantial
shareholder, the company has
procedures in place for the Deputy
Chairman, Mr Jim Kennedy to
assume the role as acting Chairman
of the Board.
(ii) Mr Geoff McGrath – Non-Executive
Director
At the Annual General Meeting on
28 October 2004 shareholders
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GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
approved the re-election of
Mr Geoff McGrath as director.
As disclosed in the 2003/04 Annual
Report, Mr McGrath was the former
Managing Director of the company
and accordingly, does not meet the
definition of an independent director
as outlined in the recommendations
of the ASX Corporate Governance
Council. In the Board’s view, this
in no way impacts on Mr McGrath’s
effectiveness and performance
as a director, nor does it affect
Mr McGrath’s ability to exercise
independent judgment in carrying
out his duties as a director.
(iii) Director Tenure
The current Board members have
been in office for many years, as
disclosed on page 14 of the Annual
Report (excluding Mr Peter Crowley
and Mr Geoff McGrath who were
appointed in the 2002/03 and
2003/04 years respectively). 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 since
listing and in the Board’s view the
company derives benefits from
having long serving directors with
a 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.
The Board has developed succession
plans for the future retirement of
individual directors. In formulating
the succession plans, the Board
recognises the importance of
maintaining corporate memory and
ensuring 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 of interest might
arise. A director who has an actual or
potential conflict of interest or 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
and trading relationships, dealings
with the directors, dealings with
companies with common directors
and dealings with any significant
shareholders of the company.
The materiality thresholds used for
the determination of independence
and issues of conflict of interest has
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.
7. Board Committees
The Board has a number of standing
Board Committees to assist in
carrying out its duties and
responsibilities as outlined in the
Board charter. All members of
Board Committees are non-executive
directors.
The standing Board Committees
are:
(i) Audit Committee
The Audit Committee consists
of the following non-executive
directors:
> J J Kennedy AO CBE DUniv (QUT) FCA FCPA
(Chairman)
> M D E Kriewaldt BA LLB FAICD
The Audit Committee meets as
required and on several occasions
throughout the year. For attendance
details of the Audit Committee, refer
to page 28 of the Annual 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 and is governed
by a charter which outlines the
Committee’s role and responsibilities,
composition, structure and
membership requirements. The
charter is regularly reviewed to
ensure it remains consistent with
the Board’s objectives and
responsibilities. The Audit Committee
charter has been posted on the
company’s website in the Corporate
Governance section.
The External Auditor, Managing
Director, Chief Financial Officer,
Company Secretary, Group
Commercial Manager and other
company executives (as required)
attend Audit Committee meetings,
by invitation, to present the relevant
statutory information, financial
statements, reports, and to answer
the questions of the Audit
Committee members. At the Audit
Committee meetings to consider the
half and full year financial results, the
Audit Committee members will meet
with the External Auditor without
management present.
The main responsibilities of the Audit
Committee include:
> Review of financial statements and
external financial reporting
> Assess the management processes
> B Thornton KSJ FCA FAICD FAIM FCIS
supporting external reporting
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> 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
and reviewed by the Audit
Committee as part of the financial
reporting process.
(ii) Nomination Committee
The Nomination Committee consists
of the following non-executive
directors:
> B Thornton KSJ FCA FAICD FAIM FCIS
> Review of tax planning and tax
(Chairman)
compliance systems and processes
> Review and monitor risk
management and internal compliance
and control systems
> Assess the performance and
objectivity of the internal audit
function
> Reporting to the Board on the
Committee’s role and responsibilities
covering all the functions in its
charter
The Company Secretary prepares the
draft minutes for each Audit
Committee meeting, which are
tabled at the next Audit Committee
meeting for review and approval. The
draft minutes are also included in the
Board papers of the next Board
meeting following the Audit
Committee meeting.
Performance Evaluation
On a regular basis, the Audit
Committee conducts an evaluation of
the performance of Audit Committee
members to determine whether the
Committee is functioning effectively
by reference to current best practice.
The performance evaluation is
conducted by the Chairman of the
Audit Committee through interviews
with individual Committee members,
the results of which are reported to
the Board.
Certification of Financial Reports
The Managing Director and Chief
Financial Officer state in writing to
the Board each reporting period that
in their opinion the company’s
financial reports present a true and
fair view of the company’s financial
position and performance, and are in
accordance with relevant Accounting
Standards. The statements from the
Managing Director and Chief
Financial Officer are based on a
formal sign-off framework
established throughout the company
> 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 page 28 of the Annual
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
non-executive director
The Nomination Committee operates
under a charter that details the
Committee’s role and responsibilities,
composition, structure and
membership requirements. The
charter is regularly reviewed to
ensure it remains consistent with
the Board’s objectives and
responsibilities. The Nomination
Committee charter has been posted
on the company’s website in the
Corporate Governance section.
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 the non-executive
directors
> Reporting to the Board on the
Committee’s role and responsibilities
covering all the functions in its
charter
In performing its responsibilities,
the Nomination Committee receives
appropriate advice from external
consultants and other advisers as
required.
The Company Secretary prepares the
draft minutes for each Nomination
Committee meeting, which are
tabled at the next Nomination
Committee meeting for review and
approval. The draft minutes are also
included in the Board papers of the
next Board meeting following the
Nomination Committee meeting.
Selection and Appointment
of Directors
The Nomination Committee is
responsible for the selection and
appointment of directors. In the
circumstances where there is a need
to appoint a director, whether due to
the retirement of a director, growth
of the company, or changed
circumstances of the company,
certain procedures will be followed,
including the following:
> Determination of the skills and
experience appropriate for an
appointee, having regard to those of
the existing directors and other likely
changes to the Board;
> Upon identifying a potential
appointee, consider the competency
and qualifications, independence,
other directorships, time availability,
and the effect that their appointment
would have on the overall balance of
the composition of the Board; and
> All existing Board members
consenting to the proposed
appointee.
Induction Program
The Nomination Committee is
responsible for ensuring that an
effective induction program for new
directors is in place, and regularly
reviewed to ensure its effectiveness.
The Board has developed a
comprehensive induction program for
new directors to allow the new
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GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
appointees to participate fully and
actively in Board decision making.
The Board views the induction
program as critical in enabling the
new directors to gain an
understanding of the company and
the markets in which it operates.
A similar induction program is also
available for key executives.
Performance Evaluation
On an annual basis, the Nomination
Committee conducts an evaluation of
the performance of Board members
to determine whether the Board is
functioning effectively by reference
to current best practice. The
performance evaluation is conducted
by the Chairman of the Board
through interviews with individual
Board members, the results of which
are reported to the Board.
(iii) Remuneration Committee
The Remuneration Committee
consists of the following
non-executive directors:
> M D E Kriewaldt BA LLB FAICD
(Chairman)
> G J McGrath MIIE
> 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 page 28 of the Annual 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 a non-
executive director
The Remuneration Committee
operates under a charter that details
the Committee’s role and
responsibilities, composition,
structure and membership
requirements. The charter is
regularly reviewed to ensure it
remains consistent with the Board’s
objectives and responsibilities.
The Remuneration Committee
charter has been posted on the
company’s website in the Corporate
Governance section.
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
> Review of the company’s
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.
The Company Secretary prepares the
draft minutes for each Remuneration
Committee meeting, which are
tabled at the next Remuneration
Committee meeting for review and
approval. The draft minutes are also
included in the Board papers of the
next Board meeting following the
Remuneration Committee meeting.
8. Code of Conduct
The company conducts its business
with the highest standards of
personal and corporate integrity. To
assist employees in achieving this
objective, the company has
developed a comprehensive Code of
Conduct which guides the behaviour
of directors, officers and employees
and demonstrates the commitment
of the company to ethical practices.
The Code of Conduct is incorporated
as part of new employees’ induction
training and an acceptance form is
signed by new employees
acknowledging their understanding
and on-going compliance.
The Code of Conduct states the
values and policies of the company
and complements the company’s
risk management and internal control
practices. The Code of Conduct is
regularly reviewed and updated to
ensure that it reflects current best
practice, and to promote the ethical
behaviour of all employees. The Code
of Conduct has been posted on the
company’s website in the About
GWA section.
9. Share Trading Policy
The company has developed
a share trading policy which prohibits
directors, officers and other
“potential insiders” from trading
in GWA International Limited shares
during designated periods. The
designated periods are six weeks
immediately prior to the release
of the company’s full year results to
the Australian Stock Exchange and
four weeks immediately prior to
the release of the company’s half
year results to the Australian Stock
Exchange, unless otherwise
determined by the directors.
Outside of these designated periods,
there are no trading restrictions
where the directors, officers and
other “potential insiders” are not
in the possession of unpublished
insider information. At all times, if
an employee possesses unpublished
insider information about the
company, that person is prohibited
from trading. In addition, employees
must not engage in any short-term
trading in the company’s shares.
As an additional restriction, the
directors must advise the Chairman
prior to trading outside the
designated periods and confirm
to the Chairman that they do not
possess unpublished insider
information. The policy also requires
the directors to notify the Company
Secretary within three business
days after trading, to enable the
Company Secretary to lodge the
required disclosures with the
Australian Stock Exchange.
10. Risk Management and
Internal Controls
The Board recognises that effective
risk management processes help
ensure the business is more likely
Corporate Governance Statement
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INNOVATION = FUTURE GROWTH
to achieve its business objectives,
and that the Board meets its
Corporate Governance
responsibilities. In meeting its
responsibilities, the Board has
ensured that management has put
in place comprehensive risk
management policies and practices
across the company which addresses
each of the key elements and
requirements of AS/NZS Standard
4360: 2004 – Risk Management.
Such processes include defining the
risk oversight responsibilities of the
Board and the responsibilities of
management in ensuring risks are
both identified and effectively
managed. The agreed policies and
practices are made effective through
the combined activities of:
> an Audit Committee that reports to
the Board on risk management and
internal control matters in accordance
with its main responsibilities as
outlined in the Audit Committee
charter (refer above);
> an Executive Risk Committee,
comprising the senior management
of the company, which has been
established to review and monitor
the day to day risk activities, and to
report to the Audit Committee on
such matters;
> a Group Commercial Manager who
has primary responsibility for
designing, implementing and
co-ordinating the overall risk
management and internal control
practices of the company. Whilst
reporting to the Chief Financial
Officer on a day to day basis,
the Group Commercial Manager
has the authority to report directly
to the Board on any matter;
> other managers, such as the Group
Compliance Manager, who has
specific responsibilities in respect
of health, safety and environmental
risks; and
> internal audit activities, undertaken
by a combination of internal and
appropriately qualified external
resources, based on a Board
approved programme of work.
Such activities link to the risk
management practices of the
company by ensuring risks are being
adequately identified and managed
through the effective and efficient
operation of control procedures.
The Board aims to continually
evaluate and re-assess the risk
management and internal control
practices of the company to ensure
current best practice is maintained,
and to preserve and create value
within the organisation. In recent
years, the Board has reviewed
the risk management policies and
practices within the company, and
the recommendations arising from
this review have been implemented.
Improvements to the identification,
reporting and monitoring of actions
in relation to health, safety and
environmental risks have also been
implemented in order to support
management’s objectives in this
area. This has included the
introduction of risk management
software across the company for
the recording, escalation and
management of such risks.
Certification of Risk Management
Controls
In conjunction with the certification
of financial reports (refer above), the
Managing Director and Chief
Financial Officer state in writing to
the Board each reporting period that
in their opinion:
> the statement is founded on a sound
system of risk management and
internal compliance and control
which implements the policies
adopted by the Board; and
> the company’s risk management and
internal compliance and control
system is operating efficiently and
effectively in all material respects.
The statements from the Managing
Director and Chief Financial Officer
are based on a formal sign-off
framework established throughout
the company and reviewed by the
Audit Committee as part of the
financial reporting process.
11. Remuneration Policies
The Board’s objective in setting the
company’s remuneration policies is
to provide maximum stakeholder
benefit from the retention of a high
quality Board and executive team.
This is achieved by remunerating
directors and executives fairly and
appropriately based on relevant
employment market conditions, and
the linking of the Managing Director’s
and executives emoluments to the
company’s financial and operating
performance.
The Nomination Committee is
responsible for determining the
remuneration for the non-executive
directors, with the maximum
aggregate amount approved by
shareholders. The directors receive
their remuneration by way of
directors’ fees only (including
statutory superannuation), and
are not able to participate in the
Executive Incentive Scheme or
the GWA International Employee
Share Plan.
The Remuneration Committee
is responsible for reviewing and
determining the remuneration and
incentive arrangements for the
executives. The Remuneration
Committee takes advice from
external advisers to assist in
determining appropriate
remuneration levels. The
remuneration and incentive
arrangements have been structured
to ensure that performance is fairly
rewarded and to attract, motivate and
retain a high quality executive team.
For details of the company’s
remuneration policies and
disclosures, refer to the
Remuneration Report on page 24
of the Annual Report.
12. Employee Share Plan
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 the Remuneration Report on
page 26 of the Annual Report.
The Employee Share Plan does
not provide for the issue of options
and no options have been issued by
the company.
13. Audit and Auditor
Independence
The Board recognises the importance
of a truly independent audit firm to
ensure that the audit function
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> The Board is committed to the
continued development and
enhancement of electronic
communications to shareholders.
This is a developing area for all
publicly listed companies and the
Board will continue to monitor what
is happening in the market place,
particularly regarding cost savings,
take-up rates and service features.
Currently, shareholders are able
to register to receive company
communications electronically (eg
Annual Report), although not all
company communications are made
available electronically.
> The company encourages
shareholders to attend the company’s
Annual General Meeting to canvass
the relevant issues of interest.
If shareholders are unable to attend
the Annual General Meeting
personally, they are encouraged
to participate through the
appointment of a proxy or proxies.
The company endeavours to set
the timing and the location of the
Annual General Meeting so that
it is convenient for shareholders
generally.
> 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 Independent Audit Report.
Shareholders attending the Annual
General Meeting are made aware
they can ask questions of the
External Auditor concerning the
conduct of the audit.
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. Consistent
with the Board’s commitment to an
independent audit firm, a policy has
been prepared and approved by the
Board on the Role of the External
Auditor, which is designed to ensure
the independence of the external
audit function.
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 External Auditor
is not passing an audit opinion on
the non-audit work of its own firm.
At the Annual General Meeting on
28 October 2004, shareholders
approved the appointment of
KPMG as the company’s External
Auditor for the financial year
commencing 1 July 2004. This
followed a comprehensive tender
process for the external audit
conducted by the Audit Committee.
KPMG replaced Ernst & Young who
had been the company’s External
Auditor since the 1995 financial year.
During the year, KPMG provided an
Auditor Independence Declaration
to the Board (refer page 28 of the
Annual Report) that, to the best of
their knowledge and belief, there
have been no contraventions of:
> the auditor independence
requirements of the Corporations
Act 2001 in relation to the audit; and
> any applicable code of professional
conduct in relation to the audit.
In considering this declaration,
the Board were satisfied with the
continuing independence of the
audit function.
For details of the non-audit roles
performed by KPMG during the year,
please refer to note 6 of the
Financial Statements.
Rotation of External Auditor
KPMG has advised the company that
their policy of audit partner rotation
requires a change in the lead
engagement partner and review
partner after a period of five years.
14. 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 the continuous
disclosure obligations contained in
the ASX Listing Rules and the
Corporations Act 2001. The company
has for many years included
continuous disclosure as a
permanent item on the agenda for
Board meetings. The Board has
approved a Continuous Disclosure
Policy to ensure the company
complies with the continuous
disclosure requirements, and to
ensure accountability at the
executive and senior management
level for that compliance.
> Ensuring that all shareholder
communications (including Annual
Report, Half Year Report and Notice
of Annual General Meeting) satisfy
relevant statutory requirements and
the guidelines of the ASX Corporate
Governance Council and other
professional bodies. The company is
committed to producing shareholder
communications in plain English with
full and open disclosure about the
company’s policies and procedures,
operations and performance.
> Ensuring that all shareholders have
the opportunity to receive externally
available information issued by the
company. The company has a
corporate website at www.gwail.
com.au for the purpose of enhancing
communication with shareholders
and other parties. 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 other company
information.
Corporate Governance Statement
21
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Your directors present their report on the consolidated entity
of GWA International Limited and the entities it controlled
(“the company”) during the financial year ended 30 June 2006.
> Directors’ Report as at 30 June 200
> Directors
> Directors’ Interests
The following persons were directors
of the company during the financial
year and up to the date of this report.
Directors were in office this entire
period unless otherwise stated.
> B Thornton
Chairman and Non-Executive Director
> J J Kennedy
Deputy Chairman and
Non-Executive Director
> P C Crowley
Managing Director
> D R Barry
Non-Executive Director
> R M Anderson
Non-Executive Director
> M D E Kriewaldt
Non-Executive Director
> G J McGrath
Non-Executive Director
Details of the directors’
qualifications, experience and
special responsibilities are located
on page 14 of the Annual Report.
Details of the directorships of other
listed companies held by each
director in the three years prior to the
end of the 2005/06 financial year, and
the period for which each directorship
has been held, are listed on page 14
of the Annual Report.
Company Secretary
Mr R J Thornton was appointed
Company Secretary of GWA
International Limited on 4 July 2003.
Details of Mr Thornton’s qualifications
and experience are located on
page 14 of the Annual Report.
At the date of this report, the relevant interest (as defined in the
Corporations Act 2001) of the directors in shares of the company were:
Director
B Thornton
J J Kennedy
D R Barry
R M Anderson
M D E Kriewaldt
P C Crowley
G J McGrath
Ordinary Shares
Interest (see notes below)
Nil
10,000
3,398,961
8,198,000
100,000
500,000
420,458
Note 4
Notes 1 and 4
Notes 2 and 4
Notes 2 and 4
Notes 2 and 4
Notes 3 and 4
Notes 1 and 4
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: In accordance with a resolution of shareholders at the Annual General Meeting on 30 October 2003, Mr Crowley was issued
500,000 shares on 14 November 2003 under the terms and conditions of the GWA International Employee Share Plan.
Note 4: Note 30 to the Financial Statements sets out the number of shares held directly, indirectly or beneficially by directors
or their related entities at balance date as prescribed in Accounting Standard AASB 124, this being 57,317,081 shares
(last year 49,370,949 shares).
> Corporate Structure
GWA International Limited is a
company limited by shares that is
incorporated and domiciled in
Australia. GWA International Limited
has prepared a consolidated financial
report incorporating the entities that it
controlled during the financial year
ended 30 June 2006, which are
outlined in note 28 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 company employed
2,226 employees as at 30 June 2006
(last year 2,474 employees).
The company recognises the
productivity benefits to be gained
from investing in its employees
to improve motivation and individual
skills. The company remains
committed to ensuring that staff
are provided access to appropriate
training and development programs.
All companies in the consolidated
entity are active equal opportunity
employers.
22
Directors’ Report
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
INNOVATION = FUTURE GROWTH
The company remains committed to ensuring
that staff are provided access to appropriate training
and development programs.
> Segment Sales and Profit
The segment sales and profit of the company for the financial year ended
30 June 2006 were as follows:
Business Segment
Segment Sales
Segment Profit
Building fixtures and fittings
523,100
523,850
102,858
105,535
2006
$’000
2005
$’000
2006
$’000
2005
$’000
56,738
40,151
61,608
4,655
5,781
41,408
(12,316)
(7,963)
619,989
626,866
95,197
103,353
corporate income tax rate was paid
on 3 April 2006 to the holders of fully
paid ordinary shares.
In respect of the financial year
ended 30 June 2006, the directors
recommend the payment on
3 October 2006 to the holders of
fully paid ordinary shares of a final
ordinary dividend of 8.0 cents per
share and a special dividend of
3.5 cents per share, fully franked at
the 30% corporate income tax rate.
(5,944)
-
> Significant Events after
89,253
103,353
Balance Date
Commercial furniture
Other
Total
Reorganisation expenses
Profit before interest and tax
> Earnings Per Share
Basic earnings per share
2006
cents
2005
cents
20.4
23.0
> Review of Operations and
> Dividends
State of Affairs
A review of the operations of the
company and the results of those
operations for the financial year
ended 30 June 2006 is provided
in the Managing Director’s Review
of Operations which is located on
page 4 of the Annual Report.
In the opinion of the directors,
there were no significant changes in
the state of affairs of the company
during the financial year, other than
that referred to in the Financial
Statements or notes thereto.
In respect of the financial year
ended 30 June 2005, as detailed
in the Directors’ Report for that
financial year, a final ordinary
dividend of 8.0 cents per share and
a special dividend of 2.0 cents per
share, fully franked at the 30%
corporate income tax rate was paid
on 3 October 2005 to the holders
of fully paid ordinary shares.
In respect of the financial year
ended 30 June 2006, an interim
ordinary dividend of 10.0 cents per
share, fully franked at the 30%
On 15 August 2006, the directors of
GWA International Limited declared
a final ordinary dividend of 8.0 cents
per share and a special dividend of
3.5 cents per share in respect of the
financial year ended 30 June 2006.
The dividends will be fully franked
at the 30% corporate income tax
rate. The total amount of the
dividend is $32,005 million (last year
$27,830 million). In accordance with
Accounting Standards, the dividends
have not been provided for in the
Financial Statements for the year
ended 30 June 2006.
There has not been any other
matter or circumstance, other than
that referred to in the Financial
Statements or notes thereto, that
has arisen since the end of the
financial year, that has significantly
affected, or may significantly affect,
the operations of the company, the
results of those operations, or the
state of affairs of the company.
Directors’ Report
23
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
INNOVATION = FUTURE GROWTH
Where appropriate, an independent
review of the company’s compliance
with licence conditions is made
by external advisors.
The company in conjunction with
external advisors monitors storage
and treatment of hazardous materials
within particular operations. Prior
to any discharge to sewers, effluent
is treated and monitored to ensure
strict observance with licence
conditions. The directors are not
aware of any breaches of the
company’s licence conditions
during the financial year ended
30 June 2006.
> Indemnification and
Insurance of Directors and
Executives
Indemnification
The company’s Constitution
provides that, to the extent
permitted by the law, every current
(and former) director or secretary
of the company shall be indemnified
out of the assets of the company
against all costs, expenses and
liabilities which results directly or
indirectly from facts or circumstances
relating to the person serving (or
having served) in their capacity as
director or secretary of the company,
but excluding any liability arising
out of conduct involving a lack of
good faith or conduct known to
the person to be wrongful or any
liability to the company or related
body corporate.
in the management of the company
and its controlled entities.
> Remuneration Report
This report outlines the remuneration
arrangements in place for the
directors and executives of the
company.
Remuneration Objectives
The performance of the company
depends upon the quality of its
directors and executives. To
maximise the performance of the
company’s businesses, the company
must attract, motivate and retain
a highly skilled director and executive
team. This is achieved through
a remuneration and incentive
framework which has been put in
place by the Board, and is guided
by the following objectives:
> Provide fair and competitive rewards
to attract high quality executives
> Linking of executive reward to
improvement in company
performance
> Significant proportion of executive
remuneration is “at risk”, dependent
upon meeting pre-determined
performance benchmarks
> The establishment of challenging
and achievable performance hurdles
in relation to variable executive
remuneration
> An employee share plan which
rewards performance and represents
a long-term financial commitment to
employment with the company
Insurance Premiums
Remuneration Structure
The company has paid premiums
in respect of insurance contracts
which provide cover against certain
liabilities of every current (and
former) director and officer of the
company and its controlled entities.
The contracts of insurance prohibit
disclosure of the total amount of the
premiums paid, or the nature of the
liabilities covered under the policies.
Premiums were paid in respect of
every current (and former) director
and officer of the company and
controlled entities, including the
directors named on page 14 of the
Annual Report, the Chief Financial
Officer, the Company Secretary and
all persons concerned or taking part
The remuneration structure for the
non-executive directors is separate
and distinct from the remuneration
structure for the executives.
Non-Executive Directors’
Remuneration Policy
The Nomination Committee is
responsible for determining the
remuneration arrangements for the
non-executive directors, with the
annual maximum aggregate amount
approved by shareholders. At
the Annual General Meeting on
28 October 2004, shareholders
approved an annual maximum
aggregate amount of $1 million
(excluding statutory superannuation).
> Likely Developments and
Expected Results
Likely developments and expected
results of the operations of the
company are provided in the
Managing Director’s Review of
Operations which is located on
page 4 of the Annual Report.
In the next financial year, the
company 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 company
generates the best possible returns
from its businesses.
Further information on likely
developments and expected results
of the operations of the company
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 company holds licences
issued by Environmental Protection
Authorities and Water Authorities
that specify limits for discharges to
the environment, which arise from
the operations of entities that it
controls. These licences regulate
the management of discharge to air,
storm water run-off, removal and
transport of waste associated with
the manufacturing operations in
Australia and the Netherlands.
Designated entities comply with
the Australian National Pollutant
Inventory by reporting on emissions
annually.
In Victoria, licenced entities
develop annual Waste Management
Plans, in conjunction with
the Victorian Environmental
Protection Authority.
2
Directors’ Report
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
The non-executive directors are
remunerated by way of directors’
fees only (including statutory
superannuation) and are not able
to participate in the Executive
Incentive Scheme or the GWA
International Employee Share Plan
(refer below). An additional fee is
also paid for each Board Committee
on which a director sits. The payment
of additional fees for serving on a
Committee recognises the additional
time commitment required by
directors who serve on one or
more Committees.
In setting the level of non-executive
directors fees’ and the manner
in which it is to be apportioned
amongst the directors, the
Nomination Committee takes advice
from external advisers to determine
market remuneration levels, with the
objective of ensuring that the levels
fairly represent the responsibilities
and time spent by the non-executive
directors on company matters.
Following shareholder approval
of the termination of the Directors’
Retirement Scheme for
non-executive directors at the
Annual General Meeting on
30 October 2003, retirement
benefits are not available for any
new non-executive directors of the
company, other than statutory
superannuation.
At the Annual General Meeting
on 28 October 2004, shareholders
approved the payment of the accrued
benefits to the non-executive
directors under the former Directors’
Retirement Scheme, when each
director requests that payment
be made.
For details of the emoluments paid
to the non-executive directors for the
year ended 30 June 2006, refer to
the Remuneration Tables on page 27
of the Annual Report.
Executives’ Remuneration Policy
The Remuneration Committee is
responsible for determining and
reviewing the remuneration
arrangements for the executives.
The Remuneration Committee takes
advice from external advisers to
ensure the appropriateness of the
nature and amount of emoluments
of such officers, with the overall
objective of ensuring maximum
stakeholder benefits from the
retention of a high quality
executive team.
The executives’ remuneration
consists of the following key
elements:
> Fixed Remuneration
> Variable Remuneration
- Short-term Incentive
- Medium-term Incentive
> Employee Share Plan
The fixed remuneration component
includes base salary, statutory
superannuation, and non-monetary
benefits including medical benefits
membership, life and disability
insurance and the provision of motor
vehicles. The variable remuneration
component includes a short-term
incentive and medium-term incentive
under the Executive Incentive
Scheme. As a further component
of remuneration, employees of
the company may be invited to
participate in the GWA International
Employee Share Plan.
Fixed Remuneration
The level of fixed remuneration
is set so as to provide a base level
of remuneration which is both
appropriate to the position and is
competitive in the market. Fixed
remuneration is reviewed annually by
the Remuneration Committee based
on external advice for determining
market remuneration levels, as well
as having regard to company,
divisional and individual performance.
The fixed remuneration of the five
most highly remunerated executives
is detailed in the Remuneration
Tables on page 27 of the
Annual Report.
Variable Remuneration
To assist in achieving the objective of
retaining a high quality executive
team, the Remuneration Committee
links the nature and amount of
the executive emoluments to the
company’s financial and operating
performance. Executives have the
opportunity to qualify for participation
in the Executive Incentive Scheme.
Under the scheme 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.
Executive Incentive Scheme
The Executive Incentive Scheme
came into effect on 1 July 2001 and
its participants include the members
of the divisional and corporate
executive. There are two incentives
including an Operating Performance
Incentive and a Strategic Growth
Incentive, with the objective of
maximising short-term operating
performance and medium-term
strategic growth.
The Operating Performance
Incentive operates from divisional
operating profit targets for divisional
executives, and group earnings
before interest and tax targets
for corporate executives. Where
the yearly profit targets are
achieved, participating executives
receive an incentive payment,
subject to a cap of 30% to 35%
of their base salary.
The yearly profit targets are set by
the Remuneration Committee at
the beginning of the year having
regard to the major external factors
which are expected to impact each
division including forecast economic
conditions, expected benefits from
new products, capital expenditure
and other relevant factors. The
Remuneration Committee ensures
that the profit targets are challenging
and achievable, and will assist in
focusing divisional and corporate
executives on maximising
operating performance of the
company’s businesses.
Directors’ Report
2
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
INNOVATION = FUTURE GROWTH
full upon an employee ceasing
employment with the company. The
employee bears the risk of share price
movements below the issue price.
circumstances, and together with
the current reorganisation activities,
will underpin profitability growth
into the future.
In accordance with the rules of the
plan, the total number of employee
shares on issue may not exceed 5%
of the total company shares on issue.
At 30 June 2006 there are currently
3.08 million shares issued under the
GWA International Employee Share
Plan, which have an outstanding loan
balance of $6.16 million. The plan
does not provide for the issue of
options and no options have been
issued by the company.
There are three events which
trigger employee share issues, all
of which must be approved by the
Remuneration Committee, including:
> Appointment of new divisional
and corporate executives as
recommended by the Managing
Director
The remuneration and incentive
framework, which has been put in
place by the Board, has ensured that
executives are focused on both
maximising short-term operating
performance and long-term strategic
growth. This has contributed to the
company generating the shareholder
returns as set out in the above table,
including a total of 15.5 cents in
fully franked special dividends paid
to shareholders in the last five
financial years.
The Board will continue to review
and monitor the remuneration
and incentive framework to ensure
that performance is fairly rewarded
and encouraged, and to attract,
motivate and retain a high quality
executive team.
> Achievement of three year targets
Termination of Employment
by divisional and corporate executives
pursuant to the Executive Incentive
Scheme (refer above)
> The periodic issue to employees
who merit additional recognition of
their performance and are integral
to the future success of the company,
as recommended by the Managing
Director
The GWA International Employee
Share Plan is an effective incentive
in encouraging and rewarding
sustained higher performance from
executives and senior management,
and represent a long-term financial
commitment to their employment
with the company.
Shareholder Wealth
The shareholder wealth table set out
on page 27 of the Annual Report
provides a summary of key
shareholder wealth statistics for
the company over the last five years.
As can be seen from the table, aside
from the year ended 30 June 2006,
the company has improved operating
performance in each of the years,
enabling increased cash dividends to
be paid to shareholders. The softening
external market conditions and record
raw material prices resulted in
a reduced level of profitability for
the year ended 30 June 2006. This
was a commendable result in the
The specified executives on page 27
of the Annual Report are on
open-ended contracts, except for
the Executive Director, Mr Peter
Crowley, whose employment
contract specifies an initial term
of twelve months with subsequent
rolling terms of twelve months.
The employment contract for
Mr Crowley provides that if either
the company or Mr Crowley wishes
to terminate employment for any
reason, three months notice of
termination is required, or payment in
lieu, based upon current salary levels.
On termination by the company,
Mr Crowley will be entitled to receive
payment of twelve months salary.
For the other specified executives,
the company is legally required to
give reasonable notice of termination,
or payment in lieu, based upon
current salary levels.
Under the Executive Incentive
Scheme, no incentive is payable
in the event of termination of
employment during the incentive
period.
Any loan to an executive under
the GWA International Employee
Share Plan, must be repaid in full
upon the cessation of employment
with the company.
The Strategic Growth Incentive
rewards progressive growth in
underlying divisional profitability
and earnings per share over time.
The incentive is calculated based
on divisional profits for divisional
executives, and earnings per share
for corporate executives, within
discrete three year periods. Where
the three year profit and earnings
per share targets are achieved,
participating executives receive an
incentive payment, subject to a cap
of 20% to 30% of their base salary.
The three year profit and earnings per
share targets are set by the
Remuneration Committee at the
beginning of the three year period
having regard to current performance
and forecast external factors
expected to impact each division,
and are also subject to minimum
return on investment achievement.
The Remuneration Committee
ensures that the three year profit
and earnings per share targets are
challenging and achievable, and will
assist in focusing divisional and
corporate executives on maximising
growth in profitability and return
on investment.
The total combined payments under
the abovementioned two incentives
are capped at 50% to 65% of salary
for each participating executive.
Payments are delivered by way of
cash bonus, and are paid when the
company’s annual Financial
Statements are completed.
Employee Share Plan
As a further component of
remuneration, employees of the
company may be invited to
participate in the GWA International
Employee Share Plan which
commenced on the listing of the
company in 1993. Under the plan,
employees are provided with a
non-interest bearing loan from the
company to acquire shares in the
company at market value. The loan
is repaid through dividends, or in
2
Directors’ Report
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
> Shareholder Wealth
30 June 2002
30 June 2003
30 June 2004
30 June 2005
30 June 2006
EBIT(1)
$m
81.1
92.4
101.0
103.4
EPS
cents
Total DPS(2)
cents
Share Price
$
16.8
19.8
22.3
23.0
17.0
18.0
20.5
22.5
21.5
2.35
2.70
2.95
2.92
3.11
95.2(3)
21.6(3)
Notes:
(1) EBIT for financial years 2002 to 2004 has been calculated in accordance with previous Australian GAAP. EBIT for
financial years 2005 and 2006 has been calculated in accordance with Australian equivalents to IFRS (AIFRS).
For impact on EBIT of transition to AIFRS, see note 32 to the Financial Statements
(2) Includes special dividends
(3) Prior to reorganisation costs
Remuneration Tables
> Emoluments of the Directors of GWA International Limited
Incentives
Non-Executive
Directors
B Thornton
J J Kennedy
D R Barry
R M Anderson
M D E Kriewaldt
G J McGrath
Executive Director
Salary
and Leave
Entitlements
$
166,173
137,477
86,814
81,900
98,280
86,814
1 Year
Plan
$
3 Year
Plan
$
Other
Benefits
$
Super- Termination
Payments
$
annuation
$
-
-
-
-
-
-
-
-
-
-
-
-
250
250
250
250
250
250
101,640
-
7,813
7,371
8,845
7,813
-
-
-
-
-
-
268,063
137,727
94,877
89,521
107,375
94,877
P Crowley
917,997
-
(190,000)
169,643
36,000
-
933,640
> Emoluments of the Five Most Highly Paid Executives of the Company and the Consolidated Entity
Proportion of
Emoluments
Performance
Related
%
Total
$
-
-
-
-
-
-
-
Incentives
Salary
and Leave
Entitlements
$
1 Year
Plan
$
3 Year
Plan
$
Other
Benefits
$
Super- Termination
Payments
$
annuation
$
Proportion of
Emoluments
Performance
Related
%
Total
$
387,089
-
(70,945)
64,838
100,592
-
481,574
447,268
-
(70,546)
92,664
-
-
469,386
-
-
177,333
79,425
(47,505)
64,262
138,475
-
411,990
7.7
281,171
275,764
-
-
-
-
54,088
58,725
-
393,984
70,348
25,485
-
371,597
-
-
Executives
S Wright
Group Operations
Manager
E Harrison
Chief Financial
Officer
G Oliver
General Manager,
Gainsborough
R Watkins
General Manager,
Rover
J Measroch
General Manager,
Sebel
Notes:
Incentives
The incentive for Mr G Oliver is based on his entitlement under the yearly Executive Incentive Scheme. The incentives for
the Executive Director and executives under the three year Executive Incentive Scheme were provided for in the 2004/05
year and written back in the 2005/06 year as the targets are not currently expected to be achieved.
Other Benefits
Other benefits for the Executive Director and executives include the provision of fringe benefits including motor vehicles,
loans under the Employee Share Plan, insurances and applicable fringe benefits tax.
Vesting of Incentives
The incentive for Mr G Oliver under the yearly Executive Incentive Scheme is fully vested in the 2005/06 year.
Directors’ Report
2
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
INNOVATION = FUTURE GROWTH
> Directors’ Meetings
> Rounding
The number of meetings of directors (including meetings of Committees of
directors) held during the financial year ended 30 June 2006 and the number of
meetings attended by each director were as follows:
Directors’
Meetings
Audit
Remuneration Nomination
Meetings of Committees
Number of
Meetings held:
Number of
Meetings attended:
B Thornton
J J Kennedy
P C Crowley
D R Barry
R M Anderson
M D E Kriewaldt
G J McGrath
11
11
10
11
10
10
11
10
3
3
3
-
-
-
3
-
2
-
-
-
2
-
2
2
1
1
1
-
-
-
1
-
Notes: As at the date of this report, the company had an Audit Committee, a Remuneration Committee and a Nomination
Committee of the Board of Directors. The charter for each Committee outlines its role and responsibilities, a summary of
which is provided in the Corporate Governance Statement on page 15 of the Annual Report.
The members of the Audit Committee are:
• Mr J J Kennedy (Chairman)
• Mr B Thornton
• Mr M D E Kriewaldt
The members of the Remuneration Committee are:
• Mr M D E Kriewaldt (Chairman)
• Mr G J McGrath
• Mr D R Barry
The members of the Nomination Committee are:
• Mr B Thornton (Chairman)
• Mr J J Kennedy
• Mr M D E Kriewaldt
Details of the Committee members qualifications and experience are located on page 14 of the Annual Report.
> Non-Audit Services
Details of the non-audit services
provided by the company’s External
Auditor, KPMG, during the financial
year ended 30 June 2006 are
outlined in note 6 of the Financial
Statements. Based on advice from
the company’s Audit Committee, the
directors are satisfied that the
provision of non-audit services is
compatible with the general standard
of independence for auditors imposed
by the Corporations Act 2001.
The nature and scope of each type
of non-audit service provided means
that auditor independence was
not compromised.
> Lead Auditor’s
Independence Declaration
The Lead Auditor’s Independence
Declaration is set out adjacent
and forms part of the Directors’
Report for the financial year ended
30 June 2006.
The company is of a kind referred to
in Class Order 98/100 issued by the
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, unless otherwise
stated.
Signed in accordance with a
resolution of the directors.
B Thornton
Chairman
P C Crowley
Managing Director
Brisbane, 15 August 2006
Lead Auditor’s Independence
Declaration under Section 307C of
the Corporations Act 2001
To the Directors of
GWA International Limited.
I declare that, to the best of my
knowledge and belief, in relation to
the audit for the financial year ended
30 June 2006 there have been:
(i) no contraventions of the auditor
independence requirements as set
out in the Corporations Act 2001 in
relation to the audit; and
(ii) no contraventions of any applicable
code of professional conduct in
relation to the audit.
KPMG
Mark Epper
Partner
Sydney, 15 August 2006
2
Directors’ Report
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Contents
Contents
Page Number
Income Statements .................................................................................................................... 30
Statements of Recognised Income and Expense .......................................................................31
Balance Sheets ........................................................................................................................... 32
Statements of Cash Flows ......................................................................................................... 33
Note
1
2
Signifi cant accounting policies ............................................................................................ 34
Segment reporting ...............................................................................................................41
3 Other income ...................................................................................................................... 43
4 Other expenses .................................................................................................................. 43
5 Personnel expenses ............................................................................................................ 43
6 Auditors’ remuneration ....................................................................................................... 43
7 Net fi nancing costs ............................................................................................................. 43
8 Restructuring expenses ...................................................................................................... 44
9
Income tax expense............................................................................................................ 44
10 Earnings per share .............................................................................................................. 45
11 Cash and cash equivalents .................................................................................................. 45
12 Trade and other receivables ................................................................................................ 45
13
Inventories .......................................................................................................................... 45
14 Current tax assets and liabilities ......................................................................................... 46
15 Deferred tax assets and liabilities ....................................................................................... 46
16 Property, plant and equipment ............................................................................................ 48
17
Intangible assets ................................................................................................................. 49
18 Trade and other payables .................................................................................................... 49
19
Interest-bearing loans and borrowings ................................................................................ 50
20 Employee benefi ts ...............................................................................................................51
21 Provisions .............................................................................................................................51
22 Capital and reserves ........................................................................................................... 52
23 Financial instruments .......................................................................................................... 55
24 Operating leases ..................................................................................................................57
25 Capital and other commitments ......................................................................................... 58
26 Contingencies ..................................................................................................................... 58
27 Deed of cross guarantee..................................................................................................... 58
28 Consolidated entities .......................................................................................................... 60
29 Reconciliation of cash fl ows from operating activities .........................................................61
30 Related parties .................................................................................................................... 62
31 Subsequent events ..............................................................................................................67
32 Explanation of transition to AIFRSs ..................................................................................... 68
33 Changes in accounting policy...............................................................................................74
Directors’ Declaration ......................................................................................................... 75
Independent Audit Report to the members of GWA International Limited..........................76
Financial Statements
29
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Income
Statements
For the year ended 30 June 2006
Revenue
Cost of sales
Gross profi t
Other income
Distribution expenses
Administrative expenses
Restructuring expenses
Other expenses
Results from operating activities
Financial income
Financial expenses
Net fi nancing costs
Profi t before tax
Income tax expense
Profi t for the year
Basic and diluted earnings per share (cents per share)
Dividends per share
Ordinary shares (cents per share)
Consolidated
The Company
Note
2006
$’000
2005
$’000
2006
$’000
2005
$’000
2
3
8
4
7
7
9
10
22
619,989
(326,128)
293,861
15,797
(135,818)
(61,004)
(21,963)
(1,620)
626,866
(330,499)
296,367
3,032
(130,845)
(63,143)
-
(2,058)
-
-
-
30,734
-
(1)
-
-
-
-
-
141,256
-
(6)
-
-
89,253
103,353
30,733
141,250
6,096
(17,586)
5,874
(17,011)
(11,490)
(11,137)
27
-
27
3
-
3
77,763
(20,911)
92,216
(28,328)
30,760
624
141,253
12
56,852
63,888
31,384
141,265
20.4
23.0
20.0
23.0
The income statements are to be read in conjunction with the notes of the fi nancial statements set out on pages 34 to 74.
30
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Statements of
Recognised Income and Expense
For the year ended 30 June 2006
Foreign exchange translation differences
Net gains/(losses) on hedge of net investment
in foreign subsidiary
Cash fl ow hedges:
Gains taken to equity
Net income recognised directly in equity
Profi t for the year
Consolidated
The Company
Note
2006
$’000
2005
$’000
2006
$’000
2005
$’000
688
(2,183)
-
100
385
1,073
56,852
-
(2,083)
63,888
-
-
-
-
-
-
-
31,384
-
141,265
Total recognised income and expense for the period
Effects of change in accounting policy- fi nancial instruments
22
33
57,925
61,805
31,384
141,265
157
-
-
-
Other movements in equity arising from transactions with owners as owners are set out in note 22.
The statements of recognised income and expense are to be read in conjunction with the notes to the fi nancial statements
set out on pages 34 to 74.
Financial Statements
31
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Balance
Sheets
As at 30 June 2006
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Other
Total current assets
Receivables
Deferred tax assets
Investment in subsidiaries
Property, plant and equipment
Intangible assets
Other
Total non-current assets
Total assets
Liabilities
Trade and other payables
Employee benefi ts
Income tax payable
Provisions
Total current liabilities
Interest-bearing loans and borrowings
Deferred tax liabilities
Payables
Employee benefi ts
Provisions
Consolidated
The Company
Note
2006
$’000
2005
$’000
2006
$’000
2005
$’000
11
12
13
14
12
15
28
16
17
18
20
14
21
19
15
18
20
21
156,498
67,853
95,342
2,512
4,399
134,854
69,221
97,491
30
5,750
326,604
307,346
3,676
26,496
-
117,839
343,786
2,333
5,142
26,565
-
133,918
342,031
3,018
-
518
-
2,512
413
3,443
512,482
-
325,646
-
-
1,771
-
900
-
-
-
900
489,938
-
325,646
-
-
-
494,130
510,674
839,899
815,584
820,734
818,020
843,342
816,484
48,664
17,451
258
19,586
51,889
17,612
6,311
13,263
85,959
89,075
297,498
1,462
-
12,503
11,344
296,560
875
-
11,600
10,364
54
-
-
-
54
-
-
458,018
-
-
48
-
6,311
-
6,359
-
-
400,579
-
-
Total non-current liabilities
322,807
319,399
458,018
400,579
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
408,766
408,474
458,072
406,938
411,968
409,546
385,270
409,546
346,853
(853)
65,968
346,853
(2,083)
64,776
346,853
-
38,417
346,853
-
62,693
22
411,968
409,546
385,270
409,546
The balance sheets are to be read in conjunction with the notes to the fi nancial statements set out on pages 34 to 74.
32
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Statements
of Cash Flows
For the year ended 30 June 2006
Cash fl ows from operating activities
Cash receipts from customers
Dividends and trust distributions received
Cash paid to suppliers and employees
Cash generated from operations
Interest paid
Interest received
Income taxes paid
Consolidated
The Company
Note
2006
$’000
2005
$’000
2006
$’000
2005
$’000
683,805
-
(585,571)
98,234
(14,717)
5,540
(29,019)
705,099
-
(574,942)
130,157
(20,960)
5,748
(31,178)
-
13,142
(1)
13,141
-
27
(27,927)
-
141,256
(6)
141,250
-
3
(29,957)
Net cash from operating activities
29
60,038
83,767
(14,759)
111,296
Cash fl ows from investing activities
Proceeds from sale of property, plant and equipment
Acquisition of property, plant and equipment
Acquisition of intangibles
Net cash from investing activities
Cash fl ows from fi nancing activities
Issue of employee share loans
Repayment of employee share loans
Repayment of loans by controlled entities
Repayment of loans from controlled entities
Issue of loans to other parties
Repayment of loans by other parties
Dividends paid
46,422
(30,228)
(738)
2,294
(19,420)
(1,911)
15,456
(19,037)
-
1,792
-
-
(7)
284
(55,660)
(5,627)
1,524
-
-
-
54
(64,010)
-
-
-
-
-
-
-
-
-
1,792
68,621
-
-
-
(55,660)
(5,627)
1,524
-
(43,179)
-
-
(64,010)
Net cash from fi nancing activities
(53,591)
(68,059)
14,753
(111,292)
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 July
Effect of exchange rate fl uctuations on cash held
21,903
134,854
(259)
(3,329)
138,352
(169)
Cash and cash equivalents at 30 June
11
156,498
134,854
(6)
(48)
-
(54)
4
(52)
-
(48)
The statements of cash fl ows are to be read in conjunction with the notes to the fi nancial statements set out on pages 34 to 74.
Financial Statements
33
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
1. Signifi cant accounting policies
GWA International Limited (the ‘company’) is a company
domiciled in Australia. The consolidated fi nancial report
of the company for the fi nancial year ended 30 June 2006
comprises the company and its subsidiaries (together
referred to as the ‘consolidated entity’).
The fi nancial report was authorised for issue by the directors
on 15 August 2006.
(a) Statement of compliance
The fi nancial report is a general purpose fi nancial report
which has been prepared in accordance with Australian
Accounting Standards (‘AASBs’) adopted by the Australian
Accounting Standards Board (‘AASB’) and the Corporations
Act 2001. International Financial Reporting Standards
(‘IFRSs’) form the basis of Australian Accounting Standards
(‘AASBs’) adopted by the AASB, and for the purpose of this
report are called Australian equivalents to IFRS (‘AIFRS’)
to distinguish from previous Australian GAAP.
This is the consolidated entity’s fi rst fi nancial report
prepared in accordance with Australian Accounting
Standards, being AIFRS and IFRS, and AASB 1 First-Time
Adoption of Australian Equivalents to International Financial
Reporting Standards has been applied. An explanation
of how the transition to AIFRS has affected the reported
fi nancial position, fi nancial performance and cash fl ows of
the consolidated entity and the company is provided in
note 32.
(b) Basis of preparation
The fi nancial report is presented in Australian dollars. The
entity has elected not to early adopt any accounting
standards or amendments.
Issued standards not early adopted
Various standards and amendments were available for early
adoption but have not been applied by the consolidated
entity in these fi nancial statements as they will not impact
the results of the company or consolidated entity in future
fi nancial periods.
The fi nancial report is prepared on the historical cost basis
except that derivative fi nancial instruments are stated at
their fair value.
The company is of a kind referred to in ASIC Class Order
98/100 dated 10 July 1998 (updated by CO 05/641 effective
28 July 2005 and CO 06/51 effective 31 January 2006)
and in accordance with that Class Order, amounts in the
fi nancial report and Directors’ Report have been rounded off
to the nearest thousand dollars, unless otherwise stated.
The preparation of a fi nancial report in conformity with
Australian Accounting Standards requires management to
make judgements, estimates and assumptions that affect
the application of policies and reported amounts of assets
and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience
and various other factors that are believed to be reasonable
under the circumstances, the results of which form the
basis of making the judgements about carrying values of
assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.
These accounting policies have been consistently applied by
each entity in the consolidated entity.
The estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised
if the revision affects only that period, or in the period of
the revision and future periods if the revision affects both
current and future periods.
The accounting policies set out below have been applied
consistently to all periods presented in the consolidated
fi nancial report and in preparing an opening AIFRS balance
sheet at 1 July 2004 for the purposes of the transition to
Australian Accounting Standards – AIFRS.
The accounting policies have been applied consistently by all
entities in the consolidated entity.
(c) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the company.
Control exists when the company has the power, directly or
indirectly, to govern the fi nancial and operating policies of an
entity so as to obtain benefi ts from its activities.
In assessing control, potential voting rights that presently
are exercisable or convertible are taken into account.
The fi nancial statements of subsidiaries are included in the
consolidated fi nancial statements from the date that control
commences until the date that control ceases.
Investments in subsidiaries are carried at their cost of
acquisition in the company’s fi nancial statements.
34
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
(e) Derivative fi nancial instruments
Current accounting policy
The consolidated entity uses derivative fi nancial instruments
to hedge its exposure to foreign exchange and interest
rate risks arising from operating, fi nancing and investing
activities. In accordance with its treasury policy, the
consolidated entity does not hold or issue derivative
fi nancial instruments for trading purposes.
Derivative fi nancial instruments are recognised initially
at fair value. Subsequent to initial recognition, derivative
fi nancial instruments are stated at fair value. The gain or
loss on remeasurement to fair value is recognised in profi t
or loss, unless the derivative qualifi es for hedge accounting,
in which case the recognition of any resultant gain or loss
depends on the nature of the item being hedged (see
accounting policy (f)).
The fair value of interest rate swaps is the estimated
amount that the consolidated entity would receive or
pay to terminate the swap at the balance sheet date,
taking into account current interest rates and the current
creditworthiness of the swap counterparties. The fair value
of forward exchange contracts is their quoted market price
at the balance sheet date, being the present value of the
quoted forward price.
Comparative period policy
The consolidated entity is exposed to changes in interest
rates, foreign exchange rates and commodity prices from
its activities. The consolidated entity uses the following
derivative fi nancial instruments to hedge these risks:
interest rate swaps and forward foreign exchange contracts.
Derivative fi nancial instruments are not held for speculative
purposes.
The quantitative effect of the change in accounting policy is
set out in note 33.
1.
Signifi cant accounting
policies (continued)
(c) Basis of consolidation (continued)
(ii) Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and
losses or income and expenses arising from intragroup
transactions, are eliminated in preparing the consolidated
fi nancial statements.
(d) Foreign currency
(i)
Foreign currency transactions
Transactions in foreign currencies are translated at the
foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated to
Australian dollars at the foreign exchange rate ruling at that
date. Foreign exchange differences arising on translation are
recognised in the income statement. Non-monetary assets
and liabilities that are measured in terms of historical cost
in a foreign currency are translated using the exchange rate
at the date of the transaction. Non-monetary assets and
liabilities denominated in foreign currencies that are stated
at fair value are translated to Australian dollars at foreign
exchange rates ruling at the dates the fair value
was determined.
(ii) Financial statements of foreign operations
The assets and liabilities of foreign operations including
goodwill and fair value adjustments arising on consolidation
are translated to Australian dollars at foreign exchange
rates ruling at the balance sheet date. The revenues and
expenses of foreign operations are translated to Australian
dollars at rates approximating to the foreign exchange rates
ruling at the dates of the transactions. Foreign exchange
differences arising on retranslation are recognised directly in
a separate component of equity.
(iii) Net investment in foreign operations
Exchange differences arising from the translation of the net
investment in foreign operations, and of related hedges are
taken to the translation reserve. They are released into the
income statement upon disposal.
In respect of all foreign operations, any differences that
arose before 1 July 2004, the date of transition to
AIFRS, were deemed to be zero in accordance with the
exemption available under AASB 1. All differences arising
after 1 July 2004 are presented as a separate component
of equity.
Financial Statements
35
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
1.
Signifi cant accounting
policies (continued)
(f) Hedging
Current accounting policy
On entering into a hedging relationship, the consolidated
entity formally designates and documents the hedge
relationship and the risk management objective and strategy
for undertaking the hedge. The documentation includes
identifi cation of the hedging instrument, the hedged
item or transaction, the nature of the risk being hedged
and how the entity will assess the hedging instrument’s
effectiveness in offsetting the exposure to changes in the
hedged item’s fair value or cash fl ows attributable to the
hedged risk. Such hedges are expected to be highly or fully
effective in achieving offsetting changes in fair value or cash
fl ows and are assessed on an ongoing basis to determine
that they actually have been highly effective throughout the
fi nancial reporting periods for which they are designated.
(i) Cash fl ow hedges
Where a derivative fi nancial instrument is designated as
a hedge of the variability in cash fl ows of a recognised
asset or liability, or a highly probable forecasted transaction,
the effective part of any gain or loss on the derivative
fi nancial instrument is recognised directly in equity. When
the forecasted transaction subsequently results in the
recognition of a non-fi nancial asset or non-fi nancial liability,
or the forecast transaction for a non-fi nancial asset or non-
fi nancial liability becomes a fi rm commitment for which
fair value hedge accounting is applied, the associated
cumulative gain or loss is removed from equity and
included in the initial cost or other carrying amount of the
non-fi nancial asset or liability. If a hedge of a forecasted
transaction subsequently results in the recognition of a
fi nancial asset or a fi nancial liability, the associated gains
and losses that were recognised directly in equity are
reclassifi ed into profi t or loss in the same period or periods
during which the asset acquired or liability assumed affects
profi t or loss.
For cash fl ow hedges, other than those described above,
the associated cumulative gain or loss is removed from
equity and recognised in the income statement in the
same period or periods during which the hedged forecast
transaction affects profi t or loss. The ineffective part
of any gain or loss is recognised immediately in the
income statement.
When a hedging instrument expires or is sold, terminated
or exercised, or the entity revokes designation of the
hedge relationship, but the hedged forecast transaction is
still expected to occur, the cumulative gain or loss at that
point remains in equity and is recognised in accordance
with the above policy when the transaction occurs. If the
hedged transaction is no longer expected to take place, the
cumulative unrealised gain or loss recognised in equity is
recognised immediately in the income statement.
(ii) Hedge of monetary assets and liabilities
Where a derivative fi nancial instrument is used to
hedge economically the foreign exchange exposure of a
recognised monetary asset or liability, no hedge accounting
is applied and any gain or loss on the hedging instrument is
recognised in the income statement.
(iii) Hedge of net investment in foreign operation
The portion of the gain or loss on an instrument used
to hedge a net investment in a foreign operation that is
determined to be an effective hedge is recognised directly
in equity. The ineffective portion is recognised immediately
in the income statement.
Comparative period policy
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 taken directly to equity where
the amount is part of a net investment in a self-sustaining
foreign operation.
(g) Property, plant and equipment
Items of property, plant and equipment are stated at cost
less accumulated depreciation (see accounting policy g(ii))
and impairment losses (see accounting policy (l)). The cost
of self-constructed assets includes the cost of materials,
direct labour, the initial estimate, where relevant, of the
costs of dismantling and removing the items and restoring
the site on which they are located, and an appropriate
proportion of production overheads.
Where parts of an item of property, plant and equipment
have different useful lives, they are accounted for as
separate items of property, plant and equipment.
36
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
1.
Signifi cant accounting
policies (continued)
(g) Property, plant and equipment (continued)
(i) Subsequent costs
The consolidated entity recognises in the carrying amount
of an item of property, plant and equipment the cost of
replacing part of such an item when that cost is incurred if
it is probable that the future economic benefi ts embodied
within the item will fl ow to the consolidated entity and the
cost of the item can be measured reliably. All other costs
are recognised in the income statement as an expense
as incurred.
(ii) Depreciation
With the exception of freehold land, depreciation is
charged to the income statement on a straight-line basis
over the estimated useful lives of each part of an item of
property, plant and equipment. Land is not depreciated.
The estimated useful lives in the current and comparative
periods are as follows:
(iii) Other intangible assets
Other intangible assets that are acquired by the
consolidated entity are stated at cost less accumulated
amortisation (see below) and impairment losses (see
accounting policy (l)).
(iv) Subsequent expenditure
Subsequent expenditure on capitalised intangible assets
is capitalised only when it increases the future economic
benefi ts embodied in the specifi c asset to which it relates.
All other expenditure is expensed as incurred.
(v) Amortisation
Amortisation is charged to the income statement on
a straight-line basis over the estimated useful lives of
intangible assets unless such lives are indefi nite. Intangible
assets with an indefi nite useful life are systematically
tested for impairment at each balance sheet date. Other
intangible assets are amortised from the date they are
available for use. The estimated useful lives in the current
and comparative periods are as follows:
• capitalised software development costs
5 years
• buildings
• plant and equipment
• fi xtures and fi ttings
40 years
3-10 years
7-15 years
(i) Trade and other receivables
Trade and other receivables are stated at their amortised
cost less impairment losses (see accounting policy (l)).
The residual value, the useful life and the deprecation
method applied to an asset are reassessed annually.
(j) Inventories
(h) Intangible assets
(i) Research and development
Expenditure on research activities, undertaken with the
prospect of gaining new scientifi c or technical knowledge
and understanding, is recognised in the income statement
as an expense as incurred.
Expenditure on development activities, whereby research
fi ndings are applied to a plan or design for the production
of new or substantially improved products and processes,
is capitalised if the product or process is technically and
commercially feasible and the consolidated entity has
suffi cient resources to complete development. Capitalised
development expenditure is stated at cost less accumulated
amortisation (see accounting policy h(v)) and impairment
losses (see accounting policy (l)).
(ii) Brand names
Expenditure incurred in developing, maintaining or
enhancing brand names is written-off against profi t from
ordinary activities in the year in which it is incurred. The
brand names are not amortised as the directors believe that
the brand names have an indefi nite useful life. The carrying
value of these brand names is reviewed each year to ensure
that no impairment exists.
Inventories are stated at the lower of cost and net realisable
value. Net realisable value is the estimated selling price in
the ordinary course of business, less the estimated costs of
completion and selling expenses.
The cost of inventories is based on the fi rst-in fi rst-out
principle and includes expenditure incurred in acquiring the
inventories and bringing them to their existing location and
condition. In the case of manufactured inventories and work
in progress, cost includes an appropriate share of overheads
based on normal operating capacity.
(k) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and
call deposits with an original maturity date of three months
or less. Bank overdrafts that are repayable on demand
and form an integral part of the consolidated entity’s cash
management are included as a component of cash and cash
equivalents for the purpose of the statement of cash fl ows.
Financial Statements
37
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
1.
Signifi cant accounting
policies (continued)
(l) Impairment
The carrying amounts of the consolidated entity’s assets,
other than inventories (see accounting policy (j)) and
deferred tax assets (see accounting policy (t)), are reviewed
at each balance sheet date to determine whether there is
any indication of impairment. If any such indication exists,
the asset’s recoverable amount is estimated.
For intangible assets that have an indefi nite useful life, the
recoverable amount is estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying
amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised in
the income statement, unless an asset has previously been
revalued, in which case the impairment loss is recognised
as a reversal to the extent of that previous revaluation with
any excess recognised through profi t or loss.
Impairment losses recognised in respect of cash-generating
units are allocated fi rst to reduce the carrying amount of any
goodwill allocated to cash-generating units (group of units)
and then, to reduce the carrying amount of the other assets
in the unit (group of units) on a pro rata basis.
Indefi nite-lived intangible assets were tested for impairment
at 1 July 2004, the date of transition to AIFRSs.
An impairment loss of $14,558,000 was recognised as
a decrease to retained earnings on transition to AIFRS
in relation to the Stylus brand name.
(i) Calculation of recoverable amount
The recoverable amount of the consolidated entity’s
receivables carried at amortised cost is calculated as the
present value of estimated future cash fl ows, discounted at
the original effective interest rate (i.e. the effective interest
rate computed at initial recognition of these fi nancial assets).
Receivables with a short duration are not discounted.
Impairment of receivables is not recognised until objective
evidence is available that a loss event has occurred.
Signifi cant receivables are individually assessed for
impairment. Impairment testing of signifi cant receivables
that are not assessed as impaired individually is performed
by placing them into portfolios of signifi cant receivables
with similar risk profi les and undertaking a collective
assessment of impairment. Non-signifi cant receivables
are not individually assessed. Instead, impairment testing
is performed by placing non-signifi cant receivables in
portfolios of similar risk profi les, based on objective
evidence from historical experience adjusted for any effects
of conditions existing at each balance sheet date.
The recoverable amount of other assets is the greater
of their fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash fl ows are
discounted to their present value using a pre-tax discount
rate that refl ects current market assessments of the time
value of money and the risks specifi c to the asset. For an
asset that does not generate largely independent cash
infl ows, the recoverable amount is determined for the cash-
generating unit to which the asset belongs.
(ii) Reversals of impairment
Impairment losses are reversed when there is an indication
that the impairment loss may no longer exist and there
has been a change in the estimate used to determine
the recoverable amount. An impairment loss in respect
of a receivable carried at amortised cost is reversed if the
subsequent increase in recoverable amount can be related
objectively to an event occurring after the impairment loss
was recognised.
An impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had
been recognised.
(m) Share capital
(i) Dividends
Dividends are recognised as a liability in the period in which
they are declared.
(ii) Transaction costs
Transaction costs of an equity transaction are accounted
for as a deduction from equity, net of any related income
tax benefi t.
(n) Interest-bearing borrowings
Current accounting policy
Interest-bearing borrowings are recognised initially at fair
value less attributable transaction costs. Subsequent to
initial recognition, interest-bearing borrowings are stated
at amortised cost with any difference between cost
and redemption value being recognised in the income
statement over the period of the borrowings on an effective
interest basis.
Comparative period policy
Bank loans are recognised at their principal amount. Interest
is recognised as an expense as it accrues.
38
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
1.
Signifi cant accounting
policies (continued)
(o) Employee benefi ts
(i) Defi ned contribution superannuation funds
Obligations for contributions to defi ned contribution
superannuation funds are recognised as an expense
in the income statement as incurred.
(ii) Long-term service benefi ts
The consolidated entity’s net obligation in respect of long-
term service benefi ts is the amount of future benefi t that
employees have earned in return for their service in the
current and prior periods. The obligation is calculated using
expected future increases in wage and salary rates including
related on-costs and expected settlement dates, and is
discounted to present value.
(iii) Wages, salaries, annual leave, sick leave
and non-monetary benefi ts
Liabilities for employee benefi ts for wages, salaries, annual
leave and sick leave that are expected to be settled
within 12 months of the reporting date represent present
obligations resulting from employees’ services provided
to reporting date, are calculated at undiscounted amounts
based on remuneration wage and salary rates that the
consolidated entity expects to pay as at reporting date
including related on-costs, such as workers compensation
insurance and payroll tax. Non-accumulating non-monetary
benefi ts, such as medical care, housing, cars and free or
subsidised goods and services, are expensed based on the
net marginal cost to the consolidated entity as the benefi ts
are taken by the employees.
(iii) Site restoration
A provision for restoration and dismantling in respect
of leased premises is recognised when the obligation
to restore or dismantle arises. The provision is the best
estimate of the present value of the expenditure required to
settle the restoration obligation and the asset dismantling
costs at the reporting date. Future restoration and
dismantling costs are reviewed annually and any changes
are refl ected in the present value of the provision at the end
of the reporting period.
The amount of the provision for future restoration and
dismantling costs is capitalised and is depreciated
in accordance with the policy set out in note (g). The
unwinding of the effect of discounting on the provision is
recognised as a fi nance cost.
(q) Trade and other payables
Trade and other payables are stated at their amortised cost.
(r) Revenue
Goods sold
Revenue from the sale of goods is recognised in the
income statement when the signifi cant risks and rewards
of ownership have been transferred to the buyer.
(s) Expenses
(i) Operating lease payments
Payments made under operating leases are recognised in
the income statement on a straight-line basis over the term
of the lease. Lease incentives received are recognised in
the income statement as an integral part of the total lease
expense and spread over the lease term.
(p) Provisions
(ii) Net fi nancing costs
Net fi nancing costs comprise interest payable on borrowings
calculated using the effective interest method, interest
receivable on funds invested and gains and losses on
hedging instruments that are recognised in the income
statement (see accounting policy (f)). Borrowing costs are
expensed as incurred and included in net fi nancing costs.
Interest income is recognised in the income statement as it
accrues, using the effective interest method.
A provision is recognised in the balance sheet when the
consolidated entity has a present legal or constructive
obligation as a result of a past event, and it is probable that
an outfl ow of economic benefi ts will be required to settle
the obligation. Provisions are determined by discounting the
expected future cash fl ows at a pre-tax rate that refl ects
current market assessments of the time value of money
and, where appropriate, the risks specifi c to the liability.
(i) Warranties
A provision for warranties is recognised when the underlying
products or services are sold. The provision is based on
historical warranty data and a weighting of all possible
outcomes against their associated probabilities.
(ii) Restructuring
A provision for restructuring is recognised when the
consolidated entity has approved a detailed and formal
restructuring plan, and the restructuring has either
commenced or has been announced publicly. Future
operating costs are not provided for.
Financial Statements
39
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
1.
Signifi cant accounting
policies (continued)
(t) Income tax
Income tax on the profi t or loss for the year comprises
current and deferred tax. Income tax is recognised in the
income statement except to the extent that it relates to
items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable
income for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to
tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability
method, providing for temporary differences between
the carrying amounts of assets and liabilities for fi nancial
reporting purposes and the amounts used for taxation
purposes. The following temporary differences are not
provided for: the initial recognition of assets or liabilities that
affect neither accounting nor taxable profi t and differences
relating to investments in subsidiaries to the extent that
they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that
it is probable that future taxable profi ts will be available
against which the asset can be utilised. Deferred tax assets
are reduced to the extent that it is no longer probable that
the related tax benefi t will be realised.
Tax consolidation
The company and its wholly-owned Australian resident
entities have formed a tax-consolidated group with effect
from 1 July 2003 and are therefore taxed as a single entity
from that date. The head entity within the tax-consolidated
group is GWA International Limited.
Current tax expense/income, deferred tax liabilities and
deferred tax assets arising from temporary differences of
the members of the tax-consolidated group are recognised
in the separate fi nancial statements of the members of the
tax-consolidated group using the ‘separate taxpayer within
group’ approach by reference to the carrying amounts
of assets and liabilities in the separate fi nancial
statements of each entity and the tax values applying
under tax consolidation.
Any current tax liabilities (or assets) are assumed by the
head entity in the tax-consolidated group and are recognised
as amounts payable (receivable) to (from) other entities
in the tax-consolidated group in conjunction with any tax
funding arrangement amounts (refer below). Any difference
between these amounts is recognised by the company as
an equity contribution or distribution.
Nature of tax funding arrangements and tax sharing
arrangements
The members of the tax-consolidated group have entered
into a tax funding arrangement and a tax sharing agreement
with the head entity. Under the terms of the tax funding
arrangement GWA International Limited and each of the
entities in the tax consolidated group recognise inter-entity
receivables (payables) equal in amount to the tax liability
(asset) assumed by the head entity.
(u) Segment reporting
A segment is a distinguishable component of the
consolidated entity that is engaged either in providing
products or services (business segment), or in providing
products or services within a particular economic
environment (geographical segment), which is subject
to risks and rewards that are different from those of
other segments.
40
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
1.
Signifi cant accounting
policies (continued)
(v) Goods and services tax
Revenue, expenses and assets are recognised net of
the amount of goods and services tax (GST), except where
the amount of GST incurred is not recoverable from the
taxation authority. In these circumstances, the GST is
recognised as part of the cost of acquisition of the asset
or as part of the expense.
Receivables and payables are stated with the amount of
GST included. The net amount of GST recoverable from, or
payable to, the ATO is included as a current asset or liability
in the balance sheet.
Cash fl ows are included in the statement of cash fl ows on
a gross basis. The GST components of cash fl ows arising
from investing and fi nancing activities which are recoverable
from, or payable to, the ATO are classifi ed as operating
cash fl ows.
(w) Accounting estimates and judgements
Management discussed with the Audit Committee the
development, selection and disclosure of the consolidated
entity’s critical accounting policies and estimates and the
application of these policies and estimates. The estimates
and judgements that have a signifi cant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next fi nancial year are discussed below.
Impairment of intangibles with indefi nite useful lives
The consolidated entity assesses whether intangibles
with indefi nite useful lives are impaired at least annually
in accordance with the accounting policy (refer accounting
policy (l)). These calculations involve an estimation of the
recoverable amount of the cash-generating units to which
the intangibles with indefi nite useful lives are allocated.
2. Segment reporting
Segment information is presented in respect of the
consolidated entity’s business and geographical segments.
The primary format, business segments, is based on the
consolidated entity’s management and internal reporting
structure.
Inter-segment pricing is determined on an arm’s length basis.
Segment results, assets and liabilities include items
directly attributable to a segment as well as those that
can be allocated on a reasonable basis. Unallocated items
comprise mainly the mower business, interest-bearing
loans, borrowings and expenses, and corporate assets
and expenses.
Segment capital expenditure is the total cost incurred during
the period to acquire segment assets that are expected to
be used for more than one period.
Business segments
The consolidated entity comprises the following main
business segments:
• Building fi xtures and fi ttings
Sanitaryware
Building hardware products
Baths and spas
Household accessories, sinks and tapware
Hot water products
• Commercial furniture
Education products
Hospitality products
Stadia seating
• Unallocated
Domestic and ride-on mowers
Corporate administration
Geographical segments
The business segments are managed on a worldwide basis,
but operate mainly in one geographical area being Australia.
Sales offi ces are operated in New Zealand, Asia, United
States and Europe, however the sales revenue from these
geographical areas comprise only 15% of the consolidated
entity’s total sales revenue and are individually less
than 10%.
In presenting information on the basis of geographical
segments, segment revenue is based on the geographical
location of customers. Segment assets are based on the
geographical location of the assets.
Financial Statements
41
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
Building fi xtures
and fi ttings*
Commercial
furniture*
Unallocated*
Eliminations
Consolidated*
2006
$’000
2005
$’000
2006
$’000
2005
$’000
2006
$’000
2005
$’000
2006
$’000
2005
$’000
2006
$’000
2005
$’000
2. Segment
reporting
(continued)
Business segments
Revenue:
External sales
Inter-segment sales
523,100 523,850
-
-
56,738
2,810
61,608
1,947
40,151
-
41,408
-
-
(2,810)
- 619,989 626,866
-
-
(1,947)
Total sales revenue
523,100 523,850
59,548
63,555
40,151
41,408
(2,810)
(1,947) 619,989 626,866
Segment result
102,858 105,535
4,655
5,781
(12,316)
(7,963)
Restructuring
income/(expenses)
Segment result
after restructuring
expenses
Net fi nancing costs
Income tax expense
Profi t for the period
(12,228)
-
6,284
-
-
-
90,630 105,535
10,939
5,781
(12,316)
(7,963)
Segment assets
570,143 567,530
36,941
52,738 213,650 197,752
Segment liabilities
92,655
82,196
8,316
6,663 307,795 319,615
Depreciation
Amortisation
Capital expenditure
Impairment losses
17,023
276
28,121
1,206
21,632
-
17,636
-
3,418
-
1,024
1,610
3,412
-
1,241
-
1,488
215
1,083
-
1,452
218
1,681
-
* All segments are continuing operations
-
-
-
-
-
-
-
-
-
-
-
95,197 103,353
(5,944)
-
-
89,253 103,353
(11,490)
(20,911)
(11,137)
(28,328)
56,852
63,888
- 820,734 818,020
- 408,766 408,474
-
-
-
-
21,929
491
30,228
2,816
26,496
218
20,558
-
Geographical segments
External sales revenue
Segment assets
Capital expenditure
* All segments are continuing operations
Australia*
Unallocated*
Consolidated*
2006
$’000
2005
$’000
2006
$’000
2005
$’000
2006
$’000
2005
$’000
521,265 532,369
95,724
94,497 619,989 626,866
760,329 762,474
60,405
55,546 820,734 818,020
28,437
19,468
1,791
1,090
30,228
20,558
42
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
3. Other income
Foreign currency gains – realised
Foreign currency gains – unrealised
Net gain on disposal of property, plant and equipment
Impairment reversals
Dividends received from controlled companies
Distributions received from controlled trusts
Other
4. Other expenses
Foreign currency losses – realised
Foreign currency losses – unrealised
Net loss on disposal of property, plant and equipment
5. Personnel expenses
Wages and salaries – including annual leave, long service leave
and on-costs
6. Auditors’ remuneration
Audit services
Auditors of the company
KPMG Australia:
Audit and review of fi nancial reports
Other regulatory audit services
Overseas KPMG Firms:
Consolidated
The Company
2006
$’000
2005
$’000
2006
$’000
2005
$’000
116
551
14,471
-
-
-
659
15,797
432
1,188
-
1,620
313
1,835
-
-
-
-
884
3,032
549
559
950
2,058
138,251
137,074
$
$
-
-
-
17,592
-
13,142
-
-
-
-
-
139,300
1,956
-
30,734
141,256
-
-
-
-
-
$
-
-
-
-
-
$
260,000
36,329
260,000
20,700
10,000
-
10,000
-
Audit and review of fi nancial reports
62,559
48,163
-
-
358,888
328,863
10,000
10,000
Other services
Auditors of the company
KPMG Australia
Due diligence services
Other
7. Net fi nancing costs
Interest income
Interest expense
Net fi nancing costs/(income)
101,500
27,500
-
51,367
129,000
51,367
-
-
-
-
-
-
$’000
$’000
$’000
$’000
(6,096)
17,586
(5,874)
17,011
11,490
11,137
(27)
-
(27)
(3)
-
(3)
Financial Statements
43
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
8. Restructuring expenses
Restructuring expenses
Gains on property sales (included in other income)
Net expense before tax
Tax benefi t
Net restructuring expense after tax
9. Income tax expense
Recognised in the income statement
Current tax expense
Current year
Adjustments for prior years
Deferred tax expense
Origination and reversal of temporary differences
Benefi t of tax losses recognised
Consolidated
The Company
2006
$’000
2005
$’000
2006
$’000
2005
$’000
21,963
(16,019)
5,944
(2,717)
3,227
-
-
-
-
-
21,898
(1,411)
29,596
(585)
20,487
29,011
434
(10)
424
(556)
(127)
(683)
-
-
-
-
-
8
(632)
(624)
-
-
-
-
-
-
-
-
608
(620)
(12)
-
-
-
Total income tax expense/(benefi t) in income statement
20,911
28,328
(624)
(12)
Numerical reconciliation between tax expense
and pre-tax net profi t
Profi t before tax
77,763
92,216
30,760
141,253
Income tax using the domestic corporation
tax rate of 30% (2005: 30%)
Increase in income tax expense due to:
Non-deductible building depreciation
Non-deductible expenses
Effect of tax rate in foreign jurisdictions
Decrease in income tax expense due to:
Effect of tax losses recognised
Non-assessable income
Non-assessable capital profi ts
Rebateable research and development
Impairment reversals
Rebateable trust distributions
Rebateable dividends
Under/(over) provided in prior years
Income tax expense/(benefi t) on pre-tax net profi t
Deferred tax recognised directly in equity
23,329
27,665
9,228
42,376
76
381
156
(10)
(576)
(934)
(100)
-
-
-
382
898
95
(127)
-
-
-
-
-
-
22,322
(1,411)
28,913
(585)
20,911
28,328
-
-
-
-
-
-
-
(5,278)
(3,942)
-
8
(632)
(624)
-
22
-
-
-
-
-
-
-
(41,790)
608
(620)
(12)
Relating to the recognition of the fair value of hedge derivatives
232
-
-
-
44
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
10. Earnings per share
Basic and diluted earnings per share
Cents per share
Profi t attributable to ordinary shareholders
Profi t for the period
Consolidated
2006
2005
20.4
23.0
$’000
$’000
56,852
63,888
In
thousands
of shares
In
thousands
of shares
Weighted average number of ordinary shares
Issued ordinary shares at 1 July
278,303
278,303
Weighted average number of ordinary shares at 30 June
278,303
278,303
Consolidated
The Company
2006
$’000
2005
$’000
2006
$’000
2005
$’000
11. Cash and cash equivalents
Bank balances
Call deposits
93,011
63,487
51,011
83,843
Cash and cash equivalents in the statement of cash fl ows
156,498
134,854
12. Trade and other receivables
Current
Trade receivables
Provision for impairment
Fair value derivatives
Other
Non-current
Receivables due from controlled entities
Provision for impairment
Other
13. Inventories
Raw materials and consumables
Work in progress
Finished goods
-
-
-
-
-
-
518
518
-
-
-
-
-
-
900
900
65,407
(1,126)
920
2,652
57,927
(1,394)
-
12,688
67,853
69,221
-
-
3,676
3,676
-
-
5,142
5,142
509,021
-
3,461
507,530
(17,592)
-
512,482
489,938
19,930
8,396
67,016
21,807
10,702
64,982
95,342
97,491
-
-
-
-
-
-
-
-
Financial Statements
45
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
14. Current tax assets and liabilities
The current tax asset for the consolidated entity of $2,512,000 (2005: $30,000) and for the company of $2,512,000
(2005: $nil) represents the amount of income taxes recoverable in respect of prior periods and that arise from the payment
of tax in excess of the amounts due to the relevant tax authority. The current tax liability for the consolidated entity of $258,000
(2005: $6,311,000) and for the company of $nil (2005: $6,311,000) represents the amount of income taxes payable in respect
of current and prior fi nancial periods. In accordance with the tax consolidation legislation, the company as the head entity of
the Australian tax-consolidated group has assumed the current tax asset/(liability) initially recognised by the members in the
tax-consolidated group.
Assets
Liabilities
Net
2006
$’000
2005
$’000
2006
$’000
2005
$’000
2006
$’000
2005
$’000
15. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable
to the following:
Consolidated
Property, plant and equipment
Intangible assets
Inventories
Employee benefi ts
Provisions
Other items
Tax value of loss carry-forwards recognised
Tax assets/(liabilities)
Set off of tax
Net tax assets/(liabilities)
444
-
5,001
8,987
10,747
1,180
137
535
65
5,641
9,005
9,857
1,335
127
(438)
(95)
-
-
(119)
(810)
-
(302)
-
-
-
6
(95)
5,001
8,987
(7) 10,628
370
137
(566)
-
233
65
5,641
9,005
9,850
769
127
26,496
-
26,565
-
(1,462)
-
(875) 25,034
-
-
25,690
-
26,496
26,565
(1,462)
(875) 25,034
25,690
Consolidated
The Company
2006
$’000
(net)
2005
$’000
(net)
2006
$’000
(net)
2005
$’000
(net)
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect
of the following items:
Tax losses
2,160
2,123
-
-
The deductible tax losses accumulated at balance date do not expire under current tax legislation. Deferred tax assets have not
been recognised in respect of these items because it is not probable that future taxable profi t will be available against which to
offset the tax benefi t of these losses.
46
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
15. Deferred tax assets and liabilities (continued)
Consolidated
The Company
Balance Recognised Recognised
in income
1July 04
$’000
$’000
Balance
in equity 30 June 05
$’000
$’000
Balance Recognised Recognised
in income
1 July 04
$’000
$’000
Balance
in equity 30 June 05
$’000
$’000
Movement in
temporary
differences
during the year
Property, plant
and equipment
Intangible assets
Inventories
Employee benefi ts
Provisions
Other items
Tax value of loss
carry-forwards
recognised
Property, plant
and equipment
Intangible assets
Inventories
Employee benefi ts
Provisions
Other items
Tax value of loss
carry-forwards
recognised
(10)
-
5,355
8,701
10,377
584
-
25,007
243
65
286
304
(527)
185
127
683
-
-
-
-
-
-
-
-
233
65
5,641
9,005
9,850
769
127
25,690
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance Recognised Recognised
in income
1July 05
$’000
$’000
Balance
in equity 30 June 06
$’000
$’000
Balance Recognised Recognised
in income
1 July 05
$’000
$’000
Balance
in equity 30 June 06
$’000
$’000
233
65
5,641
9,005
9,850
769
(227)
(160)
(640)
(18)
778
(167)
-
-
-
-
-
(232)
6
(95)
5,001
8,987
10,628
370
127
10
-
137
25,690
(424)
(232)
25,034
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial Statements
47
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
Consolidated
The Company
Land Plant and
Land Plant and
and
buildings
$’000
equip- Motor Work in
ment vehicles progress
$’000
$’000
$’000
and
Total buildings
$’000
$’000
equip- Motor Work in
ment vehicles progress
$’000
$’000
$’000
Total
$’000
16. Property, plant
and equipment
Cost
Balance at 1 July 2004
Acquisitions
Disposals
Effect of movements
in foreign exchange
71,088 220,935
13,337
(15,104)
414
(11,999)
14,070
4,280
(4,170)
6,905 312,998
20,558
2,527
(31,273)
-
(748)
(2,961)
58
(15)
(3,666)
Balance at 30 June 2005
58,755 216,207
14,238
9,417 298,617
Balance at 1 July 2005
Acquisitions
Disposals
Effect of movements
in foreign exchange
58,755 216,207
7,085
14,415
(17,179)
(18,469)
14,238
2,463
(2,603)
9,417 298,617
30,228
6,265
(38,251)
-
287
2,066
(54)
25
2,324
Balance at 30 June 2006
54,988 208,179
14,044
15,707 292,918
Depreciation and
impairment losses
Balance at 1 July 2004
Depreciation charge
for the year
Disposals
Effect of movements
in foreign exchange
(8,583) (146,236)
(4,460)
- (159,279)
(1,145)
1,203
(22,668)
14,255
(2,683)
2,321
653
2,638
6
-
-
-
(26,496)
17,779
3,297
Balance at 30 June 2005
(7,872) (152,011)
(4,816)
- (164,699)
Balance at 1 July 2005
Depreciation charge
for the year
Disposals
Impairment losses
Effect of movements
in foreign exchange
(7,872) (152,011)
(4,816)
- (164,699)
(961)
2,449
-
(18,317)
12,386
(2,816)
(2,651)
1,555
-
(222)
(1,788)
(15)
-
-
-
-
(21,929)
16,390
(2,816)
(2,025)
Balance at 30 June 2006
(6,606) (162,546)
(5,927)
- (175,079)
Carrying amounts
At 1 July 2004
62,505
74,699
9,610
6,905 153,719
At 30 June 2005
50,883
64,196
9,422
9,417 133,918
At 1 July 2005
50,883
64,196
9,422
9,417 133,918
At 30 June 2006
48,382
45,633
8,117
15,707 117,839
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Impairment losses
During the 2006 fi nancial year decisions were made to close certain operating sites. The consolidated entity assessed the
recoverable amount of plant and equipment at these sites. Based on this assessment, the carrying amount of this plant and
equipment was written down by $2,816,000.
48
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
Consolidated
The Company
Soft-
ware
$’000
Brand
names
$’000
Total
$’000
Soft-
ware
$’000
Brand
names
$’000
Total
$’000
17. Intangible assets
Cost
Balance at 1 July 2004
Acquisitions
Effect of movements in foreign exchange
Balance at 30 June 2005
Balance at 1 July 2005
Acquisitions
Effect of movements in foreign exchange
- 342,394 342,394
1,911
-
(2,056)
(2,056)
1,911
-
1,911 340,338 342,249
1,911 340,338 342,249
738
1,508
-
1,508
738
-
Balance at 30 June 2006
2,649 341,846 344,495
Amortisation and impairment losses
Balance at 1 July 2004
Amortisation for the year
Balance at 30 June 2005
Balance at 1 July 2005
Amortisation for the year
Balance at 30 June 2006
Carrying amounts
At 1 July 2004
At 30 June 2005
At 1 July 2005
At 30 June 2006
-
(218)
(218)
(218)
(491)
(709)
-
-
-
-
-
-
-
(218)
(218)
(218)
(491)
(709)
- 342,394 342,394
1,693 340,338 342,031
1,693 340,338 342,031
1,940 341,846 343,786
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
In relation to the indefi nite life brand names, the recoverable amounts are based on value in use calculations. Those calculations
use cash fl ow projections based on actual operating results and the three-year budget forecast.Management used a growth rate of
2.5% in determining these forecasts. Pre-tax discount rates ranging between 11.0% and 17.5% have been used in discounting the
projected cash fl ows depending on the industry.
18. Trade and other payables
Current
Trade payables and accrued expenses
Fair value derivatives
Non-trade payables and accrued expenses
Non-current
Payables to controlled entities
Consolidated
The Company
2006
$’000
2005
$’000
2006
$’000
2005
$’000
42,363
146
6,155
47,972
-
3,917
48,664
51,889
54
-
-
54
48
-
-
48
-
-
458,018
400,579
Financial Statements
49
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
19. Interest-bearing loans and borrowings
This note provides information about the contractual terms
of the consolidated entity’s interest-bearing loans and borrowings.
For more information about the consolidated entity’s exposure
to interest rate and foreign currency risk, see note 23.
Non-current liabilities
Unsecured bank loans
Financing facilities
Bank overdraft
Standby letters of credit
Unsecured bank facility
Facilities utilised at reporting date
Bank overdraft
Standby letters of credit
Unsecured bank facility
Facilities not utilised at reporting date
Bank overdraft
Standby letters of credit
Unsecured bank facility
Financing arrangements
Consolidated
The Company
2006
$’000
2005
$’000
2006
$’000
2005
$’000
297,498
296,560
6,370
27,320
312,498
6,413
26,797
311,560
346,188
344,770
-
6,967
297,498
-
2,273
296,560
304,465
298,833
6,370
20,353
15,000
6,413
24,524
15,000
41,723
45,937
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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:
(i) GWA Finance Pty Limited and certain other operating controlled entities of GWA International Limited to borrow and enter into
certain risk and hedging facilities;
(ii) 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.
Bank overdraft
The bank overdraft facility available to the consolidated entity is unsecured. Interest on the bank overdraft facility is charged at
prevailing market rates. No drawdowns against this facility had been made as at 30 June 2006.
50
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
19. Interest-bearing loans and borrowings (continued)
Bank loans
Bank loans are provided to GWA Finance Pty Limited under the facility agreements. The bank loans are denominated in Australian
dollars, except for the Euro facility which is denominated in Euros. The bank loans are unsecured and have a maximum three year
rolling maturity, subject to annual review.
The loans bear interest at market rates and interest is payable every 30 to 90 days. The consolidated entity hedges its exposure to
variable interest rates through interest rate swap transactions.
Letter of credit
The letter of credit facilities are committed facilities available to be drawn down under the facility agreements. The limits are
specifi ed in the facility agreements.
20. Employee benefi ts
Current
Liability for long service leave
Liability for annual leave
Liability for on-costs
Non-current
Liability for long-service leave
Liability for on-costs
Total employee benefi ts
Consolidated
The Company
2006
$’000
2005
$’000
2006
$’000
2005
$’000
2,048
11,985
3,418
17,451
11,734
769
2,717
11,652
3,243
17,612
10,724
876
12,503
11,600
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Defi ned contribution superannuation funds
The consolidated entity makes contributions to a defi ned contribution superannuation fund. The amount recognised as expense
was $10,101,000 for the fi nancial year ended 30 June 2006 (2005: $10,071,000).
Warranties Restructuring
$’000
$’000
Site
restoration
$’000
Other
$’000
Total
$’000
21. Provisions
Consolidated
Balance at 1 July 2005
Provisions made during the year
Provisions used during the year
Provisions reversed during the year
Balance at 30 June 2006
Current
Non-current
Warranties
9,233
4,364
(4,261)
(232)
9,104
4,316
4,788
9,104
-
21,963
(12,787)
-
9,176
9,176
-
9,176
4,337
149
-
-
4,486
-
4,486
4,486
10,057
1,801
(2,898)
(796)
8,164
6,094
2,070
8,164
23,627
28,277
(19,946)
(1,028)
30,930
19,586
11,344
30,930
The total provision for warranties at balance date of $9,104,000 relates to future warranty expense on products sold during
the current and previous fi nancial years. The major warranty expense relates to hot water systems. The provision is based on
estimates made from historical warranty data associated with similar products and services. The consolidated entity expects to
expend $4,316,000 of the total provision in the fi nancial year ending 30 June 2007, and the majority of the balance of the liability
over the following four years.
Financial Statements
51
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
21. Provisions (continued)
Restructuring
During the fi nancial year ended 30 June 2006, provisions of $21,963,000 were made to cover the estimated costs of redundancies
and related costs with respect to the closure of manufacturing operations and other business restructuring. Of this amount,
$9,176,000 remains provided for at balance date and this amount represents the estimate of costs to be expended in the fi nancial
year ending 30 June 2007. The restructuring is expected to be completed by December 2006.
Site restoration
At balance date the balance of the site restoration provision was $4,486,000. No expenditures were made in the current fi nancial
year, the only movement being an adjustment to refl ect the net present value of this provision. This provision relates to the
removal of plant installed in leased premises where there is a liability under the lease for the plant to be removed on expiry and
the leased premises made good. The net present value of the provision has been calculated using a discount rate of 6.5 per cent.
Consolidated
Share Translation
reserve
capital
$’000
$’000
Hedging
reserve
$’000
Retained
earnings
$’000
Total
$’000
22. Capital and reserves
Reconciliation of movement
in capital and reserves attributable
to equity holders of the parent
Balance at 1 July 2004
Total recognised income and expense
Dividends to shareholders
Balance at 30 June 2005
Balance at 1 July 2005
Effect of change in accounting policy
Balance at 1 July 2005 restated
Total recognised income and expense
Dividends to shareholders
Balance at 30 June 2006
346,853
-
-
346,853
346,853
-
346,853
-
-
346,853
-
(2,083)
-
(2,083)
(2,083)
-
(2,083)
688
-
(1,395)
-
-
-
-
-
157
157
385
-
542
64,898
63,888
(64,010)
411,751
61,805
(64,010)
64,776
409,546
64,776
-
64,776
56,852
(55,660)
409,546
157
409,703
57,925
(55,660)
65,968
411,968
52
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
22. Capital and reserves (continued)
Reconciliation of movement
in capital and reserves
Balance at 1 July 2004
Total recognised income and expense
Dividends to shareholders
Balance at 30 June 2005
Balance at 1 July 2005
Total recognised income and expense
Dividends to shareholders
Balance at 30 June 2006
Share capital
On issue at 30 June – fully paid
The Company
Share
capital
$’000
Retained
earnings
$’000
Total
equity
$’000
346,853
-
-
(14,562)
141,265
(64,010)
332,291
141,265
(64,010)
346,853
62,693
409,546
346,853
-
-
62,693
31,384
(55,660)
409,546
31,384
(55,660)
346,853
38,417
385,270
The Company
Ordinary shares
2006
In
thousands
of shares
2005
In
thousands
of shares
278,303
278,303
Effective 1 July 1998, the Company Law Review Act abolished the concept of par value shares and the concept of authorised
capital. Accordingly, the company does not have authorised capital or par value in respect of its issued shares.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at meetings of the company. All shares rank equally with regard to the company’s residual assets.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the fi nancial statements of
foreign operations where their functional currency is different from the presentation currency of the reporting entity, as well as
from the translation of liabilities that hedge the company’s net investment in a foreign subsidiary.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash fl ow hedging
instruments related to hedged transactions that have not yet occurred.
Financial Statements
53
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
22. Capital and reserves (continued)
Dividends
Dividends recognised in the current year by the company are:
2006
Interim 2006 ordinary
Final 2005 ordinary
Final 2005 special
Total amount
2005
Interim 2005 ordinary
Interim 2005 special
Final 2004 ordinary
Final 2004 special
Total amount
Cents
per share
Total
amount
$’000
Franked
%
Date of
payment
10.0
8.0
2.0
20.0
10.0
2.5
8.0
2.5
23.0
27,830
22,264
5,566
55,660
27,830
6,958
22,264
6,958
64,010
100
100
100
3rd April 2006
3rd Oct 2005
3rd Oct 2005
100
100
100
100
1st April 2005
1st April 2005
1st Oct 2004
1st Oct 2004
Franked dividends declared or paid during the year were franked at the tax rate of 30%.
After the balance sheet date the following dividends were proposed by the directors. The dividends have not been provided. The
declaration and subsequent payment of dividends has no income tax consequences.
Final ordinary
Final special
Total amount
Cents
per share
8.0
3.5
11.5
Total
amount
$’000
22,264
9,741
32,005
Franked
%
100
100
The fi nancial effect of these dividends have not been brought to account in the fi nancial statements for the fi nancial year ended
30 June 2006 and will be recognised in subsequent fi nancial reports.
Dividends
Dividend franking account:
30 per cent franking credits available to shareholders
of GWA International Limited for subsequent fi nancial years
The Company
2006
$’000
2005
$’000
37,532
42,282
The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:
(a) franking credits/debits that will arise from the payment/settlement of the current tax liabilities/assets; and
(b) franking debits that will arise from the payment of dividends recognised as a liability at the year-end.
The ability to utilise the franking credits is dependent upon there being suffi cient available profi ts to declare dividends. The impact
on the dividend franking account of dividends proposed after the balance sheet date, but not recognised as a liability, is to reduce
it by $13,716,000 (2005: $11,927,000). In accordance with the tax consolidation legislation, the company as the head entity in the
tax-consolidated group has also assumed the benefi t of $37,532,000 (2005: $42,282,000) franking credits.
54
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
23. Financial instruments
Exposure to credit, interest rate and currency risks arises in the normal course of the consolidated entity’s business. Derivative
fi nancial instruments are used to hedge exposure to fl uctuations in foreign exchange rates and interest rates.
Credit risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The consolidated entity
minimises concentrations of credit risk by undertaking transactions with a large number of customers within the industries it
trades. A risk assessment process is used for customers requiring credit over $50,000 and credit insurance is utilised for major
concentrations of trade debts. The consolidated entity does not require collateral in respect of fi nancial assets.
Transactions involving derivative fi nancial instruments are with counterparties with sound credit ratings. Given their high credit
ratings, management does not expect any counterparty to fail to meet its obligations.
At the balance sheet date there were no uninsured concentrations of credit risk. The maximum exposure to credit risk is
represented by the carrying amount of each fi nancial asset, including derivative fi nancial instruments, in the balance sheet.
Interest rate risk
Hedging
The consolidated entity adopts a policy of ensuring that its exposure to changes in interest rates on borrowings is reduced.
Interest rate swaps, denominated in Australian dollars, have been entered into to achieve an appropriate mix of fi xed and fl oating
rate exposure. The swaps mature over the next 2 years and have fi xed swap rates ranging from 5.50 per cent to 5.67 per cent.
At 30 June 2006, the consolidated entity had interest rate swaps with a notional contract amount of $125,000,000
(2005: $175,000,000).
The consolidated entity classifi es interest rate swaps as cash fl ow hedges and states them at fair value. The fair value of swaps at
1 July 2005 was adjusted against the opening balance of the hedging reserve at that date.
The net fair value of swaps at 30 June 2006 was $920,000 (2005: $302,000). These amounts were recognised as fair value
derivative assets in the current fi nancial year.
Effective interest rates and repricing analysis
In respect of income-earning fi nancial assets and interest-bearing fi nancial liabilities, the following table indicates their effective
interest rates at the balance sheet date and the periods in which they reprice.
Consolidated
2006
Effective
interest
rate
%
Total
$’000
6 months
or less
$’000
6-12
months
$’000
1-2 years
$’000
2-5 years
$’000
5.57
156,498
156,498
(0.21)
5.80
-
(297,498)
125,000
(297,498)
(141,000)
(16,000)
-
-
-
-
-
-
(100,000)
-
(25,000)
-
(100,000)
(25,000)
Consolidated
2005
Effective
interest
rate
%
Total
$’000
6 months
or less
$’000
6-12
months
$’000
1-2 years
$’000
2-5 years
$’000
5.42
134,854
134,854
-
(0.37)
5.58
-
(296,560)
175,000
(296,560)
(50,000)
-
(161,706)
13,294
(50,000)
-
-
-
-
-
(125,000)
-
(125,000)
More
than
5 years
$’000
-
-
-
-
More
than
5 years
$’000
-
-
-
-
Cash and cash equivalents
Effect of interest rate
swap derivatives*
Unsecured bank loans
Cash and cash equivalents
Effect of interest rate
swap derivatives*
Unsecured bank loans
* These assets/liabilities bear interest at a fi xed rate.
Financial Statements
55
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
23. Financial instruments (continued)
Foreign currency risk
The consolidated entity is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency
other than the AUD. The currencies giving rise to this risk are primarily NZD, USD and EUR.
The consolidated entity hedges its foreign currency exposure in respect of forecasted sales and purchases by entering into forward
exchange contracts. The forward exchange contracts have maturities of less than one year after the balance sheet date. Where
necessary, the forward exchange contracts are rolled over at maturity.
Forecasted transactions
The consolidated entity classifi es its forward exchange contracts hedging forecasted transactions as cash fl ow hedges and states
them at fair value. The fair value of forward exchange contracts at 1 July 2005 was adjusted against the opening balance of the
hedging reserve at that date.
The net fair value of forward exchange contracts used as hedges of forecasted transactions at 30 June 2006 was $146,000 (2005:
$78,000). These amounts were recognised as fair value derivative liabilities in the current fi nancial year.
Hedge of net investment in foreign subsidiary
The consolidated entity’s EUR denominated bank loan is designated as a hedge of the consolidated entity’s investment in its
subsidiary in the Netherlands. The carrying amount of the loan at 30 June 2006 was $12,556,000 (2005: $11,560,000).
Fair values
The fair values together with the carrying amounts shown in the balance sheet are as follows:
Trade and other receivables
Cash and cash equivalents
Interest rate swaps:
Assets
Forward exchange contracts:
Liabilities
Unsecured bank loans
Trade payables and accrued expenses
Unrecognised (losses)/gains
Trade and other receivables
Receivables due from controlled entities
Payables to controlled entities
Trade payables and accrued expenses
Carrying
amount
2006
$’000
Consolidated
Fair
value
2006
$’000
Carrying
amount
2005
$’000
Fair
value
2005
$’000
70,609
156,498
70,609
156,498
74,363
134,854
74,363
134,854
920
920
-
302
(146)
(297,498)
(48,518)
(146)
(297,498)
(48,518)
-
(296,560)
(51,889)
(78)
(296,560)
(51,889)
(118,135)
(118,135)
(139,232)
(139,008)
-
The Company
Carrying
amount
2006
$’000
518
512,482
(458,018)
(54)
Fair
value
2006
$’000
518
512,482
(458,018)
(54)
Carrying
amount
2005
$’000
900
489,938
(400,579)
(48)
224
Fair
value
2005
$’000
900
489,938
(400,579)
(48)
54,928
54,928
90,211
90,211
Unrecognised (losses)/gains
-
-
56
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
23. Financial instruments (continued)
Estimation of fair values
The following summarises the major methods and assumptions used in estimating the fair values of fi nancial instruments refl ected
in the table.
Derivatives
Forward exchange contracts are marked to market by discounting the contractual forward price and deducting the current spot rate.
For interest rate swaps broker quotes are obtained. These quotes are back tested using discounted cash fl ow techniques.
Where discounted cash fl ow techniques are used, estimated future cash fl ows are based on management’s best estimates and
the discount rate is a market related rate for a similar instrument at the balance sheet date. Where other pricing models are used,
inputs are based on market related data at the balance sheet date.
Interest-bearing loans and borrowings
The notional amount of the interest-bearing loans is deemed to refl ect the fair value. The interest-bearing loans have a maximum
three-year rolling maturity, however are rolled for periods no longer than 90 days. At balance date, the AUD loans were rolled over
to 28 July 2006 and the EUR loan was rolled over to 28 August 2006.
Trade and other receivables/payables
All receivables/payables are either repayable within twelve months or repayable on demand. Accordingly, the notional amount is
deemed to refl ect the fair value.
Employee share loans and other employee loans
Employee share loans and other employee loans are carried at fair value using discounted cash fl ow techniques.
Interest rates used for determining fair value
The entity uses the government yield curve as of 30 June 2006 plus an adequate constant credit spread to discount fi nancial
instruments. The interest rates used are as follows:
Derivatives
Employee share loans and other loans
Interest bearing loans and borrowings
24. Operating leases
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and fi ve years
More than fi ve years
2006
2005
5.98% – 6.21%
7.05% – 7.05%
5.53% – 5.80%
5.51% – 5.58%
7.05% – 7.05%
5.36% – 5.61%
Consolidated
The Company
2006
$’000
2005
$’000
2006
$’000
2005
$’000
10,055
23,440
1,868
6,671
13,707
1,774
35,363
22,152
-
-
-
-
-
-
-
-
The consolidated entity leases a number of warehouse and factory facilities under operating leases. The leases typically run for a
period of 5 years, with an option to renew the lease after that date. None of the leases include contingent rentals.
Two of the leased properties have been sublet by the consolidated entity. The two leases and subleases expire in June 2007 and
November 2009 respectively. Sublease payments of $429,000 will be received during the following fi nancial year.
During the fi nancial year ended 30 June 2006, $9,497,000 (2005: $7,565,000) was recognised as an expense in the income
statement in respect of operating leases, which was net of sub-lease income.
Financial Statements
57
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
Consolidated
The Company
2006
$’000
2005
$’000
2006
$’000
2005
$’000
25. Capital and other commitments
Capital expenditure commitments
Plant and equipment
Contracted but not provided for and payable:
Within one year
26. Contingencies
The directors are of the opinion that provisions are not required
in respect of these matters, as it is not probable that a future
sacrifi ce of economic benefi ts will be required or the amount
is not capable of reliable measurement.
Contingent liabilities considered remote
Guarantees
(i) Under the terms of a Deed of Cross Guarantee, described
in note 27, the company has guaranteed the repayment
of all current and future creditors in the event any of the
entities party to the Deed is wound up. No defi ciency in
net assets exists in these companies at reporting date.
10,636
29,360
-
(ii) Bank guarantees
3,243
2,833
-
27. Deed of cross guarantee
-
-
Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998, the wholly-owned subsidiaries as listed in
Note 28 are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of fi nancial reports,
and directors’ report.
It is a condition of the Class Order that the company and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect
of the Deed is that the company guarantees to each creditor payment in full of any debt in the event of winding up of any of the
subsidiaries under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act, the
company will only be liable in the event that after six months any creditor has not been paid in full. The subsidiaries have also given
similar guarantees in the event that the company is wound up.
A consolidated income statement and consolidated balance sheet, comprising the company and controlled entities which are
a party to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, at 30 June 2006 is set
out below.
Summarised income statement and retained profi ts
Profi t before tax
Income tax expense
Profi t after tax
Retained profi ts at beginning of year
Adjustment to retained profi ts on transition to IFRS, net of tax
Dividends recognised during the year
Consolidated
2006
$’000
63,137
(17,972)
45,165
43,747
-
(55,660)
2005
$’000
87,619
(27,149)
60,470
65,119
(17,832)
(64,010)
Retained profi ts at end of year
33,252
43,747
58
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
27. Deed of cross guarantee (continued)
Balance Sheet
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Other
Total current assets
Receivables
Intercompany receivables
Investments
Deferred tax assets
Property, plant and equipment
Intangible assets
Other
Total non-current assets
Total assets
Liabilities
Trade and other payables
Employee benefi ts
Income tax payable
Provisions
Total current liabilities
Interest-bearing loans and borrowings
Deferred tax liabilities
Employee benefi ts
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
Consolidated
2006
$’000
2005
$’000
138,298
61,045
85,869
4,905
3,969
124,002
62,933
87,487
-
6,003
294,086
280,425
3,677
31,252
16,280
25,330
92,896
319,066
2,326
4,561
37,456
16,280
25,394
105,977
318,819
3,018
490,827
511,505
784,913
791,930
45,257
16,400
-
19,219
48,772
16,412
5,618
14,801
80,876
85,603
297,498
967
12,369
11,344
296,560
346
11,598
10,600
322,178
319,104
403,054
404,707
381,859
387,223
346,853
1,754
33,252
346,853
(3,377)
43,747
381,859
387,223
Financial Statements
59
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
Country of
incorporation
Ownership
interest
Parties
to Cross
Guarantee
2006
2005
Y
Australia
Australia
Y
Australia
Y
Australia
Y
Australia
Y
USA
N
Australia
Y
Australia
Y
Hong Kong
N
China
N
Hong Kong
N
Australia
Y
Australia
Y
Australia
Y
Australia
Y
Y
Australia
N New Zealand
Y
Australia
N New Zealand
N Netherlands
N Netherlands
N Netherlands
N Netherlands
N
Germany
N Netherlands
Australia
Y
USA
N
Canada
N
N
UK
Australia
N
Australia
Y
Australia
Y
Australia
N
Australia
N
N
Australia
N New Zealand
N New Zealand
N New Zealand
Australia
Y
Australia
Y
Australia
Y
Australia
Y
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%
28. Consolidated entities
Parent entity
GWA International Limited
Subsidiaries
GWA Group Limited
Gainsborough Hardware Industries 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 Trading (Shanghai) Co Ltd
GWA International (Hong Kong) Limited
Stylus Pty Ltd
Ecohome Pty Ltd
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
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
60
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
28. Consolidated entities (continued)
Subsidiaries (continued)
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
Gainsborough Hardware Limited
Bankstown Unit Trust
29. Reconciliation of cash fl ows
from operating activities
Cash fl ows from operating activities
Profi t for the period
Adjustments for:
Depreciation
Amortisation
Impairment/(reversal of) losses
Foreign exchange (gains)/losses
Interest expense/(income)
Dividends from controlled entities
Distributions from controlled trusts
(Gain)/loss on sale of property, plant and equipment
Income tax expense/(benefi t)
Operating profi t before changes
in working capital and provisions
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions and employee benefi ts
Interest received/(paid)
Income taxes paid
Country of
incorporation
Ownership
interest
Parties
to Cross
Guarantee
Y
Australia
N New Zealand
Australia
Y
Singapore
N
Australia
Y
Singapore
N
Australia
Y
Australia
Y
N
UK
Australia
Y
2006
2005
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Consolidated
The Company
2006
$’000
2005
$’000
2006
$’000
2005
$’000
56,852
63,888
31,384
141,265
21,929
491
2,816
755
11,490
26,496
218
-
(1,250)
11,137
(14,471)
20,911
950
28,328
100,773
(8,235)
2,148
(4,498)
8,046
98,234
(9,177)
(29,019)
129,767
6,619
(1,111)
(5,012)
(106)
130,157
(15,212)
(31,178)
-
-
(17,592)
-
(27)
-
(13,142)
-
(624)
(1)
(41,778)
-
54,920
-
13,141
27
(27,927)
-
-
-
-
(3)
(139,300)
(1,956)
-
(12)
(6)
78,011
-
63,245
-
141,250
3
(29,957)
Net cash from operating activities
60,038
83,767
(14,759)
111,296
Financial Statements
61
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
30. Related parties
The following were key management personnel of the consolidated entity at any time during the reporting period and unless
otherwise indicated were key management personnel for the entire period:
Non-executive directors
B Thornton (Chairperson)
J Kennedy
M Kriewaldt
D Barry
R Anderson
G McGrath
Executive directors
P Crowley (Managing Director)
Key management personnel compensation
The key management personnel compensation included
in ‘personnel expenses’ (see note 5) are as follows:
Short-term employee benefi ts
Post-employment benefi ts
Termination benefi ts
Other benefi ts
Executives
E Harrison (Chief Financial Offi cer)
S Wright (Group Operations Manager)
A Rusten (Group Marketing Manager) – appointed 27 June 2005
R Watkins (General Manager – Rover)
J Measroch (General Manager – Sebel)
G Oliver (General Manager – Gainsborough)
D Duncan (General Manager – Dorf Clark)
L Patterson (General Manager – Dux)
C Bizon (General Manager – Caroma) – terminated 30 November 2004
Consolidated
The Company
2006
$
2005
$
2006
$
2005
$
4,263,776
570,997
-
39,054
5,519,767
452,263
300,000
36,839
4,873,827
6,308,869
-
-
-
-
-
-
-
-
-
-
62
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
30. Related parties (continued)
Key management personnel compensation (continued)
Individual directors and executives compensation
Apart from the details disclosed in this note, no director has entered into a material contract with the company or the
consolidated entity since the end of the previous fi nancial year and there were no material contracts involving directors’
interests existing at year-end.
Details of the nature and amount of each major element of remuneration of each director of the company and other key
management personnel are:
Short-term
Post-
employ-
ment
Salary
and fees
$
Non-
1 year monetary
benefi ts
$
incentive
$
3 year*
incentive
$
Super-
annuation
benefi ts
$
Total
$
Other
$
Total
$
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
166,173
159,080
137,477
127,327
98,280
93,600
86,814
82,680
81,900
78,000
86,814
82,290
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
166,173
159,080
137,477
127,327
98,280
93,600
86,814
82,680
81,900
78,000
86,814
82,290
101,640
95,980
-
3,603
8,845
8,424
7,813
7,441
7,371
7,020
7,813
7,371
250
250
250
250
250
250
250
250
250
250
250
250
268,063
255,310
137,727
131,180
107,375
102,274
94,877
90,371
89,521
85,270
94,877
89,911
2006
2005
917,997
877,263
-
332,500
158,916
183,230
(190,000)
886,913
190,000 1,582,993
36,000
36,000
10,727
933,640
9,519 1,628,512
Directors:
Non-executive
B Thornton
J Kennedy
M Kriewaldt
D Barry
R Anderson
G McGrath
Executive directors
P Crowley
Total – directors
2006 1,575,455
-
158,916
(190,000) 1,544,371
169,482
12,227 1,726,080
Total – directors
2005 1,500,240
332,500
183,230
190,000 2,205,970
165,839
11,019 2,382,828
* The incentives for the Executive Director and Executives under the three year Executive Incentive Scheme were provided for in
the 2004/05 year and written back in the 2005/06 year as the targets are not currently expected to be achieved.
Financial Statements
63
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
30. Related parties (continued)
Key management personnel compensation (continued)
Individual directors and executives compensation (continued)
Short-term
Post-
employ-
ment
Salary
and fees
$
Non-
1 year monetary
benefi ts
$
incentive
$
3 year*
incentive
$
Super-
annuation
benefi ts
$
Total
$
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
447,268
425,251
387,089
383,747
263,209
-
281,171
303,154
275,764
257,283
177,333
180,207
258,151
246,785
250,744
214,364
-
105,819
-
106,418
-
-
-
-
-
-
79,425
71,258
-
62,500
-
-
87,546
82,738
60,845
79,663
23,835
-
50,936
52,155
67,223
67,911
62,289
56,462
123,019
112,197
62,554
47,976
(70,546)
70,546
(70,945)
70,945
-
-
-
-
-
-
(47,505)
47,505
(50,000)
50,000
-
-
464,268
684,354
376,989
640,773
287,044
-
332,107
355,309
342,987
325,194
271,542
355,432
331,170
471,482
313,298
262,340
-
-
100,592
35,472
25,288
-
58,725
27,555
25,485
24,370
138,475
119,110
27,420
44,567
25,530
20,850
Termin-
ation
benefi ts
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other
$
5,118
4,975
3,993
4,704
3,070
-
3,152
3,598
3,125
2,999
1,973
2,056
3,266
2,849
3,130
2,602
Total
$
469,386
689,329
481,574
680,949
315,402
-
393,984
386,462
371,597
352,563
411,990
476,598
361,856
518,898
341,958
285,792
2006
2005
-
134,551
-
-
-
84,362
-
-
-
218,913
-
14,500
-
2,037
-
300,000
-
535,450
2006 2,340,729
79,425
538,247
(238,996) 2,719,405
401,515
26,827
- 3,147,747
2005 2,145,342
345,995
583,464
238,996 3,313,797
286,424
25,820
300,000 3,926,041
Executives
E Harrison
S Wright
A Rusten
R Watkins
J Measroch
G Oliver
D Duncan
L Patterson
C Bizon
(terminated
30 November
2004)
Total –
executives
Total –
executives
Total – directors
and executives 2006 3,916,184
Total – directors
and executives 2005 3,645,582
79,425
697,163
(428,996) 4,263,776
570,997
39,054
- 4,873,827
678,495
766,694
428,996 5,519,767
452,263
36,839
300,000 6,308,869
* The incentives for the Executive Director and Executives under the three year Executive Incentive Scheme were provided for in
the 2004/05 year and written back in the 2005/06 year as the targets are not currently expected to be achieved.
64
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
30. Related parties (continued)
Loans to key management personnel and their related parties (consolidated)
Details regarding loans outstanding at the reporting date to key management personnel and their related parties, where the
individual’s aggregate loan balance exceeded $100,000 at any time in the reporting period, are as follows:
Directors
P Crowley
Executives
E Harrison
S Wright
R Watkins
J Measroch
G Oliver
D Duncan
L Patterson
C Bizon
Balance
1 July
2005
$
Balance
30 June
2006
$
1,195,000
1,085,000
701,505
626,505
115,750
379,745
409,150
800,991
300,991
240,000
610,255
141,269
95,750
339,745
362,900
780,991
280,991
-
Interest
paid and
payable
in the
reporting
period
$
-
-
-
-
-
-
-
-
-
Highest
balance
in period
$
1,195,000
701,505
626,505
115,750
379,745
409,150
800,991
300,991
240,000
No loans (2005: $1,959,320) were made to key management personnel or their related parties during the year. The loans made in
the previous fi nancial year related to the Employee Share Scheme.
Details regarding the aggregate of loans made, guaranteed or secured by any entity in the consolidated entity to key management
personnel and their related parties, and the number of individuals in each group, are as follows:
Interest
paid and
payable
in the
Opening
balance
$
Closing
balance
$
reporting Number in
group at
30 June
period
$
Total for key management personnel 2006
Total for key management personnel 2005
4,769,637
3,477,837
3,696,901
4,769,637
-
-
8
9
Mr D Duncan has a housing loan of $500,000 secured by a registered second mortgage. Mr E Harrison has an unsecured housing
loan of $75,000. Each of these loans is interest free and repayable on termination. Mr C Bizon repaid a $240,000 housing loan
during the current fi nancial year. All other loans are with respect to the Employee Share Plan. 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.
Financial Statements
65
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
30. Related parties (continued)
Other key management personnel transactions with the company or its controlled entities
The consolidated entity purchased components and tooling of $304,009 (2005: $582,608) from Great Western Corporation Pty Ltd,
a company of which Mr B Thornton is a director. Amounts were billed based on normal market rates for such supplies and were
due and payable under normal payment terms. Amounts receivable from and payable to key management personnel at reporting
date arising from these transactions were as follows:
Consolidated
The Company
2006
$
2005
$
2006
$
2005
$
Trade creditors
3,982
137,089
-
-
From time to time, key management personnel of the company or its controlled entities, or their related entities, may purchase
goods from the consolidated entity. These purchases are on the same terms and conditions as those entered into by other
consolidated entity employees or customers and are trivial or domestic in nature.
Movements in shares
The movement during the reporting period in the number of ordinary shares in GWA International Limited held, directly, indirectly
or benefi cially, by each key management person, including their related parties, is as follows:
Held at
1July
2005
Purchases
Sales
Held at
30 June
2006
15,025,902
50,000
100,000
12,409,189
20,692,832
593,026
-
-
-
-
8,198,000
-
(2,500)
(40,000)
-
(36,800)
-
(172,568)
15,023,402
10,000
100,000
12,372,389
28,890,832
420,458
500,000
620,975
418,750
-
100,000
200,000
231,250
100,000
100,000
-
-
-
-
-
-
-
-
-
-
500,000
-
(250,000)
-
-
-
-
-
-
620,975
168,750
-
100,000
200,000
231,250
100,000
100,000
Directors: non-executive
B Thornton
J Kennedy
M Kriewaldt
D Barry
R Anderson
G McGrath
Executive directors
P Crowley
Executives
E Harrison
S Wright
A Rusten
R Watkins
J Measroch
G Oliver
D Duncan
L Patterson
66
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
30. Related parties (continued)
Movements in shares (continued)
Directors: non-executive
B Thornton
J Kennedy
M Kriewaldt
D Barry
R Anderson
G McGrath
Executive directors
P Crowley
Executives
E Harrison
S Wright
R Watkins
J Measroch
G Oliver
D Duncan
L Patterson
Held at
1 July
2004
Purchases
Sales
Held at
30 June
2005
14,355,902
50,000
100,000
11,537,149
20,692,832
754,276
670,000
-
-
872,040
-
-
-
-
-
-
-
(161,250)
15,025,902
50,000
100,000
12,409,189
20,692,832
593,026
500,000
-
-
500,000
470,975
275,750
268,750
150,000
156,250
2,000
-
150,000
143,000
-
50,000
75,000
98,000
100,000
-
-
(168,750)
-
-
-
-
620,975
418,750
100,000
200,000
231,250
100,000
100,000
No shares were granted to key management personnel during the reporting period as compensation. The aggregate number of
shares held by key management person related parties at 30 June 2006 was 57,036,806 (2005: 48,863,874).
31. Subsequent events
To the best of our knowledge, since balance date, no matters have arisen which will, or may, signifi cantly affect the operation or
results of the consolidated entity in later years.
Financial Statements
67
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
32. Explanation of transition to AIFRSs
Reconciliation of equity
Consolidated
The Company
Previous
GAAP
$’000
Effect of
transition
to AIFRSs
$’000
Previous
GAAP
$’000
Effect of
transition
to AIFRSs
$’000
AIFRSs
$’000
AIFRSs
$’000
Note
1 July 2004
138,352
66,625
96,380
1,594
302,951
4,288
25,258
-
153,454
357,827
540,827
-
-
-
-
-
-
567
-
265
(15,433)
(14,601)
138,352
66,625
96,380
1,594
302,951
4,288
25,825
-
153,719
342,394
526,226
-
501
-
-
501
-
-
-
-
-
-
501
-
-
501
461,471
24,780
325,646
-
-
811,897
6,523
(24,780)
-
-
-
(18,257)
467,994
-
325,646
-
-
793,640
e,g
f,g
a,c
c,e
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Total current assets
Receivables
Deferred tax assets
Investment in subsidiaries
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
843,778
(14,601)
829,177
812,398
(18,257)
794,141
57,552
17,784
8,448
14,191
97,975
297,803
-
818
10,937
7,735
-
-
-
-
-
57,552
17,784
8,448
14,191
52
-
8,774
-
97,975
8,826
-
-
-
-
-
52
-
8,774
-
8,826
-
-
-
-
2,158
297,803
-
818
10,937
9,893
-
453,024
665
-
-
-
-
(665)
-
-
-
453,024
-
-
-
317,293
2,158
319,451
453,689
(665)
453,024
415,268
2,158
417,426
462,515
(665)
461,850
428,510
(16,759)
411,751
349,883
(17,592)
332,291
346,853
918
80,739
-
(918)
(15,841)
346,853
-
64,898
346,853
-
3,030
-
-
(17,592)
346,853
-
(14,562)
428,510
(16,759)
411,751
349,883
(17,592)
332,291
g
a
b
h
Liabilities
Trade and other payables
Employee benefi ts
Income tax payable
Provisions
Total current liabilities
Interest-bearing loans and
borrowings
Payables
Deferred tax liabilities
Employee benefi ts
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
68
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
32. Explanation of transition to AIFRSs (continued)
Reconciliation of equity (continued)
Consolidated
The Company
Previous
GAAP
$’000
Effect of
transition
to AIFRSs
$’000
Previous
GAAP
$’000
Effect of
transition
to AIFRSs
$’000
AIFRSs
$’000
AIFRSs
$’000
Note
30 June 2005
134,854
69,221
97,491
30
6,732
-
-
-
-
(982)
134,854
69,221
97,491
30
5,750
308,328
(982)
307,346
-
900
-
-
-
900
-
-
-
-
-
-
-
900
-
-
-
900
5,142
25,937
-
134,643
354,896
2,800
-
628
-
(725)
(12,865)
218
5,142
26,565
-
133,918
342,031
3,018
507,530
24,766
325,646
-
-
-
(17,592)
(24,766)
-
-
-
-
489,938
-
325,646
-
-
-
c
e
f,g
a,c
c,e
c
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Other
Total current assets
Receivables
Deferred tax assets
Investment in subsidiaries
Property, plant and equipment
Intangible assets
Other
Total non-current assets
523,418
(12,744)
510,674
857,942
(42,358)
815,584
Total assets
831,746
(13,726)
818,020
858,842
(42,358)
816,484
Liabilities
Trade and other payables
Employee benefi ts
Income tax payable
Provisions
Total current liabilities
Interest-bearing loans and
borrowings
Payables
Deferred tax liabilities
Employee benefi ts
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
51,889
17,612
6,311
13,263
89,075
296,560
-
875
11,600
8,066
-
-
-
-
-
51,889
17,612
6,311
13,263
48
-
6,311
-
89,075
6,359
-
-
-
-
-
48
-
6,311
-
6,359
-
-
-
-
2,298
296,560
-
875
11,600
10,364
-
424,993
352
-
-
-
(24,414)
(352)
-
-
-
400,579
-
-
-
317,101
2,298
319,399
425,345
(24,766)
400,579
406,176
2,298
408,474
431,704
(24,766)
406,938
425,570
(16,024)
409,546
427,138
(17,592)
409,546
346,853
(1,165)
79,882
-
(918)
(15,106)
346,853
(2,083)
64,776
346,853
-
80,285
-
-
(17,592)
346,853
-
62,693
425,570
(16,024)
409,546
427,138
(17,592)
409,546
g
g
a
b
h
Financial Statements
69
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
32. Explanation of transition to AIFRSs (continued)
As stated in signifi cant accounting policies note 1(a), these are the consolidated entity’s fi rst consolidated fi nancial statements
prepared in accordance with AIFRSs.
The policies set out in the signifi cant accounting policies section of this report have been applied in preparing the fi nancial
statements for the fi nancial year ended 30 June 2006, the comparative information presented in these fi nancial statements for
the fi nancial year ended 30 June 2005 and in the preparation of an opening AIFRS balance sheet at 1 July 2004 (the consolidated
entity’s date of transition).
In preparing its opening AIFRS balance sheet, the consolidated entity has adjusted amounts reported previously in fi nancial
statements prepared in accordance with its old basis of accounting (previous GAAP). An explanation of how the transition from
previous GAAP to AIFRSs has affected the consolidated entity’s fi nancial position, fi nancial performance and cash fl ows is set out
in the previous and following tables and the notes that accompany the tables.
Notes to the reconciliation of equity
a) Restoration and dismantling provision
An obligation exists to restore certain sites for the effect of the consolidated entity’s operations. Under previous GAAP, the
cost of rectifi cation was recognised as an expense when incurred. In accordance with AIFRSs, restoration costs should be
recognised as part of the cost of assets and as a provision at the time of the obligating event.
The effect in the consolidated entity is to increase Property, plant and equipment by $265,000 at 1 July 2004 and by $204,000
at 30 June 2005, to increase Provisions by $2,158,000 at 1 July 2004 and by $2,298,000 at 30 June 2005 and to increase
Distribution expenses by $61,000 and Financial expenses by $140,000 for the fi nancial year ended 30 June 2005.
b) Cumulative foreign exchange differences
Translation differences that arose prior to the date of transition to AIFRSs in respect of all foreign entities have been reversed to
zero. Accordingly the foreign currency translation reserve as at 1 July 2004 of $918,000 was transferred to retained earnings.
c) Software development costs
Software assets developed for internal use have been reclassifi ed from property, plant and equipment and prepayments to
intangible assets. The effect was to increase Intangible assets by $1,693,000 at 30 June 2005; to increase Other assets
by $218,000 at 30 June 2005; to decrease Property, plant and equipment by $929,000 at 30 June 2005; and to decrease
Prepayments by $982,000 at 30 June 2005.
d) Gain/loss on disposal of property, plant an equipment
Under AIFRS the gain or loss on the disposal of property, plant and equipment is recognised on a net basis as a gain or loss
rather than separately recognising the consideration received as revenue. For the consolidated entity the effect of this is to
decrease Other operating income and Other operating expenses by $12,544,000 for the year ended 30 June 2005.
e) Impairment
Under AASB3 Business Combinations goodwill is no longer amortised but instead is subject to annual impairment testing.
The goodwill booked by the consolidated entity with the purchase of Gainsborough has a written down value on transition
of $875,000. Under the new methodology in impairment testing cash-generating units, this goodwill has been treated as
impaired. The effect of this was to decrease Retained earnings and Intangible assets by $875,000 at 1 July 2004 for the
consolidated entity. The effect was also to decrease Other operating expenses by $875,000 for the year ended June 2005 for
the consolidated entity.
70
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
32. Explanation of transition to AIFRSs (continued)
Notes to the reconciliation of equity (continued)
e) Impairment (continued)
Under AASB136 Impairment, intangible assets that have an indefi nite useful life are tested for impairment annually.
The recoverable amount will be estimated for the individual asset. If it is not possible to estimate the recoverable amount
for the individual asset, the recoverable amount of the cash generating unit to which the asset belongs is determined.
A cash generating unit is the smallest identifi able group of assets that generate cash infl ows largely independent of the cash
infl ows of other assets or group of assets. Each cash-generating unit must be no larger than a segment. An impairment loss
will be recognised whenever the carrying amount of an asset, or its cash generating unit exceeds its recoverable amount.
Impairment losses will be recognised in the income statement unless they relate to a revalued asset, where the impairment
loss will be treated in the same way as a revaluation decrease.
Impairment losses recognised in respect of a cash generating unit will be allocated fi rst to reduce the carrying amount of any
goodwill allocated to the cash generating unit and then to reduce the carrying amount of the other assets in the unit pro rata
based on their carrying amounts.
As a result of the impairment testing being on a cash generating unit level under AIFRS which is a lower level than under
previous GAAP, an impairment loss was recognised in relation to the Stylus brand name. The effect of this was to decrease
Retained earnings and Intangible assets by $14,558,000 at 1 July 2004 and 30 June 2005 for the consolidated entity.
As a consequence of this and other AIFRS adjustments, an impairment of intercompany receivables of $17,592,000 was
recognised in the company. The effect of this was to decrease Retained earnings and Inter-company receivable by $17,592,000
at 1 July 2004 and 30 June 2005.
f) Deferred tax
The above changes increased the deferred tax asset as follows:
Consolidated
The Company
1 July
2004
$’000
30 June
2005
$’000
1 July
2004
$’000
30 June
2005
$’000
Restoration and dismantling costs
567
628
-
-
The effect on the income statement for the fi nancial year ended 30 June 2005 was to decrease the previously reported tax
charge for the period by $61,000 in the consolidated entity and Nil in the company.
g) Tax consolidations
The consolidated entity had applied UIG 52 for tax consolidation purposes under previous GAAP, resulting in the company
as the head entity of the tax-consolidated group recognising both current and deferred tax in relation to the wholly-owned
subsidiaries in the tax-consolidated group.
Under AIFRS, the consolidated entity has adopted UIG 1052 which requires the subsidiaries to initially recognise both current
and deferred taxes before recognising the head entity’s assumption of the current tax liability (asset) and deferred tax assets
from tax losses. Under AIFRS the subsidiaries are now required to recognise deferred tax assets relating to temporary
differences, other than for tax losses.
Financial Statements
71
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
32. Explanation of transition to AIFRSs (continued)
Notes to the reconciliation of equity (continued)
g) Tax consolidations (continued)
Under previous GAAP, the tax funding arrangements assets and liabilities were recognised as inter-entity tax-related balances
whereas tax funding arrangements expenses and revenues were recognised as a component of income tax expense
or revenue.
Upon adoption of UIG 1052 under AIFRS, all tax funding arrangements amounts are recognised as inter-entity amounts, giving
rise to a contribution by or distribution to equity participants to the extent they differ from the amounts assumed by the head
entity from subsidiaries. The entities in the Australian tax-consolidated group have revised the tax funding arrangement to
address only current tax amounts and deferred tax assets from tax losses/credits so that no net contributions or distributions to
equity participants are expected to arise in the future.
The effect of the above in the company at 1 July 2004 is to increase Inter-company receivable by $24,115,000, decrease
Deferred tax liability by $665,000 and decrease Deferred tax asset by $24,780,000. The effect in the company at 30 June 2005
is to decrease Inter-company payable by $24,414,000, decrease Deferred tax liability by $352,000 and decrease Deferred tax
asset by $24,766,000.
For the consolidated entity, the impact of moving from UIG 52 to UIG 1052 is the same as the impact of moving to
AASB 112. There is nil impact on the consolidated entity from the tax funding arrangement changes as upon consolidation
the inter-company balances are eliminated.
h) Retained earnings
The effect of the above adjustments on retained earnings is as follows:
Impairment
Restoration and dismantling costs
Deferred tax
Transfer from foreign currency translation reserve
Consolidated
The Company
1 July
2004
$’000
30 June
2005
$’000
(15,433)
(1,893)
567
918
(14,558)
(2,094)
628
918
1 July
2004
$’000
(17,592)
-
-
-
30 June
2005
$’000
(17,592)
-
-
-
Note
e
a
f
b
Total adjustment to retained earnings
(15,841)
(15,106)
(17,592)
(17,592)
72
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
32. Explanation of transition to AIFRSs (continued)
Explanation of material adjustments to the cash fl ow statement for 2005
There are no material differences between the cash fl ow statement presented under AIFRSs and the cash fl ow statement
presented under previous GAAP.
Reconciliation of profi t for 2005
Consolidated
The Company
Effect of
transition
to AIFRSs
$’000
Previous
GAAP
$’000
Effect of
transition
to AIFRSs
$’000
AIFRSs
$’000
Revenue
Cost of sales
Gross profi t
Other income
Distribution expenses
Administrative expenses
Other expenses
Previous
GAAP
$’000
626,866
(330,499)
296,367
15,576
(130,784)
(63,143)
(15,477)
Note
d
a
d,e
-
-
626,866
(330,499)
-
-
-
(12,544)
(61)
-
13,419
296,367
3,032
(130,845)
(63,143)
(2,058)
-
141,256
-
(6)
-
Results from operating activities
102,539
814
103,353
141,250
Financial income
Financial expenses
Net fi nancing costs
Profi t before tax
Income tax expense
Profi t for the period
Basic and diluted earnings
per share (cents per share)
a
f
5,874
(16,871)
-
(140)
5,874
(17,011)
(10,997)
(140)
(11,137)
3
-
3
91,542
(28,389)
63,153
674
61
735
92,216
(28,328)
141,253
12
63,888
141,265
22.7
23.0
AIFRSs
$’000
-
-
-
141,256
-
(6)
-
141,250
3
-
3
141,253
12
141,265
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial Statements
73
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Notes to the
Consolidated Financial Statements
33. Changes in accounting policy
In the current fi nancial year the consolidated entity adopted AASB 132: Financial Instruments: Disclosure & Presentation
and AASB 139: Financial Instruments: Recognition and Measurement. This change in accounting policy has been adopted in
accordance with the transition rules contained in AASB 1, which does not require the restatement of comparative information
for fi nancial instruments within the scope of AASB 132 and AASB 139.
The adoption of AASB 139 has resulted in the Group recognising all derivative fi nancial instruments as assets or liabilities at fair
value. This change has been accounted for by adjusting the opening balance of the hedging reserve at 1 July 2005.
The impact on the balance sheet in the comparative period is set out below as an adjustment to the opening balance sheet at
1 July 2005. The impact on the income statement of the comparative period would have been to increase fi nancial expenses and
decrease profi t for the period to the extent that cash fl ow hedges were not 100 per cent effective. The transitional provisions will
not have any effect in future reporting periods.
Derivatives
Under previous Australian GAAP, the consolidated entity did not recognise any derivatives at fair value on the balance sheet. In
accordance with AIFRSs all derivatives would be recognised at fair value. At 1 July 2005, the fair value of the forward exchange
contracts was $(78,000) and the fair value of the interest rate swaps was $302,000. The effect in the consolidated entity is to
decrease Fair value derivatives by $224,000, increase Hedging reserve by $157,000 and increase Deferred tax liabilities by $67,000
at 1 July 2005. No adjustment has arisen for the company.
Employee share loans
Under previous Australian GAAP, the consolidated entity recognised loans made to employees under the Employee Share Scheme
at face value. In accordance with AIFRSs, the loans have been measured at present value discounted at 7.05 per cent.
The discount has been recognised as a prepayment as the loans are full recourse and dependant on future employment by the
consolidated entity.
The effect in the consolidated entity and the company is to decrease Current receivables by $244,000 at 1 July 2005, decrease
Non-current receivables by $2,713,000 at 1 July 2005, to increase Current prepayments by $537,000 at 1 July 2005 and to increase
Non-current prepayments by $2,420,000 at 1 July 2005.
Employee loans
Under previous Australian GAAP, the consolidated entity recognised loans made to employees at face value. In accordance with
AIFRSs, the loans have been measured at present value discounted at 7.05 per cent. The discount has been recognised as a
prepayment as the loans are full recourse and dependent on future employment by the consolidated entity.
The effect in the consolidated entity is to increase Current receivables by $244,000 at 1 July 2005, decrease Non-current
receivables by $668,000 at 1 July 2005, to increase Current prepayments by $43,000 at 1 July 2005 and to increase Non-current
prepayments by $381,000 at 1 July 2005. No adjustment has arisen for the company.
74
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Directors’
Declaration
1
In the opinion of the directors of GWA International Limited (‘the company’):
(a) the fi nancial statements and notes are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the fi nancial position of the company and the consolidated entity as at 30 June 2006 and of
their performance, as represented by the results of their operations and their cash fl ows, for the fi nancial year ended on that
date; and
(ii) complying with Australian Accounting Standards and the 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
3
There are reasonable grounds to believe that the company and the controlled entities identifi ed in Note 27 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 between the
company and those controlled entities pursuant to ASIC Class Order 98/1418.
The directors have been given the declarations by the Managing Director and Chief Financial Offi cer for the fi nancial year ended 30
June 2006 pursuant to Section 295A of the Corporations Act 2001.
Dated at Brisbane on 15 August 2006.
Signed in accordance with a resolution of the directors:
Barry Thornton
Director
Peter Crowley
Director
Financial Statements
75
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Independent Audit Report to the
Members of GWA International Limited
Scope
The Financial Report and Directors’ responsibility
The Financial Report comprises the Income Statements, Statements of Recognised Income and Expense, Balance Sheets, Statements
of Cash Flows, accompanying notes 1 to 33 to the Financial Statements and the Directors’ Declaration for both GWA International
Limited (the “Company”) and GWA International Limited and its controlled entities (“the Consolidated Entity”), for the fi nancial year
ended 30 June 2006. The Consolidated Entity comprises GWA International Limited (“the Company”) and the entities it controlled
during that fi nancial year.
The Directors of the Company are responsible for the preparation and true and fair presentation of the Financial Report 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. The Directors are also responsible for preparing the relevant reconciling information regarding the adjustments
required under the Australian Accounting Standard AASB 1 First-time adoption of Australian equivalents to International Financial
Reporting Standards.
Audit approach
We conducted an independent audit in order to express an opinion 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 from
material misstatement. The nature of an audit is infl uenced by factors such as the use of professional judgement, 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, Australian Accounting Standards and other mandatory fi nancial reporting requirements in Australia, a view which
is consistent with our understanding of the Company’s and the Consolidated Entity’s fi nancial position, and of their performance as
represented by the results of their operations and cash fl ows.
We formed our audit opinion on the basis of these procedures performed, which included:
• 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 signifi cant
accounting estimates made by the directors.
While we considered the effectiveness of management’s internal control over fi nancial reporting when determining the nature and
extent of our procedures, our audit was not designed to provide assurance on internal controls.
Audit opinion
In our opinion, the Financial Report of GWA International Ltd is in accordance with:
(a)
the Corporations Act 2001, including:
i.
giving a true and fair view of the Company’s and the Consolidated Entity’s fi nancial position as at 30 June 2006 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 fi nancial reporting requirements in Australia.
KPMG
Mark Epper
Partner
Sydney, 15 August 2006
76
Financial Statements
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Other
Statutory Information
As at 15 August 2006
Statement of shareholding
In accordance with the Australian Stock Exchange Listing Rules, the directors state that, as at 15 August 2006, the share capital in the
company was held as follows:-
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Ordinary shareholders
Ordinary shares
1,555
7,080
3,626
2,167
122
14,550
1,060,861
21,696,949
27,451,551
45,554,806
182,538,828
278,302,995
%
0.4
7.8
9.9
16.4
65.5
100.0
The number of shareholders with less than a marketable parcel of shares is 153.
Voting rights
The voting rights attached to shares are as set out in clause 10.20 of the company’s Constitution. Subject to that clause, at General
Meetings of the company:
1. On a show of hands, every person present as a member, proxy, attorney or representative of a member has one vote; and
2. On a poll, every person present as a member, proxy, attorney or representative of a member, has one vote for each fully paid share.
Substantial shareholders
The following information is extracted from the company’s register of substantial shareholders as at 15 August 2006:
Shareholder
HGT Investments Pty Ltd
Number
of shares
% of shares
on issue
14,448,152
5.19
Other Statutory Information
77
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Other
Statutory Information
As at 15 August 2006
20 Largest shareholders
Shareholder
JP Morgan Nominees Australia Limited
HGT Investments Pty Ltd
National Nominees Limited
Erand Pty Ltd
KFA Investments Pty Ltd
RBC Dexia Investor Services Australia Nominees Pty Limited (BKCUST A/C)
CJZ Investments Pty Ltd
JMB Investments Pty Ltd
Ashberg Pty Ltd
Citicorp Nominees Pty Limited
Theme (No 3) Pty Ltd
Australian Foundation Investment Company Limited
Westpac Custodian Nominees Limited
ITA Investments Pty Ltd
Mr Barry Thornton and Mr Chris Hamlin (The Sharp Family A/C)
Dabary Investments Pty Ltd
Cogent Nominees Pty Limited
ANZ Nominees Limited (Cash Income A/C)
Harvest Home Holdings Pty Ltd
Mr Michael John McFadyen (Michael McFadyen A/C)
Number
of Shares
14,708,023
14,448,152
10,280,559
9,898,229
9,863,817
9,755,670
9,700,651
8,800,425
8,198,000
7,514,060
7,201,160
6,612,136
5,674,906
5,152,338
4,740,033
3,398,961
3,306,758
2,869,642
2,586,416
2,497,990
% of Shares
on Issue
5.28
5.19
3.69
3.56
3.54
3.51
3.49
3.16
2.95
2.70
2.59
2.38
2.04
1.85
1.70
1.22
1.19
1.03
0.93
0.90
Total
147,207,926
52.89
78
Other Statutory Information
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
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 26 October 2006 commencing at 10:30 am. A Notice of Annual General Meeting and Proxy
Form are enclosed with the Annual Report.
Shareholder Enquiries
Shareholders with enquiries about their shareholding or dividend payments should contact the company’s share registry,
Computershare Investor Services Pty Ltd, on 1300 552 270 or write to GPO Box 523 Brisbane Queensland Australia 4001.
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.
Annual Reports
If shareholders do not wish to continue receiving the Annual Report, please notify the company’s share registry in writing. Shareholders
will still be sent the Notice of Annual General Meeting and other legally required information. The latest Annual Report can be accessed
from the company’s website at www.gwail.com.au.
Dividends
Dividends are determined by the Board, having regard to the fi nancial circumstances of the company.
A fi nal ordinary dividend of 8.0 cents per share, and a special dividend of 3.5 cents per share will be paid on 3 October 2006. The
dividends will be 100% franked for Australian tax purposes at the corporate tax rate of 30%.
Direct Credit of Dividends
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 confi rmed by an advice mailed to shareholders on that date.
To ensure the prompt receipt of dividends, the company encourages shareholders to provide direct credit instructions. Direct credit
application forms can be obtained from the company’s share registry.
Dividend Reinvestment Plan and Share Purchase Plan
Both Plans were suspended on 8 February 2000. Past support from shareholders has provided suffi cient 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 under the ASX code: GWT. Details of the trading activity of the
company’s shares are published in most daily newspapers, generally under the abbreviation GWA Intl.
Shareholder Information
79
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
Shareholder
Information
Shareholder timetable 2006
30 June
15 August
15 September
22 September
3 October
24 October
26 October
31 December
Financial year end
Year end result and fi nal dividend announcement
Record date for determining fi nal dividend entitlement
Notice of Annual General Meeting, Proxy Form and Annual Report
mailed to shareholders
Final ordinary dividend and special dividend paid
Proxy returns close 10:30 am Brisbane
Annual General Meeting
Half year end
80
Shareholder Information
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
> Corporate Directory
> Directors
> B Thornton, Chairman
> J J Kennedy, Deputy Chairman
> P C Crowley, Managing Director
> D R Barry, Non-Executive Director
> R M Anderson, Non-Executive Director
> M D E Kriewaldt, Non-Executive Director
> G J McGrath, Non-Executive Director
Company Secretary
> R J Thornton CA B Com (Acc) LLB (Hons) LLM
Chief Financial Officer
> E J Harrison CPA B Bus (Acc)
> Registered Office
Level 14 10 Market Street Brisbane QLD 4000 AUSTRALIA
Telephone 61 7 3109 6000
Facsimile 61 7 3236 0522
www.gwail.com.au
ASX code: GWT
> Auditor
KPMG
> Head Office Locations
> GWA INTERNATIONAL LIMITED
Level 14
10 Market Street
Brisbane QLD 4000
AUSTRALIA
Telephone 61 7 3109 6000
Facsimile 61 7 3236 0522
Website www.gwail.com.au
> CAROMA DORF
4 Ray Road
Epping NSW 2121
AUSTRALIA
Telephone 61 2 9202 7000
Facsimile 61 2 9869 0625
Websites www.caroma.com.au
www.caroma.smartflush.com.au
www.fowler.com.au
www.stylus.com.au
www.wisa-sanitair.com
www.starion-industries.com
www.dorf-clark.com.au
> DUX MANUFACTURING LIMITED
Collins Road
Moss Vale NSW 2577
AUSTRALIA
Telephone 61 2 4868 0200
Facsimile 61 2 4868 2014
Websites www.dux.com.au
www.ecosmart.com.au
10 Shelley Street Sydney NSW 2000 AUSTRALIA
> GAINSBOROUGH HARDWARE
Telephone 61 2 9335 7000
Facsimile 61 2 9299 7077
> Share Registry
Computershare Investor Services Pty Ltd
Level 19 307 Queen Street Brisbane QLD 4000 AUSTRALIA
GPO Box 523 Brisbane QLD 4001 AUSTRALIA
Telephone 1300 552 270
Facsimile 61 7 3237 2152
www.computershare.com
> Group Bankers
BNP Paribas
Citibank
Commonwealth Bank of Australia
National Australia Bank
GWA INTERNATIONAL LIMITED ABN 15 055 964 380
INDUSTRIES LIMITED
190 Whitehorse Road
Blackburn VIC 3130
AUSTRALIA
Telephone 61 3 9877 1555
Facsimile 61 3 9894 1599
Website www.gainsboroughhardware.com.au
> ROVER MOWERS LIMITED
155 Fison Avenue West
Eagle Farm QLD 4009
AUSTRALIA
Telephone 61 7 3213 0222
Facsimile 61 7 3868 1010
Website www.rovermowers.com.au
> SEBEL FURNITURE LIMITED
96 Canterbury Road
Bankstown NSW 2200
AUSTRALIA
Telephone 61 2 9780 2222
Facsimile 61 2 9793 3152
Website www.sebel.com.au
inside back cover
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GWA INTERNATIONAL LIMITED
ABN 15 055 964 380
Level 14 10 Mar ke t St reet Brisbane Queensland 4000 AUSTRALI A
Telepho ne : 61 7 3 109 6000 Facsimile: 61 7 3236 0522
We bsite: w ww.gwail.com.au
INNOVATION = FUTURE GROWTH
2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2005/06 ANNUAL REPORT
GWA INTERNATIONAL LIMITED