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Stanley Furniture Co. Inc.GWA INTERNATIONAL LIMITED
2008 ANNUAL REPORT
SUSTAINABLE LIVING SOLUTIONS
contents
1 Performance
Highlights
2 Chairman’s Review
4 Managing Director’s
Review of Operations
8 Health and Safety
10 Strategic Direction
and Business Divisions
15 GWA Sustainability
and Innovation Story
24 Board of Directors
26 Corporate Governance
Statement
33 Directors’ Report
logical solutions
41 Financial Statements
102 Other Statutory
Information
104 Shareholder
Information
and Timetable
caroMa Dorf
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
incorporating water saving technologies, and is the market leader in
water efficient sanitaryware and tapware.
Dux
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. Dux has developed an extensive range of innovative
environmental products to meet the changing regulatory requirements,
and which assist in reducing domestic energy consumption.
GainsborouGh
Leading Australian designer, manufacturer, importer and distributor of a
comprehensive range of domestic and commercial door hardware and
fittings, including security products.
rover
One of Australia’s leading designers, importers and distributors of
domestic and commercial lawn and garden care equipment.
sebel
At the forefront of Australian design, manufacture, import and
distribution of quality commercial furniture and seating.
Mission stateMent
GWA International Limited’s primary objective is to grow shareholder wealth. This
coMpany profile
GWA International Limited was listed on the Australian Securities Exchange in
objective will be achieved by continuing to invest in the development of its people,
May 1993 and is one of Australia’s largest designers, manufacturers, importers
new products and world leading technologies, to sustain and build premium
and distributors of household consumer products. The Company is the owner of
profitability of its businesses over time.
an extensive range of well-known brands including Caroma, Dorf, Fowler, Stylus,
Clark, Radiant, Irwell, Dux, Gainsborough, Sebel and Rover, and is the exclusive
The Company’s core business segment is building fixtures and fittings which
Australian distributor of other brands including Hansa and KWC.
will focus on the research and development of innovative new products to
maximise market opportunities for the businesses. The Company will continue to
GWA International Limited currently comprises five business divisions, Caroma Dorf,
develop products which provide sustainable solutions for reducing domestic and
Dux, Gainsborough, Rover and Sebel, all of which are well-established businesses
commercial water consumption, and greenhouse gas emissions.
with strong brand names and market positions. The Company is a large Australian
GWA International Limited will grow the profitability of its businesses by investing for
sustainable growth and adapting its business models for a changing market. The
GWA International Limited invests significantly in research and new product
Company will continue the pursuit of appropriate acquisitions that add value to its
development which has enabled the businesses to maximise opportunities in
existing businesses, and that support expansion into new markets.
a competitive marketplace. The Company is committed to the research and
employer and has manufacturing facilities located throughout Australia.
Printed using Forestry Stewardship Council (FSC) certified paper.
All paper sourced from responsibly managed plantation forests.
ISO14001 environmental management system in use.
development of innovative environmental products which provide sustainable
solutions for reducing domestic and commercial water consumption, and
greenhouse gas emissions.
GWA International Limited has achieved substantial growth 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 improved
business performance and the pursuit of further appropriate acquisitions that add
value to its existing businesses, and that support expansion into new markets.
2007/08 YEAR
PERFORMANCE
HIGHLIGHTS
Sales revenue up 2.0% to $648.9 million
Trading earnings before interest and tax
higher at $99.4 million
Cash from operating activities up $78 million
Fully franked dividend of 19.5 cents per share
(including 1.5 cent special dividend)
Five Year Financial Summary
2003/04
$’000
2004/05
$’000
2005/06
$’000
2006/07
$’000
2007/08
$’000
Revenue (2)
677,393
626,866
619,989
636,124
648,902
Earnings before interest, tax, depreciation,
amortisation and restructuring costs
(%)
Depreciation and amortisation
Earnings before interest, tax
and restructuring costs (1)
(%)
Interest (net)
Trading profit before tax
(%)
Tax expense
(%)
Trading profit after tax
Restructuring costs after tax
Net profit after tax
Net cash from operating activities (2)
Capital expenditure
Research and development
Net debt (2)
Shareholders’ equity
Other Ratios and Statistics
Return on shareholders’ equity
(%)
Interest cover
(times)
Net debt / (net debt + equity)
(%)
Earnings per share
Trading earnings per share
(cents)
(cents)
Ordinary dividend per share
(cents)
Special dividend per share
Total dividend per share
(cents)
(cents)
Franking
Ordinary dividend payout ratio
Share price (30 June)
Dividend yield (total dividend)
Number of employees
(%)
(%)
($)
(%)
131,564
130,067
117,617
118,533
117,314
19.4
20.7
19.0
18.6
18.1
30,549
26,714
22,420
19,779
17,920
101,015
103,353
95,197
98,754
99,394
14.9
12,614
88,401
13.1
16.5
11,137
92,216
14.7
15.4
11,490
83,707
13.5
15.5
12,366
86,388
13.6
15.3
14,623
84,771
13.1
26,348
28,328
23,628
24,975
24,612
29.8
30.7
28.2
28.9
62,053
63,888
60,079
61,413
–
–
62,053
114,653
63,888
83,767
20,579
21,331
5,485
6,488
3,227
56,852
60,038
30,966
5,775
29.0
60,159
14,269
45,890
5,095
56,318
24,841
102,992
21,516
22,235
5,360
6,056
159,451
161,706
141,000
225,614
193,557
428,510
409,546
411,968
408,802
389,120
14.5
10.4
27.1
22.3
22.3
18.0
2.5
20.5
100
80.7
2.95
6.9
15.6
11.7
28.3
23.0
23.0
18.0
4.5
22.5
100
78.3
2.92
7.7
13.8
10.2
25.5
20.4
21.6
18.0
3.5
21.5
100
88.2
3.11
6.9
13.8
9.6
35.6
20.2
22.0
18.0
4.0
22.0
100
89.1
4.42
5.0
11.8
8.0
33.2
16.4
21.5
18.0
1.5
19.5
100
109.8
2.50
7.8
2,565
2,474
2,226
1,957
1,786
Note: (1) EBIT for financial year 2004 has been calculated in accordance with previous Australian GAAP.
EBIT for financial years 2005 to 2008 has been calculated in accordance with Australian equivalents to IFRS (AIFRS).
(2) Financial years 2007 and 2008 have been re-calculated in accordance with the revised accounting policies as described in note 1(y) to the Financial Statements. Financial Years 2004
to 2006 have not been re-stated.
1
2
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
CHAIRMAN’S REvIEW
The significant restructuring
activities undertaken to date
have enabled the Group to
maintain profitability in the
difficult market conditions.
A sound financial performance was achieved in the 2007/08 year
11.5 cents per share, this brings the total fully franked dividend
in the difficult domestic market conditions. Rising market interest
for the 2007/08 year to 19.5 cents per share (inclusive of the 1.5
rates and a weak domestic economy have lead to further declines
cents per share special dividend paid in April 2008). This continues
in dwelling construction and renovation activity, and together with
the Company’s track record of paying fully franked dividends to
rising business input costs created a challenging environment for
shareholders.
the Group’s businesses. The significant restructuring activities
undertaken to date have enabled the Group to maintain profitability
The directors have announced the cessation of the special
in the difficult market conditions.
dividend, and the re-introduction of the Dividend Reinvestment
Plan (“DRP”). This will assist the Group to fund acquisition
The Group achieved a trading profit after tax of $60.2 million in
opportunities as they arise. In the current market, there are more
the 2007/08 year on sales revenue of $648.9 million. Net profit
acquisition opportunities becoming available at realistic asset
after tax of $45.9 million was after restructuring expenses and the
prices, and the Group needs to be in a position to move quickly
write-down in Wisa book value. Trading earnings before interest and
to fund opportunities that are consistent with the strategic
tax of $99.4 million represented a 0.6% increase on the prior year’s
growth plans.
performance, and is in line with guidance provided to the market in
February 2008.
The DRP will be in place for the final dividend payable in October
2008 and a discount of 5% will apply to shares subscribed for
In early August, a Memorandum of Understanding was signed for
under the plan. The DRP has received strong support from
the sale of Wisa Beheer in the Netherlands to management for Euro
shareholders in the past, and I encourage shareholders to continue
14 million. This business is of small scale, low profitability and is
to support the plan, and the growth aspirations of the Company.
not compatible with the Board’s future growth plans for
the Company.
DIvIDENDS AND CAPITAL MANAGEMENT
The Group’s impressive operating cash flow enabled the directors to
ExECuTIvE REMuNERATION
Together with the Company’s external remuneration consultants,
the Board conducted a review during the year on the incentive
arrangements for executives and senior management. The objective
declare a final fully franked ordinary dividend of 8.0 cents per share
of the review was to ensure that the incentive arrangements enable
to be paid in October 2008. Together with the interim dividend of
the Group to attract, motivate and retain a high quality executive
team, and to more closely align the incentive arrangements with
shareholder wealth creation. Following the review, the Board
STRATEGIC DIRECTION
Given the current trading conditions and the expectation that these
approved changes to the Short Term Incentive and Long Term
challenging conditions will continue throughout the 2008/09 year, it
Incentive plans as outlined in the Remuneration Report.
will be difficult to achieve growth in profitability in this environment.
The Group will focus on maximising opportunities for the existing
The Long Term Incentive (“LTI”) has been changed to an equity
businesses through the development and marketing of innovative
performance plan, following the expiry of the former cash based
new products, and will continue the search for suitable acquisition
plan. The LTI incorporates performance hurdles based on Earnings
opportunities. The Group is actively searching for suitable
Per Share and Total Shareholder Return targets. The performance
acquisitions that will enable the expansion of the core building
hurdles have been selected by the Board and will focus
fixtures and fittings business. The cessation of the special dividend
management on sustained long term performance. The LTI will be
and the re-introduction of the DRP will assist with funding for
put to shareholders for approval at the Annual General Meeting in
acquisitions as required.
October 2008 and I encourage shareholders to support the plan.
Further information on the LTI can be found in the Explanatory
The financial results for the 2007/08 year demonstrates the strength
Memorandum to the 2008 Notice of Meeting.
of the Group’s businesses in challenging market conditions. The
The existing GWA International Employee Share Plan will continue to
to improve their cost competitiveness in the market conditions,
operate, but will be restricted to lower level management and
and the full benefits of the restructuring will be realised when the
senior staff.
domestic dwelling construction and renovation market recovers in
restructuring activities of recent years has enabled the businesses
SuSTAINAbILITY AND
PRODuCT INNOvATION
The Board is committed to reducing energy and water usage in the
Group’s operations and significant progress has been made.
A new section has been included in the Annual Report outlining
the Group’s water and energy saving initiatives during the year. I
congratulate Caroma Dorf on receiving the 2008 Endeavour Awards
Environmental Solution of the Year for the Glaze Reclamation
System at the Wetherill Park factory which has lead to substantial
waste and water reductions. Gainsborough has also put in place
initiatives to reduce water consumption at the Blackburn factory
with impressive results to date.
The Group has invested significantly in research and new product
development to maintain competitive advantage and develop new
market opportunities. The Company is a key manufacturer and
distributor of products which deliver environmental sustainability
benefits including Caroma Dorf’s market leading water efficient
sanitaryware and tapware, and Dux Hot Water’s environmental
products which reduce household energy usage. Further
information on the Group’s sustainability focus and
product innovations is included in the Annual Report.
CORPORATE GOvERNANCE
The Board of GWA International Limited comprise experienced
and long serving directors who have overseen the growth of the
Company, and the significant restructuring activities of recent
years. Succession plans have been developed for the retirement of
individual directors and in accordance with the plans, Mr Martin
Kriewaldt will retire as a director at the Annual General Meeting in
October 2008. I wish to thank Mr Kriewaldt for his contributions as
a director and wish him well for the future.
The Board succession planning process will continue and I expect
to announce the appointment of a new director early next year.
future periods.
In closing, I would like to thank management and staff for their
efforts to achieve a sound financial result in the 2007/08 year, and
look forward to a strong performance in the 2008/09 year, despite
the current economic uncertainty.
Trading Earnings Per Share
cents
25
20
15
10
5
0
03/04
04/05
05/06
06/07
07/08
Dividend Per Share
cents
25
20
15
10
5
0
03/04
04/05
05/06
06/07
07/08
Ordinary Dividend
Special Dividend
3
4
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
MANAGING DIRECTOR’S
REvIEW OF OPERATIONS
A real highlight for the year has
been the very strong cashflow
which is a function of efficiency
improvements across all operating
divisions within the Company.
OvERvIEW – STRONG CASH FLOW
uNDERPINS STEADY PROFIT RESuLT
$ million
2007/08 2006/07
Cash Flow before Financing Activities
95.2
5.7
Trading EBIT
Trading Profit after Tax
99.4
60.2
98.8
61.4
Restructure Costs after Tax
(14.3)
(5.1)
Our restructuring initiatives have helped sustain the Company’s
performance and with the Movex ERP system on track for
deployment in Caroma Dorf during 2008/09 we are continuing to
build a stronger base for the future.
The Company’s Building Fixtures and Fittings businesses segment
is comprised of the Caroma Dorf, Gainsborough and Dux
business units.
During the financial year the segment’s revenue and trading
earnings before interest and tax benefited from improved sales of
environmentally sustainable water heaters through Dux as well as
Profit after Tax
45.9
56.3
continuing strong sales through Gainsborough as this business
expands its product range and customer reach.
During the 2007/08 financial year GWA International Limited
Caroma Dorf’s sales and trading profit were down principally due
reported trading earnings before interest and tax of $99.4 million,
to weak new housing activity in Australia and New Zealand. Profits
slightly above the previous year’s result. This was a credible result
were also impacted as a result of significant underperformance
given the difficult trading conditions experienced during the year.
by our Wisa sanitaryware business in Europe and poor sales of
stainless steel kitchen and laundry products as the Clark business
A real highlight for the year has been the very strong cashflow
was restructured from a domestic manufacturer to an importer.
which is a function of efficiency improvements across all operating
Significant restructuring charges were raised in the first half as the
divisions within the Company. Improved supply chain management
Clark business exited the Revesby manufacturing site.
and continuing improvements in productivity at the upgraded
Wetherill Park vitreous china factory have resulted in lower
Caroma Dorf’s restructuring initiatives were largely completed
inventory levels for all our operating businesses.
during the 2008 financial year. Manufacturing operations at
the Clark site at Revesby have ceased with an updated and cost
effective range of stainless steel sink and laundry tubs now available
SEGMENT RESuLTS AND OPERATING PERFORMANCE
Sales
Revenue
$ Million
2007/08
2006/07
Trading
EbIT
$ Million
2007/08
2006/07
building
Fixtures and
Fittings
558.6
546.9
building
Fixtures and
Fittings
109.5
110.5
Sebel
Rover
Other
Total
56.9
56.8
33.4
32.4
_
–
648.9
636.1
Sebel
Rover
Other
Total
3.4
3.6
0.4
(0.4)
(13.9)
(14.9)
99.4
98.8
for the new financial year. Major production issues at the Wetherill
of the supply chain throughout the year. With a restructured cost
Park vitreous china factory which impacted on supply capability
base and good rainfall expected across the eastern states, Rover is
and profit in the first half of the year have now been resolved and
expected to show improved performance in the new financial year.
substantial progress has also been made in optimizing our supply
channels for imported products.
During the 2009 financial year we expect to see a significant
increase in output from the Wetherill Park factory with minimal
increases in factory overheads.
In the 2008 financial year Dux revenue increased by 13% and
CASH FLOW
The strong net cash flow from operating activities of $103.0 million
resulted from reduced inventory levels across all divisions and the
benefit of tax refunds from the previous year.
Expenditure on acquisition of plant and equipment of $18.3 million
was in line with depreciation and was partially offset by cash inflows
has benefited from the regulatory driven change to environmental
from sale of property and equipment totalling $14.5 million.
products which have a higher unit sales value. Improved
performance of new products and investment in distribution is
As a result of this strong cash flow the Company’s net debt reduced
flowing through to higher revenue and profitability. The business
by $32.1 million during the financial year.
is focussing on enhancing its range of energy efficient products
based on technology developed in-house and key partnerships with
offshore suppliers.
Gainsborough is supplementing its strong presence in the builder
segment with a broader product offering targeting the architectural
market segment. Sales have improved in the DIY market and we
expect the broader product offering to translate into higher sales in
2008/09.
Sebel has performed credibly given the adverse impact of the strong
Australian currency on export competitiveness, reporting sales and
trading profit in line with the prior financial year. Restructuring of
the Bankstown operations is now complete following sale of the site
and consolidation of activities has been completed into an area 30%
less than previously required.
FINANCIAL CONDITION AND
CAPITAL MANAGEMENT
The Company has a strong balance sheet, established lines of
funding and quality financial metrics which will support
future growth.
During the 2007/08 financial year the Company paid $61.6 million
in dividends all fully franked. The balance of franking credits at
year end was $22.5 million and the Company remains well placed
to continue paying fully franked ordinary dividends.
As mentioned in the Chairman’s Review, the Board has decided
to cease paying special dividends and reintroduce the Dividend
Reinvestment Plan. These initiatives will further position the
Company for growth and provide shareholders with the opportunity
to cost effectively invest in the Company.
While sales were in line with the previous year, Rover’s profitability
while an improvement on the prior year’s loss was impacted by
the sell through of high cost domestically made product while our
Chinese suppliers came on stream. Some supply disruptions from
China also impacted on our ability to meet the market’s needs.
Net debt at June 2008 totalled $193.6 million representing gearing
of 33.2% as measured by net debt / net debt plus equity. Debt
funding is provided under a Master Financing Agreement with
utilized debt facilities totalling A$235 million and Euro 7.3 million.
In 2007/08 Rover completed the transition of its business model to
fully imported mowers and has progressively improved the reliability
These loans and other facilities are extended annually under 2 and
3 year evergreen arrangements. No loan facilities are set to mature
in the 2008/09 financial year.
5
6
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
MANAGING DIRECTOR’S
REvIEW OF OPERATIONS
SAFETY
Management is determined to improve the Company’s safety
well as the waste produced through our processes and packing. In
2008 GWA became a signatory to the National Packaging Covenant
performance through better safety systems and processes, through
which establishes a 3 year programme to reduce waste. The
extensive communication with our workforce and increased
Board also approved the expenditure of $1.9 million to increase
diligence in identifying safety risks in our workplace.
water recycling at Wetherill Park. In recognition of this initiative,
the Wetherill Park factory won the 2008 Endeavour Awards -
During the 2008 year, 19 of our employees suffered workplace
Environmental Solutions of the Year. This is real acknowledgement
injuries requiring them to take time off work. While these lost time
of the innovation and commitment of our people to contribute to a
injuries represent a 25% reduction on the prior year, our safety
more sustainable environment.
performance remains an area of ongoing management focus.
Our emphasis on identifying and rectifying safety risks across all our
requirements for carbon reporting and trading will be properly
sites has resulted in a 30% reduction in the injury frequency rate
addressed by GWA to ensure a profitable and sustainable future for
(injuries per million man hours worked).
the business.
The current focus on carbon reduction and the evolving
SuSTAINAbILITY AND CARbON REDuCTION
GWA is committed to improving the environment both through
STRATEGIC DIRECTION
GWA is well placed to pursue future growth opportunities. Our
the products we make and sell and the manufacturing processes
strong cashflow, supportive shareholders and bankers ensures the
we utilise. The Company is at the forefront of technology with the
Company will be able to continue pursing internal and external
development of water efficient toilets and energy efficient water
investment opportunities which will grow shareholder value.
heaters. Our environmentally sustainable products are a major
source of competitive advantage for the Company. In recognition of
Management will continue to focus on growing our Building Fixtures
the Company’s innovative products, the new water heater marketed
and Fittings segment by expanding on our core strategies of low
as the Dux Airoheat heat pump was awarded the prestigious
cost supply, product innovation and high quality products and
Australian International Design Mark.
service levels. The business has been significantly restructured to
better withstand any down turn in economic cycles while also being
GWA manufacturing operations are continually seeking ways in
able to expand quickly as the market recovers.
which to reduce the levels of energy and water usage at our sites as
The Company is also well positioned to capitalize on acquisition
opportunities which compliment our Building Fixtures and Fittings
businesses. The recent share market correction means that asset
values are now more realistic and our strong balance sheet provides
us with the capacity to take advantage of acquisition opportunities.
GWA’s current business model of managing local and offshore
supply sources means that supply chain management is developing
as a core skill in the organisation. We have 30 staff engaged in
China undertaking quality assurance, vendor management and
trading as well as improved management systems and processes.
These capabilities open up broader options for creating value
through growth and acquisitions.
We will continue to look at options to divest non core businesses but
we have not been successful in identifying a way to achieve this and
create value for the Sebel and Rover businesses. We have signed
a non binding MOU for the sale of WISA after a strategic review
indicated that this business had limited growth options under
GWA management.
PEOPLE
GWA’s long term success has been due to the efforts of a committed
and talented workforce. We are continuing to look for ways to bring
new thinking and skills into the business while also developing our
people to provide succession opportunities.
In support of these objectives a significant investment has been
made through the GWA Leadership Program, with the aim of
underpinning a high performance culture through the development
of personnel with superior skills and capabilities supported by
rigorous goal setting and performance management systems
OuTLOOk
While there is undoubtedly a strong underlying demand for
dwellings in Australia as a result of rising population and a sustained
under supply of new dwellings, continuing high interest rates and
low affordability will effectively cap demand.
Until economic conditions ease and constraints on new housing
supply are addressed, there is little prospect of any meaningful
upturn in house building activity during the 2008/09 financial year
with most forecasters predicting a continuation of the current
flat demand.
Rising cost pressures both in Australia and offshore will also impact
on our cost base. The effective management of price increases in
the subdued domestic market will be essential to protect margins.
Against this challenging economic outlook, management is certain
the benefits of our extensive restructuring program will flow through
during the new financial year. Our large investment in innovative
environmentally sustainable products also positions the Company
well to capitalize on changing consumer demands and Government
legislation.
In the current economic environment, the outlook for the 2008/09
financial year is difficult to assess. Further market guidance for
2008/09 will be provided at the Company’s Annual General Meeting
in October when we can make a more informed assessment of
the market.
7
8
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
HEALTH AND SAFETY
GWA continues to ensure that it
provides a safe workplace for its
employees, contractors, visitors
and customers in an efficient and
compliant manner.
GWA continues to ensure that it provides a safe workplace for its
• The health and safety advisors have been working to standardise
employees, contractors, visitors and customers in an efficient and
safe operating procedures across GWA. This means we are able
compliant manner.
to adopt best practice and maximise the collective resources of
the health and safety advisors.
GWA has a team of health and safety professionals. Some health
and safety advisors also have responsibilities for environment and
• Internal operational risk audits are conducted at major sites and
sustainability.
cross site auditing by health and safety advisors from different
GWA businesses is encouraged.
The health and safety advisor’s report to a senior manager within
each GWA business thus ensuring focus at all levels. The advisor’s
• Early in 2008/09 year a new training and compliance system
meet regularly with the Group Risk Manager who provides
will be introduced into GWA. Key induction and training material
overall advice and company strategic direction in a continuous
for employees and contractors will be able to be delivered
improvement environment.
online. Compliance testing, also delivered online via computer,
will ensure employee and contractor understanding in areas of
During 2007/08 new initiatives have been introduced and existing
health, safety, environment and site safe operating procedures.
systems improved:
• The Corporate Risk Database continues to be the core system
employed at GWA. The system records all incidents, including
injuries, near misses and other non lost time injuries. Every
HEALTH AND SAFETY PERFORMANCE
GWA measures a range of balanced safety performance indicators.
Proactive indicators such as number of hazards identified, risk
assessments undertaken and actions issues and completed on time
month records are analysed for trends and adequate treatment to
are recorded for each GWA site.
reduce likelihood of reoccurrence. The software issues and track
actions from hazards identified, risk assessments undertaken
as well as incident investigations. A new software upgrade is
scheduled for the first quarter of 2008/09. This will provide a
better shop floor interface to report near misses and identify
hazards. There is also an enhanced dashboard that will give real
time key performance indicators of safety performance.
10
8
6
4
2
0
35
30
25
20
15
10
5
0
2006
2007
2008
2006
2007
2008
THREE kEY MEASuRES OF SAFETY
OuTCOMES ARE:
• Lost Time Injury Frequency Rate (LTIFR) which measures Lost Time
• Injury Severity Rate which measures the number of hours for a
(injury that results in an inability to work for at least one full shift)
lost time injury per million hours worked
10
8
10
6
8
4
6
2
4
0
2
0
6000
5000
4000
3000
2000
1000
0
2006
2006
2007
2007
2008
2008
2006
2007
2008
• Medical Treatment Injury Frequency Rate (MTIFR) which measures
The trends for all three KPIs are positive and targets will continue to
the number of doctor treated injuries per million hours worked
be reset each year.
The group achieved a relatively good result for 2007/08. LTIFR is
below average for the manufacturing sector. Individual sites such as
Caroma at Norwood in SA achieved a zero LTIFR, whilst at Caroma
at Wetherill Park in NSW (GWA’s largest site) LTIFR was less than 2.
MTIFR also continues to display a downward trend.
One of the flow-on effects of good safety performance has been the
reduction of Workers Compensation premiums. All GWA businesses
have seen a significant saving in premiums for 2007/08.
9
35
30
35
25
30
20
25
15
20
10
15
5
10
0
5
0
6000
5000
6000
4000
5000
3000
4000
2000
3000
1000
2000
0
1000
0
2006
2006
2007
2007
2008
2008
2006
2006
2007
2007
2008
2008
10
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
STRATEGIC DIRECTION
AND buSINESS DIvISIONS
buSINESS DESCRIPTION
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 incorporating water saving technologies, and is
the market leader in water efficient sanitaryware and tapware.
MAIN PRODuCTS AND SERvICES
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.
MAjOR bRANDS
Owned: Caroma, Dorf, Fowler, Stylus, Clark, Radiant, Irwell, Wisa Exclusive: Hansa, Keuco, Schell, KWC, Virtu
OPERATING LOCATIONS
Australia, New Zealand, North America, Europe, China
MAjOR MARkETS
New dwellings, renovation, replacement and commercial markets in Australia, New Zealand and selected
international markets.
STRATEGIC DIRECTION
Caroma Dorf will maintain leadership in the domestic market through its investment in the research and
development of innovative products incorporating water saving technologies. Caroma Dorf is world leading in water
efficient sanitaryware and tapware and will continue to work with authorities in Australia and its overseas markets in
developing solutions for reducing domestic and commercial water consumption.
HEAD OFFICE LOCATION
Caroma Dorf
4 Ray Road Epping NSW 2121
Telephone 61 2 9202 7000 Facsimile 61 2 9869 0625
Websites www.caroma.com.au www.dorf.com.au www.fowler.com.au www.stylus.com.au
www.clark.com.au www.starion-industries.com www.smartinnovation.com.au www.wisa-sanitair.com
www.ecologicalsolutions.com www.irwell.com.au www.radiantstainless.com.au
buSINESS DESCRIPTION
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. Dux has developed an extensive range of innovative environmental products to meet the changing
regulatory requirements, and which assist in reducing domestic energy consumption.
MAIN PRODuCTS AND SERvICES
Range of hot water systems including mains pressure gas and electric storage, continuous flow gas, electric and gas
boosted solar and heat pump products.
MAjOR bRANDS
Owned: Dux, EcoSmart
OPERATING LOCATIONS
Australia, overseas distributors
MAjOR MARkETS
Dux participates actively in the new home and replacement markets. The primary market for hot water systems is
the replacement or breakdown market.
STRATEGIC DIRECTION
Dux will continue to focus on improving business performance by developing new innovative environmental
products to meet emerging market requirements and regulations, and that will assist in reducing domestic energy
consumption. Dux will continue to strengthen its key customer relationships, and reduce costs through improved
factory performance and selective sourcing of products and components.
HEAD OFFICE LOCATION
Dux Manufacturing Limited
Lackey 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
11
12
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
STRATEGIC DIRECTION
AND buSINESS DIvISIONS
buSINESS DESCRIPTION
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.
MAIN PRODuCTS AND SERvICES
A comprehensive range of door hardware comprising door handles (knobs and levers), door locks, door closers,
hinges and other metal door accessories.
MAjOR bRANDS
Owned: Gainsborough, Trilock, Homecraft, Stronghold Series, Contractor Series, In Style, Mode, Aspect
OPERATING LOCATIONS
Australia, New Zealand, export markets
MAjOR MARkETS
Domestic home builders, DIY and building projects, commercial buildings and multi-dwelling developments.
STRATEGIC DIRECTION
Gainsborough’s strategic direction encompasses the development of new and innovative door hardware products to
suit domestic buildings and commercial projects.
HEAD OFFICE LOCATION
Gainsborough Hardware Industries Limited
31-33 Alfred Street Blackburn VIC 3130 AUSTRALIA
Telephone 61 3 9877 1555 Facsimile 61 3 9894 1599
Website www.gainsboroughhardware.com.au
buSINESS DESCRIPTION
Rover is a leading Australian designer, importer and distributor of domestic and commercial lawn and garden
care equipment.
MAIN PRODuCTS AND SERvICES
Range of walk-behind and ride-on mower equipment, garden chip and shred products and spare parts.
MAjOR bRANDS
Owned: Rover
OPERATING LOCATIONS
Australia, New Zealand, export markets
MAjOR MARkETS
Domestic and commercial lawn care and garden products and equipment, marketed in over 35 countries.
STRATEGIC DIRECTION
Rover will continue to target market growth segments in Australia and overseas through its focus on new product
development and its relationships with its key customers.
HEAD OFFICE LOCATION
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
13
14
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
STRATEGIC DIRECTION
AND buSINESS DIvISIONS
buSINESS DESCRIPTION
Sebel is at the forefront of Australian design, manufacture, import and distribution of quality commercial furniture
and seating.
MAIN PRODuCTS AND SERvICES
Broad range of 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.
MAjOR bRANDS
Owned: Sebel
OPERATING LOCATIONS
Australia, New Zealand, Hong Kong, United Kingdom, export markets
MAjOR MARkETS
Entertainment, hospitality, healthcare, public seating, sports stadia, corporate and educational markets. Sells direct
to builders, developers, clubs and hotels.
STRATEGIC DIRECTION
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.
HEAD OFFICE LOCATION
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
The GWA
SuSTAINAbILITY and
INNOvATION STORY
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GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
Caroma Dorf has always
been at the forefront of
product innovation, corporate
responsibility and the development
of environmentally sound
technologies. A long-standing
commitment to helping Australians
save water has made Caroma
Dorf an international market
leader in the development of
water efficient products.
Caroma Dorf has always been at the forefront of product innovation,
corporate responsibility and the development of environmentally
ExAMPLES OF CAROMA DORF’S WATER
SAvING PRODuCTS INCLuDE:
sound technologies. A long-standing commitment to helping
Australians save water has made Caroma Dorf an international
market leader in the development of water efficient products.
SAvING WATER FROM THE bEGINNING
Caroma Dorf has always been at the forefront of product innovation,
corporate responsibility and the development of environmentally
sound technologies. A long-standing commitment to helping
Australians save water has made Caroma Dorf an international
market leader in the development of water efficient products.
CAROMA PROFILE TM TOILET SuITE WITH
INTEGRATED HAND bASIN
The first toilet in Australia to achieve a 5-star WELS rating, the
Caroma ProfileTM Toilet Suite with Integrated Hand Basin provides
a simple, effective way to re-use water in the bathroom. ProfileTM
achieves this leading water rating by using the same water twice,
firstly for hand washing followed by toilet flushing. Resulting in
water savings of over 10% compared to the 4.5/3L Smartflush®
System with separate hand basin.
A HISTORY OF WATER SAvING INNOvATION
Over the last 25 years, Caroma has designed toilets that have
Given the high degree of innovation of the ProfileTM Toilet Suite,
the launch of this product has further consolidated Caroma Dorf’s
progressively reduced water consumption, from the 11/6 litre, to the
position both in Australia and internationally as a leader in water
9/4.5 litre, the 6/3 litre dual flush to today’s Caroma Smartflush®,
saving technology. The ProfileTM has enhanced Caroma Dorf’s
Australia’s first 4.5/3 litre dual flush toilet, which can save the
already extensive range of water efficient bathroom products, whilst
average household 35,000 litres of water per year compared to an
ensuring Caroma Dorf sets the innovation benchmarks within the
11 litre single flush toilet suite.
markets in which it operates.
SuSTAINAbILITY IS OuR PRIORITY
Caroma Dorf is well placed to assist homes, and businesses, in
Researched and designed in Australia, Caroma Dorf are ensuring
this unique technology is fully accessible to the Australian market
reducing total bathroom water usage with a complete portfolio of
from a distribution, ease of installation and price position so the
water efficient products. A large percentage of households have
water saving benefits of this innovation can be carried through to
inefficient toilets, taps and showerheads. Replacing these heavy
our environment.
water using products with sophisticated and advanced technology,
like products created by Caroma Dorf, can have an immediate
impact on water saving.
vanadal Resistant Metal Grate
Replaceable bio Fresh block
Replaceable bio SealTM
CAROMA H2ZEROTM CubE uRINAL
The Caroma H2ZeroTM Cube Urinal won the inaugural Award for
THE CAROMA DORF COMMITMENT
Recognising the need for a solutions approach to address the
Excellence in Sustainable Design at the 2007 Australian Design
current water situation, devising sustainable water management
Awards. The H2ZeroTM Cube Urinal was selected from a shortlist
solutions for homes and businesses is now a core focus for the
of 32 environmentally friendly entries for its breakthrough design,
Caroma Dorf business under the banner of Eco Logical Solutions.
allowing it to be the first truly viable and sustainable high-
performance, waterless urinal option.
As an industry leader, Caroma Dorf is working closely with key
government bodies, water authorities, plumbing organisations and
The H2ZeroTM Urinal also won the Australian Design Award for
the building industry to develop responsible alternatives to save
Excellence in Australian Design in the Housing and Building
water through retrofitting initiatives.
category, as well as being one of six products nominated for
Australian Design Award of the year. Entries were judged against
The benefits of saving water through retrofitting initiatives include:
a common set of criteria, including innovation, visual appeal,
functionality, originality, quality, ergonomics, safety, sustainability,
• speed at which water saving benefits are realised
and commercial viability.
• a reduction of demand on mains water supplies for toilet flushing
AuSTRALIAN DESIGNED MIxERS DELIvER
SERIOuS STYLE & 5 STAR WATER RATING -
The Dorf Eclipse Basin Mixer releases a low 6 litres of water per
minute to achieve a superior WELS 5 star rating, while the WELS 4
star rated Eclipse Sink Mixer is durable enough to withstand even
the most demanding of kitchen duties. The contemporary good
purposes
• reduction of waste volume flowing through sewerage plants and
associated infrastructure
• no need for change to current behaviour
RESIDENTIAL RETROFIT SOLuTIONS
Caroma Dorf has strategically positioned itself as an expert in
looks of the Eclipse Bath/Shower Mixer, available with optional
developing residential retrofit programs with water authorities,
diverter, will make a stylish addition to any bathroom space.
local councils, and consumers. As part of its commitment to
residential retrofitting, Caroma Dorf is providing fully installed
solutions for replacing inefficient toilets and showers with immediate
water saving results that can be easily implemented.
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GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
Developing and manufacturing
market-leading water saving
products including toilet suites,
urinals, tapware, showers and
flush valves is an integral part of
Caroma Dorf’s philosophy.
LEADING THE WAY IN COMMERCIAL
RETROFITTING
In an effort to support sustainable living, Caroma Dorf, in joint
partnership with business organisations, is offering viable
alternatives to help save water. Through tailored fully installed
commercial initiatives, Caroma Dorf is assisting business to realise
SOFITEL HOTEL, bRISbANE
The 429 room luxury five star hotel achieved their water saving
targets and found a cost effective solution to do so on advice from
Caroma Dorf. Products featured included Caroma Liano Inset Vanity
Basins, Caroma Cube 0.8L Electronic Smartflush® Urinal Suites
(WELS 6 star rated) and Fowler Newport Smartflush® Toilet Suites
their water saving potential. We are also providing assistance in
(WELS 4 star rated).
ensuring commercial premises select the most water efficient
bathroom products to overcome issues associated with high water-
using fittings and fixtures.
DEFENCE PLAZA, SYDNEY
Over a six month period the water savings were over 2.1 million
litres per month after Caroma Dorf completed a retrofit of bathroom
To improve the use of commercial retrofits, Caroma Dorf is
fittings and fixtures. Products featured included Caroma Caravelle
developing retrofit specific products including commercial pans,
2000 Smartflush® Toilet Suites (WELS 4 star rated), Schell Flush
retrofit cisterns and retrofit specific urinal solutions, as well as
Valves (WELS 4 star rated) and Hansa Polo Tapware (WELS 4
partnering with retrofit specialist plumbing companies to ensure the
star rated).
process is completed as effectively and efficiently as possible.
Some of the high profile Australian names who have already
teamed-up with Caroma Dorf for a sustainable future include:
WESLEY HOSPITAL PROFESSIONAL SuITES,
bRISbANE
Major reductions in water usage were possible after the partnership
with Caroma Dorf ensured the most suitable sanitaryware and
tapware products were retrofitted. Products featured included
Caroma Cube 0.8L Electronic Smartflush® Urinal Suites (WELS 6
star rated), Caroma Leda InvisiTM Care Toilet Suites (WELS 4 star
rated), Hansa Prado Medica Mixers (WELS 4 star rated).
Caroma Dorf’s technology has also been put to good use in overseas
Open to architects, interior designers, builders, plumbers and
projects including:
home renovators, the Caroma Dorf Concepts Centre is a destination
GENZYME CENTRE, bOSTON, uSA
Soaring twelve story central atrium with skylight, living roof and
extensive indoor gardens. Uses 34% less water than a comparable
designed to inspire ideas, present product solutions and offer
advice. It is also a valuable resource for those renovating their
bathroom or kitchen, or embarking on building a new home.
building. Electricity costs are 42% less than a comparable building.
Full-scale designer bathrooms are on display as well as kitchen
Features Caroma Walvit InvisiTM toilet suites.
SANTA MONICA’S SuSTAINAbLE CITY PLAN,
uSA
Introduced a retrofit program designed to help a community to
think, plan and act in a more sustainable manner. By replacing
water-wasting plumbing fixtures with ultra-low flow toilets and
low-flow showerheads and aerators, residents helped achieve its
“Sustainable City Water Efficiency Goals” as they reduce their water
and wastewater charges.
NEW APPROACHES TO SHOWCASE OuR
PRODuCTS- CAROMA DORF CONCEPT
CENTRE
May 2008 saw the opening of a new showroom known as the
and laundries. Visitors can also familiarise themselves with
our innovative water and energy efficient products to suit their
environmental needs and applications.
A place where all great ideas come together, this unique resource
helps ease the selection process. A team of experienced Caroma
Dorf consultants are on hand to offer advice that will help assist the
decision making process before committing to a look or design.
Open six days a week, this high quality showroom showcases
products from all of Caroma Dorf brands (Caroma, Dorf,
Fowler, Stylus, Clark, Irwell, Radiant, Hansa) as well as Dux
and Gainsborough, in user friendly, hands-on displays, allowing
homeowners, architects and builders to see, touch, and feel the
Caroma Dorf Concepts Centre in the heart of South Melbourne’s
products before purchasing them.
design precinct.
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GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
Dux HOT WATER
AWARD WINNING
ENvIRONMENTAL
INNOvATION
The Dux product development
team is heavily focused on
developing further competitive
advantage in its already
impressive sustainable
products range.
THE MARkET IS CHANGING
Most states have already regulated against the installation of a
The more efficient gas continuous solar range, which combines a
larger tank coupled with the Endurance® continuous flow system,
standard electric hot water system in new homes and the Federal
has been a popular choice for prestige home builders. This type
Government has indicated that the replacement market won’t be
of system is the most efficient on the market and is designed to
far behind. With this in mind, the Dux product development team
maximise solar gain and provide unlimited hot water.
is heavily focused on developing further competitive advantage
in its already impressive sustainable products range. To further
complement its highly efficient Sunpro® solar and Airoheat® hot
water systems, Dux is also assisting the market with its professional
installation offer called DuxConnect.
GAS HOT WATER SYSTEMS
Dux currently has a range of high efficiency gas storage and gas
continuous flow water heaters. Reticulated natural gas is viewed as
a cheap, environmentally friendly fuel source for heating water.
The future for this segment of the market is in highly efficient gas
systems, which are typically rated at 5 stars or higher. Dux currently
has, and will continue to have, both the storage and continuous
flow products, that meet or exceed market requirements.
GAS bOOSTED SOLAR SYSTEMS
Gas boosted solar is the most environmentally friendly hot water solution
available. Dux continues to be a strong player in this market.
ELECTRIC bOOSTED SOLAR SYSTEMS
The Sunpro® range of electric boosted solar hot water systems is
proving popular with home owners, builders and plumbers when
gas is not available. Dux is well-equipped, having some of the most
efficient systems available, and they will prove to be a crucial part of
the Dux business moving forward.
AIROHEAT®
The most significant recent event for Dux has been the release of
the Airoheat Subzero model of heat pump water heater. The original
Airoheat model met with great success and the new Subzero model
is further improved, as it rates higher in efficiency and also gives
the capability of heating water in sub-zero air temperatures.
Airoheat has proven a very popular alternative with plumbers, as
the installation is much simpler. Unlike solar, Airoheat doesn’t
require the installation of solar collectors.
In May Airoheat Subzero was awarded the prestigious 2008
There are two types of gas solar in the Dux range. Sunpro 305
Australian International Design Mark. Commemorating their 50th
provides a lower entry point price whilst still maintaining all of the
anniversary, the Australian Design Awards went global in 2008 with
benefits of mains pressure hot water. Its compact footprint has
both Australian and internationally designed products eligible
made it an ideal choice on smaller building blocks, particularly
to enter.
in Victoria.
GAINSbOROuGH
FINE QuALITY DOOR
FuRNITuRE
Developed and made
in Australia, Trilock
Contemporary features
modern escutcheon and
handle styling, world
renowned ‘3 in 1’ locking
technology and world class
tarnish resistant finishes.
TRILOCk CONTEMPORARY SETS THE
STANDARD IN DOOR HARDWARE
Developed and made in Australia, Trilock Contemporary features
Designed and manufactured in Australia, the Gainsborough 2000
series (23mm backset for narrow stile doors) and 3000 Series
(60mm backset) feature the key cylinder below the lever, for greater
convenience and ease of operation. The location of cylinder under
the lever (rather than above) provides a more convenient position in
which to lock or unlock with the key.
A more proportionate distance between the furniture and the
cylinder has also been created, adding an element of style and
aesthetics to the lock. This distance is the same for both 2000
series and 3000 series, allowing uniformity throughout the building.
The Gainsborough 2000 and 3000 series cylinder mortice locks
feature a range of functions for any commercial or residential
specification.
Through fixing of cylinder and/or turn knob escutcheons and greater
modern escutcheon and handle styling, world renowned ‘3 in 1’
door gap deadlatching, along with 45 degree rotation to retract
locking technology and world class tarnish resistant finishes.
latchbolt, are just some of the features offered with this range
Choose from the “Precise” and “Angular” leverset options; or the
of locks.
“Circular” knob. All are non-handed to suit left or right-handed
Function and handing can be switched on site for ease of operation,
doors.
from combination to vestibule, simply by operating a slide contained
in the lock mechanism. Latchbolt and deadlatching auxiliary bolt
The ‘3 in 1’ locking technology offers the security and convenience
can also be altered on site to suit either inward or outward opening
of lockset, deadbolt and passage functions combined into the
doors by twisting both bolts in the direction required.
one lock. This 3 in 1 locking technology is also the recipient of an
Australian Design Mark for good design.
The full 20mm deadbolt extension helps keep possessions and
valuables safe when leaving the home; and the four installation
fixing points provide added strength against attack from outside.
Higher escutcheon plates create greater visual impact and presence
on the door and feature convex styling, aesthetic design grooves
and contoured cylinder surrounds. The rectangular styled push-
button on the inside escutcheon plate further contributes to the
contemporary feel and the concealed fixing enhancement on the
external escutcheon plate provides a smooth and modern look.
HEAvY DuTY CYLINDER MORTICE LOCkS
Gainsborough offers an exciting range of Architectural heavy duty
mortice locks, setting new standards in mortice lock design.
INNOvATIvE NEW COLOuR RANGES FROM
GAINSbOROuGH
Gainsborough now offers a range of door hardware products in
stylish new decorative colours to add class to today’s residential
building activities. These include the new “Synergy” range, which
offers satin chrome levers with “Ocean Mist” and “Expresso
Black” coloured rosettes or backplates. The new “Couture” range
features an alternative range of Chrome levers with “Expresso
Black” and “White” rosettes or backplates. The new “Accent”
range features leversets on round rosettes or square backplates
and Trilock Contemporary leversets in an impressive new Brushed
Satin Chrome finish. The new “Estilo” range offers a leversets on
round rosettes or square backplates as well as Trilock Contemporary
leversets in an innovative soft gold “Fusion” finish.
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GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
SuSTAINAbILITY
AND ENvIRONMENT
(OPERATIONS)
GROuP INITIATIvES
GWA’s product range in the building fixtures sector have continued
WATER TREATMENT
When completed the ultimate objective is to reuse most of the
to provide innovative products that enhance water and energy
166,000 litres per day for cleaning and for the process of making
savings. GWA’s commitment to sustainability and the environment
extends to its operations. 2007/08 has seen some significant
raw materials for manufacturing.
Significant savings achieved by:
developments in water and energy savings.
Highlights include:
• not having to treat 30,000 litres per day through the waste
treatment plant from waste glaze
• reduced sludge (combined glaze and water) going to landfill
CAROMA, WETHERILL PARk WATER
TREATMENT AND GLAZE RECYCLING
The ultimate objective of the Caroma Wetherill Park manufacturing
(approximately 5 tonnes per day)
• reduced glaze raw materials
facility is to recycle all process water. This objective has significant
All up both projects are estimated to save over $900,000 per year.
cost advantages as well as enhancing Caroma’s image as a
Company aware of the need for efficient water use. Caroma
Wetherill Park treats 166,000 litres of water per day. Caroma was
aware that in order to reduce its water use the water treatment plant
needed to be upgraded to enable water recycling. At the same
time the amount of solid waste going to the treatment plant had to
be reduced. A capital expenditure programme of $1.9 million was
approved by the Board for the project. The engineering is complete
for the glaze recycling, and commissioning and testing for the new
treatment plant will be completed late first quarter 2008/09.
GLAZE RECYCLING
Glazing, which is sprayed on, gives vitreous china its brilliant gloss
appearance, which also serves to protect the product and ensure
an easy clean finish. Glazing carousels and robots are used to spray
pieces prior to being fired. They are washed regularly to remove
over spray from the booths. This water – which is essentially dilute
glaze – represents a significant source of dirty water within the
factory. Technology exists to extract excess water from this diluted
glaze and recover the glaze for use. The advantages of such a
system are two fold; reusable glaze is extracted and therefore raw
material costs are reduced, and, the resultant clean water from the
system can be re-used within the factory rather than be discharged
to the sewer.
As recognition, Caroma Wetherill Park recently won the Endeavour
Award for the best Environmental Solution of the Year, 2008
REDuCING WATER AND EFFLuENT COST AT
GAINSbOROuGH, bLACkbuRN
Electroplating operations at Gainsborough consume large amounts
of fresh water.
A number of measures have been implemented to minimise water
flows. As a result, casual, uncontrolled use of water has been largely
eliminated through simple plumbing modifications.
Good housekeeping, and low-cost control devices, resulted in a
significant reduction in water use and effluent volumes.
Installation of a new soak cleaner with greater life than previous
saved 35,000 litres of water per year and approximately $7,500
worth of chemicals.
Reducing the flow through the effluent treatment plant has
improved its performance and reduced the use of treatment
chemicals. Significant reduction in the quantity of hazardous waste
generation liquid and final effluent has occurred at the site.
GWA’s commitment to
sustainability and the
environment extends to
its operations. 2007/08
has seen some significant
developments in water and
energy savings.
During 2006, Company water consumption dropped by 30%.
packaging has across all its business activities. Over the term of the
plan, Gainsborough will activate projects across the whole business
In 2007 further changes were made to the electroplating line to
to reduce waste packaging by up to 25%.
further reduce solid waste and water usage. A significant decision
was made to reuse effluent water. A waste water storage tank has
All senior management have been briefed about the objectives of,
been installed in the effluent area. The filtrated effluent has been
and role the National Packaging Covenant has to play, in reducing
collected and returned to the process. The treated effluent is used
packaging waste from the business. Leading from the top, a working
in a number of different processes including floor washing and
group of senior managers (including the General Manager) has
cleaning of filters.
been formed to assess and execute the action plan activities
ENERGY /WATER SAvINGS INITIATIvE
CAROMA SOuTH MELbOuRNE
The new Caroma Concepts Centre (showroom) has a number
of energy saving initiatives that have been built into the building
including:
• Extensive use of low energy T5 fluorescent lighting
• Reuse of water from working tap and shower displays (reused in
staff toilets)
and initiatives.
Other GWA divisions will submit action plans to the National
Packaging Covenant for approval by September 2008.
GREENHOuSE GAS INITIATIvES
AND REPORTING
In 2008/09 GWA will increase its focus around energy efficiency and
carbon (CO2) abatement strategies in preparedness for the National
Greenhouse Emissions Reporting Scheme (NGER), and ultimately
• Integration of air conditioning, security system and lighting control
the Carbon Pollution Reduction Scheme (CPRS).
via computer system. This allows a user to secure the site, turn
off air-conditioning and other key appliances in one operation
• Solar Hot Water
• Dux readyhot water reticulation system that ensures immediate
hot water and saves on water usage
• Light sensors in toilets
• Use of sky lights
NATIONAL PACkAGING
COvENANT SIGNATORY
During 2007/08 GWA joined the National Packaging Covenant. The
aim of the scheme is to reduce packaging to waste by encouraging
recycling, minimisation and reuse. Each GWA division will be
putting an action plan together for the next three years. The plan
at Gainsborough has already been developed, submitted and
approved. As a signatory to the National Packaging Covenant,
Gainsborough committed to minimising the environmental impacts
Recently an online database has been configured to track energy
usage and carbon emissions across the GWA Group within Australia.
The database will also track water usage and waste to landfill. Water
initiatives are seen by GWA as important as energy and carbon
reduction. From the database, key policy will be developed to
ensure minimum standard for engineering projects and purchased
items where practicable. Performance indicators will be developed
for key sites to track progress. The database will also track carbon
offset initiatives.
Key sites will undergo internal and external energy audits
during 2008/09.
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GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
bOARD OF DIRECTORS
bARRY THORNTON AM 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 the former public company, 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 a member
of the Brisbane Advisory Board of the Salvation Army, and is a
former director of many public companies, including Stockland
Corporation Limited and Suncorp-Metway Limited. He is also the
former Chairman of the Brisbane Airport Corporation Limited and
the Ports Corporation of Queensland.
jIM kENNEDY AO CbE DuNIv (QuT) FCA FCPA
Deputy Chairman and Non-Executive Director, Elected to the
Board 1992
PETER CROWLEY bA bECON FAICD
Managing Director, Appointed 2003
• Expertise: Broad manufacturing experience in Australia
• Expertise: Chartered Accountant, corporate and financial
and overseas
management
2001: Managing Director and Chief Executive, Austrim Nylex
• Special Responsibilities: Deputy Chairman of the Board,
Limited, a diversified industrial company;
Chairman of Audit Committee and member of Nomination
Committee
Mr Kennedy is one of Australia’s most experienced major listed
public company directors.
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;
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:
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;
• Suncorp-Metway Limited 1997 - 2006
1982: Various roles with Queensland Cement Limited and its
• Australian Securities Exchange Limited 1990 - 2006
• Qantas Airways Limited 1995 - 2006
parent company Holderbank culminating in General
Management responsibilities within Australia and
South-East Asia.
DAvID bARRY FAIM
Non-Executive Director, Elected to the Board 1992
MARTIN kRIEWALDT bA LLb FAICD
Non-Executive Director, Elected to the Board 1992
• Expertise: Importation, distribution and retailing
• Special Responsibilities: Member of Remuneration Committee
• Expertise: Lawyer and director of a number of public and other
corporations
Mr Barry was appointed a director of the former public company,
GWA Limited in 1979 and was primarily responsible for one of its
major divisions involved in importation, wholesaling and retailing.
• Special Responsibilities: Member of Remuneration Committee,
member of Audit Committee and member of Nomination
Committee
Mr Barry was appointed a Non-Executive Director of GWA
International Limited in 1992.
RObERT ANDERSON
Non-Executive Director, Elected to the Board 1992
• Expertise: Property investment and transport logistics
Mr Anderson was appointed a director of the former public
company, 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.
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
• Impedimed Limited* since 2005 (listed on ASX October 2007)
• Peptech Limited 2003-2007
*denotes current directorship
GEOFF MCGRATH MIIE
Non-Executive Director, Elected to the Board 2004
bILL bARTLETT FCA, CPA, FCMA, CA(SA)
Non-Executive Director, Elected to the Board 2007
• Expertise: Manufacturing and general management
• Expertise: Chartered Accountant, actuarial, insurance and
• Special Responsibilities: Chairman 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 the former public
company, GWA Limited, Mr McGrath was appointed Managing
Director of the GWA Manufacturing Group companies comprising
Caroma, Sebel and Rover Mowers.
financial services
• Special Responsibilities: Member of Audit Committee
Mr Bartlett is a Fellow of the Institute of Chartered Accountants, with
over 35 years experience in accounting, and was a partner at Ernst
& Young in Australia for 23 years, retiring on 30 June 2003.
During the past three years, Mr Bartlett 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 2003
• Reinsurance Group of America Inc (NYSE)* since 2004
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:
• Abacus Property Group* since 2007
• Retail Cube Limited 2004 – 2006
• Peptech Limited 2004 – 2007
• Campbell Brothers Limited*+ since 2003
*denotes current directorship
• Fletcher Building Limited* since 2003
*denotes current directorship
+denotes Chairman
RICHARD THORNTON CA b COM LLb (HONS) LLM FTIA
Company Secretary, Appointed 2003
• Expertise: Chartered Accountant, taxation and finance
Mr Thornton joined GWA International Limited in 2002 as Group
Taxation Manager and Treasurer and was appointed Company
Secretary in 2003. He is experienced in accounting, taxation and
finance through positions at Coopers & Lybrand, Citibank and Ernst
& Young in Australia and overseas.
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GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
CORPORATE GOvERNANCE
STATEMENT FOR THE YEAR
ENDED 30 juNE 2008
The corporate governance
practices of the Company have
been in place since listing and
are constantly reassessed in the
light of experience, contemporary
views and guidelines on corporate
governance practices.
The Board of Directors is responsible for the corporate governance
of GWA International Limited (“the Company”) which is an essential
PRINCIPLE 1 – LAY SOLID FOuNDATIONS
FOR MANAGEMENT AND OvERSIGHT
part of the role of the Board. The corporate governance practices
of the Company have been in place since listing and are constantly
reassessed in the light of experience, contemporary views and
guidelines on 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.
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
The Board supports the Corporate Governance Principles and
• Approval and monitoring of financial and other reporting
Recommendations (“the recommendations”) of the ASX Corporate
• Monitoring of executive and senior management performance,
Governance Council. The Board confirms that the current
including the implementation of corporate strategies, and
corporate governance practices of the Company meet or exceed
ensuring appropriate resources are available
the recommendations, except for Recommendation 2.2 which
• Appointment and monitoring of the performance of the Managing
provides that the chairperson should be an independent director.
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.
For further information on the corporate governance practices
of the Company, please refer to the Company’s website in the
Corporate Governance section.
• 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, 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
Company Secretary prepares the draft minutes for each meeting,
responsibilities of the Board. The charter is regularly reviewed
which are tabled at the next Board meeting for review and approval.
to ensure it remains consistent with the Board’s objectives and
The Company Secretary is accountable to the Board, through the
responsibilities. The Board charter has been posted on the
Chairman, on all corporate governance matters.
Company’s website in the Corporate Governance section.
SuMMARY OF DELEGATIONS
The Board has approved a Summary of Delegations Policy which
clearly outlines the authorities of the Board and those which have
been delegated to senior management. The policy ensures that
senior management understand the authorities delegated by the
Board and are accountable to the Board for its compliance. Regular
COMPOSITION OF THE bOARD
The Board presently comprises 8 directors, 7 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 in the Annual Report. The
profiles outline the skills, experience and expertise of each Board
reviews are conducted on the appropriateness of the delegated
member.
authorities, and any material breaches are reported to the Board.
LETTER OF APPOINTMENT
New directors of the Company are provided with a formal letter of
appointment which outlines the key terms and conditions of their
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:
appointment. Similarly, senior executives including the Managing
• The Board should maintain a majority of non-executive directors
Director and Chief Financial Officer have formal job descriptions
• The Board should maintain a majority of independent directors
and letter of appointment describing their salary arrangements,
rights and responsibilities and entitlements on termination.
PERFORMANCE REvIEWS
Performance reviews of staff including senior executives are
conducted formally on an annual basis. The performance
review process is critical to the development of staff and enables
performance issues to be addressed. The Company has identified
core competencies for the key roles in the organisation and these
are incorporated into the job descriptions. During the performance
review process, the performance of staff is assessed against the
core competencies.
PRINCIPLE 2 – STRuCTuRE THE bOARD TO
ADD vALuE
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 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 Managing Director. 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
• The Chairperson should be a non-executive director
• The role of Chairperson and Managing Director should not be
exercised by the same individual
• Non-executive directors should not be involved in management of
the day to day operations of the Company
• All Board members should have financial expertise and relevant
experience in the industries in which the Company operates
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.
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
considering the relationships which may affect independent
status as 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:
• Mr Jim Kennedy, Deputy Chairman and Non-Executive Director
• Mr Martin Kriewaldt, Non-Executive Director
• Mr David Barry, Non-Executive Director
• Mr Robert Anderson, Non- Executive Director
• Mr Bill Bartlett, Non-Executive Director
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28
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
The Board is responsible for ensuring that the action of individual
The materiality thresholds used for the determination of
directors in the Boardroom is that of independent persons. The
independence and issues of conflict of interest has been
Board distinguishes between the concept of independence and
considered from the point of view of the Company and directors.
issues of conflict of interest or material personal interest which may
For the Company, a relationship which accounts for 5% or
arise from time to time – refer Conflicts of Interest below.
more of its revenue is considered material. For a director, a
relationship which accounts for 5% or more of the total income
In recognising the importance of the independence of directors
of a director is considered material. Directors’ fees are not
and the immediate disclosure of conflicts of interest, the Board has
subject to this test.
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
ACCESS TO INDEPENDENT ADvICE
Directors and the Board Committees have the right in connection
to each Board meeting. The disclosure is recorded in the Register
with their duties and responsibilities to seek independent
of Directors’ Interests and in the Board minutes.
advice at the Company’s expense. Prior written approval of the
Chairman is required, but this will not be unreasonably withheld.
(I) MR bARRY THORNTON – CHAIRMAN AND
Where appropriate, directors share such advice with the other
NON-ExECuTIvE DIRECTOR
directors.
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
NOMINATION COMMITTEE
The Nomination Committee meets as required and on several
of the ASX Corporate Governance Council. This is on the basis
occasions throughout the year. For membership and attendance
that Mr Thornton is associated with a substantial shareholder.
details of the Nomination Committee, refer to the Directors’ Report.
In the Board’s view, Mr Thornton’s association with a substantial
shareholder in no way prevents Mr Thornton from exercising
The composition of the Nomination Committee is based on the
independent judgment in carrying out his duties as Chairman
following principles:
of the Board. Mr Thornton is a long serving Chairman and has
overseen the efficient and effective conduct of the Board’s
• The Nomination Committee should consist of non-executive
functions since listing.
directors only
• The Nomination Committee should maintain a majority of
In the event that any independence or conflict of interest issue
independent directors
arises with respect to Mr Thornton’s association with a substantial
• The Nomination Committee should consist of a minimum of three
shareholder, the Company has procedures in place for the Deputy
members
Chairman, Mr Jim Kennedy to assume the role as acting Chairman
• The Chairperson should be the Chairperson of the Board or
of the Board.
another non-executive director
(II) MR GEOFF MCGRATH – NON-ExECuTIvE
DIRECTOR
At the Annual General Meeting on 28 October 2004 shareholders
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.
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 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
The Code of Conduct states the values and policies of the Company
Nomination Committee meeting, which are tabled at the next
and complements the Company’s risk management and internal
Nomination Committee meeting for review and approval. The draft
control practices. The Code of Conduct is regularly reviewed
minutes are also included in the Board papers of the next Board
and updated to ensure that it reflects current good practice, and
meeting following the Nomination Committee meeting.
to promote the ethical behaviour of all employees. The Code
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
of Conduct has been posted on the Company’s website in the
Corporate Governance section.
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 30 June until the release of the Company’s
full year results to the Australian Securities Exchange and 31
December until the release of the Company’s half year results to the
Australian Securities Exchange, unless otherwise determined by
appointee, having regard to those of the existing directors and
the directors.
other likely changes to the Board;
• Upon identifying a potential appointee, consider the competency
Outside of these designated periods, there are no trading restrictions
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
• The Board members consent 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 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.
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 Securities Exchange.
A similar induction program is also available for key senior
executives.
PRINCIPLE 4 – SAFEGuARD INTEGRITY IN
FINANCIAL REPORTING
PERFORMANCE EvALuATION
On an annual basis, the Nomination Committee conducts a formal
AuDIT COMMITTEE
The Audit Committee meets as required and on several occasions
evaluation of the performance of Board, the Board Committees and
throughout the year. For membership and attendance details of the
the individual Board members to determine whether functioning
Audit Committee, refer to the Directors’ Report.
effectively by reference to current good practice. The performance
evaluation is conducted by the Chairman of the Board through
The composition of the Audit Committee is based on the following
interviews with individual Board members, the results of which are
principles:
reported to the Board.
PRINCIPLE 3 – PROMOTE ETHICAL AND
RESPONSIbLE DECISION-MAkING
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 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 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
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30
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
responsibilities. The Audit Committee charter has been posted on
to an independent audit firm, a policy has been approved by the
the Company’s website in the Corporate Governance section.
Board on the role of the External Auditor, which is designed to
ensure the independence of the external audit function.
The External Auditor, Managing Director, Chief Financial
Officer, Company Secretary, Group Commercial Manager,
During each year, the Audit Committee examines the non-audit
Group Risk Manager and other Company executives (as
roles performed by the audit firm and other potential audit
required) attend Audit Committee meetings, by invitation,
service providers to satisfy itself that the auditor’s independence
to present the relevant statutory information, Financial
will not be compromised and that alternate providers are
Statements, reports, and to answer the questions of the Audit
available, if considered desirable. Whilst the value of the
Committee members. At the Audit Committee meetings, the
non-audit services could, in extreme cases, compromise audit
Audit Committee members will meet with the External Auditor
independence, more important is to ensure that the External
without management present.
Auditor is not passing an audit opinion on the non-audit work of
The main responsibilities of the Audit Committee include:
its own firm.
During the year, the Company’s External Auditor, KPMG, provided
• Review of financial statements and external financial reporting
an Auditor Independence Declaration to the Board (refer to the
• Assess the management processes supporting external reporting
• Assess whether the external reporting is adequate to meet the
information needs for shareholders
Directors’ Report) that, to the best of their knowledge and belief,
there have been no contraventions of:
• the auditor independence requirements of the Corporations Act
• Recommendations on the appointment and removal of the
2001 in relation to the audit; and
External Auditor
• Review and monitor the performance and independence of the
external audit
• any applicable code of professional conduct in relation to the
audit.
In considering this declaration, the Board were satisfied with the
• Review of tax planning and tax compliance systems and
continuing independence of the audit function.
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.
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 and reviewed by the Audit Committee as part of the
financial reporting process.
AuDITOR INDEPENDENCE
The Board recognises the importance of a truly independent
audit firm to ensure that the audit function delivers, for the
benefit of the Board and all other stakeholders, an unbiased
confirmation of both the Financial Statements and the state of
affairs of the Company. Consistent with the Board’s commitment
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.
PRINCIPLE 5 – MAkE TIMELY AND
bALANCED DISCLOSuRE
The Company is committed to ensuring the timely disclosure of
material information through compliance with the continuous
disclosure obligations 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.
The Company Secretary is responsible for communications with the
Australian Securities Exchange including ensuring compliance with
regulatory requirements and overseeing information released to the
ASX, shareholders and other interested parties. Announcements
made to the ASX by the Company are published on the Company’s
website immediately after release.
A summary of the policies and procedures the Company has
in place to ensure compliance with the continuous disclosure
obligation in the ASX Listing Rules and Corporation Act 2001 is
published on the Company’s website.
PRINCIPLE 6 – RESPECT THE RIGHTS OF
SHAREHOLDERS
The Company is committed to ensuring shareholders and the
management policies and practices across the Company which
addresses each of the key elements and requirements of AS/NZS
Standard 4360: 2004 – Risk Management.
financial markets are provided with full, open and timely information
about its activities. This is achieved by the following:
Such processes include defining the risk oversight responsibilities of
the Board and the responsibilities of management in ensuring risks
• Ensuring that shareholder communications (including Annual
are both identified and effectively managed. The agreed policies
Report, Half Year Report and Notice of Annual General Meeting)
and practices are made effective through the combined activities of:
satisfy relevant regulatory requirements and guidelines.
The Company is committed to producing shareholder
• an Audit Committee that reports to the Board on risk
communications in plain English with full and open disclosure
about the Company’s policies and procedures, operations and
management and internal control matters in accordance with its
main responsibilities as outlined in the Audit Committee Charter
performance.
(refer above);
• Ensuring that shareholders have the opportunity to receive
external announcements by the Company through the corporate
website. 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.
• The Board is committed to the enhancement of electronic
communications with shareholders. Shareholders can elect to
• an Executive Risk Committee (ERC), comprising the executive
and senior management of the Company, which has been
established to identify business risks in the organisation and
review status and risk mitigation activities. Formal enterprise
risk profiles have been prepared for the businesses and these
are reviewed quarterly by the ERC. The major business risks
are reported to the Audit Committee at the June and December
meetings together with risk mitigation activities. The ERC reports
to the Audit Committee on its activities as outlined in the ERC
Charter;
receive Company communications electronically, although not
• a Group Commercial Manager who has primary responsibility
all communications are made available electronically. Annual
for designing, implementing and co-ordinating the overall risk
Reports are no longer printed and mailed to shareholders, unless
management and internal control practices of the Company.
specifically requested. Annual Reports are made available to
Whilst reporting to the Managing Director on a day to day basis,
shareholders on the Company’s website in an accessible and user
the Group Commercial Manager has the authority to report
friendly format. Shareholders are mailed the Notice of Annual
directly to the Board on any matter;
General Meeting and Proxy Form, which includes details on
accessing the online Annual Report and proxy voting.
• The Company encourages shareholders to attend and participate
at the Annual General Meeting to canvass the relevant issues
of interest with the Board. If shareholders are unable to attend
the Annual General Meeting personally, they are encouraged to
participate through proxy voting. The Company endeavours to set
the timing and the location of the Annual General Meeting so that
it is convenient for shareholders generally.
• The External Auditor attends the Annual General Meeting and
is available 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.
PRINCIPLE 7 – RECOGNISE AND
MANAGE RISk
The Board recognises that effective risk management processes
help ensure the business is more likely 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
• a Group Risk Manager, who has specific responsibilities in
respect of employee health and safety, business continuity and
environmental risks. The Group Risk Manager reports to the Chief
Financial Officer on such matters; 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 Company has implemented risk management software across
the Group for the purpose of identifying and managing employee
health and safety, business continuity and environmental risks. The
software is a critical tool for senior management and has enhanced
the identification, reporting and monitoring of actions in this
important area, in order to support management’s objectives.
Risk management is embedded in the Company’s policies and
procedures which has enabled the Company to pro-actively identify
and manage all types of risk within the organisation. The Board
aims to continually evaluate and re-assess the risk management
and internal control practices of the Company to ensure current
good practice is maintained, and to preserve and create value within
the organisation.
31
32
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
CERTIFICATION OF RISk MANAGEMENT
CONTROLS
In conjunction with the certification of financial reports (refer
above), the Managing Director and Chief Financial Officer state in
In performing its responsibilities, the Remuneration Committee
receives appropriate advice from external consultants and other
advisers as required.
writing to the Board each reporting period that in their opinion:
The Company Secretary prepares the draft minutes for each
• the statement is founded on a sound system of risk management
Remuneration Committee meeting for review and approval. The
Remuneration Committee meeting, which are tabled at the next
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.
draft minutes are also included in the Board papers of the next
Board meeting following the Remuneration Committee meeting.
REMuNERATION POLICIES
The Board’s objective in setting the Company’s remuneration
policies is to provide maximum stakeholder benefit from the
The statements from the Managing Director and Chief Financial
retention of a high quality Board and executive team. This is
Officer are based on a formal sign-off framework established
achieved by remunerating directors and executives fairly and
throughout the Company and reviewed by the Audit Committee
appropriately based on relevant employment market conditions,
as part of the financial reporting process.
and the linking of the Managing Director’s and executives
PRINCIPLE 8 – REMuNERATE FAIRLY AND
RESPONSIbLY
REMuNERATION COMMITTEE
The Remuneration Committee meets as required and on several
occasions throughout the year. For membership and attendance
details of the Remuneration Committee, refer to the
Directors’ Report.
The composition of the Remuneration Committee is based on the
following principles:
• The Remuneration Committee should consist of non-executive
directors only
• The Remuneration Committee should maintain a majority of
independent directors
• The Remuneration Committee should consist of a minimum of
three members
• The Chairperson of the Remuneration Committee should be a
non-executive director
emoluments to the Company’s financial and operating performance
to align with shareholder wealth creation.
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 remuneration consultants to assist in determining market
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.
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
EMPLOYEE SHARE PLAN
The Company has operated an Employee Share Plan since listing
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
responsibilities. The Remuneration Committee Charter has been
posted on the Company’s website in the Corporate Governance
Report.
section.
The main responsibilities of the Committee include:
The Employee Share Plan does not provide for the issue of options
and no options have been issued by the Company.
• Review of the Company’s remuneration and incentive policies
LONG TERM INCENTIvE (EQuITY) PLAN
The Board proposes to implement a new Long Term Incentive
• Review of executive and senior management remuneration
(Equity) Plan for executives and senior management following
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
the expiry of the former cash based plan. Shareholders will be
requested to approve the Long Term Incentive (Equity) Plan as
outlined in the 2008 Notice of Annual General Meeting.
DIRECTORS’ REPORT
AS AT 30 juNE 2008
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 2008.
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 2008.
DIRECTORS’ INTERESTS
At the date of this report, the relevant interest (as defined in the
Corporations Act 2001) of the directors in shares of the
DIRECTORS
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
W J Bartlett, Non-Executive Director
Details of the directors’ qualifications, experience and special
responsibilities are located in the Annual Report.
Company were:
Director
Ordinary Shares
Interest
(see notes below)
B Thornton
J J Kennedy
D R Barry
R M Anderson
M D E Kriewaldt
P C Crowley
G J McGrath
W J Bartlett
Nil
Note 4
101,000
Notes 1 and 4
3,406,869
8,198,000
100,000
750,000
300,000
5,000
Notes 2 and 4
Notes 2 and 4
Notes 2 and 4
Notes 3 and 4
Notes 1 and 4
Note 4
Details of the directorships of other listed companies held by each
director in the three years prior to the end of the 2007/08 financial
year, and the period for which each directorship has been held, are
listed in the Annual Report.
COMPANY SECRETARY
Mr R J Thornton was appointed Company Secretary of GWA
International Limited in 2003. Details of Mr Thornton’s qualifications
and experience are located in the Annual Report.
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 resolutions of shareholders at the Annual General
Meetings on 30 October 2003 and 25 October 2007, Mr Crowley was
issued 500,000 and 250,000 shares respectively under the terms and
conditions of the GWA International Employee Share Plan.
Note 4: Note 31 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
58,719,673 shares (last year 57,221,623 shares).
33
34
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
CORPORATE STRuCTuRE
GWA International Limited is a Company limited by shares that is
EMPLOYEES
The Company employed 1,786 employees as at 30 June 2008 (last
incorporated and domiciled in Australia. GWA International Limited
year 1,957 employees).
has prepared a Consolidated Financial Report incorporating the
entities that it controlled during the financial year ended 30 June
The Company recognises the productivity benefits to be gained
2008, which are outlined in Note 29 of the Financial Statements.
from investing in its employees to improve motivation and individual
PRINCIPAL ACTIvITIES
The principal activities during the year within the consolidated entity
skills. The Company remains committed to ensuring that staff are
provided access to appropriate training and development programs.
were the research, design, manufacturing, importing, and marketing
All companies in the consolidated entity are active equal opportunity
of household consumer products as well as the distribution of
employers.
these various products through a range of distribution channels in
Australia and overseas.
SEGMENT SALES AND PROFIT
The segment sales and profit of the Company for the financial year
There have been no significant changes in the nature of these
ended 30 June 2008 is as follows:
activities during the year.
business Segment
Segment Sales
Segment Profit
Building fixtures and fittings
Commercial furniture
Other
Total
Earnings Per Share
Basic earning per share
Trading earnings per share
2007/08
$’000
2006/07
$’000
558,657
56,864
33,381
648,902
546,938
56,794
32,392
636,124
2007/08
$’000
109,552
3,369
2006/07
$’000
110,521
3,619
(13,527)
(15,386)
99,394
98,754
2007/08
2006/07
cents
cents
16.4
21.5
20.2
22.0
REvIEW OF OPERATIONS AND STATE
OF AFFAIRS
A review of the operations of the Company and the results of those
operations for the financial year ended 30 June 2008 is provided
in the Managing Director’s Review of Operations which is located in
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.
DIvIDENDS
Dividends paid or declared by the Company to shareholders since
the end of the previous financial year were:
DECLARED AND PAID DuRING 2007/08 FINANCIAL YEAR
Dividends
Cents per share Total amount
Franked/unfranked
Date of payment
Final 2006/07 ordinary
Special 2006/07
Interim 2007/08 ordinary
Special 2007/08
$’000
8.0
2.5
10.0
1.5
22,394
Fully Franked
2 Oct 2007
6,998
Fully Franked
2 Oct 2007
28,017
Fully Franked
2 April 2008
4,203
Fully Franked
2 April 2008
Franked dividends declared and paid during the year were franked at the corporate tax rate of 30%
DECLARED AFTER END OF THE 2007/08 FINANCIAL YEAR
Dividends
Cents per share Total amount
Franked/unfranked
Date of payment
$’000
Final 2007/08 ordinary
8.0
22,414
Fully Franked
7 Oct 2008
After the balance sheet date the above dividend was approved by
the directors. The dividend has not been provided and there are no
ENvIRONMENTAL REGuLATION AND
PERFORMANCE
income tax consequences.
The financial effect of the dividend has not been brought to account
in the Financial Statements for the year ended 30 June 2008 and
will be recognised in subsequent Financial Reports.
SIGNIFICANT EvENTS AFTER
bALANCE DATE
On 12 August 2008, the Company announced that a Memorandum
ENvIRONMENTAL LICENCES
The Company holds licences issued by environmental protection
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. Where appropriate,
an independent review of the Company’s compliance with licence
of Understanding has been signed for the sale of Wisa Beheer
conditions is made by external advisors.
to management for Euro 14 million. The agreement is subject to
management arranging a financial partner and will expire at the
The Company in conjunction with external advisors monitors storage
end of November 2008, at which time the sale of the business is
and treatment of hazardous materials within particular operations.
expected to be completed. The sale is $9.4 million below book value
Prior to any discharge to sewers, effluent is treated and monitored to
which has been written-off in the Financial Statements for the year
ensure strict observance with licence conditions.
ended 30 June 2008.
On 19 August 2008, the directors declared a final ordinary dividend
licence conditions during the financial year ended 30 June 2008.
The directors are not aware of any breaches of the Company’s
of 8.0 cents per share in respect of the financial year ended 30
June 2008. The dividend will be fully franked at the 30% corporate
tax rate. The total amount of the dividend is $22.414 million (last
year $29.392 million). In accordance with Accounting Standards,
the dividend has not been provided for in the Financial Statements
for the year ended 30 June 2008.
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.
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 in the Annual Report.
In the next financial year, the Company will continue to pursue
strategies for increasing the profitability and market share of the
businesses. There will be further investment in research and new
product development to ensure that the Company generates the
best possible returns from the 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 REMEDIATION
In the previous financial year, the Company investigated and
reported two environmental contamination issues at factory sites
at Eagle Farm, Queensland and Revesby, NSW. The Eagle Farm
site was sold during the year and is leased and occupied by Rover
Mowers Limited, and the Revesby site is leased and occupied
by McIlwraith-Davey Pty Ltd. Both entities are wholly owned
subsidiaries of GWA International Limited.
There is currently no obligation to remediate the Eagle Farm site,
and testing is on-going to verify there are no issues for employee
health and safety. The costs to remediate the Revesby site have
been provided for in the Financial Statements for the year ended 30
June 2008.
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.
35
36
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
INSuRANCE PREMIuMS
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 in the Directors’ Report, the Chief
Financial Officer, the Company Secretary and all persons concerned
or taking part in the management of the Company and its
controlled entities.
REMuNERATION REPORT - AuDITED
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
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 remuneration
consultants to determine market remuneration levels, with the
objective of ensuring that the levels are market based and 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 2008, refer to the Remuneration Tables in
the Remuneration 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 remuneration
consultants 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.
hurdles in relation to variable executive remuneration
The executives’ remuneration consists of the following key elements:
• An employee share plan which rewards performance and
represents a long term financial commitment to employment with
the Company
REMuNERATION STRuCTuRE
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).
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
• Fixed Remuneration
• Variable Remuneration
– Short Term Incentive
– Long Term Incentive
• Employee Share Plan
The fixed remuneration component includes base salary, statutory
superannuation and non-monetary benefits including medical
benefits membership, salary continuance and life insurance and the
provision of motor vehicles. The variable remuneration component
includes a short term incentive and long term incentive under the
Executive Incentive Scheme. Lower level management and senior
staff 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 advice from external
remuneration consultants 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 and other key management personnel is detailed in the
Remuneration Tables in the Remuneration 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. 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. During the year, the Remuneration Committee
has reviewed and revised the scheme based on advice from external
remuneration consultants to better align the incentive arrangements
with shareholder wealth creation. Under the scheme, there are
two incentives including a Short Term Incentive and a Long Term
Incentive. The objectives of the scheme are to maximise short term
operating performance and long term performance compared to
peer companies.
The Short Term Incentive for senior executives operates from
divisional performance targets for divisional executives and group
performance targets for corporate executives. Where the yearly
targets are achieved, the Managing Director will receive an incentive
payment in the range of 40% to 60% of fixed remuneration
depending on the level of performance. Other senior executive
participants will receive an incentive payment in the range of 30%
to 40% of fixed remuneration depending on the level
of performance.
Short term incentive payments are subject to a cap such that two
thirds of the incentive is designed to be reasonably achievable
based on good business performance, with the balance rewarding
high growth performance. The yearly targets are based on personal
goals and financial targets approved by the Remuneration
Committee at the beginning of the financial year. These targets are
based on profit growth which are aimed at improving performance
consistent with shareholder wealth creation. Lower levels of
incentives are also paid to key senior staff to reward
personal performance.
The Long Term Incentive is provided as performance rights under
the rules of the GWA International Long Term Incentive (Equity)
Plan. The plan replaces the previous cash based Long Term
Incentive which has now expired, and the new plan will be put to
shareholders for approval at the Annual General Meeting on 30
October 2008. Under the plan, the Board may offer performance
rights to participants which entitle the holder to ordinary shares in
the Company (or in limited cases cash payments made), subject to
meeting financial performance hurdles and the holder remaining in
employment with the Company until the nominated vesting date.
The performance hurdles are selected by the Remuneration
Committee and are subject to financial performance conditions
which measure Total Shareholder Returns compared to a peer
group of companies, and growth in Earnings Per Share. The
performance hurdles are challenging and achievable and focus
senior executives on sustained long term growth consistent with
shareholder wealth creation. The performance rights will be issued
for five years and vest progressively in equal tranches over the first
three years, subject to achieving the performance hurdles. If the
vesting conditions and performance hurdles are achieved, ordinary
shares will be issued to the participants at no cost. If the targets are
not met, then the rights are cancelled after five years.
The Long Term Incentive is aligned to shareholder interests as
performance rights only vest if Earnings per Share and Total
Shareholder Return targets are achieved. For further details of the
Long Term Incentive including information on the performance
hurdles, please refer to the Explanatory Memorandum in the 2008
Notice of Annual General Meeting.
EMPLOYEE SHARE PLAN
As a further component of remuneration for lower level
management and senior staff, the Company may invite employees
to participate in the GWA International Employee Share Plan. This
plan was previously available to senior executives, but following the
recent review by the Remuneration Committee and introduction
of the GWA International Long Term Incentive (Equity) Plan, it is
now limited to lower level management and senior staff. 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 full upon an employee
ceasing employment with the Company. The employee bears the
risk of share price movements below the issue price.
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 2008 there are currently 3.85 million
shares issued under the GWA International Employee Share Plan,
which have an outstanding loan balance of $10.4 million. The plan
does not provide for the issue of options and no options have been
issued by the Company.
The GWA International Employee Share Plan is an effective incentive
in encouraging and rewarding sustained higher performance
from management and senior staff who merit recognition of
their performance and are integral to the future success of the
Company. Participation in the plan represents a long term financial
commitment to their employment with the Company.
SHAREHOLDER WEALTH
The following is a summary of key shareholder wealth statistics for
the Company over the last five years.
Trading EBIT has been flat since the 2003/04 year due to the weak
domestic dwelling construction and renovation market, increased
import competition and rising business input costs. Despite the
difficult market conditions, the Company’s core building fixtures
and fittings business has performed strongly enabling the Company
to maintain its high dividend pay-out ratio, and continue its track
record in paying fully franked dividends to shareholders. The
Company has taken the opportunity in the weak domestic market
to restructure the businesses with the aim to improve long term
competitiveness. The restructuring activities will place the Company
in a strong position when the market recovers and will underpin
profitability growth into the future.
37
38
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
SHAREHOLDER WEALTH
Financial Year
2003/04
2004/05
2005/06
2006/07
2007/08
Trading EBIT
Trading EPS
($m)
(cents)
Total DPS
(cents)
Share Price
($)
101.0
103.4
95.2
98.8
99.4
22.3
23.0
21.6
22.0
21.5
20.5
22.5
21.5
22.0
19.5
2.95
2.92
3.11
4.42
2.50
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 $1.06 in fully franked dividends paid to shareholders in the
last five financial years, which includes 16.0 cents in
special dividends.
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.
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.
Any loan to management and senior staff under the GWA
International Employee Share Plan, must be repaid in full upon the
cessation of employment with the Company.
TERMINATION OF EMPLOYMENT
The specified executives in the Directors’ 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
REMuNERATION TAbLES - AuDITED
DIRECTORS’ AND ExECuTIvE OFFICERS’
REMuNERATION
Details of the nature and amount of each major element of
remuneration of each director of the Company, each of the five
named Company executives and relevant consolidated entity
executives who receive the highest remuneration and other key
management personnel are:
Short-term
Salary & Fees
STI cash
bonus
Non-monetary
Benefits
$
$
$
Total
$
Other
$
Total
$
Proportion of
remuneration
performance
related
%
Post-
employment
Super-
annuation
Benefits
$
24,584
102,693
100,000
–
10,092
9,266
8,696
8,185
99,245
7,722
88,078
76,396
9,256
36,434
–
–
–
–
–
–
–
–
–
–
–
–
–
–
273,150
177,873
54,683
144,024
112,130
102,960
96,624
90,948
–
85,800
17,242
22,737
102,840
–
250
250
250
250
250
250
250
250
250
250
250
250
250
250
297,984
280,816
154,933
144,274
122,472
112,476
105,570
99,383
99,495
93,772
105,570
99,383
112,346
36,684
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
194,139
1,358,857
100,000
12,788 1,471,645
152,875
1,210,103
36,000
11,855 1,257,958
Non-Executive Directors
B Thornton, Chairman
J Kennedy, Deputy Chairman
M Kriewaldt
D Barry
R Anderson
G McGrath
W Bartlett
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
273,150
177,873
54,683
144,024
112,130
102,960
96,624
90,948
–
85,800
17,242
22,737
102,840
–
Executive Directors
P Crowley, Managing Director
2008
2007
1,164,718
1,057,228
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Financial Year
Trading EBIT
Trading EPS
($m)
(cents)
Total DPS
(cents)
Share Price
($)
2003/04
2004/05
2005/06
2006/07
2007/08
101.0
103.4
95.2
98.8
99.4
22.3
23.0
21.6
22.0
21.5
20.5
22.5
21.5
22.0
19.5
2.95
2.92
3.11
4.42
2.50
DIRECTORS’ AND ExECuTIvE OFFICERS’ REMuNERATION (CONT’D)
Short-term
Salary
& Fees
$
STI cash
bonus
$
Non-
monetary
Benefits
$
Total
$
Post-
employment
Super-
annuation
Benefits
$
Other
$
Termination
benefits
$
Total
$
Proportion of
remuneration
performance
related
STI cash
bonus
vested
in year
STI cash
bonus
forfeited
in year
%
%
%
Executives
E Harrison
Chief Financial Officer
(terminated 31 August 2007)
S Wright
Group Operations Manager
A Rusten
Group Marketing Manager
R Watkins
General Manager–Rover
(terminated 14 February 2007)
2008
2007
243,419
365,707
–
–
23,006
83,345
7,555
266,425
449,052 105,000
1,244 500,000
–
4,260
775,224
558,312
–
–
–
–
461,523
417,957
300,000
–
70,331
50,473
831,854 100,000
468,430 123,420
5,173
4,069
2008
2007
2008
2007
2008
2007
300,224
272,087
–
161,844
–
–
–
–
92,799
74,310
393,023
346,397
29,680
26,700
3,598
3,262
–
42,132
–
203,976
–
70,000
–
–
5,103 250,000
–
529,079
– 937,027
– 595,919
– 426,301
376,359
–
G Douglas
General Manager–Rover
2008
2007
184,743
–
30,000
–
32,360
–
247,103 100,000
–
–
1,977
–
– 349,080
–
–
(commenced KMP status 1 July 2007)
J Measroch
General Manager–Sebel
2008
2007
271,092
278,245
–
–
41,309
50,168
312,401
328,413
26,663
26,663
2008
G Oliver
General Manager–Gainsborough 2007
255,676
194,603
45,000
84,810
40,294
47,027
99,768
340,970
326,440 147,695
W Saxelby
Chief Financial Officer
(commenced 14 January 2008)
2008
2007
223,245
–
200,000
–
29,721
–
452,966
–
77,619
–
3,258
3,258
2,942
2,092
2,501
–
– 342,322
358,334
–
– 443,680
476,227
–
– 533,086
–
–
T Dragicevich
Chief Executive–Caroma Dorf
2008
2007
45,833
–
100,000
–
–
–
145,833
–
–
–
767
–
– 146,600
–
–
68.2
–
100
–
(commenced 2 June 2008)
L Patterson
General Manager–Dux
2008
2007
309,429
285,269
150,000
–
117,832
76,476
577,261
361,745
29,400
28,163
3,566
3,427
– 610,227
393,335
–
24.6
–
100
–
32.0
–
100
–
–
–
–
–
8.6
–
–
–
10.1
–
37.5
–
–
–
–
–
50
–
–
–
50
–
100
–
–
–
–
–
–
–
–
–
50
–
–
–
50
–
–
–
–
–
–
–
DIRECTORS’ MEETINGS
The number of meetings of directors (including meetings of Committees of directors) held during the financial year ended 30 June 2008 and
the number of meetings attended by each director were as follows:
Director
board
B Thornton
J J Kennedy
P C Crowley(1)
D R Barry
R M Anderson
M D E Kriewaldt
G J McGrath
W J Bartlett
A
11
11
11
11
11
11
11
11
B
11
11
11
11
11
11
11
11
Audit
Committee
B
A
Remuneration
Committee
A
B
Nomination
Committee
B
A
4
4
4
4
4
4
4
4
1
1
1
1
1
1
3
3
3
3
3
3
Note:
A – Number of meetings attended
B – Number of meetings held during the time the director held office during the year
(1) P C Crowley attends Committee meetings by invitation of the Board
39
40
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
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 in the Annual Report.
The members of the Audit Committee are:
• Mr J J Kennedy (Chairman)
• Mr B Thornton
• Mr M D E Kriewaldt
• Mr W J Bartlett
The members of the Remuneration Committee are:
• Mr G J McGrath (Chairman)
• Mr M D E Kriewaldt
• Mr D R Barry
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 2008 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.
The members of the Nomination Committee are:
KPMG
19 August 2008
Mark Epper
Partner
• Mr B Thornton (Chairman)
• Mr J J Kennedy
• Mr M D E Kriewaldt
Details of the Committee members qualifications and experience are
located in 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
2008 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 in the
Annual Report and forms part of the Directors’ Report for the
financial year ended 30 June 2008.
ROuNDING
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, 19 August 2008
Income Statements
Statements of Recognised Income and Expense
Balance Sheets
Statements of Cash Flows
Note
1 Significant accounting policies
2 Segment reporting
3 Other income
4 Other expenses
5 Personnel expenses
6 Auditors’ remuneration
7 Net financing costs
8 Restructuring expenses
9
Income tax expense
10 Earnings per share
11 Cash and cash equivalents
12 Trade and other receivables
13 Inventories
14 Assets and liabilities classified as held for sale
15 Current tax assets and liabilities
16 Deferred tax assets and liabilities
17 Property, plant and equipment
18 Intangible assets
19 Trade and other payables
20 Interest-bearing loans and borrowings
21 Employee benefits
22 Provisions
23 Capital and reserves
24 Financial instruments and financial risk management
25 Operating leases
26 Capital and other commitments
27 Contingencies
28 Deed of cross guarantee
29 Consolidated entities
30 Reconciliation of cash flows from operating activities
31 Related parties
32 Subsequent events
Directors’ Declaration
42
43
44
45
46
57
59
59
59
60
60
60
61
62
62
63
63
64
65
65
67
69
70
71
73
74
75
78
87
88
88
88
91
93
94
98
99
Independent Auditor’s Report to the members of
GWA International Limited
100
CONTENTS
41
42
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
Income statements
for the yeAr ended 30 june 2008
consolIdAted
the compAny
In thousands of Aud
note
2008
2007
2008
2007
revenue
cost of sales
Gross profIt
other income
selling expenses
Administrative expenses
other expenses
2
648,902
636,124
(405,539)
(392,823)
243,363
243,301
-
-
-
-
-
-
3
11,333
4,998
65,000
75,000
(92,267)
(90,826)
-
-
(55,023)
(54,177)
(745)
(502)
4
(24,828)
(11,821)
(2,359)
-
results from operAtInG ActIvItIes
82,578
91,475
61,896
74,498
finance income
finance expenses
net fInAncInG costs
7
7
5,068
5,718
(19,691)
(18,084)
(14,623)
(12,366)
745
-
745
502
-
502
profit before tax
67,955
79,109
62,641
75,000
Income tax expense
profIt for the yeAr
9
(22,065)
(22,791)
-
-
45,890
56,318
62,641
75,000
Basic and diluted earnings per share (cents per share)
10
16.4
20.2
dividends per share
ordinary shares (cents per share)
23
22.0
23.0
the income statements are to be read in conjunction with the notes to the financial statements set out on pages 46 to 98.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
statements of
recognIsed Income and
expense
for the yeAr ended 30 june 2008
consolIdAted
the compAny
In thousands of Aud
note
2008
2007
2008
2007
foreign exchange translation differences for foreign operations
(5,012)
(1,158)
cash flow hedges:
Gains/(losses) taken to equity
net Income recoGnIsed dIrectly In equIty
176
(525)
(4,836)
(1,683)
-
-
-
-
-
-
profIt for the yeAr
45,890
56,318
62,641
75,000
totAl recoGnIsed Income And expense for the yeAr
23
41,054
54,635
62,641
75,000
other movements in equity arising from transactions with owners as owners are set out in note 23.
the statements of recognised income and expense are to be read in conjunction with the notes to the financial statements set out on pages 46 to 98.
43
44
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
BaLance sHeets
As At 30 june 2008
In thousands of Aud
Assets
cash and cash equivalents
trade and other receivables
Inventories
Assets classified as held for sale
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 benefits
Income tax payable
provisions
liabilities classified as held for sale
totAl current lIABIlItIes
Interest-bearing loans and borrowings
payables
employee benefits
provisions
totAl non-current lIABIlItIes
totAl lIABIlItIes
net Assets
equIty
Issued capital
reserves
retained earnings
totAl equIty
consolIdAted
the compAny
note
2008
2007
2008
2007
11
12
13
14
15
12
16
29
17
18
19
21
15
22
14
20
19
21
22
53,418
45,953
127,821
123,603
100,806
128,211
26,018
829
4,565
-
1,440
5,043
-
644
-
-
-
814
232
576
-
-
348
724
313,457
304,250
1,458
1,880
5,298
4,983
663,132
598,992
22,845
24,531
-
-
-
-
325,646
325,646
101,441
113,019
328,636
344,463
-
-
-
-
3,777
3,549
3,699
3,381
461,997
490,545
992,477
928,019
775,454
794,795
993,935
929,899
78,469
15,736
5,854
65,067
16,056
54
-
-
5,854
17,091
13,570
3,873
-
-
-
121,023
94,693
5,908
246,975
271,567
-
-
-
-
-
-
-
-
-
-
583,653
527,430
10,524
11,015
7,812
8,718
-
-
-
-
265,311
291,300
583,653
527,430
386,334
385,993
589,561
527,430
389,120
408,802
404,374
402,469
353,938
353,062
353,938
353,062
(7,372)
(2,536)
-
-
42,554
58,276
50,436
49,407
23
389,120
408,802
404,374
402,469
the balance sheets are to be read in conjunction with the notes to the financial statements set out on pages 46 to 98.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
statements of
casH fLoWs
for the yeAr ended 30 june 2008
In thousands of Aud
cAsh floWs 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
2008
2007
2008
2007
726,256
710,907
-
-
-
-
62,641
75,000
(594,781)
(650,780)
-
(1)
131,475
60,127
62,641
74,999
(18,527)
(19,366)
4,323
5,180
-
-
-
-
(14,279)
(21,100)
(12,505)
(18,220)
net cAsh from operAtInG ActIvItIes
30
102,992
24,841
50,136
56,779
cAsh floWs 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 floWs from fInAncInG ActIvItIes
Issue of employee shares
proceeds from issue of share capital
repayment of employee share loans
repayment of loans by controlled entities
repayment of loans by related parties
repayment of bank bills
dividends paid
net cAsh from fInAncInG ActIvItIes
14,492
1,719
(18,305)
(18,161)
(3,930)
(2,717)
(7,743)
(19,159)
-
-
-
-
-
-
-
-
(2,107)
(7,828)
(2,107)
(7,828)
876
1,270
-
81
6,208
4,387
-
510
(25,000)
(25,000)
876
1,270
11,205
-
-
6,208
4,387
4,750
-
-
(61,612)
(64,010)
(61,612)
(64,010)
(86,492)
(85,733)
(50,368)
(56,493)
net increase/(decrease) in cash and cash equivalents
cash and cash equivalents at 1 july
effect of exchange rate fluctuations on cash held
8,757
(80,051)
45,953
125,487
(1,292)
517
cAsh And cAsh equIvAlents At 30 june
11
53,418
45,953
(232)
232
-
-
286
(54)
-
232
the statements of cash flows are to be read in conjunction with the notes to the financial statements set out on pages 46 to 98.
45
46
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
1. sIgnIfIcant accountIng poLIcIes
GWA International limited (the ‘company’) is a company domiciled in Australia. the consolidated financial report of the company for the
financial year ended 30 june 2008 comprises the company and its subsidiaries (together referred to as the ‘consolidated entity’).
the financial report was authorised for issue by the directors on 19 August 2008.
(a) Statement of compliance
the financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting standards
(‘AAsBs’) (including Australian Interpretations) adopted by the Australian Accounting standards Board (‘AAsB’) and the corporations Act
2001. the consolidated entity’s financial report and the financial report of the company comply with International financial reporting
standards (‘Ifrss’) and interpretations adopted by the International Accounting standards Board (‘IAsB’).
(b) Basis of preparation
the financial report is presented in Australian dollars which is the company’s functional currency and the functional currency of the majority
of the consolidated entity. the entity has elected not to early adopt any accounting standards or amendments.
the financial report is prepared on the historical cost basis except that:
• derivative financial instruments are measured at their fair value; and
• available-for-sale financial assets are measured at their fair value.
the company is of a kind referred to in AsIc class order 98/100 dated 10 july 1998 and in accordance with that class order, amounts in
the financial report and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.
the preparation of a financial report requires management to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, 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.
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.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have
the most significant effect on the amount recognised in the financial statements are described in the following notes:
• note 18 - measurement of the recoverable amounts of intangible assets
• note 22 and 27- provisions and contingencies
• note 24 - valuation of financial instruments
the accounting policies set out below have been applied consistently to all periods presented in the consolidated financial report. the
accounting policies have been applied consistently by all entities in the consolidated entity.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
1. sIgnIfIcant accountIng poLIcIes (continued)
(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
financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that
presently are exercisable or convertible are taken into account. the financial statements of subsidiaries are included in the consolidated
financial 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 financial statements.
(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 financial 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 reporting date are retranslated 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 retranslated to Australian dollars 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 acquisition, are translated to
Australian dollars at foreign exchange rates ruling at the reporting 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 the foreign currency translation reserve (fctr).
(iii) Net investment in foreign operations
foreign exchange differences arising from the retranslation of the net investment in foreign operations, and of related hedges are recognised
in the fctr to the extent that the hedge is effective. they are released into the income statement upon disposal.
(e) Derivative financial instruments
the consolidated entity uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from
operating, financing and investing activities. In accordance with its treasury policy, the consolidated entity does not hold or issue derivative
financial instruments for trading purposes.
derivative financial instruments are recognised initially at fair value. subsequent to initial recognition, derivative financial instruments are
stated at fair value. the gain or loss on remeasurement to fair value is recognised in profit or loss, unless the derivative qualifies 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 reporting 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 reporting date, being the present value of the quoted forward price.
47
48
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
1. sIgnIfIcant accountIng poLIcIes (continued)
(f) Hedging
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 identification 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 flows attributable to the hedged risk. such hedges are expected to
be highly or fully effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that
they actually have been highly effective throughout the financial reporting periods for which they are designated.
(i) Cash flow hedges
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly
probable forecasted transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity.
When the forecasted transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or the forecast
transaction for a non-financial asset or non-financial liability becomes a firm 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-financial
asset or liability. If a hedge of a forecasted transaction subsequently results in the recognition of a financial asset or a financial liability, the
associated gains and losses that were recognised directly in equity are reclassified into profit or loss in the same period or periods during
which the asset acquired or liability assumed affects profit or loss.
for cash flow 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 profit 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 financial 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.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
1. sIgnIfIcant accountIng poLIcIes (continued)
(g) Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. cost includes
expenditure that is directly attributable to the acquisition of the asset. 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. purchased software that is integral to the functionality of the related
equipment is capitalised as part of that equipment.
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.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing proceeds from disposal with
the carrying amount of property, plant and equipment and are recognised net within “other income” or “other expenses” in the income
statement.
(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 benefits embodied within the item will flow to the consolidated entity
and the cost of the item can be measured reliably. the carrying amount of the replaced part is derecognised. 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:
• buildings
• plant and equipment
• fixtures and fittings
40 years
3-11 years
7-15 years
the residual value, the useful life and the depreciation method applied to an asset are reassessed annually.
(h) Intangible assets
(i) Research and development
expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is
recognised in the income statement as an expense as incurred.
expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially
improved products and processes, is capitalised only if the product or process is technically and commercially feasible and the consolidated
entity has sufficient resources to complete development. capitalised development expenditure is measured at cost less accumulated
amortisation and impairment losses.
(ii) Brand names
expenditure incurred in developing, maintaining or enhancing brand names is written off against profit from ordinary activities in the year
in which it is incurred. the brand names are not amortised as the directors believe that the brand names have an indefinite useful life. the
carrying value of these brand names is reviewed each year to ensure that no impairment exists.
49
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GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
1. sIgnIfIcant accountIng poLIcIes (continued)
(h) Intangible assets (continued)
(iii) Other intangible assets
other intangible assets that are acquired by the consolidated entity are measured at cost less accumulated amortisation and impairment
losses.
(iv) Subsequent expenditure
subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the
specific 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 indefinite. Intangible assets with an indefinite 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
(i) Trade and other receivables
trade and other receivables are initially measured at fair value and subsequently at their amortised cost less impairment losses.
(j) Inventories
Inventories are measured 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 first-in first-out principle and includes expenditure incurred in acquiring the inventories, production or
conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories
and work in progress, cost includes an appropriate share of production 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 flows.
(l) Impairment
the carrying amounts of the consolidated entity’s assets, other than inventories and deferred tax assets, 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 indefinite 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 profit or loss.
Impairment losses recognised in respect of cash-generating units are allocated first 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.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
1. sIgnIfIcant accountIng poLIcIes (continued)
(l) Impairment (continued)
(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 flows, discounted at the original effective interest rate (i.e. the effective interest rate computed at initial recognition of these
financial 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. significant receivables
are individually assessed for impairment. Impairment testing of significant receivables that are not assessed as impaired individually is
performed by placing them into portfolios of significant receivables with similar risk profiles and undertaking a collective assessment of
impairment. non-significant receivables are not individually assessed. Instead, impairment testing is performed by placing non-significant
receivables in portfolios of similar risk profiles, 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 flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset. for an asset that does not generate largely independent cash inflows, 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 benefit.
(n) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. subsequent to initial recognition, interest-
bearing borrowings are measured 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.
(o) Employee benefits
(i) Defined contribution superannuation funds
A defined contribution superannuation fund is a post-employment benefit plan under which an entity pays fixed contributions into a
separate entity and will have no legal or constructive obligation to pay further amounts. obligations for contributions to defined contribution
superannuation funds are recognised as an expense in the income statement as incurred.
51
52
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
1. sIgnIfIcant accountIng poLIcIes (continued)
(o) Employee benefits (continued)
(ii) Other long-term employee benefits
the consolidated entity’s net obligation in respect of long-term employee benefits is the amount of future benefit 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) Short-term benefits
liabilities for employee benefits 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 benefits, 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 benefits are
taken by the employees.
(p) Provisions
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 outflow of economic benefits will be required to settle the obligation. provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where
appropriate, the risks specific 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.
(iii) Site restoration
A provision for restoration in respect of leased premises is recognised when the obligation to restore arises. the provision is the best estimate
of the present value of the expenditure required to settle the restoration obligation at the reporting date. future restoration obligations are
reviewed annually and any changes are reflected in the present value of the provision at the end of the reporting period. the unwinding of
the effect of discounting on the provision is recognised as a finance cost.
(q) Trade and other payables
trade and other payables are initially measured at fair value and subsequently at their amortised cost.
(r) Revenue
Goods sold
revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns, discounts and
rebates. revenue is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the
buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no
continuing management involvement with the goods and the amount of revenue can be measured reliably.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
1. sIgnIfIcant accountIng poLIcIes (continued)
(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.
(ii) Net financing costs
net financing 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. Borrowing costs are expensed as
incurred and included in net financing costs. Interest income is recognised in the income statement as it accrues, using the effective interest
method.
(t) Income tax
Income tax expense on the profit or loss for the year comprises current and deferred tax. Income tax expense 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 reporting
date, and any adjustment to tax payable in respect of previous years.
deferred tax is recognised using the balance sheet liability method, providing for temporary differences between the carrying amounts
of assets and liabilities for financial 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 profit 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 reporting date.
deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to
income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax
liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits 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 benefit 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 financial 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 financial 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.
53
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GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
1. sIgnIfIcant accountIng poLIcIes (continued)
(t) Income tax (continued)
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.
(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 flows are included in the statement of cash flows on a gross basis. the Gst components of cash flows arising from investing and
financing activities which are recoverable from, or payable to, the Ato are classified as operating cash flows.
(w) Non-current assets held for sale
non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather
than through continuing use are classified as held for sale. Immediately before classification as held for sale, the assets (or components
of a disposal group) are remeasured in accordance with the consolidated entity’s accounting policies. thereafter generally the assets (or
disposal group) are measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group
first is allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories,
financial assets, deferred tax assets, employee benefit assets and investment property, which continue to be measured in accordance with
the consolidated entity’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on
re-measurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.
(x) Earnings per share
the consolidated entity presents basic and diluted earnings per share (eps) data for its ordinary shares. Basic eps is calculated by dividing
the profit or loss attributable to ordinary shareholders of the company by the weighted average number of ordinary shares outstanding during
the period. diluted eps is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number
of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
1. sIgnIfIcant accountIng poLIcIes (continued)
(y) Changes in accounting policy
(i) Cash in transit
during the reporting period, management changed its accounting policy in respect of cash in transit. due to the increasing use of electronic
funds transfer by customers, it was determined that the cut-off for cash in transit should be on the last day of the reporting period, bringing
this forward by two days. the impact on the balance sheet in the consolidated entity for the period ended 30 june 2008 is to decrease
cash by $28,349,000 (2007:$34,468,000) and increase debtors by $28,349,000 (2007:$34,468,000). the impact on the statement of
cash flows in the consolidated entity for the period ended 30 june 2008 is to increase cash from operating activities by $6,119,000 (2007:
decrease $3,457,000). comparative amounts have been changed for consistency. there is no impact on the income statement for the
consolidated entity. no adjustments have arisen for the company.
(ii) Builders rebates
during the reporting period, management changed its accounting policy in respect of the classification of builders’ rebates expense in
the income statement. the rebates are a primary factor in generating sales revenue by the consolidated entity and therefore should be
recognised in the income statement against sales revenue. previously, the expense was recognised as an administrative expense.
the change in accounting policy was applied retrospectively to sales revenue relating to builders’ rebates incurred and comparatives have
been restated. the impact on the income statement in the consolidated entity for the year ended 30 june 2008 is to decrease sales revenue
and administrative expenses by $10,022,000 (2007: $9,545,000). there is no impact on the balance sheet for the consolidated entity. no
adjustments have arisen for the company.
(iii) Freight outwards
during the reporting period, management changed its accounting policy in respect of the classification of freight outwards expenses in the
income statement. the expenses represent costs incurred in transporting the consolidated entity’s products to its customers. In accordance
with AAsB 2 Inventories, transportation costs that are necessary to get the inventory to a present location form part of the cost of inventory
and the related cost of sale. these expenses therefore should be recognised in the income statement against cost of sales. previously, the
expense was recognised as a selling expense.
the change in accounting policy was applied retrospectively to cost of sales relating to freight outwards costs incurred and comparatives
have been restated. the impact on the income statement in the consolidated entity for the year ended 30 june 2008 is to increase cost of
sales and decrease selling expenses by $51,327,000 (2007: $48,883,000). there is no impact on the balance sheet for the consolidated
entity. no adjustments have arisen for the company.
(z) New standards and interpretations not yet adopted
the following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the
period of initial application. they are available for early adoption at 30 june 2008, but have not been applied in preparing this financial
report:
• Revised AASB 3 Business Combinations changes the application of acquisition accounting for business combinations and the accounting
for non-controlling (minority) interests. Key changes include: the immediate expensing of all transaction costs; measurement of contingent
consideration at acquisition date with subsequent changes through the income statement; measurement of non-controlling (minority)
interests at full fair value or the proportionate share of the fair value of the underlying net assets; guidance on issues such as reacquired
rights and vendor indemnities; and the inclusion of combinations by contract alone and those involving mutuals. The revised standard
becomes mandatory for the consolidated entity’s 30 june 2010 financial statements. the consolidated entity has not yet determined the
potential effect of the revised standard on the consolidated entity’s financial report.
55
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GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
1. sIgnIfIcant accountIng poLIcIes (continued)
(z) New standards and interpretations not yet adopted (continued)
• AASB 8 Operating Segments introduces the “management approach” to segment reporting. AAsB 8, which becomes mandatory for the
consolidated entity’s 30 june 2010 financial statements, will require the disclosure of segment information based on the internal reports
regularly reviewed by the consolidated entity’s chief operating decision maker in order to assess each segment’s performance and to
allocate resources to them. currently the consolidated entity presents segment information in respect of its business and geographical
segments (see note 2). the consolidated entity has not yet determined the potential effect of the revised standard on the consolidated
entity’s financial report.
• Revised AASB 101 Presentation of Financial Statements introduces as a financial statement (formerly “primary” statement) the “statement
of comprehensive income”. the revised standard does not change the recognition, measurement or disclosure of transactions and events
that are required by other AAsBs. the revised AAsB 101 will become mandatory for the consolidated entity’s 30 june 2010 financial
statements. the consolidated entity has not yet determined the potential effect of the revised standard on the consolidated entity’s
disclosures.
• Revised AASB 123 Borrowing Costs removes the option to expense borrowing costs and requires that an entity capitalise borrowing costs
directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. the revised AAsB
123 will become mandatory for the consolidated entity’s 30 june 2010 financial statements and will constitute a change in accounting
policy for the consolidated entity. In accordance with the transitional provisions the consolidated entity will apply the revised AAsB 123 to
qualifying assets for which capitalisation of borrowing costs commences on or after the effective date. the consolidated entity has not yet
determined the potential effect of the revised standard on future earnings.
• Revised AASB 127 Consolidated and Separate Financial Statements changes the accounting for investments in subsidiaries. Key changes
include: the re-measurement to fair value of any previous/retained investment when control is obtained/lost, with any resulting gain or
loss being recognised in profit or loss; and the treatment of increases in ownership interest after control is obtained as transactions with
equity holders in their capacity as equity holders. the revised standard will become mandatory for the consolidated entity’s 30 june 2010
financial statements. the consolidated entity has not yet determined the potential effect of the revised standard on the consolidated entity’s
financial report.
• AASB 2008-1 Amendments to Australian Accounting Standard - Share-based Payment: Vesting Conditions and Cancellations changes
the measurement of share-based payments that contain non-vesting conditions. AAsB 2008-1 becomes mandatory for the consolidated
entity’s 30 june 2010 financial statements. the consolidated entity has not yet determined the potential effect of the amending standard
on the consolidated entity’s financial report.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
2. segment reportIng
A segment is a distinguishable component of the consolidated entity that is engaged either in providing related 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.
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 fixtures and fittings
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 offices 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.
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GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
2. segment reportIng (continued)
BuSINESS SEGmENTS
Building Fixtures
Commercial
and Fittings*
Furniture*
unallocated*
Eliminations
Consolidated*
In thousands of Aud
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
revenue:
external sales
558,657
546,938
56,864
56,794
33,381
32,392
-
-
648,902
636,124
Inter-segment sales
-
-
1,852
1,993
-
-
(1,852)
(1,993)
-
-
total sales revenue
558,657
546,938
58,716
58,787
33,381
32,392
(1,852)
(1,993)
648,902
636,124
segment result
109,552
110,521
3,369
3,619
(13,527)
(15,386)
restructuring income/
(expenses)
(21,629)
(3,158)
(614)
-
5,427
(4,121)
87,923
107,363
2,755
3,619
(8,100)
(19,507)
segment result after
restructuring
expenses
net financing costs
Income tax expense
profit for the year
segment assets
627,265
606,435
35,087
34,498
113,102
153,862
segment liabilities
106,358
88,378
9,457
6,331
270,519
291,284
depreciation
14,895
15,689
1,690
2,325
801
1,226
Amortisation
275
276
-
-
259
263
capital expenditure
17,028
18,726
1,504
156
3,703
2,634
Impairment losses
9,419
1,227
-
-
-
-
* All segments are continuing operations
GEOGRAPHICAl SEGmENTS
-
-
-
-
-
-
-
-
-
-
99,394
98,754
-
(16,816)
(7,279)
-
82,578
91,475
(14,623)
(12,366)
(22,065)
(22,791)
45,890
56,318
775,454
794,795
386,334
385,993
17,386
19,240
534
539
22,235
21,516
9,419
1,227
-
-
-
-
-
-
Australia*
unallocated*
Consolidated *
In thousands of Aud
2008
2007
2008
2007
2008
2007
external sales revenue
551,587 535,394
97,315
100,730
648,902
636,124
segment assets
727,045 731,304
48,409
63,491
775,454
794,795
capital expenditure
19,433
18,666
2,802
2,850
22,235
21,516
* All segments are continuing operations
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
3. otHer Income
In thousands of Aud
foreign currency gains - realised
foreign currency gains - unrealised
net gain on disposal of property, plant and equipment
dividends received from controlled companies
other
4. otHer expenses
In thousands of Aud
foreign currency losses - realised
foreign currency losses - unrealised
distribution losses from controlled trusts
net loss on disposal of property, plant and equipment
restructuring expenses
Impairment loss on intangible assets
CONSOlIDATED
THE COmPANy
2008
2,082
1,370
6,879
-
2007
2,288
204
-
-
2008
2007
-
-
-
-
-
-
65,000
75,000
1,002
2,506
-
-
11,333
4,998
65,000
75,000
CONSOlIDATED
THE COmPANy
2008
217
2007
969
1,264
2,278
2008
2007
-
-
-
-
13,928
9,419
-
2,359
1,295
7,279
-
-
-
-
24,828
11,821
2,359
-
-
-
-
-
-
-
5. personneL expenses
In thousands of Aud
Wages and salaries - including superannuation contributions,
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
annual leave, long service leave and on-costs
143,509
140,785
-
-
59
60
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
6. audItors’ remuneratIon
In Aud
Audit services
Auditors of the company
KpmG Australia:
Audit and review of financial reports
overseas KpmG firms:
Audit and review of financial reports
Other services
Auditors of the company
KpmG Australia:
due diligence services
taxation services
7. net fInancIng costs
In thousands of Aud
Interest income
Interest expense
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
360,000
340,000
10,000
10,000
66,000
60,000
-
-
426,000
400,000
10,000
10,000
-
30,000
112,000
102,819
112,000
132,819
-
-
-
-
-
-
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
(5,068)
(5,718)
(745)
(502)
19,691
18,084
-
-
net financing costs/(income)
14,623
12,366
(745)
(502)
8. restructurIng expenses
In thousands of Aud
restructuring expenses
Impairment loss on intangible assets
Gains on property sales (included in ‘other income’)
net expense before tax
tax benefit
net restructuring expense after tax
CONSOlIDATED
THE COmPANy
2008
13,928
9,419
(6,531)
2007
7,279
-
-
16,816
7,279
(2,547)
(2,184)
14,269
5,095
2008
2007
-
-
-
-
-
-
-
-
-
-
-
-
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
9. Income tax expense
Recognised in the income statement
In thousands of Aud
Current tax expense
current year
Adjustments for prior years
Deferred tax expense
origination and reversal of temporary differences
Benefit of tax losses recognised
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
20,572
23,487
-
(1,539)
20,572
21,948
1,493
-
1,493
706
137
843
-
-
-
-
-
-
-
-
-
-
-
-
-
-
total income tax expense in income statement
22,065
22,791
Numerical reconciliation between tax expense and pre-tax net profit
CONSOlIDATED
THE COmPANy
In thousands of Aud
profit before tax
2008
2007
2008
2007
67,955
79,109
62,641
75,000
Income tax using the domestic tax rate of 30% (2007: 30%)
20,387
23,733
18,792
22,500
Increase in income tax expense due to:
non-deductible building depreciation
non-deductible expenses
non-deductible impairment loss
rebateable trust distributions
effect of tax rate in foreign jurisdictions
decrease in income tax expense due to:
effect of tax rate in foreign jurisdictions
non-assessable income
non-assessable capital profits
-
530
2,825
-
-
(97)
(111)
(1,280)
63
636
-
-
39
-
-
-
rebateable research and development
(189)
(141)
-
-
-
708
-
-
-
-
-
-
-
-
-
-
-
-
-
-
rebateable dividends
-
-
(19,500)
(22,500)
under / (over) provided in prior years
Income tax expense on pre-tax net profit
22,065
24,330
-
(1,539)
22,065
22,791
-
-
-
-
-
-
61
62
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
9. Income tax expense (continued)
Deferred tax recognised directly in equity
In thousands of Aud
derivatives
10. earnIngs per sHare
Basic and diluted earnings per share
CONSOlIDATED
THE COmPANy
2008
193
2007
(340)
2008
2007
-
-
calculation of basic and diluted earnings per share at 30 june 2008 was based on the profit attributable to ordinary shareholders of $45,890,000
(2007: $56,318,000) and a weighted average number of ordinary shares of 280,075,000 (2007: 278,756,000) calculated as follows:
cents per share
Profit attributable to ordinary shareholders
In thousands of Aud
profit for the year
Weighted average number of ordinary shares
In thousands of shares
Issued ordinary shares at 1 july
effect of shares issued
Weighted average number of ordinary shares at 30 june
11. casH and casH equIvaLents
In thousands of Aud
Bank balances *
call deposits
cash and cash equivalents in the statement of cash flows
* refer change in accounting policy - note 1(y)
CONSOlIDATED
2008
16.4
2007
20.2
CONSOlIDATED
2008
2007
45,890
56,318
CONSOlIDATED
2008
2007
279,923
278,303
152
453
280,075
278,756
CONSOlIDATED
THE COmPANy
2008
2007
2008
18,323
13,029
35,095
32,924
53,418
45,953
-
-
-
2007
232
-
232
the consolidated entity’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 24.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
12. trade and otHer receIvaBLes
In thousands of Aud
Current
trade receivables *
provision for impairment
fair value derivatives
employee share loans
other
Non-current
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
96,217
107,988
(832)
(804)
27,872
14,264
644
576
3,920
1,579
127,821
123,603
-
-
-
644
-
644
-
-
-
576
-
576
receivables due from controlled entities
-
-
657,847
594,069
employee share loans
other
* refer change in accounting policy - note 1(y)
5,285
4,923
5,285
4,923
13
60
-
-
5,298
4,983
663,132
598,992
the consolidated entity’s exposure to credit and currency risk and impairment losses related to trade and other receivables are disclosed in note 24.
13. InventorIes
In thousands of Aud
raw materials and consumables
Work in progress
finished goods
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
16,735
22,205
6,113
10,220
77,958
95,786
100,806
128,211
-
-
-
-
-
-
-
-
63
64
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
14. assets and LIaBILItIes cLassIfIed as HeLd for saLe
the sanitaryware business Wisa Beheer, which forms part of the Building fixtures and fittings segment, is presented as a disposal group held
for sale following the commitment of the consolidated entity’s management to a plan to sell the business to the management of Wisa Beheer. A
memorandum of understanding for the sale was signed on 12 August 2008 granting Wisa Beheer management an exclusive dealing period to
purchase the business for euro 14 million. the agreement is subject to Wisa Beheer management arranging a financial partner and will expire at the
end of november 2008 at which time the sale of the business is expected to be complete.
An impairment loss of $9,419,000 on the re-measurement of the disposal group to the lower of its carrying value and its fair value less costs to sell
has been recognised in “other expenses”.
In thousands of Aud
Assets classified as held for sale
trade and other receivables
Inventories
property, plant and equipment
Intangibles
other
liabilities classified as held for sale
trade and other payables
Income tax payable
employee benefits
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
3,759
6,702
4,866
10,424
267
26,018
2,823
36
1,014
3,873
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
15. current tax assets and LIaBILItIes
the current tax asset for the consolidated entity of $829,000 (2007: $1,440,000) represents the amount of income taxes recoverable in respect of
prior periods. the current tax liability for the consolidated entity of $5,854,000 (2007: nil) and for the company of $5,854,000 (2007: nil) represents
the amount of income taxes payable in respect of the current period. no current tax asset exists for the company at balance date (2007:$348,000).
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.
16. deferred tax assets and LIaBILItIes
Recognised deferred tax assets and liabilities
deferred tax assets and liabilities are attributable to the following:
CONSOlIDATED
In thousands of Aud
property, plant and equipment
Intangible assets
Inventories
employee benefits
provisions
other items
tax assets / (liabilities)
set off of tax
net tax assets
Assets
liabilities
Net
2008
817
-
3,583
7,879
2007
948
-
3,979
7,524
8,096
10,653
3,202
1,626
23,577
24,730
(732)
(199)
22,845
24,531
2008
2007
2008
2007
(181)
(205)
-
-
-
(346)
(732)
732
-
(1)
636
947
(197)
(205)
(197)
-
-
-
3,583
3,979
7,879
7,524
8,096
10,653
(1)
2,856
1,625
(199)
22,845
24,531
199
-
-
-
22,845
24,531
unrecognised deferred tax assets
deferred tax assets have not been recognised in respect of the following items:
In thousands of Aud
tax losses
CONSOlIDATED
THE COmPANy
2008
351
2007
403
2008
2007
-
-
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 profit will be available against which to offset the tax benefit of these losses.
65
66
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
16. deferred tax assets and LIaBILItIes (continued)
movement in temporary differences during the year
In thousands of Aud
1 July 06
in income
in equity
30 June 07
1 July 06
in income
in equity
30 June 07
Balance
Recognised
Recognised
Balance
Balance
Recognised Recognised
Balance
CONSOlIDATED
THE COmPANy
property, plant and equipment
Intangible assets
Inventories
employee benefits
provisions
other items
tax loss carry-forwards
6
(95)
5,001
8,987
10,628
370
137
25,034
941
(102)
(1,022)
(1,463)
25
915
(137)
(843)
-
-
-
-
-
947
(197)
3,979
7,524
10,653
340
1,625
-
-
340
24,531
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
In thousands of Aud
1 July 07
in income
in equity
30 June 08
1 July 07
in income
in equity
30 June 08
Balance
Recognised
Recognised
Balance
Balance
Recognised Recognised
Balance
CONSOlIDATED
THE COmPANy
property, plant and equipment
Intangible assets
Inventories
employee benefits
provisions
other items
947
(197)
3,979
7,524
(311)
(8)
(396)
355
10,653
(2,557)
-
-
-
-
-
636
(205)
3,583
7,879
8,096
1,625
1,424
(193)
2,856
24,531
(1,493)
(193)
22,845
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
17. property, pLant and equIpment
In thousands of Aud
buildings equipment
vehicles
progress
Total
buildings
equipment
vehicles progress
Total
land and Plant and
motor
Work in
land and
Plant and
motor Work in
CONSOlIDATED
THE COmPANy
Cost
Balance at 1 july 2006
54,988 208,179
14,044
15,707
292,918
Additions
transfers
disposals
518
16,173
2,108
-
18,799
-
4,929
-
(4,929)
-
(976) (38,554)
(2,885)
-
(42,415)
effect of movements in foreign
exchange
(303)
(1,765)
54
(96)
(2,110)
Balance at 30 june 2007
54,227 188,962
13,321
10,682
267,192
Balance at 1 july 2007
54,227 188,962
13,321
10,682
267,192
Additions
transfers
disposals
374
13,281
3,170
1,480
18,305
-
5,441
-
(5,441)
-
(4,420) (19,638)
(3,948)
-
(28,006)
transfer to assets held for sale
(4,026) (27,696)
-
(1,024)
(32,746)
effect of movements in foreign
exchange
133
721
(119)
(80)
655
Balance at 30 june 2008
46,288 161,071
12,424
5,617
225,400
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
67
68
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
17. property, pLant and equIpment (continued)
In thousands of Aud
buildings equipment
vehicles
progress
Total
buildings
equipment
vehicles progress
Total
land and Plant and
motor
Work in
land and
Plant and
motor Work in
CONSOlIDATED
THE COmPANy
Depreciation and impairment losses
Balance at 1 july 2006
(6,606) (162,546)
(5,927)
-
(175,079)
depreciation charge for the year
(1,025) (15,746)
(2,469)
disposals
Impairment losses
-
-
37,262
2,010
(1,227)
-
effect of movements in foreign
exchange
229
1,903
(31)
Balance at 30 june 2007
(7,402) (140,354)
(6,417)
-
-
-
-
-
(19,240)
39,272
(1,227)
2,101
(154,173)
Balance at 1 july 2007
(7,402) (140,354)
(6,417)
-
(154,173)
depreciation charge for the year
(984) (13,985)
(2,417)
disposals
942
16,623
2,828
transfer to assets held for sale
3,071
24,809
-
effect of movements in foreign
exchange
(102)
(653)
82
Balance at 30 june 2008
(4,475) (113,560)
(5,924)
-
-
-
-
-
(17,386)
20,393
27,880
(673)
(123,959)
Carrying amounts
At 1 july 2006
48,382
45,633
8,117
15,707 117,839
At 30 june 2007
46,825
48,608
6,904
10,682 113,019
At 1 july 2007
46,825
48,608
6,904
10,682 113,019
At 30 june 2008
41,813
47,511
6,500
5,617 101,441
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Impairment losses
there were no impairment losses to property, plant and equipment during the 2008 financial year (2007: $1,227,000).
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
18. IntangIBLe assets
In thousands of Aud
Software
Brand names
Total
Software
Brand names
Total
CONSOlIDATED
THE COmPANy
Cost
Balance at 1 july 2006
2,649
341,846
344,495
Additions
2,717
-
2,717
effect of movements in foreign exchange
-
(1,501)
(1,501)
Balance at 30 june 2007
5,366
340,345
345,711
Balance at 1 july 2007
5,366
340,345
345,711
Additions
3,930
-
3,930
effect of movements in foreign exchange
transfer to assets held for sale
-
-
620
620
(19,843)
(19,843)
Balance at 30 june 2008
9,296
321,122
330,418
Amortisation and impairment losses
Balance at 1 july 2006
Amortisation for the year
Balance at 30 june 2007
Balance at 1 july 2007
Amortisation for the year
Impairment loss
transfer to assets held for sale
(709)
(539)
(1,248)
(1,248)
(534)
-
-
-
-
-
-
-
(709)
(539)
(1,248)
(1,248)
(534)
(9,419)
(9,419)
9,419
9,419
Balance at 30 june 2008
(1,782)
-
(1,782)
Carrying amounts
At 1 july 2006
At 30 june 2007
At 1 july 2007
At 30 june 2008
1,940
341,846
343,786
4,118
340,345
344,463
4,118
340,345
344,463
7,514
321,122
328,636
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
69
70
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
18. IntangIBLe assets (continued)
Impairment testing for brand names
the recoverable amounts of all brand names were assessed at 30 june 2008 based on internal value in use calculations, (with exception of the
Wisa brand name below) and no impairment was identified. value in use was determined by discounting the future cash flows generated from the
continuing use of the business unit and to which the brand is attached was based on the following assumptions:
• Cash flows were projected based on actual operating results and business plans of the units, with projected cash flows ranging from two to five
years, before a terminal value was calculated. maintainable earnings were adjusted for an allocation of corporate overheads.
• Management used a constant growth rate of 2.5% in calculating terminal values of the units, which does not exceed the long-term average growth
rate for the industry.
• A pre-tax discount rate of 13.9% was used in discounting the projected future cash flows.
Wisa Beheer brand name impairment
the Wisa Beheer brand name impairment test was based on fair value less costs to sell. As discussed in note 14 to the financial statements, a
memorandum of understanding has been signed granting the management of Wisa Beheer an exclusive dealing period to purchase the Wisa Beheer
business for euro 14 million. Based on a selling price of euro 14 million less costs to sell, an impairment loss of $9,419,000 has been recognised
during the year.
19. trade and otHer payaBLes
In thousands of Aud
Current
trade payables and accrued expenses
fair value derivatives
non-trade payables and accrued expenses
Non-current
payables to controlled entities
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
47,464
47,372
27,592
14,625
3,413
3,070
78,469
65,067
54
-
-
54
-
-
-
-
-
-
583,653
527,430
the consolidated entity’s exposure to currency risk and liquidity risk related to trade and other payables are disclosed in note 24.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
20. Interest-BearIng Loans and BorroWIngs
this note provides information about the contractual terms of the consolidated entity’s and the company’s interest-bearing loans and borrowings,
which are measured at amortised cost. for more information about the consolidated entity’s exposure to interest rate and foreign currency risk,
see note 24.
Non-current liabilities
In thousands of Aud
unsecured bank loans
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
246,975
271,567
-
-
Terms and debt repayment schedule
CONSOlIDATED
In thousands of Aud
Currency
unsecured bank loan
unsecured bank loan
unsecured bank loan
unsecured bank loan
Aud
Aud
Aud
Aud
Nominal
interest rate
Rate at
30 June
2008
BBsW+0.48%
8.24%
BBsW+0.55%
8.31%
BBsW+0.50%
8.26%
BBsW+0.50%
8.25%
unsecured bank loan
eur
eurIBor+0.65% 5.40%
Financing facilities
In thousands of Aud
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
year of
maturity
2010
2010
2010
2010
2010
2008
Face
value
2008
Carrying
amount
2007
Face
value
2007
Carrying
amount
60,000
60,000
60,000
60,000
60,000
60,000
60,000
60,000
65,000
65,000
90,000
90,000
50,000
50,000
50,000
50,000
11,975
11,975
11,567
11,567
246,975
246,975
271,567
271,567
CONSOlIDATED
THE COmPANy
2008
6,357
7,685
2007
6,408
25,378
286,975
271,567
301,017
303,353
-
-
1,578
1,440
246,975
271,567
248,553
273,007
6,357
6,408
6,107
23,938
40,000
-
52,464
30,346
2008
2007
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
71
72
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
20. Interest-BearIng Loans and BorroWIngs (continued)
Financing arrangements
GWA International limited, GWA finance pty limited, a wholly owned controlled entity of GWA International limited, and each other controlled entity
of GWA International limited, have entered into a master financing Agreement with a number of banks.
this document provides for the following:
(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 2008.
unsecured 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.
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 specified in the
facility agreements.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
21. empLoyee BenefIts
In thousands of Aud
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
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
1,728
1,792
10,494
11,773
3,514
2,491
15,736
16,056
9,794
10,157
730
858
10,524
11,015
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Defined contribution superannuation funds
the consolidated entity makes contributions to a defined contribution superannuation fund. contributions are charged against income as they are
made based on various percentages of each employee’s gross salaries. the amount recognised as expense was $8,656,000 for the financial year
ended 30 june 2008 (2007: $9,326,000).
Employee share plan
the employee share plan was established to assist in the retention and motivation of employees. All permanent employees of the company, who are
invited to participate, may participate in the plan. the maximum number of shares subject to the plan at any time may not exceed 5% of the nominal
amount of all ordinary shares on issue. the plan does not provide for the issue of options and no options have been issued by the company at
balance date.
under the plan, shares can either be issued to employees or purchased on market, and in both cases the employee will pay market price for the
shares. during 2008, 400,000 ordinary shares were purchased on market for employees at an average share price of $3.07 and 250,000 ordinary
shares were issued to employees at the market price of $3.52, being total market value of $2,108,000. In the prior year, no ordinary shares were
issued to employees.
As at 30 june 2008, loans are issued for 3,846,250 (2007: 3,436,561) shares and the remaining balances of these loans is $10,442,000 (2007:
$9,605,000) or $5,929,000 (2007: $5,499,000) at net present value. during 2008, dividends of $814,000 (2007: $640,000) were paid against the
loans and a further $456,000 (2007: $3,747,000) was paid by employees against these loans.
73
74
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
22. provIsIons
In thousands of Aud
CONSOlIDATED
Balance at 1 july 2007
provisions made during the year
Warranties
Restructuring
Site restoration
Other
Total
8,332
7,061
2,598
13,928
4,646
6,712
22,288
21,870
729
152
-
provisions used during the year
(5,348)
(10,556)
(3,317)
(19,221)
transfers during the year
effect of movements in foreign exchange
-
(34)
(1,692)
1,692
-
-
-
-
-
(34)
Balance at 30 june 2008
10,011
4,278
6,490
4,124
24,903
current
non-current
Warranties
6,555
3,456
4,278
-
10,011
4,278
3,100
3,390
6,490
3,158
17,091
966
7,812
4,124
24,903
the total provision for warranties at balance date of $10,011,000 relates to future warranty expense on products sold during the current and previous
financial 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 $6,555,000 of the total provision in the financial year
ending 30 june 2009, and the majority of the balance of the liability over the following four years.
Restructuring
during the financial year ended 30 june 2008, provisions of $13,928,000 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, $4,278,000 remains provided for at
balance date and this amount represents the estimate of costs to be expended in the financial year ending 30 june 2009.
Site restoration
At balance date the balance of the site restoration provision was $6,490,000. no expenditures were made in the current financial year, the only
movements being an adjustment to reflect the net present value of this provision and a transfer from restructuring. 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, and for site remediation required. the site restoration is expected to be completed by december 2009. the net present value of the
provision has been calculated using a discount rate of 6.5 per cent.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
23. capItaL and reserves
Reconciliation of movement in capital and reserves
CONSOlIDATED
In thousands of Aud
Balance at 1 july 2006
Share
capital
Translation
reserve
Hedging
reserve
Retained
earnings
Total
346,853
(1,395)
542
65,968
411,968
total recognised income and expense
-
(1,158)
(525)
56,318
54,635
Issue of ordinary shares
dividends to shareholders
Balance at 30 june 2007
Balance at 1 july 2007
total recognised income and expense
Issue of ordinary shares
dividends to shareholders
Balance at 30 june 2008
THE COmPANy
In thousands of Aud
Balance at 1 july 2006
total recognised income and expense
Issue of ordinary shares
dividends to shareholders
Balance at 30 june 2007
Balance at 1 july 2007
total recognised income and expense
Issue of ordinary shares
dividends to shareholders
Balance at 30 june 2008
6,209
-
-
-
-
-
-
6,209
(64,010)
(64,010)
353,062
(2,553)
17
58,276
408,802
353,062
(2,553)
-
(5,012)
876
-
-
-
17
176
-
-
58,276
408,802
45,890
41,054
-
876
(61,612)
(61,612)
353,938
(7,565)
193
42,554
389,120
Share
capital
Retained
earnings
Total
346,853
38,417
385,270
-
75,000
75,000
6,209
-
6,209
-
(64,010)
(64,010)
353,062
49,407
402,469
353,062
49,407
402,469
-
62,641
62,641
876
-
876
-
(61,612)
(61,612)
353,938
50,436
404,374
75
76
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
23. capItaL and reserves (continued)
Share capital
In thousands of shares
on issue at 1 july - fully paid
Issue of shares under the employee share plan
on issue at 30 june - fully paid
THE COmPANy
Ordinary shares
2008
2007
279,923
278,303
250
1,620
280,173
279,923
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 retranslation of the financial statements of foreign operations
where their functional currency is different from the presentation currency of the reporting entity, as well as from the retranslation 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 flow hedging instruments related to hedged
transactions that have not yet occurred.
Dividends
dividends recognised in the current year by the consolidated entity and the company are:
In thousands of Aud
2008
Interim 2008 ordinary
Interim 2008 special
final 2007 ordinary
final 2007 special
total amount
Cents per share
Total amount
Franked
Date of
payment
10.0
1.5
8.0
2.5
22.0
28,017
4,203
22,394
6,998
61,612
100%
2nd April 2008
100%
2nd April 2008
100%
2nd oct 2007
100%
2nd oct 2007
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
23. capItaL and reserves (continued)
Dividends (continued)
In thousands of Aud
2007
Interim 2007 ordinary
Interim 2007 special
final 2006 ordinary
final 2006 special
total amount
Cents per share
Total amount
Franked
Date of
payment
10.0
1.5
8.0
3.5
23.0
27,830
4,175
22,264
9,741
64,010
100%
2nd April 2007
100%
2nd April 2007
100%
100%
3rd oct 2006
3rd oct 2006
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 approved by the directors. the dividends have not been provided for. the declaration and
subsequent payment of dividends has no income tax consequences.
In thousands of Aud
final ordinary
Cents per share
Total amount
Franked
Date of
payment
8.0
22,414
100%
7th oct 2008
the financial effect of these dividends has not been brought to account in the financial statements for the financial year ended 30 june 2008 and will
be recognised in subsequent financial reports.
Dividend franking account
In thousands of Aud
THE COmPANy
2008
2007
30 per cent franking credits available to shareholders of GWA International limited for subsequent financial years
22,528
30,225
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 year-end.
the ability to utilise the franking credits is dependent upon there being sufficient available profits 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 $9,606,000 (2007:
$12,597,000). In accordance with the tax consolidation legislation, the company as the head entity in the tax-consolidated group has also assumed
the benefit of $22,528,000 (2007: $30,225,000) franking credits.
77
78
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
24. fInancIaL Instruments and fInancIaL rIsk management
exposure to credit, interest rate and currency risks arises in the normal course of the consolidated entity’s business. derivative financial instruments
are used to hedge exposure to fluctuations in foreign exchange rates and interest rates.
Risk management policy
the Board has overall responsibility for the establishment and oversight of the risk management framework. the Board has established the executive
risk committee, which is responsible for developing and monitoring risk management policies. the committee is required to report regularly to the
Board on its activities.
risk management policies are established to identify and analyse the risks faced by the consolidated entity and the company, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. risk management policies and systems are reviewed regularly to reflect changes in
market conditions and the consolidated entity’s and the company’s activities.
the Board Audit committee oversees how management monitors compliance with the risk management policies and procedures and reviews the
adequacy of the risk management framework in relation to the risks faced by the consolidated entity and the company. the Board Audit committee
is assisted in its oversight role by the Internal Audit team. the Internal Audit team conducts both regular and ad hoc reviews of risk management
controls and procedures. the results of the reviews are reported to the Board Audit committee.
Capital management policy
the Board’s policy is to maintain a strong capital base and grow shareholder wealth. the Board monitors debt levels, cash flows and financial
forecasts to establish appropriate levels of dividends and funds available to reinvest in the businesses or invest in growth opportunities.
the Board focuses on growing shareholder wealth by monitoring the performance of the consolidated entity by reference to the return on funds
employed. the Board defines return on funds employed as trading earnings before interest and tax divided by net assets after adding back net debt.
there were no changes to the Boards approach to capital management during the year.
Credit risk
credit risk is the risk of financial loss to the consolidated entity and the company if a customer or other counterparty to a financial instrument fails to
discharge their obligations.
management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. A risk assessment process is used for
customers requiring credit over $50,000 and credit insurance is utilised for major concentrations of trade debts. Goods are sold subject to retention
of title clauses in most circumstances. the consolidated entity does not require collateral in respect of financial assets.
the consolidated entity maintains an allowance for impairment that represents its estimate of incurred losses in respect of trade receivables.
transactions involving derivative financial 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.
the consolidated entity has two major customers which comprise 46% of the trade receivables carrying amount at 30 june 2008 (2007: 36%). At
the balance sheet date there were no uninsured concentrations of credit risk.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
24. fInancIaL Instruments and fInancIaL rIsk management (continued)
Credit risk (continued)
the carrying amount of financial assets represents the maximum credit exposure of the consolidated entity and the company. the maximum
exposure to credit risk at balance date was:
In thousands of Aud
cash and cash equivalents
Gross trade receivables
employee share loans
receivables due from controlled entities
Assets classified as held for sale
forward exchange contracts used for hedging
Interest rate swaps used for hedging
the ageing of gross trade receivables for the consolidated entity at balance date is as follows:
In thousands of Aud
not yet due
past due 0-30 days
past due 31-60 days
past due 61-90 days
past due 91-120 days
past due 120+ days
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
53,418
49,953
118,683
125,253
-
-
232
-
5,929
5,499
5,929
5,499
-
26,018
-
-
26,285
13,627
1,587
637
657,847
594,069
-
-
-
-
-
-
231,920
194,969
663,776
599,800
CONSOlIDATED
2008
2008
2007
2007
Gross
Impairment
Gross
Impairment
66,844
(170)
72,200
41,517
(7)
45,872
4,778
3,092
1,482
970
(116)
(140)
(216)
(403)
2,672
3,676
580
253
(95)
(24)
(190)
(168)
(245)
(82)
118,683
(1,052)
125,253
(804)
79
80
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
24. fInancIaL Instruments and fInancIaL rIsk management (continued)
Credit risk (continued)
the carrying amount of gross trade receivables classified as not yet due at balance date for the consolidated entity that would be past due if terms
had not been re-negotiated is as follows:
In thousands of Aud
CONSOlIDATED
2008
2008
2007
2007
Gross
Impairment
Gross
Impairment
Gross trade receivables with terms re-negotiated
265
(120)
23
(7)
the movement in the allowance for impairment in respect of trade receivables during the year for the consolidated entity was as follows:
In thousands of Aud
Balance at 1 july
Impairment loss recognised
Impairment losses applied
Balance at 30 june
liquidity risk
CONSOlIDATED
2008
2007
(804)
(1,117)
(527)
279
-
313
(1,052)
(804)
liquidity risk is the risk that the consolidated entity and the company will not be able to meet its financial obligations as they fall due. the
consolidated entity and the company prepares cash flow forecasts and maintains financing and overdraft facilities with a number of institutions
to ensure sufficient funds will be available to meet obligations without incurring excessive costs. the cash flows of the consolidated entity and the
company are controlled by management and reported monthly to the Board who is ultimately responsible for maintaining liquidity.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
24. fInancIaL Instruments and fInancIaL rIsk management (continued)
liquidity risk (continued)
the contractual maturities of financial liabilities and derivatives that are cash flow hedges of the consolidated entity and the company, including
estimated interest payments are as follows:
maturity analysis
CONSOlIDATED
THE COmPANy
In thousands of Aud
amount
cash flows 6 months
months
years
amount cash flows 6 months months
years
Carrying Contractual less than
6-12
1-2
Carrying Contractual less than
6-12
1-2
Non-derivative financial liabilities - 2007
unsecured bank loans
(271,567) (309,088)
(9,380)
(9,380) (290,328)
trade and other payables
(47,372)
(47,372)
(47,272)
(100)
-
Derivative financial liabilities - 2007
Interest rate swaps designated
as hedges
637
1,691
439
408
844
forward exchange contracts
designated as hedges - outflow
(14,625)
(14,625)
(14,625)
forward exchange contracts
designated as hedges - inflow
13,627
13,627
13,627
-
-
-
-
total at 30 june 2007
(319,300) (355,767)
(57,211)
(9,072) (289,484)
Non-derivative financial liabilities - 2008
unsecured bank loans
(246,975) (287,830)
(10,214) (10,214) (267,402)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
trade and other payables
(50,287)
(50,287)
(50,262)
(25)
-
(54)
(54)
(54)
Derivative financial liabilities - 2008
Interest rate swaps designated
as hedges
1,587
1,373
569
431
373
forward exchange contracts
designated as hedges - outflow
(27,592)
(27,592)
(27,592)
forward exchange contracts
designated as hedges - inflow
26,285
26,285
26,285
-
-
-
-
-
-
-
-
-
-
-
-
-
total at 30 june 2008
(296,982) (338,051)
(61,214)
(9,808) (267,029)
(54)
(54)
(54)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
the unsecured bank loans have a maximum three year rolling maturity, subject to annual review. the periods in which the cash flows associated with
derivatives arise match the periods of profit and loss impact.
81
82
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
24. fInancIaL Instruments and fInancIaL rIsk management (continued)
market risk
market risk is the risk that changes in market prices such as interest rates and foreign exchange rates will affect the consolidated entity’s and the
company’s income or value of holdings of financial instruments. the objective of market risk management is to manage and control market risk
exposures within acceptable parameters.
the consolidated entity enters into derivatives and also incurs financial liabilities in order to manage market risks. All transactions are carried out
within the guidelines set by the executive risk committee.
a) Interest rate risk
Interest rate risk is the risk that changes in interest rates will affect the consolidated entity’s and the company’s income. the consolidated entity’s
variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates.
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 fixed and floating rate exposure. the swaps mature over
the next 2 years and have fixed swap rates ranging from 5.63 per cent to 7.36 per cent. At 30 june 2008, the consolidated entity had interest rate
swaps with a notional contract amount of $125,000,000 (2007: $125,000,000).
the consolidated entity classifies interest rate swaps as cash flow hedges and states them at fair value.
the net fair value of swaps at 30 june 2008 was $1,587,000 (2007: $637,000). these amounts were recognised as fair value derivative assets.
(i) Profile
At balance date the consolidated entity’s and the company’s interest bearing financial instruments were:
CONSOlIDATED
THE COmPANy
2008
2008
2007
2007
2008
2008
2007
2007
Notional
Carrying
Notional
Carrying
Notional
Carrying
Notional
Carrying
In thousands of Aud
value
amount
value
amount
value
amount
value
amount
Variable rate financial
instruments
unsecured bank loans
(246,975)
(246,975)
(271,567)
(271,567)
Bank balances
18,323
18,323
13,029
13,029
call deposits
35,095
35,095
20,924
20,924
(193,557)
(193,557)
(237,614)
(237,614)
Fixed rate financial
instruments
Interest rate swap derivatives
125,000
1,587
125,000
637
call deposits
-
-
12,000
12,000
125,000
1,587
137,000
12,637
total
(68,557)
(191,970)
(100,614)
(224,977)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
232
-
232
-
-
-
-
232
-
232
-
-
-
232
232
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
24. fInancIaL Instruments and fInancIaL rIsk management (continued)
market risk (continued)
a) Interest rate risk (continued)
(ii) Fair value sensitivity analysis for fixed rate instruments
the consolidated entity does not account for fixed rate financial assets and liabilities at fair value through profit or loss. therefore a change in interest
rates at the reporting date would not affect profit or loss.
A change of 100 basis points in interest rates at balance date would have affected the consolidated entity’s and the company’s equity and financial
assets and liabilities as follows:
In thousands of Aud
Increase of 100 basis points
hedging reserve (increase)/decrease
financial assets increase/(decrease)
Decrease of 100 basis points
hedging reserve (increase)/decrease
financial assets increase/(decrease)
financial liabilities (increase)/decrease
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
(1,311)
(459)
1,311
-
459
-
1,608
619
(1,587)
(619)
(21)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(iii) Cash flow sensitivity analysis for fixed and variable rate instruments
A change of 100 basis points in interest rates during the period would have affected the consolidated entity’s and the company’s profit as follows:
In thousands of Aud
Increase of 100 basis points
unsecured bank loans (Aud)
unsecured bank loans (eur)
Bank balances
Interest rate swap derivatives
call deposits variable rate
call deposits fixed rate
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
(2,560)
(2,650)
(122)
(125)
183
130
1,049
1,294
351
166
209
408
(933)
(734)
-
-
-
-
-
-
-
-
-
2
-
-
-
2
83
84
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
24. fInancIaL Instruments and fInancIaL rIsk management (continued)
market risk (continued)
a) Interest rate risk (continued)
(iii) Cash flow sensitivity analysis for fixed and variable rate instruments (continued)
In thousands of Aud
Decrease of 100 basis points
unsecured bank loans (Aud)
unsecured bank loans (eur)
Bank balances
Interest rate swap derivatives
call deposits variable rate
call deposits fixed rate
b) Foreign currency risk
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
2,565
2,658
122
125
(183)
(130)
(1,049)
(1,294)
(351)
(166)
938
(209)
(408)
742
-
-
-
-
-
-
-
-
-
(2)
-
-
-
(2)
the consolidated entity is exposed to foreign currency risk on sales, purchases and asset and liability holdings that are denominated in a currency
other than the respective functional currencies of its subsidiaries and retranslation of the financial statements of foreign subsidiaries. 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 six months after the balance sheet date. the consolidated entity classifies its
forward exchange contracts hedging forecasted transactions as cash flow hedges and states them at fair value.
the consolidated entity’s euro denominated bank loan is designated as a hedge of the consolidated entity’s investment in its subsidiary in the
netherlands.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
24. fInancIaL Instruments and fInancIaL rIsk management (continued)
market risk (continued)
b) Foreign currency risk (continued)
(i) Exposure to currency risk
In thousands of Aud equivalent
AuD
uSD
NZD
EuR
HKD
uKP
yEN
411
756
-
61
95
-
2007
trade receivables
trade payables
cash
Gross balance sheet exposure
estimated forecast sales
estimated forecast purchases
Gross exposure
forward exchange contracts
-
-
4,166
4,166
-
-
-
-
453
(1,131)
372
(306)
-
-
-
-
-
13,092
(34,364)
-
(4,187)
(34,364)
13,092
(4,187)
12,229
(173)
-
364
-
(19)
(50)
-
(50)
-
-
-
-
-
(1)
-
(1)
-
-
-
-
-
(15)
-
(15)
-
(1,041)
(1,041)
367
net exposure 30 june 2007
4,166
(22,441)
12,919
(3,431)
(50)
(1)
(689)
foreign exchange rates at balance date
1.0000
0.8487
1.1025
0.6311
6.6337
0.4236
104.70
2008
trade receivables
trade payables
cash
-
-
3,246
(2,301)
6,658
334
Gross balance sheet exposure
6,658
1,279
-
-
-
-
estimated forecast sales
estimated forecast purchases
Gross exposure
forward exchange contracts
-
-
-
-
-
13,747
(45,808)
-
(5,092)
(45,808)
13,747
(5,092)
22,092
(2,195)
2,442
196
300
2
(162)
(12)
(21)
1
289
-
-
-
-
-
(19)
-
-
-
-
-
-
-
-
-
(842)
(842)
883
41
net exposure 30 june 2008
6,658
(22,437)
11,552
(2,555)
289
(19)
foreign exchange rates at balance date
1.0000
0.9626
1.2609
0.6096
7.5091
0.4829
101.93
(ii) Sensitivity analysis
the impact of exchange rate movements on profit is subject to other variables including competitor exchange rate positions and movement in market
prices. the impact of exchange rate movements on equity is not material.
85
86
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
24. fInancIaL Instruments and fInancIaL rIsk management (continued)
Fair values
the fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet are as follows:
In thousands of Aud
CONSOlIDATED
trade and other receivables
cash and cash equivalents
Interest rate swaps:
Assets
forward exchange contracts:
Assets
liabilities
Carrying
amount
2008
Fair
value
2008
Carrying
amount
Fair
value
2007
2007
109,006
109,006
114,322
114,322
53,418
53,418
45,953
45,953
1,587
1,587
637
637
26,285
26,285
13,627
13,627
(27,592)
(27,592)
(14,625)
(14,625)
unsecured bank loans
(246,975)
(246,975)
(271,567)
(271,567)
trade payables and accrued expenses
(53,700)
(53,700)
(50,442)
(50,442)
THE COmPANy
cash and cash equivalents
trade and other receivables
payables to controlled entities
(137,971)
(137,971)
(162,095)
(162,095)
-
-
232
232
663,776
663,776
599,568
599,568
(583,654)
(583,654)
(527,430)
(527,430)
trade payables and accrued expenses
(54)
(54)
-
-
80,068
80,068
72,370
72,370
Estimation of fair values
the following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected in the table.
(i) 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 flow techniques. Where discounted cash flow techniques are
used, estimated future cash flows 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.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
24. fInancIaL Instruments and fInancIaL rIsk management (continued)
Estimation of fair values (continued)
(ii) Interest-bearing loans and borrowings
the notional amount of the interest-bearing loans is deemed to reflect the fair value. the interest-bearing loans have a maximum three-year rolling
maturity.
(iii) 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 reflect
the fair value.
(iv) Employee share loans and other employee loans
employee share loans and other employee loans are carried at fair value using discounted cash flow techniques.
(v) Interest rates used for determining fair value
the entity uses the government yield curve as of 30 june 2008 plus an adequate constant credit spread to discount financial instruments. the
interest rates used are as follows:
derivatives
employee share loans and other loans
Interest bearing loans and borrowings
25. operatIng Leases
leases as lessee
non-cancellable operating lease rentals are payable as follows:
In thousands of Aud
less than one year
Between one and five years
more than five years
2008
2007
7.77% - 7.82%
6.49% - 6.96%
7.30% - 7.55%
7.05% - 7.30%
5.40% - 8.31%
5.80% - 6.35%
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
10,127
8,838
28,014
19,116
4,317
-
42,458
27,954
-
-
-
-
-
-
-
-
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.
one of the leased properties has been sublet by the consolidated entity. the lease and sublease expire in november 2009. sublease payments of
$282,000 will be received during the following financial year.
during the financial year ended 30 june 2008, $10,473,000 (2007: $9,770,000) was recognised as an expense in the income statement in respect
of operating leases, which was net of sub-lease income.
87
88
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
26. capItaL and otHer commItments
In thousands of Aud
Capital expenditure commitments
Plant and equipment
contracted but not provided for and payable:
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
Within one year
3,152
2,274
-
-
27. 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 sacrifice of economic
benefits will be required or the amount is not capable of reliable measurement.
In thousands of Aud
Contingent liabilities not considered remote
In the previous financial year, the consolidated entity investigated and identified
levels of contamination at the eagle farm site. the site was sold during the year
and is currently leased and occupied by rover mowers limited. there is currently
no obligation to remediate the site, and testing is on-going to verify that there is no
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
risk to employee health and safety. All costs incurred to date have been expensed.
-
-
-
Contingent liabilities considered remote
Guarantees
(i) under the terms of a deed of cross Guarantee, described in note 28, 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 deficiency
in net assets exists in these companies at reporting date.
(ii) Bank guarantees
-
-
3,865
4,387
-
-
-
-
-
28. 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 29 are relieved from the
corporations Act 2001 requirements for preparation, audit and lodgement of financial 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.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
28. deed of cross guarantee (continued)
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 2008, is set out below.
Summarised income statement and retained profits
In thousands of Aud
profit before tax
Income tax expense
profit after tax
retained profits at beginning of year
dividends recognised during the year
retained profits at end of year
CONSOlIDATED
2008
2007
69,138
80,072
(20,337)
(21,751)
48,801
58,321
27,563
33,252
(61,612)
(64,010)
14,752
27,563
89
90
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
28. deed of cross guarantee (continued)
Balance sheet
In thousands of Aud
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
Income tax payable
employee benefits
provisions
Total current liabilities
Interest-bearing loans and borrowings
employee benefits
provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
reserves
retained earnings
Total equity
CONSOlIDATED
2008
2007
33,700
32,837
121,355
112,749
92,807
116,511
-
320
4,358
4,636
252,220
267,053
5,298
4,982
55,493
44,179
12,212
15,600
22,553
24,161
70,101
77,287
324,640
321,244
3,770
3,542
494,067
490,995
746,287
758,048
77,336
59,759
5,948
-
15,537
14,618
16,982
13,329
115,803
87,706
246,975
271,567
10,514
10,871
7,812
8,720
265,301
291,158
381,104
378,864
365,183
379,184
353,938
353,062
(3,507)
(1,441)
14,752
27,563
365,183
379,184
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
29. 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 (liquidated)
caroma Industries limited
G subs pty ltd
sebel furniture (hong Kong) ltd
GWA trading (shanghai) co ltd
GWA International (hong Kong) limited (in liquidation)
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 (liquidated)
caroma Industries europe Bv
Wisa Beheer Bv
Wisa Bv
Wisa systems Bv
Wisa Gmbh
stokis Kon fav. van metaalwerken nv
Parties to
coss
Country of
Ownership interest
guarantee
incorporation
2008
2007
y
y
y
y
y
n
y
y
n
n
n
y
y
y
y
y
n
y
n
n
n
n
n
n
n
Australia
Australia
Australia
Australia
Australia
usA
Australia
Australia
hong Kong
china
hong Kong
Australia
Australia
Australia
Australia
Australia
new Zealand
Australia
new Zealand
netherlands
netherlands
netherlands
netherlands
Germany
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%
netherlands
100%
100%
91
92
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
29. consoLIdated entItIes (continued)
Subsidiaries (continued)
caroma International pty ltd
caroma usA Inc
caroma canada Industries ltd (liquidated)
caroma Industries (uK) ltd (liquidated)
canereb pty ltd
dux manufacturing limited
GWA taps manufacturing limited
lake nakara pty ltd
mainrule pty ltd (deregistered)
Warapave pty ltd
rover mowers (nZ) limited
caroma Industries (nZ) limited
GWAIl (nZ) ltd
rover mowers limited
Industrial mowers (Australia) limited
olliveri pty ltd
sebel service & Installations pty ltd
sebel properties pty ltd
sebel furniture limited (nZ)
sebel furniture limited
sebel furniture (seA) pte ltd (in liquidation)
sebel sales pty limited
caroma singapore pte limited (in liquidation)
GWA finance pty limited
hetset (no. 5) pty ltd
Gainsborough hardware limited (liquidated)
Bankstown unit trust
Parties to
cross
Country of
Ownership interest
guarantee
incorporation
2008
2007
y
n
n
n
n
y
y
n
n
n
n
n
n
y
y
y
y
y
n
y
n
y
n
y
y
n
y
Australia
usA
canada
uK
Australia
Australia
Australia
Australia
Australia
Australia
new Zealand
new Zealand
new Zealand
Australia
Australia
Australia
Australia
Australia
new Zealand
Australia
singapore
Australia
singapore
Australia
Australia
uK
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%
Australia
100%
100%
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
30. reconcILIatIon of casH fLoWs from operatIng actIvItIes
In thousands of Aud
Cash flows from operating activities
profit for the period
Adjustments for:
depreciation
Amortisation
Impairment 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
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
45,890
56,318
62,641
75,000
17,386
19,240
534
539
9,419
1,227
(1,971)
755
14,623
12,366
-
-
-
-
(6,879)
1,295
22,065
22,791
-
-
-
-
-
-
-
-
-
-
(65,000)
(75,000)
2,359
-
-
-
-
-
-
-
Operating profit before changes in working capital and provisions
101,067
114,531
(Increase)/decrease in trade and other receivables
(8,095)
(11,837)
(64,208)
12,806
(Increase)/decrease in inventories
20,703
(32,869)
-
-
Increase/(decrease) in trade and other payables
12,378
1,986
126,849
62,193
Increase/(decrease) in provisions and employee benefits
5,422
(11,684)
-
-
Interest received/(paid)
Income taxes paid
131,475
60,127
62,641
74,999
(14,204)
(14,186)
-
-
(14,279)
(21,100)
(12,505)
(18,220)
Net cash from operating activities
102,992
24,841
50,136
56,779
93
94
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
31. reLated partIes
Key management personnel compensation
the key management personnel compensation included in ‘personnel expenses’ (see note 5) are as follows:
In Aud
short-term employee benefits
post-employment benefits
termination benefits
other benefits
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
5,583,364
4,318,898
910,634
804,337
500,000
250,000
39,564
39,076
7,033,562
5,412,311
-
-
-
-
-
-
-
-
-
-
Individual directors and executives compensation disclosures
Information regarding individual directors and executives compensation is provided in the remuneration report section of the director’s report.
Apart from the details disclosed in this note, no director has entered into a material contract with the consolidated entity since the end of the previous
financial year and there were no material contracts involving directors’ interests existing at year end.
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:
In Aud
Directors
p crowley
Executives
s Wright
A rusten
W saxelby
l patterson
Balance
1 July 2007
Balance
in the reporting
balance in
30 June 2008
period
period
Interest paid
and payable
Highest
980,000
1,721,250
486,457
858,540
-
1,025,991
427,332
792,540
886,100
959,991
-
-
-
-
-
1,778,750
486,457
858,540
920,600
1,025,991
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
31. reLated partIes (continued)
loans to key management personnel and their related parties (consolidated) (continued)
loans totalling $1,227,467 (2007: $2,525,040) were made to key management personnel or their related parties during the year. the loans made in
the current financial year related to the employee share plan.
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:
In Aud
total for key management personnel 2008
total for key management personnel 2007
Opening
balance
5,830,110
3,706,901
Closing
balance
4,787,213
5,830,110
Interest paid
and payable
in the reporting
period
-
-
Number
in group
at
30 June
5
5
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.
Other key management personnel transactions with the Company or its controlled entities
the consolidated entity purchased components and tooling of $282,731 (2007: $355,128) 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:
In Aud
trade creditors
CONSOlIDATED
THE COmPANy
2008
2007
2008
2007
-
41,679
-
-
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.
95
96
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
31. reLated partIes (continued)
movements in shares
the movement during the reporting period in the number of ordinary shares in GWA International limited held, directly, indirectly or beneficially, by
each key management person, including their related parties, is as follows:
Held at
1 July 2007
Purchases
Sales
30 June 2008
Held at
Directors: non-executive
B thornton
j Kennedy
m Kriewaldt
d Barry
r Anderson
G mcGrath
W Bartlett
Executive directors
p crowley
Executives
e harrison
s Wright
A rusten
G oliver
W saxelby
l patterson
15,073,902
1,112,820
1,000
100,000
12,355,889
28,890,832
300,000
100,000
-
30,230
-
-
-
5,000
500,000
250,000
113,911
268,750
300,000
156,250
-
-
-
-
-
300,000
300,000
-
-
-
-
-
-
-
-
-
(113,911)
-
-
-
-
-
16,186,722
101,000
100,000
12,386,119
28,890,832
300,000
5,000
750,000
-
268,750
300,000
156,250
300,000
300,000
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
31. 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
A rusten
r Watkins
j measroch
G oliver
l patterson
Held at
1 July 2006
Purchases
Sales
30 June 2007
Held at
15,023,402
52,000
(1,500)
15,073,902
10,000
100,000
12,372,389
28,890,832
420,458
500,000
620,975
168,750
-
100,000
200,000
231,250
100,000
-
-
-
-
-
-
100,000
100,000
300,000
-
-
25,000
200,000
(9,000)
1,000
-
100,000
(16,500)
12,355,889
-
28,890,832
(120,458)
300,000
-
500,000
(607,064)
-
-
(100,000)
(200,000)
(100,000)
-
113,911
268,750
300,000
-
-
156,250
300,000
no shares were granted to key management personnel during the reporting period as compensation. the aggregate number of shares held by key
management personnel or their related parties at 30 june 2008 was 60,044,673 (2007: 58,360,534).
97
98
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
notes to tHe
consoLIdated
fInancIaL statements
31. reLated partIes (continued)
Subsidiaries
loans are made by the company to its wholly owned subsidiaries. the loans have no fixed date of repayment and are non-interest bearing.
loans are made by wholly owned subsidiaries to other wholly owned subsidiaries. these loans are categorised as funding or trading depending on
the nature of transactions.
the funding loans represent funding for tax, capital expenditure and initial investment transactions. Where the funding loans are for tax or capital
expenditure and are also between different countries, interest is charged on these loans at market rates. Where the funding loans are in relation to
initial investment transactions, these loans are considered part of the net investment in the wholly owned foreign subsidiary and accordingly these
loans have no fixed date of repayment and are non-interest bearing. All other funding loans have no fixed date of repayment and are non-interest
bearing.
trading transactions between wholly owned subsidiaries are generally transacted on 30 day credit terms.
32. suBsequent events
subsequent to 30 june 2008, a memorandum of understanding has been signed granting Wisa Beheer management an exclusive dealing period to
purchase the Wisa Beheer business for euro 14 million. the sale price of euro 14 million is below the carrying value of the Wisa Beheer business,
and accordingly an impairment loss of $9,419,000 has been incurred in the year ended 30 june 2008. further details are outlined in note 14 to the
financial statements.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
dIrectors’ decLaratIon
1. In the opinion of the directors of GWA International limited (‘the company’):
(a) the financial statements and notes are in accordance with the corporations Act 2001, including:
(i) giving a true and fair view of the financial position of the company and the consolidated entity as at 30 june 2008 and of their
performance, as represented by the results of their operations and their cash flows, for the financial 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. there are reasonable grounds to believe that the company and the controlled entities identified in note 28 will be able to meet any obligations or
liabilities to which they are or may become subject to by virtue of the deed of cross Guarantee between the company and those controlled entities
pursuant to AsIc class order 98/1418.
3. the directors have been given the declarations by the managing director and chief financial officer for the financial year ended 30 june 2008
pursuant to section 295A of the corporations Act 2001.
dated at Brisbane on 19 August 2008.
signed in accordance with a resolution of the directors:
Barry thornton
director
peter crowley
director
99
100 GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
Independent
audItor’s report to
tHe memBers of gWa
InternatIonaL LImIted
report on tHe fInancIaL reports
We have audited the accompanying financial report of GWA International limited (the ‘company’), which comprises the balance sheets as at 30
june 2008, and the income statements, statements of recognised income and expense and cash flow statements for the year ended on that date, a
summary of significant accounting policies and other explanatory notes 1 to 32 and the directors’ declaration of the consolidated entity comprising the
company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
the directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian
Accounting standards (including the Australian Accounting Interpretations) and the corporations Act 2001. this responsibility includes establishing
and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement,
whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in
the circumstances. In note 1(a), the directors also state, in accordance with Australian Accounting standard AAsB 101 presentation of financial
statements, that the financial report of the consolidated entity, comprising the financial statements and notes, complies with International financial
reporting standards.
Auditor’s responsibility
our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing
standards. these Auditing standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform
the audit to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. the procedures selected
depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial
report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.
We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the corporations Act
2001 and Australian Accounting standards (including the Australian Accounting Interpretations), a view which is consistent with our understanding of
the company’s and the consolidated entity’s financial position and of their performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
Independent
audItor’s report to
tHe memBers of gWa
InternatIonaL LImIted
Auditor’s opinion
In our opinion:
(a) the financial report of GWA International limited is in accordance with the corporations Act 2001, including:
(i) giving a true and fair view of the company’s and the consolidated entity’s financial position as at 30 june 2008 and of their performance for
the year ended on that date; and
(ii) complying with Australian Accounting standards (including the Australian Accounting Interpretations) and the corporations
regulations 2001.
(b) the financial report also complies with International financial reporting standards as disclosed in note 1(a).
report on tHe remuneratIon report
We have audited the remuneration report as included in the directors’ report for the year ended 30 june 2008. the directors of the company are
responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the corporations Act 2001. our
responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with auditing standards.
Auditor’s opinion
In our opinion, the remuneration report of GWA International limited for the year ended 30 june 2008, complies with section 300A of the
corporations Act 2001.
KpmG
mark epper
partner
sydney, 19 August 2008
101
102 GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
otHer statutory
InformatIon
as at 18 august 2008
statement of sHareHoLdIng
In accordance with the Australian securities exchange listing rules, the directors state that, as at 18 August 2008, 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
1,804
6,989
3,474
2,341
129
14,737
1,198,264
21,193,072
26,351,321
50,272,389
181,157,949
280,172,995
%
0.43
7.56
9.41
17.94
64.66
100
the number of shareholders with less than a marketable parcel of shares is 164.
votInG rIGhts
the voting rights attached to shares are as set out in clause 9.20 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 18 August 2008:-
shareholder
number of shares
% of shares on Issue
hGt Investments pty ltd
14,548,152
5.19
GWA InternAtIonAl lImIted And Its controlled entItIes
ABn 15 055 964 380
otHer statutory
InformatIon
as at 18 august 2008
20 Largest sHareHoLders as at 18 august 2008
shareholder
number of shares % shares on Issue
hGt Investments pty ltd
nAtIonAl nomInees lImIted
rBc dexIA Investor servIces AustrAlIA nomInees pty lImIted
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