G
W
A
I
N
T
E
R
N
A
T
O
N
A
L
I
I
I
L
M
T
E
D
2
0
0
9
A
N
N
U
A
L
R
E
P
O
R
T
Level 14 10 Market Street Brisbane Queensland 4000 Australia
Telephone: 61 7 3109 6000 Facsimile: 61 7 3236 0522
Website: www.gwail.com.au
GWA INTERNATIONAL LIMITED
2009 ANNUAL REPORT
CONTENTS
Performance Summary
Company Profile and Mission Statement
Chairman’s Review
Managing Director’s Review of Operations
Health and Safety
In the Community
Business Divisions
GWA Sustainability and Innovation Story
Board of Directors
Corporate Governance Statement
Directors’ Report
Financial Statements
Other Statutory Information
Shareholder Information and Timetable
1
2
4
6
10
12
14
19
30
32
39
48
102
104
HEAD OFFICE LOCATIONS
GWA INTERNATIONAL LIMITED
Level 14 10 Market Street
Brisbane QLD 4000
AUSTRALIA
Telephone: 61 7 3109 6000
Facsimile: 61 7 3236 0522
Website: www.gwail.com.au
CAROMA DORF
4 Ray Road
Epping NSW 2121
AUSTRALIA
Telephone: 61 2 9202 7000
Facsimile: 61 2 9869 0625
Websites: www.caroma.com.au
www.fowler.com.au
www.stylus.com.au
www.starion-industries.com
www.dorf.com.au
www.clark.com.au
www.irwell.com.au
www.radiantstainless.com.au
www.ecologicalsolutions.com
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
www.hotwaterrebate.com.au
CORPORATE DIRECTORy
DIRECTORS
B Thornton, Chairman
J J Kennedy, Deputy Chairman
P C Crowley, Managing Director
D R Barry, Non-Executive Director
R M Anderson, Non-Executive Director
G J McGrath, Non-Executive Director
W J Bartlett, Non-Executive Director
D D McDonough, Non-Executive Director
R J Thornton, Executive Director
CHIEF FINANCIAL OFFICER
W R Saxelby, FCPA GAICD
COMPANy SECRETARy
R J Thornton, CA B Com (Acc) LLB (Hons) LLM
REGISTERED OFFICE
Level 14, 10 Market Street
Brisbane QLD 4000
AUSTRALIA
Telephone: 61 7 3109 6000
Facsimile: 61 7 3236 0522
Website: www.gwail.com.au
ASX code: GWT
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
www.ausloc.com
ROvER MOWERS LIMITED
155 Fison Avenue West
Eagle Farm QLD 4009
AUSTRALIA
Telephone: 61 7 3213 0222
Facsimile: 61 7 3868 1010
Website: www.rovermowers.com.au
SEBEL FuRNITuRE LIMITED
92 Gow Street
Padstow NSW 2211
AUSTRALIA
Telephone 61 2 9780 2222
Facsimile 61 2 9793 3152
Website: www.sebel.com.au
WISA Bv
Driepoortenweg 5
6827 BP Arnhem
NETHERLANDS
Telephone +31 (0) 26 362 9020
Facsimile +31 (0) 26 363 5480
Website: www.wisa-sanitair.com
AuDITOR
KPMG
10 Shelley Street
Sydney NSW 2000
AUSTRALIA
Telephone: 61 2 9335 7000
Facsimile: 61 2 9335 7001
SHARE REGISTRy
Computershare Investor Services Pty Ltd
Level 19, 307 Queen Street
Brisbane QLD 4000
AUSTRALIA
GPO Box 523
Brisbane QLD 4001
AUSTRALIA
Telephone: 1300 552 270
Facsimile: 61 7 3237 2152
Website: www.computershare.com.au
GROuP BANkERS
Commonwealth Bank of Australia
Australia and New Zealand Banking Group Limited
HSBC Bank Australia Limited
National Australia Bank
Westpac Banking Corporation
Printed using Forestry Stewardship Council (FSC) certified paper. All
paper sourced from responsibly managed plantation forests. ISO14001
environmental management system in use.
Revenue increased 4% due to new product and market
development initiatives in a weak market
Net Profit rose 5% after restructuring charges
Trading EBIT down 12% to $87 million due to market decline
impacting high margin products
Two new banks join banking group with core facilities
increased to $268 million
Strong cash flow and capital management initiatives
reduced net debt to $155 million
Final fully franked dividend of 8.5 cents per share,
maintaining full year ordinary dividend at 18 cents per share
2008/09 YEAR
PERFORMANCE
SUMMARY
Five Year Financial Summary
2004/05
$’000
2005/06
$’000
2006/07
$’000
2007/08 2008/09
$’000
$’000
Revenue
626,866
619,989
636,124
648,902
678,344
Earnings before interest, tax, depreciation,
amortisation and restructuring costs
(%)
Depreciation and amortisation
Earnings before interest, tax and restructuring costs
(%)
Interest (net)
Trading profit before tax
(%)
Tax expense
(%)
Trading profit after tax
Restructuring costs after tax
Net profit after tax
Net cash from operating activities
Capital expenditure
Research and development
Net debt
Shareholders’ equity
Other Ratios and Statistics
Return on shareholders’ equity
(%)
Interest cover
(times)
Net debt / (net debt + equity)
(%)
Earnings per share
Trading earnings per share
Ordinary dividend per share
Special dividend per share
Total dividend per share
Franking
Ordinary dividend payout ratio
Share price (30 June)
Dividend yield (total dividend)
Number of employees
(cents)
(cents)
(cents)
(cents)
(cents)
(%)
(%)
($)
(%)
130,067
117,617
118,533
117,314
105,060
20.7
26,714
103,353
16.5
11,137
92,216
14.7
19.0
22,420
95,197
15.4
11,490
83,707
13.5
18.6
19,779
98,754
15.5
12,366
86,388
13.6
18.1
17,920
99,394
15.3
14,623
84,771
13.1
15.5
18,105
86,955
12.8
13,844
73,111
10.8
28,328
23,628
24,975
24,612
21,919
30.7
63,888
–
63,888
83,767
21,331
6,488
161,706
409,546
28.2
60,079
3,227
56,852
60,038
30,966
5,775
28.9
61,413
5,095
56,318
24,841
21,516
5,360
29.0
60,159
14,269
45,890
102,992
22,235
6,056
30.0
51,192
2,867
48,325
78,628
17,348
8,119
141,000
225,614
193,557
154,985
411,968
408,802
389,120
426,164
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
11.3
7.6
26.7
16.9
17.9
18.0
–
18.0
100
109.8
106.5
2.50
7.8
2.30
7.8
2,474
2,226
1,957
1,786
1,891
1
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
COMPANY PROFILE
MISSION STATEMENT
GWA International Limited’s primary objective is to grow
shareholder wealth. This objective will be achieved by continuing
to invest in the development of its people, new products
and world leading technology, to sustain and build premium
profitability of its businesses over time.
The Company’s core business segment is building fixtures and
fittings which will focus on the research and development of
innovative new products to maximise market opportunities for
the businesses. The Company will continue to develop products
which provide sustainable solutions for reducing domestic and
commercial water consumption and greenhouse gas emissions.
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 Company will
continue the pursuit of appropriate acquisitions that add value
to its existing businesses and that support expansion into
new markets.
GWA International Limited (GWA) is one of Australia’s leading
designers, manufacturers, importers and distributors of household
consumer products.
A key focus is the research and development of innovative
environmental products which provide sustainable solutions
for reducing domestic and commercial water consumption and
greenhouse gas emissions.
We support our customers through five well-established business
divisions, Caroma Dorf, Dux, Gainsborough, Rover and Sebel.
These business divisions serve as the foundation for our suite
of well-known brands, including many household names such
as Caroma, Dorf, Fowler, Stylus, Clark, Radiant, Irwell, Dux,
Gainsborough, Sebel and Rover. In Australia, we are also the
exclusive distributor for other brands including Hansa and KWC.
GWA International Limited is a large Australian employer with
manufacturing operations across the country.
The Company invests significantly in research and new
product development which enables GWA to take advantage of
opportunities in a competitive marketplace.
GWA International Limited has achieved substantial growth since
its listing on the Australian Securities Exchange in 1993 as
a result of robust operating performance, successful
acquisitions and strong management.
The Company remains committed to building
shareholder value through continuously
improving business performance and
pursuing acquisitions which add
value to existing operations and
support our entry into new
markets.
2
2
logical solutions
PMS279
Process Black 75%
CAROMA DORF
Australia’s foremost designer, manufacturer,
importer and distributor of domestic and
commercial bathroom and kitchen products,
including sanitaryware, tapware, showers,
accessories, bathware, stainless steel sinks and
laundry tubs. Caroma Dorf is at the forefront of
product innovation incorporating water saving
technology, 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
A leading Australian designer, manufacturer,
importer and distributor of a comprehensive range
of domestic and commercial door hardware and
fittings, including security products.
SEBEL
At the forefront of Australian design, manufacture,
import and distribution of quality commercial
furniture and seating.
ROvER
One of Australia’s leading designers, importers and
distributors of domestic and commercial lawn and
garden care equipment.
3
3
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
ChAIRMAN’S REvIEW
Undoubtedly the operational
highlight of the year has been
the growth in revenue achieved
through new product and market
development activities which
helped to partially offset the
negative impact of the lower
underlying demand.
As we entered into the 2008/09 financial year there was considerable
uncertainty about the economic conditions ahead but few predicted
the near collapse of the global financial system and the depth of the
recession which would engulf the world in the last quarter of 2008.
For the first time in living memory finance was simply not available for
many organisations due to a loss of confidence and company collapses
ensued. GWA was not immune to these conditions but the robustness
of the business and a long history of prudent financial management
meant we have been able to refinance the business, maintain
dividends, and avoid large capital raisings which if not offset by strong
earnings growth will destroy shareholder value.
The Group achieved a trading profit after tax of $51.2 million in the
2008/09 year on sales revenue of $678.3 million. Net profit after tax
of $48.5 million was after restructuring charges of $2.9 million after
tax. These charges will results in improved efficiency over the next 12
months through ongoing rationalisation of operations and by realising
benefits from the recently implemented Movex ERP system into
Caroma Dorf.
Trading earnings before interest and tax of $87.0 million represented
a 12.5% decrease on the prior year’s performance due to the fall in
underlying demand. Undoubtedly the operational highlight of the
year has been the growth in revenue achieved through new product
and market development activities which helped to partially offset
the negative impact of the lower underlying demand. The Managing
Director will expand on this in his Review of Operations.
DIvIDENDS AND CAPITAL MANAGEMENT
The Group’s impressive operating cash flow enabled the directors to
declare a final fully franked ordinary dividend of 8.5 cents per share
to be paid in October 2009. Together with the interim dividend of 9.5
cents per share paid in April, this maintains the ordinary fully franked
dividend for the 2008/09 year at 18.0 cents per share, in line with the
prior year ordinary dividend. This is a commendable achievement in
an economic environment where many listed companies have been
reducing and in some instances ceasing dividend payments to improve
their balance sheet.
Following the announcement last year, the Board ceased payment of
the special dividend to better position the Company for growth through
acquisition. The current dividend policy is that absent an unexpected
decline in profitability, ordinary dividends will be maintained at 18.0
cents per share until such time as it equals 70–80% of earnings. At
such a time, it is proposed that dividends will then increase in line with
improvements in profitability.
In August 2008, the Board announced the reintroduction of the
Dividend Reinvestment Plan (DRP). The DRP has been well supported
by shareholders throughout the year with take-up rates of 26% and
35% for the final 2007/08 and interim 2008/09 dividends respectively.
The DRP has again been offered to shareholders for the final 2008/09
dividend at a discount of 3%, with future availability being subject to
the funding requirements of the business.
Another highlight for the year has been the overall refinancing of the
group loan facilities. BNP Paribas has exited as a lender to GWA and
two new banks now provide loan facilities to GWA. The ability to attract
these new lenders during a global financial crisis reflects the strength
of the business and confidence in the management of GWA. We
appreciate the ongoing support of Commonwealth Bank of Australia,
National Australia Bank Limited and Australia and New Zealand
Banking Group Limited, and welcome Westpac Banking Corporation
and HSBC Bank Australia Limited to the GWA banking group.
4
ExECUTIvE REMUNERATION
As part of the overall GWA salary structure, a new equity performance
plan for the executives was implemented during the year following
shareholder approval at the 2008 Annual General Meeting (AGM). The
plan incorporates challenging performance hurdles based on earning
per share growth and total shareholder return targets with the objective
of maximising long term performance. The plan was well supported
by shareholders at the 2008 AGM and will continue as part of the
remuneration arrangements for the executives.
The Board takes advice from external remuneration consultants in
setting remuneration levels for the executives. Given the difficult
economic environment and downturn in dwelling construction
and renovation activity, incentive payments have been limited
and a Company wide freeze has been imposed on fixed executive
remuneration increases for the 2009/10 year. Despite these actions,
the Board is satisfied that the current remuneration levels are market
competitive and will enable the retention of its high quality executive
and management team.
SUSTAINABILITY AND PRODUCT INNOvATION
The Board is committed to reducing energy and water usage across
the Group’s operations. In 2008/09, the Company has continued to
build on the progress of the prior year. I congratulate Caroma Dorf on
the significant water and waste reductions achieved during the year
at the Wetherill Park factory through recycling initiatives. Significant
energy savings were also achieved at this site during the year. There
are many other examples of the Company’s commitment to reducing
energy, waste and water across its operations, and I refer you to the
Sustainability and Environment (Operations) section in the Annual
Report for highlights of the Company’s initiatives during the year.
The Group invests over 1% of revenue in research and development
and in excess of 25% of revenue is derived from products which
were not in the market two years ago. This is a source of competitive
advantage for the Company with its commitment to develop new
market opportunities in our building fixtures and fittings businesses.
The focus of product innovation is in both water saving and energy
efficient water heating. The Company is a leading manufacturer
and distributor of products which deliver sustainable environmental
benefits. These products include Caroma Dorf’s market leading water
efficient sanitaryware and tapware, and Dux’s environmental water
heating products.
During the year, Caroma Dorf won the prestigious 2009 Australian
Design Award for the Caroma Invisi Series II toilet suite in the Housing
and Building Category. The product was developed at Caroma Dorf’s
Research and Development Centre and features the latest water saving
technology, and demonstrates the Company’s commitment to the
development of innovative environmentally friendly products. I refer you
to the Sustainability and Innovation (Products) section in the Annual
Report for further information on the Group’s sustainability focus.
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 these plans, the Deputy Chairman, Mr Jim
Kennedy will retire as a director at the Annual General Meeting in
October 2009.
Mr Kennedy has been Deputy Chairman of GWA and Chairman of the
Audit Committee since the float in 1993. His experience has been a
valuable asset to the Board and I wish to thank Mr Kennedy for his
contributions as a director and wish him well for the future.
Mr Darryl McDonough and Mr Richard Thornton have joined the
Board during the year and will be subject to election at the Annual
General Meeting in October 2009. Mr McDonough will become Deputy
Chairman of the Board and Mr Bill Bartlett will become Chairman of the
Audit Committee following the retirement of Mr Kennedy.
STRATEGIC DIRECTION
The Group will continue to focus on maximising opportunities for the
existing businesses through the development and marketing of innovative
new products, and will continue the search for suitable acquisition
opportunities. Progress has been made in this regard with the acquisition
of Austral Lock in January 2009 for $12 million which is a leading
Australian manufacturer of locks for the residential security door and patio
door markets. The Group is actively searching for further acquisitions
that will enable the expansion of our core building fixtures and fittings
businesses. Our balance sheet is strong and we have capacity to grow with
support from our banks and shareholders as required.
The financial performance for the 2008/09 year demonstrates the
strength of the Group’s businesses in challenging market conditions.
Despite some early increased activity in the first home buyer market
we do not see a substantial increase in overall building activity during
the 2009/10 financial year. The cost competitiveness of our operations,
new product innovation, improved efficiency of our supply chain and
benefits from implementation of the new Movex ERP system will ensure
we are well positioned to take advantage of the upturn when it occurs.
In closing, I would like to thank management and staff for their efforts in
achieving a sound financial result in the 2008/09 year, and look forward
to a further improvement in the performance in the 2009/10 year.
Revenue
$million
08/09
07/08
06/07
05/06
04/05
0
100
200
300
400
500
600
700
800
Dividend Per Share
cents
08/09
07/08
06/07
05/06
04/05
0
5
10
15
20
25
Ordinary Dividend
Special Dividend
5
GWA INTERNATIONAL LIMITED 2009 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 improved
supply chain management
and stable operations at
the upgraded Wetherill Park
vitreous china factory.
Trading conditions for the 2008/09 year have been the most difficult in
recent history with dwelling commencements falling to the lowest level
since 2001. The loss of confidence arising from the global financial
crisis in late 2008 and subsequent lack of financing available
for developers, builders and investors, has resulted in a fall in new
construction which is unlikely to improve until the 2010 calendar year.
The following chart shows the level of dwelling activity since 2003:
New Dwelling Activity
S
R
E
B
M
U
N
L
A
U
N
N
A
G
N
I
V
O
M
190,000
180,000
170,000
160,000
150,000
140,000
130,000
120,000
6
APPROVALS
COMMENCEMENTS
COMPLETIONS
3
0
E
N
U
J
3
0
C
E
D
4
0
E
N
U
J
4
0
C
E
D
5
0
E
N
U
J
5
0
C
E
D
6
0
E
N
U
J
6
0
C
E
D
7
0
E
N
U
J
7
0
C
E
D
8
0
E
N
U
J
8
0
C
E
D
)
f
(
9
0
E
N
U
J
Source: BIS Shrapnel
Trading Earnings Per Share
cents
07/08
06/07
05/06
04/05
03/04
07/08
06/07
05/06
04/05
03/04
0
5
10
15
20
25
Dividend Per Share
cents
0
5
10
15
20
25
Ordinary Dividend
Special Dividend
Given this context, the results for 2008/09 have been acceptable and
reflect the success of GWA’s core strategies which require:
■■
■■
■■
■■
■■
Investment in innovative and sustainable products
Leveraging our investment in brands, sales and marketing to ensure
products are specified and widely available
Low cost supply chain to ensure a cost competitive supply position
Continuing improvement in operational and business efficiency
improvement with the aid of a modern ERP system
Optimising our supply chain infrastructure to deliver superior
customer service levels.
The summary of financial results for 2008/09 outlined in the table
below highlight the key achievements for the year which saw increased
revenue from new product and market development and strong
operating cash flow reflecting improved supply chain management.
$million
Sales Revenue
Cash Flow before Financing Activities
Trading EBIT
Trading Profit after Tax
Restructure Costs after Tax
Net Profit after Tax
2008/09
2007/08
678.3
648.9
55.3
87.0
51.2
(2.9)
48.3
95.2
99.4
60.2
(14.3)
45.9
Sales revenue increased by 4.5% despite a decline in underlying
demand. This is due to the successful development of new product and
market opportunities, principally in environmental water heating and
the Do It Yourself (DIY) market. Increased demand in environmental
water heating is being driven by government rebates aimed at replacing
less energy efficient water heating. Over the past two years Dux has
successfully developed new products and marketing strategies to
take advantage of this market opportunity. For the Group as a whole,
overall margins have declined due to additional product and market
development costs and a general decline in higher margin product sales.
A real highlight for the year has been the very strong cashflow which
is a function of improved supply chain management and stable
operations at the upgraded Wetherill Park vitreous china factory.
The restructure charge for 2008/09 reflects a planned 4% reduction
in the workforce during 2009 as a result of on-going rationalisation
of operations and planned improvements in efficiency after the
full implementation of the Movex ERP system into Caroma Dorf in
September 2009. We expect this charge to be fully recovered through
cost savings in the 2009/10 financial year.
SEGMENT PERFORMANCE
The Company’s Building Fixtures and Fittings business segment
comprise the Caroma Dorf, Gainsborough and Dux business units.
Caroma Dorf sales declined by 7% for the year. While all markets
experienced declines in building activity, the downturns were most
pronounced in Queensland (-16%) and New Zealand (-14%).
The completion of restructuring initiatives during the 2007/08
financial year and improved supply chain management has driven
cost reductions during 2008/09, but these could not offset the volume
decline and adverse Australian dollar exchange rate movements. Price
rises were successfully implemented but overall margins have declined
in line with the lower volumes.
Dux sales increased by 50% for the year due to the regulatory-
driven change to higher-priced environmental products. Improved
performance of new products and investment in distribution is flowing
through to higher revenue and profitability. The business is continuing
to focus on enhancing its range of energy efficient products based
on technology developed in-house and through key partnerships with
offshore suppliers.
Gainsborough sales increased by 8% for the year due to the impact
of the Austral Lock acquisition in January 2009 and new product
and market development. Gainsborough is supplementing its strong
presence in the builder segment with a broader product offering
targeting the architectural and commercial market segments. Sales
have also improved in the DIY market and the business has done well
to offset the weaker underlying demand through these initiatives.
Sebel has encountered extremely difficult trading conditions with the
total absence of demand from the hospitality sector and delays in
Government spending. Sales revenue has been maintained due to
increased stadium work, but this is much lower margin contract work
resulting in lower profitability.
Rover sales have been severely impacted by lower discretionary
spending and poor weather conditions early in the year. This was
compounded by the devaluation of the Australian dollar which
increased product costs prior to the peak selling season. The
restructured business is far better positioned now to deliver profitable
sales with a stable low cost supply source in China.
CASh FLOW
The strong net cash flow from operating activities of $78.6 million
resulted from our continued focus on working capital management and
was a very pleasing result given the overall weak market conditions.
Expenditure on the acquisition of plant and equipment of $10.5
million was in line with depreciation. Further investment in the Movex
ERP system implementation totalled $6.8 million during the period.
Proceeds from the sale of property, plant and equipment of $6.4 million
includes a change to more flexible lease arrangements for
motor vehicles.
Sales Revenue $million
2008/09
2007/08
Trading EBIT $million
2008/09
2007/08
Building Fixtures
and Fittings
593.6
558.6
Building Fixtures
and Fittings
98.5
109.5
Sebel
56.1
56.9
Sebel
2.0
3.4
Rover
28.6
33.4
Rover
(0.9)
0.4
Other
–
–
Other
(12.6)
(13.9)
Total
678.3
648.9
Total
87.0
99.4
7
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
MANAGING DIRECTOR’S
REvIEW OF OPERATIONS
Net interest paid during the year reduced to $12.8 million following
the rapid fall in market interest rates in late 2008 and the repayment
of lending facilities to the exiting banker, BNP Paribas. The acquisition
of Austral Lock in January 2009 for $12.4 million was funded through
operating cash flow.
FINANCIAL CONDITION AND CAPITAL
MANAGEMENT
As a result of the strong cash flow performance and capital
management initiatives, the Company’s net debt reduced by $38.6
million to $155.0 million at June 2009. During the financial year
the Company paid $49.2 million in dividends and $33.3 million was
reinvested through the Dividend Reinvestment Plan (DRP). Of this
amount, $15.2 million was taken up by shareholders and $18.1
million was taken up by the underwriters of the DRP for the interim
dividend in April 2009.
Net debt at June 2009 totalled $155.0 million, representing gearing
of 26.8% as measured by net debt / net debt plus equity. The
Company has a strong balance sheet, established lines of funding and
investment grade financial metrics which will support future growth
opportunities. This has been achieved without a dilutive equity issue
so future increases in profits will deliver growth in earnings per share
and support our capacity to lift ordinary dividend payments
to shareholders.
The Group’s financial position at 30 June 2009 has been achieved
with the support of our banks over a difficult period in the credit
markets. GWA has renegotiated its Master Financing Agreement with
its banks, established new bank covenants and managed the exit of
BNP Paribas as a core lender using operating cash flow and existing
facilities.
GWA has negotiated the addition of two new banks to our banking
group. Westpac and HSBC will provide new facilities which further
assist our capacity to grow through acquisitions. Currently, we have total
core loan facilities of $267.5 million, of which $200 million is drawn. A
summary of current facilities and maturity dates is provided below.
Bank
$million
CBA
ANZ
NAB
Westpac
HSBC
Total
Available
Facilities
Drawn
Facilities
90.0
60.0
50.0
47.5
20.0
90.0
60.0
50.0
-
-
267.5
200.0
Maturity
Dates
June 2011
Jan 2011
Jan 2011
June 2011
Jan 2011
GWA is finalising arrangements for a stand alone EUR5 million facility
with ING for our Wisa operations in the Netherlands, as a replacement
for the EUR facility previously provided by BNP Paribas.
8
8
hEALTh AND SAFETY
Management is determined to improve the Company’s health and
safety performance through better safety systems and processes,
through extensive communication with our workforce and through
increased diligence in identifying safety risks across our workplace.
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.
During the 2008/09 year, the total injury frequency rate (injuries per
million man hours worked) was reduced by 21% which is a pleasing
result, however our safety performance remains an area of on-going
management focus and our objective is to improve this by a further
30% in the coming year.
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
There are a number of positive signals in the market with increased
housing finance and first home buyer activity and a more stable
Australian dollar, but we do not believe we will see a sustained
recovery in dwelling and non-dwelling construction until business
confidence improves and financing is available for developers, builders
and investors. Given that our products tend to be installed towards
the end of the construction phase, we do not expect any material
improvement in underlying sales in the 2009/10 financial year.
Increased sales of environmental water heating products, continued
benefits from product innovation and market development activities
and cost improvements from restructuring are expected to result in
some improvement in profitability in the 2009/10 financial year.
Further market guidance for 2009/10 will be provided at the
Company’s Annual General Meeting in October following first
quarter trading.
SUSTAINABILITY AND CARBON REDUCTION
GWA is committed to improving the environment both through
the products we make and sell and the manufacturing processes
we utilise. The Company is at the forefront of technology with the
development of water efficient toilets and tapware, and energy efficient
water heaters. Our environmentally-sustainable products are a major
source of competitive advantage for the Company.
The achievement of the 2009 Australian Design Award for the Caroma
Invisi Series II toilet suite further highlights the Company’s commitment
to sustainable design and innovation. During the year, the Company
spent $8.1 million on research and development and new products
sold during the year accounted for 17% of total sales revenue. This
demonstrates the importance of new product development to support
future growth in revenue and profitability.
GWA manufacturing operations are continually seeking ways in which
to reduce the levels of energy and water usage at our sites as well as
the waste produced through our processes and packaging. During
the year, recycling initiatives were implemented at the Wetherill Park
factory which has resulted in significant reductions in water usage and
waste. Similar sustainability initiatives are being implemented at the
other factory locations.
The current focus on carbon reduction and the new requirements for
carbon reporting and trading are being properly addressed. For GWA
this is not just a matter of compliance, but an opportunity to ensure a
profitable and sustainable future for the business.
STRATEGIC DIRECTION
GWA is well placed to pursue future growth opportunities. Our strong
cashflow, together with supportive shareholders and banks ensures
the Company will be able to continue pursuing internal and external
investment opportunities which will grow shareholder value.
Management will continue to focus on growing our Building Fixtures
and Fittings segment by expanding on our core strategies of low cost
supply, product innovation and high-quality products and service
levels. The Company is also well positioned to capitalise on acquisition
opportunities which complement our Building Fixtures and Fittings
businesses. The small Austral Lock acquisition during the year has
improved our capabilities to evaluate, execute and integrate an
acquisition and provides the model for larger acquisitions in the future.
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
in the current market. Indicative offers were received for Wisa and
Rover which did not reflect fair value and we will continue to work on
improving these businesses so they are better positioned for sale when
the opportunity arises.
9
9
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
hEALTh AND SAFETY
GWA continues to ensure it
provides a safe workplace for
its employees, contractors,
visitors and customers, in an
efficient and compliant manner.
GWA continues to ensure it provides a safe workplace for its employees,
contractors, visitors and customers, in an efficient and compliant manner.
Through divisionally or site-based health and safety advisors, GWA
promotes health and safety awareness in an environment which
encourages continuous improvement.
GWA’s health and safety advisors meet with the Group Risk Manager
approximately three times each year with the objectives of:
■ Discussing safety performance, goals and improvement strategies;
■ Exchanging ideas and detailing successful improvement programs;
■ Promoting training through guest speakers and external experts;
■ Arranging visits to view best practice sites;
■ Planning for cross-site auditing (with health and safety advisors
visiting different GWA sites); and
■ Planning and implementing new systems and procedures.
The Group Risk Manager reports two times each year to the GWA
Audit Committee. The reporting includes current health and safety
performance, current improvement plans and compliance with
regulations (e.g. asbestos and air monitoring). An audit plan, consistent
with GWA’s health and safety objectives, is also presented for approval
for the new financial year.
In January 2009, “eLearning” was successfully introduced into GWA.
eLearning is a computer-based online learning tool provided by
Learning Seat (a division of News Limited). eLearning allows GWA to
deliver its own tailored online learning courses and access an extensive
library of more than 400 available courses. Each course meets Federal
and State Government compliance obligations and is independently
audited by an Australian legal firm. Courses can be delivered as a
package and can also be mandated to designate certain pass marks
and completion dates. For example, the GWA induction package for
all new employees, integrates various training and education elements
and can be tailored to meet each individual’s role and needs. Learning
elements include:
■■
GWA company history, vision and values; and
■ Key policies
u Health and Safety;
u Equal Opportunity;
u Trade Practices;
u Emergency management;
u Harassment and bullying prevention; and
u Local site specific inductions.
eLearning provides GWA and its people with records of training which
are easily accessible online at all times. Training completion certificates
are also sent electronically to employees when training has been
successfully completed. eLearning is cost and time effective and
delivers top-up training to existing employees.
10
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 issued and completed on time
are recorded for each GWA site.
Three key measures of safety outcomes are:
■■
■■
■■
Lost Time Injury Frequency Rate (LTIFR), which measures lost time
injury resulting in an inability to work for at least one full shift;
Medical Treatment Injury Frequency Rate (MTIFR), which
measures the number of doctor-treated injuries per million hours
worked; and
Injury Severity Rate (ISR), which measures the number of hours for
a lost time injury per million hours worked.
In 2008-09, GWA posted a creditable improvement in two of the key
performance measures (LTIFR and MTIFR) by reporting 3% and 26%
respective reductions, compared with last financial year. ISR was 1%
above the previous financial year.
In 2009-10, GWA will target a 30% year-on-year improvement on the
2008-09 results for total injury frequency. Improvement objectives are
planned to be met through continuation of the 2008-09 initiatives and
new initiatives. These new initiatives include improved investigations
following medical and lost time injuries and an increased focus on
return to work after an injury.
One of the flow-on effects of good safety performance has been
the continued and sustainable reduction of workers compensation
premiums.
10
8
10
GWA Lost Time Injury Frequency Rate
6
8
10
4
6
8
2
4
6
0
2
4
0
2
0
2006
2007
2008
2009
2006
2007
2008
2009
Initiatives introduced for 2008-09 year include:
2006
2007
2008
2009
■■
Improvements to “Visual Factory” (Safety Star and noticeboards)
u Major sites now have improved visibility of safety performance
with dedicated noticeboards. This reinforces the safety message;
■■
Increased hazard reporting focus;
■■
Increased focus and emphasis on supervisor participation and
awareness of responsibility for health and safety;
■■
Monthly event calendars;
■■
Increased mandatory scheduled audits;
■■
■■
Integration of Austral Lock (acquired in January 2009) with health
and safety systems consistent with GWA policies and procedures;
Upgraded computer-based health and safety system with significant
improvements to incident reporting protocols and the automatic
scheduling and reporting of audits undertaken in operational risk
and general housekeeping.
35
GWA Medical Treatment Injury Frequency Rate
30
35
25
30
20
35
25
15
30
20
10
25
15
5
20
10
0
15
5
10
0
5
0
2006
2007
2008
2009
2006
2007
2008
2009
GWA Injury Severity Rate
2006
2007
2008
2009
6000
5000
6000
4000
5000
6000
3000
4000
5000
2000
3000
4000
1000
2000
3000
0
1000
2000
0
1000
0
2006
2007
2008
2009
2006
2007
2008
2009
2006
2007
2008
2009
11
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
IN ThE COMMUNITY
GWA takes its role as a good
corporate citizen very seriously,
and for this reason, is keen
to support community events
and organisations, particularly
those with a sustainability or
environmental focus.
GWA takes its role as a good corporate citizen very seriously, and for
this reason, is keen to support community events and organisations,
particularly those with a sustainability or environmental focus.
The Company is also committed to forming strong relationships with
the communities surrounding its operations and making a positive
contribution wherever possible.
In early 2009, bushfires swept across Victoria, devastating 78
communities and 400,000 hectares of land. A total of 173 people
lost their lives. The devastation also resulted in 2,029 homes being
destroyed along with hundreds of businesses, five schools and
kindergartens, three sporting clubs and numerous other buildings.
GWA wanted to play its part to support individuals and communities in
towns and suburbs affected by these devastating fires.
We felt our best opportunity to help those who suffered such profound
loss was during the reconstruction and recovery phase, which is
presently underway.
Through a direct approach to the Victorian Government, GWA
developed a plan to donate to the fit-out of two public information
centres being built at Kinglake and Marysville, which were the two
towns worst affected by the fires. These centres will provide vital
information to home owners seeking to rebuild after the devastation
of the fires.
Our Gainsborough, Caroma, Dux and Sebel businesses are each
donating products including locks and door handles, all vitreous china
products, taps, sinks, solar hot water systems and public seating for
the two centres.
12
In 2009, GWA’s head office also contributed to numerous events and
organisations including:
■■
■■
■■
Sponsorship of the ASX Thomson Reuters Charity Foundation,
which raises funds for children’s and medical research charities
Support for the Lions Club of Golden Valley which provides funds
for local special needs children
Donating to Variety Australia which contributes to various projects
assisting the Variety Children’s Charity
■■
Contributing to the Rotary Club of Ipswich
■■
Donating to the Closeburn Rural Fire Brigade.
Individually, our separate businesses also supported several
community events and organisations throughout the year.
Caroma Dorf was the Exclusive Bathroom Partner for Channel Nine’s
Jack of All Trades TV series for 2009. Caroma assisted with the design,
supply and installation of the two complete bathrooms within the
Jack of all Trades house. The completed house was auctioned and all
proceeds donated to Cystic Fibrosis Australia and the Mater Hospital
Brisbane, raising in excess of $250,000.
Caroma Dorf was a sponsor of World Toilet Day in November 2008.
This event was organised by the not-for-profit Engineers Without
Borders organisation. The event featured a public art exhibition of
100 decorated toilet pans at Reddacliff Place and the Queen Street
Mall in Brisbane. Designed by local creative industries and firms, the
toilet pan exhibition was created to raise awareness of World Toilet
Day. This event was established to raise awareness of global sanitation
issues. Designed toilets were auctioned on eBay after the event with
all proceeds raised donated towards funding sanitation projects in
disadvantaged communities via the World Toilet Organisation and
Water Aid Australia.
Caroma Dorf was a silver sponsor of the Australian Water Association’s
fifth International Water Association specialist conference on
efficient use and management of urban water. It was also a diamond
sponsor of the Kitchen Bathroom Designer Institute (KBDI), a
national organisation providing kitchen and bathroom designers with
accreditation, training and professional development opportunities.
GWA is committed to forging strong relationships in the communities
where it has its operations. With this objective in mind, our
Gainsborough business is a sponsor of the Kyneton Football Club
in Victoria, where one of our manufacturing operations is located.
Fundraising for the Royal Children’s Hospital Melbourne is a
further initiative of Gainsborough, which is supported by employee
contributions.
Our Dux business was the sponsor of the 2008 race day at the famous
Bong Bong Picnic Races. The race day is one of the biggest sporting
events in the Southern Highlands attracting thousands of visitors from
all over Australia. The 2008 race day was the 50th anniversary of
the races being held at its current location, Wyeera, and was a huge
success for Dux and its invited guests from Victoria, Queensland and
parts of New South Wales.
Dux sponsored the Ute Muster at the local Moss Vale Show which
attracts thousands of local visitors each year. Dux also purchased for
its staff family passes to the Show so the whole family could enjoy the
friendly country atmosphere of this very popular event.
Dux is also sponsoring local sporting clubs – the Moss Vale Junior
Dragons Rugby League Club, the Moss Vale Soccer Club and the
Robertson Junior Rugby League Club.
13
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
BUSINESS DIvISIONS
BUSINESS DESCRIPTION
Caroma Dorf is Australia’s foremost designer, manufacturer, importer
and distributor of domestic and commercial bathroom and kitchen
products. The product range includes sanitaryware, tapware, showers,
accessories, bathware, stainless steel sinks and laundry tubs. Caroma
Dorf is at the forefront of product innovation incorporating water saving
technology and is the market leader in water efficient sanitaryware
and tapware.
PMS279
STRATEGIC DIRECTION
Caroma Dorf will maintain leadership in the domestic market by
creating value for its customers through the development of innovative
products with appealing design and advanced water saving technology,
and providing a superior level of customer service. Caroma Dorf will
continue to invest in its iconic brands to reinforce its brand values.
Caroma Dorf is committed to continuous process improvement in its
Australian manufacturing and supply operations.
MAIN PRODUCTS AND SERvICES
Vitreous china toilet suites, urinals, basins, plastic cisterns, bathroom
Process Black 75%
accessories and fittings. Acrylic and pressed steel spas, baths and
shower trays. Tapware, showers and accessories, stainless steel sinks
and laundry tubs.
MAjOR BRANDS
Owned: Caroma, Dorf, Fowler, Stylus, Clark, Radiant, Irwell
Exclusive: Hansa, Schell, KWC, Virtu
OPERATING LOCATIONS
Australia, New Zealand, North America, China
MAjOR MARkETS
New dwellings, renovation, replacement and commercial markets in
Australia, New Zealand and selected international markets.
hEAD OFFICE LOCATION
Caroma Dorf
4 Ray Road
Epping NSW 2121
AUSTRALIA
Telephone 61 2 9202 7000
Facsimile 61 2 9869 0625
Website: www.caroma.com.au
www.fowler.com.au
www.stylus.com.au
www.starion-industries.com
www.dorf.com.au
www.clark.com.au
www.irwell.com.au
www.radiantstainless.com.au
www.ecologicalsolutions.com
14
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, Radiant
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 develop and improve its range of environmental
water heaters to meet the new market requirements of improved
energy efficiency. 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
Website: www.dux.com.au
www.ecosmart.com.au
www.hotwaterrebate.com.au
15
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
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.
STRATEGIC DIRECTION
Gainsborough’s strategic direction encompasses the development of
new and innovative door hardware products to suit domestic buildings
and commercial projects.
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, Austral Lock
OPERATING LOCATIONS
Australia, New Zealand, export markets
MAjOR MARkETS
Domestic home builders, DIY and building projects, commercial
buildings and multi-dwelling developments.
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
www.ausloc.com
16
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 and aged care markets.
MAjOR BRANDS
Owned: Sebel
OPERATING LOCATIONS
Australia, New Zealand, Hong Kong, United Kingdom, Germany and
dealers in over 50 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
92 Gow Street
Padstow NSW 2211
AUSTRALIA
Telephone 61 2 9780 2222
Facsimile 61 2 9793 3152
Website: www.sebel.com.au
17
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
BUSINESS DIvISIONS
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, overseas distributors
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
18
ThE GWA SUSTAINABILITY AND
INNOvATION STORY
19
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
CAROMA DORF –
COMMITMENT TO
WATER-SAvING INNOvATION
A key area of focus for the
Caroma Dorf business is the
design, development and
commercialisation of a range
of retrofit-specific water-saving
product solutions.
logical solutions
Government, businesses and the wider community are actively
pursuing solutions and initiatives to address sustainability challenges
including climate change and water usage. Caroma Dorf is committed
to developing market-leading water saving technologies to meet
market needs for more water efficient product solutions. A key area of
focus for the Caroma Dorf business is the design, development and
commercialisation of a range of retrofit-specific water-saving product
solutions. These solutions not only help reduce water consumption with
their design features, they also facilitate the replacement of inefficient
fixtures in commercial and residential premises.
Winner of the GreenPlumbers Innovative Product of the Year Award,
the Caroma Flex is designed to cover the footprint of many older
wall hung toilet pans found in aging commercial bathrooms across
Australia. Flex features a unique bracket with adjustable inlet and
outlet connections to suit a range of existing set outs, which makes old
inefficient pans easier to retrofit. This installation flexibility reduces
the need to relocate plumbing and demolish walls, helping lower
installation costs and making previously cost prohibitive retrofits
possible. It also minimises the need to re-tile or re-paint over old
pan footprints.
CAROMA FLEx RETROFIT SOLUTION
Caroma’s Flex Retrofit solution is the only product of its kind in the
Australian market and it is already recognised for its innovation. The
Caroma Flex is an advanced and cost-effective way of accelerating the
retrofit of commercial premises, while reducing water consumption.
With many commercial buildings built in the 1970s and now needing
refurbishment, Flex provides a retrofit solution previously only possible
through a full bathroom renovation. These buildings often have
inefficient fixtures and by providing an innovative, retrofit solution,
Caroma Dorf is assisting commercial premises to lower their
water usage.
The Flex pan has been specially developed to be coupled with the new
Caroma Invisi™ Series II concealed in-wall cistern, which is another
breakthrough innovation, for a complete water-saving retrofit solution.
CAROMA RETROFIT CISTERN
The Caroma Sovereign Retro Suite is an innovative product that
simplifies the retrofitting of older style toilet suites. The suite features
the unique Retro cistern with a large footprint designed to cover most
of the old single-flush cisterns. This water-efficient Smartflush® option
can often be installed without the need for re-tiling or re-paint. This
4-star water-saving solution results in minimal disruption and cost.
20
RETROFIT PROGRAM PARTNERShIPS
The Caroma Dorf Eco Logical Solutions team works proactively with
government bodies and the plumbing industry to encourage retrofit
programs which deliver both product and installation solutions to help
businesses and communities to more easily upgrade their premises.
RESIDENTIAL PROGRAMS
With millions of single flush toilet suites still in use across Australia,
Caroma Dorf continues to provide market-leading, water-saving
solutions for government-led toilet replacement programs. These
programs have been developed in consultation with the plumbing
industry. By providing consumers with a packaged product
and installation solution, these programs are making it easy for
householders to reduce their water consumption. These initiatives
include:
■■
■■
■■
■■
Launching the ACT Government ToiletSmart Program in mid-2008.
This program is now in its second phase with more than 3,900
single flush and inefficient dual flush toilets already replaced with
Smartflush® toilet suites. Caroma Dorf worked closely with the ACT
Government to develop this program, which to date has already led
to significant water savings and significantly reduced the amount of
water flowing to the sewerage treatment plant within the Territory
Partnering with local councils, Caroma Dorf also played a key role
in the development of toilet retrofit programs currently underway
in regional areas of New South Wales including Palerang, Leeton,
Bathurst and Yass
Playing an instrumental role in implementing residential toilet
retrofit programs in Toowoomba (QLD), Dalby (QLD) and Port
Macquarie (NSW) in 2008; and
Continuing to work closely with local councils, water authorities and
government departments around Australia to promote the benefits
of toilet retrofitting as a cost effective and sustainable solution to
saving water.
COMMERCIAL RETROFIT INITIATIvES
With a significant amount of water used in bathrooms, commercial
retrofit solutions are a viable option for companies seeking to save
water and cut their operating and maintenance expenses by changing
to more efficient fixtures and fittings. The Caroma Dorf Eco Logical
team continues to work with government and businesses to develop
retrofit programs designed to make bathrooms in commercial premises
more water efficient.
In February 2009, the ACT Government launched a Commercial
Bathroom Retrofit Program to assist businesses in reducing their water
consumption. Caroma Dorf is pleased to be part of this proactive
initiative, offering a product range designed to meet the needs of most
commercial buildings. The program provides eligible businesses with
access to funding of up to $20,000 per property to replace inefficient
bathroom fixtures with more water efficient product solutions.
NEW ECO LOGICAL TOOLS
LAUNCh OF COMMERCIAL WATER
SAvING CALCULATOR
Caroma Dorf launched a sophisticated new Commercial Water
Saving Calculator created in conjunction with The Institute for
Sustainable Futures at the University of Technology, Sydney.
The calculator supports the Caroma Dorf Eco Logical Solutions
platform and is an easy-to-use tool that allows businesses to
review their water usage and make informed decisions about their
retrofit programs. The calculator further reinforces Caroma Dorf’s
commitment to delivering innovative environmental solutions to help
industry to reduce water consumption.
The calculator highlights water savings that can be made from
installing more efficient bathroom products in commercial
buildings. For specific retrofit projects, a tailored savings
assessment can be generated and for new premises the calculator
can be used to pre-determine future water usage based on the
efficiency of the fixtures selected.
SUSTAINABILITY WEBSITE
Caroma Dorf has launched a new website to support its sustainability
initiatives. www.ecologicalsolutions.com reinforces Caroma Dorf’s
position as a viable partner for sustainability and commitment to
a sustainable future through the development of environmentally-
friendly bathroom products and the provision of packaged retrofit
solutions.
The new website highlights the products, services and tools that
Caroma Dorf offers to support businesses wanting to reduce water
consumption. The site is an information hub for commercial and
residential retrofitting. It is also a platform to keep the market
informed on the latest water-saving technologies and retrofit initiatives
from Caroma Dorf.
21
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
CAROMA’S REvOLUTIONARY INvISI™ SERIES II TOILET SUITE
WINS 2009 AUSTRALIAN INTERNATIONAL DESIGN AWARD
logical solutions
The Caroma Invisi™ Series II toilet suite collection has been awarded
the highly acclaimed 2009 Australian International Design Award for
the Housing and Building Category in recognition of its innovative
design at the Australian International Design Awards.
“A more comprehensive range of toilet suites is offered by the
Invisi™ Series II collection, which are suitable for both residential
and commercial applications. This allows the sophisticated look of
concealed cistern toilet suites to be integrated into any bathroom.”
The awards, which are a division of Standards Australia, represent
Australia’s only national product design awards program, which
recognises local product design and innovation excellence.
The Invisi™ Series II range is a unique in-wall toilet system recognised
for its water saving technology and ease of installation for commercial
and domestic applications.
The 2009 Design Award for the Invisi™ Series II adds to Caroma’s
earlier Design Awards for the Smartflush® toilet suite system, which
innovatively delivers maximum water savings while optimising flushing
performance, and the H2Zero™ Cube urinal, a sustainable, high
performance waterless urinal.
Caroma Dorf’s Research and Design Manager Dr Steve Cummings
said: “We are proud the Invisi™ Series II has been acknowledged with
a Design Award amongst so many high quality designs across such
varied product categories.”
“The Invisi™ Series II has been developed using world class technology
that breaks new ground in the housing and building sectors,” he said.
The versatile Invisi™ Series II toilet suites are suitable for in-wall, under
counter, induct and in-ceiling applications, and are the first wall-hung
toilet suites that fit within a standard 90mm wall cavity with
450mm centres.
Suite servicing can be completed through the wall-mounted button
plate to access the cistern and plumbing, as required.
The Invisi™ Series II also incorporates Caroma’s reliable and proven
Smartflush® water-saving technology and carries a 4 star Water
Efficiency Labelling and Standards (WELS) rating.
The collection meets all relevant Australian Standards and is
guaranteed against leaking in wall when installed by a certified
plumber, in accordance with the installation instructions.
22
The Invisi™ Series II has been
developed using world class
technology that breaks new
ground in the housing and
building sectors
23
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
DUx hOT WATER –
AWARD WINNING
ENvIRONMENTAL
INNOvATION
STRONG GROWTh IN ENvIRONMENTAL WATER
hEATERS
The hot water market has undergone rapid change over the past three
to five years with strong growth in high-efficiency gas, solar and heat
pump water heaters. Legislation, backed by significant government
incentives, has supported the strong growth of environmental
water heaters. These incentives are forecast to continue until the
government’s proposed ban on storage electric water heaters in 2012.
Dux continues to focus on constant product innovation. In 2008-09
Dux received industry accolades including:
■■
■■
■■
■■
“ Environmental Product of the Year” at the Queensland Plumbing
Industry Awards
“ Environment and Heritage Award” at the Engineering
Excellence Awards
WA Master Plumbers “Environmental Product of the Year”
2009 Endeavour Award “Australian Trade/Consumer
Product of the Year”
Dux has a highly awarded range of environmental water heaters,
following the receipt of these important industry accolades.
In September 2008, Dux launched the pioneering rebate website,
www.hotwaterrebate.com.au. It is the first national website that
calculates Federal and State Government hot water rebates for
homeowners across Australia. The website helps to simplify and explain
rebates as well as making the claim process easier. With more than
2.5 million page views in less than a year, it is now the industry’s most
popular rebate information source.
Dux also has a strong focus on customer service and training
improvement. The company will soon launch the ‘Dux Solar University’.
This will be a state-of-the-art training facility, which will enable staff and
customers to be provided with the very best technical information on all
Dux products, their installation and servicing.
24
homeowners can reduce their
energy costs and household
carbon emissions by installing
a solar hot water system.
AIROhEAT®
Airoheat continues to be a highly-successful product. Its unique
and innovative design has made it an award winning environmental
hot water system with six prestigious industry awards. Airoheat is an
efficient compact heat pump water heater as well as being simple,
convenient and quick to install. Airoheat is very appealing to consumers
seeking environmentally-friendly solutions because it offers similar
benefits to electric-boosted solar hot water systems but without the
need for solar roof panels. This dramatically reduces installation costs
and complexity.
GAS BOOSTED SOLAR SYSTEMS
Dux continues to be a strong player in the gas boosted solar hot water
system market as these systems are among the most environmentally-
friendly hot water solutions available.
There are two types of gas solar hot water systems in the Dux range.
These include Sunpro 305, which provides a lower entry point price,
while maintaining all of the benefits of mains pressure hot water. Its
compact footprint has made it an ideal choice on smaller building
blocks, particularly in Victoria.
ELECTRIC BOOSTED SOLAR SYSTEMS
The traditional electric storage water heater is presently the dominant
hot water system type in Australian households. Homeowners can
reduce their energy costs and household carbon emissions by
installing a solar hot water system. The Dux range of Sunpro® electric
boosted solar hot water systems (along with the Airoheat), is the
logical replacement for these old electric systems. These systems
are rapidly gaining popularity among consumers because of their
environmental benefits.
The Dux range of Sunpro® electric boosted solar is at the forefront of
efficiency and will continue to be a hugely popular product of
the future.
The more efficient gas continuous solar range, which combines a larger
tank coupled with the Endurance® continuous flow system, has been
a popular choice for higher-end home builders. This type of system is
the most efficient on the market and is designed to maximise solar gain
and provide unlimited hot water.
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 an
inexpensive, environmentally-friendly fuel source for heating water.
The future for this segment of the market is in highly efficient gas
systems, which typically have an energy rating of 5 stars or higher.
Dux continues to develop quality products in these categories with an
emphasis being placed on efficiency and innovation.
25
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
GAINSBOROUGh –
A COMMITMENT TO
ThE ENvIRONMENT
Gainsborough is committed to
reducing the use of packaging
across the supply chain and
increasing the use of recyclable
packaging materials.
Gainsborough is actively managing a number of initiatives to improve
environmental sustainability.
Water usage has been reduced by 55% in core production activities
over the past three years.
Gainsborough is proud to introduce the exciting new Trilock Eclipse and
Trilock Omni, both featuring modern styling and the world renowned
Trilock ‘3 in 1’ functionality with the unique convenience of lockset,
deadbolt and passage functions. These products are presented in the
Gainsborough Designer Collection.
Over the past year, solid waste has been reduced by 22%, with further
waste minimisation initiatives to be implemented later in 2009.
Gainsborough was awarded Certificates of Recognition by the Victorian
EPA for participation in the Resource Efficiency in Metal Finishing
Program in 2007 and for participation in the EPA’s Partnership Program
in 2008.
Product marketing is also subject to a strong program of sustainability.
As a signatory to the National Packaging Covenant, Gainsborough is
committed to reducing the use of packaging across the supply chain
and increasing the use of recyclable packaging materials.
INNOvATIvE NEW PRODUCTS FROM
GAINSBOROUGh
Gainsborough combines the latest in door hardware styling with Trilock
‘3 in 1’ functionality, to provide innovative door solutions for
today’s homes.
The Trilock Eclipse includes a slim, elegantly designed internal and
external escutcheon plate to add style to exterior doors. This door
solution is available in a selection of lever designs and finishes and
combines impressive styling with Trilock ‘3 in 1’ functionality. Finishes
include bright chrome, fusion and brushed satin chrome. Matching
leversets are available to coordinate interior doors.
The new Trilock Omni offers all the benefits of Trilock ‘3 in 1’
functionality combined with an impressive 600mm stainless steel
pull handle.
The external side of the lock features the 600mm pull handle, slim
escutcheon plate and lever, all manufactured from durable 316 marine-
grade stainless steel. The inside lever and contemporary escutcheon
plate are finished in popular brushed satin chrome.
There are three fashionable inside lever designs which complement the
styling of the interior leversets in the Designer Collection’s Accent range.
Both products feature a five-year tarnish resistant and 10 year
mechanical guarantee.
26
SEBEL –
QUALITY FURNITURE
AND SEATING
SEBEL LEADING ThE WAY IN REDUCING ITS
ECOLOGICAL FOOTPRINT ON ThE ENvIRONMENT
Sebel remains at the forefront of injection moulding technology and
recycling with today’s state-of-the-art factory producing high-quality,
sustainable products.
In an effort to support sustainability and strategically position Sebel as
an expert in developing and manufacturing polypropylene products, the
company sets the environmental and ecological benchmarks within the
markets that it operates in.
Examples of Sebel’s new innovative sustainable products include:
Postura Chair – 100% Recyclable
The most significant recent event for Sebel has been the release of the
100% recycled school chair called the Postura.
Education clients demand high quality furniture that withstands the
rigours of a modern classroom environment.
Sebel has established itself as a market leader and Australia’s largest
school furniture company.
Sebel has taken the global environmental lead with the new Postura
totally recycled school chair. The new Sebel Postura recycled school
chair has been designed and strenuously tested to pass the highest
Australian and European standards, with key features being strong
durability and comfort for students of all ages.
Coinciding with the Federal Government’s Building the Education
Revolution stimulus package, Sebel is now buying back old Sebel
school chairs, re-manufacturing them and creating totally new
products. Under Sebel’s new buy-back system, schools can now renew
their classrooms with bright new chairs at a low cost, while not adding
to landfill with discarded chairs.
The launch of this product has further consolidated Sebel’s Australian
and International leadership position in plastic recycling technology.
Chameleon Office Chair Range
To improve our competitive position and profile in the office furniture
market, Sebel has developed a responsible solution to help clients who
make their purchasing decisions based on environmental factors.
The Chameleon range is innovative, versatile and environmentally-
friendly. It is GECA certified, and with a NATA certified in-house testing
facility, the Chameleon range has been tested over 500,000 cycles at
150kg which is well beyond severe duty standards AS 4438.
All of its plastic components are moulded in Australia, using recycled
materials (excluding specific outer). At the end of the products useful
life, it is genuinely recyclable thus reducing our ecological footprint.
This new range will set Sebel apart from this segment of the market
and create new standards that meet or exceed market requirements.
27
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
SUSTAINABILITY
AND ENvIRONMENT
(OPERATIONS)
Waste Stream
Clay waste
Vitreous china waste
Cardboard packaging
Office paper
All plastics
Bulker bags
One trip pallets
Tonnes per Annum
1440
840
All
All
240
All
All
GROUP INITIATIvES
GWA’s product ranges in the building fixtures sector have continued
to provide innovative products that enhance water and energy saving
measures. GWA’s commitment to sustainability and the environment
also extends to its operations.
2008-09 has been another year of significant developments in water and
energy savings, continuing on from the successes of the 2007-08 year.
Significant highlights include:
CAROMA WEThERILL PARk, NEW SOUTh WALES
■■
Caroma Wetherill Park became a member of Sustainability
Advantage – a NSW State Government initiative targeting reduction
in energy/emissions and awareness of environmental influences
in manufacturing operations and associated capital projects.
Objectives and outcomes targeted include maximising efficiency
of resources employed in manufacturing including electricity, gas
(natural and LPG) and water.
As further benefit to Caroma, Wetherill Park has achieved a 75% cost
reduction on a waste disposal cost base of $1.1million per annum.
Water Recycling/Reduction
■■
The installation of a new water treatment plant was completed
last year. Caroma Wetherill Park is now treating all process water,
and generating water quality suitable for reuse in non-critical plant
(approximately 40% of total usage). Distribution of recycled water
is being introduced in phases during the 2009-10 year. In order
to extend water reuse to critical plant, further enhancement of
water quality will be required. Capital investment for this project
is pending approval. When approved it will give Caroma Wetherill
Park the opportunity to recycle and reuse an estimated 80% of
total water consumption (approximately 200,000 litres) of which
170,000 litres is being discharged to Sydney Water sewerage
■■
Engineers reprogrammed the computer wash cycles for Pressure
Casting Moulds to deliver an annual town water usage reduction of
5,000,000 litres per year.
Waste Stream Recycling
Glaze Reclamation
■■
Caroma Wetherill Park manufactures vitreous china sanitaryware
including toilets and hand basins. Caroma has established a
comprehensive program for segregation of waste streams for recycling
as outlined in the table above.
■■
The most significant recycling initiative has been the clay and
fired waste (vitreous china) streams which were previously sent to
landfill. Boral Recycling are now taking 95% of Caroma Wetherill
Park’s manufacturing waste material by weight. Boral Recycling
re-use these materials to manufacture (for clay waste) bricks,
pavers and garden blocks and (for vitreous china waste) as a
material component for road base and also as an adjunct to brick
manufacture.
Caroma Wetherill Park is partnering Boral in the study of further
uses of the clay and vitreous china waste into other manufactured
products.
Paper, cardboard and plastics collected are 100% recycled.
Timber and particle board pallets, which are classed as single use
by Caroma, are 95% recycled. These pallets are now being reused
in other applications or converted to timber chips for reuse in
landscaping applications.
It is estimated that for all the waste streams, greater than 95% are
recycled and reused in secondary manufacturing processes such
as bricks, road base and recycled paper and cardboard.
28
The glaze recycling system has now operated successfully for 12
months. The system, called Xtract, recovers the overspray glaze
which is applied onto the vitreous china ware. Caroma Wetherill
Park is reclaiming all overspray at the rate of 336 tonnes per
annum of recycled glaze, which represents 40% of total glaze
requirements. The process also produces 8,000 litres of recycled
water which is re-used in cleaning operations. Previously the used
glaze was sent to landfill (1,400kg annually) and the water sent to
waste via the sewer.
Energy Reduction
■■
■■
■■
■■
■■
Air conditioning – a combination of replacement, rebalancing and
installation of timers has occurred in office and canteen areas with
estimated usage reductions of 25% for these facilities
Factory air compressors have been refitted to new energy efficient
inverter drive compressors
Baseline measurements are currently underway to identify
opportunities for further efficiency improvements
Lighting – lux sensors have been trialled in some factory areas.
Work is in progress to retro-fit energy efficiency light bulbs
throughout the Wetherill Park site
Investigation and feasibility studies are a work in progress for
the feasibility of co-generation, kiln heat recovery, forklift energy
conversion and rain water harvesting.
CAROMA NORWOOD, SOUTh AUSTRALIA
NATIONAL PACkAGING COvENANT SIGNATORY
Energy Reduction
■■
Electricity consumption was reduced by 6% when measured as
a ratio of consumption compared to factory output. This was
achieved via more efficient use of air compressors.
Water Reduction
■■
Water usage was reduced by 26% compared to the previous year
when measured as a ratio of usage compared to factory output by
more efficient use of water for cooling.
SEBEL BANkSTOWN, NEW SOUTh WALES
Energy Reduction
■■
Sebel conducted an air consumption and energy usage survey on
three air compressors running on site. Modifications were made
to control equipment to optimise running times and efficiency.
Estimated savings are approximately 357,000KWh per annum.
Water Reduction
■■
Sebel Bankstown has reduced the water consumption used in
the cooling towers on site by 50% through reconfiguring the
cooling tower set-up. This has resulted in an annual saving of
approximately 30,000 litres per year.
GAINSBOROUGh BLACkBURN, vICTORIA
Plating Waste Reduction
■■
Plating waste weight reduction of 6.5% has been realised due to
waste filter cake being allowed to dry out prior to being sent off-site
as prescribed waste, saving disposal costs.
Additional initiatives to be implemented are to capture heat
generated by die-casting machines into an oven to dry filter cake
more efficiently. Further advantages can be achieved if waste can
be stored on-site to be sent away in larger volumes made possible
due to weight reduction.
Diecast Waste Reduction
■■
A program to treat oily water from the diecast process is being
implemented. Cooling emulsion is currently trapped in machine
bunds and pumped to holding tanks for disposal as prescribed
waste. The solution will use chemical separation of emulsion
streams from holding tanks and will allow the water component
to be discharged to sewer. The emulsifying agent to be employed
does not require pH and temperature adjustment, which means
lower cost for disposal.
GWA joined the National Packaging Covenant (NPC) during 2008. The
signatory commitment is for three years. The aim of the scheme is to
reduce packaging to waste by encouraging recycling, minimisation and
reuse. Each GWA division has now submitted an approved action plan.
During 2009-10 each division will report progress to the NPC against
approved action plans.
GREENhOUSE GAS INITIATIvES AND REPORTING
Ultimately all identified energy and water savings will reduce
greenhouse gases. Reduction in water usage frequently leads to
reduced on-site treatment and typically leads to less energy demands
for downstream sewerage treatment plants through decreased effluent
processing. GWA remains committed to sustainability, through energy,
water and waste reductions in all operations as well as products.
During 2009, a sustainability group was formed within GWA. The group
is made up of key operational staff from major operations sites and
group marketing. The aim of the group is to promote awareness of
sustainability for both products and processes in GWA by:
■■
■■
■■
■■
Reducing energy and water consumption in both products
and processes
Reducing waste in processes
Encouraging recycling of material where practical
Ensure reporting requirements under NPC and National
Greenhouse Emissions Reporting (NGER).
National Greenhouse Emissions Reporting (NGER)
■■
GWA has been undertaking preparatory work to capture,
record and report greenhouse gas emissions under NGER. In
2009, Caroma Wetherill Park will trigger reporting obligations
for greenhouse gas emissions. Policy and procedures are well
advanced to report on emissions. A computer based system to
streamline recording and to assist with compliance to NGER is
running and, with further enhancements, will be used to help
provide empirically based data for sustainability based capital
projects as well as track reductions. The database captures water
and energy usage at all GWA sites where there is operational
control. It is expected that all GWA sites will report greenhouse
gas emissions during the 2009-10 financial year.
29
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 a former
director of many major listed public companies, including Stockland
Corporation Limited and Suncorp-Metway Limited. He is also a
former Chairman of the Brisbane Airport Corporation Limited and the
Ports Corporation of Queensland.
PETER CROWLEY BA B ECON FAICD
Managing Director, Appointed 2003
■■
Expertise: Broad manufacturing experience in Australia
and overseas
2001: Managing Director and Chief Executive, Austrim Nylex
Limited, a diversified industrial company;
1999: Executive Director, Cement and Lime, The Rugby Group PLC,
a UK Public Company with extensive international cement
operations. During this period, also served as a director of
Adelaide Brighton Limited;
1997: Chief Executive, Cockburn Cement Limited (a subsidiary of
The Rugby Group PLC), Western Australia’s largest cement
producer and Australia’s largest lime producer;
1982: Various roles with Queensland Cement Limited and its parent
company Holderbank culminating in General Management
responsibilities within Australia and South-East Asia.
30
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
GWA INTERNATIONAL LIMITED 2008 ANNUAL REPORT
BOARD OF DIRECTORS
BOARD OF DIRECTORS
jIM kENNEDY AO CBE DUNIv (QUT) FCA FCPA
Deputy Chairman and Non-Executive Director,
Elected to the Board 1992
■■
■■
Expertise: Chartered Accountant, corporate and financial
management
Special Responsibilities: Deputy Chairman of the Board and
Chairman of Audit Committee
Mr Kennedy is one of Australia’s most experienced major listed
public company directors.
During the past three years, Mr Kennedy has served as a director
of the following other listed companies, and the period in which the
directorships have been held:
■■
■■
■■
Suncorp-Metway Limited 1997 - 2006
Australian Securities Exchange Limited 1990 - 2006
Qantas Airways Limited 1995 - 2006
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.
30
DAvID BARRY FAIM
Non-Executive Director, Elected to the Board 1992
DARRYL MCDONOUGh
BBUS (ACTY), LLB (hONS), SjD, FCPA, FAICD
■■
■■
Expertise: Importation, distribution and retailing
Special Responsibilities: Member of Remuneration Committee
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.
Mr Barry was appointed a Non-Executive Director of GWA
International Limited in 1992.
RIChARD ThORNTON CA B COM LLB (hONS) LLM
Executive Director and Company Secretary, Elected
to the Board 2009
Non-Executive Director, Elected to the Board 2009
■■
■■
Expertise: Lawyer and experienced public company director
Special Responsibilities: Member of Nomination Committee
Darryl McDonough is a practicing solicitor with over 25 years of
corporate experience. He has served as a director of a number
of public companies in the past, including Bank of Queensland
Limited and is currently a director of Super Cheap Auto Group
Limited and is a Past-President of The Australian Institute of
Company Directors, Queensland Division.
During the past three years, Mr McDonough has served as a
director of the following other listed company, and the period in
which the directorship has been held:
■■
Expertise: Chartered Accountant, taxation and finance
■■
Super Cheap Auto Group Limited since 2004
*
Mr Thornton joined GWA International Limited in 2002 as Group
Taxation Manager and Treasurer and was appointed Company
Secretary in 2003. He is a Chartered Accountant and is
experienced in accounting, taxation and finance through positions
at Coopers & Lybrand, Citibank and Ernst & Young in Australia and
overseas. Mr Thornton continued in his role as Company Secretary
following his appointment as an Executive Director.
*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
Special Responsibilities: Chairman of Remuneration Committee
and member of Nomination 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.
During the past three years, Mr McGrath has served as a director
of the following other listed companies, and the period in which the
directorships have been held:
■■
■■
Campbell Brothers Limited since 2003*
+
Fletcher Building Limited 2003 – 2009
*denotes current directorship
+denotes Chairman
Expertise: Chartered Accountant, actuarial, insurance and
financial services
Special Responsibilities: Member of Audit Committee and member
of Remuneration 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. He is a
director of the Bradman Foundation and Museum.
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*
Arana Therapeutics Limited (formerly Peptech Limited) 2004 - 2007
Abacus Property Group since 2007*
■■
Retail Cube Limited 2004 – 2006
*denotes current directorship
31
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
CORPORATE GOvERNANCE
STATEMENT FOR ThE YEAR
ENDED 30 jUNE 2009
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.
The Board of Directors is responsible for the corporate governance
of GWA International Limited (“the Company”) which is an essential
part of the role of the Board. 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.
The Board supports the Corporate Governance Principles and
Recommendations (“the recommendations”) of the ASX Corporate
Governance Council. The Board confirms that the current
corporate governance practices of the Company meet or exceed
the recommendations, except for Recommendation 2.2 which
provides that the chairperson should be an independent director.
The Chairman of the Company, Mr Barry Thornton, would not be
considered an independent director in accordance with the definition
of independence outlined in the recommendations, as he is associated
with a substantial shareholder. This matter is outlined in more detail
below – refer Independence of Directors.
PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR
MANAGEMENT AND OvERSIGhT
ROLE OF ThE BOARD
The Board is responsible for the long term growth and financial
performance 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:
■■
Providing input into and final approval of corporate strategies and
performance objectives developed by senior management
■■
Approval and monitoring of financial and other reporting
■■
■■
■■
■■
■■
Monitoring of executive and senior management performance,
including the implementation of corporate strategies, and ensuring
appropriate resources are available
Appointment and monitoring of the performance of the Managing
Director
Liaison with the Company’s External Auditor through the Audit
Committee
Ensuring that the Company has appropriate systems of risk
management and internal controls, reporting mechanisms and
delegation authority limits in place
Approval and monitoring of the progress of major capital
expenditure, capital management, acquisitions and divestments
32
■■
Any other matters required to be dealt with by the Board from time
to time depending upon circumstances of the Company
■■
Other matters referred to in the Board Committee charters
The Board operates under a charter that details the functions and
responsibilities of the Board. The charter is regularly reviewed
to ensure it remains consistent with the Board’s objectives and
responsibilities.
DELEGATIONS POLICY
The Board has approved a 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
understands the authorities delegated by the Board and are
accountable to the Board for its compliance. Regular reviews are
conducted on the appropriateness of the delegated 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
appointment. Similarly, senior executives including the Managing
Director and Chief Financial Officer have formal job descriptions 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 business objectives and
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 various business locations, followed by
management presentations and site tours.
The Divisional General Managers are required to regularly attend and
present at the Board meetings on operational issues and performance.
A Group strategy meeting is held annually as part of the budget
approval process, which enables the Board to review corporate
strategies and performance with the Divisional General Managers. This
ensures that the Board is effectively carrying out its duties of providing
input into and approving corporate strategies and performance
objectives.
The Chief Financial Officer is required to attend Board meetings and
present the Finance Department Monthly Report, and to answer
questions from the directors on financial performance, accounting, risk
management and treasury matters.
The Company Secretary is responsible for the completion and
dispatch of the agenda and Board papers for each meeting. The
Company Secretary prepares the draft minutes for each meeting,
which are tabled at the next Board meeting for review and approval.
The Company Secretary is accountable to the Board, through the
Chairman, on all corporate governance matters.
COMPOSITION OF ThE BOARD
The Board presently comprises 9 directors, 7 of whom, including the
Chairman and Deputy Chairman, are non-executive directors and 2,
the Managing Director and Executive Director, are executive directors.
Profiles of the directors are set out on in the Annual Report. The
profiles outline the skills, experience and expertise of each Board
member, including the period of office held by each director.
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:
■■
The Board should maintain a majority of non-executive directors
■■
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 be financially literate and have 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 non-executive directors of the Company:
■■
Mr Jim Kennedy, Deputy Chairman and Non-Executive Director
■■
Mr David Barry, Non-Executive Director
■■
Mr Robert Anderson, Non-Executive Director
■■
Mr Bill Bartlett, Non-Executive Director
■■
Mr Darryl McDonough, Non-Executive Director
■■
Mr Geoff McGrath, Non-Executive Director.
33
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
The Board is responsible for ensuring that the action of individual
directors in the Boardroom is that of independent persons. The Board
distinguishes between the concept of independence and issues of
conflict of interest or material personal interest which may arise from
time to time – refer Conflicts of Interest below.
In recognising the importance of the independence of directors
and the immediate disclosure of conflicts of interest, the Board has
included both matters as permanent items on the agenda at Board
meetings. Any independence or conflict of interest issues arising
during the relevant period must be disclosed to the Chairman prior
to each Board meeting. The disclosure is recorded in the Register of
Directors’ Interests and in the Board minutes.
(i) Mr Barry Thornton – Chairman and
Non-Executive Director
As indicated earlier, the Chairman, Mr Barry Thornton, would not
be considered an independent director based on the definition
of independence outlined in the recommendations of the ASX
Corporate Governance Council. This is on the basis that Mr Thornton
is associated with a substantial shareholder. In the Board’s view,
Mr Thornton’s association with a substantial shareholder in no way
prevents Mr Thornton from exercising independent judgment in
carrying out his duties as Chairman of the Board. Mr Thornton is a long
serving Chairman and has overseen the efficient and effective conduct
of the Board’s functions since listing.
In the event that any independence or conflict of interest issue
arises with respect to Mr Thornton’s association with a substantial
shareholder, the Company has procedures in place for the Deputy
Chairman to assume the role as acting Chairman of the Board.
(ii) Mr Geoff McGrath – Non-Executive Director
In previous years, Mr Geoff McGrath was deemed not to be an
independent director as he was the former Managing Director until his
retirement in May 2003. It has been more than three years since the
appointment of Mr McGrath as a non-executive director in July 2004.
Accordingly, Mr McGrath now meets the definition of an independent
director as outlined in the recommendations of the ASX Corporate
Governance Council. In the Board’s view, Mr McGrath exercises
independent judgement in carrying out his duties as director and
should be considered an independent 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 materiality thresholds used for the determination of independence
and issues of conflict of interest has been considered from the point
of view of the Company and directors. For the Company, a relationship
which accounts for 5% or more of its revenue is considered material.
For a director, a relationship which accounts for 5% or more of the
total income of a director is considered material. Directors’ fees are not
subject to this test.
ACCESS TO INDEPENDENT ADvICE
Directors and the Board Committees have the right in connection with
their duties and responsibilities to seek independent advice at the
Company’s expense. Prior written approval of the Chairman is required,
but this will not be unreasonably withheld. Where appropriate, directors
share such advice with the other directors.
NOMINATION COMMITTEE
The Nomination Committee meets as required and on several
occasions throughout the year. For membership and attendance details
of the Nomination Committee, refer to the Directors’ Report.
The composition of the Nomination Committee is based on the
following principles:
■■
■■
■■
The Nomination Committee should consist of non-executive
directors only
The Nomination Committee should consist of a minimum of three
members
The Chairperson should be the Chairperson of the Board or
another non-executive director.
The Nomination Committee operates under a charter that details the
Committee’s role and responsibilities, composition, structure and
membership requirements. The charter is regularly reviewed to ensure
it remains consistent with the Board’s objectives and responsibilities.
The main responsibilities of the Committee include:
■■
Assessment of the necessary and desirable competencies of Board
members
■■
Review of the Board succession plans
■■
Evaluation of the performance and contributions of Board members
■■
Recommendations for the appointment and removal of directors
■■
■■
Review of the remuneration framework for the non-executive
directors
Reporting to the Board on the Committee’s role and responsibilities
covering all the functions in its charter.
In performing its responsibilities, the Nomination Committee receives
appropriate advice from external consultants and other advisers
as required.
The Company Secretary prepares the draft minutes for each
Nomination Committee meeting, which are tabled at the next
Nomination Committee meeting for review and approval. The draft
minutes are also included in the Board papers of the next Board
meeting following the Nomination Committee meeting.
34
SELECTION AND APPOINTMENT OF DIRECTORS
The Nomination Committee is responsible for the selection and
appointment of directors. In the circumstances where there is a need
to appoint a director, whether due to the retirement of a director,
growth of the Company, or changed circumstances of the Company,
certain procedures will be followed, including the following:
■■
■■
Determination of the skills and experience appropriate for an
appointee, having regard to those of the existing directors and other
likely changes to the Board;
Upon identifying a potential appointee, consider the competency
and qualifications, independence, other directorships, time
availability, and the effect that their appointment would have on the
overall balance of the composition of the Board; and
■■
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.
PERFORMANCE EvALUATION
On an annual basis, the Nomination Committee conducts a formal
evaluation of the performance of Board, the Board Committees and the
individual Board members to determine whether functioning effectively
by reference to current good practice. The performance evaluation
is conducted by the Chairman of the Board through interviews with
individual Board members, the results of which are reported to
the Board.
PRINCIPLE 3 – PROMOTE EThICAL AND
RESPONSIBLE DECISION-MAkING
CODE OF CONDUCT
The Company’s objective is to conduct its business with the highest
standards of personal and corporate integrity. To assist employees in
achieving this objective, the Company has developed a comprehensive
Code of Conduct which guides the behaviour of directors, officers
and employees and demonstrates the commitment of the Company
to ethical practices. The Code of Conduct is incorporated as part of
new employees’ induction training and an acceptance form is signed
by new employees acknowledging their understanding and on-going
compliance.
The Code of Conduct states the values and policies of the Company
and complements the Company’s risk management and internal
control practices. The Code of Conduct is regularly reviewed and
updated to ensure that it reflects current good practice, and to promote
the ethical behaviour of all employees.
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 the directors.
Outside of these designated periods, there are no trading restrictions
where the directors, officers and other “potential insiders” are not
in the possession of unpublished insider information. At all times,
if an employee possesses unpublished insider information about
the Company, that person is prohibited from trading. In addition,
employees must not engage in any short-term trading in the
Company’s shares.
As an additional restriction, the directors must advise the Chairman
prior to trading outside the designated periods and confirm to the
Chairman that they do not possess unpublished insider information.
The policy also requires the directors to notify the Company Secretary
within three business days after trading, to enable the Company
Secretary to lodge the required disclosures with the Australian
Securities Exchange.
PRINCIPLE 4 – SAFEGUARD INTEGRITY IN
FINANCIAL REPORTING
AUDIT COMMITTEE
The Audit Committee meets as required and on several occasions
throughout the year. For membership and attendance details of the
Audit Committee, refer to the Annual Report.
The composition of the Audit Committee is based on the following
principles:
■■
The Audit Committee should consist of non-executive directors only
■■
The Chairperson of the Audit Committee must not be 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 and accounting
related 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 responsibilities. A
detailed Terms of Reference has been developed to ensure the Audit
Committee meeting agenda is consistent with the Committee’s role and
responsibilities as outlined in the charter.
35
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
The External Auditor, Managing Director, Chief Financial Officer,
Company Secretary, Group Commercial Manager, and other Company
executives (as required) attend Audit Committee meetings, by
invitation, to present the relevant statutory information, Financial
Statements, reports, and to answer the questions of the Audit
Committee members. At the Audit Committee meetings, the Audit
Committee members will meet with the External Auditor without
management present.
During each year, the Audit Committee examines the non-audit
roles performed by the audit firm and other potential audit service
providers to satisfy itself that the auditor’s independence will not be
compromised and that alternate providers are available, if considered
desirable. Whilst the value of the non-audit services could, in extreme
cases, compromise audit independence, more important is to ensure
that the External Auditor is not passing an audit opinion on the non-
audit work of its own firm.
The main responsibilities of the Audit Committee include:
■■
Review of financial statements and external financial reporting
■■
Assess the management processes supporting external reporting
During the year, the Company’s External Auditor, KPMG, provided an
Auditor Independence Declaration to the Board (refer to the Directors’
Report) that, to the best of their knowledge and belief, there have been
no contraventions of:
■■
■■
■■
Assess whether the external reporting is adequate to meet the
information needs for shareholders
Recommendations on the appointment and removal of the External
Auditor
■■
■■
the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
any applicable code of professional conduct in relation to
the audit.
Review and monitor the performance and independence of the
external audit
In considering this declaration, the Board were satisfied with the
continuing independence of the audit function.
■■
Review of tax planning and tax compliance systems and processes
■■
■■
■■
Review and monitor risk management and internal compliance and
control systems
Assess the performance and objectivity of the internal
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 to an independent audit firm,
a policy has been approved by the Board on the role of the External
Auditor, which is designed to ensure the independence of the external
audit function.
For details of the non-audit roles performed by KPMG during the year,
please refer to the notes to the Financial Statements.
SELECTION AND APPOINTMENT OF ExTERNAL
AUDITOR
Following shareholder approval at the 2004 Annual General Meeting,
KPMG were appointed External Auditor for the financial year
commencing 1 July 2004 after a comprehensive tender process
conducted by the Audit Committee. KPMG replaced Ernst & Young
who had been the External Auditor since 1995.
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. An audit partner rotation plan has
been reviewed and approved by the Audit Committee to ensure the
transition process is managed effectively.
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 includes 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 Managing Director is the Company’s Continuous Disclosure
Compliance Officer and is responsible for ensuring compliance with the
continuous disclosure requirements, and overseeing and authorising
disclosure of information to the ASX. All media releases which contain
material price sensitive information must be approved by the Board
prior to release to the ASX.
The Company Secretary coordinates the communications with the
ASX 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.
36
PRINCIPLE 6 – RESPECT ThE RIGhTS OF
ShAREhOLDERS
The Company is committed to ensuring shareholders and the financial
markets are provided with full, open and timely information about its
activities. This is achieved by the following:
■■
■■
■■
■■
■■
Ensuring that shareholder communications (including Annual
Report, Half Year Report and Notice of Annual General Meeting)
satisfy relevant regulatory requirements and guidelines. The
Company is committed to producing shareholder communications
in plain English with full and open disclosure about the Company’s
policies and procedures, operations and performance
Ensuring that shareholders have the opportunity to receive
external announcements by the Company through the corporate
website, www.gwail.com.au. All Company announcements and
information released to the market are located on the website
and may be accessed by shareholders. There is a Corporate
Governance section on the website which outlines the practices
of the Company, and other Company information including the
Company’s environmental and social impacts
The Board is committed to the enhancement of electronic
communications with shareholders to reduce the environmental
impact and costs. Shareholders can elect to receive Company
communications electronically, although not all communications
are made available electronically. Annual Reports are no longer
printed and mailed to shareholders, unless specifically requested.
Annual Reports are made available to shareholders on the
Company’s website in an accessible and user friendly format.
Shareholders are mailed the Notice of Annual 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 has recently
embraced online proxy voting to make it easier for shareholders
to lodge their proxy votes if they are unable to attend the Annual
General Meeting. 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 management policies and
practices across the Company which addresses each of the key
elements and requirements of AS/NZS Standard 4360: 2004 –
Risk Management.
Such processes include defining the risk oversight responsibilities of
the Board and the responsibilities of management in ensuring risks
are both identified and effectively managed. The agreed policies and
practices are made effective through the combined activities of:
■■
■■
■■
■■
■■
■■
an Audit Committee that reports to the Board on risk management
and internal control matters in accordance with its main
responsibilities as outlined in the Audit Committee Charter. Whilst
ultimate responsibility for risk oversight rests with the Board,
the Audit Committee is an efficient mechanism for focusing the
Company on risk oversight, risk management and internal control
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
a Finance Committee, comprising the executive and senior
management of the Company, which has been established to
review and monitor the financial risks in the organisation and
oversee the execution of finance policies and risk mitigation
activities. The Finance Committee reports to the Audit Committee
on its activities as outlined in the Finance Committee charter
a Group Commercial Manager who has primary responsibility
for designing, implementing and coordinating the overall risk
management and internal control practices of the Company. The
Group Commercial Manager attends the Audit Committee meetings
to present the Internal Audit Report. Whilst reporting to the Chief
Financial Officer on a day to day basis, the Group Commercial
Manager has the authority to report directly to the Board on
any matter
a Group Risk Manager, who has specific responsibilities in respect
of operational risks including occupational health and safety,
business continuity, environmental and sustainability risks. The
Group Risk Manager prepares a monthly Group Risk Report for
the Board and attends the June and December Audit Committee
meetings to present the Operational Risk Report
Internal Audit activities, undertaken by a combination of internal
and appropriately qualified external resources, based on an Audit
Committee 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 occupational
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.
37
In performing its responsibilities, the Remuneration Committee
receives appropriate advice from external consultants and other
advisers as required.
The Company Secretary prepares the draft minutes for each
Remuneration Committee meeting, which are tabled at the next
Remuneration Committee meeting for review and approval. The draft
minutes are also included in the Board papers of the next Board
meeting following the Remuneration Committee meeting.
REMUNERATION POLICIES
The Board’s objective in setting the Company’s remuneration policies
is to provide maximum stakeholder benefit from the retention of a high
quality Board and executive team. This is achieved by remunerating
directors and executives fairly and appropriately based on relevant
employment market conditions, and the linking of the Managing
Director’s and executives emoluments to the Company’s financial and
operating performance 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 non-executive
directors receive their remuneration by way of directors’ fees only
(including statutory superannuation), and are not able to participate in
the incentive schemes for the executives.
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.
LONG TERM INCENTIvE (EQUITY) PLAN
Shareholders approved a new Long Term Incentive (Equity) Plan
(LTIP) as part of the incentive arrangements for executives at the 2008
Annual General Meeting. Full details of the operation of the LTIP is
described in the Remuneration Report.
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
Risk management is embedded in the Company’s policies and
procedures which have 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.
CERTIFICATION OF RISk MANAGEMENT
CONTROLS
In conjunction with the 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 statement is founded on a sound system of risk management
and internal compliance and control which implements the policies
adopted by the Board; and
the Company’s risk management and internal compliance and
control system is operating efficiently and effectively in all material
respects.
The statements from the Managing Director and Chief Financial Officer
are based on a formal sign-off framework established throughout the
Company and reviewed by the Audit Committee as part of the financial
reporting process.
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 consist of a minimum of
three members
The Chairperson of the Remuneration Committee should be a non-
executive director.
The Remuneration Committee operates under a charter that details
the Committee’s role and responsibilities, composition, structure and
membership requirements. The charter is regularly reviewed to ensure
it remains consistent with the Board’s objectives and responsibilities.
The main responsibilities of the Committee include:
■■
Review of the Company’s remuneration and incentive policies
■■
■■
Review of executive and senior management remuneration
packages
Review of the Company’s recruitment, retention and termination
policies and procedures
■■
Review of the Company’s superannuation arrangements
■■
Reporting to the Board on the Committee’s role and responsibilities
covering all the functions in its charter.
38
DIRECTORS’ REPORT
AS AT 30 jUNE 2009
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 2009.
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 (Retired 30 October 2008)
G J McGrath, Non-Executive Director
W J Bartlett, Non-Executive Director
D D McDonough, Non-Executive Director (Appointed 16 February 2009)
R J Thornton, Executive Director (Appointed 6 May 2009)
Details of the directors’ qualifications, experience and special
responsibilities are located in the Annual Report.
Details of the directorships of other listed companies held by each
director in the three years prior to the end of the 2008/09 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. Mr Thornton continued in his role as
Company Secretary following his appointment as an Executive Director
on 6 May 2009. Details of Mr Thornton’s qualifications and experience
are located in the Annual Report.
DIRECTORS’ INTERESTS
The relevant interest of each director in the share capital of the
Company as notified by the directors to the Australian Securities
Exchange in accordance with Section 205G(1) of the Corporations Act
2001 as at the date of this report is:
Director
B Thornton
J J Kennedy
P C Crowley
D R Barry
R M Anderson
G J McGrath
W J Bartlett
D D McDonough
R J Thornton
Ordinary Shares
Nil
101,000
750,000
3,553,830
8,418,442
150,000
15,425
43,635
110,850
Mr P C Crowley and Mr R J Thornton are holders of Performance
Rights under the Long Term Incentive (Equity) Plan. For details of the
Performance Rights held, please refer to the Remuneration Report.
Note 33 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 61,351,674 shares (last year 58,719,673 shares).
39
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
CORPORATE STRUCTURE
GWA International Limited is a Company limited by shares that is
incorporated and domiciled in Australia. GWA International Limited
has prepared a Consolidated Financial Report incorporating the
entities that it controlled during the financial year ended 30 June
2009, which are outlined in Note 31 of the Financial Statements.
PRINCIPAL ACTIvITIES
The principal activities during the year within the consolidated entity
were the research, design, manufacturing, importing and marketing
of household consumer products as well as the distribution of these
various products through a range of distribution channels in Australia
and overseas.
There have been no significant changes in the nature of these
activities during the year.
EMPLOYEES
The Company employed 1,891 employees as at 30 June 2009 (last
year 1,786 employees).
The Company recognises the productivity benefits to be gained from
investing in its employees to improve motivation and individual skills.
The Company remains committed to ensuring that staff are provided
access to appropriate training and development programs.
All companies in the consolidated entity are active equal opportunity
employers.
SEGMENT PERFORMANCE
The segment performance of the Company for the financial year
ended 30 June 2009 is as follows:
Business Segment
Segment Revenue
Trading EBIT
Building fixtures and fittings
Commercial furniture
Mowers
Other
Total
Earnings Per Share
Basic earnings per share
Trading earnings per share
2008/09
$’000
2007/08
$’000
2008/09
$’000
2007/08
$’000
593,671
558,657
98,493
109,552
56,088
28,585
–
56,864
33,381
2,033
3,369
(931)
370
–
(12,640)
(13,897)
678,344
648,902
86,955
99,394
2008/09
2007/08
cents
16.9
17.9
cents
16.4
21.5
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 2009 is provided in
the Managing Director’s Review of Operations which is located in the
Annual Report.
In the opinion of the directors other than the decision to no longer
classify the Wisa Beheer sanitaryware business as an asset held for
sale, 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:
Dividends
Cents per share
Total Amount
Franked
Date of Payment
$’000
Final 2007/08 Ordinary
Interim 2008/09 Ordinary
8.0
9.5
22,414
Fully Franked
7 October 2008
26,831
Fully Franked
1 April 2009
Franked dividends declared and paid during the year were franked at
the corporate tax rate of 30%.
DECLARED AFTER END OF ThE 2008/09
FINANCIAL YEAR
After the balance sheet date the following dividend was approved by
the directors. The dividend has not been provided and there are no
income tax consequences.
40
Dividend
Cents per share
Total Amount
Franked
Date of Payment
$’000
Final 2008/09 Ordinary
8.5
25,332
Fully Franked
7 October 2009
The financial effect of the dividend has not been brought to account in
the Financial Statements for the year ended 30 June 2009 and will be
recognised in subsequent Financial Reports.
The record date for the final dividend is 18 September 2009 and the
dividend payment date is 7 October 2009. The Dividend Reinvestment
Plan (DRP) will be offered to shareholders for the final dividend, and a
discount of 3% will apply to shares subscribed for under the DRP. The
record date for DRP participation is 18 September 2009.
SIGNIFICANT EvENTS AFTER BALANCE DATE
On 18 August 2009, the directors declared a final ordinary dividend
of 8.5 cents per share in respect of the financial year ended 30 June
2009. The dividend will be fully franked at the 30% corporate tax rate.
The total amount of the dividend is $25.332 million (last year $22.414
million). In accordance with Accounting Standards, the dividend has
not been provided for in the Financial Statements for the year ended
30 June 2009.
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 REGULATION AND
PERFORMANCE
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 conditions is made by external
advisors.
The Company in conjunction with external advisors monitors storage
and treatment of hazardous materials within particular operations. Prior
to any discharge to sewers, effluent is treated and monitored to ensure
strict observance with licence conditions.
The directors are not aware of any breaches of the Company’s licence
conditions during the financial year ended 30 June 2009.
ENvIRONMENTAL REMEDIATION
In previous financial years, the Company investigated and reported
two environmental contamination issues at factory sites at Eagle Farm,
Queensland and Revesby, NSW. The Eagle Farm site 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 the ultimate parent entity, GWA International Limited.
The costs to remediate the Eagle Farm site have been provided in the
Financial Statements for the year ended 30 June 2009. Whilst there
is currently no legal obligation to remediate the site, the Board has
approved targeted remediation activities to mitigate potential future
environmental liabilities. It is expected that these activities will be
carried out during the year ending 30 June 2010. A Site Management
Plan will be developed following remediation.
The costs to remediate the Revesby site have been provided in prior
years. During the year, a Voluntary Remediation Proposal for the site
was submitted to the Department of Environment and Climate Change
(NSW) and it is expected that remediation activities will commence
during the year ending 30 June 2010. A Site Management Plan will be
developed following remediation.
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.
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
and all persons concerned or taking part in the management of the
Company and its controlled entities.
41
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
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
hurdles in relation to variable executive remuneration
An employee share plan which rewards performance and
represents a long term financial commitment to employment with
the Company.
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 2004 Annual General Meeting, 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. An additional fee is also paid for each Board
Committee on which a director sits. The payment of additional fees for
serving on a Committee recognises the additional time commitment
required by directors who serve on one or more Committees.
In setting the level of non-executive directors fees and the manner in
which it is to be apportioned amongst the directors, the Nomination
Committee takes advice from external 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 the termination of the Directors’ Retirement Scheme in 2003,
retirement benefits are not available for non-executive directors of the
Company, other than statutory superannuation.
For details of the emoluments paid to the non-executive directors for
the year ended 30 June 2009, refer to the Remuneration Tables.
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.
The executives’ remuneration consists of the following key elements:
■■
Fixed Remuneration
■■
Variable Remuneration
u Short Term Incentive
u 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 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.
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 participants include the members
of the divisional and corporate executive. Under the scheme, there
are two incentives including a Short Term Incentive and Long Term
Incentive. The objectives of the scheme are to maximise short term
operating performance and longer term performance on an absolute
basis, and compared to peer companies.
42
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 the achievement
of personal goals and financial targets approved by the Remuneration
Committee at the beginning of the financial year. The provision of
incentives based on the achievement of personal goals reinforces the
Company’s leadership model for improved business performance.
The financial targets are based on profit growth which is 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 replaced the previous cash based Long Term Incentive and was
approved by shareholders at the 2008 Annual General Meeting. 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 (TSR) compared to a peer group
of companies, and growth in Earnings Per Share (EPS). The EPS
hurdle is calculated as statutory EPS adjusted at the discretion of the
Board for significant or abnormal events. The performance hurdles are
challenging and achievable and focus senior executives on sustained
long term growth consistent with shareholder wealth creation. The plan
runs over a three year performance period and the rights will only vest
if the performance hurdles are achieved. If the vesting conditions and
performance hurdles are achieved, ordinary shares will be issued to
the participants at no cost. If the performance hurdles are not met,
then the rights are cancelled after three years.
In accordance with the rules of the Long Term Incentive (Equity) Plan,
the executives are prohibited from entering into hedging transactions
or arrangements which reduce or limit the economic risk of holding
unvested Performance Rights.
The Long Term Incentive is aligned to shareholder interests as
Performance Rights only vest if the EPS and TSR performance hurdles
are achieved over the three year performance period. The performance
hurdles and vesting proportions for each measure are as follows:
EPS Growth over three year performance period
Proportion of Performance Rights that may be exercised if EPS
growth hurdle is met
10% or more
50% (ie, 50% of total grant)
TSR of GWA International Limited relative to TSRs of
Comparator Companies
Proportion of Performance Rights that may be Exercised if
TSR hurdle is met
More than the 50th percentile
50% (ie, 50% of total grant)
Comparator companies
GUD Holdings Limited
Hills Industries Limited
Bradken Limited
Spotless Group Limited
Alesco Corporation Limited
Crane Group Limited
Pacific Brands Limited
Adelaide Brighton Limited
Ansell Limited
Paperlinx Limited
43
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
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 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 2009 there are currently 3.9 million shares issued
under the GWA International Employee Share Plan, which have an
outstanding loan balance of $9.96 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 below table is a summary of key shareholder wealth statistics for
the Company over the last five years.
Trading EBIT has declined in the 2008/09 year due to the downturn
in the domestic dwelling construction and renovation market following
the global financial crisis in late 2008. This follows a number of years
of weak domestic dwelling construction activity which is a key driver
of earnings growth in the Company’s core building fixtures and fittings
business. Despite the difficult market conditions, the core business has
performed soundly over the last five years generating strong operating
cash flows enabling the Company to maximise fully franked dividend
payments to shareholders. The restructuring activities of recent years
placed the Company in a strong position during the current downturn,
and will underpin profitability growth as the market recovers.
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
$1.035 in fully franked dividends paid to shareholders in the last five
financial years, which includes 13.5 cents in special dividends.
The Board will continue to review and monitor the remuneration and
incentive framework to ensure that performance is fairly rewarded and
encouraged, and to attract, motivate and retain a high quality
executive team.
TERMINATION OF EMPLOYMENT
The specified executives in the Directors’ Report are on open-ended
contracts, except for the Managing Director, Mr Peter Crowley, whose
employment contract specifies an initial term of twelve months with
subsequent rolling terms of twelve months.
The employment contract for Mr Crowley provides that if either the
Company or Mr Crowley wishes to terminate employment for any
reason, three months notice of termination is required, or payment in
lieu, based upon current salary levels. On termination by the Company,
Mr Crowley will be entitled to receive payment of twelve months salary.
For the other specified executives, the Company is legally required to
give reasonable notice of termination, or payment in lieu, based upon
current salary levels.
Performance Rights held by executives under the Long Term Incentive
(Equity) Plan will lapse upon the cessation of employment with the
Company.
Any loan to management and senior staff under the GWA International
Employee Share Plan must be repaid in full upon the cessation of
employment with the Company.
REMUNERATION TABLES - AUDITED
DIRECTORS’ AND ExECUTIvE OFFICERS’
REMUNERATION
Details of the nature and amount of each element of remuneration
of each director of the Company, each of the five named Company
executives and relevant consolidated entity executives who receive
the highest remuneration and other key management personnel are
outlined in the table on the following page.
Financial Year
Trading EBIT
($m)
Trading EPS
(cents)
Total DPS
(cents)
Share Price
($)
2004/05
2005/06
2006/07
2007/08
2008/09
103.4
95.2
98.8
99.4
87.0
23.0
21.6
22.0
21.5
17.9
22.5
21.5
22.0
19.5
18.0
2.92
3.11
4.42
2.50
2.30
44
Short–term
Salary
& Fees
STI Cash
Bonus
Non–
Monetary
Long–
term
Value of
Share–
Based
Awards
Post–employment
Super
annuation
Benefits
Termin–
ation
Benefits
$
$(a)*
$(b)
$(c)
$
Proportion of
remuneration
performance
based
STI Cash
Bonus
vested in
year
STI Cash
Bonus
forfeited
in year
%
%
%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
250
–
250
–
250
–
250
–
250
–
250
–
250
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
26,001
24,584
100,000
100,000
3,639
10,092
9,207
8,696
100,000
99,245
86,172
88,078
10,377
9,256
28,000
–
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
65,342
54,683
40,433
112,130
102,300
96,624
4,967
–
28,241
17,242
115,300
102,840
–
–
Non–Executive Directors
B Thornton, Chairman
2009
2008
288,899
273,150
J Kennedy, Deputy Chairman
M Kriewaldt
(Retired 30 October 2008)
D Barry
R Anderson
G McGrath
W Bartlett
D McDonough
(Appointed 16 February 2009)
Executive Directors
P Crowley, Managing Director
R Thornton, Executive Director
(Appointed 6 May 2009)
Executives
S Wright,
Group Operations Manager
2009
2008
1,379,601
1,164,718
112,500
–
240,918
206,927
194,658
–
50,000
100,000
2009
2008
39,160
–
4,167
–
9,526
–
3,199
–
3,767
–
1,977,677
1,471,645
59,819
–
15.5
–
12.3
–
(Ceased employment 18 July 2008)
2008
461,523
300,000
75,504
100,000
937,027
32.0
2009
28,634
–
26,603
100,000
500,000
655,237
–
–
–
A Rusten, Group Marketing
Manager
2009
316,280
17,000
100,817
27,417
31,160
2008
300,224
–
96,397
–
29,680
T Dragicevich, Chief Executive
– Caroma Dorf
2009
2008
435,219
45,833
41,000
100,000
40,659
767
54,833
–
100,000
–
G Douglas, General Manager
– Rover
2009
2008
182,943
184,743
–
33,965
45,286
34,337
21,933
–
100,000
100,000
J Measroch, General Manager
– Sebel
(Ceased employment 31 Oct 2008)
2009
105,337
2008
271,092
-
-
18,994
44,567
-
-
26,663
9,333
210,000
343,664
G Oliver, General Manager
–Gainsborough
2009
2008
295,097
255,676
147,000
76,920
44,888
43,236
30,158
-
101,112
99,768
W Saxelby, Chief Financial
Officer
G Welsh, General Manager
– Sebel
2009
552,854
62,000
199,172
54,833
96,000
2008
223,245
200,000
32,222
-
77,619
2009
216,684
75,000
4,460
21,933
18,109
(Commenced employment 20 October 2008)
2008
-
-
-
-
-
L Patterson, General Manager
– Dux
2009
2008
356,290
309,429
142,000
88,200
123,033
121,398
30,158
-
41,220
29,400
* Comparative STI cash bonus amounts have been adjusted to reflect the actual amounts paid.
336,186
28.8
-
692,701
548,427
-
24.9
16.1
Total
$
314,900
297,984
165,342
154,933
44,072
122,472
111,507
105,570
104,967
99,495
114,413
105,570
125,677
112,346
28,000
–
492,674
426,301
671,711
146,600
350,162
353,045
342,322
618,255
475,600
964,859
533,086
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9.0
–
14.3
68.2
6.3
9.6
-
-
28.7
16.2
12.1
37.5
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
-
-
-
-
-
-
-
-
-
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
13
–
25
–
–
100
13
–
19
100
–
50
-
-
100
50
25
100
100
-
100
100
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
87
100
75
–
–
–
87
100
81
–
100
50
-
100
-
50
75
-
-
-
-
-
45
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
(a) The Short Term Incentive cash bonus is for the performance
during the financial year ended 30 June 2009 based on the
achievement of personal goals and specified performance criteria
as set out earlier in the report. The STI cash bonuses are paid
annually following the end of the preceding financial year. The
amounts have been determined following individual performance
reviews and have been approved by the Remuneration Committee.
(b) The non-monetary benefits include the provision of other benefits
such as motor vehicles, medical benefits membership, salary
continuance and life insurance, interest free loans under the
GWA International Employee Share Plan and any applicable fringe
benefits tax thereon.
(c) The Long Term Incentive (Equity) Plan was approved by
shareholders at the 2008 Annual General Meeting and runs for a
three year performance period. If the performance hurdles are
achieved the performance rights will vest on the date of the release
of the Company’s audited financial results for the year ending 30
June 2011 to the Australian Securities Exchange. The fair value of
the performance rights granted during the year ended 30 June 2009
is calculated using Binomial option pricing model (EPS hurdle) and
Monte Carlo simulation (TSR hurdle) valuation methodologies and
allocated to each financial year evenly over the three year
performance period.
PERFORMANCE RIGhTS OvER ORDINARY ShARES
GRANTED AS COMPENSATION
Details of Performance Rights over ordinary shares in the Company
that were granted as compensation to each key management person
under the Long Term Incentive (Equity) Plan during the year are
as follows:
Executive Directors
P Crowley, Managing Director
355,000
27 February 2009
583,975
Number of rights granted
Grant date*
Fair value of rights at grant date
$*
R Thornton, Executive Director (Appointed 6 May 2009)
35,000
27 February 2009
57,575
Executives
S Wright, Group Operations Manager
(Ceased employment 18 July 2008)
–
–
–
A Rusten, Group Marketing Manager
50,000
27 February 2009
82,250
T Dragicevich, Chief Executive – Caroma Dorf
100,000
27 February 2009
164,500
G Douglas, General Manager – Rover
40,000
27 February 2009
65,800
J Measroch, General Manager – Sebel
(Ceased employment 31 October 2008)
–
–
–
G Oliver, General Manager –Gainsborough
55,000
27 February 2009
90,475
W Saxelby, Chief Financial Officer
100,000
27 February 2009
164,500
G Welsh, General Manager – Sebel
(Commenced employment 20 October 2008)
40,000
27 February 2009
65,800
L Patterson, General Manager – Dux
55,000
27 February 2009
90,475
All of the above rights carry an exercise price of nil and vest on the
date of the release of the Company’s audited financial results for the
year ending 30 June 2011 to the Australian Securities Exchange,
subject to the achievement of the performance hurdles set out earlier
in this report. No rights were forfeited, vested or exercised during the
year. The number of rights granted during the year also represents the
balance yet to vest at 30 June 2009.
* The issue price used to determine the number of rights offered to all participants
during the year, including Mr Crowley and other key management personnel,
was $2.46 being the volume weighted average price of the Company’s shares
calculated over the 20 trading days after the Company’s Annual General Meeting
on 30 October 2008. The grant dates and corresponding fair values per right in
the above table have been determined in accordance with Australian Accounting
Standards and are dependent on the dates on which the individual executives
are deemed to have received their offers to participate in the plan. Fair values
have been calculated using Binomial option pricing model (EPS hurdle) and
Monte Carlo simulation (TSR hurdle) valuation methodologies. The fair value of
rights issued during the year under the EPS hurdle was $1.78 per right, and the
TSR hurdle was $1.51 per right.
46
DIRECTORS’ MEETINGS
The number of meetings of directors (including meetings of
Committees of directors) held during the financial year ended 30 June
2009 and the number of meetings attended by each director were
as follows:
Director
Board
Audit Committee
Remuneration
Committee
Nomination Committee
B Thornton
J J Kennedy
P C Crowley (1)
D R Barry
R M Anderson
M D E Kriewaldt (4)
G J McGrath (2)
W J Bartlett (3)
D D McDonough (6)
R J Thornton (5)
A
13
13
13
13
13
5
13
13
5
2
B
13
13
13
13
12
5
12
13
5
2
A
4
4
1
4
B
4
4
1
4
A
3
1
3
2
B
3
1
3
2
A
2
2
2
B
2
2
2
Note:
A – Number of meetings held during the time the director held office
during the year B – Number of meetings attended
(1) P C Crowley attends Committee meetings by invitation of the Board
(2) G J McGrath was appointed a member of the Nomination
Committee on 30 October 2008
(3) W J Bartlett was appointed a member of the Remuneration
Committee on 30 October 2008
(4) M D E Kriewaldt retired as a non-executive director on
30 October 2008
(5) R J Thornton was appointed an executive director on 6 May 2009
(6) D D McDonough was appointed a non-executive director on
16 February 2009 and a member of the Nomination Committee
on 3 March 2009
As at the date of this report, the Company had an Audit Committee,
Remuneration Committee and 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 Kennedy (Chairman)
Mr B Thornton
Mr W Bartlett
The members of the Remuneration Committee are:
■■
■■
■■
Mr G McGrath (Chairman)
Mr D Barry
Mr W Bartlett
The members of the Nomination Committee are:
■■
■■
■■
Mr B Thornton (Chairman)
Dr D McDonough
Mr G McGrath
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 2009 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 2009.
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
Brisbane, 18 August 2009
P C Crowley
Managing Director
47
GWA INTERNATIONAL LIMITED 2009 ANNUAL REPORT
CONTENTS
48
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 and impairment 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 Acquisitions of subsidiaries
16 Current tax assets and liabilities
17 Deferred tax assets and liabilities
18 Property, plant and equipment
19 Intangible assets
20 Trade and other payables
21 Interest-bearing loans and borrowings
22 Employee benefits
23 Share-based payments
24 Provisions
25 Capital and reserves
26 Financial instruments and financial risk management
27 Operating leases
28 Capital and other commitments
29 Contingencies
30 Deed of cross guarantee
31 Consolidated entities
32 Reconciliation of cash flows from operating activities
33 Related parties
34 Subsequent events
Directors’ Declaration
Independent Auditor’s Report to the members of
GWA International Limited
49
50
51
52
53
61
63
63
63
64
64
64
65
66
67
67
67
68
68
69
69
71
73
74
75
76
77
78
79
81
90
91
91
92
94
95
96
99
100
101
GWa international limited and its controlled entities
ABN 15 055 964 380
income statements
income statements
For the year ended 30 June 2009
consolidated
the company
In thousands of AUD
Note
2009
2008
2009
2008
Sales revenue
Cost of sales
Gross profit
Other income
Selling expenses
Administrative expenses
Other expenses
Results from operating activities
Finance income
Finance expenses
Net financing costs
Profit before tax
Income tax (expense)/benefit
Profit for the year
2
678,344
648,902
(448,815)
(416,043)
229,529
232,859
–
–
–
–
–
–
3
4,338
11,333
40,000
65,000
(97,550)
(93,981)
–
–
(47,916)
(42,805)
(1,465)
(745)
(5,542)
(24,828)
–
(2,359)
82,859
82,578
38,535
61,896
2,866
5,068
(16,710)
(19,691)
(13,844)
(14,623)
797
–
797
745
–
745
4
7
7
69,015
67,955
39,332
62,641
9
(20,690)
(22,065)
3
–
48,325
45,890
39,335
62,641
Basic and diluted earnings per share (cents per share)
Dividends per share:
Ordinary shares (cents per share)
10
25
16.9
16.4
17.5
22.0
The income statements are to be read in conjunction with the notes to the financial statements set out on pages 53 to 99.
49
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
statements oF recoGnised
income and eXpense
For the year ended 30 June 2009
consolidated
the company
In thousands of AUD
Foreign exchange translation differences for foreign operations
Note
2009
4,026
(5,012)
2008
2009
2008
Cash flow hedges:
Gains/(losses) taken to equity, net of tax
Net income recognised directly in equity
(755)
176
3,271
(4,836)
–
–
–
–
–
–
Profit for the year
48,325
45,890
39,335
62,641
Total recognised income and expense for the year
25
51,596
41,054
39,335
62,641
Other movements in equity arising from transactions with owners as owners are set out in note 25.
The statements of recognised income and expense are to be read in conjunction with the notes to the financial statements set out on
pages 53 to 99.
50
GWa international limited and its controlled entities
ABN 15 055 964 380
Balance sheets
For the year ended 30 June 2009
consolidated
the company
In thousands of AUD
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Other
Total current assets
Receivables
Deferred tax assets
Investment in subsidiaries
Property, plant and equipment
Intangible assets
Other
Total non–current assets
Total assets
Liabilities
Trade and other payables
Employee benefits
Income tax payable
Provisions
Total current liabilities
Trade and other payables
Interest–bearing loans and borrowings
Deferred tax liabilities
Employee benefits
Provisions
Total non–current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
Note
2009
2008
2009
2008
11
12
13
16
12
17
31
18
19
20
22
16
24
20
21
17
22
24
45,015
53,418
135,039
131,580
111,671
107,508
980
3,694
829
4,832
–
661
–
–
–
644
–
–
562
814
296,399
298,167
1,223
1,458
12,185
22,961
–
5,298
703,666
663,132
22,845
–
–
–
325,646
325,646
98,569
106,307
349,438
339,060
–
–
–
–
2,901
3,777
2,879
3,699
486,054
477,287
1,032,191
992,477
782,453
775,454
1,033,414
993,935
89,231
14,191
7,207
81,292
16,599
5,890
57
–
54
–
7,123
5,854
19,853
17,091
–
–
130,482
120,872
7,180
5,908
5,585
–
597,077
583,653
200,000
246,975
22
–
11,337
10,675
8,863
7,812
–
–
–
–
–
–
–
–
225,807
265,462
597,077
583,653
356,289
386,334
604,257
589,561
426,164
389,120
429,157
404,374
387,981
353,938
387,981
353,938
(3,451)
(7,372)
650
–
41,634
42,554
40,526
50,436
25
426,164
389,120
429,157
404,374
The balance sheets are to be read in conjunction with the notes to the financial statements set out on pages 53 to 99.
51
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
statements oF cash FloWs
For the year ended 30 June 2009
consolidated
the company
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
Note
2009
2008
2009
2008
738,652
726,256
–
–
–
–
40,000
62,641
(628,092)
(594,781)
(8)
–
110,560
131,475
39,992
62,641
(14,852)
(18,527)
2,070
4,323
–
–
–
–
(19,150)
(14,279)
(18,559)
(12,505)
Net cash from operating activities
32
78,628
102,992
21,433
50,136
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Acquisition of property, plant and equipment
Acquisition of intangibles
6,395
14,492
(10,514)
(18,305)
(6,834)
(3,930)
Acquisition of subsidiary, net of cash acquired
15
(12,419)
–
Net cash from investing activities
(23,372)
(7,743)
–
–
–
–
–
–
–
–
–
–
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
(841)
(2,107)
(841)
(2,107)
34,043
876
34,043
876
1,321
1,270
1,321
1,270
–
8
–
81
(48,167)
(25,000)
(6,711)
11,205
–
–
–
–
(49,245)
(61,612)
(49,245)
(61,612)
(62,881)
(86,492)
(21,433)
(50,368)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 July
Effect of exchange rate fluctuations on cash held
(7,625)
8,757
53,418
45,953
(778)
(1,292)
Cash and cash equivalents at 30 June
11
45,015
53,418
–
–
–
–
(232)
232
–
–
The statements of cash flows are to be read in conjunction with the notes to the financial statements set out on pages 53 to 99.
52
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 2009 comprises the Company and its
subsidiaries (together referred to as the ‘consolidated entity’).
The financial report was authorised for issue by the directors on 18
August 2009.
(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
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 19 – measurement of the recoverable amounts of
intangible assets
■■
note 23 – fair value of share–based payments
■■
note 24 and 29 – provisions and contingencies
■■
note 26 – 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.
(c) Basis of consolidation
(‘IFRSs’) and interpretations adopted by the International Accounting
(i) Subsidiaries
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.
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.
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.
53
GWa international limited 2009 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
(d) Foreign currency (continued)
(ii) Financial statements of foreign operations
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
The assets and liabilities of foreign operations, including goodwill and
documentation includes identification of the hedging instrument, the
fair value adjustments arising on acquisition, are translated to Australian
hedged item or transaction, the nature of the risk being hedged and how
dollars at foreign exchange rates ruling at the reporting date. The
the entity will assess the hedging instrument’s effectiveness in offsetting
revenues and expenses of foreign operations are translated to Australian
the exposure to changes in the hedged item’s fair value or cash flows
dollars at rates approximating to the foreign exchange rates ruling at
attributable to the hedged risk. Such hedges are expected to be highly or
the dates of the transactions. Foreign exchange differences arising on
fully effective in achieving offsetting changes in fair value or cash flows
retranslation are recognised directly in the foreign currency translation
and are assessed on an ongoing basis to determine that they actually
reserve (FCTR).
have been highly effective throughout the financial reporting periods for
(iii) Net investment in foreign operations
Foreign exchange differences arising from the retranslation of the net
which they are designated.
(i) Cash flow hedges
investment in foreign operations, and of related hedges are recognised in
Where a derivative financial instrument is designated as a hedge of
the FCTR to the extent that the hedge is effective. They are released into
the variability in cash flows of a recognised asset or liability, or a highly
the income statement upon disposal.
(e) Derivative financial instruments
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
The consolidated entity uses derivative financial instruments to hedge
non–financial asset or non–financial liability, or the forecast transaction
its exposure to foreign exchange and interest rate risks arising from
for a non–financial asset or non–financial liability becomes a firm
operating, financing and investing activities. In accordance with its
commitment for which fair value hedge accounting is applied, the
treasury policy, the consolidated entity does not hold or issue derivative
associated cumulative gain or loss is removed from equity and included
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
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.
depends on the nature of the item being hedged (see accounting
For cash flow hedges, other than those described above, the associated
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
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.
creditworthiness of the swap counterparties. The fair value of forward
When a hedging instrument expires or is sold, terminated or exercised, or
exchange contracts is their quoted market price at the reporting date,
the entity revokes designation of the hedge relationship, but the hedged
being the present value of the quoted forward price.
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.
54
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
1. siGniFicant accountinG policies (continued)
(ii) Depreciation
(f) Hedging (continued)
(ii) Hedge of monetary assets and liabilities
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
Where a derivative financial instrument is used to hedge economically
depreciated. The estimated useful lives in the current and comparative
the foreign exchange exposure of a recognised monetary asset or liability,
periods are as follows:
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.
(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
■■
buildings
40 years
■■
plant and equipment
3–11 years
■■
fixtures and fittings
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.
labour, the initial estimate, where relevant, of the costs of dismantling
Expenditure on development activities, whereby research findings are
and removing the items and restoring the site on which they are located,
applied to a plan or design for the production of new or substantially
and an appropriate proportion of production overheads. Purchased
improved products and processes, is capitalised only if the product or
software that is integral to the functionality of the related equipment is
process is technically and commercially feasible and the consolidated
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.
entity has sufficient resources to complete development. Capitalised
development expenditure is measured at cost less accumulated
amortisation and impairment losses.
(ii) Brand names
Gains and losses on disposal of an item of property, plant and equipment
Expenditure incurred in developing, maintaining or enhancing brand
are determined by comparing proceeds from disposal with the carrying
names is written off against profit from ordinary activities in the year
amount of property, plant and equipment and are recognised net within
in which it is incurred. The brand names are not amortised as the
“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
directors believe that the brand names have an indefinite useful life. The
carrying value of brand names is reviewed each year to ensure that no
impairment exists.
(iii) Goodwill
item when that cost is incurred if it is probable that the future economic
Goodwill acquired in business combinations of the consolidated entity
benefits embodied within the item will flow to the consolidated entity and
are measured at cost less accumulated impairment losses. Goodwill
the cost of the item can be measured reliably. The carrying amount of
represents the excess of the cost of the acquisition over the consolidated
the replaced part is derecognised. All other costs are recognised in the
entity’s interest in the net fair value of the identifiable assets, liabilities
income statement as an expense as incurred.
and contingent liabilities of the acquired business.
55
GWa international limited 2009 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)
(k) Cash and cash equivalents
(h) Intangible assets (continued)
(iv) Other intangible assets
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
Other intangible assets that are acquired by the consolidated entity are
entity’s cash management are included as a component of cash and cash
measured at cost less accumulated amortisation and impairment losses.
equivalents for the purpose of the statement of cash flows.
(v) Subsequent expenditure
(l) Impairment
Subsequent expenditure on capitalised intangible assets is capitalised
The carrying amounts of the consolidated entity’s assets, other than
only when it increases the future economic benefits embodied in the
inventories and deferred tax assets, are reviewed at each balance sheet
specific asset to which it relates. All other expenditure is expensed as
date to determine whether there is any indication of impairment. If any
incurred.
(vi) Amortisation
Amortisation is charged to the income statement on a straight–line
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.
basis over the estimated useful lives of intangible assets unless such
An impairment loss is recognised whenever the carrying amount of
lives are indefinite. Intangible assets with an indefinite useful life are
an asset or its cash–generating unit exceeds its recoverable amount.
systematically tested for impairment at each balance sheet date. Other
Impairment losses are recognised in the income statement, unless an
intangible assets are amortised from the date they are available for use.
asset has previously been revalued, in which case the impairment loss
The estimated useful lives in the current and comparative periods are
is recognised as a reversal to the extent of that previous revaluation with
as follows:
■■
designs
■■
patents
15 years
3–19 years
(based on patent term)
■■
trade names
10 years
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.
■■
capitalised software development costs 5 years
(i) Calculation of recoverable amount
(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
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.
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.
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.
56
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
(l) Impairment (continued)
(i) Defined contribution superannuation funds
(i) Calculation of recoverable amount (continued)
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
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.
generate largely independent cash inflows, the recoverable amount is
(ii) Other long–term employee benefits
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
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.
subsequent increase in recoverable amount can be related objectively to
(iii) Short–term benefits
an event occurring after the impairment loss was recognised.
Liabilities for employee benefits for wages, salaries, annual leave and sick
An impairment loss is reversed only to the extent that the asset’s carrying
leave that are expected to be settled within 12 months of the reporting
amount does not exceed the carrying amount that would have been
date represent present obligations resulting from employees’ services
determined, net of depreciation or amortisation, if no impairment loss had
provided to reporting date, are calculated at undiscounted amounts
been recognised. An impairment loss in respect of goodwill is not reversed.
based on remuneration wage and salary rates that the consolidated entity
(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–
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.
(iv) Share–based payment transactions
The grant date fair value of performance rights granted to employees
is recognised as a personnel expense, with a corresponding increase
in equity, over the specified period that the performance rights vest to
employees. The amount recognised as an expense is adjusted to reflect
the actual number of performance rights for which the related service
and non–market vesting hurdles are met.
bearing borrowings are measured at amortised cost with any difference
(p) Provisions
between cost and redemption value being recognised in the income
statement over the period of the borrowings on an effective interest basis.
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 that can be estimated reliably, 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.
57
GWa international limited 2009 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)
(ii) Net financing costs
(p) Provisions (continued)
(i) Warranties
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
A provision for warranties is recognised when the underlying products or
the income statement. Borrowing costs are expensed as incurred and
services are sold. The provision is based on historical warranty data and
included in net financing costs. Interest income is recognised in the
a weighting of all possible outcomes against their associated probabilities.
income statement as it accrues, using the effective interest method.
(ii) Restructuring
(t) Income tax
A provision for restructuring is recognised when the consolidated
Income tax expense on the profit or loss for the year comprises current
entity has approved a detailed and formal restructuring plan, and the
and deferred tax. Income tax expense is recognised in the income
restructuring has either commenced or has been announced publicly.
statement except to the extent that it relates to items recognised directly
Future operating costs are not provided for.
in equity, in which case it is recognised in equity.
(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
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.
of the present value of the expenditure required to settle the restoration
Deferred tax is recognised using the balance sheet liability method,
obligation at the reporting date. Future restoration obligations are
providing for temporary differences between the carrying amounts of
reviewed annually and any changes are reflected in the present value
assets and liabilities for financial reporting purposes and the amounts
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
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
Trade and other payables are initially measured at fair value and
reverse in the foreseeable future. The amount of deferred tax provided is
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
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
significant risks and rewards of ownership have been transferred to the
liabilities and assets on a net basis or their tax assets and liabilities will be
buyer, recovery of the consideration is probable, the associated costs and
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.
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.
(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.
58
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
1. siGniFicant accountinG policies (continued)
Receivables and payables are stated with the amount of GST included.
(t) Income tax (continued)
Tax consolidation
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 Company and its wholly–owned Australian resident entities have
The GST components of cash flows arising from investing and financing
formed a tax–consolidated group with effect from 1 July 2003 and are
activities which are recoverable from, or payable to, the ATO are
therefore taxed as a single entity from that date. The head entity within
classified as operating cash flows.
the tax–consolidated group is GWA International Limited. Current tax
expense/income, deferred tax liabilities and deferred tax assets arising
(w) Earnings per share
from temporary differences of the members of the tax–consolidated
The consolidated entity presents basic and diluted earnings per share
group are recognised in the separate financial statements of the
(EPS) data for its ordinary shares. Basic EPS is calculated by dividing
members of the tax–consolidated group using the ‘separate taxpayer
the profit or loss attributable to ordinary shareholders of the Company
within group’ approach by reference to the carrying amounts of assets
by the weighted average number of ordinary shares outstanding during
and liabilities in the separate financial statements of each entity and the
the period. Diluted EPS is determined by adjusting the profit or loss
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
attributable to ordinary shareholders and the weighted average number
of ordinary shares outstanding for the effects of all dilutive potential
ordinary shares.
(receivable) to (from) other entities in the tax–consolidated group in
(x) Changes in accounting policy
conjunction with any tax funding arrangement amounts (refer below).
Any difference between these amounts is recognised by the Company as
(i) Warranty costs
an equity contribution or distribution.
Nature of tax funding arrangements and tax sharing arrangements
During the reporting period, management changed its accounting policy in
respect of the classification of warranty costs in the income statement. It
was determined that warranty costs should be included in cost of sales to
The members of the tax–consolidated group have entered into a tax
better reflect the nature of the cost. In the prior reporting period warranty
funding arrangement and a tax sharing agreement with the head entity.
costs were reported in selling expenses. The impact on the income
Under the terms of the tax funding arrangement GWA International
statement in the consolidated entity for the year ended 30 June 2009 is
Limited and each of the entities in the tax consolidated group recognise
to increase cost of sales and decrease selling expenses by $12,300,000
inter–entity receivables (payables) equal in amount to the tax liability
(asset) assumed by the head entity.
(2008: $10,504,000). There is no impact on the balance sheet for the
consolidated entity. No adjustments have arisen for the Company.
(u) Segment reporting
(ii) Selling costs
A segment is a distinguishable component of the consolidated entity that
During the reporting period, management changed its accounting policy
is engaged either in providing products or services (business segment),
in respect of the classification of costs incurred by state selling regions in
or in providing products or services within a particular economic
the income statement. It was determined that all costs incurred by state
environment (geographical segment), which is subject to risks and
selling regions should be included in selling expenses to better reflect the
rewards that are different from those of other segments.
(v) Goods and services tax
nature of the cost. In the prior reporting period certain costs of the state
selling regions were reported in administrative expenses. The impact on
the income statement in the consolidated entity for the year ended 30
Revenue, expenses and assets are recognised net of the amount of
June 2009 is to increase selling expenses and decrease administrative
goods and services tax (GST), except where the amount of GST incurred
expenses by $12,585,000 (2008: $12,218,000). There is no impact on
is not recoverable from the taxation authority. In these circumstances, the
the balance sheet for the consolidated entity. No adjustments have arisen
GST is recognised as part of the cost of acquisition of the asset or as part
for the Company.
of the expense.
59
GWa international limited 2009 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)
(y) New standards and interpretations not yet adopted
■■
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
The following standards, amendments to standards and interpretations
of a qualifying asset as part of the cost of that asset. The revised
have been identified as those which may impact the entity in the period
AASB 123 will become mandatory for the consolidated entity’s 30
of initial application. They are available for early adoption at 30 June
June 2010 financial statements. In accordance with the transitional
2009, but have not been applied in preparing this financial report:
provisions the consolidated entity will apply the revised AASB 123
■■
Revised AASB 3 Business Combinations (2008) 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
to qualifying assets for which capitalisation of borrowing costs
commences on or after the effective date. Therefore, there will be
no impact on prior periods in the consolidated entity’s 30 June 2010
financial statements.
costs; measurement of contingent consideration at acquisition
date with subsequent changes through the income statement;
■■
Revised AASB 127 Consolidated and Separate Financial Statements
(2008) changes the accounting for investments in subsidiaries. Key
measurement of non–controlling (minority) interests at full fair value
changes include: the re–measurement to fair value of any previous/
or the proportionate share of the fair value of the underlying net
retained investment when control is obtained/lost, with any resulting
assets; guidance on issues such as reacquired rights and vendor
gain or loss being recognised in profit or loss; and the treatment
indemnities; and the inclusion of combinations by contract alone and
of increases in ownership interest after control is obtained as
those involving mutuals. The revised standard becomes mandatory
transactions with equity holders in their capacity as equity holders.
for the consolidated entity’s 30 June 2010 financial statements,
The revised standard will become mandatory for the consolidated
which will be applied prospectively and therefore there will be no
entity’s 30 June 2010 financial statements. The consolidated entity
impact on prior periods in the consolidated entity’s 30 June 2010
has not yet determined the potential effect of the revised standard on
financial statements.
the consolidated entity’s financial report.
■■
AASB 8 Operating Segments introduces the “management
approach” to segment reporting. AASB 8, which becomes mandatory
■■
AASB 2008–1 Amendments to Australian Accounting Standard
– Share–based Payment: Vesting Conditions and Cancellations
for the consolidated entity’s 30 June 2010 financial statements, will
changes the measurement of share–based payments that contain
require a change in the presentation and the disclosure of segment
non–vesting conditions. AASB 2008–1 becomes mandatory for
information based on the internal reports regularly reviewed by the
the consolidated entity’s 30 June 2010 financial statements with
consolidated entity’s Chief Operating Decision Maker in order to
assess each segment’s performance and to allocate resources to
retrospective application. The consolidated entity has not yet
determined the potential effect of the amending standard on the
them. Currently the consolidated entity presents segment information
consolidated entity’s financial report.
in respect of its business and geographical segments (see note 2).
Under the management approach, the effect of the revised standard
on the consolidated entity’s 30 June 2010 financial statements is not
significant.
■■
Revised AASB 101 Presentation of Financial Statements (2007)
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.
60
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
2. seGment reportinG
Geographical segments
A segment is a distinguishable component of the consolidated entity
The business segments are managed on a worldwide basis, but operate
that is engaged either in providing related products or services (business
mainly in one geographical area being Australia. Sales offices are
segment), or in providing products or services within a particular
operated in New Zealand, Asia, United States and Europe, however the
economic environment (geographical segment), which is subject to risks
sales revenue from these geographical areas comprise only 15% of the
and rewards that are different from those of other segments.
consolidated entity’s total sales revenue and are individually less
Segment information is presented in respect of the consolidated entity’s
than 10%.
business and geographical segments. The primary format, business
In presenting information on the basis of geographical segments,
segments, is based on the consolidated entity’s management and internal
segment revenue is based on the geographical location of customers.
reporting structure.
Segment assets are based on the geographical location of the assets.
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
u Sanitaryware
u Building hardware products
u Baths and spas
u Household accessories, sinks and tapware
u Hot water products
■■
Commercial furniture
u Education products
u Hospitality products
u Stadia seating
■■
Unallocated
u Domestic and ride–on mowers
u Corporate administration
61
GWa international limited 2009 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
and Fittings*
Commercial Furniture* Unallocated*
Eliminations
Consolidated*
In thousands of AUD
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
Revenue:
External sales
Inter–segment sales
Total sales revenue
593,671 558,657
56,088 56,864
28,585
33,381
–
– 678,344 648,902
–
–
32
1,852
–
–
(32)
(1,852)
–
–
593,671 558,657
56,120 58,716
28,585
33,381
(32)
(1,852) 678,344 648,902
–
–
–
–
–
–
–
–
–
–
–
–
86,955
99,394
(4,096)
(16,816)
82,859
82,578
(13,844)
(14,623)
(20,690)
(22,065)
48,325
45,890
– 782,453 775,454
– 356,289 386,334
–
–
–
–
16,789
17,386
1,316
534
17,348
22,235
–
9,419
Segment result
98,493 109,552
2,033
3,369
(13,571) (13,527)
Restructuring income/(expenses)
(4,096)
(21,629)
–
(614)
–
5,427
Segment result after restructuring expenses 94,397
87,923
2,033
2,755
(13,571)
(8,100)
Net financing costs
Income tax expense
Profit for the year
Segment assets
Segment liabilities
Depreciation
Amortisation
Capital expenditure
Impairment losses
Geographical segments
643,196 627,265
33,703 35,087 105,554 113,102
114,733 106,358
7,449
9,457 234,107 270,519
14,961
14,895
1,248
1,690
1,081
275
–
–
580
235
801
259
14,165
17,028
2,332
1,504
851
3,703
–
9,419
–
–
–
–
Australia*
Unallocated*
Consolidated *
In thousands of AUD
2009
2008
2009
2008
2009
2008
External sales revenue
580,934 551,587
97,410 97,315 678,344 648,902
Segment assets
737,836 727,045
44,617 48,409 782,453 775,454
Capital expenditure
15,759
19,433
1,589
2,802
17,348
22,235
* All segments are continuing operations
62
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 and intangible assets
Dividends received from controlled companies
Other
4. other eXpenses
In thousands of AUD
Foreign currency losses – realised
Foreign currency losses – unrealised
Net loss on disposal of intangible assets
Distribution losses from controlled trusts
Restructuring and impairment expenses
5. personnel eXpenses
In thousands of AUD
Wages and salaries – including superannuation contributions,
annual leave, long service leave and on–costs
Equity–settled share–based payment transactions
CONSOLIDATED
THE COmPANy
2009
1,148
1,927
156
–
1,107
4,338
2008
2,082
1,370
6,879
2009
2008
–
–
–
–
–
–
–
40,000
65,000
1,002
–
–
11,333
40,000
65,000
CONSOLIDATED
THE COmPANy
2009
660
743
43
–
4,096
5,542
2008
217
1,264
–
–
23,347
24,828
2009
2008
–
–
–
–
–
–
–
–
–
2,359
–
2,359
CONSOLIDATED
THE COmPANy
2009
2008
2009
2008
144,384
143,509
650
–
145,034
143,509
–
–
–
–
–
–
63
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
6. auditors’ remuneration
CONSOLIDATED
THE COmPANy
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:
Other assurance services
Taxation services
Overseas KPMG Firms:
Other assurance services
Taxation services
7. net FinancinG costs
In thousands of AUD
Interest income
Interest expense
Net financing costs/(income)
2009
2008
2009
2008
398,000
360,000
12,000
10,000
85,000
66,000
–
–
483,000
426,000
12,000
10,000
30,000
–
17,000
112,000
21,000
83,000
–
–
151,000
112,000
–
–
–
–
–
–
–
–
–
–
CONSOLIDATED
THE COmPANy
2009
2008
2009
2008
(2,866)
(5,068)
(797)
(745)
16,710
13,844
19,691
14,623
–
–
(797)
(745)
8. restructurinG and impairment eXpenses
CONSOLIDATED
THE COmPANy
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
64
2009
2008
2009
2008
4,096
13,928
–
–
9,419
(6,531)
4,096
16,816
(1,229)
(2,547)
2,867
14,269
–
–
–
–
–
–
–
–
–
–
–
–
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/(benefit)
Current year
Adjustments for prior years
Deferred tax expense
Origination and reversal of temporary differences
Benefit of tax losses recognised
CONSOLIDATED
THE COmPANy
2009
2008
2009
2008
20,491
20,572
32
–
20,523
20,572
167
–
167
1,493
–
1,493
(3)
–
(3)
–
–
–
(3)
–
–
–
–
–
–
–
Total income tax expense/(benefit) in income statement
20,690
22,065
Numerical reconciliation between tax expense and pre–tax net profit
CONSOLIDATED
THE COmPANy
In thousands of AUD
Profit before tax
2009
2008
2009
2008
69,015
67,955
39,332
62,641
Income tax using the domestic tax rate of 30% (2008: 30%)
20,705
20,387
11,800
18,792
Increase in income tax expense due to:
Non–deductible expenses
Non–deductible impairment loss
Rebateable trust distributions
Decrease in income tax expense due to:
Effect of tax rate in foreign jurisdictions
Non–assessable income
Non–assessable capital profits
Rebateable investment allowance
Rebateable research and development
Rebateable dividends
Under / (over) provided in prior years
Income tax expense/(benefit) on pre–tax net profit
Deferred tax recognised directly in equity
In thousands of AUD
Derivatives
877
–
–
(48)
(571)
530
2,825
–
(97)
(111)
–
(1,280)
(86)
(219)
–
–
(189)
197
–
–
–
–
–
–
–
–
–
708
–
–
–
–
–
–
(12,000)
(19,500)
20,658
22,065
32
–
20,690
22,065
(3)
–
(3)
–
–
–
CONSOLIDATED
THE COmPANy
2009
(324)
2008
193
2009
2008
-
-
65
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
10. earninGs per share
Basic earnings per share
Calculation of basic earnings per share at 30 June 2009 was based on the profit attributable to ordinary shareholders of $48,325,000 (2008:
$45,890,000) and a weighted average number of ordinary shares of 285,498,000 (2008: 280,075,000) calculated as follows:
Cents per share
Profit attributable to ordinary shareholders
Profit for the year
Weighted average number of ordinary shares
Issued ordinary shares at 1 July
Effect of shares issued
Weighted average number of ordinary shares at 30 June
Diluted earnings per share
CONSOLIDATED
2009
16.9
2008
16.4
CONSOLIDATED
2009
2008
48,325
45,890
CONSOLIDATED
2009
2008
280,173
279,923
5,325
152
285,498
280,075
Calculation of diluted earnings per share at 30 June 2009 was based on the profit attributable to ordinary shareholders of $48,325,000
(2008: $45,890,000) and a weighted average number of ordinary shares of 285,899,000 (2008: 280,075,000) calculated as follows:
Cents per share
Profit attributable to ordinary shareholders
Profit for the year
Weighted average number of ordinary shares
Issued ordinary shares at 1 July
Effect of shares issued
Weighted average number of ordinary shares at 30 June
66
CONSOLIDATED
2009
16.9
2008
16.4
CONSOLIDATED
2009
2008
48,325
45,890
CONSOLIDATED
2009
2008
280,173
279,923
5,726
152
285,899
280,075
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
11. cash and cash equivalents
CONSOLIDATED
THE COmPANy
In thousands of AUD
Bank balances
Call deposits
Cash and cash equivalents in the statement of cash flows
2009
2008
2009
2008
22,011
23,004
45,015
18,323
35,095
53,418
–
–
–
–
–
–
The consolidated entity’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 26.
12. trade and other receivaBles
CONSOLIDATED
THE COmPANy
In thousands of AUD
Current
Trade receivables
Provision for impairment
Derivatives used for hedging
Employee share loans
Other
Non–current
Receivables due from controlled entities
Derivatives used for hedging
Employee share loans
Other
2009
2008
2009
2008
108,282
100,121
(2,028)
(1,052)
23,943
27,872
661
4,181
644
3,995
135,039
131,580
–
–
–
661
–
661
–
–
–
644
–
644
–
6,318
5,859
8
–
–
5,285
13
697,807
657,847
–
–
5,859
5,285
–
–
12,185
5,298
703,666
663,132
The consolidated entity’s exposure to credit and currency risk and impairment losses related to trade and other receivables are disclosed in note 26.
13. inventories
In thousands of AUD
Raw materials and consumables
Work in progress
Finished goods
CONSOLIDATED
THE COmPANy
2009
2008
2009
2008
17,818
18,676
7,518
6,892
86,335
81,940
111,671
107,508
–
–
–
–
–
–
–
–
67
GWa international limited 2009 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, was presented as a disposal group held for
sale in the prior reporting period. Management became aware during the current reporting period of the prospective buyer’s inability to obtain finance
due to the difficult prevailing market conditions. Accordingly, the conditions for sale of the Wisa business no longer exist and the business is no longer
classified as held for sale. There is no impact on the results for the current reporting period ended 30 June 2009 due to this change in circumstances.
An impairment loss of $9,419,000 was recognised in the prior reporting period.
15. acquisitions oF suBsidiaries
Business combination
On 5 January 2009 the consolidated entity acquired 100% of the shares in Austral Lock Pty Ltd for $12,419,000. Austral Lock Pty Ltd is an Australian
manufacturer of locks for security and sliding doors. As part of the transaction, the consolidated entity had a call option over the Indian operations of
Austral Lock Pty Ltd which was not exercised.
In the six months to 30 June 2009 the subsidiary contributed profit before tax of $432,000. If the acquisition had occurred on 1 July 2008,
management estimates that consolidated revenue for the period would have been $682,930,000 and consolidated profit before tax would have been
$69,447,000. In determining those amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would
have been the same if the acquisition occurred on 1 July 2008.
The acquisition had the following effect on the consolidated entity’s assets and liabilities on acquisition date:
In thousands of AUD
Trade and other receivables
Inventories
Property, plant and equipment
Intangible assets
Deferred tax assets
Trade and other payables
Employee benefits
Deferred tax liabilities
Net identifiable assets and liabilities
Goodwill on acquisition
Consideration paid (including legal and consulting fees), satisfied in cash
Pre–acquisition
carrying amounts
Fair value
adjustments
Recognised values
on acquisition
2,078
2,899
3,901
2,365
–
(278)
(390)
–
10,575
–
–
–
812
117
–
–
(180)
749
2,078
2,899
3,901
3,177
117
(278)
(390)
(180)
11,324
1,095
12,419
Pre-acquisition carrying amounts were determined based on applicable AASBs immediately before the acquisition. The values of assets and liabilities
recognised on acquisition are their estimated fair values determined by independent consultants.
The goodwill recognised on the acquisition is attributable mainly to the skills and technical expertise of the acquired businesses work force and the
synergies expected to be achieved from integrating the company into the consolidated entity’s existing building hardware product business.
68
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
16. current taX assets and liaBilities
The current tax asset for the consolidated entity of $980,000 (2008: $829,000) represents the amount of income taxes recoverable in respect
of current and prior periods. The current tax liability for the consolidated entity of $7,207,000 (2008: $5,890,000) and for the Company of
$7,123,000 (2008: $5,854,000) represents the amount of income taxes payable in respect of the current period. 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.
17. 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
Assets
Liabilities
Net
2009
2008
2009
2008
2009
2008
Property, plant and equipment
841
817
(218)
(181)
623
636
Intangible assets
Inventories
Employee benefits
Provisions
Other items
Tax assets / (liabilities)
Set off of tax
Net tax assets / (liabilities)
–
–
(343)
(205)
(343)
(205)
2,624
3,583
7,297
7,879
10,607
8,096
–
–
–
–
–
–
2,624
3,583
7,297
7,879
10,607
8,096
2,603
3,202
(472)
(346)
2,131
2,856
23,972
23,577 (1,033)
(732)
22,939
22,845
(1,011)
(732)
1,011
732
–
–
22,961
22,845
(22)
–
22,939
22,845
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
2009
451
2008
351
2009
2008
–
–
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.
69
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
17. deFerred taX assets and liaBilities (continued)
movement in temporary differences during the year
CONSOLIDATED
THE COmPANy
In thousands of AUD
Balance
1 July 07
Recognised Recognised
in income
in equity
Acquired in
business
Balance
Balance Recognised Recognised
Balance
combinations 30 June 08 1 July 07
in income
equity
30 June 08
Property, plant and equipment
947
(311)
Intangible assets
(197)
(8)
Inventories
3,979
(396)
Employee benefits
7,524
355
Provisions
Other items
10,653
(2,557)
1,625
1,424
24,531
(1,493)
–
–
–
–
–
(193)
(193)
–
–
–
–
–
–
–
636
(205)
3,583
7,879
8,096
2,856
22,845
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
In thousands of AUD
Balance
1 July 08
Recognised Recognised
in income
in equity
Acquired in
business
Balance
Balance Recognised Recognised
Balance
combinations 30 June 09 1 July 08
in income
equity
30 June 09
Property, plant and equipment
636
(205)
3,583
7,879
(13)
42
(959)
(699)
8,096
2,511
2,856
(1,049)
22,845
(167)
–
–
–
–
–
324
324
–
(180)
–
117
–
–
623
(343)
2,624
7,297
10,607
2,131
(63)
22,939
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Intangible assets
Inventories
Employee benefits
Provisions
Other items
70
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
18. property, plant and equipment
In thousands of AUD
Cost
CONSOLIDATED
THE COmPANy
Land and
buildings
Plant and motor Work in
equipment vehicles progress
Total
Land and Plant and motor Work in
buildings equipment vehicles progress Total
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)
Effect of movements in foreign exchange
133
721
(119)
(80)
655
Balance at 30 June 2008
50,314
188,767 12,424
6,641 258,146
Balance at 1 July 2008
50,314
188,767 12,424
6,641 258,146
Acquisitions through business combinations
–
3,883
18
–
3,901
Additions
Transfers
Disposals
122
6,629
2,664
1,099
10,514
–
–
740
–
(740)
–
(18,002)
(9,934)
–
(27,936)
Effect of movements in foreign exchange
234
1,724
39
56
2,053
Balance at 30 June 2009
50,670
183,741
5,211
7,056 246,678
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
71
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
18. property, plant and equipment (continued)
In thousands of AUD
Depreciation and impairment losses
CONSOLIDATED
THE COmPANy
Land and
buildings
Plant and motor Work in
equipment vehicles progress
Total
Land and Plant and motor Work in
buildings equipment vehicles progress Total
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
Effect of movements in foreign exchange
(102)
(653)
82
–
–
–
(17,386)
20,393
(673)
Balance at 30 June 2008
(7,546) (138,369)
(5,924)
– (151,839)
Balance at 1 July 2008
(7,546) (138,369)
(5,924)
– (151,839)
Depreciation charge for the year
(1,039)
(13,826)
(1,924)
Disposals
–
18,104
4,054
Effect of movements in foreign exchange
(171)
(1,460)
(8)
–
–
–
(16,789)
22,158
(1,639)
Balance at 30 June 2009
(8,756) (135,551)
(3,802)
– (148,109)
Carrying amounts
At 1 July 2007
At 30 June 2008
At 1 July 2008
At 30 June 2009
Impairment losses
46,825
48,608
6,904
10,682 113,019
42,768
50,398
6,500
6,641 106,307
42,768
50,398
6,500
6,641 106,307
41,914
48,190
1,409
7,056
98,569
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
There were no impairment losses to property, plant and equipment during the 2009 financial year (2008: nil).
72
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
19. intanGiBle assets
In thousands of AUD
Software
CONSOLIDATED
THE COmPANy
Trade names,
Brand designs and
names
patents Goodwill
Total
Software
Trade names,
Brand designs and
names
patents Goodwill Total
Cost
Balance at 1 July 2007
Additions
5,366 340,345
3,930
–
Effect of movements in foreign exchange
–
620
Balance at 30 June 2008
9,296 340,965
Balance at 1 July 2008
9,296 340,965
Acquisitions through business combinations
–
Additions
Disposals
6,834
(291)
–
–
–
Effect of movements in foreign exchange
–
631
–
–
–
–
–
– 345,711
–
–
3,930
620
– 350,261
– 350,261
3,177
1,095
4,272
–
–
–
–
–
–
6,834
(291)
631
Balance at 30 June 2009
15,839 341,596
3,177
1,095 361,707
Amortisation and impairment losses
Balance at 1 July 2007
Amortisation for the year
Impairment loss
(1,248)
(534)
–
–
–
(9,419)
Balance at 30 June 2008
(1,782)
(9,419)
Balance at 1 July 2008
(1,782)
(9,419)
–
–
–
–
–
Amortisation for the year
Disposals
(1,166)
248
–
–
(150)
–
Balance at 30 June 2009
(2,700)
(9,419)
(150)
–
–
–
–
–
–
–
–
(1,248)
(534)
(9,419)
(11,201)
(11,201)
(1,316)
248
(12,269)
Carrying amounts
At 1 July 2007
At 30 June 2008
At 1 July 2008
At 30 June 2009
4,118 340,345
7,514 331,546
7,514 331,546
–
–
–
– 344,463
– 339,060
– 339,060
13,139 332,177
3,027
1,095 349,438
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
73
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
19. intanGiBle assets (continued)
Carrying value of brand names and goodwill
In thousands of AUD
Building Fixtures and Fittings
Commercial Furniture
Impairment testing for brand names and goodwill
CONSOLIDATED
THE COmPANy
2009
2008
2009
2008
320,872
319,146
12,400
12,400
333,272
331,546
–
–
–
–
–
–
The recoverable amounts of all brand names and goodwill were assessed at 30 June 2009 based on internal value in use calculations and no
impairment was identified for any segments (2008: Building Fixtures and Fittings segment: $9,419,000, Commercial Furniture segment: nil).
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 and 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 post–tax discount rate of 10.27% was used in discounting the projected future cash flows.
The values assigned to the key assumptions represent management’s assessment of future trends in the Building Fixtures and Fittings and Commercial
Furniture industries and are based on both external sources and internal sources (historical data).
The above assumptions are particularly sensitive in the following areas:
■■
■■
An increase of 1 percentage point in the post–tax discount rate would have decreased value in use for the Building Fixtures and Fittings segment
by $99,200,000 and for the Commercial Furniture segment by $4,600,000. No impairment losses would be realised for either segment as a result
of this change.
A 10 percent decrease in future planned revenues would have decreased value in use for the Building Fixtures and Fittings segment by
$74,300,000 and for the Commercial Furniture segment by $2,500,000. No impairment losses would be realised for either segment as a result of
this change.
20. trade and other payaBles
CONSOLIDATED
THE COmPANy
In thousands of AUD
Current
Trade payables and accrued expenses
Derivatives used for hedging
Non–trade payables and accrued expenses
Non–current
Derivatives used for hedging
Payables to controlled entities
2009
2008
2009
2008
60,583
25,477
3,171
50,287
27,592
3,413
89,231
81,292
5,585
–
5,585
–
–
–
57
–
–
57
–
54
–
–
54
–
597,077
583,653
597,077
583,653
The consolidated entity’s exposure to currency risk and liquidity risk related to trade and other payables are disclosed in note 26.
74
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
21. 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 26.
Non–current liabilities
In thousands of AUD
Unsecured bank loans
CONSOLIDATED
THE COmPANy
2009
2008
2009
2008
200,000
246,975
–
–
Terms and debt repayment schedule
CONSOLIDATED
In thousands of AUD
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
year of
Currency maturity
2009
Face
value
2009
Carrying
amount
2008
Face
value
2008
Carrying
amount
AUD
2011
60,000
60,000
60,000
60,000
AUD
–
–
60,000
60,000
AUD
2011
90,000
90,000
65,000
65,000
AUD
2011
50,000
50,000
50,000
50,000
EUR
–
–
11,975
11,975
200,000 200,000 246,975 246,975
The unsecured bank loans mature over the next 2 years and have variable rates ranging from 5.01% – 5.26% at 30 June 2009
(2008: 5.40% – 8.31%).
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
CONSOLIDATED
THE COmPANy
2009
6,000
8,000
2008
6,357
7,685
247,500
286,975
261,500
301,017
–
–
1,530
1,578
200,000
246,975
201,530
248,553
6,000
6,470
47,500
59,970
6,357
6,107
40,000
52,464
2009
2008
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
75
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
21. 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 2009.
Unsecured bank loans
Bank loans are provided to GWA Finance Pty Limited under the facility agreements. The bank loans are denominated in Australian dollars. 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.
22. employee BeneFits
Current
In thousands of AUD
Liability for long–service leave
Liability for annual leave
Liability for on–costs
Non–current
Liability for long–service leave
Liability for on–costs
Defined contribution superannuation funds
CONSOLIDATED
THE COmPANy
2009
1,778
9,943
2,470
2008
1,728
11,357
3,514
14,191
16,599
10,073
1,264
9,794
881
11,337
10,675
2009
2008
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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 $9,212,000 for the financial year
ended 30 June 2009 (2008: $8,656,000).
76
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
22. employee BeneFits (continued)
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 2009, 442,500 ordinary shares were issued to employees at the market price of $1.90, being total market value of $840,750. In the
prior year, 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.
As at 30 June 2009, loans are issued for 3,933,750 (2008: 3,846,250) shares and the remaining balances of these loans is $9,962,000 (2008:
$10,442,000) or $6,520,000 (2008: $5,929,000) at net present value. During 2009, dividends of $630,000 (2008: $814,000) were paid against the
loans and a further $691,000 (2008: $456,000) was paid by employees against these loans.
23. share-Based payments
The Long Term Incentive (Equity) Plan was approved by shareholders at the 2008 Annual General Meeting. 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 certain financial performance hurdles and the holder remaining in employment with the Company until the nominated
vesting date.
The performance hurdles are subject to financial performance conditions which measure Total Shareholder Returns (TSR) compared to a peer group
of companies, and growth in Earnings Per Share (EPS). The performance hurdles are challenging and achievable and focus senior executives on
sustained long term growth consistent with shareholder wealth creation. The plan runs over a three year performance period and the rights will only
vest if the performance hurdles are achieved. If the vesting conditions and performance hurdles are achieved, ordinary shares will be issued to the
participants at no cost. If the performance hurdles are not met, then the rights are cancelled after three years.
The performance hurdles are as follows:
■■
EPS hurdle – 10% or more EPS growth over the three-year performance period; and
■■
TSR hurdle – GWAIL’s TSR is more than the 50th percentile relative to the TSR of comparator companies.
Fair value
During the current financial year 1,185,000 performance rights were granted to employees (2008: nil) at a weighted average fair value of $1.65 (2008:
nil). The fair value of the performance rights subject to the EPS hurdle for vesting (50%) was determined as $1.78 by using a Binomial option pricing
model. The fair value of the performance rights granted subject to the TSR hurdle for vesting (50%) was determined as $1.51 by using a Monte Carlo
simulation. When determining the fair values it was assumed the Company would have a dividend yield of 7.86%, the risk free rate was 3.25% and
volatility ranged between 40-50% for the Company and its comparator companies listed for the TSR hurdle.
The fair value of the performance rights granted will be allocated to each financial year evenly over the specified three year service period. The amount
recognised as personnel expenses in the current financial year was $650,000 (2008: nil).
77
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
24. provisions
In thousands of AUD
Consolidated
Balance at 1 July 2008
Provisions made during the year
Provisions used during the year
Warranties
Restructuring
Site
restoration
Other
Total
10,011
8,159
4,278
6,490
4,124
24,903
4,096
–
2,549
14,804
(6,093)
(2,652)
(541)
(1,721)
(11,007)
Effect of movements in foreign exchange
16
–
–
–
16
Balance at 30 June 2009
12,093
5,722
5,949
4,952
28,716
Current
Non–current
Warranties
7,091
5,002
5,722
2,559
4,481
19,853
–
3,390
471
8,863
12,093
5,722
5,949
4,952
28,716
The total provision for warranties at balance date of $12,093,000 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 $7,091,000 of the total provision in the financial year ending
30 June 2010, and the majority of the balance of the liability over the following four years.
Restructuring
During the financial year ended 30 June 2009, provisions of $4,096,000 were made to cover the estimated costs of redundancies and related costs
with respect to the closure of manufacturing operations and other business restructuring. At balance date the balance of the restructuring provision
was $5,722,000. Of this amount $1,755,000 remains from the prior financial year for onerous lease commitments in relation to sites restructured and
$3,967,000 represents the balance remaining for the provision raised in the current year. The restructuring is expected to be completed by
June 2010.
Site restoration
At balance date the balance of the site restoration provision was $5,949,000. Payments of $541,000 were made in the current financial year. 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. Site restoration will be incurred when leased sites are exited. The net present value
of the provision has been calculated using a discount rate of 5.85 per cent.
78
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
Balance at 1 July 2008
353,938
(7,565)
193
25. capital and reserves
Reconciliation of movement in capital and reserves
In thousands of AUD
Consolidated
Balance at 1 July 2007
Total recognised income and expense
Issue of ordinary shares
Dividends to shareholders
Balance at 30 June 2008
Total recognised income and expense
Share–based payments, net of tax
Issue of ordinary shares
Dividends to shareholders
Balance at 30 June 2009
In thousands of AUD
The Company
Balance at 1 July 2007
Total recognised income and expense
Issue of ordinary shares
Dividends to shareholders
Balance at 30 June 2008
Balance at 1 July 2008
Total recognised income and expense
Share–based payments, net of tax
Issue of ordinary shares
Dividends to shareholders
Balance at 30 June 2009
Share
capital
Translation Hedging compensation Retained
earnings
reserve
reserve
reserve
Total
Equity
353,062
(2,553)
–
(5,012)
876
–
–
–
17
176
–
–
353,938
(7,565)
193
–
–
34,043
–
4,026
(755)
–
–
–
–
–
–
–
–
–
–
–
–
–
650
–
–
58,276
408,802
45,890
41,054
–
876
(61,612)
(61,612)
42,554
389,120
42,554
389,120
48,325
51,596
–
–
650
34,043
(49,245)
(49,245)
387,981
(3,539)
(562)
650
41,634
426,164
Equity
Share
capital
compensation
reserve
Retained
earnings
Total equity
353,062
–
876
–
353,938
353,938
–
–
34,043
–
387,981
–
–
–
–
–
–
–
650
–
–
650
49,407
62,641
–
(61,612)
50,436
50,436
39,335
–
–
(49,245)
40,526
402,469
62,641
876
(61,612)
404,374
404,374
39,335
650
34,043
(49,245)
429,157
79
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
25. capital and reserves (continued)
Share capital
In thousands of shares
On issue at 1 July – fully paid
Issue of shares under the dividend reinvestment plan
Issue of shares under the employee share plan
On issue at 30 June – fully paid
THE COmPANy
Ordinary shares
2009
2008
280,173
279,923
17,403
443
–
250
298,019
280,173
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.
Equity compensation reserve
The equity compensation reserve represents the fair value of performance rights expensed during the year ended 30 June 2009 (2008: nil).
Dividends
Dividends recognised in the current year by the consolidated entity and the Company are:
In thousands of AUD
2009
Interim 2009 ordinary
Final 2008 ordinary
Total amount
2008
Interim 2008 ordinary
Interim 2008 special
Final 2007 ordinary
Final 2007 special
Total amount
80
Cents
per share
Total amount
Franked
Date of
payment
9.5
8.0
17.5
26,831
100%
1st April 2009
22,414
100%
7th Oct 2008
49,245
10.0
28,017
100%
2nd April 2008
1.5
8.0
2.5
4,203
100%
2nd April 2008
22,394
100%
2nd Oct 2007
6,998
100%
2nd Oct 2007
22.0
61,612
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
25. capital and reserves (continued)
Dividends (continued)
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
8.5
25,332
100%
7th Oct 2009
The financial effect of these dividends has not been brought to account in the financial statements for the financial year ended 30 June 2009 and
will be recognised in subsequent financial reports.
Dividend franking account
In thousands of AUD
THE COmPANy
2009
2008
30 per cent franking credits available to shareholders of GWA International Limited for subsequent financial years
20,009
22,528
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 $10,857,000 (2008:
$9,606,000). In accordance with the tax consolidation legislation, the Company as the head entity in the tax–consolidated group has also assumed
the benefit of $20,009,000 (2008: $22,528,000) franking credits.
26. 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.
81
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
26. Financial instruments and Financial risk manaGement (continued)
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 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 42% of the trade receivables carrying amount at 30 June 2009 (2008: 46%).
At the balance sheet date there were no material uninsured concentrations of credit risk.
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
Commodity contracts used for hedging
Forward exchange contracts used for hedging
Interest rate swaps used for hedging
CONSOLIDATED
THE COmPANy
2009
2008
2009
2008
45,015
53,418
128,542
118,683
–
–
–
–
6,520
5,929
6,520
5,929
–
13,819
–
–
16,442
26,285
–
1,587
697,807
657,847
–
–
–
–
–
–
210,338
205,902
704,327
663,776
82
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
26. Financial instruments and Financial risk manaGement (continued)
Credit risk (continued)
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
2009
Gross
78,523
40,155
3,245
1,584
2,850
2,185
CONSOLIDATED
2009
Impairment
2008
Gross
2008
Impairment
(69)
(13)
(361)
(150)
(464)
(971)
66,844
(170)
41,517
4,778
3,092
1,482
970
(7)
(116)
(140)
(216)
(403)
128,542
(2,028)
118,683
(1,052)
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
2009
Gross
2009
Impairment
2008
Gross
2008
Impairment
Gross trade receivables with terms re–negotiated
74
(60)
265
(120)
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
Effect of movements in foreign exchange
Balance at 30 June
Liquidity risk
CONSOLIDATED
2009
2008
(1,052)
(1,305)
354
(25)
(804)
(527)
279
–
(2,028)
(1,052)
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.
83
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
26. 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:
In thousands of AUD
Carrying Contractual Less than 6 6–12
cash flows months months
amount
1–2
years
Carrying Contractual Less than 6 6–12
amount cash flows months
months
1–2
years
CONSOLIDATED
THE COmPANy
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
Forward exchange contracts designated
as hedges – inflow
(27,592)
(27,592) (27,592)
26,285
26,285
26,285
–
–
–
–
–
–
–
–
–
–
–
–
–
Total at 30 June 2008
(296,982) (338,051) (61,214)
(9,808) (267,029)
(54)
(54)
(54)
Non–derivative financial liabilities – 2009
Unsecured bank loans
(200,000) (218,681)
(5,490)
(5,491) (207,700)
–
–
–
Trade and other payables
(60,583)
(60,583) (60,547)
(36)
–
(57)
(57)
(57)
Derivative financial liabilities – 2009
Interest rate swaps designated as hedges
(1,839)
(2,056)
(1,205)
(733)
(118)
Commodity contracts designated
as hedges – outflow
Commodity contracts designated
as hedges – inflow
Forward exchange contracts designated
as hedges – outflow
Forward exchange contracts designated
as hedges – inflow
(12,280)
(12,280)
(3,982)
(2,713)
(5,585)
13,819
13,819
4,342
3,159
6,318
(16,943)
(16,943) (15,064)
(1,879)
16,442
16,442
14,568
1,874
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total at 30 June 2009
(261,384) (280,282) (67,378)
(5,819) (207,085)
(57)
(57)
(57)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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.
84
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
26. 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 3.76% to 7.36% (2008: 5.63% – 7.36%). At 30 June 2009, the consolidated entity had interest
rate swaps with a notional contract amount of $125,000,000 (2008: $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 2009 was $1,839,000 recognised as a fair value derivative liability. (2008: $1,587,000 fair value
derivative asset).
(i) Profile
At balance date the consolidated entity’s and the Company’s interest bearing financial instruments were:
CONSOLIDATED
THE COmPANy
In thousands of AUD
Variable rate financial instruments
2009
2009
Notional Carrying Notional
value
amount
value
2008
2008
2009
2008
Carrying Notional Carrying Notional Carrying
amount
amount
amount
2009
2008
value
value
Unsecured bank loans
(200,000) (200,000) (246,975) (246,975)
Bank balances
Call deposits
Fixed rate financial instruments
22,011
22,011
18,323
18,323
23,004
23,004
35,095
35,095
(154,985) (154,985) (193,557) (193,557)
Interest rate swap derivatives
125,000
(1,839) 125,000
1,587
Total
(29,985) (156,824)
(68,557) (191,970)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
85
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
26. 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:
CONSOLIDATED
THE COmPANy
2009
2008
2009
2008
(603)
(1,311)
–
603
–
1,311
–
–
609
1,608
–
(1,587)
(609)
–
(21)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
In thousands of AUD
Increase of 100 basis points
Hedging reserve (increase)/decrease
Financial assets increase/(decrease)
Financial liabilities (increase)/decrease
Decrease of 100 basis points
Hedging reserve (increase)/decrease
Financial assets increase/(decrease)
Financial liabilities (increase)/decrease
86
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
26. 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
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
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
2009
2008
2009
2008
(2,207)
(2,560)
(117)
220
(122)
183
1,198
1,049
303
–
351
166
(603)
(933)
2,209
2,565
117
(220)
122
(183)
(1,198)
(1,049)
(303)
–
605
(351)
(166)
938
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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 was designated as a hedge of the consolidated entity’s investment in its subsidiary in
the Netherlands.
87
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
26. 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
2008
Trade receivables
Trade payables
Cash
Gross balance sheet exposure
Estimated forecast sales
Estimated forecast purchases
Gross exposure
Forward exchange contracts
Net exposure 30 June 2008
–
–
3,246
(2,301)
6,658
6,658
334
1,279
–
–
–
–
196
(162)
61
95
300
(12)
1
289
–
–
–
–
13,747
–
(45,808)
– (5,092)
(45,808)
13,747 (5,092)
–
22,092
(2,195)
2,442
–
–
–
–
2
(21)
–
(19)
–
–
–
–
6,658
(22,437)
11,552 (2,555)
289
(19)
–
–
–
–
–
(842)
(842)
883
41
Foreign exchange rates at balance date
1.0000
0.9626
1.2609 0.6096
7.5091
0.4829
101.93
2009
Trade receivables
Trade payables
Cash
Gross balance sheet exposure
Estimated forecast sales
Estimated forecast purchases
Gross exposure
Forward exchange contracts
Net exposure 30 June 2009
–
–
–
–
–
–
–
–
–
1,457
(1,065)
93
485
–
–
–
–
1,400
1,528
(191)
51
(26)
399
1,260
1,901
7,231
10,549 17,825
(66,101)
(4,624) (20,501)
(58,870)
5,925 (2,676)
16,330
–
–
–
–
–
–
(42,055)
5,925 (1,416)
1,901
3
(1)
–
2
–
–
–
–
2
–
–
–
–
–
(3,472)
(3,472)
–
(3,472)
Foreign exchange rates at balance date
1.0000
0.8114
1.2428 0.5751
6.2884
0.4872
77.76
(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.
88
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
26. 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:
Consolidated
In thousands of AUD
Cash and cash equivalents
Trade and other receivables
Interest rate swaps:
Assets
Liabilities
Commodity contracts:
Assets
Liabilities
Forward exchange contracts:
Assets
Liabilities
Unsecured bank loans
Carrying
amount
2009
Fair
value
2009
Carrying
amount
2008
Fair
value
2008
45,015
45,015
53,418
53,418
116,963
116,963
109,006
109,006
–
–
1,587
1,587
(1,839)
(1,839)
13,819
13,819
(12,280)
(12,280)
–
–
–
–
–
–
16,442
16,442
26,285
26,285
(16,943)
(16,943)
(27,592)
(27,592)
(200,000)
(200,000)
(246,975)
(246,975)
Trade payables and accrued expenses
(63,754)
(63,754)
(53,700)
(53,700)
The Company
In thousands of AUD
Trade and other receivables
Payables to controlled entities
(102,577)
(102,577)
(137,971)
(137,971)
Carrying
amount
2009
Fair
value
2009
Carrying
amount
2008
Fair
value
2008
704,327
704,327
663,776
663,776
(597,077)
(597,077)
(583,654)
(583,654)
Trade payables and accrued expenses
(57)
(57)
(54)
(54)
107,193
107,193
80,068
80,068
89
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
26. Financial instruments and Financial risk manaGement (continued)
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. Commodity
contracts are marked to market by discounting the contractual forward price and deducting the current commodity spot price. 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.
(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 2009 plus an adequate constant credit spread to discount financial instruments. The interest
rates used are as follows:
Derivatives
2009
2008
3.19% – 4.84%
7.77% – 7.82%
Employee share loans and other loans
5.85% – 8.05%
7.30% – 7.55%
Interest bearing loans and borrowings
5.01% – 5.26%
5.40% – 8.31%
27. 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
CONSOLIDATED
THE COmPANy
2009
2008
2009
2008
13,416
10,127
29,494
28,014
2,967
4,317
45,877
42,458
–
–
–
–
–
–
–
–
The consolidated entity leases a warehouse and factory facilities and motor vehicles under operating leases. The warehouse and facility leases typically
run for a period of 3 to 5 years, with an option to renew the lease after that date. None of the leases include contingent rentals.
90
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
27. operatinG leases (continued)
Leases as lessee (continued)
One of the leased properties has been sublet by the consolidated entity. The lease and sublease expire in November 2009. Sublease payments of
$95,000 will be received during the following financial year.
During the financial year ended 30 June 2009, $11,407,000 (2008: $10,473,000) was recognised as an expense in the income statement in respect
of operating leases, which was net of sub–lease income.
28. capital and other commitments
CONSOLIDATED
THE COmPANy
In thousands of AUD
Capital expenditure commitments
Plant and equipment
Contracted but not provided for and payable:
Within one year
29. continGencies
2009
2008
2009
2008
4,401
3,152
–
–
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 previous financial years, the Company investigated and reported two
environmental contamination issues at factory sites at Eagle Farm,
Queensland and Revesby, NSW. Both sites are leased and occupied
by wholly owned subsidiaries of the ultimate parent entity,
GWA International Limited.
The costs to remediate the Eagle Farm site have been provided in the
financial statements for the year ended 30 June 2009. The costs to
remediate the Revesby site have been fully provided in prior years.
Contingent liabilities considered remote
Guarantees
(i) Under the terms of a Deed of Cross Guarantee, described in note 30,
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
CONSOLIDATED
THE COmPANy
2009
2008
2009
2008
–
–
–
–
–
1,404
3,865
–
–
–
–
–
91
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
30. 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 31 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.
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 2009, is set out below.
Summerised 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
2009
2008
68,446
69,138
(20,396)
(20,337)
48,050
48,801
14,752
27,563
(49,245)
(61,612)
13,557
14,752
92
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
30. deed oF cross Guarantee (continued)
Balance sheet
In thousands of AUD
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
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
Trade and other payables
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
2009
2008
37,979
33,700
126,447
121,355
99,729
92,807
3,052
4,358
267,207
252,220
12,185
5,298
25,729
55,493
22,973
12,212
22,516
22,553
63,040
70,101
334,206
324,640
2,894
3,770
483,543
494,067
750,750
746,287
85,063
77,336
7,211
5,948
12,953
15,537
19,473
16,982
124,700
115,803
5,585
–
200,000
246,975
11,091
10,514
8,864
7,812
225,540
265,301
350,240
381,104
400,510
365,183
387,981
353,938
(1,028)
(3,507)
13,557
14,752
400,510
365,183
93
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
31. consolidated entities
Parent entity
GWA International Limited
Subsidiaries
GWA Group Limited
Gainsborough Hardware Industries Limited
Caroma Holdings Limited
GWA (North America) Pty Ltd
Caroma Industries Limited
G Subs Pty Ltd
Sebel Furniture (Hong Kong) Ltd
GWA Trading (Shanghai) Co Ltd
GWA International (Hong Kong) Limited (liquidated)
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
Caroma Industries Europe BV
Wisa Beheer BV
Wisa BV
Wisa Systems BV
Wisa GmbH
Stokis Kon Fav. Van Metaalwerken NV
Caroma International Pty Ltd
Caroma USA Inc
Canereb Pty Ltd
Dux Manufacturing Limited
GWA Taps Manufacturing Limited
Lake Nakara Pty Ltd
Warapave Pty Ltd
Rover Mowers (NZ) Limited
Caroma Industries (NZ) Limited
GWAIL (NZ) Ltd
Rover Mowers Limited
Industrial Mowers (Australia) Limited
Olliveri Pty Ltd
Sebel Service & Installations Pty Ltd
Sebel Properties Pty Ltd
Austral Lock Pty Ltd (acquired)
94
Parties
to cross
guarantee
Country of
incorporation Ownership interest
2009
2008
Y
Y
Y
Y
Y
Y
Y
N
N
N
Y
Y
Y
Y
Y
N
Y
N
N
N
N
N
N
Y
N
N
Y
Y
N
N
N
N
N
Y
Y
Y
Y
Y
Y
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
China
Hong Kong
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Netherlands
Netherlands
Netherlands
Netherlands
Germany
Netherlands
Australia
USA
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
–
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
–
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
31. consolidated entities (continued)
Subsidiaries (continued)
Sebel Furniture Limited (NZ)
Sebel Furniture Limited
Sebel Furniture (SEA) Pte Ltd (liquidated)
Sebel Sales Pty Limited
Caroma Singapore Pte Limited (liquidated)
GWA Finance Pty Limited
Hetset (No. 5) Pty Ltd
Bankstown Unit Trust
Parties
to cross
guarantee
Country of
incorporation Ownership interest
2009
2008
N
Y
N
Y
N
Y
Y
N
New Zealand
100%
Australia
100%
Singapore
–
Australia
100%
Singapore
–
Australia
100%
Australia
100%
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
32. reconciliation oF cash FloWs From operatinG activities
In thousands of AUD
Cash flows from operating activities
Profit for the period
Adjustments for:
Depreciation
Amortisation
Share–based payments
Impairment losses
Foreign exchange (gains)/losses
Interest expense/(income)
Dividends from controlled entities
Distributions from controlled trusts
CONSOLIDATED
THE COmPANy
2009
2008
2009
2008
48,325
45,890
39,335
62,641
16,789
1,316
650
–
17,386
534
–
9,419
(1,183)
(1,971)
13,844
14,623
–
–
–
–
–
–
650
–
–
–
–
–
–
–
–
–
(40,000)
(65,000)
–
–
(3)
(18)
2,359
–
–
–
(Gain)/loss on sale of property, plant and equipment and intangible assets
(113)
(6,879)
Income tax expense
Operating profit before changes in working capital and provisions
20,690
22,065
100,318
101,067
(Increase)/decrease in trade and other receivables
(19,114)
(8,095)
(40,541)
(64,208)
(Increase)/decrease in inventories
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions and employee benefits
Interest received/(paid)
Income taxes paid
Net cash from operating activities
(1,264)
28,942
1,677
20,703
12,378
5,422
–
–
80,551
126,849
–
–
110,559
131,475
39,992
62,641
(12,781)
(14,204)
–
–
(19,150)
(14,279)
(18,559)
(12,505)
78,628
102,992
21,433
50,136
95
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
33. 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
Share–based payments
Termination benefits
CONSOLIDATED
THE COmPANy
2009
2008
2009
2008
6,008,604
5,622,928
1,014,097
910,634
439,122
–
710,000
500,000
8,171,823
7,033,562
–
–
–
–
–
–
–
–
–
–
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
R Thornton
Executives
S Wright
A Rusten
W Saxelby
L Patterson
Balance
Balance
Interest paid
and payable in
Highest
balance
1 July 2008 30 June 2009 the reporting period in period
1,721,250
1,590,000
298,996
281,496
427,332
–
792,540
740,040
886,100
833,600
959,991
907,491
–
–
–
–
–
–
1,721,250
298,996
427,332
792,540
886,100
959,991
No loans were made to key management personnel or their related parties during the year (2008: $1,227,467). The loans made in the prior financial
year related to the Employee Share Plan.
96
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
33. related parties (continued)
Loans to key management personnel and their related parties (consolidated) (continued)
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 2009*
Total for key management personnel 2008
Opening
Balance
Closing
Interest paid
and payable in
Number in
group at
Balance
the reporting period 30 June
5,086,209
4,352,627
5,830,110
4,787,213
–
–
6
5
*The 2009 opening balance differs to the 2008 closing balance due to the appointment of Richard Thornton as Director on 6 May 2009.
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 $214,331 (2008: $282,731) 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. The consolidated entity incurred legal fees of $380,343 (2008: n/a) from Clayton Utz Lawyers, a legal firm of which Mr D McDonough
is an equity partner. 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
2009
67
2008
2009
2008
–
–
–
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.
97
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
33. 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:
Directors: non–executive
B Thornton
J Kennedy
M Kriewaldt (Retired 30 October 2008)
D Barry
R Anderson
G McGrath
W Bartlett
D McDonough (Appointed 16 February 2009)
Executive directors
P Crowley
R Thornton (Appointed 6 May 2009)
Executives
S Wright (Ceased employment 18 July 2008)
A Rusten
G Oliver
W Saxelby
L Patterson
Held at
1 July 2008
Purchases
Held at
Sales 30 June 2009
16,186,722
1,263,228
101,000
100,000
–
–
12,386,119
28,890,832
517,415
895,363
–
–
–
–
–
17,449,950
101,000
n/a
12,903,534
29,786,195
300,000
5,000
n/a
750,000
n/a
268,750
300,000
156,250
300,000
300,000
– (150,000)
150,000
10,425
–
–
–
–
–
13,280
–
–
–
–
–
–
–
–
–
–
–
15,425
83,635
750,000
111,935
n/a
300,000
169,530
300,000
300,000
The relevant interest of each director in the share capital of the Company as notified by the directors’ to the Australian Securities Exchange in
accordance with Section 205G(1) of the Corporations Act 2001 as at 30 June 2009 is listed in the Directors’ Report.
Directors: non–executive
B Thornton
J Kennedy
M Kriewaldt
D Barry
R Anderson
G McGrath
W Bartlett (Appointed 21 February 2007)
Executive directors
P Crowley
Executives
S Wright
A Rusten
G Oliver
W Saxelby
L Patterson
Held at
1 July 2007
Purchases
Held at
Sales 30 June 2008
15,073,902
1,112,820
1,000
100,000
12,355,889
28,890,832
300,000
n/a
100,000
–
30,230
–
–
–
500,000
250,000
268,750
300,000
156,250
–
–
–
–
300,000
300,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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
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 2009 was 62,421,204 (2008: 60,044,673).
98
GWa international limited and its controlled entities
ABN 15 055 964 380
notes to the consolidated
Financial statements
33. 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.
34. suBsequent events
To management’s best knowledge, there are no events that have arisen subsequent to 30 June 2009 that will, or may, significantly affect the operation
or results of the consolidated entity.
99
GWa international limited 2009 ANNUAL REPORT
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, and the Remuneration Report in the Directors’ Report, 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 2009 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 30 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 2009
pursuant to Section 295A of the Corporations Act 2001.
Dated at Brisbane on 18 August 2009.
Signed in accordance with a resolution of the directors:
B Thornton
Director
P C Crowley
Director
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 2009 there have been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
KPmG
Sydney, 18 August 2009
mark Epper
Partner
100
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 2009, 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 34 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.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
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 2009 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 2009. 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 2009, complies with Section 300A of the
Corporations Act 2001.
KPmG
Sydney, 18 August 2009
mark Epper
Partner
101
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
other statutory inFormation
as at 17 august 2009
statement oF shareholdinG
In accordance with the Australian Securities Exchange Listing Rules, the directors state that, as at 17 August 2009, 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
1,920
6,503
3,194
2,163
129
1,058,920
19,259,506
24,020,432
%
0.36
6.46
8.06
46,013,128
15.44
207,666,866
69.68
13,909
298,018,852
100
The number of shareholders with less than a marketable parcel of 174 shares is 325.
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 17 August 2009:
Shareholder
HGT Investments Pty Ltd
Number of Shares
% of Shares on Issue
15,784,678
5.30
102
GWa international limited and its controlled entities
ABN 15 055 964 380
other statutory inFormation
as at 17 august 2009
20 larGest shareholders as at 17 august 2009
Shareholder
Number of Shares
% Shares on Issue
NATIONAL NOMINEES LIMITED
J P MORGAN NOMINEES AUSTRALIA
HGT INVESTMENTS PTY LTD
KFA INVESTMENTS PTY LTD
ERAND PTY LTD
JMB INVESTMENTS PTY LTD
RBC DEXIA INVESTOR SERVICES
HSBC CUSTODY NOMINEES
ASHBERG PTY LTD
THEME (NO 3) PTY LTD
CJZ INVESTMENTS PTY LTD
18,753,896
16,206,726
15,784,678
10,864,945
9,898,229
9,186,434
8,897,629
8,727,554
6.29
5.44
5.30
3.65
3.32
3.08
2.99
2.93
8,418,442
2.82
7,843,226
2.63
7,016,832
2.35
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
6,681,130
2.24
CITICORP NOMINEES PTY LIMITED
ITA INVESTMENTS PTY LTD
CITICORP NOMINEES PTY LIMITED
DABARY INVESTMENTS PTY LTD
5,372,931
1.80
5,152,338
1.73
5,069,218
3,553,830
1.70
1.19
MR PETER ZINN & MRS CAROL JOAN ZINN (CAROL ZINN FAMILY NO 2 A/C)
3,353,740
1.13
HARVEST HOME HOLDINGS PTY LTD
2,586,416
0.87
ANZ NOMINEES LIMITED
AMP LIFE LIMITED
Total
2,496,205
2,319,688
158,184,087
0.84
0.78
46.92
103
GWa international limited 2009 ANNUAL REPORT
GWa international limited and its controlled entities
ABN 15 055 964 380
shareholder inFormation
annual General meetinG
The Annual General Meeting of GWA International Limited will be held
in The Grand Ballroom, Stamford Plaza Brisbane, Cnr Edward and
Margaret Streets Brisbane on Thursday 29 October 2009 commencing
at 10:30 am. Shareholders will be mailed their Notice of Annual
General Meeting and Proxy Form during September 2009.
shareholder enquiries
Shareholders with enquiries about their shareholding or dividend
payments should contact the Company’s share registry, Computershare
Investor Services Pty Limited, on 1300 552 270 or write to GPO Box
523 Brisbane Queensland Australia 4001. Alternatively, you can view
details of your holding or make changes to your personal information
online at www.computershare.com.au.
dividend reinvestment plan
The Dividend Reinvestment Plan (DRP) was re-introduced by the
Board on 19 August 2008. The DRP rules can be found on the
Company’s website.
To participate in the DRP, shareholders must complete an election form
which can be obtained from the Company’s share registry or online at
www.computershare.com.au.
stock eXchanGe listinG
The Company’s shares are listed on the Australian Securities Exchange
under the ASX code: GWT. Details of the trading activity of the
Company’s shares are published in most daily newspapers, generally
under the abbreviation GWA Intl.
chanGe oF address
Shareholders who have changed their address should immediately
notify the Company’s share registry in writing or online at www.
computershare.com.au.
consolidation oF shareholdinGs
Shareholders who wish to consolidate their separate shareholdings into
one holding should notify the Company’s share registry in writing.
annual reports
Annual Reports are made available to shareholders on the Company’s
website. Shareholders wishing to be mailed a copy of the Annual
Report should notify the Company’s share registry in writing or online at
www.computershare.com.au. Shareholders will be mailed the Notice of
Annual General Meeting and Proxy Form which will include details on
accessing the online Annual Report.
dividends
Dividends are determined by the Board, having regard to the financial
circumstances of the Company. Dividends are normally paid in April
and October each year following the release of the Company’s half year
and full year results to the market. The latest dividend details can be
found on the Company’s website.
direct credit oF dividends
Dividends may be paid directly to a bank, building society or credit
union account in Australia. Payments are electronically credited
on the dividend payment date and confirmed by an advice mailed
to shareholders on that date, or emailed where shareholders have
requested this form of communication.
To ensure the timely receipt of dividends, the Company encourages
shareholders to provide direct credit instructions. Direct credit
application forms can be obtained from the Company’s share registry
or online at www.computershare.com.au.
shareholder timetaBle 2009
30 JUNE
Financial year end
18 AUGUST
Year end result and final dividend announcement
14 SEPTEmBER
Ex dividend date for final dividend
18 SEPTEmBER
Record date for determining final dividend entitlement
25 SEPTEmBER
Notice of Annual General Meeting and Proxy Form mailed
to shareholders
7 OCTOBER
Final ordinary dividend paid
27 OCTOBER
Proxy returns close 10:30 am Brisbane
29 OCTOBER
Annual General Meeting
31 DECEmBER
Half year end
104
CONTENTS
Performance Summary
Company Profile and Mission Statement
Chairman’s Review
Managing Director’s Review of Operations
Health and Safety
In the Community
Business Divisions
GWA Sustainability and Innovation Story
Board of Directors
Corporate Governance Statement
Directors’ Report
Financial Statements
Other Statutory Information
Shareholder Information and Timetable
1
2
4
6
10
12
14
19
30
32
39
48
102
104
HEAD OFFICE LOCATIONS
GWA INTERNATIONAL LIMITED
Level 14 10 Market Street
Brisbane QLD 4000
AUSTRALIA
Telephone: 61 7 3109 6000
Facsimile: 61 7 3236 0522
Website: www.gwail.com.au
CAROMA DORF
4 Ray Road
Epping NSW 2121
AUSTRALIA
Telephone: 61 2 9202 7000
Facsimile: 61 2 9869 0625
Websites: www.caroma.com.au
www.fowler.com.au
www.stylus.com.au
www.starion-industries.com
www.dorf.com.au
www.clark.com.au
www.irwell.com.au
www.radiantstainless.com.au
www.ecologicalsolutions.com
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
www.hotwaterrebate.com.au
CORPORATE DIRECTORy
DIRECTORS
B Thornton, Chairman
J J Kennedy, Deputy Chairman
P C Crowley, Managing Director
D R Barry, Non-Executive Director
R M Anderson, Non-Executive Director
G J McGrath, Non-Executive Director
W J Bartlett, Non-Executive Director
D D McDonough, Non-Executive Director
R J Thornton, Executive Director
CHIEF FINANCIAL OFFICER
W R Saxelby, FCPA GAICD
COMPANy SECRETARy
R J Thornton, CA B Com (Acc) LLB (Hons) LLM
REGISTERED OFFICE
Level 14, 10 Market Street
Brisbane QLD 4000
AUSTRALIA
Telephone: 61 7 3109 6000
Facsimile: 61 7 3236 0522
Website: www.gwail.com.au
ASX code: GWT
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
www.ausloc.com
ROvER MOWERS LIMITED
155 Fison Avenue West
Eagle Farm QLD 4009
AUSTRALIA
Telephone: 61 7 3213 0222
Facsimile: 61 7 3868 1010
Website: www.rovermowers.com.au
SEBEL FuRNITuRE LIMITED
92 Gow Street
Padstow NSW 2211
AUSTRALIA
Telephone 61 2 9780 2222
Facsimile 61 2 9793 3152
Website: www.sebel.com.au
WISA Bv
Driepoortenweg 5
6827 BP Arnhem
NETHERLANDS
Telephone +31 (0) 26 362 9020
Facsimile +31 (0) 26 363 5480
Website: www.wisa-sanitair.com
AuDITOR
KPMG
10 Shelley Street
Sydney NSW 2000
AUSTRALIA
Telephone: 61 2 9335 7000
Facsimile: 61 2 9335 7001
SHARE REGISTRy
Computershare Investor Services Pty Ltd
Level 19, 307 Queen Street
Brisbane QLD 4000
AUSTRALIA
GPO Box 523
Brisbane QLD 4001
AUSTRALIA
Telephone: 1300 552 270
Facsimile: 61 7 3237 2152
Website: www.computershare.com.au
GROuP BANkERS
Commonwealth Bank of Australia
Australia and New Zealand Banking Group Limited
HSBC Bank Australia Limited
National Australia Bank
Westpac Banking Corporation
Printed using Forestry Stewardship Council (FSC) certified paper. All
paper sourced from responsibly managed plantation forests. ISO14001
environmental management system in use.
G
W
A
I
N
T
E
R
N
A
T
O
N
A
L
I
I
I
L
M
T
E
D
2
0
0
9
A
N
N
U
A
L
R
E
P
O
R
T
Level 14 10 Market Street Brisbane Queensland 4000 Australia
Telephone: 61 7 3109 6000 Facsimile: 61 7 3236 0522
Website: www.gwail.com.au
GWA INTERNATIONAL LIMITED
2009 ANNUAL REPORT