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Flexsteel IndustriesGWA INTERNATIONAL LIMITED
2010 ANNUAL REPORT
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Contents
five Year financial 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
28
30
38
50
102
104
2009/10 Year Performance highlights
■■ Revenue from continuing operations increased by
■■ Increased operating cash flow from continuing businesses
7.1% to $656.8 million1
of $116 million reflects strong working capital management
■■ Trading EBIT up 9.5% to $94.5 million1
■■ Fully franked full year dividend maintained at 18.0 cents per share
■■ Brivis Climate Systems acquisition performing well
■■ Core debt facilities extended to 2012/13
■■ Divestment of the non-core Rover Mowers and
■■ Trading profit for 2010/11 expected to exceed the current year
Wisa Beheer businesses
five Year financial summary
Revenue from continuing operations
Earnings before interest, tax, depreciation,
2005/06
$’000
619,989
2006/07
$’000
636,124
2007/08
$’000
648,902
2008/09
$’000
678,344
2009/10
$’000
656,809
amortisation and restructuring costs
117,617
118,533
117,314
105,060
112,099
(%)
19.0
18.6
18.1
15.5
17.1
Depreciation and amortisation
(22,420)
(19,779)
(17,920)
(18,105)
(17,551)
Earnings before interest, tax and restructuring costs
(%)
Interest (net)
Trading profit before tax
(%)
Tax expense
(%)
Trading profit after tax
Restructuring costs after tax
Net profit after tax from continuing operations
Loss from discontinued operations (net of income tax)
Net profit after tax for the period
Net cash from operating activities
Capital expenditure
Research and development
Net debt
Shareholders’ equity
Other Ratios and Statistics
Return on shareholders’ equity (%)
Interest cover (times)
Net debt / (net debt + equity) (%)
Basic earnings per share (cents)
Trading earnings per share (cents)*
Ordinary dividend per share (cents)
Special dividend per share (cents)
Total dividend per share (cents)
Franking (%)
Ordinary dividend payout ratio (%)
Share price (30 June) ($)
Dividend yield (total dividend)(%)
Number of employees
* excludes restructuring expenses
95,197
15.4
98,754
15.5
99,394
15.3
86,955
12.8
94,548
14.4
(11,490)
(12,366)
(14,623)
(13,844)
(15,027)
83,707
13.5
86,388
13.6
84,771
13.1
73,111
10.8
79,521
12.1
(23,628)
(24,975)
(24,612)
(21,919)
(24,068)
28.2
60,079
(3,227)
56,852
-
56,852
60,038
30,966
5,775
141,000
411,968
13.8
10.2
25.5
20.4
21.6
18.0
3.5
21.5
100
88.2
3.11
6.9
28.9
61,413
(5,095)
56,318
-
56,318
24,841
21,516
5,360
225,614
408,802
13.8
9.6
35.6
20.2
22.0
18.0
4.0
22.0
100
89.1
4.42
5.0
2,226
1,957
29.0
60,159
(14,269)
45,890
-
45,890
102,992
22,235
6,056
193,557
389,120
11.8
8.0
33.2
16.4
21.5
18.0
1.5
19.5
100
109.8
2.50
7.8
1,786
30.0
51,192
(2,867)
48,325
-
48,325
78,628
17,348
6,619
154,985
426,164
11.3
7.6
26.7
16.9
17.9
18.0
-
18.0
100
106.5
2.30
7.8
1,891
30.3
55,453
-
55,453
(6,926)
48,527
67,165
15,098
7,729
175,952
431,089
11.3
7.5
29.0
16.2
18.5
18.0
-
18.0
100
111.1
3.01
6.0
1,922
1 The financial years 2005/06 through to 2008/09 include the results of Rover Mowers and Wisa Beheer. These businesses were divested during the 2009/10 financial year and are disclosed as
discontinued operations in the 2009/10 year.
section header
Company Profile
GWA International Limited (GWA) listed on the Australian Securities
Exchange in May 1993 and is Australia’s leading supplier of building
fixtures and fittings to households and commercial premises. The
Company has approximately 1,900 employees with manufacturing
and distribution facilities located across Australia.
GWA Heating & Cooling is an Australian designer, manufacturer,
importer and distributor of a range of hot water and ducted heating
and cooling systems for the residential and commercial markets.
The range is distributed under Australian brands including Dux,
EcoSmart, Radiant, Brivis and APAC.
GWA currently operates through four distinct business divisions
including:
■ GWA Bathrooms & Kitchens
■ GWA Heating & Cooling
■ GWA Door & Access Systems
■ GWA Commercial Furniture
GWA Bathrooms & Kitchens is Australia’s foremost designer,
manufacturer, importer and distributor of domestic and commercial
bathroom, kitchen and laundry products. The range is distributed
under Australian brands including Caroma, Dorf, Fowler, Stylus, Clark,
Radiant, Irwell and international brands including Hansa and KWC.
GWA Door & Access Systems is a leading Australian designer,
manufacturer, importer and distributor of a comprehensive range
of domestic and commercial door hardware and fittings. The range
is distributed under Australian brands including Gainsborough,
Austral Lock and international brands including Hillaldam.
GWA Commercial Furniture is at the forefront of Australian design,
manufacture, import and distribution of quality commercial furniture
and seating. The range is distributed under the Sebel brand.
GWA has grown significantly since listing as a result of the
strong operating performance of the Company’s core building
fixtures and fittings businesses and successful acquisitions.
The Company remains committed to growing shareholder wealth
through continuous business improvement initiatives and pursuing
acquisition opportunities that add value to its core business
segments and that support expansion into new markets.
mission statement
GWA’s primary objective is to sustainably grow shareholder
wealth over time. This objective will be achieved by investing in
the development of its people, systems, new products and world
leading technology, to sustain and build the premium profitability
of the business over time.
The Company’s core building fixtures and fittings businesses
will focus on the research and development of innovative
new products to maximise market opportunities and create
competitive advantage. The Company will continue to develop
products through sustainable manufacturing processes
and which provide solutions for reducing domestic and
commercial water consumption and carbon emissions.
GWA will grow the profitability of its business by investing for
sustainable growth and adapting its business models for a
changing market. The Company will continue the pursuit of
acquisition opportunities that add value to its core business
segments and that support expansion into new markets.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
Smarter Solutions
PMS279
Process Black 75%
3
3
Geoff McGrath
Chairman’s review
having successfully navigated the
market uncertainty of the past 2
years your Board has focused on
positioning the Company to maximise
benefits from the improved outlook
for the Australian economy.
Our businesses and the industries in which we operate have undergone
strategic reviews and our direction is confirmed to focus on the
Australian building fixtures and fittings sector. This was supported during
the year by the divestment of two non-core businesses in Rover Mowers
and Wisa Beheer, and the acquisition of Brivis Climate Systems.
The Brivis Climate Systems acquisition has created a broader based GWA
Heating and Cooling business comprising both hot water and ducted
climate systems. Our overarching strategy is to expand growth options
through market and product extensions in broader industry segments.
These currently comprise Heating and Cooling, Bathrooms and Kitchens,
and Door and Access Systems. The Managing Director, Peter Crowley,
will expand on our strategic priorities in his review of operations.
The Board itself is undergoing a period of transition with the retirement
of Jim Kennedy last October, our Chairman of the last 17 years, Barry
Thornton, in June and the impending retirement of David Barry at the
next Annual General Meeting in October. All these directors have been
on the Board since the Company was listed in 1993 and have made
an invaluable contribution to the success of GWA over this period. I
particularly wish to acknowledge Barry Thornton for his leadership as
Chairman of the Board over this period and I know I speak on behalf of
all shareholders in wishing each of these directors well in their retirement.
These times also provide opportunities for renewal and in the past
year we have benefited from the skills and contributions of Darryl
McDonough and Richard Thornton who joined the Board in 2009. We
are engaged in a search for another director with appropriate experience
and skills who will be appointed during the current financial year.
overvieW of results
The Group achieved a trading profit from continuing businesses after
tax of $55.4 million in the 2009/10 year on sales revenue of $656.8
million. Net profit after tax of $48.5 million was after adjusting for the
discontinued Rover Mowers and Wisa Beheer businesses. Trading
earnings before interest and tax of $94.5 million represented a 9.5%
increase on the prior year’s performance due to improvements in
GWA internAtionAl limiteD 2010 ANNUAL REPORT
underlying demand, market development activities, contributions from
acquisitions and ongoing business improvement. We believe this is a
credible performance given the volatility of our markets during the year.
DiviDenDs AnD CAPitAl mAnAGement
The current GWA 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% to 80% of earnings. It
is proposed that dividends will increase as profitability improves in
accordance with the above dividend payout ratio.
The Group’s strong 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. Together with the interim dividend of 9.5 cents per
share paid in April, this maintains the ordinary fully franked dividend
for the year at 18.0 cents per share which is in accordance with our
policy. We expect that the same dividend payout will be maintained in
the year ahead, absent unforseen circumstances.
The Dividend Reinvestment Plan (DRP) will not be offered to
shareholders for the final dividend in October and remains suspended.
The Board will look to reintroduce the DRP where additional funding
is required to support acquisition opportunities and to ensure a strong
balance sheet is maintained.
Net Debt at the end of June 2010 was $176 million. Prudent
management of our asset portfolio and working capital has meant
that net debt has increased by only $21 million despite funding the
$48.6 million Brivis Climate Systems acquisition. Our debt is well
covered by total bank facilities of $268 million and we appreciate the
ongoing support of our banks including Commonwealth Bank, National
Australia Bank, Australia and New Zealand Banking Group, Westpac
Banking Corporation and HSBC Bank Australia. Their support has
been validated through the year by ongoing term extensions for current
facilities and we feel confident that new facilities are available to assist
with funding growth opportunities as required.
exeCutive remunerAtion
Our Remuneration Report has been expanded this year to address
comments raised on last year’s report and further improve
transparency of executive remuneration. The Board takes advice
from an external remuneration consultant in setting remuneration
levels for executives and we are satisfied that the current mix of fixed
remuneration and performance incentives is appropriate.
In 2009/10 the Board exercised a freeze on fixed remuneration
increases due to market uncertainty and the strong improvement in
operating results has led to an increase in incentives. Our executive
and management incentives scheme covers approximately 16% of
total staff employees with total short term incentive payments for the
year representing approximately 5% of trading earnings before tax. The
Board believes this is a reasonable balance of reward for management
and shareholders and is necessary to ensure we are market competitive
to retain our high quality executive and management team.
CorPorAte GovernAnCe
As mentioned in my opening comments the Board is undergoing
transition and renewal and the Board have invited me to become
Chairman following Barry Thornton’s retirement. My priority is to
ensure we have the best talent available on the Board with the
diversity of skills necessary to oversee and guide the Company.
I am aware of the current commentary about Board diversity and
acknowledge the need to achieve diversity of skills and views in
Board representation. This is a key determinant for the selection
of all Board members and will be the case as we seek a new
director appointment over the coming year.
Following my appointment as Chairman of the Board, I have
rotated as Chairman of the Remuneration Committee and Bill
Bartlett has become Chairman together with Darryl McDonough
as an additional Committee member. These appointments
ensure the independence of executive remuneration decisions.
sustAinABilitY AnD ProDuCt innovAtion
The Board is committed to reducing energy, water and waste
across the Group’s operations. We are also proud of the
contribution our innovative products make to improvements in
water and energy efficiency in their application and continue to
invest over 1% of revenue per annum to advance further product
innovation and create competitive advantage.
Our operating plants aim to continually set high standards in
energy, water and waste efficiency. Our flagship operation, the
Caroma Dorf vitreous china factory at Wetherill Park received
the Bronze Award from the NSW Department of Environment,
Climate Change and Water (DECCW) and is now a Bronze
Partner of the Sustainability Advantage Program. The Caroma
Dorf Wetherill Park factory was also awarded the 2010 Green
Globe Business Water Award from the DECCW recognising
the substantial reductions in water consumption in the
manufacturing processes.
Overall the water, energy and emissions savings at Wetherill
Park have resulted in a reduction of:-
■■ gas usage per cast vitreous china piece of 8.5%
■■ electricity usage per cast vitreous china piece of 7.8%
■■ water usage per cast vitreous china piece of 13.5%
GWA now reports its group carbon emissions under the
Federal Government’s National Greenhouse and Emissions
Reporting (NGER) and we are making this report available
on the GWA website. This will increase transparency and
demonstrate the continuous improvement we aim to achieve
for a sustainable future.
Trading EBIT
$m
09/10
08/09
07/08
06/07
05/06
84
86
88 90 92
94
96
98 100 102
Trading EBIT up 9.5% reflecting improved underlying demand, market
development initiatives, cost management and contributions from acquisitions
Dividend Per Share
Ordinary Dividend
Special Dividend
09/10
08/09
07/08
06/07
05/06
0
5.0
10.0
15.0
20.0
25.0
Strong operating cash flow has enabled ordinary dividends to be
maintained at 18 cents per share fully franked
GWA PeoPle
Our business is only as good as our people and we aim to provide
a safe and rewarding environment in the workplace. We are
very pleased with progress in safety performance resulting in a
48% reduction in total injuries during the year. This is the fifth
consecutive year of improvement and represents a step change
in achieving our aim for an injury free work environment.
We are also continually working to ensure we attract and retain
the best management. In recognition of changes in community
expectations for work life balance, we have introduced a number
of policies which provide flexibility in work arrangements. It is a
fundamental point in the discussion around diversity that females
are encouraged to continue in the workplace and develop the skills
and knowledge to advance in the Company. These polices are
aimed at creating a work environment which will support this aim.
In closing, I would like to thank management and staff for their
efforts in achieving an improved financial result in the 2009/10
year, and look forward to a further improvement in performance
in the 2010/11 year.
5
managing Director’s
review of operations
Peter Crowley
the financial results for the 2009/10
year are presented in the accounts for
GWA’s continuing operations following
the divestment of rover mowers and
Wisa Beheer and the acquisition of
Brivis Climate systems during the year.
These transactions demonstrate progress in our strategy to grow in our
core Australian building fixtures and fittings segment.
Revenue increased by 7% comprising underlying growth of 4% and
three months sales by Brivis. Dwelling approvals and commencements
of new residential buildings improved progressively through the year
but there is a lag in completions, where GWA sells the majority of its
products. We expect the stronger level of dwelling approvals to flow
through to increased sales revenue in the 2010/11 year.
The following chart demonstrates this trend by showing the twelve
month moving annual numbers for dwelling activity since 2003.
The summary of financial results for the 2009/10 year outlined below
highlight the improvement in operating results with increased margins
and strong cash flow.
$million
2009/10
2008/09 % Change
Sales Revenue
656.8
613.0
Trading EBIT
EBIT Margin
94.5
86.4
14.4%
14.1%
7.1%
9.5%
Trading Profit after Tax from
Continuing Operations
55.4
50.6
9.6%
Restructure Costs after Tax
-
Discontinued Operations
Net Profit after Tax
Cash Generated from
Operations
(2.4)
0.1
48.3
-
(6.9)
48.5
105.3
110.6
(4.8%)
Sales revenue increased by 7% despite a decline in demand for
environmental water heating products due to reductions in Federal
Government rebates in August 2009. Sales and profit benefited from
market development activities, recent acquisitions and demand
New Dwelling Activity
APPROVALS
COMMENCEMENTS
COMPLETIONS
Source: BIS Shrapnel
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
JUNE 03
JUNE 04
JUNE 05
JUNE 06
JUNE 07
JUNE 08
JUNE 09
JUNE 10 (f)
DEC 03
DEC 04
DEC 05
DEC 06
DEC 07
DEC 08
DEC 09
GWA internAtionAl limiteD 2010 ANNUAL REPORT
generated by the Federal Government’s Building the Education
Revolution (BER) program. This program has principally benefited our
Commercial Furniture business where we worked with contractors in
fitting out schools.
Continued strong operating cash flow was also achieved through the
year reflecting ongoing supply chain management improvements.
The cash generated from operations excludes proceeds from the Rover
Mowers and Wisa Beheer asset sales which generated $20 million and
assisted with funding the Brivis Climate Systems acquisition.
strAteGY AnD GroWth
During the year we reviewed our strategic priorities which involved
extensive industry analysis to confirm our business direction and
growth options. The review confirmed that we have sufficient scope for
growth in our core Australian building fixtures and fittings businesses.
Following the review, we now have a much clearer view on how we will
manage our businesses for growth both organically and inorganically.
Historically our approach has been to define our businesses by the
brands we sell such as Caroma Dorf, Dux and Gainsborough. This
has underpinned our focus but constrained the way we looked at
growth options. In response to this we have redefined our businesses
to broaden the opportunity to leverage off our core capabilities. Our
businesses are now being managed to operate and grow in three core
segments including:
■■ Bathrooms and Kitchens
■■ Heating and Cooling
■■ Door and Access Systems
Our core strategies for success in the businesses we operate are
unchanged and involve our key value propositions to the markets
we serve including:
■■ 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
seGment PerformAnCe
In accordance with the strategic direction and the acquisition and
divestments during the year, the segment performance reporting in the
Financial Statements has been expanded to comprise the following:
Building Fittings
- Bathrooms and Kitchens
- Door and Access Systems
Heating and Cooling
- Dux Hot Water
- Brivis Climate Systems
- EcoSmart
Commercial Furniture
In addition to these businesses we will continue to evaluate the
performance of the Sebel Commercial Furniture business against
alternative divestment options.
This strategy materially increases the markets in which we will compete
in the future. The Brivis Climate Systems acquisition is a good example
of the strategy, where we have expanded from hot water heating to
a broader based hot water and ducted climate system heating and
cooling business.
We believe our acquisition of Brivis Climate Systems and divestments
of Rover Mowers and Wisa Beheer during 2009/10 have created value
for shareholders through the application of strict financial criteria in our
evaluations. This financial discipline will continue to be applied as we
look for further growth opportunities with an emphasis on product and
market extensions to our current core Australian building fixtures and
fittings market offering.
These segment results are summarised below:
$million
Building
Fittings
Heating
and Cooling
Commercial
Furniture
Other
Total
Sales Revenue
2009/10
420.0
2008/09
403.6
% Change
4.1%
Trading EBIT
2009/10
2008/09
88.8
81.8
161.5
153.3
5.4%
14.6
15.2
74.8
56.1
33.4%
0.5
656.8
-
613.0
7.1%
5.7
2.0
-14.6
94.5
-12.6
86.4
% Change
8.6%
(3.7%)
181.6%
9.5%
7
7
managing Director’s review of operations Cont.
Sales from Bathrooms and Kitchens increased by 2% with market
development activities being particularly successful in sinks and
tapware. Underlying demand has improved but this was offset by
lower demand in Queensland, South Australia and North America.
The priority for this business is to fully realise the benefits from the
upgraded Wetherill Park vitreous china factory by ramping up to
full capacity as the market improves and delivering the benefits of
a local supplier to customers. The ERP system implementation was
successfully completed during the year and we are working to leverage
off this investment to improve efficiency and service to our markets.
Door and Access Systems sales grew by 16% benefiting from the
Austral Lock contribution for the full year (acquired January 2009) and
growth in the Do-It-Yourself market. This is a very strong result and I
am pleased with the ongoing performance improvements. During the
year the business entered into an exclusive distribution agreement with
Hillaldam sliding door systems which will enhance our product offering
and provide access to new markets.
Heating and Cooling sales includes $19 million revenue for Brivis
Climate Systems for the last quarter of the financial year. Integration
of this business has progressed well and we are pleased with the
improvement opportunities and growth options from this acquisition.
Sales from Dux Hot Water declined by 6% compared to the prior
year due to the severe drop in demand after the reduction in Federal
Government rebates in August 2009. The initial increase in rebates
in February 2009 and the subsequent reversal of this policy in
August 2009 caused a short term surge in demand which severely
disrupted the industry supply chain. Our Dux management have
done an admirable job in bringing stock levels back to equilibrium
by year end but changes in product demand will continue to present
difficult market conditions in 2010/11. We are continuing to invest
in both product development and efficiency improvements and have
committed to spend $18 million to upgrade the Moss Vale factory for
completion in January 2012.
Commercial Furniture sales grew by 33% as a result of the Federal
Government’s BER program. The other core markets for commercial
furniture have been subdued so the BER has provided a good filler for
demand. We expect this to continue through to early 2011 at which
time the business will be looking for other market opportunities.
CAsh floW
Cash generated from operations is slightly down on last year due to
timing of cash flows but is still a very strong result. Working capital for
continuing businesses declined a further $5 million during the year
reflecting ongoing improvement in supply chain management. Working
capital as a percent of sales reduced from 24% to 22.9% as we
continue to focus on both profitability and funds management as key
performance measures.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
Net expenditure on the acquisition of plant, equipment and systems
of $14 million was slightly up on last year due to lower asset sales.
Following the completion adjustments the outlay for the Brivis Climate
Systems acquisition has been $48.6 million and proceeds from the
Rover Mowers and Wisa Beheer divestments was $19.7 million.
Net interest paid during the year increased to $15 million due to higher
debt levels to fund the Brivis Climate Systems acquisition and higher
funding cost. The cost of debt continues to remain elevated following
the global financial crisis in late 2008.
finAnCiAl ConDition AnD CAPitAl
mAnAGement
Net debt at June 2010 increased by $21 million to $176 million due
to funds required for the Brivis Climate Systems acquisition. A gearing
ratio of 29% as measured by net debt/net debt plus equity is within
our target range and the leverage ratio (Net debt/EBITDA) is a very
acceptable 1.5 times. Interest cover (EBITDA/Net Interest) of 7.9 times
further highlights the Company’s strong financial metrics.
Given the strength of our financial position we did not activate
the Dividend Reinvestment Plan (DRP) during the year which
demonstrates the benefits of ongoing cash flow management. As
we search for growth options, one of our key financial criteria is to
maintain our investment grade metrics and we will continue to evaluate
the merits of the DRP as a source of funds.
GWA continued to enjoy the support of our banks and the maturity
dates for the core facilities have been extended during the year.
We have sufficient undrawn facilities and have in-principal support
from our banks to increase facilities to assist with funding growth
opportunities if required.
Bank
$million
CBA
ANZ
NAB
Westpac
HSBC
Maturity
Dates
July 2012
July 2012
Jan 2013
July 2011
July 2012
Available
Facilities
Drawn
Facilities
90.0
60.0
50.0
47.5
20.0
70.0
60.0
50.0
35.0
15.9
230.9
(54.9)
176.0
Gross Debt
267.5
Cash and deposits
Net Debt
heAlth AnD sAfetY
Management is committed to continuous improvement in the
Company’s health and safety performance through better safety
systems and processes, extensive communication with our workforce
and increased diligence in identifying and removing safety risks across
our workplace.
We achieved a step change in safety performance during the year with a
44% improvement in lost time injuries and a 48% improvement in total
injury rate. The lost time injury frequency rate of 3.4 is very pleasing
and reflects a consistent sense of purpose in creating a safe work
environment for our people. This outcome reflects both the efforts of
management and the diligence of our workforce and we are committed
to continuous improvement to work to create an injury free environment.
The chart below highlights the continued improvement in the lost time
injury frequency rate in the 2009/10 year.
GWA Lost Time Injury Frequency Rate
10
8
6
4
2
0
2006
2007
2008
2009
2010
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 and ducted climate systems. Our environmentally
sustainable products are a major source of competitive advantage
for the Company.
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. We are a
member of Sustainability Advantage which is a NSW State Government
initiative targeting reductions 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 and water.
A key requirement for any improvement initiative is to have a good
basis to measure improvements. GWA has improved its systems and
procedures to capture, record and report greenhouse gas emissions
under the National Greenhouse and Energy Reporting Scheme
(NGER). This Federal Government requirement now applies to all
GWA sites and the report will be made available on GWA’s website to
reinforce our commitment to reducing the impact of our operations on
the environment.
PeoPle
GWA’s long term success has been due to the efforts of a committed
and talented workforce. We are continuing to examine ways to bring
new thinking and skills into the business while also developing our
people to provide succession opportunities.
In support of these objectives, a significant investment has been made
through the GWA Leadership Program with the aim of underpinning a
high performance culture. This involves the development of personnel
in core capabilities supported by rigorous goal setting and performance
management procedures.
As well as developing our people, we are also looking to ensure
we attract and retain the best talent. We accept that community
expectations are changing and we need policies which recognise
work life balance. This is particularly the case if we wish to attract
women in our senior ranks which currently only represent 20% of our
senior positions. In response we have introduced a number of policies
aimed at providing more flexibility and work life balance in the GWA
workplace. These include parental leave, unpaid leave, flexible work
hours and transition to retirement provisions.
outlook
The 2010/11 year will benefit from a full year of trading from the
recently acquired, Brivis Climate Systems, and if recent dwelling
approval levels are sustained and flow through to completions, we
would expect a 5% to 6% increase in underlying demand.
Given the current market uncertainty it is difficult to forecast until we
confirm this underlying demand and we will be in a better position to
give full year profit guidance at the Annual General Meeting in October
following first quarter trading.
We expect the 2010/11 dividend payout will be maintained at
current levels in accordance with the dividend policy, absent
unforseen circumstances.
9
9
health and safety
GWA continues to ensure that it provides
a safe workplace for its employees,
contractors, visitors and customers
in an efficient and compliant manner.
Through divisional or site based health and safety advisors,
GWA promotes awareness of health and safety in a continuous
improvement environment.
The health and safety advisors meet with the Group Risk Manager
with the collective 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 (whereby health and safety advisers
visit other internal GWA sites)
■■ planning and implementing of new systems and procedures
The Group Risk Manager reports twice per annum to the GWA
Audit Committee. The reporting includes current health and safety
performance, current improvement plans and compliance to
regulations. An audit plan, consistent with health and safety objectives,
is also presented for approval for the new financial year.
GWA’s on-line learning system “elearning”, introduced in 2008,
continues to provide a suitable platform to deliver core training to
employees. elearning is also proving to be a cost and time effective
system by delivering induction training to new employees and top-
up training for existing employees. In 2009/10 approximately 4,300
on-line courses and compliance tests were completed. Courses range
from 1 hour to 4 hours and include a range of core competencies in
health and safety, bullying and harassment prevention, trade practices,
site specific inductions and Fair Work Australia just to name a few.
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.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
GWA Total Injury Frequency Rate
50
40
30
20
10
0
2006
2007
2008
2009
2010
GWA Lost Time Injury Frequency Rate
10
8
6
4
2
0
2006
2007
2008
2009
2010
GWA Medical Treatment Injury Frequency Rate
35
30
25
20
15
10
5
0
Three key measures of safety outcomes are:
1. Lost Time Injury Frequency Rate (LTIFR) which measures
lost time (injury that results in an inability to work for at least
one full shift)
2. Medical Treatment Injury Frequency Rate (MTIFR) which
measures the number of doctor treated injuries per million
hours worked
3. Injury Severity Rate which measures the number of hours
for a lost time injury per million hours worked
The collective sum of MTIFR plus LTIFR results in the Total
Injury Frequency Rate (TIFR) for GWA.
Initiatives introduced for the 2009/10 year include:
■■ Increased hazard reporting focus
■■ Increased focus and emphasis on supervisor participation
and awareness of responsibility for health and safety
2006
2007
2008
2009
2010
■■ Increase on mandatory scheduled audits
GWA Injury Severity Rate
■■ Integration of Brivis (acquired in April 2010) ensuring
health and safety systems are consistent with GWA policies
and procedures
At the start of the 2009/10 year GWA set a target of 30% year on
year improvement on the 2008/09 results for TIFR. The actual
improvement for the 2009/10 year was 48%, a much improved
result. A further 30% target improvement over the 2009/10 target
has been set for 2010/11. Improvement objectives are planned
to be met through continuation of the 2009/10 initiatives and new
initiatives to improve safety performance.
6000
5000
4000
3000
2000
1000
0
2006
2007
2008
2009
2010
11
in the Community
our role as a good corporate citizen
is very important to us and the culture
at GWA supports a commitment
to developing and building strong
relationships with the communities
we work in.
Community events and organisations with an environmental or
sustainability focus are particularly important to us and we aim
to make a positive contribution wherever possible.
This year we were delighted to be able to help some of the youngest
members of the community and their families by working with Ronald
McDonald House Charities (RMHC).
RMHC is an independent, not-for-profit organisation that seeks to
create, find and support programs that help seriously ill children and
their families. The Charity has a number of houses across Australia
that provide care and support for children and families during and
after serious illness.
GWA Bathrooms and Kitchens donated the bathroom fixtures and
fittings for a new development at the Ronald McDonald House in North
Adelaide which helps provide “a home-away-from-home” for seriously
ill children and their families. The new facility will house an additional
ten families in individual, self-contained units, providing greater
stability to long-stay families who are suffering enormous emotional
and financial strain.
This donation ensured the house in North Adelaide was able to
continue its core mission to:
■■ Provide a well maintained home for country families
■■ Provide care and support by professional staff and trained volunteers
■■ Enable facilitation and coordination of the Ronald McDonald
Learning Program in South Australia
■■ Raise the funds necessary to finance its various programs.
GWA Bathrooms and Kitchens continues to donate sinks, laundry
tubs, basins and taps to the Stephanie Alexander Kitchen Garden
Foundation for its national kitchen garden program in 190 schools
across Australia. The Stephanie Alexander Kitchen Garden Foundation
program develops lifelong skills in the kitchen and garden and
encourages children to enjoy all the benefits of growing, harvesting,
preparing and sharing.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
Ronald McDonald House
The Oncology Children’s Foundation (OCF) was the beneficiary of funds
raised at the Caroma Dorf CARC State Golf Challenge Calcutta auction
held in New South Wales in November 2009. GWA Bathrooms and
Kitchens contributed $12,550 on behalf of its participating customers to
help the OCF fund research programs with the sole objective of finding
cures for childhood cancers with the lowest survival rates.
GWA Bathrooms and Kitchens was keen to lend support to a Mount
Druitt family by helping remodel the family bathroom to cater to the
special requirements of their wheelchair-bound son. By renovating the
bathroom, utilising a range of its specifically designed Caroma Dorf
care products, we were able to benefit the day-to-day activities of this
very deserving family.
GWA Heating and Cooling business sponsored the Rodeo at the local
Moss Vale Show (pictured above) which attracts thousands of local
visitors each year. GWA Heating and Cooling also purchased family
passes to the Show for its staff so the whole family could enjoy the
friendly country atmosphere at this very popular event.
In addition, GWA Heating and Cooling demonstrated its commitment
to supporting sporting and business endeavours in the community by
extending sponsorship and donations to local clubs including:
■■ The Moss Vale Junior Dragons Rugby League Club
■■ The Moss Vale Soccer Club
■■ The Robertson Junior Rugby League Club
■■ The Rotary Club of Moss Vale
■■ The Lions Club of Moss Vale.
Rodeo at the Moss Vale Show
In 2010, our GWA Commercial Furniture business became a signatory
to the United Nations Global Compact (UNGC) – a strategic policy
initiative for businesses that are committed to aligning their operations
and strategies with 10 universally accepted principles in the areas of
human rights, labour, environment and anti-corruption.
As an exporter of education furniture, the GWA Commercial Furniture
Executive Team was committed to demonstrating a clear commitment
to the highest levels of international probity. As a signatory, GWA
Commercial Furniture can now ensure Global Compact principles
become part of strategy, culture and day-to-day operations to benefit
economies and societies everywhere.
GWA Commercial Furniture Chief Executive Officer Greg Welsh has
been appointed to the Australian Steering Committee of the UNGC.
During 2009/10 GWA Door and Access Systems furthered its
involvement in supporting local primary schools by way of employee
contributions.
GWA Door and Access Systems also continued its sponsorship of the
Kyneton Football Club in Victoria, where one of GWA Door and Access
Systems manufacturing operations is located.
GWA Door and Access Systems continued its annual employee
contribution drive in support of the Royal Children’s Hospital
Melbourne and extended its contribution to the community by
sponsoring a number of local businesses and initiatives throughout
the greater Blackburn area in Victoria.
13
GWA
Bathrooms & kitchens
Business overvieW
PMS279
Process Black 75%
heADer here
Body copy here
Business DesCriPtion
GWA Bathrooms and Kitchens 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. GWA Bathrooms and Kitchens is at the
forefront of product innovation incorporating water saving technology,
and is the market leader in water efficient sanitaryware and tapware.
mAin ProDuCts AnD serviCes
Vitreous china toilet suites, urinals, basins, plastic cisterns, bathroom
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.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
strAteGiC DireCtion
GWA Bathrooms and Kitchens 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. GWA
Bathrooms and Kitchens will continue to invest in its iconic brands to
reinforce its brand values. GWA Bathrooms and Kitchens is committed
to continuous process improvement in its Australian manufacturing
and supply operations.
heAD offiCe loCAtion
GWA Bathrooms and Kitchens
4 Ray Road
Epping NSW 2121
AUSTRALIA
Telephone 61 2 9202 7000
Facsimile 61 2 9202 7099
Website: www.caroma.com.au
www.mycaroma.com.au
www.fowler.com.au
www.dorf.com.au
www.irwell.com.au
www.stylus.com.au
www.clark.com.au
www.radiantstainless.com.au
www.ecologicalsolutions.com
www.toiletrebate.com.au
www.economicstimulus.com.au
www.starionaust.com.au
GWA
heating & Cooling
Business overvieW
Business DesCriPtion
GWA Heating and Cooling Division was formed after the acquisition of
Brivis Climate Systems in April 2010. The division comprises the Dux,
EcoSmart and Brivis business units. GWA Heating and Cooling is an
Australian designer, manufacturer and importer of hot water, heating
and cooling systems. All products are developed to provide consumers
with greater control and comfort in their home or workplace. GWA
Heating and Cooling has developed an extensive range of innovative
environmental products to meet changing regulatory requirements,
while assisting consumers to reduce their energy consumption and
manage comfort in the home.
mAin ProDuCts AnD serviCes
A wide range of products to assist consumers manage comfort
and energy in their homes. The range includes hot water systems,
including mains pressure gas and electric storage, continuous flow
gas, electric and gas boosted solar and heat pump products; heating
and cooling systems, including ducted gas furnaces, evaporative
coolers and refrigeration based heating and cooling systems, and
photovoltaic renewable energy systems.
mAjor BrAnDs
Owned: Brivis, APAC, Dux, EcoSmart, Radiant
oPerAtinG loCAtions
Australia, overseas distributors
mAjor mArkets
GWA Heating and Cooling participates in the new home, renovation
and replacement or breakdown markets, primarily for residential
applications.
strAteGiC DireCtion
GWA Heating and Cooling will continue to develop its range of climate
solutions for consumers and take them to market through its channel
partners under its strong brands. Much of the development in the division
will be centered around reducing energy and water consumption to meet
emerging Australian regulations. GWA Heating and Cooling will continue
to strengthen its key customer and channel relationships, invest in
brands and reduce costs through investment in improved manufacturing
capability and selective sourcing of products and components.
heAD offiCe loCAtion
GWA Heating and Cooling
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.brivis.com.au
www.hotwaterrebate.com.au
15
15
GWA
Door & Access systems
Business overvieW
Business DesCriPtion
GWA Door and Access Systems is a leading Australian designer,
manufacturer, importer and distributor of a comprehensive range
of domestic and commercial door hardware and fittings, including
security products.
mAin ProDuCts AnD serviCes
A comprehensive range of door hardware comprising door handles
(knobs and levers), door locks, door closers, hinges and other metal
door accessories.
mAjor BrAnDs
Owned: Gainsborough, Trilock, Homecraft, Stronghold Series,
Contractor Series, In Style, Mode, Aspect, Austral Lock
Exclusive: Hillaldam
strAteGiC DireCtion
GWA Door and Access Systems strategic direction encompasses the
development of new and innovative door hardware products to suit
domestic buildings and commercial projects. GWA Door and Access
Systems will continue to focus on its key customer relationships
through market-leading product innovation and design, and superior
levels of customer service.
heAD offiCe loCAtion
GWA Door and Access Systems
31-33 Alfred Street
Blackburn VIC 3130
AUSTRALIA
Telephone 61 3 9877 1555
Facsimile 61 3 9894 1599
oPerAtinG loCAtions
Australia, New Zealand, export markets
Website: www.gainsboroughhardware.com.au
www.ausloc.com
mAjor mArkets
Domestic home builders, DIY and building projects, commercial
buildings and multi-dwelling developments.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
GWA
Commercial furniture
Business overvieW
Business DesCriPtion
GWA Commercial Furniture Division is at the forefront of Australian
design, manufacture, import and distribution of quality commercial
furniture and seating.
mAin ProDuCts AnD serviCes
A 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 and
corporate and educational markets. Sells direct to builders, developers,
clubs and hotels.
strAteGiC DireCtion
As well as its strong emphasis on new product development, GWA
Commercial Furniture 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
GWA Commercial Furniture
92 Gow Street
Padstow NSW 2211
AUSTRALIA
Telephone 61 2 9780 2222
Facsimile 61 2 9780 2111
Website: www.sebel.com.au
17
17
GWA internAtionAl limiteD 2010 ANNUAL REPORT
GWA sustainability
and innovation story
GWA
Bathrooms & kitchens
sustAinABilitY AnD
innovAtion (ProDuCts)
A key area of focus for the GWA
Bathrooms and kitchens business
is the design, development and
commercialisation of a range of retrofit-
specific water-saving product solutions.
GWA BAthrooms AnD kitChens helPinG
You AChieve environmentAllY ConsCious
outComes
As the leading Australian manufacturer of bathroom products, GWA
Bathrooms and Kitchens has always made sustainability the focus of
product development. Long before it became fashionable to think of
water saving solutions, GWA Bathrooms and Kitchens was developing
water saving technologies:
■■ First two button, dual flush toilet system
■■ First 4.5/3L toilet suite with Smartflush® technology
■■ First WELS 6 star rated urinal with the Cube 0.8L Urinal Suite.
These innovations have become the foundation for building sustainable
partnerships with governments, water authorities, businesses, and the
plumbing industry to deliver market-leading, water saving products and
solutions for homes and businesses.
eCo loGiCAl solutions for Businesses
Retrofitting amenities can deliver significant water savings, reduce
maintenance costs, improve aesthetics and enhance the asset value
of an existing building. GWA Bathrooms and Kitchens offers a range of
obligation-free services to help facilitate bathroom retrofit projects:
■■ Fixtures assessments to identify water saving opportunities
■■ Water saving assessment using our sophisticated Commercial
Water Saving Calculator
■■ Product replacement plans in line with style and budget requirements
■■ Identification of relevant funding and grant programs
■■ Project management and installation services via one of our
specialist partners.
eCo loGiCAl solutions for homes
Single flush toilet suites are one of the biggest users of water inside
the home and their replacement can save the average household up
to 35,000L* of water every year with no change in behaviour. GWA
Bathrooms and Kitchens continues to work closely with government,
*Compared to 11L single flush toilet.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
PMS279
water authorities and the plumbing industry to promote the benefits
of toilet replacement. Market-leading product solutions from Caroma
Dorf are an integral part of major toilet replacement programs currently
running including:
Process Black 75%
■■ Sydney Water Single Flush Toilet Replacement Service
■■ Melbourne Toilet Replacement Program
■■ ACT Government ToiletSmart® Program.
With a financial incentive to retrofit, and a high quality product solution
packaged with professional plumber installation, these programs are
making it easier for householders to replace old single flush toilets.
eCo frienDlY ProDuCts
The selection of sustainable building products is a key consideration
in new commercial developments and Caroma Dorf has a range of
water efficient products to help strengthen the environmental rating
of new buildings.
The award winning Caroma Flex toilet suite is an Australian first, with
flexible inlet and outlet connections to facilitate the retrofit of inefficient
wall hung pans prevalent in commercial premises.
CAromA flex invisi series ii toilet suite Wins
2009 BPn sustAinABilitY AWArD
The Caroma Flex Invisi Series II toilet suite won the BPN Sustainability
Award in the Innovation of the Year category.
The awards recognise organisations within Australia’s design and
construction industry that have produced energy efficient and
sustainable buildings, landscapes or products.
The Flex was developed as a replacement solution for inefficient wall
hung toilets in commercial buildings. Flex features a unique bracket
with adjustable inlet and outlet connections to suit a range of existing
set outs, making old, inefficient pans easier to retrofit. This installation
flexibility reduces the need to relocate plumbing and knock down walls,
helping lower installation costs and making previously cost-prohibitive
retrofits possible. Flex Invisi can help reduce water consumption by up
to 70 per cent compared to an 11L single flush toilet suite.
Adding to its sustainable credentials, the Flex pan, which is made
from vitreous china, can be crushed at the end of its life for building
aggregate or road base. The plastic cisterns can also be recycled for
the 65 per cent polypropylene component.
GWA BAthrooms AnD kitChens ContinuAllY
innovAtinG
Research indicates that Australia’s aging population and changing
pattern of disease is expected to increase the proportion of older
people with more complex care needs. Australians are also choosing
to live their retirement years in their own homes, unless their health
situation requires high level care, such as in nursing homes. The
demand for low level care facilities is being replaced by the desire of
at-home independence.
Catering for the needs and demands of this growing sector of the
community will test the building and plumbing industry as they
increasingly have to source products for people who require more
assistance and care.
GWA Bathrooms and Kitchens is at the forefront of the market and
has invested significantly in the development of Care products for
Australians, to address the trend of extended living in the home and
the future needs of our community.
The Caroma Dorf portfolio of Care products was successfully launched
at the Caroma Dorf Innovations Forums held in June 2010 in each
state across Australia.
The Caroma Dorf Care range was unveiled to the plumbing and
building trade, retail suppliers, architects and media who were able to
preview the comprehensive Care portfolio which now includes toilets,
basins, tapware, showers, grab rails and even kitchen sinks that are
suitable to install in the home to assist access and mobility.
Many products can be installed to comply with Australian Standard
1428.1 Design for Access and Mobility, and all have been designed
to help increase the independence, safety and comfort of users and
their carers.
The roll out of the Caroma Dorf Care range of innovative bathroom
products is designed to make life easier regardless of age, illness or
disability, while offering superior functionality without compromising
on style. The range is suited to aged care, disabled applications and
independent living situations, to help keep seniors in their homes
comfortably for longer.
Caroma Dorf Care products
Caroma Flex Invisi Series II toilet suite
21
GWA
heating & Cooling
sustAinABilitY AnD
innovAtion (ProDuCts)
GWA heating and Cooling has joined
forces with ian kiernan of Clean up
Australia to promote environmental water
heaters to Australian homeowners.
lonG term GroWth in environmentAl
WAter heAters
Thanks to a long list of industry awards, GWA Heating and Cooling now
boasts the most highly awarded range of environmental water heaters in
Australia. This range includes electric boosted solar, gas boosted solar and
heat pump hot water systems. All these products have been designed in
Australia to perform in local conditions and meet Australian standards.
In September 2008, GWA Heating and Cooling launched the
pioneering rebate website www.hotwaterrebate.com.au. It was the
first national website that calculated Federal and State Government
hot water rebates for homeowners across Australia. The website helps
to simplify and explain rebates as well as making the claims process
easier. With more than five million page views, it is the industry’s most
popular rebate information source.
The strong growth in environmental water heaters has placed pressure
on the entire industry in terms of product knowledge and installation
capability. The new environmental water heaters are significantly more
complex than the old storage electric water heaters and take longer to
install. The entire industry needs to increase its knowledge to ensure
consumers are provided with a high level of service and satisfaction.
To meet the challenge, Dux and EcoSmart have developed the Solar
Institute. The Solar Institute is a state-of-the-art training facility, which
enables staff and customers to be provided with the very best technical
information on all Dux products, their installation and servicing.
CleAn uP our ClimAte
Dux has joined forces with Ian Kiernan of Clean Up Australia to promote
environmental water heaters to Australian homeowners. Clean Up Our
Climate is an initiative of Clean Up, a national not-for-profit organisation
that coordinates Clean Up Australia Day and Clean Up the World.
Specifically, Clean Up Our Climate is a community-based
environmental program that addresses the need for the ongoing care
and restoration of environmental assets. It also assists communities in
reducing their environmental footprint. The initiative provides additional
assistance to the community, government and businesses, and also
provides practical solutions to help Australians reduce their household
carbon emissions.
Both television and radio advertisements were recorded over the past
12 months, which focus on reducing household carbon emissions and
energy costs by replacing the old electric water heater with an energy
efficient Dux solar or heat pump system. Ian Kiernan has also attended
the state-of-the-art Solar Institute training facility in Moss Vale, where
he received a factory tour and training on the Dux range of solar, heat
pump and high efficiency gas water heaters.
Brivis tAkes effiCienCY to neW heiGhts
Brivis Gas Ducted Heaters are renowned for their quality, performance
and reliability. This commitment to excellence has led to the
development of the Brivis StarPro MAX high efficiency range of
heaters. Achieving a 5.8 Star Rating on selected models, it is currently
Australia’s most energy efficient ducted gas furnace.
The Brivis StarPro series also incorporates an advanced Energy
Management System, which automatically reduces heat output
by up to 80 per cent when not heating the entire home.
The Brivis StarPro MAX is Australia’s leading high efficiency gas
ducted heater.
Dux environmental water heater
Brivis StarPro MAX high efficiency heater
GWA internAtionAl limiteD 2010 ANNUAL REPORT
Ian Kiernan of Clean Up Australia promoting Dux environmental water heaters
23
GWA
Door & Access systems
sustAinABilitY AnD
innovAtion (ProDuCts)
GWA Door and Access systems
continued its commitment to innovation
and development through 2009/10
with the development of exciting new
product lines and advancements to
some of its most popular ranges.
The 2009/10 year saw a unique partnership and distribution
agreement entered into with Hillaldam sliding door systems.
Hillaldam is a South African company that produces world-leading
systems for sliding, folding, and stacking doors. This partnership
allows GWA Door and Access Systems to now offer complete sliding
door systems to customers, including sliding hardware and locksets,
giving access to new market segments.
A further advancement for the industry has been the development
of a new lockset under the Austral Lock brand, specifically for bifold
doors. The new Sorrento Low-Profile lockset offers a distinct market
advantage in its low profile handle design, allowing bifold doors the
ability to fold nicely in a more compact fashion, saving valuable
space in the home. This exciting new product has been extremely
well received and supports GWA Door and Access Systems position
in leading innovation and design.
Through the 2009/10 year, GWA Door and Access Systems launched
an entirely new product line to the market called Pearl lock, under
the Austral Lock brand. Designed for aluminium-framed sliding
windows and doors, Pearl lock was developed in response to market
demand for a quality alternative to the commonly seen solution.
With its innovative, slimline and discreet “Push and Slide” operating
mechanism, Pearl lock offers consumers the first genuine answer
– for design and quality – to aluminium framed windows and doors.
Fulfilling the needs of the market, and with additional innovative
features, the Pearl lock range is set to make strong inroads into the
domestic and international markets.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
Hillaldam folding door system
Austral Lock Pearl
window and door lock
GWA
Commercial furniture
sustAinABilitY AnD
innovAtion (ProDuCts)
GWA Commercial furniture has
developed a responsible solution
to help clients who make their
purchasing decisions based on
environmental factors.
GWA Commercial Furniture 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 GWA
Commercial Furniture as an expert in developing and manufacturing
polypropylene products, the Company sets the environmental and
ecological benchmarks within the markets it operates in.
Many of Sebel’s products are GECA (Good Environmental Choice
Australia) Certified and examples of Sebel’s new innovative sustainable
products include:
Postura Chair – 100% Recyclable
The most significant recent event for GWA Commercial Furniture has
been the release of the 100 per cent recycled school chair called the
Postura.
Education clients demand high quality furniture that withstands the
rigours of a modern classroom environment.
GWA Commercial Furniture has established itself as a market leader
and Australia’s largest school furniture company.
GWA Commercial Furniture has taken the global environmental lead
with the new Postura totally recycled school chair. The new 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, GWA Commercial Furniture is now
buying back old GWA Commercial Furniture’s school chairs, re-
manufacturing them and creating totally new products. Under Sebel’s
new buy-back system, schools can now refresh their classrooms with
bright new chairs at a low cost, while not contributing discarded chairs
to landfill.
The launch of this product has further consolidated GWA Commercial
Furniture’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, GWA Commercial Furniture 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 in this market segment and
create new standards that meet or exceed market requirements.
Sebel’s fully recyclable Postura school chair
25
sustainability
and environment
(operations)
2009/10 has been another year of
significant developments in water and
energy savings at GWA’s operations.
GrouP initiAtives
GWA’s product ranges in the building fixtures and fittings sector have
continued to provide innovative products that enhance water and energy
savings. GWA’s commitment to sustainability and the environment also
extends to its operations.
2009/10 has been another year of significant developments in water and
energy savings at GWA’s operations, continuing on from the successes of
the previous 2 years. Significant highlights include:-
Caroma Wetherill Park, NSW
Caroma Wetherill Park is by far the most significant GWA site in terms of
energy consumed and emissions generated so efforts have been directed
to the site. Caroma Wetherill Park has become 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.
Caroma Wetherill Park received the Bronze Award from the NSW
Department of Environment, Climate Change and Water (DECCW)
and is now a Bronze Partner of the Sustainability Advantage Program.
Caroma Wetherill Park environmental achievements will be featured
in the Sustainability Advantage Annual Report and used as a success
story in Sustainability Advantage’s program training pack. Caroma
Wetherill Park also received the prestigious 2010 Green Globe
Business Water Award from the DECCW acknowledging outstanding
achievements in the sustainable use of natural resources in NSW and
leadership in tackling climate change.
Achievements at Wetherill Park include:
Waste Savings
■■ Aggregated 97% waste to landfill saved through waste segregation,
third party recycling, change of raw material and redesign of product
kiln firing setters.
Natural Gas Savings
■■ 14,280 Giga Joule (GJ) per annum saved by reducing firing settings
and kiln heat reuse.
Water Reduction
■■ 14 water sub-meters were installed to identify and target water usage
reduction. A total reduction of 6 million litres per year was achieved,
which in turn allowed a 6 million litre per year reduction of water
being processed through the water treatment plant.
■■ The Ultra Filtration (UF) membrane plant was successfully
piloted for 6 months feeding recycled process water to production
equipment in the casting area. Caroma Wetherill Park has
subsequently completed 95% of the installation of factory scale
UF unit. On completion the UF unit will process 100% of Caroma
Wetherill Park waste water and deliver recycled water suitable for
use in all production process. An 80% reduction in town water
usage is expected from this project.
Energy Reduction
■■ Energy audits have been performed on factory air compressor
systems, with project savings up to 9% of electrical energy and
747 tonnes of CO2 emissions.
■■ Energy efficient lighting has been trialed in the engineering
workshop with 50% energy savings measured from area lighting
energy usage. Completion of proposed capital expenditure will
deliver 7% savings of factory electricity usage and 953 tonnes
reduction of CO2 emissions.
■■ Investigation and feasibility studies are work in progress for the
feasibility of kiln heat recovery, forklift energy conversion and rain
water harvesting.
Overall the energy and emissions savings have resulted in a
reduction of:-
■■ Gas usage per cast vitreous china piece of 8.5%
■■ Electricity usage per cast vitreous china piece of 7.8%
■■ Water usage per cast vitreous china piece of 13.5%
nAtionAl PACkAGinG CovenAnt siGnAtorY
GWA joined the National Packaging Covenant (NPC) during 2008. The
Australian Packaging Covenant is a unique collaborative agreement
between Government and Industry based on the principles of product
stewardship. It is designed to minimise the environmental impacts
arising from the disposal of used packaging, conserve resources through
better design and production processes and facilitate the re-use and
recycling of used packaging materials. A new Covenant has just been
announced for a further 5 years. It will now be called the Australian
Packaging Covenant (APC). The new APC will focus on improved
packaging design, away from home recycling, litter and increased
engagement across the supply chain through product stewardship.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
Dux Moss Vale containment cell being constructed (above picture) and the
finished remediated area (below picture)
Caroline Sunaryo, (Mechatronics Engineer, Caroma) accepts DECCW Bronze
Award for energy and emission reductions on behalf of Caroma Wetherill Park
An important element of the APC is the Sustainable Packaging
Guidelines (SPG) which has been developed to assist signatories to
review and optimise their packaging.
The applicable GWA business units will sign the Australian Packaging
Covenant. During 2009/10 all GWA business divisions completed
action plans and reported progress to the Covenant.
Greenhouse Gas InItIatIves and reportInG
Ultimately all identified energy and water savings will reduce green
house gases. Reduction in water usage frequently leads to reduced
on site treatment and will generally lead to less energy used by
down stream sewerage treatment plants through decreased effluent
processing. Sustainability, through energy, water and waste reductions
in GWA operations, as well as GWA products, continues to be a key
focus. During 2009/10 the Sustainability Group that was formed in the
previous year continued. The aim of the group is to:-
■■ Reducing energy and water consumption in both products
and processes
■■ Reducing waste in processes
■■ Encouraging recycling of material where practical
■■ Ensure reporting requirements under National Greenhouse
Emissions Reporting (NGER)
National Greenhouse Emissions Reporting (NGER)
GWA has improved its systems and procedures to capture, record and
report Greenhouse Gas (GHG) emissions under NGER. A computer
based system is now streamlining recording and reporting. Data will
also be used to provide information for sustainability based capital
projects. The database captures water and energy usage at all GWA
sites where there is operational control.
In 2009 Caroma Wetherill Park triggered the NGER reporting obligations
for GHG emissions (based on the energy trigger, not the carbon
emissions trigger). In 2010 it is expected that all GWA sites, where there
is operational control defined by the NGER Act, will report GHG emissions
for the 2009/10 financial year. This will occur on or before 31 October
2010 when emissions are entered into the Federal Government’s Online
System for Comprehensive Activity Reporting (OSCAR).
The estimated NGER-reportable Scope 1 and Scope 2 emissions for
2009/10 for GWA will be in the range of 45,000 to 47,000 tonnes of
Carbon Dioxide equivalent. The graph below shows the approximate
split of emissions by category.
Approx GWA (all sites 2009/10) Scope 1 and Scope 2 Emissions
by Category
5% Emissions Transport
26% Emissions
Processes (Scope 1)
69% Emissions Electricity
(Scope 2)
envIronment
General environmental risk mitigation strategies with respect to property
purchases, leases and asset disposals are procedurally documented.
Environmental audits and audits of chemical storages are also routinely
undertaken. The Brivis and Austral Lock acquisitions are two examples of
best practice environmental due diligence undertaken during acquisition.
During 2009/10 two major site remediation projects were undertaken:-
1. Asbestos in soil at Dux Moss Vale where approximately 23,000m3
of Asbestos in soil was contained in a specially constructed
containment cell (pictured above)
2. Solvent contamination at Caroma Dorf Revesby where source
contaminated soil was removed from the previous manufacturing
area inside the factory and outside in storage areas.
27
Board of Directors
Geoff mCGrAth miie
DArrYl mCDonouGh BBus (ACtY), llB (hons), sjD,
Chairman and non-executive Director
fCPA, fAiCD
■ Expertise: Manufacturing and general management
■ Special Responsibilities: Chairman of Board, Chairman
of Nomination Committee and member of Audit and
Remuneration Committees
Mr McGrath was appointed a Non-Executive Director of GWA
International Limited in 2004 and was appointed Chairman
effective 1 July 2010. He retired from GWA International Limited
in May 2003 after 43 years service, including the last 10 years as
Managing Director. In 1982 Mr McGrath was appointed Managing
Director of the GWA Manufacturing Group companies following the
takeover of UPL Group by the former public company, GWA Limited.
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
Deputy Chairman and non-executive Director
■ Expertise: Lawyer and experienced public company director
■ Special Responsibilities: Deputy Chairman of Board, Member
of Audit, Nomination and Remuneration Committees
Mr McDonough was appointed a Non-Executive Director of GWA
International Limited in February 2009 and was appointed Deputy
Chairman in October 2009. He 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 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:
■ Super Cheap Auto Group Limited 2003-2010
DAviD BArrY fAim
non-executive Director
Peter CroWleY BA B eCon fAiCD
■ Expertise: Importation, distribution and retailing
Mr Barry was appointed a Non-Executive Director of GWA
International Limited in 1992. He 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.
managing Director
■ Expertise: Broad manufacturing experience in Australia
and overseas
2003: Managing Director of GWA International Limited;
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.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
roBert AnDerson
non-executive Director
riChArD thornton CA B Com llB (hons) llm
executive Director and Company secretary
■ Expertise: Property investment and transport logistics
Expertise: Chartered Accountant, taxation and finance
Mr Thornton was appointed an Executive Director of GWA
International Limited in May 2009. He 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 in 2009.
Mr Anderson was appointed a Non-Executive Director of GWA
International Limited in 1992. He 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.
Bill BArtlett fCA, CPA, fCmA, CA(sA)
non-executive Director
■ Expertise: Chartered Accountant, actuarial, insurance
and financial services
■ Special Responsibilities: Chairman of Audit and Remuneration
Committees and member of Nomination Committee
Mr Bartlett was appointed a Non-Executive Director of
GWA International Limited in 2007 and Chairman of the
Audit Committee in October 2009. He 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*
*denotes current directorship
29
Corporate Governance
statement for the Year
ended 30 june 2010
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 Company’s corporate governance practices 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
endeavoring 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.
In previous years, the Company identified the departure from
Recommendation 2.2 on the basis that the former Chairman, Mr
Barry Thornton, was not an independent director in accordance with
the definition of independence outlined in the recommendations.
Following the retirement of Mr Barry Thornton on 30 June 2010 and
appointment of Mr Geoff McGrath as Chairman, this recommendation
has now been satisfied as Mr McGrath is an independent director.
The Board supports the recently announced changes to the
recommendations requiring disclosure on diversity initiatives which
are effective from 1 January 2011. During the year, the Company
has implemented a number of important diversity related initiatives
as outlined in the Managing Director’s Review of Operations. The
Company will report by reference to the diversity recommendations in
next year’s Annual Report.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
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
■■ 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.
Refer to the Company’s website for a copy of the charter.
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.
A comprehensive induction program is available to senior executives
to ensure full understanding of the Company and industry within which
it operates.
Performance reviews
Performance reviews of staff including senior executives are conducted
formally on a bi-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
individual job descriptions. During the performance review process,
the performance of staff is assessed against the business objectives
and core competencies.
Measurable personal financial and business improvement goals
are established during the performance review process, and the
achievement of the personal goals is incorporated into the Company’s
Short Term Incentive as outlined in the Remuneration Report.
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 business, 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.
An annual group strategy meeting is held 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 Executive Director is responsible for the completion and dispatch
of the agenda and Board papers for each meeting. The Executive
Director prepares the draft minutes for each meeting, which are tabled
at the next Board meeting for review and approval. The Executive
Director is accountable to the Board, through the Chairman, on all
corporate governance matters.
Composition of the Board
The Board presently comprises 7 directors, 5 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 all directors of the Company, other than the
Managing Director and Executive Director, are independent.
31
Corporate Governance statement for the Year ended 30 june 2010 Cont.
The following directors are considered by the Board to be independent:
■■ Mr Geoff McGrath, Chairman and Non-Executive Director
■■ Mr Darryl McDonough, Deputy Chairman and Non-Executive Director
■■ Mr David Barry, Non-Executive Director
■■ Mr Robert Anderson, Non- Executive Director
■■ Mr Bill Bartlett, Non-Executive Director
The Board is responsible for ensuring that the action of individual
directors in the Boardroom is that of independent persons. The Board
distinguishes between the concept of independence and issues of
conflict of interest or material personal interest which may arise from
time to time – refer Conflicts of Interest below.
In recognising the importance of the independence of directors
and the immediate disclosure of conflicts of interest, the Board has
included both matters as permanent items on the agenda at Board
meetings. Any independence or conflict of interest issues arising
during the relevant period must be disclosed to the Chairman prior
to each Board meeting. The disclosure is recorded in the Register of
Directors’ Interests and in the Board minutes.
(i) mr Geoff mcGrath – Chairman and
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 2003. It has been more than three years since the
appointment of Mr McGrath as Non-Executive Director in 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.
(ii) Board succession Planning
The Board has established succession plans for the retirement of
individual Board members to ensure an appropriate balance of skills,
experience and expertise on the Board. The Board views director
renewal as an essential process to ensure optimal Board performance.
In accordance with the succession plans, the following director
retirements and appointments have occurred in recent years:
■■ Appointment of Mr Bill Bartlett in 2007
■■ Retirement of Mr Martin Kriewaldt in 2008
In August 2010 the Company announced the retirement of Mr
David Barry at the 2010 Annual General Meeting and the proposed
appointment of an additional non-executive director later in the year.
Further director retirements and appointments are expected in future
years to continue the Board succession planning process, whilst
ensuring an efficient and effective Board is maintained.
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
■■ Retirement of Mr Jim Kennedy in 2009
of three members
■■ Appointment of Mr Darryl McDonough in 2009
■■ Appointment of Mr Richard Thornton in 2009
■■ Retirement of Mr Barry Thornton in 2010
GWA internAtionAl limiteD 2010 ANNUAL REPORT
■■ 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.
Refer to the Company’s website for a copy of the charter.
The main responsibilities of the Committee include:
■■ Assessment of the necessary and desirable competencies of
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.
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 Executive Director prepares the draft minutes for each Nomination
Committee meeting, which are tabled at the next Nomination
Committee meeting for review and approval. The draft minutes are also
included in the Board papers of the next Board meeting following the
Nomination Committee meeting.
selection and Appointment of Directors
The Nomination Committee is responsible for the selection and
appointment of directors. In the circumstances where there is a
need to appoint a director, whether due to the retirement of a director,
growth of the Company, or changed circumstances of the Company,
certain procedures will be followed including the following:
■■ Determination of the skills and experience appropriate for an
appointee, having regard to those of the existing directors and
other likely changes to the Board;
■■ Upon identifying a potential appointee, consider the competency
and qualifications, independence, other directorships, time
availability, and the effect that their appointment would have on
the overall balance of the composition of the Board; and
■■ The Board members consent to the proposed appointee.
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 and questionnaires, 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. Refer to the Company’s website
for a copy of the Code of Conduct.
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.
33
Corporate Governance statement for the Year ended 30 june 2010 Cont.
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 Executive Director
within three business days after trading, to enable the Executive
Director 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.
Refer to the Company’s website for a copy of the charter. 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.
The External Auditor, Managing Director, Chief Financial Officer,
Executive Director, 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.
The main responsibilities of the Audit Committee include:
■■ Review of financial statements and external financial reporting
■■ Assess the management processes supporting external reporting
■■ Assess whether the external reporting is adequate to meet the
information needs for shareholders
■■ Recommendations on the appointment and removal of the
External Auditor
■■ Review and monitor the performance and independence of the
external audit
■■ Review of 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 Executive Director 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.
The Audit Committee reviews the independence of the audit function
annually and makes a recommendation to the Board on continuing
independence. As part of this review, the Audit Committee examines
the non-audit roles performed by the External Auditor to satisfy itself
GWA internAtionAl limiteD 2010 ANNUAL REPORT
that the auditor’s independence is not compromised. 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.
As a further measure to ensure the independence of the audit
function, the Chairman of the Audit Committee must pre-approve all
audit services provided by the External Auditor, and non-audit services
with a value of greater than $5,000.
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:
■■ the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
■■ any applicable code of professional conduct in relation to the audit.
In considering the KPMG declaration and the recommendation of
the Audit Committee, the Board are satisfied with the continuing
independence of the audit function.
For details of the non-audit roles performed by KPMG during the year,
please refer to 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. In accordance with the
plan, effective from 1 July 2010 Mr Greg Boydell will take over as lead
engagement partner from Mr Mark Epper.
PrinCiPle 5 – mAke timelY AnD BAlAnCeD
DisClosure
The Company is committed to ensuring the timely disclosure of
material price sensitive 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 Executive Director 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 are published on
the Company’s website immediately after release.
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 Company’s governance
practices and other information including details of the Company’s
sustainability performance.
■■ The Board is committed to the use 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.
35
Corporate Governance statement for the Year ended 30 june 2010 Cont.
■■ 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:
■■ 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 and prepares a
monthly Commercial Risk Report for the Board. 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 internal audit
function is independent of the external audit function; and
■■ an Audit Committee that reports to the Board on risk management
■■ External Audit activities undertaken by the External Auditor,
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 half yearly
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;
KPMG, to review internal controls as part of the year end audit
procedures. Internal control weaknesses are identified by the
External Auditor and communicated to management to address
through a formal reporting process. The actions taken by
management are reviewed by the Chief Financial Officer as part
of the stewardship review process.
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.
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
GWA internAtionAl limiteD 2010 ANNUAL REPORT
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.
■■ 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
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.
Refer to the Company’s website for a copy of the charter.
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
In performing its responsibilities, the Remuneration Committee receives
appropriate advice from external consultants and other advisors as
required. During the year, the Remuneration Committee engaged the
services of an external adviser to provide market benchmarking data to
assist with the 2010/11 executive remuneration review.
The Executive Director 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 executives
emoluments to the Company’s financial and operating performance in
order 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 executive incentive schemes. There are no director retirement
benefits other than statutory superannuation.
The Remuneration Committee is responsible for reviewing and
determining the remuneration and incentive arrangements for
the executives. The Remuneration Committee obtains market
benchmarking data from an external remuneration consultant 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.
37
Directors’ report
As At 30 june 2010
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 2010.
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.
G J McGrath, Chairman and Non-Executive Director
D D McDonough, Deputy Chairman and Non-Executive Director
P C Crowley, Managing Director
D R Barry, Non-Executive Director
R M Anderson, Non-Executive Director
W J Bartlett, Non-Executive Director
R J Thornton, Executive Director
B Thornton, Non-Executive Director (Retired 30 June 2010)
J J Kennedy, Non-Executive Director (Retired 29 October 2009)
On 6 August 2010, Mr D R Barry announced his retirement as a
Non-Executive Director at the Company’s 2010 Annual General
Meeting on 28 October 2010.
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 2009/10 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
in May 2009. Details of Mr Thornton’s qualifications and experience
are located in the Annual Report.
GWA internAtionAl limiteD 2010 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
G J McGrath
D D McDonough
P C Crowley
D R Barry
R M Anderson
W J Bartlett
R J Thornton
Ordinary Shares
150,000
60,495
750,000
3,553,830
8,418,442
15,914
111,194
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 34 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 61,817,510 shares (last year 61,351,674 shares).
CorPorAte struCture
GWA International Limited is a Company limited by shares that is
incorporated and domiciled in Australia. GWA International Limited
has prepared a Consolidated Financial Report incorporating the entities
that it controlled during the financial year ended 30 June 2010, 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, manufacture, import and marketing of
building fixtures and fittings to households and commercial premises
and the distribution of these various products through a range of
distribution channels in Australia and overseas.
The Company divested the Rover Mowers and Wisa Beheer businesses
in April and June 2010 respectively. These businesses were previously
identified by the Board as non-core operations. The Company also
announced the acquisition of Brivis Climate Systems in April 2010
which is a leading Australian manufacturer of ducted climate systems
for the residential market. There have been no other significant
changes in the nature of the activities of the Company during the year.
emPloYees
The Consolidated Entity employed 1,922 employees as at 30 June 2010
(last year 1,891 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.
The Company has implemented employment policies aimed at
providing flexibility and work life balance to attract and retain the best
people, including a stronger representation of women. 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 2010 is as follows:
Details of the changes are as follows:
■■ On 1 April 2010, the Company sold the business and assets of its
lawn and garden care equipment business, Rover Mowers, to MTD
Products Australia Pty Ltd for $7.3 million.
■■ On 1 April 2010, the Company purchased the business and assets
of Brivis Climate Systems from Carrier Air Conditioning Pty Ltd
for $48.6 million. Brivis Climate Systems is a leading Australian
manufacturer of ducted climate systems for the residential market
and has been integrated with the Dux water heating business to
form GWA Heating & Cooling.
■■ On 1 June 2010, the Company sold the business and assets of its
European sanitaryware business, Wisa Beheer, to a group led by
local management for Euro11.7 million.
Business Segment
Segment Sales
Trading EBIT
Building Fittings
Heating and Cooling
Commercial Furniture
Other
Total
Earnings Per Share
Basic earnings per share
Trading earnings per share*
* excludes restructuring expenses
2009/10
$’000
420,031
161,495
74,823
460
656,809
2008/09
$’000
403,658
153,288
56,088
-
613,034
2009/10
$’000
88,830
14,607
5,724
(14,613)
94,548
2008/09
$’000
81,822
15,161
2,033
(12,663)
86,353
2009/10
2008/09
cents
16.2
18.5
cents
16.9
17.9
In the opinion of the directors, there were no other significant changes
in the state of affairs of the Company during the financial year, other
than disclosed in the Directors’ Report or referred to in the Financial
Statements or notes thereto.
revieW of oPerAtions
A review of the operations of the Company and the results of those
operations for the financial year ended 30 June 2010 is provided in
the Managing Director’s Review of Operations which is located in the
Annual Report.
DiviDenDs
Dividends paid or declared by the Company to shareholders since the
end of the previous financial year were:
Declared and paid during the 2009/10 financial year
Total
Cents per
Amount
Date of
stAte of AffAirs
Changes in the state of affairs of the Company during the financial
year resulted from the strategy announced by the Board to divest the
Company’s identified non-core operations and the continued pursuit
of acquisition opportunities to expand the core building fixtures and
fittings businesses through market and product extensions.
Dividend
Final 2008/09
Ordinary
Interim 2009/10
Ordinary
share
8.5
25,332
$’000
Franked
Payment
Fully
Franked
7 October
2009
Fully
Franked
7 April
2010
9.5
28,563
Franked dividends declared and paid during the year were franked at
the corporate tax rate of 30%.
39
Directors’ report As At 30 june 2010 Cont.
Declared after end of the 2009/10 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.
Total
Cents per
Amount
Date of
Dividend
Final 2009/10
Ordinary
share
8.5
$’000
Franked
Payment
25,594
Fully
Franked
6 October
2010
The financial effect of the dividend has not been brought to account in
the Financial Statements for the year ended 30 June 2010 and will be
recognised in subsequent Financial Reports.
The record date for the final dividend is 15 September 2010 and the
dividend payment date is 6 October 2010. The Dividend Reinvestment
Plan will not be offered to shareholders for the final dividend and
remains suspended.
siGnifiCAnt events After BAlAnCe DAte
On 17 August 2010, the directors declared a final ordinary dividend
of 8.5 cents per share in respect of the financial year ended 30 June
2010. The dividend will be fully franked at the 30% corporate tax rate.
The total amount of the dividend is $25.594 million (last year $25.332
million). In accordance with Accounting Standards, the dividend has
not been provided for in the Financial Statements for the year ended
30 June 2010.
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 and to create competitive advantage.
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.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
environmentAl reGulAtion AnD
PerformAnCe
environmental licenses
The Company holds licenses 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 licenses
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 license conditions is made by external advisers.
The Company, in conjunction with external advisers, 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 license conditions.
In April 2010, Gainsborough Hardware Industries Limited, a wholly
owned subsidiary, was issued a penalty infringement notice from EPA
Victoria for a minor discharge of metal cooling fluid to stormwater
following a leak from a broken pipe at the Blackburn Victoria factory
site. A full clean-up was completed and appropriate actions taken
to prevent reoccurrence. The directors are not aware of any other
breaches of the Company’s license conditions during the financial year
ended 30 June 2010.
environmental remediation
In previous financial years, the Company investigated and reported two
environmental contamination issues at factory sites at Revesby NSW
and Eagle Farm Queensland. The Revesby site is leased and occupied
by McIlwraith-Davey Pty Ltd. The Eagle Farm site was previously
occupied by Corille Limited (formerly Rover Mowers Limited) and was
sub-leased to MTD Products Australia Pty Ltd on 1 April 2010 following
the sale of the Rover Mowers business.
The costs to remediate the Revesby site have been provided in prior
years. During the year, the remediation activities were commenced in
accordance with the Voluntary Remediation Proposal approved by the
Department of Environment, Climate Change and Water (NSW). It is
expected that the remediation activities will be completed during the
2010/11 year. McIlwraith-Davey Pty Ltd will continue to occupy the site
after the remediation activities until lease expiry in April 2013.
The costs to remediate the Eagle Farm site have been provided in prior
years. Whilst there is currently no legal obligation to remediate the
site, the Board has approved targeted remediation activities to mitigate
potential future environmental liabilities. Preliminary remediation
activities commenced during the year ended 30 June 2010. It is
expected that the remediation activities will be completed during the
2010/11 year. The Company no longer occupies the site with the sub-
lease to MTD Products Australia Pty Ltd expiring in November 2010.
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.
remunerAtion rePort - AuDiteD
This report outlines the remuneration arrangements in place for the
directors and executives of the Company.
In this year’s Remuneration Report the Board has endeavored to
address through more detailed disclosure the comments raised on last
year’s Remuneration Report. This has resulted in more disclosure in
the following areas:
■■ Information on the Board’s objectives for determining the appropriate
split of fixed versus variable remuneration for the executives
■■ Details of the Board’s approach for determining fixed remuneration
for executives including the role of the Company’s external
remuneration adviser
■■ Explanations of any notable increases in fixed remuneration during
the period
■■ Details of the parameters adopted by the Board for determining the
Short Term Incentive targets for executives
■■ Change the classification of the GWA International Employee Share
Plan to a long term incentive in the Remuneration Tables, rather
than a short term non-monetary benefit as disclosed last year
■■ Explanation of the approach for determining base year EPS for the
purposes of the Long Term Incentive (Equity) Plan and disclosing
the 2009/10 base year EPS for grants of Performance Rights to
executives during the 2010/11 year
■■ Explanation of the genuine disposal restrictions that apply to shares
issued upon vesting of Performance Rights under the Long Term
Incentive (Equity) Plan
The Board acknowledges the comments raised last year on the “cliff
vesting” approach for the vesting of Performance Rights under the
Long Term Incentive (Equity) Plan and is currently taking advice
from an external remuneration consultant on this issue. Any changes
announced by the Board following this review will be effective for
grants of Performance Rights to executives during the 2011/12 year.
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 $1.09 million (including statutory
superannuation). This amount represents a limit on non-executive
directors’ fees and does not represent the actual fees paid to the non-
executive directors which are outlined in the Remuneration Tables.
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.
41
Directors’ report As At 30 june 2010 Cont.
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 obtains market benchmarking data from an external
remuneration consultant to ensure that the levels are market based
and fairly represent the responsibilities and time spent by the non-
executive directors on Company matters.
Retirement benefits are not available for non-executive directors of the
Company, other than statutory superannuation.
For details of the remuneration paid to the non-executive directors for
the year ended 30 June 2010, 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 obtains market benchmarking data from an
external remuneration consultant to ensure the appropriateness of the
nature and amount of remuneration 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
■X Short Term Incentive
■X 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, the provision of
motor vehicles and any applicable fringe benefits tax. The variable
remuneration component includes the 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.
The Remuneration Committee aims to ensure that the split of fixed
versus variable remuneration for executives is appropriate for the type
of business that the Company operates, namely a cyclical, mature
business which operates in lower growth industries. The Committee
also takes into consideration the importance for stability of earnings
and high operating cash flow generation for the continuing high
dividend payments to shareholders. The Committee acknowledges that
this has generally resulted in the approval of a higher proportion of
fixed remuneration for executives compared to peer companies and a
lower proportion of variable remuneration.
The Remuneration Committee considers that a one size fits all approach
to executive remuneration is not appropriate and that the current GWA
remuneration split of fixed versus variable remuneration successfully
GWA internAtionAl limiteD 2010 ANNUAL REPORT
achieves the Company’s remuneration objectives. The Company’s strong
financial performance during the recent global financial crisis, where
the Company maintained the high level of dividends to shareholders, is
evidence of the success of the remuneration approach.
fixeD remunerAtion
The level of fixed remuneration is set so as to provide a base level of
remuneration which is appropriate to the position and experience of
the executive, and is competitive in the market. Fixed remuneration
is reviewed annually by the Remuneration Committee based on
remuneration market benchmarking data provided by the Company’s
external remuneration consultant, as well as having regard to
Company, divisional and individual performance through the well
established performance management process.
During the year, the Remuneration Committee engaged the services of
an external adviser for the 2010/11 executive remuneration review. The
objective of the engagement was to assess the competitiveness of the
remuneration packages provided to the Company’s executive team with
like roles from similar organisations. The external adviser used two main
approaches to remuneration market benchmarking depending upon
the executive role including position matching and position evaluation.
The market data outcomes, analysis and observations from the review
were reported to the Remuneration Committee to assist in determining
executive remuneration levels for the 2010/11 year.
The Remuneration Committee applied a salary freeze on executive
fixed remuneration for the 2009/10 year given the difficult economic
environment and downturn in dwelling construction and renovation
activity impacting the Company last year. There were some executive
positional changes in the group during the year which has resulted in
specified changes in executive fixed remuneration as outlined in the
Remuneration Tables.
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.
short term incentive
The Short Term Incentive for executives operates from divisional
financial performance targets for divisional executives and group
financial performance targets for corporate executives. When the yearly
targets are achieved, the Managing Director will receive an incentive
payment in the range of 40% to 60% of base salary depending on
the level of performance. Other executive participants will receive
an incentive payment in the range of 30% to 40% of base salary
depending on the level of performance. No incentive is paid for poor
business performance. Base salary for the purposes of the Short Term
Incentive excludes superannuation and non-monetary benefits.
The Short Term Incentive is structured so that a lower level of incentive
is paid to the executives for reasonably achievable performance with
a higher level of incentive paid to the executives for higher 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 achievement of personal goals represents 25% to 30% of total
short term incentive payments at the reasonably achievable level with
the balance tied to growth in financial performance. The provision of
incentives based on the achievement of personal goals reinforces the
Company’s leadership model for improved performance management
through achieving measurable personal goals established during the
annual performance review process at the beginning of the financial year.
The achievement of the financial targets represents 70% to 75% of total
short term incentive payments at the reasonably achievable level. The
financial performance targets are based on a combination of improving
revenue, reducing costs and efficiency in funds employed. The targets
are calculated using the principles of economic profit which is defined
as pre-tax profit after deducting the cost of capital for funds used in
generating the profit. Specific circumstances affecting the businesses
are taken into account in determining the financial targets.
The Short Term Incentive is aligned to shareholder interests as the
executives will only become entitled to the majority of incentive payments
if profitability improves, with maximum incentive payments above the
reasonably achievable level linked directly to shareholder wealth creation.
long term incentive
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 Remuneration Committee 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 value of Performance Rights which may be issued to the
executives is capped at a maximum of 60% of base salary for the
Managing Director and 40% of base salary for corporate and divisional
executives. Base salary for the purposes of the Long Term Incentive
excludes superannuation and non-monetary benefits.
The performance hurdles for the Long Term Incentive 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 net profit after tax as set out in the
Company’s audited Financial Statements divided by the weighted
average of ordinary shares on issue. The Board has discretion to make
reasonable adjustments to base year EPS where it is unduly distorted
by significant or abnormal events.
The Board has determined that the base year EPS for the year ended
30 June 2010 for the purpose of grants to executives under the Long
Term Incentive is 18.5 cents per share and has been adjusted for the
discontinued Rover Mowers and Wisa Beheer businesses.
The performance hurdles are challenging and achievable and focus
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.
A participant may not dispose of the ordinary shares issued under the
Long Term Incentive until the seventh anniversary of the grant date
and the shares are subject to a holding lock upon issue. There are
limited circumstances where a participant may dispose of the shares
which includes cessation of employment with the Company or where
approval is granted by the Board. In considering an application from
a participant to dispose of the shares the Board will consider whether
the sale is in the best interests of the Company, relevant policies and
regulations and other factors.
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. In addition, the rules do not allow for re-
testing of the performance hurdles during the performance period.
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 shown in the
table on the following page.
43
Directors’ report As At 30 june 2010 Cont.
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 over three year performance period
Proportion of Performance Rights that may be Exercised
if TSR hurdle is met
More than the 50th percentile
Comparator companies
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 introduction of the GWA
International Long Term Incentive (Equity) Plan, it is now limited to
lower level management and senior staff. Company executives who
were issued with shares under the plan prior to 2009 continue to hold
their shares in accordance with the plan rules, but there have been no
further issues to the executives who now participate in the Long Term
Incentive (Equity) Plan as outlined above.
Under the plan, employees are provided with a non-interest bearing
unsecured 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 loan is full
recourse meaning the employee bears the risk of company share price
movements below the issue price and must repay the Company in the
event of a shortfall. To ensure the plan represents an effective long term
incentive, the employee is subject to a two year restriction on the sale of
the shares which commences from the time the shares are acquired.
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 2010 there are currently 3.9 million shares issued
under the Employee Share Plan which have an outstanding loan
balance of $9.5 million. The plan does not provide for the issue of
options and no options have been issued by the Company.
The 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 employment with the Company.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
50% (ie, 50% of total grant)
GUD Holdings Limited
Crane Group Limited
Hills Industries Limited
Pacific Brands Limited
Bradken Limited
Adelaide Brighton Limited
Spotless Group Limited
Ansell Limited
Alesco Corporation Limited
Paperlinx Limited
shAreholDer WeAlth
The table on the following page is a summary of key shareholder
wealth statistics for the Company over the last five years.
Trading EBIT has improved in the 2009/10 year due to market
development initiatives, enhanced cost management, acquisitions and
a stronger domestic dwelling construction and renovation market. This
follows a number of years of weak domestic dwelling construction and
renovation activity, particularly following the global financial crisis in
late 2008, which is a key driver of earnings growth in the Company’s
core building fixtures and fittings businesses.
Despite the difficult market conditions over the past five years, the
core business has performed soundly generating strong operating
cash flows enabling the Company to maximise fully franked dividend
payments to shareholders. The Company is well placed to grow
profitability as the domestic dwelling construction and renovation
market recovers in future periods, and to continue with the organic
and inorganic growth plans for the business.
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
99.0 cents in fully franked dividends paid to shareholders in the last
five financial years which includes 9.0 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 executives, 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.
notes to the remunerAtion tABles
(a) The Short Term Incentive (STI) cash bonus is for the performance
during the financial year ended 30 June 2010 based on the
achievement of personal goals and specified financial performance
targets. 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 short term non-monetary benefits include the provision of
motor vehicles, medical benefits membership, salary continuance
and life insurance and any applicable fringe benefits tax thereon.
(c) The Employee Share Plan interest includes an amount representing
commercial interest that would have been charged during the
period on the executives outstanding employee loan balances owed
to the Company had these loans not been interest free. The benefit
has been re-classified as a long term benefit in the above tables
which properly reflects the long term nature of the incentive. In the
prior year, the benefit was classified as a short term non-monetary
benefit. The Employee Share Plan is no longer offered to executives
who now participate in the Long Term Incentive (Equity) Plan.
(d) The Long Term Incentive (Equity) Plan was approved by
shareholders at the 2008 Annual General Meeting. Performance
rights were granted to executives in each of the years ended 30
June 2009 and 2010 and are subject to vesting conditions over
specific performance periods. No performance rights vested during
either of the years ended 30 June 2009 and 2010. The fair value of
the performance rights granted during both years were 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.
(e) Mr G Douglas was made redundant on 30 April 2010 following
the sale of Rover Mowers. Mr Douglas received a redundancy
payment of $181,875 which represented 6 months salary and 3
months payment in lieu of notice which is in accordance with the
Company’s Redundancy Policy.
(f) The fixed remuneration for Mr G Oliver was increased by the
Remuneration Committee following his appointment as Interim
Chief Executive – Caroma Dorf on 1 October 2009 to 31 March 2010.
Prior to this appointment, Mr Oliver was the General Manager –
Gainsborough. On 1 April 2010, Mr Oliver was appointed as General
Manager – Group Development and his fixed remuneration reverted
back to the same level as his former position as General Manager –
Gainsborough.
(g) Mr P Crossley became a key management person following his
appointment as Interim General Manager – Gainsborough on 1
October 2009 and subsequent appointment as General Manager
– Gainsborough on 1 April 2010. Prior to these appointments, Mr
Crossley was not classified as a key management person in the
Remuneration Tables.
Financial Year
Trading EBIT ($m)
Trading EPS* (cents)
Total DPS (cents)
Share Price ($)
2005/06
2006/07
2007/08
2008/09
2009/10
* Excludes restructuring expenses
95.2
98.8
99.4
86.4
94.5
21.6
22.0
21.5
17.9
18.5
21.5
22.0
19.5
18.0
18.0
3.11
4.42
2.50
2.30
3.01
45
Short–term
Long–term
Post-employment
Salary
& Fees
STI Cash
Bonus
Non-
Monetary
Employee
Share Plan
Interest
Value of
Share-
Based
Awards
Super-
annuation
Benefits
Termin-
ation
Benefits
$
$(a)*
$(b)
$(c)
$(d)
$
$
Proportion of
remuneration
performance
based
STI Cash
Bonus
vested in
year
STI Cash
Bonus
forfeited
in year
%
%
%
Non–Executive Directors
B Thornton, Chairman
(Retired 30 June 2010)
J Kennedy,
Non-Executive Director
(Retired 29 October 2009)
D Barry,
Non-Executive Director
R Anderson,
Non-Executive Director
G McGrath,
Non-Executive Director
W Bartlett,
Non-Executive Director
2010
2009
304,066
288,899
2010
55,114
2009
65,342
2010
2009
2010
2009
2010
2009
2010
2009
102,300
102,300
56,301
4,967
79,724
28,241
122,300
115,300
D McDonough,
Deputy Chairman
(Appointed 16 February 2009)
2010
82,999
2009
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,834
26,001
-
100,000
9,207
9,207
48,666
100,000
36,142
86,172
11,007
10,377
25,003
28,000
Executive Directors
P Crowley,
Managing Director
R Thornton,
Executive Director
(Appointed 6 May 2009)
2010 1,368,975
2009 1,379,601
780,000
112,500
129,699
91,659
89,176
149,259
456,450
194,658
50,000
50,000
2010
232,157
83,620
30,511
15,956
44,942
24,873
2009
39,160
3,788
5,167
4,359
3,199
3,767
Executives
A Rusten,
2010
Group Marketing Manager 2009
324,357
316,280
109,060
15,455
31,221
31,750
41,757
69,067
61,750
27,417
50,000
31,160
T Dragicevich, Chief
Executive – Caroma Dorf
(Ceased employment
30 September 2009)
2010
125,912
-
7,633
2009
435,219
41,000
40,659
G Douglas,
General Manager – Rover
(Ceased employment
30 April 2010) (e)
2010
192,437
2009
182,943
-
-
31,719
45,286
G Oliver, General Manager
– Group Development
(Appointed 1 April 2010)(f)
2010
400,019
133,680
39,867
2009
295,097
133,636
44,888
-
-
-
-
-
-
(54,833)
12,498
54,833
100,000
21,933
100,000
73,075
52,238
30,158
101,112
W Saxelby,
Chief Financial Officer
2010
2009
603,477
552,854
229,400
62,000
12,444
121,684
47,230
77,488
54,833
54,833
48,000
96,000
G Welsh,
General Manager - Sebel
(Commenced employment
20 October 2008)
2010
289,799
92,500
8,099
2009
216,684
68,182
4,460
-
-
51,975
31,818
21,933
18,109
L Patterson, Chief Executive 2010
– GWA Heating and Cooling 2009
334,384
356,290
25,920
129,091
42,758
38,895
48,658
84,138
73,075
30,158
45,309
41,220
N Evans, Chief Executive
– Caroma Dorf
(Commenced employment
17 March 2010)
P Crossley, General
Manager – Gainsborough
(Appointed 1 April 2010)(g)
2010
169,500
2009
-
-
-
-
-
2010
180,856
70,500
11,973
2009
-
-
-
-
-
-
-
64,375
3,800
-
-
38,087
15,866
-
-
* Comparative STI cash bonus amounts have been adjusted to reflect the actual amounts paid.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
Total
$
314,900
314,900
55,114
165,342
111,507
111,507
104,967
104,967
115,866
114,413
133,307
125,677
108,002
28,000
2,874,300
1,977,677
432,059
59,440
618,145
491,129
91,210
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
350,162
698,879
604,891
995,384
964,859
474,191
329,368
570,104
679,792
237,675
-
317,282
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43.0
15.5
29.8
11.8
27.6
8.7
-
-
6.3
29.6
27.1
28.6
12.1
30.5
27.4
17.4
23.4
27.1
-
34.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
87
13
93
23
87
11
-
19
-
-
100
91
93
25
93
91
20
91
-
-
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13
87
7
77
13
89
-
81
-
100
-
9
7
75
7
9
80
9
-
-
-
-
671,711
14.3
(21,933)
47,979
181,875
432,077
Directors’ report As At 30 june 2010 Cont.
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 are shown in the below table.
the achievement of the performance hurdles set out earlier in the
Remuneration Report. The rights granted to Mr Crowley and Mr
Thornton on 12 March 2010 were approved by shareholders at the
Annual General Meeting on 29 October 2009 in accordance with ASX
Listing Rule 10.14.
All of the rights shown in the table carry an exercise price of nil. For
the rights granted on 27 February 2009 and 12 March 2010 the
rights will vest on the date of the release of the Company’s audited
financial results for the years ending 30 June 2011 and 30 June
2012 respectively to the Australian Securities Exchange, subject to
No rights were vested or exercised during the year. Rights were
forfeited where an employee ceased employment with the Company
during the year in accordance with the rules of the Long Term
Incentive (Equity) Plan. The number of rights outstanding at
30 June 2010 also represents the balance yet to vest.
Number of
% forfeited
of rights at
determine number
rights granted
Grant date*
in year
grant date
of rights granted
Fair value
Issue price used to
Executive Directors
P Crowley, Managing Director
R Thornton, Executive Director
(Appointed 6 May 2009)
Executives
A Rusten, Group Marketing Manager
2010
2009
2010
2009
2010
2009
T Dragicevich, Chief Executive - Caroma Dorf 2010
(Ceased employment 30 September 2009)
2009
G Douglas, General Manager – Rover
(Ceased employment 30 April 2010)
G Oliver, General Manager
– Group Development
(Appointed 1 April 2010)
W Saxelby, Chief Financial Officer
G Welsh, General Manager – Sebel
(Commenced employment 20 October 2008)
L Patterson, Chief Executive
– GWA Heating and Cooling
N Evans, Chief Executive – Caroma Dorf
(Commenced employment 17 March 2010)
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
305,000
355,000
30,000
35,000
40,000
50,000
-
12 March 2010
27 February 2009
12 March 2010
27 February 2009
12 March 2010
27 February 2009
-
100,000
27 February 2009
-
40,000
50,000
-
27 February 2009
12 March 2010
55,000
27 February 2009
-
-
100,000
27 February 2009
35,000
40,000
50,000
55,000
75,000
-
12 March 2010
27 February 2009
12 March 2010
27 February 2009
12 March 2010
-
P Crossley, General Manager – Gainsborough 2010
(Appointed 1 April 2010)
2009
40,000
12 March 2010
-
-
-
-
-
-
-
-
100
-
100
-
-
-
-
-
-
-
-
-
-
-
-
-
785,375
583,975
77,250
57,595
103,000
82,250
-
164,500
-
65,800
128,750
90,475
-
164,500
90,125
65,800
128,750
90,475
193,125
-
103,000
-
2.84
2.46
2.84
2.46
2.84
2.46
-
2.46
-
2.46
2.84
2.46
-
2.46
2.84
2.46
2.84
2.46
2.84
-
2.84
-
* 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 $2.84 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 29 October 2009. The grant dates and
corresponding fair values per right in the above table have been determined in accordance with Australian Accounting Standards. 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 $2.95 per
right, and the TSR hurdle was $2.20 per right.
47
Directors’ report As At 30 june 2010 Cont.
DireCtors’ meetinGs
The number of meetings of directors (including meetings of Committees
of directors) held during the financial year ended 30 June 2010 and the
number of meetings attended by each director were as follows:
Director
Board
Audit Committee
Remuneration
Committee
Nomination Committee
A
16
7
16
16
16
16
16
16
16
B
11
6
16
15
14
15
16
16
16
A
4
1
1
4
3
B
2
1
1
4
3
A
4
4
4
B
3
4
4
A
2
2
2
B
0
2
2
B Thornton(1)
J J Kennedy(2)
P C Crowley(3)
D R Barry
R M Anderson
G J McGrath(4)
W J Bartlett(5)
D D McDonough(6)
R J Thornton
Note:
A – Number of meetings held during the time the director held office
during the year
B – Number of meetings attended
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.
(1) B Thornton was granted a leave of absence by the Board
The members of the Audit Committee are:
from 2 February 2010 until his retirement on 30 June 2010
for health reasons
(2) J J Kennedy retired as a Non-Executive Director on 29 October 2009
(3) P C Crowley attends Committee meetings by invitation of the Board
(4) G J McGrath was appointed Chairman of the Board effective
1 July 2010, Chairman of the Nomination Committee and a
member of the Audit Committee on 28 May 2010
(5) W J Bartlett was appointed Chairman of the Audit Committee on
29 October 2009, Chairman of the Remuneration Committee and
a member of the Nomination Committee on 28 May 2010
(6) D D McDonough was appointed Deputy Chairman of the Board
and a member of the Audit Committee on 29 October 2009 and
a member of the Remuneration Committee on 16 August 2010
■■ Mr W Bartlett (Chairman)
■■ Mr D McDonough
■■ Mr G McGrath
The members of the Remuneration Committee are:
■■ Mr W Bartlett (Chairman)
■■ Mr D McDonough
■■ Mr G McGrath
The members of the Nomination Committee are:
■■ Mr G McGrath (Chairman)
■■ Mr D McDonough
■■ Mr W Bartlett
Details of the Committee members qualifications and experience
are located in the Annual Report.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
non-AuDit serviCes
Details of the non-audit services provided by the External Auditor,
KPMG, during the financial year ended 30 June 2010 are outlined in
Note 7 of the Financial Statements. Based on advice from the 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 2010.
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.
G McGrath
Chairman
P C Crowley
Managing Director
Brisbane, 17 August 2010
49
GWA International Limited
Financial Report
CONTENTS
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of cash flows
Consolidated statement of changes in equity
NOTE
1
Significant accounting policies
2 Operating segments
3 Discontinued operations
4 Other income
5 Other expenses
6 Personnel expenses
7 Auditors’ remuneration
8 Net financing costs
9 Restructuring expenses
10
Income tax expense
11 Earnings per share
12 Cash and cash equivalents
13 Trade and other receivables
14
Inventories
15 Acquisitions of subsidiaries
16 Current tax assets and liabilities
17 Deferred tax assets and liabilities
18 Property, plant and equipment
19
Intangible assets
Director’s Declaration
56
64
67
68
68
69
69
69
69
70
71
72
72
72
73
73
74
75
76
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 Parent entity disclosures
33
Reconciliation of cash flows
from operating activities
34 Related parties
35 Subsequent events
Independent Auditor’s Report to the members of GWA International Limited
51
52
53
54
77
78
79
80
80
81
84
91
91
92
93
94
95
96
97
99
100
101
consolIdAted stAtement of comprehensIve Income
GWA InternAtIonAl lImIted And Its controlled entItIes
ABN 15 055 964 380
for the yeAr ended 30 June 2010
In thousands of AUD
Continuing operations
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
Profit from continuing operations
Discontinued operations
Profit/(loss) from discontinued operations, net of income tax
Profit for the period
Other comprehensive income
Foreign currency translation differences for foreign operations, net of income tax
Effective portion of changes in fair value of cash flow hedges, net of income tax
Other comprehensive income for the period, net of income tax
Total comprehensive income for the period
Earnings per share
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Continuing operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
* Refer to discontinued operations – note 3.
Note
2010
2
4
5
8
10
3
11
11
11
11
656,809
(424,096)
232,713
2,399
(89,649)
(46,863)
(4,052)
94,548
1,905
(16,932)
(15,027)
79,521
(24,068)
55,453
(6,926)
48,527
(1,115)
1,620
505
49,032
16.18
16.10
18.48
18.39
2009
Restated*
613,034
(399,323)
213,711
4,035
(88,053)
(41,554)
(5,233)
82,906
2,866
(16,710)
(13,844)
69,062
(20,900)
48,162
163
48,325
4,026
(755)
3,271
51,596
16.93
16.90
16.87
16.85
The statement of comprehensive income is to be read in conjunction with the notes to the financial statements set out on pages 56 to 99.
51
consolIdAted stAtement of fInAncIAl posItIon
GWA InternAtIonAl lImIted And Its controlled entItIes
ABN 15 055 964 380
As At 30 June 2010
In thousands of AUD
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Other
Total current assets
Non-current assets
Receivables
Deferred tax assets
Property, plant and equipment
Intangible assets
Other
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Employee benefits
Income tax payable
Provisions
Total current liabilities
Non-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
2010
2009
12
13
14
16
13
17
18
19
20
22
16
24
20
21
17
22
24
54,914
148,569
104,435
420
3,343
311,681
5,102
18,786
104,331
369,164
3,366
500,749
812,430
95,306
14,367
4,543
15,115
45,015
135,039
111,671
980
3,694
296,399
12,185
22,961
98,215
349,792
2,901
486,054
782,453
89,231
14,191
7,207
19,853
129,331
130,482
-
230,866
31
12,251
8,862
252,010
381,341
431,089
396,539
(1,716)
36,266
431,089
5,585
200,000
22
11,337
8,863
225,807
356,289
426,164
387,981
(3,451)
41,634
426,164
The statement of financial position is to be read in conjunction with the notes to the financial statements set out on pages 56 to 99.
GWA InternAtIonAl lImIted 2010 ANNUAL REPORT
consolIdAted stAtement of cAsh floWs
GWA InternAtIonAl lImIted And Its controlled entItIes
ABN 15 055 964 380
for the yeAr ended 30 June 2010
In thousands of AUD
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Interest paid
Interest received
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Acquisition of property, plant and equipment
Acquisition of intangibles
Acquisition of subsidiary, net of cash acquired
Disposal of subsidiaries, net of cash disposed
Net cash from investing activities
Cash flows from financing activities
Repayment of employee share loans
Repayment of loans by related parties
Drawdown of bank bills
Repayment of bank bills
Dividends paid, net of dividend reinvestment plan
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 July
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 30 June
Note
2010
2009
796,963
(691,672)
105,291
(16,398)
1,345
(23,073)
67,165
1,049
(10,614)
(4,484)
(48,579)
19,712
(42,916)
1,955
13
30,866
-
(46,816)
(13,982)
10,267
45,015
(368)
54,914
738,652
(628,092)
110,560
(14,852)
2,070
(19,150)
78,628
6,395
(10,514)
(6,834)
(12,419)
-
(23,372)
1,321
8
-
(48,167)
(16,043)
(62,881)
(7,625)
53,418
(778)
45,015
33
15
3
12
The statement of cash flows is to be read in conjunction with the notes to the financial statements set out on pages 56 to 99.
53
consolIdAted stAtement of chAnGes In equIty
GWA InternAtIonAl lImIted And Its controlled entItIes
ABN 15 055 964 380
for the yeAr ended 30 June 2010
In thousands of AUD
Balance at 1 July 2008
Total comprehensive income for the period
Profit for the period
Other comprehensive income
Foreign currency translation differences for
foreign operations, net of income tax
Effective portion of changes in fair value of
cash flow hedges, net of income tax
Total other comprehensive income
Total comprehensive income for the period
Transaction with owners, recorded directly in equity
Dividends to shareholders
Share-based payments, net of income tax
Issue of ordinary shares
Total transactions with owners
34,043
34,043
Share
capital
Translation
reserve
Hedging
reserve
353,938
(7,565)
193
-
-
-
-
-
-
-
-
4,026
-
4,026
4,026
-
-
-
-
-
-
(755)
(755)
(755)
-
-
-
-
Equity
compensation
reserve
-
-
-
-
-
-
-
650
-
650
650
Retained
earnings
Total
42,554
389,120
48,325
48,325
-
-
-
4,026
(755)
3,271
48,325
51,596
(49,245)
(49,245)
-
-
(49,245)
41,634
650
34,043
(14,552)
426,164
Balance at 30 June 2009
387,981
(3,539)
(562)
The statement of changes in equity is to be read in conjunction with the notes to the financial statements set out on pages 56 to 99.
GWA InternAtIonAl lImIted 2010 ANNUAL REPORT
consolIdAted stAtement of chAnGes In equIty (cont.)
GWA InternAtIonAl lImIted And Its controlled entItIes
ABN 15 055 964 380
for the yeAr ended 30 June 2010
Share
capital
Translation
reserve
Hedging
reserve
Equity
compensation
reserve
Retained
earnings
Total
387,981
(3,539)
(562)
650
41,634
426,164
In thousands of AUD
Balance at 1 July 2009
Total comprehensive income for the period
Profit for the period
Other comprehensive income
Foreign currency translation differences for
foreign operations, net of income tax
Translation differences for disposed business
transferred to profit or loss, net of income tax
Effective portion of changes in fair value of
cash flow hedges, net of income tax
Total other comprehensive income
Total comprehensive income for the period
-
-
-
-
-
-
-
-
-
(5,045)
3,930
-
(1,115)
(1,115)
-
-
-
-
-
-
-
1,620
1,620
1,620
-
-
-
-
-
-
-
-
-
-
48,527
48,527
-
-
-
-
(5,045)
3,930
1,620
505
48,527
49,032
1,230
-
1,230
-
-
1,230
1,880
(53,895)
(53,895)
-
(53,895)
36,266
8,558
(44,107)
431,089
Transaction with owners, recorded directly in equity
Share-based payments, net of income tax
Dividends to shareholders
Issue of ordinary shares
Total transactions with owners
8,558
8,558
Balance at 30 June 2010
396,539
(4,654)
1,058
The statement of changes in equity is to be read in conjunction with the notes to the financial statements set out on pages 56 to 99.
55
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
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 2010 comprises the Company and its
subsidiaries (together referred to as the ‘consolidated entity’).
The financial report was authorised for issue by the directors on
17 August 2010.
(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
complies with International Financial Reporting Standards (‘IFRSs’)
and interpretations adopted by the International Accounting
Standards Board (‘IASB’).
(b) Basis of preparation
The financial report is presented in Australian dollars which is the
Company’s functional currency and the functional currency of the
majority of the consolidated entity. The entity has elected not to early
adopt any accounting standards or amendments.
The financial report is prepared on the historical cost basis except
that derivative financial instruments are measured at their fair value.
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
(i) Subsidiaries
Subsidiaries are entities controlled by the consolidated entity.
Control exists when the consolidated entity 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.
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.
(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.
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.
(iii) Business combinations
Change in accounting policy
The consolidated entity has adopted revised AASB 3 Business
Combinations (2008) and amended AASB 127 Consolidated and
Separate Financial Statements (2008) for business combinations
occurring in the financial year starting 1 July 2009. All business
combinations occurring on or after 1 July 2009 are accounted for
by applying the acquisition method. The change in accounting
policy is applied prospectively and had no material impact on
earnings per share.
The consolidated entity has applied the acquisition method for the
business combination disclosed in note 15.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
1. siGnifiCAnt ACCountinG PoliCies (cont.)
(ii) Financial statements of foreign operations
(c) Basis of consolidation (cont.)
(iii) Business combinations (cont.)
Change in accounting policy (cont.)
For every business combination, the consolidated entity identifies
the acquirer, which is the combining entity that obtains control of
the other combining entities or businesses. Control is the power to
govern the financial and operating policies of an entity so as to obtain
benefits from its activities. In assessing control, the consolidated
entity takes into consideration potential voting rights that currently
are exercisable. The acquisition date is the date on which control is
transferred to the acquirer. Judgement is applied in determining the
acquisition date and determining whether control is transferred from
one party to another.
Measuring goodwill
The consolidated entity measures goodwill as the fair value of the
consideration transferred including the recognised amount of any
non-controlling interest in the acquiree, less the net recognised
amount (generally fair value) of the identifiable assets acquired and
liabilities assumed, all measured as of the acquisition date.
Consideration transferred includes the fair values of the assets
transferred, liabilities incurred by the consolidated entity to the
previous owners of the acquiree, and equity interests issued by the
consolidated entity.
Transaction costs
Transaction costs the consolidated entity incurs in connection
with a business combination, such as finder’s fees, legal fees,
due diligence fees, and other professional and consulting fees,
are expensed as incurred.
(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 profit or loss. 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.
The assets and liabilities of foreign operations, including goodwill
and fair value adjustments arising on acquisition, are translated to
Australian dollars at foreign exchange rates ruling at the reporting
date. The revenues and expenses of foreign operations are translated
to Australian dollars at rates approximating to the foreign exchange
rates ruling at the dates of the transactions. Foreign exchange
differences arising on retranslation are recognised directly in the
foreign currency translation reserve (FCTR).
(iii) Net investment in foreign operations
Foreign exchange differences arising from the retranslation of the
net investment in foreign operations (including monetary items
neither planned to be settled or likely to be settled in the foreseeable
future), and of related hedges are recognised in the FCTR to the
extent that the hedge is effective. They are released into profit or
loss upon disposal.
(e) Derivative financial instruments
The consolidated entity uses derivative financial instruments to
hedge its exposure to foreign exchange and interest rate risks arising
from operating, financing and investing activities. In accordance
with its treasury policy, the consolidated entity does not hold or issue
derivative financial instruments for trading purposes.
Derivative financial instruments are recognised initially at fair value.
Subsequent to initial recognition, derivative financial instruments
are stated at fair value. The gain or loss on remeasurement to fair
value is recognised in profit or loss, unless the derivative qualifies
for hedge accounting, in which case the recognition of any resultant
gain or loss depends on the nature of the item being hedged (see
accounting policy (f)).
The fair value of interest rate swaps is the estimated amount that the
consolidated entity would receive or pay to terminate the swap at
the reporting date, taking into account current interest rates and the
current creditworthiness of the swap counterparties. The fair value
of forward exchange contracts is their quoted market price at the
reporting date, being the present value of the quoted forward price.
(f) Hedging
On entering into a hedging relationship, the consolidated entity
formally designates and documents the hedge relationship and the
risk management objective and strategy for undertaking the hedge.
The documentation includes identification of the hedging instrument,
the hedged item or transaction, the nature of the risk being hedged
and how the entity will assess the hedging instrument’s effectiveness
in offsetting the exposure to changes in the hedged item’s fair value
57
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
1. siGnifiCAnt ACCountinG PoliCies (cont.)
(iii) Hedge of net investment in foreign operation
(f) Hedging (cont.)
or cash flows attributable to the hedged risk. Such hedges are
expected to be highly or fully effective in achieving offsetting changes
in fair value or cash flows and are assessed on an ongoing basis to
determine that they actually have been highly effective throughout
the financial reporting periods for which they are designated.
(i) Cash flow hedges
Where a derivative financial instrument is designated as a hedge of
the variability in cash flows of a recognised asset or liability, or a highly
probable forecasted transaction, the effective part of any gain or loss
on the derivative financial instrument is recognised directly in equity.
When the forecasted transaction subsequently results in the recognition
of a non-financial asset or non-financial liability, or the forecast
transaction for a non-financial asset or non-financial liability becomes a
firm commitment for which fair value hedge accounting is applied, the
associated cumulative gain or loss is removed from equity and included
in the initial cost or other carrying amount of the non-financial asset or
liability. If a hedge of a forecasted transaction subsequently results in
the recognition of a financial asset or a financial liability, the associated
gains and losses that were recognised directly in equity are reclassified
into profit or loss in the same period or periods during which the asset
acquired or liability assumed affects profit or loss.
For cash flow hedges, other than those described above, the
associated cumulative gain or loss is removed from equity and
recognised in profit or loss 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 profit or loss.
When a hedging instrument expires or is sold, terminated or
exercised, or the entity revokes designation of the hedge relationship,
but the hedged forecast transaction is still expected to occur,
the cumulative gain or loss at that point remains in equity and is
recognised in accordance with the above policy when the transaction
occurs. If the hedged transaction is no longer expected to take place,
the cumulative unrealised gain or loss recognised in equity
is recognised immediately in profit or loss.
(ii) Hedge of monetary assets and liabilities
Where a derivative financial instrument is used to hedge
economically the foreign exchange exposure of a recognised
monetary asset or liability, no hedge accounting is applied and any
gain or loss on the hedging instrument is recognised in profit or loss.
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 profit or loss.
(g) Property, plant and equipment
Items of property, plant and equipment are measured at cost less
accumulated depreciation and impairment losses. Cost includes
expenditure that is directly attributable to the acquisition of the asset.
The cost of self-constructed assets includes the cost of materials,
direct labour, the initial estimate, where relevant, of the costs of
dismantling and removing the items and restoring the site on which
they are located, and an appropriate proportion of production
overheads. Purchased software that is integral to the functionality of
the related equipment is capitalised as part of that equipment.
Where parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items of
property, plant and equipment.
Gains and losses on disposal of an item of property, plant and
equipment are determined by comparing proceeds from disposal
with the carrying amount of property, plant and equipment and are
recognised net within “other income” or “other expenses” in profit
or loss.
(i) Subsequent costs
The consolidated entity recognises in the carrying amount of an
item of property, plant and equipment the cost of replacing part
of such an item when that cost is incurred if it is probable that the
future economic benefits embodied within the item will flow to the
consolidated entity and the cost of the item can be measured reliably.
The carrying amount of the replaced part is derecognised. All other
costs are recognised in profit or loss as an expense as incurred.
(ii) Depreciation
With the exception of freehold land, depreciation is recognised in
profit or loss as incurred on a straight-line basis over the estimated
useful lives of each part of an item of property, plant and equipment.
Land is not depreciated. The estimated useful lives in the current
and comparative periods are as follows:
■■ buildings
■■ plant and equipment
■■ fixtures and fittings
40 years
3-15 years
5-10 years
The residual value, the useful life and the depreciation method
applied to an asset are reassessed annually.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
1. siGnifiCAnt ACCountinG PoliCies (cont.)
(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 profit or loss as incurred.
Expenditure on development activities, whereby research findings
are applied to a plan or design for the production of new or
substantially improved products and processes, is capitalised only
if the product or process is technically and commercially feasible
and the consolidated entity has sufficient resources to complete
development. Capitalised development expenditure is measured
at cost less accumulated amortisation and impairment losses.
date. Other intangible assets are amortised from the date they are
available for use. The estimated useful lives in the current and
comparative periods are as follows:
■■ designs
■■ patents
15 years
3-19 years (based on patent term)
■■ trade names
10-20 years
■■ capitalised software
development costs
■■ brand names
4 years
nil
(i) Trade and other receivables
Trade and other receivables are initially measured at fair value and
subsequently at their amortised cost less impairment losses.
(ii) Brand names
(j)
Inventories
Expenditure incurred in developing, maintaining or enhancing brand
names is written off against profit from ordinary activities in the year
in which it is incurred. The brand names are not amortised as the
directors believe that the brand names have an indefinite useful life.
The carrying value of brand names is reviewed each year to ensure
that no impairment exists.
(iii) Goodwill
Goodwill acquired in business combinations of the consolidated
entity are measured at cost less accumulated impairment losses.
Goodwill represents the excess of the cost of the acquisition over the
consolidated entity’s interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities of the acquired business.
(iv) Other intangible assets
Other intangible assets that are acquired by the consolidated
entity are measured at cost less accumulated amortisation and
impairment losses.
(v) Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is
capitalised only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other
expenditure is expensed as incurred.
(vi) Amortisation
Amortisation is recognised in profit or loss on a straight-line basis
over the estimated useful lives of intangible assets unless such
lives are indefinite. Intangible assets with an indefinite useful life
are systematically tested for impairment at each balance sheet
Inventories are measured at the lower of cost and net realisable
value. Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of completion
and selling expenses.
The cost of inventories is based on the first-in first-out principle
and includes expenditure incurred in acquiring the inventories,
production or conversion costs and other costs incurred in
bringing them to their existing location and condition. In the case
of manufactured inventories and work in progress, cost includes
an appropriate share of production overheads based on normal
operating capacity.
(k) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with an original maturity date of three months or less. Bank
overdrafts that are repayable on demand and form an integral part
of the consolidated entity’s cash management are included as a
component of cash and cash equivalents for the purpose of the
statement of cash flows.
(l)
Impairment
The carrying amounts of the consolidated entity’s assets, other
than inventories and deferred tax assets, are reviewed at each
balance sheet date to determine whether there is any indication of
impairment. If any such indication exists, the asset’s recoverable
amount is estimated.
For intangible assets that have an indefinite useful life, the
recoverable amount is estimated at each balance sheet date.
59
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
1. siGnifiCAnt ACCountinG PoliCies (cont.)
(ii) Reversals of impairment
(l)
Impairment (cont.)
An impairment loss is recognised whenever the carrying amount of
an asset or its cash-generating unit exceeds its recoverable amount.
Impairment losses are recognised in profit or loss, unless an asset
has previously been revalued, in which case the impairment loss is
recognised as a reversal to the extent of that previous revaluation
with any excess recognised through profit or loss.
Impairment losses recognised in respect of cash-generating units
are allocated first to reduce the carrying amount of any goodwill
allocated to cash-generating units (group of units) and then, to
reduce the carrying amount of the other assets in the unit (group of
units) on a pro rata basis.
(i) Calculation of recoverable amount
The recoverable amount of the consolidated entity’s receivables
carried at amortised cost is calculated as the present value of
estimated future cash flows, discounted at the original effective
interest rate (i.e. the effective interest rate computed at initial
recognition of these financial assets). Receivables with a short
duration are not discounted.
Impairment of receivables is not recognised until objective evidence
is available that a loss event has occurred. Significant receivables
are individually assessed for impairment. Impairment testing of
significant receivables that are not assessed as impaired individually
is performed by placing them into portfolios of significant receivables
with similar risk profiles and undertaking a collective assessment
of impairment. Non-significant receivables are not individually
assessed. Instead, impairment testing is performed by placing non-
significant receivables in portfolios of similar risk profiles, based on
objective evidence from historical experience adjusted for any effects
of conditions existing at each balance sheet date.
The recoverable amount of other assets is the greater of their fair
value less costs to sell and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset. For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for the cash-
generating unit to which the asset belongs.
Impairment losses are reversed when there is an indication that the
impairment loss may no longer exist and there has been a change in
the estimate used to determine the recoverable amount. An impairment
loss in respect of a receivable carried at amortised cost is reversed if the
subsequent increase in recoverable amount can be related objectively to
an event occurring after the impairment loss was recognised.
An impairment loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would
have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised. An impairment loss in respect
of goodwill is not reversed.
(m) Share capital
(i) Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares are recognised as a
deduction from equity, net of any tax effects.
(ii) Dividends
Dividends are recognised as a liability in the period in which they are
declared.
(iii) Transaction costs
Transaction costs of an equity transaction are accounted for as a
deduction from equity, net of any related income tax benefit.
(n) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value
less attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are measured at amortised cost with
any difference between cost and redemption value being recognised
in profit or loss over the period of the borrowings on an effective
interest basis.
(o) Employee benefits
(i) Defined contribution superannuation funds
A defined contribution superannuation fund is a post-employment
benefit plan under which an entity pays fixed contributions into a
separate entity and will have no legal or constructive obligation to pay
further amounts. Obligations for contributions to defined contribution
superannuation funds are recognised as an employee benefit
expense in profit or loss in the periods during which the services are
rendered by employees.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
1. siGnifiCAnt ACCountinG PoliCies (cont.)
(i) Warranties
(o) Employee benefits (cont.)
(ii) Other long-term employee benefits
The consolidated entity’s net obligation in respect of long-term
employee benefits is the amount of future benefit that employees
have earned in return for their service in the current and prior
periods. The obligation is calculated using expected future increases
in wage and salary rates including related on-costs and expected
settlement dates, and is discounted to present value.
(iii) Short-term benefits
Liabilities for employee benefits for wages, salaries, annual leave
and sick leave that are expected to be settled within 12 months
of the reporting date represent present obligations resulting from
employees’ services provided to reporting date, are calculated at
undiscounted amounts based on remuneration wage and salary
rates that the consolidated entity expects to pay as at reporting
date including related on-costs, such as workers compensation
insurance and payroll tax. Non-accumulating non-monetary benefits,
such as medical care, housing, cars and free or subsidised goods
and services, are expensed based on the net marginal cost to the
consolidated entity as the benefits are taken by the employees.
(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, such that the
amount ultimately recognised as an expense is based on the number
of awards that do not meet the related service and non-market
performance conditions at the vesting date. For share-based payment
awards with non-vesting conditions, the grant date fair value of the
share-based payment is measured to reflect such conditions and there
is no true-up for differences between expected and actual outcomes.
(p) Provisions
A provision is recognised 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.
A provision for warranties is recognised when the underlying
products or services are sold. The provision is based on historical
warranty data and a weighting of all possible outcomes against their
associated probabilities.
(ii) Restructuring
A provision for restructuring is recognised when the consolidated
entity has approved a detailed and formal restructuring plan, and
the restructuring has either commenced or has been announced
publicly. Future operating costs are not provided for.
(iii) Site restoration
A provision for restoration in respect of leased premises is
recognised when the obligation to restore arises. The provision is
the best estimate of the present value of the expenditure required
to settle the restoration obligation at the reporting date. Future
restoration obligations are reviewed annually and any changes are
reflected in the present value of the provision at the end of the
reporting period. The unwinding of the effect of discounting on the
provision is recognised as a finance cost.
(q) Trade and other payables
Trade and other payables are initially measured at fair value and
subsequently at their amortised cost.
(r) Revenue
Goods sold
Revenue from the sale of goods is measured at the fair value of
the consideration received or receivable, net of returns, discounts
and rebates. Revenue is recognised when the significant risks and
rewards of ownership have been transferred to the buyer, recovery
of the consideration is probable, the associated costs and possible
return of goods can be estimated reliably, there is no continuing
management involvement with the goods and the amount of revenue
can be measured reliably.
(s) Expenses
(i) Operating lease payments
Payments made under operating leases are recognised in profit
or loss on a straight-line basis over the term of the lease. Lease
incentives received are recognised as an integral part of the total
lease expense and spread over the lease term.
61
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
1. siGnifiCAnt ACCountinG PoliCies (cont.)
Tax consolidation
(s) Expenses (cont.)
(ii) Net financing costs
Net financing costs comprise interest payable on borrowings
calculated using the effective interest method, interest receivable on
funds invested and gains and losses on hedging instruments that are
recognised in profit or loss. Borrowing costs are expensed as incurred
and included in net financing costs. Interest income is recognised in
profit or loss as it accrues, using the effective interest method.
(t)
Income tax
Income tax expense on the profit or loss for the year comprises
current and deferred tax. Income tax expense is recognised in profit
or loss except to the extent that it relates to items recognised directly
in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for
the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of
previous years.
Deferred tax is recognised using the balance sheet liability method,
providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The following temporary differences
are not provided for: the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit and differences relating
to investments in subsidiaries to the extent that they will probably not
reverse in the foreseeable future. The amount of deferred tax provided
is based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets and they
relate to income taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax assets and
liabilities will be realised simultaneously.
The Company and its wholly-owned Australian resident entities have
formed a tax-consolidated group with effect from 1 July 2003 and
are therefore taxed as a single entity from that date. The head entity
within the tax-consolidated group is GWA International Limited.
Current tax expense/income, deferred tax liabilities and deferred
tax assets arising from temporary differences of the members of
the tax-consolidated group are recognised in the separate financial
statements of the members of the tax-consolidated group using
the ‘separate taxpayer within group’ approach by reference to the
carrying amounts of assets and liabilities in the separate financial
statements of each entity and the tax values applying under tax
consolidation.
Any current tax liabilities (or assets) are assumed by the head
entity in the tax-consolidated group and are recognised as amounts
payable (receivable) to (from) other entities in the tax-consolidated
group in conjunction with any tax funding arrangement amounts
(refer below). Any difference between these amounts is recognised
by the Company as an equity contribution or distribution.
Nature of tax funding arrangements and tax sharing arrangements
The members of the tax-consolidated group have entered into a
tax funding arrangement and a tax sharing agreement with the
head entity. Under the terms of the tax funding arrangement GWA
International Limited and each of the entities in the tax consolidated
group recognise inter-entity receivables (payables) equal in amount
to the tax liability (asset) assumed by the head entity.
(u) Goods and services tax
Revenue, expenses and assets are recognised net of the amount
of goods and services tax (GST), except where the amount of
GST incurred is not recoverable from the taxation authority. In
these circumstances, the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the ATO is
included as a current asset or liability in the balance sheet.
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.
Cash flows are included in the statement of cash flows on a gross
basis. The GST components of cash flows arising from investing and
financing activities which are recoverable from, or payable to, the
ATO are classified as operating cash flows.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
1. siGnifiCAnt ACCountinG PoliCies (cont.)
(v) Earnings per share
The consolidated entity presents basic and diluted earnings per
share (EPS) data for its ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders of the
Company by the weighted average number of ordinary
shares outstanding during the period. Diluted EPS is determined by
adjusting the profit or loss attributable to ordinary shareholders and
the weighted average number of ordinary shares outstanding for the
effects of all dilutive potential ordinary shares.
(w) Discontinued operations
A discontinued operation is a component of the consolidated entity’s
business that represents a separate line of business operations
that has been disposed of or is held for sale. Classification as a
discontinued operation occurs upon disposal or when the operation
meets the criteria to be classified as held for sale if earlier. When an
operation is classified as a discontinued operation, the comparative
statement of comprehensive income is re-presented as if the
operation had been discontinued from the start of the period.
(x) Changes in accounting policy
(i) Operating segments
As of 1 July 2009, the consolidated entity determines and presents
operating segments based on the information that internally is
provided to the CEO, who is the consolidated entity’s chief operating
decision maker. This change in accounting policy is due to the
adoption of AASB 8 Operating Segments. Operating segments were
previously determined and presented in accordance with AASB114
Segment Reporting. The new accounting policy in respect of
segment operating disclosures is presented below.
An operating segment is a component of the consolidated entity
that engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate to
transactions with any of the consolidated entity’s other components.
All operating segments’ operating results are regularly reviewed by
the consolidated entity’s CEO to make decisions about resources
to be allocated to the segment and assess its performance, and for
which discrete financial information is available.
Segment results that are reported to the CEO include items directly
attributable to a segment as well as those that can be allocated on
a reasonable basis. Unallocated items mainly comprise corporate
expenses, net interest, borrowings, cash, corporate assets, fair
value derivatives and income tax assets and liabilities. Segment capital
expenditure is the total cost incurred during the period to acquire
property, plant and equipment and intangible assets other than goodwill.
Comparative segment information has been re-presented so it is in
conformity with the new standard.
(ii) Business combinations
The consolidated entity is applying revised AASB 3 Business
Combinations (2008) and amended AASB 127 Consolidated and
Separate Financial Statements (2008) for the first time. All business
combinations occurring on or after 1 July 2009 will be accounted for
by applying the acquisition method. Refer note 1(c)(iii).
(iii) Presentation of financial statements
The consolidated entity is applying revised AASB101 Presentation
of Financial Statements (2007) for the first time. As a result, the
consolidated entity presents all owner changes in equity in a
consolidated statement of changes in equity and all non-owner
changes in equity in a consolidated statement of comprehensive
income. Comparative information has been re-presented so it is in
conformity with the revised standard. The change in accounting
policy is applied prospectively and had no material impact on
earnings per share.
(y) New standards and interpretations not yet adopted
The following standards, amendments to standards and
interpretations have been identified as those which may impact the
entity in the period of initial application. They are available for early
adoption at 30 June 2010, but have not been applied in preparing
this financial report:
■■ AASB 9 Financial Instruments includes requirements for the
classification and measurement of financial assets resulting
from the first part of Phase 1 of the project to replace AASB 139
Financial Instruments: Recognition and Measurement. AASB
9 will become mandatory for the consolidated entity’s 30 June
2014 financial statements. Retrospective application is generally
required, although there are exceptions, particularly if the entity
adopts the standard for the year ended 30 June 2012 or earlier.
The consolidated entity has not yet determined the potential
effect of the standard.
63
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
2. oPerAtinG seGments
The consolidated entity has three reportable segments, as described below. The segments are managed separately because they operate in
different markets and require different marketing strategies. For each segment the CEO reviews internal management reports on a monthly
basis. The following describes the operations in each of the consolidated entity’s reportable segments:
■■ Building Fittings – This segment includes the sale of vitreous china toilets, hand basins, plastic cisterns, tapware, baths, spas, kitchen
sinks, laundry tubs, bathroom accessories, door handles and door access systems primarily to the Australian and New Zealand markets.
These products are all fixtures and fittings in the construction of buildings, and they are also installed at the same stage in construction of
buildings or used in the home renovation market.
■■ Heating and Cooling – This segment includes the sale of heating and cooling products primarily to the Australian market.
■■ Commercial Furniture – This segment includes the sale of education and hospitality furniture and stadia seating.
■■ Discontinued Operations – This segment included the sale of lawn mowers and the sale of sanitaryware in the European market.
Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit
before interest and income tax as included in the management reports that are reviewed by the CEO. Segment profit is used to measure
performance as management believes that such information is the most relevant in evaluating the results of the segments relative to other
entities that operate in these industries.
Comparative segment information has been presented in conformity with the requirements of AASB8 Operating Segments.
Building Fittings
Heating and
Cooling
Commercial
Furniture
Discontinued
Operations
Total
In thousands of AUD
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
External sales revenue
420,031
403,658
161,495
153,288
74,823
56,088
44,029
65,422 700,378
678,456
Inter-segment revenue
-
-
-
-
16
32
-
-
16
32
Total sales revenue
420,031
403,658
161,495
153,288
74,839
56,120
44,029
65,422
700,394
678,488
Segment result before
restructuring
88,830
81,822
14,607
15,161
5,724
2,033
452
602
109,613
99,618
Restructuring expenses
-
(3,447)
-
-
-
-
-
(649)
-
(4,096)
Reportable segment profit/
(loss) before income tax
Depreciation
Amortisation
88,830
78,375
14,607
15,161
5,724
2,033
452
(47)
109,613
95,522
(9,455)
(11,110)
(2,135)
(2,549)
(1,056)
(1,248)
(626)
(1,177)
(13,272)
(16,084)
Capital expenditure
9,389
11,662
(4,048)
(806)
(437)
3,566
(275)
1,873
-
-
1,207
2,332
-
634
-
(4,485)
(1,081)
979
14,796
16,846
Reportable segment assets
524,871
530,328
123,001
87,570
44,659
33,703
Reportable segment
liabilities
52,774
61,013
39,657
48,187
13,066
7,449
-
-
34,629
692,531
686,230
7,476
105,497
124,125
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
2. oPerAtinG seGments (cont.)
Reconciliations of reportable segment revenues, profit or loss, assets and liabilities
In thousands of AUD
Revenues
Total revenue for reportable segments
Unallocated amounts: corporate revenue
Elimination of inter-segment revenue
Elimination of discontinued operations
Consolidated revenue
Profit
Total profit for reportable segments
Elimination of discontinued operations
Unallocated amounts: corporate expenses
Profit from operating activities
Net financing costs
Consolidated profit before tax
Assets
Total assets for reportable segments
Unallocated amounts: corporate assets*
Consolidated total assets
Liabilities
Total liabilities for reportable segments
Unallocated amounts: corporate liabilities*
Consolidated total liabilities
2010
2009
700,394
678,488
460
(16)
(44,029)
656,809
109,613
(452)
(14,613)
94,548
(15,027)
79,521
692,531
119,899
812,430
105,497
275,844
381,341
-
(32)
(65,422)
613,034
95,522
47
(12,663)
82,906
(13,844)
69,062
686,230
96,223
782,453
124,125
232,164
356,289
* Corporate assets include cash and cash equivalents, tax assets, employee share loans and treasury financial instruments at fair value. Corporate liabilities include loans and
borrowings, tax liabilities and treasury financial instruments at fair value.
65
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
2. oPerAtinG seGments (cont.)
Reconciliations of other material items
In thousands of AUD
Depreciation
Total depreciation for reportable segments
Unallocated amounts: depreciation on corporate assets
Consolidated total depreciation
Amortisation
Total amortisation for reportable segments
Unallocated amounts: amortisation on corporate assets
Consolidated total amortisation
Capital expenditure
Total capital expenditure for reportable segments
Unallocated amounts: corporate capital expenditure
Consolidated total capital expenditure
Geographical segments
2010
2009
13,272
391
13,663
4,485
29
4,514
14,796
302
15,098
16,084
705
16,789
1,081
235
1,316
16,846
502
17,348
The business segments are managed on a worldwide basis, but operate mainly in one geographical area being Australia. Sales offices are
operated in New Zealand, Asia, United States and the United Kingdom, however the sales revenue from these geographical areas comprise
only 8% of the consolidated entity’s total sales revenue for the current year (2009: 9%).
In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers.
Segment assets are based on the geographical location of the assets.
In thousands of AUD
External sales revenue
Segment assets
Capital expenditure
Major customers
Australia
Unallocated
Consolidated
2010
2009
604,056
555,363
794,755
737,836
2010
52,753
17,675
2009
2010
2009
57,671
656,809
613,034
44,617
812,430
782,453
15,046
15,759
59
1,589
15,098
17,348
The consolidated entity conducts business with 2 customers where the gross revenue generated from each customer exceeds 10%
of the consolidated entity’s total gross revenue. Gross revenue from the first customer represents approximately $111,000,000
(2009: $127,000,000) and gross revenue from the second customer represents approximately $108,000,000 (2009: $114,000,000) of the
consolidated entity’s total gross revenues for the current year of approximately $742,000,000 (2009: $693,000,000). The difference between
gross revenue and reported sales revenue is due to industry rebates. The revenues from both customers are reported in the Building Fittings
segment and the Heating and Cooling segment.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
3. DisContinueD oPerAtions
During the financial year, the lawn mower business, Rover, was sold with an effective date of 1 April 2010. The European sanitaryware
business, Wisa, was also sold, with an effective date 28 February 2010. The operating activities of both businesses were not discontinuing
operations or classified as held for sale as at 30 June 2009. The comparative statement of comprehensive income has been re-presented
to show the discontinued operations separately from continuing operations.
In thousands of AUD
Results of discontinued operations
Revenue
Expenses
Results from operating activities
Income tax
Results from operating activities, net of income tax
Loss on sale of the discontinued operations
Income tax benefit on loss on sale of discontinued operations
Profit/(loss) for the period
Basic profit/(loss) per share (cents per share)
Diluted profit/(loss) per share (cents per share)
In thousands of AUD
Cash flows from discontinued operations
Net cash from/(used in) operating activities
Net cash used in investing activities
Net cash from disposal
Net cash used in financing activities
Net cash from discontinued operations
2010
2009
44,029
(43,577)
65,422
(65,469)
452
28
480
(7,672)
266
(6,926)
(2.31)
(2.30)
2010
(4,457)
(592)
19,712
-
14,663
(47)
210
163
-
-
163
0.06
0.06
2009
5,550
(642)
-
-
4,908
67
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
3. DisContinueD oPerAtions (cont.)
In thousands of AUD
Total
Wisa
Rover
Effect of disposals on the financial position of the consolidated entity
Trade and other receivables
Inventories
Property, plant and equipment
Other current assets
Trade and other payables
Income tax receivable
Provisions
Employee benefits
Interest bearing loans and borrowings
Deferred tax assets
Intangible assets
Net assets and liabilities
Foreign currency translation reserve
Consideration proceeds
Consideration owing
Net cash inflow
4. 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
Other
5. other exPenses
In thousands of AUD
Foreign currency losses - realised
Foreign currency losses - unrealised
Net loss on disposal of property, plant and equipment and intangible assets
Acquisition costs
Restructuring expenses
GWA internAtionAl limiteD 2010 ANNUAL REPORT
(3,341)
(13,531)
(3,384)
(428)
2,160
(72)
(678)
1,868
4,465
(172)
(12,617)
(25,730)
(3,930)
(29,660)
21,988
(2,276)
19,712
(3,341)
(4,387)
(2,713)
(338)
2,188
(72)
-
1,218
4,465
-
(12,617)
(15,597)
(3,930)
(19,527)
14,675
-
14,675
2010
1,042
152
-
1,205
2,399
2010
1,902
456
170
1,524
-
4,052
-
(9,144)
(671)
(90)
(28)
-
(678)
650
-
(172)
-
(10,133)
-
(10,133)
7,313
(2,276)
5,037
2009
1,148
1,913
89
885
4,035
2009
586
743
43
414
3,447
5,233
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
6. 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
7. AuDitors’ remunerAtion
In AUD
Audit services
Auditors of the Company
KPMG Australia:
Audit and review of financial reports
Overseas KPMG Firms:
Audit and review of financial reports
Other services
Auditors of the Company
KPMG Australia
Other assurance services
Taxation services
Overseas KPMG Firms:
Other assurance services
Taxation services
8. net finAnCinG Costs
In thousands of AUD
Finance income
Finance expense
Net financing costs
9. restruCturinG exPenses
In thousands of AUD
Restructuring expenses
Tax benefit
Net restructuring expense after tax
2010
2009
139,605
1,230
140,835
130,483
650
131,133
2010
2009
480,000
398,000
15,000
495,000
85,000
483,000
30,000
17,000
21,000
83,000
151,000
2009
(2,866)
16,710
13,844
2009
3,447
(1,034)
2,413
53,000
17,000
38,000
109,000
217,000
2010
(1,905)
16,932
15,027
2010
-
-
-
69
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
10. inCome tAx exPense
Recognised in the income statement
In thousands of AUD
Current tax expense
Current year
Adjustments for prior years
Deferred tax expense
Origination and reversal of temporary differences
2010
2009
21,939
65
22,004
20,701
32
20,733
2,064
167
Income tax expense from continuing operations
24,068
20,900
Income tax benefit from discontinued operation (excluding loss on sale)
Income tax benefit on loss on sale of discontinued operation
Total income tax expense in income statement
Numerical reconciliation between tax expense and pre-tax net profit
In thousands of AUD
Profit before tax
Income tax using the domestic tax rate of 30% (2009: 30%)
Increase in income tax expense due to:
Non-deductible expenses
Non-deductible acquisition and disposal costs
Non-deductible share-based payments
Non-rebateable withholding tax on foreign dividends
Non-deductible capital losses
Decrease in income tax expense due to:
Effect of tax rate in foreign jurisdictions
Non-assessable income
Rebateable investment allowance
Rebateable research and development
Under provided in prior years
Income tax expense on pre-tax net profit
Deferred tax recognised directly in equity
In thousands of AUD
Derivatives
GWA internAtionAl limiteD 2010 ANNUAL REPORT
(28)
(266)
23,774
2010
72,301
21,690
94
535
369
580
821
(51)
-
(155)
(174)
23,709
65
23,774
(210)
-
20,690
2009
69,015
20,705
79
-
195
-
338
(48)
(306)
(86)
(219)
20,658
32
20,690
2010
694
2009
(324)
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
11. eArninGs Per shAre
Basic earnings per share
Calculation of basic earnings per share at 30 June 2010 was based on the profit attributable to ordinary shareholders of $48,527,000
(2009: $48,325,000) and a weighted average number of ordinary shares of 300,010,000 (2009: 285,498,000) calculated as follows:
Cents per share
Profit attributable to ordinary shareholders
In thousands of AUD
Continuing operations
Discontinued operations
Profit for the year
Weighted average number of ordinary shares
In thousands of shares
Issued ordinary shares at 1 July
Effect of shares issued
Weighted average number of ordinary shares at 30 June
2010
16.18
2009
16.93
2010
55,453
(6,926)
48,527
2010
298,019
1,991
300,010
2009
48,162
163
48,325
2009
280,173
5,325
285,498
Diluted earnings per share
Calculation of diluted earnings per share at 30 June 2010 was based on the profit attributable to ordinary shareholders of $48,527,000
(2009: $48,325,000) and a weighted average number of ordinary shares of 301,469,000 (2009: 285,899,000) calculated as follows:
Cents per share
Profit attributable to ordinary shareholders (diluted)
In thousands of AUD
Continuing operations
Discontinued operations
Profit for the year
Weighted average number of ordinary shares (diluted)
In thousands of shares
Weighted average number of ordinary shares (basic)
Effect of performance rights on issue
Weighted average number of ordinary shares (diluted)
2010
16.10
2009
16.90
2010
55,453
(6,926)
48,527
2010
300,010
1,459
301,469
2009
48,162
163
48,325
2009
285,498
401
285,899
71
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
12. CAsh AnD CAsh equivAlents
In thousands of AUD
Bank balances
Call deposits
Cash and cash equivalents in the statement of cash flows
2010
22,913
32,001
54,914
2009
22,011
23,004
45,015
The consolidated entity’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 26.
13. trADe AnD other reCeivABles
In thousands of AUD
Current
Trade receivables
Provision for impairment
Derivatives used for hedging
Employee share loans
Other
Non-current
Derivatives used for hedging
Employee share loans
Other
2010
2009
107,764
(4,751)
37,434
566
7,556
148,569
-
5,102
-
5,102
108,282
(2,028)
23,943
661
4,181
135,039
6,318
5,859
8
12,185
The consolidated entity’s exposure to credit and currency risk and impairment losses related to trade and other receivables are disclosed in
note 26.
14. inventories
In thousands of AUD
Raw materials and consumables
Work in progress
Finished goods
2010
21,757
6,170
76,508
2009
17,818
7,518
86,335
104,435
111,671
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
15. ACquisitions of suBsiDiAries
Business combinations
On 1 April 2010 the consolidated entity acquired the assets and liabilities of the Brivis heating and cooling business for $48,579,000.
In the three months to 30 June 2010 the business contributed profit before tax of $2,805,000. If the acquisition had occurred on
1 July 2009, management estimates that consolidated revenue of continuing operations for the period would have been $708,045,000
and consolidated profit before tax of continuing operations would have been $84,500,000. In determining those amounts, management
has assumed that the fair values on the date of acquisition would have been the same if the acquisition occurred on 1 July 2009.
In the prior year, the consolidated entity acquired 100% of the shares in Austral Lock Pty Ltd for $12,419,000. 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. As a result, the fair
value of the plant and equipment was impacted and accordingly an adjustment to the prior period acquisition accounting was made as
follows: property, plant and equipment decreased by $354,000; goodwill increased by $354,000. Comparative information has been restated.
The acquisitions had the following effect on the consolidated entity’s assets and liabilities on the respective acquisition dates:
Amounts recognised on acquisition
In thousands of AUD
Trade and other receivables
Inventories
Other current assets
Property, plant and equipment
Intangible assets
Trade and other payables
Employee benefits
Provisions
Deferred tax liabilities
Net identifiable assets and liabilities
Goodwill on acquisition
Consideration paid, satisfied in cash
Brivis
2010
8,126
6,588
69
14,075
11,053
(4,975)
(2,518)
(3,600)
(1,204)
27,614
20,965
48,579
Austral Lock
Pty Ltd
2009
2,078
2,899
-
3,547
3,177
(278)
(390)
-
(63)
10,970
1,449
12,419
The goodwill recognised on the acquisitions 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 business into the consolidated entity’s existing businesses.
16. Current tAx Assets AnD liABilities
The current tax asset for the consolidated entity of $420,000 (2009: $980,000) represents the amount of income taxes recoverable in
respect of current and prior periods. The current tax liability for the consolidated entity of $4,543,000 (2009: $7,207,000) 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.
73
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
17. DeferreD tAx Assets AnD liABilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
In thousands of AUD
Property, plant and equipment
Intangible assets
Inventories
Employee benefits
Provisions
Other items
Tax assets / (liabilities)
Set off of tax
Net tax assets / (liabilities)
Assets
Liabilities
Net
2010
806
284
2,587
7,990
10,930
883
23,480
(4,694)
18,786
2009
841
2010
(418)
-
(3,710)
2,624
7,297
10,607
2,603
23,972
(1,011)
22,961
-
-
-
(597)
(4,725)
4,694
(31)
2009
(218)
(343)
-
-
-
(472)
(1,033)
1,011
(22)
2010
388
(3,426)
2,587
7,990
10,930
286
18,755
-
2009
623
(343)
2,624
7,297
10,607
2,131
22,939
-
18,755
22,939
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
In thousands of AUD
Tax losses
2010
4,125
2009
451
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.
Movement in temporary differences during the year
In thousands of AUD
Property, plant and equipment
Intangible assets
Inventories
Employee benefits
Provisions
Other items
In thousands of AUD
Property, plant and equipment
Intangible assets
Inventories
Employee benefits
Provisions
Other items
Balance
1 July 08
Recognised in
income
Recognised in
equity
Acquired
in business
combinations
Disposals
30 June 09
Balance
636
(205)
3,583
7,879
8,096
2,856
22,845
(13)
42
(959)
(699)
2,511
(1,049)
(167)
-
-
-
-
-
324
324
-
(180)
-
117
-
-
(63)
-
-
-
-
-
-
-
623
(343)
2,624
7,297
10,607
2,131
22,939
Balance
1 July 09
Recognised
in income
Recognised
in equity
Acquired
in business
combinations
Disposals
30 June 10
Balance
623
(343)
2,624
7,297
10,607
2,131
22,939
(235)
233
(313)
110
(758)
(1,151)
(2,114)
-
-
-
-
-
(694)
(694)
-
(3,316)
276
755
1,081
-
-
-
-
(172)
-
-
(1,204)
(172)
388
(3,426)
2,587
7,990
10,930
286
18,755
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
Land and
buildings
Plant and
equipment
Motor
vehicles
Work in
progress
18. ProPertY, PlAnt AnD equiPment
In thousands of AUD
Cost
Balance at 1 July 2008
Acquisitions through business combinations
Additions
Transfers
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2009
Balance at 1 July 2009
Acquisitions through business combinations
Additions
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2010
Depreciation and impairment losses
Balance at 1 July 2008
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2009
Balance at 1 July 2009
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
50,314
188,767
-
122
-
-
234
50,670
50,670
10,000
186
(3,746)
(521)
56,589
(7,546)
(1,039)
-
(171)
(8,756)
(8,756)
(935)
2,985
403
3,547
6,629
740
(18,002)
1,724
183,405
183,405
4,075
9,446
(34,558)
(3,750)
158,618
(138,369)
(13,826)
18,104
(1,460)
(135,551)
(135,551)
(12,383)
31,783
3,359
Balance at 30 June 2010
(6,303)
(112,792)
Carrying amounts
At 1 July 2008
At 30 June 2009
At 1 July 2009
At 30 June 2010
Impairment losses
42,768
41,914
41,914
50,286
50,398
47,854
47,854
45,826
12,424
-
2,664
-
(9,934)
39
5,193
5,193
-
-
(4,040)
(22)
1,131
(5,924)
(1,924)
4,054
(8)
(3,802)
(3,802)
(345)
3,287
2
(858)
6,500
1,391
1,391
273
There were no impairment losses to property, plant and equipment during the 2010 financial year (2009: nil).
Total
258,146
3,547
10,514
-
(27,936)
2,053
246,324
246,324
14,075
10,614
(42,344)
(4,385)
224,284
(151,839)
(16,789)
22,158
(1,639)
(148,109)
(148,109)
(13,663)
38,055
3,764
(119,953)
106,307
98,215
98,215
104,331
6,641
-
1,099
(740)
-
56
7,056
7,056
-
982
-
(92)
7,946
-
-
-
-
-
-
-
-
-
-
6,641
7,056
7,056
7,946
75
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
19. intAnGiBle Assets
In thousands of AUD
Cost
Balance at 1 July 2008
Acquisitions through business combinations
Additions
Disposals
Effect of movements in foreign exchange
Software
Brand names
Trade names,
designs and
patents
9,296
-
6,834
(291)
-
340,965
-
-
-
631
-
3,177
-
-
-
Goodwill
Total
-
1,449
-
-
-
350,261
4,626
6,834
(291)
631
Balance at 30 June 2009
15,839
341,596
3,177
1,449
362,061
Balance at 1 July 2009
15,839
341,596
Acquisitions through business combinations
Additions
Disposals
Balance at 30 June 2010
Amortisation and impairment losses
Balance at 1 July 2008
Amortisation for the year
Disposals
Balance at 30 June 2009
Balance at 1 July 2009
Amortisation for the year
Disposals
Balance at 30 June 2010
Carrying amounts
At 1 July 2008
At 30 June 2009
At 1 July 2009
At 30 June 2010
Impairment losses
-
4,484
(1,660)
18,663
(1,782)
(1,166)
248
(2,700)
(2,700)
(4,077)
90
(6,687)
7,514
13,139
13,139
11,976
-
-
(20,465)
321,131
(9,419)
-
-
(9,419)
(9,419)
-
9,419
-
331,546
332,177
332,177
321,131
3,177
11,053
-
-
1,449
20,965
-
-
14,230
22,414
-
(150)
-
(150)
(150)
(437)
-
(587)
-
3,027
3,027
13,643
-
-
-
-
-
-
-
-
-
1,449
1,449
22,414
362,061
32,018
4,484
(22,125)
376,438
(11,201)
(1,316)
248
(12,269)
(12,269)
(4,514)
9,509
(7,274)
339,060
349,792
349,792
369,164
There were no impairment losses to intangible assets during the 2010 financial year (2009: nil).
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
19. intAnGiBle Assets (cont.)
Carrying value of brand names and goodwill for each cash generating unit
In thousands of AUD
Building Fittings
Heating and Cooling
Commercial Furniture
Discontinued Operations
2010
304,180
26,965
12,400
-
343,545
2009
304,180
6,000
12,400
11,046
333,626
Impairment testing for brand names and goodwill
The recoverable amounts of all brand names and goodwill were assessed at 30 June 2010 based on internal value in use calculations and
no impairment was identified for any segments (2009: nil for all segments).
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 or goodwill 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 9.97% 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 Fittings, Heating
and Cooling 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 as follows: Building Fittings
$91,400,000, Heating and Cooling $6,600,000, Commercial Furniture $4,500,000. No impairment losses would be realised for any
segment as a result of this change.
■■ A 10 percent decrease in future planned revenues would have decreased value as follows: Building Fittings $68,400,000, Heating
and Cooling $3,000,000, Commercial Furniture $2,400,000. No impairment losses would be realised for any segment as a result
of this change.
20. trADe AnD other PAYABles
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
2010
2009
53,471
35,923
5,912
95,306
-
-
60,583
25,477
3,171
89,231
5,585
5,585
The consolidated entity’s exposure to currency risk and liquidity risk related to trade and other payables are disclosed in note 26.
77
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
21. interest-BeArinG loAns AnD BorroWinGs
This note provides information about the contractual terms of the consolidated entity’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
Terms and debt repayment schedule
In thousands of AUD
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
Unsecured bank loan
2010
230,866
2009
200,000
Currency
Year of
maturity
2010
Face value
AUD
AUD
AUD
AUD
AUD
USD
2012
2011
2012
2013
2012
2012
60,000
35,000
70,000
50,000
10,000
5,866
2010
Carrying
amount
60,000
35,000
70,000
50,000
10,000
5,866
2009
Face value
60,000
-
90,000
50,000
-
-
2009
Carrying
amount
60,000
-
90,000
50,000
-
-
230,866
230,866
200,000
200,000
The unsecured bank loans mature over the next 2 financial years and have variable rates ranging from 4.38% - 7.73% at 30 June 2010
(2009: 5.01% - 5.26%).
Financing facilities
In thousands of AUD
Bank overdraft
Standby letters of credit
Unsecured bank facility
Facilities utilised at reporting date
In thousands of AUD
Bank overdraft
Standby letters of credit
Unsecured bank facility
Facilities not utilised at reporting date
In thousands of AUD
Bank overdraft
Standby letters of credit
Unsecured bank facility
GWA internAtionAl limiteD 2010 ANNUAL REPORT
2010
1,000
8,000
267,500
276,500
2010
-
391
230,866
231,257
2010
1,000
7,609
36,634
45,243
2009
6,000
8,000
247,500
261,500
2009
-
1,530
200,000
201,530
2009
6,000
6,470
47,500
59,970
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
21. interest-BeArinG loAns AnD BorroWinGs (cont.)
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; and
(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 2010.
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
In thousands of AUD
Current
Liability for long-service leave
Liability for annual leave
Liability for on-costs
Non-current
Liability for long-service leave
Liability for on-costs
2010
2009
1,990
9,501
2,876
14,367
11,276
975
12,251
1,778
9,943
2,470
14,191
10,073
1,264
11,337
Defined contribution superannuation funds
The consolidated entity makes contributions to a defined contribution superannuation fund. Contributions are charged against income as
they are made based on various percentages of each employee’s gross salaries. The amount recognised as expense was $9,924,000 for the
financial year ended 30 June 2010 (2009: $9,212,000).
79
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
22. emPloYee Benefits (cont.)
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 2010, 435,000 ordinary shares were issued to employees at the market price of $3.40, being total market value of $1,479,000.
In the prior year, 442,500 ordinary shares were issued to employees at the market price of $1.90, being total market value of $840,750.
As at 30 June 2010, loans are issued for 3,904,489 (2009: 3,933,750) shares and the remaining balances of these loans is $9,486,000
(2009: $9,962,000) or $5,668,000 (2009: $6,520,000) at net present value. During 2010, dividends of $680,000 (2009: $630,000) were
paid against the loans and a further $1,275,000 (2009: $691,000) 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.
Tranche
Grant date
Expiry date
Balance
at beginning
of the year
Issued during
the year
Cancelled
during the year
Balance at end
of the year
Number
Number
Number
Number
2010
(i)
(ii)
2009
(i)
27/02/2009
12/03/2010
30/06/2011
30/06/2012
1,185,000
-
1,185,000
-
175,000
900,000
900,000
-
175,000
1,010,000
900,000
1,910,000
27/02/2009
30/06/2011
-
1,185,000
-
1,185,000
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
23. shAre-BAseD PAYments (cont.)
Fair value
During the current financial year 900,000 performance rights were granted to employees (2009: 1,185,000) at a weighted average fair value
of $2.58 (2009: $1.65). The fair value of the performance rights subject to the EPS hurdle for vesting (50%) was determined as $2.95 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 $2.20 by using a Monte Carlo simulation. When determining the fair values it was assumed the Company would have a
dividend yield of 5.88%, the risk free rate was 5.12% 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 $1,230,000 (2009: $650,000). Refer to the Remuneration
Report for further details.
24. Provisions
In thousands of AUD
Balance at 1 July 2009
Acquisitions through business combinations
Provisions made during the year
Provisions used during the year
Effect of movements in foreign exchange
Balance at 30 June 2010
Current
Non-current
Warranties
Warranties
Restructuring
Site
restoration
12,093
3,394
10,576
(10,369)
(9)
15,685
8,685
7,000
15,685
5,722
5,949
-
-
(4,246)
-
1,476
1,476
-
1,476
-
-
(2,194)
-
3,755
2,365
1,390
3,755
Other
4,952
206
1,361
Total
28,716
3,600
11,937
(3,458)
(20,267)
-
3,061
2,589
472
3,061
(9)
23,977
15,115
8,862
23,977
The total provision for warranties at balance date of $15,685,000 relates to future warranty expense on products sold during the current
and previous financial years. The major warranty expense relates to water heating products. The provision is based on estimates made from
historical warranty data associated with similar products and services. The consolidated entity expects to expend $8,685,000 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
The restructuring provision relates to the estimated costs of redundancies and related costs with respect to the closure of manufacturing
operations and other business restructuring. During the financial year ended 30 June 2010, a majority of the restructuring was completed
with $4,246,000 being spent. At balance date the balance of the restructuring provision was $1,476,000. The restructuring is expected to be
completed and finalised by the end of the next financial year.
Site restoration
At balance date the balance of the site restoration provision was $3,755,000. Payments of $2,194,000 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 remediation is currently being undertaken and
is expected to be completed by June 2011. The remaining balance classified as non-current will be utilised when leased sites are exited. The
net present value of the provision has been calculated using a discount rate of 6.65 per cent.
81
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
25. CAPitAl AnD reserves
Share capital
In thousands
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
Ordinary shares
AUD
2010
298,019
2,649
435
301,103
2009
280,173
17,403
443
298,019
2010
387,981
7,079
1,479
396,539
2009
353,938
33,202
841
387,981
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 the cumulative net charges of the performance rights.
Dividends
Dividends recognised in the current year by the consolidated entity and the Company are:
In thousands of AUD
2010
Interim 2010 ordinary
Final 2009 ordinary
Total amount
2009
Interim 2009 ordinary
Final 2008 ordinary
Total amount
Cents per share
Total amount
Franked
Date of
payment
9.5
8.5
18.0
9.5
8.0
17.5
28,563
25,332
53,895
26,831
22,414
49,245
100%
100%
7th April 2010
7th Oct 2009
100%
100%
1st April 2009
7th Oct 2008
Franked dividends declared or paid during the year were franked at the tax rate of 30%.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
25. CAPitAl AnD reserves (cont.)
Dividends (cont.)
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
8.5
25,594
Franked
100%
Date of
payment
6th Oct 2010
The financial effect of these dividends has not been brought to account in the financial statements for the financial year ended 30 June 2010
and will be recognised in subsequent financial reports.
Dividend franking account
In thousands of AUD
30 per cent franking credits available to shareholders of
GWA International Limited for subsequent financial years
2010
2009
17,848
21,251
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 $10,969,000
(2009: $10,857,000). In accordance with the tax consolidation legislation, the Company as the head entity in the tax-consolidated group has
also assumed the benefit of $17,848,000 (2009: $21,251,000) franking credits.
83
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
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, 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 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. The Board Audit Committee
is assisted in its oversight role by the Internal Audit team. The Internal Audit team conducts both regular and ad hoc reviews of risk
management controls and procedures. The results of the reviews are reported to the Board Audit Committee.
Capital management policy
The Board’s policy is to maintain a strong capital base and grow shareholder wealth. The Board monitors debt levels, cash flows and financial
forecasts to establish appropriate levels of dividends and funds available to reinvest in the businesses or invest in growth opportunities.
The Board focuses on growing shareholder wealth by monitoring the performance of the consolidated entity by reference to the return on
funds employed. The Board defines return on funds employed as trading earnings before interest and tax divided by net assets after adding
back net debt.
There were no changes to the Boards approach to capital management during the year.
Credit risk
Credit risk is the risk of financial loss to the consolidated entity 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 33% of the trade receivables carrying amount at 30 June 2010
(2009: 42%). At the balance sheet date there were no material uninsured concentrations of credit risk.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
26. finAnCiAl instruments AnD finAnCiAl risk mAnAGement (cont.)
Credit risk (cont.)
The carrying amount of financial assets represents the maximum credit exposure of the consolidated entity. The maximum exposure to credit
risk at balance date was:
In thousands of AUD
Cash and cash equivalents
Gross trade receivables
Employee share loans
Commodity contracts used for hedging
Forward exchange contracts used for hedging
The ageing of gross trade receivables for the consolidated entity at balance date is as follows:
In thousands of AUD
Not yet due
Past due 0-30 days
Past due 31-60 days
Past due 61-90 days
Past due 91-120 days
Past due 120+ days
2010
Gross
2010
Impairment
87,036
33,709
3,819
1,061
698
4,624
130,947
(784)
(80)
(204)
(180)
(138)
(3,365)
(4,751)
2010
54,914
130,947
5,668
7,848
29,586
228,963
2009
Gross
78,523
40,155
3,245
1,584
2,850
2,185
2009
45,015
128,542
6,520
13,819
16,442
210,338
2009
Impairment
(69)
(13)
(361)
(150)
(464)
(971)
128,542
(2,028)
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
Gross trade receivables with terms re-negotiated
2010
Gross
-
2010
Impairment
-
2009
Gross
74
2009
Impairment
(60)
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
Acquired through business combinations
Disposals
Effect of movements in foreign exchange
Balance at 30 June
2010
(2,028)
(985)
159
(2,068)
145
26
(4,751)
2009
(1,052)
(1,305)
354
-
-
(25)
(2,028)
85
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
26. finAnCiAl instruments AnD finAnCiAl risk mAnAGement (cont.)
Liquidity risk
Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they fall due. The consolidated entity
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 are controlled by management and
reported monthly to the Board who is ultimately responsible for maintaining liquidity.
The contractual maturities of financial liabilities and derivatives that are cash flow hedges of the consolidated entity, including estimated
interest payments are as follows:
Maturity analysis
In thousands of AUD
Non-derivative financial liabilities – 2010
Unsecured bank loans
Trade and other payables
Derivative financial liabilities - 2010
Interest rate swaps designated as hedges
Commodity contracts designated as hedges – outflow
Commodity contracts designated as hedges – inflow
Non-derivative financial liabilities – 2009
Unsecured bank loans
Trade and other payables
Derivative financial liabilities – 2009
Interest rate swaps designated as hedges
Commodity contracts designated as hedges – outflow
Commodity contracts designated as hedges – inflow
Forward exchange contracts designated as hedges – outflow
(28,708)
Forward exchange contracts designated as hedges – inflow
29,586
Total at 30 June 2010
(288,738)
(152,134)
Carrying
amount
Contractual
cash flows
Less than 6
months
6-12
months
1-2
years
(230,866)
(59,383)
(94,167)
(59,383)
(8,542)
(59,383)
(8,542)
(77,083)
-
-
(740)
(6,475)
7,848
(835)
(6,475)
7,848
(28,708)
29,586
(283)
(3,998)
4,689
(28,708)
29,586
(66,639)
(203)
(2,477)
3,159
-
-
(349)
-
-
-
-
(8,063)
(77,432)
(200,000)
(218,681)
(63,754)
(63,754)
(5,490)
(63,718)
(5,491)
(207,700)
(36)
-
(1,839)
(12,280)
13,819
(2,056)
(12,280)
13,819
(16,943)
16,442
(1,205)
(3,982)
4,342
(15,064)
14,568
(70,549)
(733)
(2,713)
3,159
(1,879)
1,874
(118)
(5,585)
6,318
-
-
(5,819)
(207,085)
Forward exchange contracts designated as hedges – outflow
(16,943)
Forward exchange contracts designated as hedges – inflow
16,442
Total at 30 June 2009
(264,555)
(283,453)
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.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
26. finAnCiAl instruments AnD finAnCiAl risk mAnAGement (cont.)
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
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 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 3 years and have fixed swap rates ranging from 5.05 % to 6.81 % (2009: 3.76% - 7.36%). At 30 June 2010,
the consolidated entity had interest rate swaps with a notional contract amount of $125,000,000 (2009: $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 2010 was $740,000 recognised as a fair value derivative liability.
(2009: $1,839,000 fair value derivative liability).
(i) Profile
At balance date the consolidated entity’s interest bearing financial instruments were:
In thousands of AUD
Variable rate financial instruments
Unsecured bank loans
Bank balances
Call deposits
Fixed rate financial instruments
Interest rate swap derivatives
Total
2010
Notional
value
2010
Carrying
amount
2009
Notional
value
2009
Carrying
amount
(230,866)
(230,866)
(200,000)
(200,000)
22,913
32,001
22,913
32,001
22,011
23,004
22,011
23,004
(175,953)
(175,952)
(154,985)
(154,985)
125,000
(50,953)
(740)
(176,692)
125,000
(29,985)
(1,839)
(156,824)
87
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
26. finAnCiAl instruments AnD finAnCiAl risk mAnAGement (cont.)
Market risk (cont.)
(a) Interest rate risk (cont.)
(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 equity and financial assets and
liabilities as follows:
In thousands of AUD
Increase of 100 basis points
Hedging reserve (increase)/decrease
Financial assets increase/(decrease)
Financial liabilities (increase)/decrease
Decrease of 100 basis points
Hedging reserve (increase)/decrease
Financial assets increase/(decrease)
Financial liabilities (increase)/decrease
2010
2009
(2,103)
1,363
740
-
2,149
-
(2,149)
-
(603)
-
603
-
609
-
(609)
-
(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 profit or loss as follows:
In thousands of AUD
Increase of 100 basis points
Unsecured bank loans (AUD)
Unsecured bank loans (EUR)
Unsecured bank loans (USD)
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)
Unsecured bank loans (USD)
Bank balances
Interest rate swap derivatives
Call deposits variable rate
Call deposits fixed rate
GWA internAtionAl limiteD 2010 ANNUAL REPORT
2010
2009
(2,078)
-
(36)
229
877
334
15
(659)
2,078
-
36
(229)
(877)
(334)
(15)
659
(2,207)
(117)
-
220
1,198
303
-
(603)
2,209
117
-
(220)
(1,198)
(303)
-
605
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
26. finAnCiAl instruments AnD finAnCiAl risk mAnAGement (cont.)
Market risk (cont.)
(b) Foreign currency risk
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 USD and NZD.
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 USD denominated bank loan was designated as a hedge of the consolidated entity’s investment in its subsidiary
in North America.
(i) Exposure to currency risk
In thousands of AUD equivalent
AUD
USD
NZD
EUR
HKD
UKP
YEN
2010
Trade receivables
Trade payables
Loans and borrowings
Cash
Gross balance sheet exposure
Estimated forecast sales
Estimated forecast purchases
Gross exposure
Forward exchange contracts
Net exposure 30 June 2010
-
-
-
-
-
-
-
-
-
-
Foreign exchange rates at balance date
1.0000
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
-
-
-
-
-
-
-
-
-
Foreign exchange rates at balance date
1.0000
3,562
(1,882)
(5,866)
1,469
(2,717)
7,958
(55,063)
(47,105)
17,717
(32,105)
0.8523
1,457
(1,065)
93
485
7,231
(66,101)
(58,870)
16,330
(42,055)
0.8114
-
-
-
-
-
-
(2,934)
(2,934)
-
(2,934)
75.46
-
-
-
-
-
(3,472)
(3,472)
-
(3,472)
77.76
3,191
(154)
-
2,397
5,434
12,372
(3,950)
8,422
775
(492)
-
14,390
14,673
1,313
(3,200)
(1,887)
-
(11,463)
947
-
-
166
1,113
-
-
-
-
853
(544)
-
563
872
-
-
-
-
13,856
1.2308
1,323
0.6979
1,113
6.6340
872
0.5666
-
-
-
-
10,549
(4,624)
5,925
-
5,925
1.2428
1,400
(191)
51
1,260
17,825
(20,501)
(2,676)
-
(1,416)
0.5751
1,528
(26)
399
1,901
-
-
-
-
1,901
6.2884
3
(1)
-
2
-
-
-
-
2
0.4872
89
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
26. finAnCiAl instruments AnD finAnCiAl risk mAnAGement (cont.)
Market risk (cont.)
(b) Foreign currency risk (cont.)
(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.
Fair values
The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet are as follows:
In thousands of AUD
Cash and cash equivalents
Trade and other receivables
Interest rate swaps:
Liabilities
Commodity contracts:
Assets
Liabilities
Forward exchange contracts:
Assets
Liabilities
Unsecured bank loans
Trade payables and accrued expenses
Estimation of fair values
2010
Carrying
amount
54,914
116,237
2010
Fair
value
54,914
116,237
2009
Carrying
amount
45,015
116,963
2009
Fair
value
45,015
116,963
(740)
(740)
(1,839)
(1,839)
7,848
(6,475)
29,586
(28,708)
(230,866)
(59,383)
(117,587)
7,848
(6,475)
29,586
(28,708)
(230,866)
(59,383)
(117,587)
13,819
(12,280)
16,442
(16,943)
(200,000)
(63,754)
(102,577)
13,819
(12,280)
16,442
(16,943)
(200,000)
(63,754)
(102,577)
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.
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
26. finAnCiAl instruments AnD finAnCiAl risk mAnAGement (cont.)
Estimation of fair values (cont.)
(v) Interest rates used for determining fair value
The consolidated entity uses the government yield curve as of 30 June 2010 plus an adequate constant credit spread to discount financial
instruments. The interest rates used are as follows:
Derivatives
Employee share loans and other loans
Interest bearing loans and borrowings
(vi) Fair value hierarchy
2010
2009
4.81% - 4.91%
3.19% - 4.84%
5.85% - 6.65%
4.38% - 7.73%
5.85% - 8.05%
5.01% - 5.26%
The consolidated entity recognises the fair value of its financial instruments using the level 2 valuation method. The different levels have been
defined as follows:
■■ Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
■■ Level 2: inputs other than quoted prices included within Level1 that are observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices)
■■ Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
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
2010
12,300
20,824
967
34,091
2009
13,416
29,494
2,967
45,877
The consolidated entity leases warehouse and factory facilities and motor vehicles under operating leases. The warehouse and factory 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.
One of the leased properties has been sublet by the consolidated entity. The lease and sublease expire in November 2010. Sublease
payments of $188,000 will be received during the following financial year.
During the financial year ended 30 June 2010, $13,040,000 (2009: $11,407,000) was recognised as an expense in profit or loss in respect
of operating leases.
28. CAPitAl AnD other Commitments
In thousands of AUD
Capital expenditure commitments
Plant and equipment
Contracted but not provided for and payable:
Within one year
2010
2009
2,890
4,401
91
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
29. ContinGenCies
The directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacrifice of
economic benefits will be required or the amount is not capable of reliable measurement.
In thousands of AUD
Contingent liabilities not considered remote
In previous financial years, the Company investigated and reported two environmental
contamination issues at factory sites at Eagle Farm, Queensland and Revesby, NSW. The
Revesby site is leased and occupied by a wholly owned subsidiary of the ultimate parent
entity, GWA International Limited. The Eagle Farm site was previously occupied by Corille
Limited (formerly Rover Mowers Limited) and was sub-leased to MTD Products Australia
Pty Ltd on 1 April 2010 following the sale of the Rover Mowers business.
The costs to remediate both sites, based on the best available estimates have been
provided in prior years.
Contingent liabilities considered remote
Guarantees
(i) Under the terms of a Deed of Cross Guarantee, described in note 30, the parent
entity 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.
2010
2009
-
-
-
-
(ii) Bank guarantees
2,658
1,404
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 statement of comprehensive income and consolidated statement of financial position, 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 2010, is
set out below.
Summarised statement of comprehensive income 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
GWA internAtionAl limiteD 2010 ANNUAL REPORT
2010
93,330
(22,249)
71,081
13,557
(53,895)
30,743
2009
68,446
(20,396)
48,050
14,752
(49,245)
13,557
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
30. DeeD of Cross GuArAntee (cont.)
Statement of financial position
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
2010
2009
37,979
126,447
99,729
3,052
267,207
12,185
25,729
22,973
22,516
63,040
334,206
2,894
483,543
750,750
85,063
7,211
12,953
19,473
124,700
5,585
200,000
11,091
8,864
225,540
350,240
400,510
387,981
(1,028)
13,557
400,510
39,159
143,377
98,564
3,015
284,115
5,102
22,205
37,219
17,969
74,575
365,155
3,362
525,587
809,702
96,016
4,348
14,097
15,021
129,482
-
230,866
12,197
8,862
251,925
381,407
428,295
396,539
1,013
30,743
428,295
93
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
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
Stylus Pty Ltd
Brivis Climate Systems Pty Ltd (previously 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 (disposed)
Wisa BV (disposed)
Wisa Systems BV (disposed)
Wisa GmbH (disposed)
Stokis Kon Fav. Van Metaalwerken NV (disposed)
Caroma International Pty Ltd
Caroma USA Inc
Canereb Pty Ltd
Dux Manufacturing Limited
GWA Taps Manufacturing Limited
Lake Nakara Pty Ltd
Warapave Pty Ltd
Mainrule Limited (previously Rover Mowers (NZ) Limited)
Caroma Industries (NZ) Limited
GWAIL (NZ) Ltd
Corille Limited (previously Rover Mowers Limited)
Industrial Mowers (Australia) Limited
Olliveri Pty Ltd
Sebel Service & Installations Pty Ltd
Sebel Properties Pty Ltd
Austral Lock Pty Ltd
Sebel Furniture Limited (NZ)
Sebel Furniture Limited
Sebel Sales Pty Limited
GWA Finance Pty Limited
Hetset (No. 5) Pty Ltd
Bankstown Unit Trust
GWA internAtionAl limiteD 2010 ANNUAL REPORT
Parties to cross
guarantee
Country of
incorporation
Ownership interest
2010
2009
Y
Y
Y
Y
Y
Y
Y
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
N
Y
Y
Y
Y
N
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
China
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
New Zealand
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%
100%
100%
100%
100%
100%
100%
100%
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
32. PArent entitY DisClosures
As at, and throughout, the financial year ended 30 June 2010 the parent company of the consolidated entity was GWA International Limited.
In thousands of AUD
Results of the parent entity
Profit for the period
Other comprehensive income
Total comprehensive income for the period
Financial position of the parent entity
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders equity of the parent entity
Share capital
Equity compensation reserve
Retained earnings
Total shareholders equity
Parent entity contingencies
2010
2009
43,770
-
43,770
1,106
485,420
4,228
56,600
396,539
1,880
30,401
428,820
39,335
-
39,335
1,223
1,033,414
7,180
604,257
387,981
650
40,526
429,157
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.
Contingent liabilities
The directors are not aware of any contingent liabilities of the parent entity as at reporting date (2009: nil).
Capital expenditure commitments
The parent entity has not entered into any contractual commitments for the acquisition of property, plant or equipment as at reporting date
(2009: nil).
Parent entity guarantees in respect of debts of its subsidiaries
The parent entity has entered into a Deed of Cross Guarantee with the effect that the parent entity 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 (2009: nil). Further details of the Deed of Cross Guarantee and the subsidiaries subject to the Deed are
disclosed in Note 30.
95
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
33. 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
Foreign exchange (gains)/losses
Interest expense
Loss on disposal of discontinued operations, net of income tax
(Gain)/loss on sale of property, plant and equipment and intangible assets
Income tax expense
Operating profit before changes in working capital and provisions
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions and employee benefits
Net interest paid
Income taxes paid
Net cash from operating activities
2010
2009
48,527
48,325
13,663
4,514
1,230
1,164
15,027
7,406
170
24,040
115,741
2,346
292
(4,510)
(8,578)
105,291
(15,053)
(23,073)
67,165
16,789
1,316
650
(1,183)
13,844
-
(113)
20,690
100,318
(19,114)
(1,264)
28,943
1,677
110,560
(12,782)
(19,150)
78,628
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
34. relAteD PArties
Key management personnel compensation
The key management personnel compensation included in ‘personnel expenses’ (see note 6) are as follows:
In AUD
Short-term employee benefits
Other long term benefits*
Post-employment benefits
Share-based payments
Termination benefits
2010
6,895,280
242,777
523,240
841,796
181,875
2009
5,617,034
391,570
1,014,097
439,122
710,000
8,684,968
8,171,823
* Other long term benefits represent the amount of commercial interest that would have been charged during the period on the outstanding employee loan balances owed to the
Company had these loans not been interest free. In the prior year, the benefit was classified as a short-term employee benefit. The benefit has been restated as a long term benefit
which properly reflects the long term nature of the incentive.
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
A Rusten
L Patterson
W Saxelby
Balance
1 July 2009
Balance
30 June 2010
1,590,000
281,496
1,455,000
263,496
740,040
907,491
833,600
686,040
655,536
779,600
Interest paid
and payable in
the reporting
period
-
-
-
-
-
Highest
balance in
period
1,590,000
281,496
740,040
907,491
833,600
No loans were made to key management personnel or their related parties during the year (2009: nil).
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 2010
Total for key management personnel 2009
Opening
balance
4,352,627
5,086,209
Closing
balance
3,839,672
4,352,627
Interest paid
and payable in
the reporting
period
-
-
Number in
group at
30 June
5
5
97
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
34. relAteD PArties (cont.)
Loans to key management personnel and their related parties (consolidated) (cont.)
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 $222,795 (2009: $214,331) 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 $689,693 (2009: $380,343) 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
2010
13,951
2009
66,899
From time to time, key management personnel of the Company or its controlled entities, or their related entities, may purchase goods from
the consolidated entity. These purchases are on the same terms and conditions as those entered into by other consolidated entity employees
or customers and are trivial or domestic in nature.
Movements in shares
The movement during the reporting period in the number of ordinary shares in GWA International Limited held, directly, indirectly or
beneficially, by each key management person, including their related parties, is as follows:
Directors: non-executive
B Thornton (Retired 30 June 2010)
J Kennedy (Retired 29 October 2009)
D Barry
R Anderson
G McGrath
W Bartlett
D McDonough
Executive directors
P Crowley
R Thornton
Executives
A Rusten
G Oliver
W Saxelby
L Patterson
N Evans (Commenced employment 17 March 2010)
Held at
1 July 2009
17,449,950
101,000
12,903,534
29,786,195
150,000
15,425
83,635
750,000
111,935
300,000
169,530
300,000
300,000
n/a
Purchases
Sales
Held at
30 June 2010
555,244
-
-
-
-
489
36,860
-
378
-
5,377
-
-
-
-
-
(26,135)
-
-
-
-
-
-
-
-
-
(59,261)
-
18,005,194
n/a
12,877,399
29,786,195
150,000
15,914
120,495
750,000
112,313
300,000
174,907
300,000
240,739
14,338
GWA internAtionAl limiteD 2010 ANNUAL REPORT
notes to the ConsoliDAteD finAnCiAl stAtements
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
34. relAteD PArties (cont.)
Movements in shares (cont.)
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 2010 is listed in the Directors’ Report. Mr D McDonough
is a director of a company which is the registered owner of 60,000 shares in GWA International Limited; he has no economic interest in
that company nor does he have any economic interest in the shares and he does not exercise control over those shares or the voting rights
attached to them.
Held at
1 July 2008
Purchases
Sales
Held at
30 June 2009
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 (Retired 18 July 2008)
A Rusten
G Oliver
W Saxelby
L Patterson
16,186,722
1,263,228
-
-
517,415
895,363
-
-
-
-
-
17,449,950
101,000
n/a
12,903,534
29,786,195
-
(150,000)
10,425
-
-
-
-
-
13,280
-
-
-
-
-
-
-
-
-
-
-
150,000
15,425
83,635
750,000
111,935
n/a
300,000
169,530
300,000
300,000
101,000
100,000
12,386,119
28,890,832
300,000
5,000
n/a
750,000
n/a
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 2010 was 62,847,494 (2009: 62,421,204).
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.
35. suBsequent events
To the Director’s best knowledge, there are no events that have arisen subsequent to 30 June 2010 that will, or may, significantly affect the
operation or results of the consolidated entity.
99
DireCtor’s DeClArAtion
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
1
In the opinion of the directors of GWA International Limited (‘the Company’):
(a) the consolidated 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 consolidated entity’s financial position as at 30 June 2010 and of its performance, for the
financial year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2
3
There are reasonable grounds to believe that the Company and the 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
entities pursuant to ASIC Class Order 98/1418.
The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Managing Director
and Chief Financial Officer for the financial year ended 30 June 2010.
4.
The directors draw attention to Note 1 to the consolidated financial statements, which includes a statement of compliance with
International Financial Reporting Standards.
Dated at Brisbane on 17 August 2010.
Signed in accordance with a resolution of the directors:
Geoff McGrath
Director
Peter 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 2010 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, 17 August 2010
Mark Epper
Partner
GWA internAtionAl limiteD 2010 ANNUAL REPORT
inDePenDent AuDitor’s rePort
to the memBers of GWA internAtionAl limiteD
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
rePort on the finAnCiAl rePort
We have audited the accompanying financial report of the consolidated
entity comprising GWA International Limited (the ‘Company’) and the
entities it controlled at the year’s end or from time to time during the
financial year, which comprises the statement of financial position as
at 30 June 2010, and statement of comprehensive income, statement
of changes in equity and statement of cash flows for the year ended
on that date, a summary of significant accounting policies and other
explanatory notes 1 to 35 and the directors’ declaration.
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,
the directors also state, in accordance with Australian Accounting
Standard AASB 101 Presentation of Financial Statements, that the
financial report, 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 consolidated entity’s
financial position and of its 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 the consolidated entity is in accordance
with the Corporations Act 2001, including:
(i)
giving a true and fair view of the consolidated entity’s financial
position as at 30 June 2010 and of its 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.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’
report for the year ended 30 June 2010. 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 2010, complies with Section
300A of the Corporations Act 2001.
KPMG
Sydney, 17 August 2010
Mark Epper
Partner
101
other stAtutorY informAtion As At 16 AuGust 2010
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
stAtement of shAreholDinG
In accordance with the Australian Securities Exchange Listing Rules, the directors state that, as at 16 August 2010, 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
1,933
6,422
3,178
2,196
120
13,849
1,058,088
19,077,846
24,035,977
47,103,777
209,826,826
301,102,514
%
0.35
6.34
7.98
15.64
69.69
100.0
The number of shareholders with less than a marketable parcel of 168 shares is 394.
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 16 August 2010:-
Shareholder
HGT Investments Pty Limited
Number of Shares
% Shares on Issue
16,285,311
5.41
GWA internAtionAl limiteD 2010 ANNUAL REPORT
other stAtutorY informAtion As At 16 AuGust 2010
GWA internAtionAl limiteD AnD its ControlleD entities
ABN 15 055 964 380
20 lArGest shAreholDers As At 16 AuGust 2010
Shareholder
National Nominees Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
HGT Investments Pty Limited
KFA Investments Pty Limited
Erand Pty Limited
HSBC Custody Nominees (Australia) Limited
JMB Investments Pty Limited
Ashberg Pty Limited
Theme (No 3) Pty Limited
CJZ Investments Pty Limited
Australian Foundation Investment Company Limited
RBC Dexia Investor Services Australia Nominees Pty
Limited
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