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AnnuAl RepoRt 2012
CONTENTS
Five Year Financial Summary
Company Profile and Mission Statement
Chairman’s Review
Managing Director’s Review of Operations
Health and Safety
GWA Bathrooms & Kitchens
GWA Door & Access Systems
GWA Heating & Cooling
Board of Directors
Corporate Governance Statement
Directors’ Report
GWA Group Financial Report
Other Statutory Information
Shareholder Information and Timetable
1
2
4
6
10
12
13
14
16
18
26
40
90
92
2011/12 year PerFormance HigHligHts
Headline revenue down 6% with underlying revenue down
by 12%, after allowing for full year of the Gliderol acquisition
Trading Earnings before Interest and Tax (EBIT) from
continuing operations of $75 million**
Strong cash flow reduced net debt to $174 million
Substantial restructuring funded by sale of non-core properties
Fully franked final dividend of 8.5 cents per share with total
fully franked dividend maintained at 18 cents for the year
Dividend policy reviewed to reflect uncertain outlook
Five year Financial summary
Revenue from continuing operations
Earnings before interest, tax, depreciation,
amortisation and restructuring costs**
(%)
Depreciation and amortisation
Earnings before interest, tax and restructuring costs**
(%)
Interest (net)
Trading profit before tax**
(%)
Tax expense
(%)
Trading profit after tax**
Restructuring costs after tax
Net profit after tax from continuing operations
Loss from discontinued operations (net of income tax)
Net profit after tax for the period
Net cash from operating activities
Capital expenditure
Research and development
Net debt
Shareholders’ equity
Other Ratios and Statistics
Return on shareholders’ equity (%)
Interest cover (times)
Net debt / (net debt + equity) (%)
Basic earnings per share (cents)
Trading earnings per share (cents)*
Ordinary dividend per share (cents)
Special dividend per share (cents)
Total dividend per share (cents)
Franking (%)
Ordinary dividend payout ratio (%)
Share price (30 June) ($)
Dividend yield (total dividend)(%)
Number of employees
* excludes restructuring expenses
2007/08
$’000
648,902
2008/09
$’000
678,344
2009/10
$’000
656,809
2010/11
$’000
726,367
117,314
105,060
112,099
125,243
18.1
(17,920)
99,394
15.3
(14,623)
84,771
13.1
15.5
(18,105)
86,955
12.8
(13,844)
73,111
10.8
17.1
(17,551)
94,548
14.4
(15,027)
79,521
12.1
17.2
(18,087)
107,156
14.8
(15,175)
91,981
12.7
2011/12
$’000
602,128
94,228
15.6
(18,864)
75,364
12.5
(14,247)
61,117
10.2
(24,612)
(21,919)
(24,068)
(28,622)
(15,565)
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
15,450
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
31.1
63,359
-
63,359
-
63,359
88,558
24,727
9,486
198,083
439,995
14.4
8.3
31.0
21.0
21.0
18.0
-
18.0
100
85.7
2.75
6.5
2,150
25.5
45,552
621
46,173
(6,518)
39,655
60,499
25,798
7,587
174,472
426,984
9.3
6.6
29.0
13.2
15.1
18.0
-
18.0
100
136.4
2.10
8.6
1,788
** non-IFRS financial measures – given the significance of restructure costs, the directors believe the presentation of non-IFRS financial measures is useful for the users of this document as they reflect
the underlying financial performance of the business. The non-IFRS financial disclosures included in this document exclude restructuring costs that are detailed in note 6 of the financial report.
Notes: The financial years 2007/08 and 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.
The financial years 2007/08 through to 2010/11 include the results of Sebel Furniture and Caroma North America. These businesses were divested during the 2011/12 financial year and are disclosed
as discontinued operations in the 2011/12 year.
Company profile
GWA Group 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 had
approximately 1,800 employees at 30 June 2012 with manufacturing
and distribution facilities located across Australia and with branch
offices in New Zealand.
GWA currently operates through three distinct business divisions
including:
GWa Bathrooms & KitChens is Australia’s foremost
designer, manufacturer, importer and distributor of domestic and
commercial bathroom and kitchen products. The product range
is distributed under Australian brands including Caroma, Dorf,
Fowler, Stylus, Clark, Epure, Radiant, Irwell and international
brands including Hansa, Schell, KWC, EMCO and Virtu.
gWa grouP limiteD ∕ ∕ 2012 annual rePort
GWa heatinG & CoolinG is an Australian designer,
manufacturer, importer and distributor of hot water, heating and
cooling systems for residential and commercial markets. The product
range is distributed under Australian brands including Brivis, APAC,
Dux, EcoSmart and Radiant.
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, garage doors and openers. The product range is distributed
under Australian brands including Gainsborough, Trilock, Renovator,
Austral Lock, Gliderol, Matador and international brands including
Salto, Hillaldam and Eco Schulte.
GWA has grown significantly since listing as a result of the strong
operating performance of the core building fixtures and fittings
businesses and through successful acquisitions. The Company
remains committed to growing shareholder wealth through
continuous business improvement initiatives and pursuing
growth opportunities that add value to its core business
segments and that support expansion into new markets.
our mission
GWA’s primary objective is to grow shareholder wealth over time. This objective will be achieved
by continuing to invest in the development of people, systems, new products and world leading
technologies, to sustain and build the premium profitability of the business over time.
GWA comprises three core business segments of scale which compete in the Australian and
New Zealand building fixtures and fittings sector. The core strategies for success involve key
value propositions to our markets including:
■ Investment in innovative and sustainable
products;
■ Leveraging our investment in brands, sales
and marketing to ensure our products are
specified and widely available;
■ Continuing improvements in operational and
business efficiency with the aid of modern
information systems;
■ Deliver superior customer service levels; and
■ Improve our installation and service
■ Low cost supply chain management to
capabilities.
ensure a cost competitive supply position;
GWA will grow the profitability of its business by investing for sustainable growth and adapting its
business models for changing and competitive markets. The Company will increase its market
share through targeted organic growth initiatives and acquisitions that add value to its core business
segments by supporting expansion into new markets or providing access to new products.
3
Chairman’s
revieW
in 2011 i reported that the decline in dwelling
approvals in the second half of the year
and constrained household discretionary
spending would create a challenging economic
environment in 2011/12. Whilst we understood
this adverse trend, the actual decline in
market activity and difficult trading conditions
experienced by the australian building industry
in 2011/12 was unexpected and worse than the
market forecasts.
New home construction is the weakest sector in the Australian
economy. The national accounts released for the March 2012 quarter
show that new dwelling investment has fallen for four consecutive
quarters, detracting from aggregate GDP growth. This requires a
policy coordination at all levels of Government to improve affordability
and regulatory impacts which delay new housing development.
GWA is supporting the Housing Industry Association (HIA) in their
efforts to advise Governments on policy responses to the current
downturn. We welcome the recent announcement by the Federal
Government appointing a panel to look at the impact of costs and
competitiveness on the industry cost structure. Housing affordability
is severely impacted by regulation and Government charges and this
is a key issue in demand for housing.
strategy
With the successful divestment of our Caroma North American and
Sebel Commercial Furniture businesses during 2011/12, our strategy
is now focused on the Australian Building Fixtures and Fittings sector
with three core business segments of scale comprising Bathrooms
& Kitchens, Heating & Cooling and Door & Access Systems. We are
committed to providing compelling customer value propositions in
the sector through product innovation, efficient supply chains, strong
brand management, and installation and service capabilities.
overvieW oF results
The Group achieved a net profit after tax from continuing businesses of
$46.2 million in the 2011/12 year on sales revenue of $602.1 million.
This represents a decline of 22% and 6% respectively. Considerable
restructuring activities have been successfully completed during
the year to improve competitiveness. This has involved the closure
gWa grouP limiteD ∕ ∕ 2012 annual rePort
or phasing down of uncompetitive Australian manufacturing and
establishing efficient offshore supply chains. This restructuring was
funded by the sale of non-core properties resulting in a small net
increase to profit after tax of $0.6 million. The Board is pleased
that such large scale restructuring was achieved with no impact
on shareholder funds.
New dwelling approvals in the first half of 2012 do not indicate an early
improvement in business conditions in 2012/13 but the underlying
demand for housing still exists and GWA is in a good position to take
advantage of an upturn when it occurs. The Managing Director will
expand on the achievements for 2011/12, the outlook for the year
ahead, together with our strategic priorities in his Review of Operations.
DiviDenDs anD caPital management
GWA’s dividend policy has been that “absent an unexpected decline
in profitability, ordinary dividends will be maintained at 18.0 cents
per share until it equals 70% to 80% of earnings at which time the
dividend will increase in line with performance.”
The Group’s strong operating cash flow enabled the directors to declare
a final fully franked dividend of 8.5 cents per share to be paid in
October which maintained the fully franked dividend for the year at
18.0 cents per share. GWA has maintained a high dividend payout
at 120% of trading profit after tax in 2011/12 whilst reducing debt,
but this cannot be sustained in the future without an improvement
in earnings. The sustained nature of adverse trading conditions has
been unexpected and the timing for improved building activity is
uncertain meaning a review of our dividend policy is required.
The Board is focussed on maximising returns to shareholders whilst
maintaining a capacity to grow the business and has therefore
approved a new dividend policy which increases the return to
shareholders through the business cycle but limits dividend payouts
in the cyclical downturns. The new dividend policy is as follows:
“ The dividend payout through the business cycle will be in the range
of 80% to 95% of net profit after tax. We expect the payout to be at
the higher end of this range for 2012/13 and be fully franked.”
Net debt at the end of June 2012 was $174 million, down by $24 million
from June 2011 due to divestments and reduced working capital.
Debt is well covered by total bank facilities of $300 million and we
appreciate the ongoing support of our banks including Commonwealth
Bank, Australia and New Zealand Banking Group, National Australia
Bank, Westpac Banking Corporation and HSBC Bank Australia.
Trading EBIT
11/12
10/11
09/10
08/09
07/08
$m
Ordinary Dividend Per Share
cents
11/12
10/11
09/10
08/09
07/08
0
25
50
75
100
125
0
5.0
10.0
15.0
20.0
Trading EBIT from continuing operations of $75 million reflects the decline in
market activity and difficult trading conditions.
Strong operating cash flow has enabled ordinary dividends to be
maintained at 18 cents per share fully franked.
This is less than last year and in line with the lower trading result.
The Board believes this is a reasonable balance of reward for
management and shareholders and is necessary to ensure we are
competitive to retain our high quality executive and management team.
sustainaBility anD carBon emissions
The Board is committed to reducing energy, carbon emissions, water
and waste across the GWA Group operations. GWA reports its group
carbon emissions annually under the Federal Government’s National
Greenhouse and Emissions Reporting (NGER) Scheme and the
reports can be accessed on GWA’s website.
An important project undertaken during the year was the upgrade of
the Dux water heater factory at Moss Vale which aims to minimise the
use of energy, waste and raw materials used in the factory. This project
included capital expenditure of $3.5 million for new tank foaming
equipment which uses pentane as a blowing agent. Pentane is
non-ozone depleting and has virtually no greenhouse gas emissions.
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 continuing progress in safety performance resulting in
a 14% reduction in the total injury frequency rate in 2011/12. This
is the seventh consecutive year of improvement and reflects the
ongoing commitment to creating an injury free work environment.
In closing, I would like to thank management and staff for their
efforts in the 2011/12 year and their commitment to GWA. The
business environment will continue to be difficult but we have
the people, business processes and strategies to build stronger
businesses for the future.
tHe BoarD
The Board is working effectively with no changes after the appointments
of Mr John Mulcahy and Mr Peter Birtles last financial year. The new
directors have made valuable contributions to the Board during the
year and we continue to benefit from their skills and expertise. We are
aware of the current focus on diversity and will continue to look for
opportunities to improve diversity and maintain relevant experience
when making future Board appointments. The Board supports the
recommendations of the ASX Corporate Governance Council on
diversity which are effective from 1 January 2011 and has provided the
required diversity disclosures in its Corporate Governance Statement.
executive remuneration
GWA’s remuneration policies continue to be assessed with the
independent advice of Guerdon Associates. We aim to provide
remuneration that is fair and sufficient to attract and retain
management and directors with the experience, knowledge,
skills and judgment required for the business. The key principle
is that remuneration varies between the median and third
quartiles (or higher if warranted by superior performance)
relative to companies of comparable size and scope to GWA.
The only change in the remuneration policy for 2012/13 is the cessation
of the legacy GWA Employee Share Plan. Changing employee attitudes
to share ownership has led to lower participation levels in recent years
and it is no longer effective as a long term incentive (LTI). A more
effective approach will be to expand the use of the LTI Plan approved
by shareholders in 2008 to select lower level management that formerly
participated in the legacy GWA Employee Share Plan. These changes
are proposed to commence from the 2012/13 LTI grant and will be
reported in next year’s Remuneration Report.
Our Remuneration Report has been improved through ongoing
feedback and engagement with stakeholders. The Board endeavours
to balance the need to address market trends whilst positioning GWA
to retain and attract a high quality management team led by our
experienced Managing Director of the past 9 years, Mr Peter Crowley.
As outlined last year, Mr Crowley agreed to a freeze on his fixed
remuneration for 3 years from 2011 to 2014 and will not receive any
increase in fixed remuneration in 2012. For other GWA executives,
the review by Guerdon Associates during the year concluded that fixed
remuneration for most GWA executives is closer to market levels.
Our executive and management incentive schemes cover
approximately 16% of total employees with total short term incentive
payments for the year representing less than 4% of trading profit.
Geoff McGrath
5
manaGinG DireCtor’s
revieW of operations
the results for 2011/12 are presented in the
Financial statements for gWa’s continuing
operations and the comparative impact of
discontinued operations during the year.
Revenue reduced by 6% but this was favourably impacted by the
full year’s contribution from Gliderol and like for like underlying sales
were down by 12%. This decline is in line with market demand where
dwelling commencements for the year reduced by 13% compared
to 2010/11. New dwelling commencements for the financial year
are approaching levels experienced in the global financial crisis
and reflect a 10 year declining trend in building activity. In our view
the key issue impacting demand is housing affordability driven by
Government charges and regulatory costs. These issues are limiting
building activity to levels which do not support underlying demand
for housing. GWA’s focus is to ensure our businesses are in a good
position to benefit from the inevitable upturn when it occurs.
The low building activity is particularly apparent in New South Wales
and Queensland and we are starting to see policy initiatives such
as stamp duty relief on new dwellings for first home buyers which
will assist with affordability. Streamlining regulatory processes to
reduce developer costs is still to be addressed and as noted in the
New Dwelling Activity – 12 Month Moving Average
Chairman’s Review we welcome the formation of a panel by the
Federal Government to provide recommendations on costs and
competitiveness for the housing industry.
The chart below demonstrates the trend in reduced dwelling
construction by showing the twelve month moving annual numbers
for dwelling activity since 2003.
$million
Sales Revenue
Trading EBIT
EBIT Margin
Trading Profit after Tax from
Continuing Operations
Profit after Tax from
Continuing Operations after
Restructuring Costs
Discontinued Operations
Net Profit after Tax
Trading Earnings per Share
– Continuing Operations
* excludes net restructuring expenses
2011/12
2010/11 % Change
602.1
75.4*
641.6
99.9
(6%)
(25%)
12.5%
15.6%
45.6*
59.0
(23%)
46.2
59.0
(22%)
(6.5)
39.7
15.1
4.3
63.4
(37%)
19.6
(23%)
APPROVALS
COMMENCEMENTS
COMPLETIONS
Source: BIS Shrapnel
190,000
180,000
170,000
160,000
150,000
140,000
130,000
120,000
s
r
e
b
m
u
N
l
a
u
n
n
A
g
n
i
v
o
M
JUNE 03
JUNE 04
JUNE 05
JUNE 06
JUNE 07
JUNE 08
JUNE 09
JUNE 10
JUNE 11
JUNE 12
DEC 03
DEC 04
DEC 05
DEC 06
DEC 07
DEC 08
DEC 09
DEC 10
DEC 11
gWa grouP limiteD ∕ ∕ 2012 annual rePort
The twelve months sales from Gliderol which was acquired in January
2011 added 10% to overall revenue in 2011/12, partially offsetting
the decline in underlying demand for our products. This decline has
been driven by three key factors:
■■ Cessation of Federal Government stimulus spending and
environmental water heater rebates reduced overall sales by 6%;
■■ Decline in new dwelling activity reduced sales by 4%; and
■■ Lower building renovation activity reduced sales by 2%.
The lower underlying demand was partially offset by market and
product development activities. Do-it-Yourself market channels grew
during the year compared to the decline in merchant channels and
we have grown our installed market offers for selected products.
The decline in trading profit is almost entirely attributed to the decline
in revenue. Cost increases and pricing pressure has been largely
offset by cost improvement initiatives. This is despite the higher costs
incurred during commissioning of the Moss Vale water heater factory
upgrade and costs incurred in transitioning from local manufacturing
to lower cost offshore suppliers.
Cash generated from continuing operations of $111 million was
similar to last year despite the 25% reduction in trading EBIT. We are
pleased with the strong operating cash flow reflecting the benefits
of investment in information systems and ongoing improvements in
supply chain management to reduce working capital. Proceeds from
the sale of Sebel and Caroma North America were used to repay
debt which reduced from $198 million to $174 million. Restructuring
activities which resulted in an 8% reduction in employee numbers
were funded by the sale of non-core properties. This strong cash
position has underpinned our ability to maintain the dividend payout
at 18 cents despite the lower trading result.
strategy anD groWtH
The sale of Sebel Commercial Furniture, non-core properties and
Caroma North America during the year completes a 3 year strategy
to divest non-core assets and focus on creating a strong competitive
position in the Australian Building Fixtures and Fittings sector.
Divestments over this period have yielded approximately $80 million
in funds and allowed us to invest some $100 million in acquisitions
of core businesses. At the same time we have maintained the high
dividend payout and reduced debt. Given the economic volatility over
this period we are satisfied with the effectiveness of this transition and
our strong balance sheet which provides scope for further growth.
We now have three core business segments of scale which are
managed under separate management structures. The core
business segments reported separately in the Financial Statements
are as follows:
Bathrooms & Kitchens – sale of vitreous china toilet suites, hand
basins, plastic cisterns, tapware, baths, spas, kitchen sinks, laundry
tubs and bathroom accessories.
Door & Access Systems – sale of garage doors, door handles and door
access systems.
Heating & Cooling – sale of water heating and climate control systems.
In the Australian Building Fixtures and Fittings sector where we
believe we can compete, the total sales activity approximates
$5 billion per annum. GWA has a 13% share of the defined market,
varying from as high as 50% in some segments to less than 5%
in other segments. These are competitive markets but we will
look to increase our market share through organic and inorganic
growth initiatives. Organic growth involves leveraging what we
have by developing new market channels, extending existing
relationships with builders and merchants, product innovation or
new distributorships. Inorganic growth will be through acquisition of
product or market adjacencies. This may involve the acquisition of
businesses to facilitate the supply of new products or for expanding
our installation and service capabilities.
The nature of GWA’s products mean that there is an extensive
installation and service offering in a number of our businesses.
We see growth opportunities by extending these capabilities to
enable a larger range of products to be offered with an installation
and service option. An example of this is the recent announcement
of our intention to acquire API Locksmiths which is a commercial
locksmithing business. If this acquisition proceeds, it will provide
GWA with options for installed offers for both mechanical and
electronic access systems and give us access to the commercial
sector where we are looking to increase sales.
Our core strategies for success in the businesses we operate
are unchanged and involve the key value propositions to our
markets, including:
■■ Investment in innovative and sustainable products;
■■ Leveraging our investment in brands, sales and marketing to
ensure our products are specified and widely available;
■■ Low cost supply chain management to ensure a cost competitive
supply position;
■■ Continuing improvements in operational and business efficiency
with the aid of modern information systems;
■■ Deliver superior customer service levels; and
■■ Improve our installation and service capabilities.
segment PerFormance
Sales from Bathrooms & Kitchens were adversely impacted by
reduced Government stimulus spending and lower building activity.
The business made substantial progress during the year with
improving operational efficiency and market service. At the same
time production from the Wetherill Park vitreous china plant was
phased down to allow for a greater proportion of product to be
sourced offshore.
Heating & Cooling sales were impacted by the cessation of Federal
Government rebates on environmental water heaters in February
2012 which caused a substantial reduction in demand for these
products. Commissioning of the Moss Vale water heater factory
upgrade was largely complete by the end of June 2012 which has
established a lower cost base for 2012/13.
Door & Access Systems sales increased due to the inclusion of
Gliderol for the full year. This business is exposed to the new build
market which reduced by 10% compared to 2010/11. The lower
trading profit reflects the impact of the reduced underlying demand.
7
managing Director's review of operations cont.
Segment results are summarised below:
$million
Sales Revenue
2011/12
2010/11
% Change
Trading EBIT
2011/12
2010/11
% Change
Bathrooms
& Kitchens
heating
& Cooling
Door & access
systems
297.8
332.4
(10%)
61.0
78.9
(23%)
165.8
195.1
(15%)
13.3
17.2
(23%)
138.6
114.0
22%
14.1
17.2
(18%)
other
-
-
(13.0)
(13.4)
Total
602.2
641.5
75.4
99.9
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.
Continuous improvement in safety performance over the past 5
years has been consolidated with a further 14% decline in the total
injury frequency rate in 2011/12. With our total injury frequency
rate reducing to 8.6 we now have a consistent sense of purpose
in creating a safe work environment for our people. Despite these
impressive results, we still had 12 employees sustain a lost time
injury during the year which we will strive to reduce. Good safety is
good management which reflects both the efforts of management
and the diligence of our workforce. We remain committed to
continuous safety improvements with the objective of creating an
injury free work environment.
The chart below highlights the continued improvement in the total
injury frequency rate in the 2011/12 year.
GWA Group Total Injury Frequency Rate
50
40
30
20
10
0
2006/07 2007/08 2008/09
2009/10
2010/11
2011/12
Financial conDition anD caPital
management
Net debt at June 2012 reduced by $24 million from $198 million
to $174 million as a result of the sale of non-core businesses and
assets. The gearing ratio (net debt/net debt plus equity) of 29% is
within our target range and the leverage ratio (net debt/EBITDA) is
a very acceptable 1.9 times. Interest cover (EBITDA/Net Interest) of
6.7 times further highlights the Company’s strong financial metrics.
As we review growth options, one of our key financial criteria is
to maintain our investment grade metrics. The prolonged market
downturn is increasing the likelihood of businesses being available for
acquisition and a strong balance sheet means we are in a good position
to respond to these opportunities. In order to ensure we maintain this
position the Dividend Reinvestment Plan has been reactivated for
the October 2012 final dividend at a 2.5% discount. Details will be
communicated to shareholders in time to participate in the plan.
We have sufficient undrawn facilities and in-principle support
from our banks to increase facilities to fund growth opportunities
if required, but additional capital from the Dividend Reinvestment
Plan will assist with financial flexibility.
A summary of our debt position and existing facilities is provided below.
Bank
$million
available
facilities
Drawn
facilities
maturity profile
CBA
ANZ
NAB
Westpac
HSBC
100
50
50
50
50
68.2
34.2
34.2
34.2
34.2
Gross debt
300
200.0
5.0
July 2014 - $200 million
July 2016 - $100 million
Cash and deposits
Net debt
(30.5)
174.5
gWa grouP limiteD ∕ ∕ 2012 annual rePort
sustainaBility anD carBon reDuction
GWA has an active program to improve our impact on the
environment through the reduction of energy, carbon emissions,
water and waste. Our environmentally sustainable products are
also a major source of competitive advantage for the Company.
GWA has engaged the Australian Institute of Management to provide
an in-house Certificate of Management program constituting 4 modules
of advanced learning to better prepare our managers to be effective
in their roles. 34 managers and senior staff attended the programme
during 2011/12.
outlook
After a prolonged period of contraction in building approvals in 2011/12
there was some increase in the last quarter. If this is sustained we
expect that the improvement will flow through to higher sales late
in 2012. Lower interest rates and State Government initiatives such
as the New South Wales stamp duty relief should support higher
building activity in the second half of the 2012/13 year and build
confidence for the renovation market.
Restructuring activities completed in 2011/12 and the commissioning
of the Moss Vale water heater factory upgrade will improve the cost
base and protect margins.
We will be in a better position to update the market at the Annual
General Meeting in October following first quarter trading and updated
statistics on dwelling activity.
GWA reports greenhouse gas emissions under the National
Greenhouse and Energy Reporting Scheme (NGER). We are
supplementing this with a standalone Sustainability Report which
will be placed on the GWA website to allow for transparency in our
improvement initiatives.
In 2011/12 the estimate of direct carbon emissions for GWA is
11,000 tonnes plus 27,000 tonnes of indirect carbon emissions
through the purchase of energy. This compares with 48,000 tonnes
of total reported emissions in 2010/11. The 20% reduction reflects
the impact of plant closures and energy efficiency initiatives.
PeoPle
GWA’s long term success has been due to the efforts of a committed
and talented workforce. We are continuing to bring new thinking and
skills into the business while also developing our people to provide
succession opportunities. The Company recognises the benefits that
can be achieved from a diverse workforce and has implemented
policies aimed at improving workplace diversity.
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.
Peter Crowley
9
health anD safety
gWa group 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 regularly 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
advisors visit and audit other internal GWA sites); and
■■ Planning and implementing of new systems and procedures.
The Group Risk Manager reports twice per annum to the Audit
Committee. The reporting includes health and safety performance,
improvement plans and compliance to regulations. An audit plan,
consistent with the health and safety objectives, is also presented
for approval at the beginning of the new financial year.
Work HealtH anD saFety PerFormance
GWA Group measures a range of balanced safety performance
indicators. Proactive indicators such as number of hazards identified,
risk assessments undertaken and actions issued and completed on
time are recorded for each GWA site.
Three key measures of safety outcomes are:
1.
2.
Lost Time Injury Frequency Rate (LTIFR) which measures lost time
(injury that results in an inability to work for at least one full shift);
Medical Treatment Injury Frequency Rate (MTIFR) which
measures the number of doctor treated injuries per million hours
worked; and
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 Group.
Major projects for the 2011/12 year include:-
■■ Continued work on transition to the new harmonised Work Health
and Safety (WHS) Act that commenced operation in Qld and NSW
from 1 January 2012; and
■■ Significant improvements to reporting via updates to the WHS
system software which provides managers with enhanced
reporting and timely access of health and safety performance
data. In addition, the updated WHS system software provides
summaries of health and safety actions and audits completed or
still outstanding. All improvements are in line with the obligations
under the new WHS Act.
gWa grouP limiteD ∕ ∕ 2012 annual rePort
At the start of the 2011/12 year, GWA set a target of 15% year on
year improvement on the 2009/10 results for TIFR. The actual
improvement in performance was 14% which was just short of the
target. This is the 7th consecutive year that GWA has improved TIFR
and by an impressive 79% since 2005/06.
Highlights within the GWA Group business units include:
■■ GWA Bathrooms & Kitchens achieving a Lost Time Injury Rate
of less than 1;
■■ GWA Door & Access Systems (Gainsborough) reducing all key
performance indicators for Lost Time, Medical Treatment, and
Injury Severity;
■■ GWA Door & Access Systems (Gliderol) improving their TIFR by
73%, albeit off a reasonably poor base at the time of acquisition
in January 2011; and
■■ Acceptance into a new workers compensation scheme in NSW
(called Retro Paid Loss). The scheme provides GWA with the
ability to be more self managed, independent of peer company
performance and with significant cost down opportunities.
Work health and safety improvement objectives and projects are
planned to be met through continuation of the 2011/12 initiatives
including:
■■ 2012/13 TIFR target of a further 14% reduction versus the
GWA Group Total Injury Frequency Rate
50
40
30
20
10
0
2006/07 2007/08 2008/09
2009/10
2010/11
2011/12
GWA Group Lost Time Injury Frequency Rate
10
8
6
4
2
0
2006/07 2007/08 2008/09
2009/10
2010/11
2011/12
2011/12 year;
GWA Group Medical Treatment Injury Frequency Rate
■■ Plans to reduce Injury Severity Rate through improved return
to work plans;
■■ Further integration of health and safety systems for all GWA
business units; and
■■ Introduction of a software based contractor management system.
35
30
25
20
15
10
5
0
2006/07 2007/08 2008/09
2009/10
2010/11
2011/12
GWA Group Injury Severity Rate
6000
5000
4000
3000
2000
1000
0
2006/07 2007/08 2008/09
2009/10
2010/11
2011/12
11
■■z HeaD oFFice location
GWA Bathrooms & Kitchens
Caroma Industries Limited
4 Ray Road
Epping NSW 2121
AUSTRALIA
Telephone 61 2 9202 7000
Facsimile 61 2 9202 7099
Websites: www.gwabathroomsandkitchens.com.au
www.caroma.com.au
www.fowler.com.au
www.dorf.com.au
www.irwell.com.au
www.stylus.com.au
www.epure.com.au
www.clark.com.au
www.radiantstainless.com.au
www.starionaust.com.au
segment PerFormance
Sales Revenue
Trading EBIT
Margin
2011/12
$’000
2010/11
$’000
297,759
332,379
60,965
20.5%
78,903
23.7%
%
Change
(10.4)
(22.7)
Business DescriPtion
GWA Bathrooms & Kitchens is Australia’s foremost designer,
manufacturer, importer and distributor of domestic and commercial
bathroom and kitchen products. Through its portfolio of well known
bathroom and kitchen brands, GWA Bathrooms & Kitchens aims to
create environmentally friendly innovative product solutions for every
Australian and New Zealand bathroom and kitchen. GWA Bathrooms
& 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, Caroma Marc Newson, Dorf, Fowler, Stylus, Clark,
Epure, Radiant, Irwell
Distributed: Hansa, KWC, Schell, Virtu, EMCO
oPerating locations
Australia, New Zealand, China
major markets
New dwellings, renovation, replacement and commercial markets in
Australia, New Zealand and selected international markets.
strategic Direction
GWA Bathrooms & 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 & Kitchens will continue to invest in its iconic
brands to reinforce its brand values. GWA Bathrooms & Kitchens
are committed to continuous process improvement in its Australian
manufacturing and supply operations.
gWa grouP limiteD ∕ ∕ 2012 annual rePort
HeaD oFFice location
GWA Door & Access Systems
Gainsborough Hardware Industries Limited
31-33 Alfred Street
Blackburn VIC 3130
AUSTRALIA
Telephone 61 3 9877 1555
Facsimile 61 3 9894 1599
Websites: www.gainsboroughhardware.com.au
www.ausloc.com
Gliderol International Pty Limited
32 Jacobsen Crescent
Holden Hill SA 5088
AUSTRALIA
Telephone 61 8 8261 9633
Facsimile 61 8 8261 9700
Website: www.gliderol.com.au
segment PerFormance
Sales Revenue
Trading EBIT
Margin
2011/12
$’000
2010/11
$’000
138,568
114,026
14,057
10.1%
17,158
15.0%
%
Change
21.5
(18.1)
Business DescriPtion
GWA Door & Access Systems is a leading Australian designer,
manufacturer, importer and distributor of a comprehensive range
of pedestrian and vehicle access and security systems for use in
domestic and commercial buildings. In January 2011, the division
was expanded with the acquisition of the Australian garage door
and opener business of Gliderol. Gliderol is a leading manufacturer
and distributor of garage door and openers for the residential and
commercial markets.
main ProDucts anD services
A comprehensive range of door hardware and access systems
comprising door handles (knobs and levers), locking systems,
door closers, hinges and other door accessories. A wide range of
roller doors, sectional overhead doors, automatic operators, gate
operators, roller shutters, specialty doors, garage storage solutions
and accessories.
major BranDs
Owned: Gainsborough, Trilock, Renovator, Austral Lock,
Gliderol, Matador
Distributed: Salto, Hillaldam, Eco Schulte
oPerating locations
Australia, New Zealand, export markets
major markets
Domestic home builders, DIY and renovation projects, commercial
buildings and multi-dwelling developments, after sales servicing.
strategic Direction
GWA Door & Access Systems strategic direction encompasses the
development of new and innovative door hardware, access system
technologies and vehicle door products to suit domestic buildings
and commercial projects. GWA Door & Access Systems will continue
to focus on its key customer relationships through the supply of
market leading product innovation and design, and a high level of
customer service.
13
strategic Direction
GWA Heating & 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
& 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 & Cooling
Dux Manufacturing Limited
Lackey Road
Moss Vale NSW 2577
AUSTRALIA
Telephone 61 2 4868 0200
Facsimile 61 2 4868 2014
Brivis Climate Systems Pty Ltd
61 Malcolm Road
Braeside VIC 3195
AUSTRALIA
Telephone 61 3 9264 9555
Facsimile 61 3 9264 9400
Websites: www.dux.com.au
Website: www.brivis.com.au
www.ecosmart.com.au
www.hotwaterrebate.com.au
segment PerFormance
Sales Revenue
Trading EBIT
Margin
2011/12
$’000
2010/11
$’000
166,156
195,298
13,259
17,195
8.0%
8.8%
%
Change
(14.9)
(22.9)
Business DescriPtion
GWA Heating & Cooling comprises the Dux, EcoSmart and Brivis
business units. GWA Heating & Cooling is an Australian designer,
manufacturer and importer of hot water, heating and cooling systems
for residential and commercial markets. All products are developed
to provide consumers with greater control and comfort in their home
or place of work. GWA Heating & 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.
major BranDs
Owned: Brivis, APAC, Dux, EcoSmart, Radiant
oPerating locations
Australia, overseas distributors
major markets
GWA Heating & Cooling participates in the new home, renovation
and replacement or breakdown markets primarily for residential
applications.
gWa grouP limiteD ∕ ∕ 2012 annual rePort
15
BoarD of DireCtors
geoFF mcgratH miie
chairman and non-executive Director
■■ 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 Group
Limited in 2004 and was appointed Chairman effective 1 July 2010.
He retired from GWA Group 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. He retired
as Chairman of Campbell Brothers Limited on 31 July 2012.
Darryl mcDonougH
BBus (acty), llB (Hons), sjD, FcPa, FaicD
Deputy chairman and non-executive Director
■■ expertise: Experienced public company director and lawyer
■■ special responsibilities: Deputy Chairman of Board, Member of
Nomination Committee
Mr McDonough was appointed a Non-Executive Director of GWA
Group Limited in February 2009 and was appointed Deputy
Chairman in October 2009. He has over 25 years of corporate
experience as a director and lawyer. He has served as a director
of a number of public companies in the past, including Bank of
Queensland Limited and Super Retail Group Limited and is a
Past-President of The Australian Institute of Company Directors,
Queensland Division.
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:
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:
■■ Campbell Brothers Limited 2003 – 2012
■■ Fletcher Building Limited 2003 – 2009
■■ Super Retail Group Limited 2003 – 2010
roBert anDerson
non-executive Director
■■ expertise: Property investment and transport logistics
Mr Anderson was appointed a Non-Executive Director of GWA
Group 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.
Peter croWley Ba Becon FaicD
managing Director
■■ expertise: Broad manufacturing experience in Australia
and overseas
2003: Managing Director of GWA Group 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; and
1982: Various roles with Queensland Cement Limited and its parent
company Holderbank culminating in General Management
responsibilities within Australia and South-East Asia.
gWa grouP limiteD ∕ ∕ 2012 annual rePort
Bill Bartlett Fca, cPa, Fcma, ca(sa)
non-executive Director
joHn mulcaHy PHD (civil engineering), Fie aust
non-executive Director
■■ expertise: Chartered Accountant, actuarial, insurance and
■■ expertise: Civil Engineer and experienced public company director
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 Group
Limited in 2007 and Chairman of the Audit Committee in October
2009. He is a Fellow of the Institute of Chartered Accountants and
was a partner at Ernst & Young in Australia for 23 years, retiring
on 30 June 2003. He is Chairman of the Cerebral Palsy Council of
Governors and recently retired as a director and honorary treasurer
of the Bradman Museum and Foundation.
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 Group Limited since 2003*
■■ Reinsurance Group of America Inc (NYSE) since 2004*
■■ Abacus Property Group since 2007*
*denotes current directorship
■■ special responsibilities: Member of Remuneration Committee
Mr Mulcahy was appointed a Non-Executive Director of GWA
Group Limited in November 2010. He is a Fellow of the Institute of
Engineers and is a Non-Executive Director of Mirvac Group Limited,
Coffey International Limited, Campbell Brothers Limited and a
Guardian of the Future Fund. He is the former Managing Director
and Chief Executive Officer of Suncorp Group Limited (“Suncorp”).
Prior to joining Suncorp, he held a number of senior executive roles
at the Commonwealth Bank and Lend Lease Corporation.
During the past three years, Mr Mulcahy has served as a director
of the following other listed companies, and the period in which the
directorships have been held:
■■ Mirvac Group Limited since 2009*
■■ Coffey International Limited since 2009*
■■ Campbell Brothers Limited since 2012*
■■ Suncorp Group Limited 2003-2009
*denotes current directorship
Peter Birtles Bsc, aca
non-executive Director
■■ expertise: Chartered Accountant, retail, financial and operational
■■ special responsibilities: Member of Audit Committee
Mr Birtles was appointed a Non-Executive Director of GWA Group
Limited in November 2010. He is a Chartered Accountant and is the
current Managing Director and Chief Executive Officer of Super Retail
Group Limited (“Super Retail”). He was formerly the Chief Financial
Officer of Super Retail. Prior to joining Super Retail, he held a variety
of finance, operational and information technology roles with The
Boots Company in the United Kingdom and Australia and worked for
Coopers & Lybrand.
During the past three years, Mr Birtles has served as a director of
the following other listed companies, and the period in which the
directorship has been held:
■■ Super Retail Group Limited since 2006*
*denotes current directorship
ricHarD tHornton ca B com llB (Hons) llm
executive Director and company secretary
■■ expertise: Chartered Accountant, taxation and finance
Mr Thornton was appointed an Executive Director of GWA Group
Limited in May 2009. He joined GWA Group 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. He is a director of
Great Western Corporation Pty Ltd.
17
Corporate GovernanCe statement
for the year enDeD 30 june 2012
the Board of Directors is responsible for the
corporate governance of gWa group limited
(“the company”) which is an essential part of
■■ 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
the role of the Board. the company’s corporate
Managing Director;
governance practices have been in place since
■■ Liaison with the Company’s External Auditor through the
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.
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.
The Board supports the changes to the recommendations requiring
disclosure of the Company’s Diversity Policy and measurable
objectives for achieving gender diversity which are effective from
1 January 2011. During the year, the Board approved a specific
Diversity Policy to provide the framework for achieving a diverse
workforce and established measurable objectives for achieving gender
diversity. In recent years, the Company has implemented a number of
important diversity related policies and initiatives to further the Board’s
objective for achieving a diverse workforce. The Company’s diversity
disclosures are outlined below under ‘Diversity in the Workforce’.
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 and final approval of corporate strategies and
performance objectives developed by senior management;
■■ Approval and monitoring of financial and other reporting;
gWa grouP limiteD ∕ ∕ 2012 annual rePort
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 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; and
■■ Other matters referred to in the Board and Board Committee
charters.
The Board operates under a charter that details the functions and
responsibilities of the Board. The charter is reviewed annually 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 executives. The policy ensures that the executives understand
the authorities delegated by the Board and are accountable to
the Board for its compliance. Annual 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, Executive Director and Chief Financial Officer have formal
job descriptions and letters of appointment describing their salary
arrangements, rights and responsibilities and entitlements on
termination.
A comprehensive induction program is available to directors and
senior executives to ensure full understanding of the Company, its
policies and procedures and the 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 Plan as outlined in the Remuneration Report.
PrinciPle 2 – structure tHe BoarD to aDD
value
Board meetings
The Board meets at least 10 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 Chief Executives and General Managers are required
to regularly attend and present at the Board meetings on divisional
and business unit 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 executives. This ensures that the Board is
effectively carrying out its duties of providing input 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 8 directors, 6 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 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 Board should consist of a majority of independent directors;
■■ The Chairperson should be an independent 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; and
■■ 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 the non-executive directors must be
independent from management and free of any business or other
relationship that could interfere, or reasonably be perceived to interfere,
with the exercise of their unfettered and independent judgment.
In considering the relationships which may affect independent status
as outlined in the recommendations of the ASX Corporate Governance
Council, it has been determined that the Company’s non-executive
directors are independent. Therefore, the Board comprises 75%
independent directors and 25% non-independent directors (being
the Managing Director and Executive Director) which meets the
recommendations of the ASX Corporate Governance Council.
19
corporate governance statement for the year ended 30 june 2012 cont.
The following table outlines the Company’s directors considered to be
independent:
Director
Mr Geoff McGrath
Mr Darryl McDonough
Mr Peter Crowley
Mr Bill Bartlett
Mr Robert Anderson
Mr John Mulcahy
Mr Peter Birtles
Mr Richard Thornton
Role
Non-
Executive
Independent
Chairman
Deputy
Chairman
Managing
Director
Non-Executive
Director
Non-Executive
Director
Non-Executive
Director
Non-Executive
Director
Executive
Director
Yes
Yes
No
Yes
Yes
Yes
Yes
No
Yes
Yes
No
Yes
Yes
Yes
Yes
No
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 that arise
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) 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
■■ Retirement of Mr Jim Kennedy in 2009
■■ Appointment of Mr Darryl McDonough in 2009
■■ Appointment of Mr Richard Thornton in 2009
■■ Retirement of Mr Barry Thornton in 2010
■■ Retirement of Mr David Barry in 2010
■■ Appointment of Mr John Mulcahy in 2010
■■ Appointment of Mr Peter Birtles in 2010
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.
gWa grouP limiteD ∕ ∕ 2012 annual rePort
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 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 majority of
independent directors;
■■ The Nomination Committee should consist of a minimum of
three members; and
■■ 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 reviewed annually 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 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; and
■■ 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.
acceptance form is signed by new employees acknowledging their
understanding and on-going compliance with the Code of Conduct
and the Company’s policies and procedures.
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;
■■ Consideration of the need for Board diversity and whether the
potential appointee furthers the Board’s objective of achieving a
diverse workforce in accordance with its Diversity Policy; and
■■ The Board members consent to the proposed appointee.
induction Program
The Nomination Committee is responsible for ensuring that an
effective induction program for new directors is in place and regularly
reviewed to ensure its effectiveness. The Board has developed a
comprehensive induction program for new directors to allow the new
appointees to participate fully and actively in Board decision making.
The Board views the induction program as critical in enabling the
new directors to gain an understanding of the Company and the
markets in which it operates.
Performance evaluation
On an annual basis, the Nomination Committee conducts a formal
evaluation of the performance of the Board, the Board Committees
and the individual Board members to determine whether they are
functioning effectively by reference to current good practice. The
performance evaluation is conducted by the Chairman of the Board
through open discussions with the Board members and detailed
questionnaires as required. Any issues or improvement opportunities
identified from the performance evaluation are actioned.
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
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 reviewed annually
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
During the year, the Board approved a revised Share Trading Policy
which complies with the ASX Listing Rules. The revised policy
modified the trading periods for directors and senior executives to
30 days after each yearly/half yearly results announcement and
Annual General Meeting, and provided they are not in the possession
of unpublished insider information.
Outside of these trading periods, the directors, senior executives and
other ‘potential insiders’ are prohibited from trading in the Company’s
securities unless ‘exceptional circumstances’ exist and prior written
approval has been obtained. ‘Exceptional circumstances’ mean
severe financial hardship or other circumstances considered to be
exceptional, including a court order or court enforceable undertaking
in a bona fide family settlement or some other overriding legal or
regulatory requirement to transfer the Company’s securities.
The revised Share Trading Policy requires the directors to notify the
Executive Director within two business days after trading, to enable
the Executive Director to lodge the required disclosures with the
Australian Securities Exchange.
Diversity in the Workforce
The Company is committed to the promotion of diversity in the
organisation through the implementation of targeted employment
policies and initiatives to achieve a diverse workforce. The Board
understands the significant benefits that can arise from increasing
the pool of talent from which the Company can draw high quality
employees and the different perspectives that can be brought to
the organisation from a diverse workforce.
The Company has strengthened its focus on diversity with the
Board’s approval of a specific Diversity Policy which is available on
the Company’s website. In accordance with the policy, the Board has
set a number of measurable objectives to promote and encourage
increased diversity and in particular, to improve the representation
of females within the workforce. The measurable objectives will be
assessed by the Board annually and performance will be reported
in the Corporate Governance Statement in the Annual Report.
The measurable objectives are:
1. Increase the percentage of females employed by GWA
■■ Ensure the recruitment process and practices continue to comply
with equal opportunity principles;
■■ Provide recruitment training for managers ensuring a focus on
equal opportunity and avoiding ‘unconscious bias’; and
■■ Investigate the feasibility of implementing a graduate program with
an emphasis on encouraging women into non-traditional roles.
21
corporate governance statement for the year ended 30 june 2012 cont.
2. Provide and promote flexible work practices to attract and retain
female employees
The following table outlines the Company’s workplace profile at
31 March 2012:
■■ Continue to promote awareness of current flexible work practices
available in the Company to existing employees and potential
candidates; and
■■ Investigate and implement any additional flexible work arrangements
appropriate to the needs of employees with families.
3. Succession planning and high potential employee development
■■ Ensure high potential female employees are identified as part
of the Company’s succession planning process and actively
developed for career progression.
The Company follows a detailed recruitment process to ensure staff
are selected on merit, irrespective of gender. In the upcoming year,
the Company plans to provide additional recruitment training to its
managers with a focus on equal opportunity employment and in
particular, exploring the concept of ‘unconscious bias’ and putting
in place processes to avoid this occurring.
Based on the Company’s 2012 Equal Opportunity for Women in
the Workplace (‘EOWA’) Report, 35% of staff recruited into the
organisation during the reporting period were female. Although this is
the same percentage as the previous reporting period, there was an
increase in the number of female team leaders and managers. The
Company expects this positive trend will continue and over time will
see these higher numbers result in more females moving into higher
level management and executive roles as the team leaders and
managers are developed and promoted.
The Company has continued to promote the ‘Work Life Balance’
policies introduced in the previous year. These policies, such as
paid parental leave and flexible work arrangements, were aimed at
assisting in attracting more females to apply for positions advertised
and retaining the current female employees. During the year, a
number of employees moved to flexible work arrangements and
the majority of employees have returned to work at the end of their
parental leave period. This year, the Company introduced a new
‘Working from Home’ policy specifically to accommodate employees
with carer responsibilities.
As part of the Company’s succession planning process, a number
of female employees have been identified as high potential. The
Company has ensured that they continue to be developed through
a mix of external and internal development. The aim is for these
employees to be ready to step up to the next level when a position
becomes available. Discussions are held regularly by the corporate and
divisional executive with the aim of identifying potential opportunities
for the transfer of high potential staff across the divisions.
As outlined in the Company’s 2012 EOWA report, the overall
workforce consists of 29% female and 71% male. Although these
percentages have not changed from 2011, the Company has
undertaken significant restructuring during the year resulting in lower
overall employee numbers, divested the Sebel Furniture business
and acquired Gliderol Garage Doors which employs approximately
80% male. It is encouraging that despite these changes, the
Company has maintained the percentage of females in the workforce.
gWa grouP limiteD ∕ ∕ 2012 annual rePort
Title
Board
Senior Executives
Senior Managers
Managers
Team Leader/Supervisor
Professional
Skilled Workers
Admin Staff
Production/Distribution Staff
Sales Staff
Service Staff
Total
% Women
0
0
14%
17%
31%
21%
3%
75%
21%
21%
72%
29%
% Men
100%
100%
86%
83%
69%
79%
97%
25%
79%
79%
28%
71%
The Company is an active equal opportunity employer which is
highlighted in the employee recruitment process. The Company
received notification from EOWA in July 2012 that the organisation
continues to be compliant with the Equal Opportunity for Women in
the Workplace Act 1999.
PrinciPle 4 – saFeguarD integrity in
Financial rePorting
audit committee
The Audit Committee meets as required and at least four times
throughout the year. For membership and attendance details of the
Audit Committee, refer to the Directors’ Report.
The composition of the Audit Committee is based on the following
principles:
■■ The Audit Committee should consist of non-executive directors only;
■■ The Audit Committee should consist of a majority of independent
directors;
■■ The Chairperson of the Audit Committee must be an independent
director and not Chairperson of the Board;
■■ The Audit Committee should consist of at least three members; and
■■ 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 reviewed annually
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, Group Risk 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
members. At the Audit Committee meetings, the 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;
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:
■■ Recommendations on the appointment and removal of the
■■ The auditor independence requirements of the Corporations Act
External Auditor;
2001 in relation to the audit; and
■■ Review and monitor the performance and independence of the
■■ Any applicable code of professional conduct in relation to the audit.
external audit function;
■■ Review of tax planning and tax compliance systems and processes;
■■ Review and monitor risk management and internal compliance
and control systems;
■■ Assess the performance and objectivity of the internal audit
function; and
■■ 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.
external auditor independence
The Board recognises the importance of a truly independent
external 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 external 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 that the auditor’s independence is not compromised.
Whilst the value of 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.
In considering the KPMG independence declaration and the
recommendation of the Audit Committee, the Board is satisfied with
the continuing independence of the external audit function. For
details of the non-audit roles performed by KPMG during the year,
please refer to the notes to the Financial Statements.
selection and appointment of external auditor
Following shareholder approval at the 2004 Annual General Meeting,
KPMG were appointed External Auditor for the financial year
commencing 1 July 2004 after a comprehensive tender process
conducted by the Audit Committee. KPMG replaced Ernst & Young
who had been the External Auditor since 1995.
rotation of external auditor
KPMG has advised the Company that their policy of audit partner
rotation requires a change in the lead engagement partner and
review partner after a period of five years. In accordance with the
policy, effective from 1 July 2010, Mr Greg Boydell was appointed the
Lead Engagement Partner following the rotation of 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.
23
corporate governance statement for the year ended 30 june 2012 cont.
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 the
Annual 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.gwagroup.com.au. All Company announcements
and information released to the market (including half and full
year results) 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
policies and other information including details of the Company’s
sustainability and environmental 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 at present not all communications are
made available electronically. Annual Reports are no longer
printed and mailed to shareholders, unless specifically requested.
Annual Reports are made available to shareholders on the
Company’s website in an accessible and user friendly format.
Shareholders are mailed the Notice of Annual General Meeting
and Proxy Form, which includes details on accessing the online
Annual Report and proxy voting;
■■ The Company encourages shareholders to attend and participate
at the Annual General Meeting to canvass the relevant issues
of interest with the Board. If shareholders are unable to attend
the Annual General Meeting personally, they are encouraged to
participate through proxy voting. The Company has implemented
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 external audit and the preparation and content
of the Independent Auditor’s Report. Shareholders attending the
Annual General Meeting are made aware they can ask questions
of the External Auditor concerning the conduct of the audit.
PrinciPle 7 – recognise anD manage risk
The Board recognises that effective risk management processes help
ensure the business is more likely to achieve its business objectives
and that the Board meets its corporate governance responsibilities. In
meeting its responsibilities, the Board has ensured that management
has put in place comprehensive risk management policies and practices
across the Company which addresses each of the key elements and
requirements of AS/NZS Standard 4360:2004 – Risk Management.
Such processes include defining the risk oversight responsibilities of
the Board and the responsibilities of management in ensuring risks
are both identified and effectively managed. The agreed policies and
practices are made effective through the combined activities of:
■■ An Audit Committee that reports to the Board on risk management
and internal control matters in accordance with its main
responsibilities as outlined in the Audit Committee Charter. Whilst
ultimate responsibility for risk oversight rests with the Board,
the Audit Committee is an efficient mechanism for focusing the
Company on risk oversight, risk management and internal controls;
■■ 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 November meetings together with risk
mitigation activities. The ERC reports to the Audit Committee on
its activities as outlined in the ERC charter;
■■ A Finance Committee comprising the executive and senior
management of the Company which has been established to
review and monitor the financial risks in the organisation and
oversee the execution of finance policies and risk mitigation
activities. The Finance Committee reports to the Audit Committee
on its activities as outlined in the Finance Committee charter;
■■ A Group Commercial Manager who has primary responsibility
for designing, implementing and coordinating the overall risk
management and internal control practices of the Company.
The Group Commercial Manager attends the Audit Committee
meetings to present the Internal Audit Report 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 November Audit Committee
meetings to present the Operational Risk Report;
■■ A co-sourced Internal Audit structure under the management
of Grant Thornton. The Internal Audit activities are carried out
by a combination of internal and appropriately qualified external
resources based on an Audit Committee approved program of
work. Such activities link to the Company’s risk management
gWa grouP limiteD ∕ ∕ 2012 annual rePort
practices 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
■■ External Audit activities undertaken by the External Auditor,
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 executives and 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
continually evaluate and re-assess the risk management and internal
control practices of the Company to ensure current good practice is
maintained and to preserve and create value within the organisation.
certification of risk management controls
In conjunction with the certification of financial reports, the Managing
Director and Chief Financial Officer state in writing to the Board each
reporting period that in their opinion:
■■ The statement is founded on a sound system of risk management
and internal compliance and control which implements the
policies adopted by the Board; and
■■ The Company’s risk management and internal compliance and
control system is operating efficiently and effectively in all
material respects.
The statements from the Managing Director and Chief Financial
Officer are based on a formal sign-off framework established
throughout the Company and reviewed by the Audit Committee as
part of the financial reporting process.
PrinciPle 8 – remunerate Fairly anD
resPonsiBly
remuneration committee
The Remuneration Committee meets as required and on several
occasions throughout the year. For membership and attendance
details of the Remuneration Committee, refer to the Directors’ Report.
The composition of the Remuneration Committee is based on the
following principles:
■■ The Remuneration Committee should consist of non-executive
directors only;
■■ The Remuneration Committee should consist of a majority of
independent directors;
■■ The Remuneration Committee should consist of a minimum of
three members; and
■■ The Chairperson of the Remuneration Committee should be an
independent director.
The Remuneration Committee operates under a charter that details
the Committee’s role and responsibilities, composition, structure and
membership requirements. The charter is reviewed annually 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;
■■ Review of the Company’s superannuation arrangements; and
■■ Reporting to the Board on the Committee’s role and
responsibilities covering all the functions in its charter.
In performing its responsibilities, the Remuneration Committee
receives appropriate advice from independent external advisers.
During the year, the Remuneration Committee engaged the services
of Guerdon Associates to provide market benchmarking data to assist
with the 2012/13 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 market benchmarking data 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 independent external adviser 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.
25
DireCtors' report
as at 30 june 2012
your directors present their report on the
consolidated entity of gWa group limited
(“the company”) and the entities it controlled
Director
G J McGrath
D D McDonough
during the financial year ended 30 june 2012.
P C Crowley
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
R M Anderson
W J Bartlett
J F Mulcahy
P A Birtles
R J Thornton
Total
ordinary shares
150,000
100,495
750,000
8,418,442
30,914
45,000
15,000
128,694
9,638,545
P C Crowley, Managing Director
R M Anderson, Non-Executive Director
W J Bartlett, Non-Executive Director
J F Mulcahy, Non-Executive Director
P A Birtles, Non-Executive Director
R J Thornton, Executive Director
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 2011/12 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 Group
Limited in 2003. Mr Thornton continued in his role as Company
Secretary following his appointment as Executive Director in May
2009. Details of Mr Thornton’s qualifications and experience are
located in the Annual Report.
Directors’ interests
The relevant interest of each director in the share capital of the
Company as notified by the directors to the Australian Securities
Exchange in accordance with Section 205G(1) of the Corporations
Act 2001 as at the date of this report is shown in the above table.
The executive directors, Mr P C Crowley and Mr R J Thornton, are
holders of Performance Rights under the GWA Group Limited Long
Term Incentive Plan. For details of the Performance Rights held,
please refer to the Remuneration Report.
Note 33 to the Financial Statements sets out the number of shares held
directly, indirectly or beneficially by directors or their related entities at
balance date as prescribed in Accounting Standard AASB 124, this
being 19,624,906 shares (last year 19,587,525 shares).
corPorate structure
GWA Group Limited is a Company limited by shares that is
incorporated and domiciled in Australia. GWA Group Limited has
prepared a Consolidated Financial Report incorporating the entities
that it controlled during the financial year ended 30 June 2012,
which are outlined in Note 30 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 completed the divestments of the remaining non-
core operations through the sale of Sebel Furniture Limited and
related entities in September 2011 and the sale of the Caroma North
American business in December 2011. There have been no other
significant changes in the nature of the activities of the consolidated
entity during the year.
gWa grouP limiteD ∕ ∕ 2012 annual rePort
emPloyees
The consolidated entity employed 1,788 employees as at
30 June 2012 (last year 2,150 employees).
The consolidated entity recognises the productivity benefits to be
gained from investing in its employees to improve motivation and
individual skills. The consolidated entity remains committed to
ensuring that staff are provided access to appropriate training and
development programs.
The consolidated entity has implemented employment policies aimed
at encouraging diversity in the workforce to attract and retain the best
people, including a stronger representation of women. All companies
in the consolidated entity are active equal opportunity employers and
the consolidated entity is compliant with the Equal Opportunity for
Women in the Workplace Act 1999.
segment PerFormance
The segment performance of the Company for the financial year ended
30 June 2012 is outlined in the table at the bottom of this page.
earnings Per sHare
earnings per share
Basic earnings per share
Basic earnings per share –
continuing operations
2011/12
cents
2010/11
cents
13.2
15.3
21.0
19.6
revieW oF oPerations
A review of the operations of the consolidated entity and the results
of those operations for the financial year ended 30 June 2012 is
provided in the Managing Director’s Review of Operations.
state oF aFFairs
Changes in the state of affairs of the consolidated entity during the
financial year resulted from the divestment of the remaining non-core
operations. Details of the changes are as follows:
■■ On 30 September 2011, the consolidated entity sold Sebel
Furniture Limited and related entities (“Sebel”) to Krueger
International, Inc. Sebel is shown as a discontinued operation in
the 2011/12 Financial Statements; and
■■ On 31 December 2011, the consolidated entity sold the Caroma
North American business to Sustainable Solutions International.
Caroma North America is shown as a discontinued operation in
the 2011/12 Financial Statements.
In the opinion of the directors, there were no other significant
changes in the state of affairs of the consolidated entity during the
financial year, other than disclosed in the Directors’ Report or referred
to in the Financial Statements or notes thereto.
DiviDenDs
Dividends paid or declared by the Company to shareholders since
the end of the previous financial year were:
DeclareD anD PaiD During 2011/12
Financial year
Dividend
Final 2010/11
Ordinary
Interim 2011/12
Ordinary
Cents per
share
total
amount
$’000
8.5
25,630
9.5
28,645
franked
Date of
payment
Fully
Franked
6 October
2011
Fully
Franked
4 April
2012
Franked dividends declared and paid during the year were franked at
the corporate tax rate of 30%.
Business segment
segment sales
trading eBit
Bathrooms & Kitchens
Heating & Cooling
Door & Access Systems
Discontinued Operations
Total
2011/12
$’000
297,759
166,156
138,568
12,441
614,924
2010/11
$’000
332,379
195,298
114,026
84,796
726,499
2011/12
$’000
60,965
13,259
14,057
(7,792)
80,489
2010/11
$’000
78,903
17,195
17,158
7,246
120,502
27
Directors' report as at 30 june 2012 cont.
DeclareD aFter enD oF tHe 2011/12
Financial year
After balance date the following dividend was approved by the
directors. The dividend has not been provided and there are no
income tax consequences.
Dividend
Final 2011/12
Ordinary
Cents per
share
total
amount
$’000
8.5
25,670
franked
Date of
payment
Fully
Franked
4 October
2012
The financial effect of the dividend has not been brought to account
in the Financial Statements for the year ended 30 June 2012 and will
be recognised in subsequent Financial Reports.
The record date for the final dividend is 14 September 2012 and the
dividend payment date is 4 October 2012. The Dividend Reinvestment
Plan (DRP) will be offered to shareholders for the final dividend and a
discount of 2.5% will apply to shares subscribed for under the DRP.
The record date for DRP participation is 14 September 2012.
signiFicant events aFter Balance Date
On 14 June 2012, the consolidated entity entered into a scheme
implementation agreement (SIA) to acquire all of the shares of
Q Technology Group Ltd (QTG). Subsequent to 30 June 2012,
the SIA was terminated by the parties due to a condition precedent
in the SIA becoming incapable of satisfaction. On 16 July 2012,
the consolidated entity signed an indicative non-binding heads of
agreement with QTG for the acquisition of API Services and Solutions
Pty Ltd (API) for $14 million on a debt free basis. API is a supplier
of safes, locks, alarms and locksmithing services to commercial
premises. The consolidated entity is continuing its discussions with
QTG on the acquisition of API.
On 14 August 2012, the directors declared a final ordinary dividend of
8.5 cents per share in respect of the financial year ended 30 June 2012.
The dividend will be fully franked at the 30% corporate tax rate. The
total amount of the dividend is $25.670 million (last year $25.630
million). In accordance with Accounting Standards, the dividend has
not been provided for in the Financial Statements for the year ended
30 June 2012.
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 consolidated entity, the results
of those operations, or the state of affairs of the consolidated entity.
likely DeveloPments anD exPecteD
results
Likely developments and expected results of the operations of the
consolidated entity are provided in the Managing Director’s Review
of Operations.
In the next financial year, the consolidated entity 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 consolidated entity
generates the best possible returns from the businesses and to create
competitive advantage.
gWa grouP limiteD ∕ ∕ 2012 annual rePort
Further information on likely developments and expected results of
the operations of the consolidated entity have not been included in
this report because the directors believe it would be likely to result in
unreasonable prejudice to the consolidated entity.
environmental regulation anD
PerFormance
environmental licenses
The consolidated entity 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 consolidated entity’s compliance with
license conditions is made by external advisers.
The consolidated entity, 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. The
directors are not aware of any breaches of the consolidated entity’s
license conditions during the financial year ended 30 June 2012.
environmental remediation
In previous financial years, the consolidated entity 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, a wholly owned
subsidiary of the ultimate parent, GWA Group Limited. The Eagle
Farm site was previously occupied by Corille Limited (formerly Rover
Mowers Limited) and was exited in a prior financial year following the
sale of the Rover Mowers business.
During the year, the remediation activities at the Revesby site were
conducted in accordance with the Voluntary Remediation Proposal
approved by the NSW Office of Environment and Heritage. The
remediation activities were substantially completed during the
2011/12 year and a Site Audit Statement declaring the site is suitable
for on-going use has been obtained. McIlwraith-Davey Pty Ltd intends
to exit the site on lease expiry in April 2013 and on-going monitoring
will be required for two years in accordance with the Groundwater
Management Plan for the site.
Whilst there was no legal obligation to remediate the Eagle Farm
site, the Board approved targeted remediation activities to mitigate
potential future environmental liabilities. The remediation activities
were completed during the 2011/12 year. It is expected that a Site
Audit Statement declaring the site is suitable for on-going use and
with no on-going monitoring obligations will be obtained during the
2012/13 year. The consolidated entity no longer occupies the site.
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
The Remuneration Report provides information about the
remuneration arrangements for key management personnel
(‘KMP’), which includes non-executive directors and the most senior
group executives, for the year ended 30 June 2012. Reference to
‘executives’ in this report means KMP executives.
The report covers the following matters:
1. Board role in setting remuneration strategy and principles;
2. Relationship between remuneration policy and company
performance;
3. Description of non-executive director remuneration;
4. Description of executive remuneration;
5. Details of director and executive remuneration;
6. Key terms of employment contracts; and
7. Legacy equity based remuneration plan.
1. BoarD role in setting remuneration
strategy anD PrinciPles
GWA’s strategy is to provide remuneration that is fair and sufficient
to attract and retain management and directors with the experience,
knowledge, skills and judgment required for the consolidated entity’s
success.
The key principle is that remuneration varies between the median and
third quartiles (or higher if warranted by superior performance) relative
to companies of comparable size and scope to GWA.
The Board engages with shareholders, management and other
stakeholders to continuously refine and improve executive and director
remuneration polices and practices. The Nomination Committee is
responsible for determining the remuneration arrangements for the
non-executive directors, with the annual maximum aggregate amount
approved by shareholders. The Remuneration Committee deals with
remuneration matters for executives.
Both the Nomination Committee and the Remuneration Committee
have the authority to engage external professional advisers without
seeking approval of the Board or management.
During the reporting period, the Remuneration Committee obtained
advice from Guerdon Associates for the 2012/13 executive
remuneration review. Guerdon Associates does not provide services
to management and is considered to be independent. In response
to feedback from shareholders and advice from Guerdon Associates
a number of important changes were implemented last year to the
2011/12 remuneration structure which is consistent with GWA’s
remuneration strategy. These changes are detailed in this report.
1.1 executive remuneration strategy – 2011/12
changes
As a result of shareholder feedback on current practices, GWA’s
executive remuneration structure was changed with effect from
the start of the 2011/12 financial year.
The Remuneration Committee aims to ensure that the mix of fixed
and variable remuneration for executives is appropriate for the
cyclical, mature, competitive and lower growth industries in which
GWA operates, having regard to:
■■ The need to protect the market leading positions of established
products against large global competitors in order to maintain
competitiveness; and
■■ The importance of developing growth opportunities whilst
maintaining stability of earnings and a high operating cash flow
to fund the fully franked dividend payments to shareholders.
The Committee acknowledges that this strategy has generally
resulted in the approval of a higher proportion of fixed remuneration
and a lower proportion of variable remuneration for some executives
compared to peer companies.
Key concerns raised by shareholders and the changes implemented
to GWA’s remuneration structure for the 2011/12 financial year are
summarised in the table on the following page.
1.2 managing Director’s remuneration
The Managing Director’s fixed remuneration has been established over
the past 9 years of service to shareholders where he has consistently
delivered value and positioned the consolidated entity for sustainable
performance. The Managing Director has been instrumental in the
restructuring of the GWA businesses over recent years to compete in
the cyclical Australian building industry with the high Australian dollar
increasing import competition in its primary markets.
During that time, the Company has successfully executed its growth
strategies through the divestment of its non-core businesses and
surplus properties, and through strategic acquisitions to provide
options for growth and expand its core Australian building fixtures
and fittings business. The strong financial position has enabled the
Company to maintain high dividends and fund growth opportunities
as they arise.
During the 9 years of service, the Managing Director has received
only modest incentive payments due to the low activity levels in
the building sector. The Board believes the above changes to
the 2011/12 remuneration structure represented an appropriate
balance between addressing the issues raised by shareholders and
maintaining a competitive compensation package for key executives.
29
Directors' report as at 30 june 2012 cont.
Shareholder Concern
GWA Board Response
Fixed remuneration for Managing Director
and some executives is above third quartile
measured against peer companies.
Long term incentives are too high
Long term incentives are subject to “cliff”
vesting with low targets.
Managing Director’s fixed remuneration will be frozen for three years from 1 July 2011 to
30 June 2014.
Reduce long term incentives with more emphasis on short term incentives with part
deferred subject to further testing and potential clawback.
Remove “cliff” reward vesting that may encourage excessive risk taking as a performance
threshold is approached. The Long Term Incentive plan has graduated vesting scales to
more closely align reward with performance.
Performance targets have been increased for reasonably achievable levels and stretch
targets applied for full vesting.
Incentives could encourage excessive risk taking. Shift some of the incentive from longer term to shorter term requirements for growth with
payment of deferred amounts subject to further testing and potential clawback.
A higher proportion of short term incentives has been set to stretch targets requiring
sustainable performance.
2. relationsHiP BetWeen remuneration
Policy anD comPany PerFormance
Remuneration is linked to performance by:
■■ Applying challenging financial and non-financial measures to
assess performance; and
■■ Ensuring that these measures focus management on operational
and strategic business objectives that create shareholder value.
GWA measures performance on the following key corporate
measures:
■■ Earnings per share (‘EPS’) growth;
■■ Total shareholder return (‘TSR’) relative to companies with similar
scope, operations, customers or products; and
■■ Economic Profit, defined as the pre tax profit after deducting the
cost of capital for funds used.
3 Year Rolling TSR
Remuneration for all executives varies with performance on these
key measures together with achievement of key personal goals which
underpin delivery of these financial outcomes and are linked to the
consolidated entity’s performance review process.
The following graph shows the Company’s relative performance over
a rolling 3 year period to 30 June 2012 compared to the peer group
companies used for the 2012 grant of Performance Rights. The
companies comprise Reece Australia Limited, Brickworks Limited,
CSR Limited, Goodman Fielder Limited, Super Retail Group Limited,
Premier Investments Limited, Breville Group Limited, GUD Holdings
Limited, Hills Industries Limited, Bradken Limited, Dulux Group
Limited, Pacific Brands Limited, Adelaide Brighton Limited and
Ansell Limited.
GWA 3 YEAR ROLLING TSR
PEER GROUP 3 YEAR ROLLING TSR 50TH PERCENTILE
Source: Guerdon Associates
^ Assuming 36 months in each rolling period
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
-20.00%
-40.00%
JUNE 09
OCT 09
FEB 10
JUNE 10
OCT 10
FEB 11
JUNE 11
OCT 11
FEB 12
JUNE 12
AUG 09
DEC 09
APR 10
AUG 10
DEC 10
APR 11
AUG 11
DEC 11
APR 12
gWa grouP limiteD ∕ ∕ 2012 annual rePort
The following is a summary of key shareholder wealth statistics for the Company over the last five years:
financial year
trading eBit* ($m)
trading eps* (cents)
total Dps (cents)
Share Price ($)
2007/08
2008/09
2009/10**
2010/11**
2011/12**
*excludes restructuring expenses
**excludes discontinued operations
99.4
86.4
94.5
99.9
75.4
21.5
17.9
18.5
19.6
15.1
19.5
18.0
18.0
18.0
18.0
2.50
2.30
3.01
2.75
2.10
The remuneration and incentive framework which has been put in
place by the Board has ensured that executives are focused on both
sustaining short term operating performance with moderate long term
strategic growth. This has contributed to the Company generating
the above shareholder returns despite lower building activity and
the global financial crisis. This includes a total of 91.5 cents in fully
franked dividends paid to shareholders in the last five financial years
which includes 1.5 cents in special dividends.
The remuneration and incentive framework has allowed the
Company to respond to the downturn. STI payments to executives
related to Economic Profit targets are lower in 2011/12. LTI rewards
to executives related to earnings per share growth have failed to
meet targets to date. However, STI payments related to performance
improvement and restructuring in the downturn have encouraged
management to respond quickly and make long term decisions to
maintain competitiveness and profitability.
The decline in the Company’s profitability performance in 2011/12
has been primarily driven by the cyclical decline in domestic dwelling
construction and falling house prices impacting renovation activity.
Import competition has increased with the high Australian dollar which
has led to the need for substantial restructuring in the past year.
The Managing Director’s key performance goals and outcomes
subject to STI incentive payments for 2011/12 is provided in the
table below.
2011/12 Goals
Results
Achieve leading safety performance to work towards
an injury free workplace.
Continuous improvement in safety performance over the past 7 years has been
consolidated with a further 14% decline in the total injury frequency rate in 2011/12.
Complete divestments of remaining non-core
businesses and surplus properties.
Execute an acquisition to grow the core building
fixtures and fittings business.
Execute the restructuring of the Caroma Wetherill
Park sanitaryware factory and Gainsborough door
hardware business at Blackburn and Kyneton.
Deliver performance improvement.
Complete the Dux factory upgrade to budget and
plan timetable.
The non-core Sebel Furniture and Caroma North American businesses were
successfully divested during the year to complete the sale of the remaining non-core
businesses and enables the group to focus on growing in the core Australian building
fixtures and fittings segment.
The surplus Norwood and Coburg properties were successfully divested during the
year with the gains on sale fully offsetting the restructuring costs in the Caroma and
Gainsborough businesses.
A heads of agreement was signed in July 2012 for the acquisition of API Locksmiths,
which will provide strategic opportunities for growth in the commercial access systems
market. This followed the termination of the Scheme Implementation Agreement with Q
Technology Group Ltd, the owner of API Locksmiths, due to the non-satisfaction of
a condition.
The restructuring at Caroma and Gainsborough was successfully completed during the
year to improve competitiveness which resulted in an 8% reduction in employee numbers
and was funded by the sale of the surplus Norwood and Coburg properties. The benefits
of the restructuring are expected to flow through in 2012/13 and future periods.
Material cash flow benefits were derived by rationalising unprofitable products,
lowering inventory levels, improved delivery performance and reducing credit claims.
The strong operating cash flow from continuing operations was similar to last year
despite the 25% reduction in trading EBIT.
The Dux factory upgrade was largely complete at the end of June 2012 but there have
been unexpected delays and some cost overruns. The upgrade has established a lower
cost base and the benefits are expected to flow through in 2012/13 and future periods.
31
Directors' report as at 30 june 2012 cont.
3. DescriPtion oF non-executive Director
remuneration
There has been no change to the basis of non-executive director
fees since the prior reporting period.
Fees for non-executive directors are fixed and are not linked to
the financial performance of the consolidated entity. The Board
believes this is necessary for non-executive directors to maintain
their independence.
At the 2004 Annual General Meeting, shareholders approved non-
executive director fees up to an annual maximum aggregate amount
of $1.09 million (including statutory superannuation). The actual fees
paid to the non-executive directors are outlined in the Remuneration
Tables (see section 5.1).
Non-executive director remuneration consists of base fees and
statutory superannuation, plus an additional fee for each Board
committee on which a director sits. The payment of committee fees
recognises the additional time commitment required by directors who
serve on one or more committees. Non-executive directors are not
able to participate in the executive incentive schemes or the GWA
Employee Share Plan.
The Nomination Committee obtains market benchmarking data
from an external remuneration adviser to ensure that the level and
allocation of non-executive director remuneration is market based
and fairly represents the responsibilities and time spent by the
directors on Company matters. The benchmarking survey from
Guerdon Associates in 2011 sampled the same companies used for
executive remuneration benchmarking (see section 4.2) and found
the fees received by most non-executive directors were positioned at
about the 60th percentile.
Retirement benefits are not available for non-executive directors of
the Company, other than statutory superannuation.
4. DescriPtion oF executive remuneration
4.1 executive remuneration structure
Executive remuneration has a fixed component and a component
that varies with performance.
The variable component ensures that total pay varies with
performance. The short term incentive (‘STI’) provides rewards for
performance over a 1 year period. The long term incentive (‘LTI’)
provides rewards for performance over a 3 year period.
The maximum total remuneration that can be provided to an
executive is capped, with maximum incentive payments expressed
as a percentage of total fixed remuneration. Total fixed remuneration
for the purposes of the incentives includes superannuation and non-
monetary benefits. The STI and LTI maximum percentages are less
than most market peers given the emphasis on stability of earnings,
cash flow and dividends and the relatively high fixed pay for some
executives.
4.1.1 managing Director remuneration structure
The 2011/12 incentives structure for the Managing Director
is provided in the above table.
Maximum short
term incentive
% of fixed
remuneration
LTI % of fixed
remuneration
(grant date fair
value)
managing
Director
Total
performance
pay as %
of fixed
remuneration
2011/12
80
40
120
The 2011/12 STI for the Managing Director is provided in the
table below:
managing
Director
Personal
Goals
Financial
Targets
Total
Reasonably
Achievable
Maximum
for achieving
stretch goals
2011/12
20
30
50
80
4.1.2 other executives remuneration structure
The 2011/12 incentives structure for other executives is provided in
the table below:
Maximum short
term incentive
% of fixed
remuneration
LTI % of fixed
remuneration
(grant date fair
value)
other
executives
Total
performance
pay as %
of fixed
remuneration
2011/12
50
30
80
The 2011/12 STI for the other executives is provided in the table below:
other
executives
Personal
Goals
Financial
Targets
Total
Reasonably
Achievable
Maximum
for achieving
stretch goals
2011/12
20
20
40
50
The 2011/12 changes implemented for all executives, including the
Managing Director, resulted in a shift in incentives from longer term
to shorter term requirements to focus on responding to the short
term challenges posed by cyclical factors, sustain competitiveness,
deliver value and growth, and maintain cash flows for dividends. This
is supported by a requirement that 50% of the financial component
of the STI be deferred and subject to further testing and potential
clawback with payment at the discretion of the Board at the time of
signing the following year’s annual audited Financial Statements.
The further testing involves the Board verifying the integrity of the
achievement of the STI financial targets. Interest at market rates will
be earned by the executives on the deferred component.
The payment of the STI at the reasonably achievable level has
a greater likelihood of achievement than not, if management
successfully implement improvement plans, and the maximum level
has stretch targets with a one in three year likelihood of achievement.
4.2 Fixed remuneration
Fixed remuneration is the sum of salary and the direct cost of
providing employee benefits, including superannuation, motor
vehicles, car parking and fringe benefits tax.
gWa grouP limiteD ∕ ∕ 2012 annual rePort
The level of fixed remuneration is set:
■■ to retain proven performers with difficult to source experience
in manufacturing and global supply chain management;
■■ to attract external recruits with depth and breadth of expertise
usually acquired while working with larger companies; and
■■ in recognition that the primary focus in recent years has been
on conserving market leadership, cash flow and dividends.
Based on an independent survey by Guerdon Associates for the
2012/13 executive remuneration review, the fixed remuneration for
most executive positions at GWA remains above the 50th percentile
for companies of comparable revenues. However, the Guerdon
Associates survey concluded that compared to the prior year, fixed
remuneration for most GWA executives is closer to market levels.
The 25 listed companies included in the survey provided reliable
and robust statistical remuneration benchmarking and shared
some common attributes with GWA, but few direct competitors and
good position matches exist for precise remuneration positioning.
Judgment was therefore exercised by the Remuneration Committee
in determining appropriate remuneration levels, having regard to the
background and experience of the individuals.
While market levels of remuneration are monitored on a regular basis,
there is no contractual requirement or expectation that pay will be
adjusted each year. Where these levels are above the 75th percentile,
fixed remuneration will either be frozen or increases will be below
market levels. In this regard, the Managing Director agreed last year
to a freeze on his fixed remuneration for 3 years to 30 June 2014.
4.3 short-term incentive (‘sti’)
4.3.1 sti overview
The STI plan provides for an annual payment that varies with
performance measured over the Company’s financial year to
30 June 2012. The STI is aligned to shareholder interests as
executives will only become entitled to the majority of payments if
profitability improves (allowing for the building cycle), with maximum
incentive payments above the reasonably achievable level linked
directly to shareholder wealth creation. Total incentive payments for
2011/12 to executives and management represent less than 3% of
earnings before interest and tax. As noted in section 4.1, the maximum
STI that can be earned is capped to minimise excessive risk taking.
The STI payment is made in cash after finalisation of the annual
audited Financial Statements. As outlined in the Remuneration
Tables, 50% of the financial target component of the STI has been
deferred for the executives that achieved their STI financial targets for
2011/12. The deferred component will be subject to further testing
to confirm the integrity of the achievement of the STI financial targets
following finalisation of the 2012/13 audited Financial Statements.
Interest will be earned by the executives at market rates on the
deferred component.
The achievement of personal goals reinforces the Company’s
leadership model for improved performance management through
achieving measurable personal goals established during the
performance review process at the beginning of the financial year.
Strict criteria have been established by the Remuneration Committee
for the setting of personal goals in order for them to be approved.
The goals can be drawn from a number of areas specific to individual
roles but must be specific, measurable, aligned, realistic and time
based. Weightings are allocated to the personal goals based on their
importance to the individual’s role and the Company.
Personal goals include both measurable financial goals and
measurable business improvement goals. The measurable financial
goals to improve Economic Profit are financial outcomes which
the individual aims to achieve through their effort and their team.
Examples may include achieving working capital reductions, sales/
margin targets or cost reduction targets. The measurable business
improvement goals are outcomes which drive business improvement
and which may or may not have an immediate financial outcome but
will improve the business in the short to medium term. Examples may
include improved safety and environmental performance, delivering
a major project on time and budget, market share and productivity
improvements or implementing a change or strategic initiative.
Assessment of the personal goals STI component for 2011/12 has
been determined following a formal performance review process
conducted for the executives. The performance reviews for the
executives are conducted semi-annually by the Managing Director
with the outcomes approved by the Remuneration Committee. The
Managing Director’s performance review is conducted semi-annually
by the Chairman with the outcomes approved by the Remuneration
Committee. The personal goals of the executives for 2012/13 were
established at the performance reviews.
The inclusion of personal goals in the remuneration structure ensures
that executives can be recognised for good business performance
whether or not the Company or business unit achieves its STI
financial performance targets. The Company operates in the cyclical
building industry so fluctuations in profitability can occur through
the cycle which is out of the control of the executives. The reward for
achievement of personal goals provides specific focus on responding to
changes in the economic cycle, as well as on continuous performance
improvement. Hence the personal goals are a key part of the
Company’s performance management process.
4.3.2.2 Financial Targets
Financial performance targets are based on a combination of
improving revenue, margin and/or improved Return on Funds
Employed (ROFE). This will be calculated using the principle of
Economic Profit which is the pre tax profit after deducting the cost of
funds used in generating the profit.
The formula is:
4.3.2 sti performance requirements
Economic Profit = EBIT – (Funds Employed x pre tax cost of capital)
4.3.2.1 Personal Goals
The personal goals set for each executive includes achievement of
key milestones to improve or consolidate the Company’s or business
unit’s strategic position. The goals vary with the individual’s role, risks
and opportunities.
Pre tax cost of capital is 15% per annum
(NB: Where significant restructuring has been undertaken in a division, trading EBIT
will be used for the calculation of Economic Profit)
33
Directors' report as at 30 june 2012 cont.
Under the STI framework, a business unit head may receive an STI
payment if business unit Economic Profit has grown, although the
overall corporate Economic Profit may not have grown, and vice versa.
The ‘reasonably achievable’ and ‘stretch’ STI financial targets are
determined by the Remuneration Committee at the beginning of
the financial year following approval of the divisional and corporate
budgets by the Board.
The budget performance levels are taken into consideration in setting
the financial targets but different targets may be set (either higher or
lower than budget) depending on the degree of difficulty in achieving
the budget. Performance between the ‘reasonably achievable’ and
‘stretch’ levels is rewarded on a pro rata basis.
The Board retains the right to vary from policy in exceptional
circumstances. However, any variation from policy and the reasons for it
will be disclosed. There were no variations from policy during the period.
For the 2011/12 year the Company’s lower profitability performance
has meant the STI financial targets at both the divisional and
corporate level have not been achieved, except for the Brivis
business unit which achieved its financial targets at the ‘reasonably
achievable’ level. This is reflected in the STI cash bonus amounts in
the Remuneration Tables.
4.4 long-term incentive (‘lti’)
4.4.1 lti overview
Executives participate in a LTI plan. This is an equity based plan that
provides for a reward that varies with Company performance over
three year periods. Three years is considered to be the maximum
time period over which financial projections and detailed business
plans can reasonably be made.
The LTI is provided as Performance Rights, with each right entitling
the holder to an ordinary share in the Company (or in limited cases to
a cash payment), subject to meeting financial performance hurdles
and the holder remaining in employment with the Company until the
nominated vesting date.
If the vesting conditions and performance hurdles are achieved,
ordinary shares will be issued to the participants at no cost.
Performance Rights are cancelled if the performance hurdles
are not met.
The performance hurdles for the LTI are selected by the
Remuneration Committee. Half of the Performance Rights are based
on Total Shareholder Returns (TSR) for GWA compared to a peer
group of companies (which is a relative performance requirement)
and half of the Performance Rights are based on growth in Earnings
Per Share (EPS) (which is an absolute performance requirement).
The EPS performance condition is calculated as net profit after tax
as set out in the Company’s annual 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.
Any such adjustments will be disclosed.
A participant may not dispose of the ordinary shares issued under the
LTI 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 before the end of
the seven year period, including cessation of employment with the
Company or where the Board grants approval. 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 LTI plan, the executives are
prohibited from entering into hedging transactions or arrangements
which reduce or limit the economic risk of holding unvested
Performance Rights.
The LTI rules do not allow for re-testing of the performance hurdles
after the initial performance period.
In the event of a change of control, all outstanding Performance
Rights granted to executives will vest and be exercised into ordinary
shares, except to the extent the Board determines in its discretion
that the vesting conditions are unlikely to be satisfied. If the Board
makes the decision that not all Performance Rights will vest on a
change of control, then all remaining Performance Rights will lapse.
For the 2012 LTI grant, the proportion of Performance Rights that
can vest will be calculated and the shares will vest in August 2014
subject to achieving the performance hurdles.
All unvested rights will be forfeited if the Board determines that
an executive has committed an act of fraud, defalcation or gross
misconduct or in other circumstances specified by the Board.
4.4.2 lti performance requirements
For the 2012 LTI grant, the “cliff” vesting for the performance
hurdles in the 2011 grant was replaced by vesting scales graduated
with performance and more demanding performance hurdles.
The comparator group for the 2012 LTI plan was also expanded to
include selected comparator group companies used by Guerdon
Associates for benchmarking executive fixed remuneration levels for
the 2011/12 remuneration review.
4.4.2.1 TSR Hurdle
The performance hurdles and vesting proportions for the TSR
performance measure that applied to the 2012 LTI grant is outlined in
the table below.
TSR of GWA Group Limited relative to TSRs of Comparator Companies
Proportion of Performance Rights to Vest if TSR hurdle is met
Less than the 50th percentile
50th percentile
0%
25%
Between the 50th percentile and 75th percentile
Straight line vesting between 25% and 50%
75th percentile or higher
50% (i.e. 50% of total grant)
gWa grouP limiteD ∕ ∕ 2012 annual rePort
The group of comparator companies for the TSR hurdle includes
14 domestic ASX listed companies with comparable market
capitalisation or revenues, including: Reece Australia Limited,
Adelaide Brighton Limited, Ansell Limited, Brickworks Limited, CSR
Limited, Goodman Fielder Limited, Bradken Limited, Dulux Group
Limited, Super Retail Group Limited, Premier Investments Limited,
Pacific Brands Limited, GUD Holdings Limited, Breville Group
Limited and Hills Holdings Limited.
The Board has discretion to adjust the comparator group to take into
account events including, but not limited to, takeovers, mergers,
de-mergers and similar transactions that might occur over the
performance period.
4.4.2.2 EPS Hurdle
For the 2012 LTI grant, EPS growth is measured over the three years
from 1 July 2011 to 30 June 2014. The EPS hurdle is calculated
as net profit after tax, as set out in the Company’s annual audited
Financial Statements, divided by the weighted average number of
ordinary shares on issue. The base year EPS for the 2012 LTI grant
was 21.0 cents. The Board did not exercise its discretion to adjust
the EPS figure.
The performance hurdles and vesting proportions for the EPS
performance measure that applied to the 2012 LTI grant is outlined
in the table below.
Compound annual EPS Growth
Less than 3% per annum
3% per annum
Between 3% and 8% per annum
8% or higher per annum
Proportion of
Performance Rights
to Vest if EPS growth
hurdle is met
0%
25%
Straight line vesting
between 25% and 50%
50%
(i.e. 50% of total grant)
4.4.3 changes for 2013
The LTI plan has been part of the remuneration structure for the
executives since its approval by shareholders in 2008, with lower
level management participating in the legacy GWA Employee Share
Plan referred to in section 7 below. The Remuneration Committee
proposes to cease using the legacy GWA Employee Share Plan due
to its lack of effectiveness as a long term incentive and expand the
use of the LTI plan to select lower level management that formerly
participated in the legacy GWA Employee Share Plan. These changes
are proposed to commence from the 2013 LTI grant and will be
reported in next year’s Remuneration Report.
5. Details oF Director anD executive
remuneration
5.1 remuneration tables
Details of the nature and amount of each element of remuneration of
each director of the Company and other key management personnel
for the year ended 30 June 2012 are outlined in the Remuneration
Tables on the following pages.
Notes to the Remuneration Tables
(a) The Short Term Incentive (STI) cash bonus is for the
performance during the financial year ended 30 June 2012
based on the achievement of personal goals and financial
performance targets. Brivis was the only business unit to
achieve STI financial performance targets during the year and in
accordance with the STI plan rules, 50% of the amount has been
deferred and will be subject to further testing as outlined in the
Remuneration Report. The STI cash bonuses are paid annually
following the end of the preceding financial year. The amounts
have been determined following individual performance reviews
and have been approved by the Remuneration Committee.
(b) The 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
is classified as a long term benefit in the Remuneration Tables
which reflects the long term nature of the incentive.
(d) The Long Term Incentive (LTI) Plan was approved by
shareholders at the 2008 Annual General Meeting. The
outstanding Performance Rights at 30 June 2012 were granted
to executives in each of the years 30 June 2010, 2011 and
2012 and are subject to vesting conditions and the achievement
of the EPS and TSR performance hurdles over the three year
performance periods. During the year, 50% of the Performance
Rights in respect of the 2009 LTI grant vested following the
achievement of the TSR hurdle and 50% of the Performance
Rights lapsed as the EPS hurdle was not achieved. The fair value
of the Performance Rights granted in each of the 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. If the EPS and TSR performance hurdles
are not achieved, then no benefits will be received by the
executives under the LTI plan.
(e) The Board approved the payment of a retention bonus for Mr
L Patterson in 2011 due to the rapidly changing regulatory
environment and the increased business complexity facing
the Dux business. The retention bonus was subject to the
achievement of performance hurdles linked to value creation
including market share and EBIT performance.
(f) Mr Geoff Oliver was appointed Chief Executive - GWA Door
& Access Systems on 1 May 2012. He was formerly General
Manager – Group Development where he served as Interim
General Manager – Brivis from 1 April 2010 to 30 April 2012.
(g) Mr Peter Crossley was considered Key Management Personnel
until the appointment of Mr Geoff Oliver to the position of Chief
Executive – GWA Door & Access Systems on 1 May 2012.
35
Directors' report as at 30 june 2012 cont.
Short–term
Long–term
Post-employment
y
r
a
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a
s
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&
h
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e
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fi
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B
$
$(a)*
$(b)
$(c)
$(d)
$(e)
$
$
f
o
n
o
i
t
r
o
p
o
r
p
n
o
i
t
a
r
e
n
u
m
e
r
e
c
n
a
m
r
o
f
r
e
p
d
e
s
a
b
%
h
s
a
C
i
t
s
d
e
t
s
e
v
s
u
n
o
B
%
r
a
e
y
n
i
h
s
a
C
i
t
s
d
e
t
i
e
f
r
o
f
s
u
n
o
B
%
r
a
e
y
n
i
l
a
t
o
t
$
334,046
321,199
119,076
107,999
111,347
107,066
148,927
143,200
128,692
66,765
120,892
65,915
2,134,447
2,678,611
519,158
455,760
867,309
883,641
749,132
785,353
737,324
645,671
660,538
1,047,273
354,345
476,525
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22.7
37.7
19.6
25.1
15.6
19.1
22.0
24.1
29.0
29.1
14.9
55.3
18.4
19.0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27,581
26,521
49,998
46,917
50,293
49,940
12,296
11,824
10,626
5,513
9,766
5,443
50,000
50,000
24,639
32,583
48,000
48,000
50,000
50,000
49,999
49,091
57,066
20,833
36,483
2,725
50,000
56,236
-
37,129
-
498,335
26.1
100
-
-
-
-
-
-
-
-
-
-
-
-
23
64
40
75
40
75
36
25
78
82
26
76
20
20
-
-
-
-
-
-
-
-
-
-
-
-
-
78
36
60
25
60
25
64
75
22
18
74
24
80
80
-
0
Non–Executive Directors
G McGrath
Chairman
D McDonough
Deputy Chairman
R Anderson
Non-Executive Director
W Bartlett
Non-Executive Director
P Birtles
Non-Executive Director
(Appointed 24 November 2010)
J Mulcahy
Non-Executive Director
(Appointed 24 November 2010)
Executive Directors
P Crowley
Managing Director
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
306,465
294,678
69,078
61,082
61,054
57,126
136,631
131,376
118,066
61,252
108,520
60,472
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,606
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2012 1,413,522
280,800
103,055
82,420
204,650
2011 1,428,814
600,600
98,804
92,393
408,000
R Thornton
Executive Director
2012
2011
365,207
72,000
282,469
73,636
8,921
9,589
18,466
29,925
16,941
40,542
2012
2011
2012
2011
Executives
W Saxelby
Chief Financial Officer
N Evans, Chief Executive
GWA Bathrooms & Kitchens
G Oliver, Chief Executive
– GWA Door and Access
Systems (f)
(Appointed 1 May 2012)
613,113
135,100
16,548
54,549
-
603,343
202,650
13,716
50,098
(34,167)
521,156
108,180
13,047
505,766
57,800
40,537
2012
444,203
173,550
29,330
2011
377,236
119,407
31,229
-
-
-
-
56,750
131,250
40,242
68,708
46,689
40,242
L Patterson, Chief Executive
– GWA Heating and Cooling
2012
2011
449,529
57,850
380,150
110,361
9,162
7,651
P Crossley, General
Manager Gainsborough (g)
(Appointed 1 April 2010)
2012
254,829
32,167
13,565
2011
348,859
26,128
847
G Welsh, General
Manager – GWA
Commercial Furniture
(Ceased employment
30 September 2011)
2012
62,125
-
1,469
2011
322,086
113,818
8,928
42,257
68,708
400,000
38,145
-
-
-
-
32,952
64,208
(60,083)
16,375
-
-
-
-
* Comparative STI cash bonus amounts have been adjusted to reflect the actual amounts paid.
gWa grouP limiteD ∕ ∕ 2012 annual rePort
5.2 share based payments
5.2.1 Performance rights
The table below shows details of the Performance Rights granted to key management personnel during the year ended 30 June 2012 and in prior
years that affects compensation in this or future reporting periods.
Number of
rights granted
Grant date*
%
vested
in year
%
forfeited
in year
Fair value
of rights at
grant date
$*
Issue price used to
determine number
of rights granted
Executive Directors
P Crowley
Managing Director
R Thornton
Executive Director
Executives
W Saxelby
Chief Financial Officer
N Evans, Chief Executive
GWA Bathrooms and Kitchens
G Oliver, Chief Executive
GWA Door and Access Systems
(Appointed 1 May 2012)
L Patterson, Chief Executive
GWA Heating & Cooling
P Crossley,
General Manager Gainsborough
(Appointed 1 April 2010)
G Welsh, General Manager
GWA Commercial Furniture
(Ceased employment 30 September 2011)
2012
2011
2010
2009
2012
2011
2010
2009
2012
2011
2010
2009
2012
2011
2010
2009
2012
2011
2010
2009
2012
2011
2010
2009
2012
2011
2010
2009
2012
2011
2010
2009
260,000
300,000
305,000
355,000
45,000
30,000
30,000
35,000
-
-
-
17 February 2012
21 February 2011
12 March 2010
-
-
-
27 February 2009
50
17 February 2012
21 February 2011
12 March 2010
-
-
-
27 February 2009
50
-
-
-
-
-
-
100,000
27 February 2009
50
75,000
75,000
75,000
-
55,000
50,000
50,000
55,000
55,000
50,000
50,000
55,000
50,000
45,000
40,000
-
-
-
35,000
40,000
17 February 2012
21 February 2011
12 March 2010
-
17 February 2012
21 February 2011
12 March 2010
-
-
-
-
-
-
-
27 February 2009
50
17 February 2012
21 February 2011
12 March 2010
-
-
-
27 February 2009
50
17 February 2012
21 February 2011
12 March 2010
-
-
-
12 March 2010
-
-
-
-
-
-
-
27 February 2009
50
-
-
50
-
-
-
50
-
-
-
-
-
-
-
50
-
-
-
50
-
-
-
50
-
-
-
50
-
-
-
375,700
802,500
785,375
583,975
65,025
80,250
77,250
57,595
-
-
-
164,500
108,375
200,625
193,125
-
79,475
133,750
128,750
90,475
79,475
133,750
128,750
90,475
72,250
120,375
103,000
-
-
-
100
-
90,125
65,800
2.35
3.00
2.84
2.46
2.35
3.00
2.84
2.46
-
-
-
2.46
2.35
3.00
2.84
-
2.35
3.00
2.84
2.46
2.35
3.00
2.84
2.46
2.35
3.00
2.84
-
-
-
2.84
2.46
* 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
$2.35 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 25
October 2011. 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 $1.84 per right and the TSR hurdle was $1.05 per right.
37
Directors' report as at 30 june 2012 cont.
The testing of Performance Rights granted on 27 February 2009
in respect of the three year performance period of 1 July 2008 to
30 June 2011 occurred on 16 August 2011. The EPS hurdle was
not achieved and 50% of the Performance Rights lapsed (in the prior
period). The TSR hurdle was achieved at the 67th percentile for the
Comparator Companies and 50% of the Performance Rights vested
and were automatically exercised into ordinary shares at no cost to
the executives. A total of 470,000 shares were purchased
on-market for the executives at an average price of $2.32 following
the achievement of the TSR hurdle in respect of the 2009 LTI grant.
All of the rights set out in the table on the previous page carry
an exercise price of nil. The rights granted on 12 March 2010,
21 February 2011 and 17 February 2012 will vest on the date of the
release to the Australian Securities Exchange of the Company’s annual
audited Financial Statements for the years 30 June 2012, 2013 and
2014 respectively, subject to the achievement of the performance
hurdles. The rights granted to Mr Crowley and Mr Thornton were
approved by shareholders at the 2009, 2010 and 2011 Annual
General Meetings in accordance with ASX Listing Rule 10.14.
Rights were forfeited where an employee ceased employment with
the Company during the year in accordance with the rules of the
Long Term Incentive Plan. For the rights granted to key management
personnel on 12 March 2010, the Company has not achieved the EPS
hurdle for the performance period of 1 July 2009 to 30 June 2012.
This has resulted in the forfeiture of 415,000 rights with a value of
$1,213,250. The number of rights outstanding at 30 June 2012
also represents the balance yet to vest.
6. key terms oF emPloyment contracts
6.1 notice and termination payments
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. The Company
retains the right to terminate the employment contract of Mr Crowley
immediately, by making payment equal to three months salary in lieu
of providing notice. 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 required to give
reasonable notice of termination of up to six months. The Company
retains the right to terminate the employment contracts of the
executives immediately, by making payment equal to the relevant
notice period (of up to six months) in lieu of providing notice.
The executives are also entitled to receive on termination of
employment their statutory entitlements of accrued annual and long
service leave, together with any superannuation benefits.
The termination arrangements for the executives are specified in their
employment contracts and any other termination payments require
approval of the Remuneration Committee. Shareholder approval is
required for termination payments in excess of twelve months salary.
Performance Rights held by executives under the LTI plan will lapse
upon the cessation of employment with the Company.
Any loan to executives, management and senior staff under the
legacy GWA Employee Share Plan must be repaid in full upon
the cessation of employment with the Company. Details of loans
outstanding to key management personnel under this plan are
detailed in the notes to the Financial Statements.
7. legacy equity BaseD remuneration
Plan
The GWA Employee Share Plan is a legacy GWA equity based
remuneration plan in which executives and lower level management
retained an interest during the reporting period. The plan was
formerly available to executives up to 2008 but following the
introduction of the LTI plan referred to in section 4.4 above, was
restricted to lower level management and select staff that deserved
recognition of their performance and to encourage employee share
ownership. The Remuneration Committee has approved annual
share allocations to lower level management and staff under the
plan since 2008 as part of their long term incentive arrangements.
Details of the GWA Employee Share Plan is outlined in the
table below.
GWa employee share plan
Type of award
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.
Year/s of grant
Annually from 1993 to 2012.
Performance
requirements
Service
requirements
The Board may invite employees to participate in the plan to encourage and reward sustained higher performance
from management and senior staff who merit recognition of their performance and are integral to the future success
of the Company.
The service condition requires that the employee remains employed. On termination the loan must be repaid.
gWa grouP limiteD ∕ ∕ 2012 annual rePort
Directors’ meetings
The number of meetings of directors (including meetings of Committees of directors) held during the financial year ended 30 June 2012 and
the number of meetings attended by each director were as follows:
Director
Board
audit Committee
remuneration
Committee
nomination Committee
A
10
10
10
10
10
10
10
10
B
10
10
10
10
10
10
10
10
A
4
-
-
-
4
-
4
-
B
4
-
-
-
4
-
4
-
A
3
-
-
-
3
3
-
-
B
3
-
-
-
3
3
-
-
A
1
1
-
-
1
-
-
-
B
1
1
-
-
1
-
-
-
G J McGrath
D D McDonough
P C Crowley(1)
R M Anderson
W J Bartlett
J F Mulcahy
P A Birtles
R J Thornton(2)
Note:
A – Number of meetings held during the time the director held office during the year
B – Number of meetings attended
(1) P C Crowley attends Committee meetings by invitation of the Board
(2) R J Thornton attends Committee meetings as Company Secretary
As at the date of this report, the Company had an Audit Committee,
Remuneration Committee and Nomination Committee of the Board
of Directors. The charter for each Committee outlines its role and
responsibilities, a summary of which is provided in the Corporate
Governance Statement in the Annual Report.
The members of the Audit Committee are:
■■ Mr W Bartlett (Chairman)
■■ Mr P Birtles
■■ Mr G McGrath
The members of the Remuneration Committee are:
■■ Mr W Bartlett (Chairman)
■■ Mr J Mulcahy
■■ 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.
non-auDit services
Details of the non-audit services provided by the External Auditor,
KPMG, during the financial year ended 30 June 2012 are outlined in
Note 8 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 2012.
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, 14 August 2012
39
gWa grouP limiteD
Financial rePort
gWa grouP limiteD anD its controlleD entities
ABN 15 055 964 380
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 Restructuring expenses
7 Personnel expenses
8 Auditors’ remuneration
9 Net financing costs
10
Income tax expense
11 Earnings per share
12 Cash and cash equivalents
13 Trade and other receivables
14
Inventories
15 Current tax assets and liabilities
16 Deferred tax assets and liabilities
17 Property, plant and equipment
18
Intangible assets
19 Trade and other payables
45
53
56
57
57
58
58
58
59
59
61
62
62
62
62
63
64
65
66
20
Loans and borrowings
21 Employee benefits
22 Share-based payments
23 Provisions
24 Capital and reserves
25
Financial instruments and
financial risk management
26 Operating leases
27 Capital commitments
28 Contingencies
29 Deed of cross guarantee
30 Consolidated entities
31 Parent entity disclosures
32
Reconciliation of cash flows
from operating activities
33 Related parties
34 Subsequent events
Directors’ Declaration
Independent Auditor’s Report to the members of GWA Group Limited
41
42
43
44
66
68
68
70
71
72
80
80
80
80
82
83
84
84
87
88
89
gWa grouP limiteD ∕ ∕ 2012 annual rePort
Consolidated statement
of Comprehensive inCome
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
For the yeAr ended 30 June 2012
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
(Loss)/income 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
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
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)
Note
2
4
5
9
10
3
11
11
2012
602,128
(384,978)
217,150
12,847
(93,788)
(50,719)
(13,452)
72,038
1,979
(16,226)
(14,247)
57,791
(11,618)
46,173
(6,518)
39,655
(199)
2,975
(1,600)
1,176
40,831
13.15
13.08
15.31
15.23
2011
Restated*
641,574
(405,344)
236,230
473
(85,470)
(48,718)
(2,605)
99,910
2,243
(17,418)
(15,175)
84,735
(25,705)
59,030
4,329
63,359
(776)
-
(1,706)
(2,482)
60,877
21.03
20.87
19.59
19.44
* Refer to discontinued operations – note 3.
The statement of comprehensive income is to be read in conjunction with the notes to the financial statements set out on pages 45 to 87.
41
Consolidated statement
of finanCial position
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
As At 30 June 2012
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
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
2012
2011
12
13
14
15
13
16
17
18
19
21
15
23
20
16
21
23
30,528
99,187
91,766
1,564
2,691
36,573
126,408
104,160
493
3,276
225,736
270,910
4,747
17,488
113,292
383,537
3,521
522,585
748,321
68,099
13,536
169
13,857
95,661
205,000
-
12,346
8,330
225,676
321,337
426,984
398,930
(2,489)
30,543
426,984
4,659
17,085
118,660
398,278
4,171
542,853
813,763
76,422
15,828
10,632
13,865
116,747
234,656
27
14,146
8,192
257,021
373,768
439,995
397,844
(3,276)
45,427
439,995
The statement of financial position is to be read in conjunction with the notes to the financial statements set out on pages 45 to 87.
GWA Group Limited ∕ ∕ 2012 AnnuAL report
Consolidated statement
of Cash flows
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
For the yeAr ended 30 June 2012
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 and facility fees
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
Share listing fees paid
(Repayment)/drawdown of bank bills
Dividends paid
Net cash from financing activities
Net 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
The statement of cash flows is to be read in conjunction with the notes to the financial statements set out on pages 45 to 87.
Note
2012
2011
703,744
(604,859)
98,885
(17,284)
1,305
(22,407)
60,499
18,361
(21,339)
(4,459)
-
23,743
16,306
1,235
(5)
(29,874)
(54,275)
(82,919)
(6,114)
36,573
69
30,528
32
3
12
813,586
(687,507)
126,079
(18,197)
1,646
(20,970)
88,558
130
(21,239)
(3,488)
(36,756)
2,276
(59,077)
1,882
(5)
5,000
(54,198)
(47,321)
(17,840)
54,914
(501)
36,573
43
Consolidated statement
of Changes in equity
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
For the yeAr ended 30 June 2012
Share
capital
Translation
reserve
Hedging
reserve
Equity
compensation
reserve
Retained
earnings
Total
396,539
(4,654)
1,058
1,880
36,266
431,089
In thousands of AUD
Balance at 1 July 2010
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
Transactions with owners, recorded directly in equity
Share-based payments, net of income tax
Dividends to shareholders
Issue of ordinary shares
Total transactions with owners
Balance at 30 June 2011
-
-
-
-
-
-
-
1,305
1,305
-
(776)
-
(776)
(776)
-
-
-
-
-
-
(1,706)
(1,706)
(1,706)
-
-
-
-
397,844
(5,430)
(648)
-
-
-
-
-
63,359
63,359
-
-
-
63,359
(776)
(1,706)
(2,482)
60,877
922
-
-
922
2,802
-
922
(54,198)
(54,198)
-
1,305
(54,198)
(51,971)
45,427
439,995
In thousands of AUD
Balance at 1 July 2011
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
Transactions with owners, recorded
directly in equity
Share-based payments, net of income tax
Dividends to shareholders
Issue of ordinary shares
Total transactions with owners
Balance at 30 June 2012
Share
capital
Translation
reserve
Hedging
reserve
Equity
compensation
reserve
Retained
earnings
Total
397,844
(5,430)
(648)
2,802
45,427
439,995
-
-
-
-
-
-
-
-
1,086
1,086
-
(199)
2,975
-
2,776
2,776
-
-
-
-
-
-
-
(1,600)
(1,600)
(1,600)
-
-
-
-
398,930
(2,654)
(2,248)
-
-
-
-
-
-
39,655
39,655
-
-
-
-
39,655
(199)
2,975
(1,600)
1,176
40,831
(389)
(264)
(653)
-
-
(54,275)
(54,275)
-
1,086
(389)
2,413
(54,539)
(53,842)
30,543
426,984
The statement of changes in equity is to be read in conjunction with the notes to the financial statements set out on pages 45 to 87.
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
1. siGniFicAnt AccountinG poLicies
GWA Group Limited (the ‘Company’) is a company domiciled in
Australia. The consolidated financial report of the Company for the
financial year ended 30 June 2012 comprises the Company and
its subsidiaries (together referred to as the ‘consolidated entity’).
The financial report was authorised for issue by the directors on
14 August 2012.
(a) Statement of compliance
The financial report is a general purpose financial report which has
been prepared in accordance with Australian Accounting Standards
(‘AASBs’) adopted by the Australian Accounting Standards Board
(‘AASB’) and the Corporations Act 2001. The consolidated entity’s
financial report complies with International Financial Reporting
Standards (‘IFRSs’) 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 18 – measurement of the recoverable amounts of
intangible assets
• note 22 – fair value of share-based payments
• note 23 and 28 – provisions and contingencies
• note 25 – 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
Business combinations are accounted for using the acquisition
method as at the acquisition date, which is the date on which control
is transferred to the consolidated entity.
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.
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.
45
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
1. siGniFicAnt AccountinG poLicies (cont.)
(c) Basis of consolidation (cont.)
(iii) Business combinations (cont.)
Measuring goodwill (cont.)
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.
(ii) Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill
and fair value adjustments arising on acquisition, are translated
to Australian dollars at foreign exchange rates ruling at the
reporting date. The revenues and expenses of foreign operations
are translated to Australian dollars at rates approximating to the
foreign exchange rates ruling at the dates of the transactions.
Foreign exchange differences arising on retranslation are recognised
in other comprehensive income, and presented in the foreign
currency translation reserve (FCTR) in equity.
When a foreign operation is disposed such that control, significant
influence or joint control is lost, the cumulative amount in the
translation reserve related to that foreign operation is reclassified
to profit or loss as part of the gain or loss on disposal.
(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
GWA Group Limited ∕ ∕ 2012 AnnuAL report
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
The consolidated entity holds derivative financial instruments
to hedge its foreign currency and interest rate risk exposures.
Embedded derivatives are separated from the host contract and
accounted for separately if the economic characteristics and risks
of the host contract and the embedded derivative are not closely
related, a separate instrument with the same terms as the embedded
derivative would meet the definition of a derivative, and the combined
instrument is not measured at fair value through profit or loss.
On initial designation of the derivative as the hedging instrument,
the consolidated entity formally documents the relationship
between the hedging instrument and hedged item, including the
risk management objectives and strategy in undertaking the hedge
transaction and the hedged risk, together with the methods that will
be used to assess the effectiveness of the hedging relationship. The
consolidated entity makes an assessment, both at the inception of
the hedge relationship as well as on an ongoing basis, whether the
hedging instruments are expected to be highly effective in offsetting
the changes in the fair value or cash flows of the respective hedged
items attributable to hedged risk, and whether the actual results of
each hedge are within a range of 80-125 percent. For a cash flow
hedge of a forecast transaction, the transaction should be highly
probably to occur and should present an exposure to variations in
cash flows that could ultimately affect reported profit or loss.
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
1. siGniFicAnt AccountinG poLicies (cont.)
(g) Property, plant and equipment
(f) Hedging (cont.)
Derivatives are recognised initially at fair value and attributable
transaction costs are recognised in profit or loss as incurred.
Subsequent to initial recognition, derivatives are measured at fair
value and changes therein are accounted for as described below.
(i) Cash flow hedges
When a derivative is designated as the hedging instrument in
a hedge of the variability in cash flows attributable to a particular
risk associated with a recognised asset or liability or a highly
probable forecast transaction that could affect profit or loss, the
effective portion of changes in the fair vair value of the derivative is
recognised in other comprehensive income and presented in the
hedging reserve in equity. Any ineffective portion of changes in the
fair value of the derivative is recognised immediately in profit or loss.
When the hedged item is a non-financial asset, the amount
recognised in equity is included in the carrying amount of the
asset when the asset is recognised. In other cases the amount
accumulated in equity is reclassified to profit or loss in the same
period the hedged item affects profit or loss. If the hedging
instrument no longer meets the criteria for hedge accounting,
expires or is sold, terminated or exercised, or the designation is
revoked, then hedge accounting is discontinued prospectively.
If the forecast transaction is no longer expected to occur, then the
balance in equity is reclassified to profit or loss.
Separable embedded derivatives
Changes in the fair value of separable embedded derivatives
are recognised immediately in profit or loss.
Other non-trading derivatives
When a derivative financial instrument is not designated in a hedge
relationship that qualifies for hedge accounting, all changes in its
fair value are 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.
(iii) Hedge of net investment in foreign operation
The portion of the gain or loss on an instrument used to hedge
a net investment in a foreign operation that is determined to be
an effective hedge is recognised in other comprehensive income,
and presented in the foreign currency translation reserve in equity.
The ineffective portion is recognised immediately in profit or loss.
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
•
• motor vehicles
40 years
3-15 years
5-10 years
4-8 years
The residual value, the useful life and the depreciation method
applied to an asset are reassessed annually.
47
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
1. siGniFicAnt AccountinG poLicies (cont.)
(vi) Amortisation
(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.
(ii) Brand names
Acquired brand names are stated at cost. 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 values of brand names are tested each year to ensure
that no impairment exists.
(iii) Goodwill
Goodwill acquired in business combinations of the consolidated
entity is 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.
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 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
•
•
trade names
capitalised software
development costs
• brand names
15 years
3-19 years (based on patent term)
10-20 years
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.
(j)
Inventories
Inventories are measured at the lower of cost and net realisable
value. Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of completion
and selling expenses.
The cost of inventories is based on the first-in first-out principle
and includes expenditure incurred in acquiring the inventories,
production or conversion costs and other costs incurred in
bringing them to their existing location and condition. In the case
of manufactured inventories and work in progress, cost includes
an appropriate share of production overheads based on normal
operating capacity.
(k) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with an original maturity date of three months or less.
Bank overdrafts that are repayable on demand and form an integral
part of the consolidated entity’s cash management are included as
a component of cash and cash equivalents for the purpose of the
statement of cash flows.
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
1. siGniFicAnt AccountinG poLicies (cont.)
Available-for-sale financial assets
(l)
Impairment
(i) Non-derivative financial assets
A financial asset not carried at fair value through profit or loss is
assessed at each reporting date to determine whether there is
objective evidence that it is impaired. A financial asset is impaired if
there is objective evidence of impairment as a result of one or more
events that occurred after the initial recognition of the asset, and that
the loss event(s) had an impact on the estimated future cash flows
of that asset that can be estimated reliably.
Objective evidence that financial assets are impaired includes
default or delinquency by a debtor, restructuring of an amount due
to the Group on terms that the Group would not consider otherwise,
indications that a debtor or issuer will enter bankruptcy, the
disappearance of an active market for a security. In addition, for an
investment in an equity security, a significant or prolonged decline in
its fair value below its cost is objective evidence of impairment.
Financial assets measured at amortised cost
The consolidated entity considers evidence of impairment for
financial assets measured at amortised cost (loans and receivables
and held-to-maturity investment securities) at both a specific asset
and collective level. All individually significant assets are assessed
for specific impairment. Those found not to be specifically impaired
are then collectively assessed for any impairment that has been
incurred but not yet identified. Assets that are not individually
significant are collectively assessed for impairment by grouping
together assets with similar risk characteristics.
In assessing collective impairment the consolidated entity uses
historical trends of the probability of default, timing of recoveries and
the amount of loss incurred, adjusted for management’s judgement
as to whether current economic and credit conditions are such that
the actual losses are likely to be greater or less than suggested by
historical trends.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows
discounted at the asset’s original effective interest rate. Losses are
recognised in profit or loss and reflected in an allowance account
against receivables. Interest on the impaired asset continues to be
recognised through the unwinding of the discount. When an event
occurring after the impairment was recognised causes the amount
of impairment loss to decrease, the decrease in impairment loss is
reversed through profit or loss.
Impairment losses on available-for-sale financial assets are
recognised by reclassifying the losses accumulated in the fair
value reserve in equity to profit or loss. The cumulative loss that is
reclassified from equity to profit or loss is the difference between the
acquisition cost, net of any principal repayment and amortisation,
and the current fair value, less any impairment loss recognised
previously in profit or loss. Changes in cumulative impairment
losses attributable to application of the effective interest method are
reflected as a component of interest income. If, in a subsequent
period, the fair value of an impaired available-for-sale debt security
increases and the increase can be related objectively to an event
occurring after the impairment loss was recognised, then the
impairment loss is reversed, with the amount of the reversal
recognised in profit or loss. However, any subsequent recovery
in the fair value of an impaired available-for-sale equity security is
recognised in other comprehensive income.
(ii) Non-financial assets
The carrying amounts of the consolidated entity’s non-financial
assets, other than biological assets, investment property, inventories
and deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such
indication exists, then the asset’s recoverable amount is estimated.
Goodwill and indefinite life intangible assets are tested annually for
impairment. An impairment loss is recognised if the carrying amount
of an asset or its related cash-generating unit (CGU) exceeds its
recoverable amount.
The recoverable amount of an asset or CGU unit is the greater of its
value in use and its fair value less costs to sell. 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 the purpose of impairment testing, assets that
cannot be tested individually are grouped together into the smallest
group of assets that generates cash inflows from continuing use
that are largely independent of the cash inflows of other assets or
CGUs. Subject to an operating segment ceiling test, CGUs to which
goodwill has been allocated are aggregated so that the level at which
impairment is tested reflects the lowest level at which goodwill is
monitored for internal reporting purposes. Goodwill acquired in
a business combination is allocated to groups of CGUs that are
expected to benefit from the synergies of the combination.
49
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
1. siGniFicAnt AccountinG poLicies (cont.)
(ii) Other long-term employee benefits
(l)
Impairment (cont.)
(ii) Non-financial assets (cont.)
Impairment losses are recognised in profit or loss. Impairment losses
recognised in respect of CGUs are allocated first to reduce the
carrying amount of any goodwill allocated to the CGU (or group of
CGUs), and then to reduce the carrying amounts of the other assets
in the CGU (or group of CGUs) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. For other
assets, an impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation,
if no impairment loss had been recognised.
(m) Share capital
(i) 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.
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.
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
1. siGniFicAnt AccountinG poLicies (cont.)
(iii) Net financing costs
(p) Provisions (cont.)
(i) Warranties
A provision for warranties is recognised when the underlying
products or services are sold. The provision is based on historical
warranty data and a weighting of all possible outcomes against their
associated probabilities.
(ii) Restructuring
A provision for restructuring is recognised when the consolidated
entity has approved a detailed and formal restructuring plan, and
the restructuring has either commenced or has been announced
publicly. Future operating costs are not provided for.
(iii) Site restoration
A provision for restoration in respect of owned and 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) Cost of goods sold
Cost of good sold comprises the cost of manufacture and purchase of
goods including supply chain costs such as freight and warehousing.
(ii) 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.
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
unless they relate to qualifying assets. Interest income is recognised
in profit or loss as it accrues, using the effective interest method.
(t)
Income tax
Tax expense comprises current and deferred tax. Current and
deferred tax are recognised in profit or loss except to the extent that
it relates to a business combination, or items recognised directly in
equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable
income or loss 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. Current tax payable also includes any tax
liability arising from the declaration of dividends.
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for:
•
•
•
temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination
and that affects neither accounting nor taxable profit or loss
temporary differences related to investments in subsidiaries
and associates and jointly controlled entities to the extent that
it is probable that they will not reverse in the foreseeable future
taxable temporary differences arising on the initial recognition
of goodwill.
Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they reverse, using tax rates
enacted or substantively enacted at the reporting date.
In determining the amount of current and deferred tax the
consolidated entity takes into account the impact of uncertain tax
positions and whether additional taxes and interest may be due.
The consolidated entity believes that its accruals for tax liabilities are
adequate for all open tax years based on its assessment of many
factors, including interpretations of tax law and prior experience.
This assessment relies on estimates and assumptions and may
involve a series of judgements about future events. New information
may become available that causes the consolidated entity to change
its judgement regarding the adequacy of existing tax liabilities; such
changes to tax liabilities will impact tax expense in the period that
such a determination is made.
51
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
1. siGniFicAnt AccountinG poLicies (cont.)
(v) Earnings per share
(t)
Income tax (cont.)
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and they
relate to income taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax assets and
liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits
and deductible temporary differences, to the extent that it is
probable that future taxable profits will be available against which
they can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Additional income tax expenses that arise from the distribution of
cash dividends are recognised at the same time that the liability to
pay the related dividend is recognised. The consolidated entity does
not distribute non-cash assets as dividends to its shareholders.
The Company and its wholly-owned Australian resident entities are
part of a tax-consolidated group. As a consequence, all members
of the tax-consolidated group are taxed as a single entity. The head
entity within the tax-consolidated group is GWA Group Limited.
(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 statement of
financial position.
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.
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) Segment reporting
Segment results that are reported to the CEO include items that
are directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly
corporate assets, head office expenses, loans and borrowings,
treasury financial instruments and income tax assets and liabilities.
(y) New standards and interpretations not yet adopted
A number of new standards, amendments to standards and
interpretations are effective for annual periods beginning after
1 July 2012, and have not been applied in preparing these
consolidated financial statements. None of these are expected to
have a significant effect on the consolidated financial statements
of the consolidated entity, except for AASB 9 Financial Instruments,
which becomes mandatory for the consolidated entity’s 2016
consolidated financial statements and could change the
classification and measurement of financial assets. The
consolidated entity does not plan to adopt this standard
early and the extent of the impact has not been determined.
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group 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:
•
•
•
•
Bathrooms & Kitchens – This segment includes the sale of vitreous china toilet suites, hand basins, plastic cisterns, tapware,
baths, spas, kitchen sinks, laundry tubs and bathroom accessories;
Door & Access Systems – This segment includes the sale of garage doors, door handles and door access systems;
Heating & Cooling – This segment includes the sale of water heating and climate control systems; and
Discontinued operations – This segment includes the sale of education, hospitality and aged care furniture and stadia seating.
It also includes the sale of sanitaryware in the North American 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.
In thousands of AUD
External sales revenue
Inter-segment revenue
Total sales revenue
Bathrooms
& Kitchens
Door & Access
Systems
Heating
& Cooling
Discontinued
operations
Total
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
297,722 332,223 138,568 114,026 165,764 195,129 12,438 84,793 614,492 726,171
37
156
-
-
392
169
3
3
432
328
297,759 332,379 138,568 114,026 166,156 195,298 12,441 84,796 614,924 726,499
Segment result before restructuring
60,965
78,903
14,057
17,158
13,259
17,195 (7,792)
7,246
80,489 120,502
Restructuring income/(expense)
3,477
-
(6,104)
-
-
-
-
-
(2,627)
-
Segment profit/(loss) before income tax
64,442
78,903
7,953
17,158
13,259
17,195 (7,792)
7,246
77,862 120,502
Depreciation
Amortisation
Capital expenditure
6,749
4,354
7,679
6,739
4,250
5,373
2,455
1,930
681
452
3,138
1,220
2,927
267
1,049
12,609
12,645
740
-
-
6,255
5,442
3,893
1,006
11,495
16,830
195
747
23,262
23,956
Reportable segment assets
434,493 457,735 106,100 109,578 126,251 126,197
- 33,946 666,844 727,456
Reportable segment liabilities
33,798
32,244
18,935
19,400
32,233
36,085
-
8,430
84,966
96,159
53
notes to the Consolidated
finanCial statements
GWA Group 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 from continuing operations
Profit
Total profit for reportable segments
Elimination of discontinued operations
Restructuring expenses: corporate
Unallocated amounts: corporate expenses
Profit from operating activities
Net financing costs
Consolidated profit before tax from continuing operations
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
2012
2011
614,924
726,499
74
(432)
(12,438)
602,128
77,862
7,792
(699)
(12,917)
72,038
(14,247)
57,791
666,844
81,477
748,321
84,966
236,371
321,337
196
(328)
(84,793)
641,574
120,502
(7,246)
-
(13,346)
99,910
(15,175)
84,735
727,456
86,307
813,763
96,159
277,609
373,768
* 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.
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group 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
2012
2011
12,609
242
12,851
6,255
114
6,369
23,262
2,536
25,798
12,645
193
12,838
5,442
173
5,615
23,956
771
24,727
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 and Asia. Sales revenue from geographical areas outside Australia comprised only 5% of the consolidated entity’s
total sales revenue for the current year (2011: 6%).
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
2012
584,531
743,303
25,693
2011
684,364
802,367
24,618
2012
30,035
5,018
105
2011
42,003
11,396
109
2012
614,566
748,321
25,798
2011
726,367
813,763
24,727
The consolidated entity conducts business with 3 customers where the gross revenue generated from each customer exceeds 10% of the
consolidated entity’s total gross revenue. Gross revenue from these customers represent approximately $97,000,000 (2011: $111,000,000),
$84,000,000 (2011: $97,000,000) and approximately $71,000,000 (2011: $65,000,000) respectively of the consolidated entity’s total gross
revenues for the current year of approximately $674,000,000 (2011: $725,000,000). The difference between gross revenue and reported
sales revenue is due to industry rebates. The revenues from these customers are reported in the Bathrooms & Kitchens, Door & Access
Systems and the Heating & Cooling segments.
55
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
3. discontinued operAtions
During the period ended 30 June 2012, the commercial furniture business was sold with an effective date of 30 September 2011. The North
American sanitaryware business was also sold, with an effective date of 31 December 2011. The operating activities of both businesses were
not discontinuing operations or classified as held for sale as at 30 June 2011. The comparative statement of comprehensive income has been
re-presented to show the discontinued operations separately from continuing operations.
In the prior reporting period, the final payment of $2,276,000 for the sale of the Rover business was also received.
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
(Loss)/profit for the period
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Cash flows from discontinued operations
Net cash (used in)/from operating activities
Net cash from investing activities
Net cash from discontinued operations
2012
2011
12,441
(15,002)
(2,561)
362
(2,199)
(5,231)
912
(6,518)
(2.16)
(2.15)
(1,975)
23,559
21,584
84,796
(77,128)
7,668
(2,917)
4,751
(422)
-
4,329
1.44
1.43
16,557
1,546
18,103
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
3. discontinued operAtions (cont.)
In thousands of AUD
2012
2011
Effect of disposals on the financial position of the consolidated entity
Trade and other receivables
Inventories
Property, plant and equipment
Cash and cash equivalents
Other current assets
Trade and other payables
Income tax receivable
Provisions
Employee benefits
Income tax payable
Deferred tax assets
Intangible assets
Net assets and liabilities
Disposal costs
Foreign currency translation reserve
Consideration proceeds
Cash and cash equivalents disposed of
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
Restructuring expenses
Acquisition costs
Disposal costs
(4,140)
(8,560)
(4,262)
(354)
(635)
3,681
(26)
354
2,689
136
(1,027)
(12,400)
(24,544)
(1,809)
(2,975)
(29,328)
24,097
(354)
23,743
2012
233
1,204
9,632
1,778
12,847
2012
86
53
-
13,180
133
-
13,452
-
-
-
-
-
-
-
-
-
-
-
-
-
(422)
-
(422)
2,276
-
2,276
2011
22
31
-
420
473
2011
1,277
205
178
-
900
45
2,605
57
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
6. restructurinG expenses
In thousands of AUD
Restructuring income – gains on disposal of property
Restructuring expenses
Tax benefit
Net restructuring income after tax
7. 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
8. Auditors’ remunerAtion
In AUD
Audit services
Auditors of the Company
KPMG Australia:
Audit and review of financial reports
Other regulatory services
Overseas KPMG Firms:
Audit and review of financial reports
Other services
Auditors of the Company
KPMG Australia:
Taxation services
Other services
Overseas KPMG Firms:
Other assurance services
Taxation services
GWA Group Limited ∕ ∕ 2012 AnnuAL report
2012
9,854
(13,180)
3,947
621
2011
-
-
-
-
2012
2011
148,211
321
148,532
145,676
922
146,598
2012
2011
455,000
3,500
12,000
470,500
28,682
45,660
-
31,132
105,474
472,000
3,000
15,000
490,000
40,806
-
27,655
62,915
131,376
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
9. net FinAncinG costs
In thousands of AUD
Finance income
Interest income on call deposits
Unwinding of discount on loans and provisions
Other
Finance expense
Interest expense on financial liabilities
Interest expense on swaps
Facility fees on financial liabilities
Establishment fee amortisation
Other
Net financing costs
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
Income tax expense from continuing operations
Income tax (benefit)/expense from discontinued operations (excluding loss on sale)
Income tax benefit on loss on sale of discontinued operations
Total income tax expense in income statement
2012
1,226
674
79
1,979
10,061
674
4,897
521
73
16,226
14,247
2011
1,569
596
78
2,243
10,842
392
5,423
549
212
17,418
15,175
2012
2011
14,818
(2,374)
12,444
(826)
11,618
(362)
(912)
10,344
24,583
(465)
24,118
1,587
25,705
2,917
-
28,622
59
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
10. income tAx expense (cont.)
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% (2011: 30%)
Increase in income tax expense due to:
Non-deductible expenses
Non-deductible acquisition and disposal costs
Non-deductible share-based payments
Tax losses not recognised
Decrease in income tax expense due to:
Effect of tax rate in foreign jurisdictions
Capital gains offset with prior capital losses
Deductible share-based payments
Rebateable investment allowance
Rebateable research and development
Over provided in prior years
Income tax expense on pre-tax net profit
Deferred tax recognised directly in equity
In thousands of AUD
Derivatives
2012
49,999
15,000
241
-
-
437
(10)
(2,477)
(116)
-
(357)
12,718
(2,374)
10,344
2011
91,981
27,594
453
396
277
726
(85)
-
-
(27)
(247)
29,087
(465)
28,622
2012
(631)
2011
(729)
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group 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 2012 was based on the profit attributable to ordinary shareholders of $39,655,000
(2011: $63,359,000) and a weighted average number of ordinary shares of 301,662,000 (2011: 301,221,000) 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
Diluted earnings per share
2012
13.15
2011
21.03
2012
46,173
(6,518)
39,655
2012
301,525
137
301,662
2011
59,030
4,329
63,359
2011
301,103
118
301,221
Calculation of diluted earnings per share at 30 June 2012 was based on the profit attributable to ordinary shareholders of $39,655,000
(2011: $63,359,000) and a weighted average number of ordinary shares of 303,232,000 (2011: 303,571,000) 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)
2012
13.08
2011
20.87
2012
46,173
(6,518)
39,655
2012
301,662
1,570
303,232
2011
59,030
4,329
63,359
2011
301,221
2,350
303,571
61
notes to the Consolidated
finanCial statements
GWA Group 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
2012
12,998
17,530
30,528
2011
14,216
22,357
36,573
The consolidated entity’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 25.
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
Employee share loans
2012
2011
80,549
(1,666)
18,495
660
1,149
99,187
103,609
(2,200)
20,373
637
3,989
126,408
4,747
4,659
The consolidated entity’s exposure to credit and currency risk and impairment losses related to trade and other receivables are disclosed
in note 25.
14. inventories
In thousands of AUD
Raw materials and consumables
Work in progress
Finished goods
2012
21,310
2,571
67,885
91,766
2011
20,524
5,676
77,960
104,160
15. current tAx Assets And LiAbiLities
The current tax asset for the consolidated entity of $1,564,000 (2011: $493,000) represents the amount of income taxes recoverable
in respect of current and prior periods. The current tax liability for the consolidated entity of $169,000 (2011: $10,632,000) 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.
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
16. deFerred tAx Assets And LiAbiLities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
Net
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)
2012
562
509
2,578
7,762
8,082
4,462
23,955
(6,467)
17,488
2011
823
349
2,545
8,963
8,838
2,687
24,205
(7,120)
17,085
2012
(1,144)
(5,240)
-
-
-
(83)
(6,467)
6,467
-
2011
(951)
(5,826)
-
-
-
(370)
(7,147)
7,120
(27)
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
In thousands of AUD
Capital losses
Revenue losses
2012
(582)
(4,731)
2,578
7,762
8,082
4,379
2011
(128)
(5,477)
2,545
8,963
8,838
2,317
17,488
17,058
-
-
17,488
17,058
2012
7,779
1,463
2011
4,246
773
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 10
Recognised
in income
Recognised
in equity
Acquired
in business
combinations
Disposals
Balance
30 June 11
388
(3,426)
2,311
7,990
11,229
286
18,778
(516)
112
39
278
(1,902)
402
(1,587)
-
-
-
-
-
729
729
-
(2,163)
195
695
411
-
(862)
-
-
-
-
-
-
-
(128)
(5,477)
2,545
8,963
9,738
1,417
17,058
Balance
1 July 11
Recognised
in income
Recognised
in equity
Acquired
in business
combinations
Disposals
Balance
30 June 12
(128)
(5,477)
2,545
8,963
9,738
1,417
17,058
(691)
823
33
(399)
(1,336)
2,396
826
-
-
-
-
-
631
631
-
-
-
-
-
-
-
237
(77)
-
(802)
(320)
(65)
(582)
(4,731)
2,578
7,762
8,082
4,379
(1,027)
17,488
63
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
17. property, pLAnt And equipment
In thousands of AUD
Cost
Balance at 1 July 2010
Acquisitions through business combinations
Additions
Disposals
Effect of movements in foreign exchange
Land and
buildings
Plant and
equipment
Motor
vehicles
Work in
progress
Total
58,532
-
1,090
-
-
176,572
1,131
7,946
244,181
5,366
10,360
(5,459)
(215)
971
-
(387)
(33)
6
9,789
-
-
6,343
21,239
(5,846)
(248)
Balance at 30 June 2011
59,622
186,624
1,682
17,741
265,669
Balance at 1 July 2011
Additions
Disposals
Transfers
Effect of movements in foreign exchange
59,622
364
(11,294)
9,534
-
186,624
16,076
(34,333)
4,021
70
1,682
30
(400)
-
4
17,741
4,869
265,669
21,339
(342)
(46,369)
(13,555)
-
-
74
Balance at 30 June 2012
58,226
172,458
1,316
8,713
240,713
Depreciation and impairment losses
Balance at 1 July 2010
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
(8,246)
(1,003)
-
-
(130,746)
(11,630)
5,203
131
Balance at 30 June 2011
(9,249)
(137,042)
Balance at 1 July 2011
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
(9,249)
(1,061)
2,794
-
(137,042)
(11,548)
29,514
(46)
Balance at 30 June 2012
(7,516)
(119,122)
Carrying amounts
At 1 July 2010
At 30 June 2011
At 1 July 2011
At 30 June 2012
50,286
50,373
50,373
50,710
45,826
49,582
49,582
53,336
(858)
(205)
329
16
(718)
(718)
(242)
179
(2)
(783)
273
964
964
533
-
-
-
-
-
-
-
-
-
-
(139,850)
(12,838)
5,532
147
(147,009)
(147,009)
(12,851)
32,487
(48)
(127,421)
7,946
17,741
17,741
8,713
104,331
118,660
118,660
113,292
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
18. intAnGibLe Assets
In thousands of AUD
Cost
Balance at 1 July 2010
Acquisitions through business combinations
Additions
Effect of movements in foreign exchange
Software
Brand
names
Trade names,
designs and
patents
Goodwill
Total
18,663
321,131
-
3,488
-
-
-
(20)
14,230
7,317
-
-
22,283
24,075
-
-
376,307
31,392
3,488
(20)
Balance at 30 June 2011
22,151
321,111
21,547
46,358
411,167
Balance at 1 July 2011
Additions
Disposals
Effect of movements in foreign exchange
22,151
4,459
-
(486)
(12,400)
-
6
321,111
21,547
46,358
411,167
-
-
-
-
-
-
4,459
(12,886)
6
Balance at 30 June 2012
26,124
308,717
21,547
46,358
402,746
Amortisation
Balance at 1 July 2010
Amortisation for the year
Disposals
Balance at 30 June 2011
Balance at 1 July 2011
Amortisation for the year
Disposals
Balance at 30 June 2012
Carrying amounts
At 1 July 2010
At 30 June 2011
At 1 July 2011
At 30 June 2012
(6,687)
(4,610)
-
(11,297)
(11,297)
(5,149)
49
(16,397)
11,976
10,854
10,854
9,727
-
-
-
-
-
-
-
-
321,131
321,111
321,111
308,717
(587)
(1,005)
-
(1,592)
(1,592)
(1,220)
-
(2,812)
13,643
19,955
19,955
18,735
Carrying value of brand names and goodwill for each cash generating unit
In thousands of AUD
Bathrooms & Kitchens
Door & Access Systems
Heating & Cooling
Discontinued operations
-
-
-
-
-
-
-
-
22,283
46,358
46,358
46,358
(7,274)
(5,615)
-
(12,889)
(12,889)
(6,369)
49
(19,209)
369,033
398,278
398,278
383,537
2012
2011
284,117
284,111
44,124
26,834
-
44,124
26,834
12,400
355,075
367,469
65
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
18. intAnGibLe Assets (cont.)
Impairment testing for brand names and goodwill
The recoverable amounts of all brand names and goodwill were assessed at 30 June 2012 based on internal value in use calculations and no
impairment was identified for any segment (2011: nil for all segments).
Value in use was determined by discounting the future cash flows to be 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 approved by the Board, with projected cash
flows 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% (2011: 2.5%) in calculating terminal values of the units, which does not exceed the
long-term average growth rate for the industry; and
• A pre-tax discount rate of 12.26% was used (2011: 14.08%).
The values assigned to the key assumptions represent management’s assessment of future trends in the Bathrooms & Kitchens, Door & Access
Systems and Heating & Cooling industries and are based on both external sources and internal sources (historical data).
19. trAde And other pAyAbLes
In thousands of AUD
Current
Trade payables and accrued expenses
Derivatives used for hedging
Non-trade payables and accrued expenses
2012
2011
45,069
21,706
1,324
68,099
50,111
21,296
5,015
76,422
The consolidated entity’s exposure to currency risk and liquidity risk related to trade and other payables are disclosed in note 25.
20. LoAns And borroWinGs
This note provides information about the contractual terms of the consolidated entity’s 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 25.
Non-current liabilities
In thousands of AUD
Unsecured cash advance facilities
Terms and debt repayment schedule
2012
205,000
2011
234,656
In thousands of AUD
Currency
Unsecured cash advance facilities
Unsecured cash advance facilities
Unsecured cash advance facilities
AUD
AUD
USD
Year of
maturity
2012
Face value
2014
2016
-
200,000
5,000
-
2012
Carrying
amount
2011
Face value
2011
Carrying
amount
200,000
200,000
200,000
5,000
-
30,000
4,656
30,000
4,656
205,000
205,000
234,656
234,656
The unsecured cash advance facilities mature over the next 2 to 4 financial years and have variable rates ranging from 5.36% - 5.66% at
30 June 2012 (2011: 2.37% - 7.18%).
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
20. LoAns And borroWinGs (cont.)
In thousands of AUD
Financing facilities
Bank overdraft
Standby letters of credit
Bank guarantees
Unsecured cash advance facility
Facilities utilised at reporting date
Bank overdraft
Standby letters of credit
Bank guarantees
Unsecured cash advance facility
Facilities not utilised at reporting date
Bank overdraft
Standby letters of credit
Bank guarantees
Unsecured cash advance facility
Bank overdraft
2012
2011
1,000
12,000
4,200
300,000
317,200
-
135
1,445
205,000
206,580
1,000
11,865
2,755
95,000
110,620
1,000
12,000
4,200
300,000
317,200
-
-
624
234,656
235,280
1,000
12,000
3,576
65,344
81,920
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 2012.
Unsecured cash advance facility
Bank loans are provided to GWA Finance Pty Limited under the Multi-currency Revolving Facility Agreement. The bank loans at reporting
date are denominated in Australian dollars. The bank loans are unsecured with a negative pledge in favour of the banks, and are split between
three year and five year terms.
The loans bear interest at market rates and interest is typically 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.
Bank guarantees
The bank guarantees are committed facilities available to be drawn down under the facility agreement. The limits are specified in the
facility agreement.
67
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
21. empLoyee beneFits
In thousands of AUD
Current
Liability for annual leave
Liability for long-service leave
Non-current
Liability for long-service leave
Defined contribution superannuation funds
2012
2011
11,195
2,341
13,536
13,029
2,799
15,828
12,346
14,146
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 $10,440,000 for the
financial year ended 30 June 2012 (2011: $11,031,000).
Employee share plan
The employee share plan (‘the 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. The loans must be repaid in full by the employee.
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 2012, 480,500 ordinary shares were issued to employees at the market price of $2.27, being total market value of
$1,090,000 with $5,000 expenditure incurred by the consolidated entity for listing fees. In the prior year, 422,500 ordinary shares were issued
to employees at the market price of $3.10, being total market value of $1,310,000 with listing fees of $5,000.
As at 30 June 2012, loans are issued for 4,051,750 (2011: 3,813,750) shares and the remaining balances of these loans is $8,769,000
(2011: $8,914,000) or $5,407,000 (2011: $5,296,000) at net present value. During 2012, dividends of $660,000 (2011: $664,000)
were paid against the loans and a further $575,000 (2011: $1,218,000) was paid by employees against these loans.
22. 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 based on a 50% allocation of each grant to the two performance
hurdles. 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.
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
22. shAre-bAsed pAyments (cont.)
For performance rights granted to executives in the 2011/12 year, the performance hurdles and vesting proportions for the EPS performance
measure is outlined in the table below. The base year EPS for the 2012 Long Term Incentive (Equity) Plan grant was 21.0 cents.
Compound annual EPS Growth
Proportion of Performance Rights to Vest if EPS growth hurdle is met
Less than 3% per annum
3% per annum
Between 3% and 8% per annum
8% or higher per annum
0%
25%
Straight line vesting between 25% and 50%
50% (i.e. 50% of total grant)
For performance rights granted to executives in the 2011/12 year, the performance hurdles and vesting proportions for the TSR performance
measure is outlined in the table below.
TSR of GWA Group Limited relative to TSRs
of Comparator Companies
Less than the 50th percentile
50th percentile
Proportion of Performance Rights to Vest if TSR growth hurdle is met
0%
25%
Between the 50th percentile and 75th percentile
Straight line vesting between 25% and 50%
75th percentile or higher
50% (i.e. 50% of total grant)
For further details of the Long Term Incentive (Equity) Plan, please refer to the Remuneration Report.
Tranche
Grant date
Expiry date
Balance at
beginning
of the year
Number
Granted
during
the year
Number
Cancelled
during
the year
Vested
during the
year
Forfeited
during
the year
Balance
at end of
the year
Number
Number
Number
Number
2012
(i)
(ii)
(iii)
(iv)
2011
(i)
(ii)
(iii)
27/02/2009
30/06/2011
12/03/2010
30/06/2012
21/02/2011
30/06/2013
17/02/2012
30/06/2014
470,000
845,000
720,000
-
2,035,000
-
-
-
780,000
780,000
-
(470,000)
-
(95,000)
(40,000)
-
-
-
-
(375,000)
-
-
-
375,000
680,000
780,000
(135,000)
(470,000)
(375,000)
1,835,000
27/02/2009
30/06/2011
1,010,000
12/03/2010
30/06/2012
900,000
-
-
21/02/2011
30/06/2013
-
1,910,000
745,000
745,000
(70,000)
(55,000)
(25,000)
(150,000)
-
-
-
-
(470,000)
-
-
470,000
845,000
720,000
(470,000)
2,035,000
No performance rights were vested and exercisable at 30 June 2012.
69
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
22. shAre-bAsed pAyments (cont.)
Fair value
During the current financial year 780,000 performance rights were granted to employees (2011: 745,000) at a weighted average fair value of
$1.44 (2011: $2.68). The fair value of the performance rights subject to the EPS hurdle for vesting (50%) was determined as $1.84 by using a
Binomial option pricing model. The fair value of the performance rights granted subject to the TSR hurdle for vesting (50%) was determined as
$1.05 by using a Monte Carlo simulation. When determining the fair values it was assumed the Company would have a dividend yield of 8.04%,
the risk free rate was 3.63% and volatility ranged between 35-45% 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 $321,000 (2011: $922,000). Refer to the Remuneration
Report for further details.
23. provisions
In thousands of AUD
Balance at 1 July 2011
Provisions made during the year
Provisions used during the year
Disposals
Effect of movements in foreign exchange
Balance at 30 June 2012
Current
Non-current
Warranties
Warranties
Restructuring
16,463
5,124
(7,620)
(273)
4
13,698
7,242
6,456
13,698
36
10,740
(8,293)
-
-
2,483
2,483
-
2,483
Site
restoration
2,741
2,840
Other
2,817
6,584
Total
22,057
25,288
(2,068)
(6,827)
(24,808)
-
-
3,513
2,123
1,390
3,513
(81)
-
(354)
4
2,493
22,187
2,009
484
2,493
13,857
8,330
22,187
The total provision for warranties at balance date of $13,698,000 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 $7,242,000 of the total
provision in the financial year ending 30 June 2013, and the majority of the balance of the liability over the following four years. The net
present value of the provision has been calculated using a discount rate of 3.00 per cent.
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 2012, restructuring was undertaken in our Bathrooms
& Kitchens and Door & Access Systems operating segments with $10,740,000 being provided and $8,293,000 being utilised. At balance date
the balance of the restructuring provision was $2,483,000 with the majority to be utilised in the next financial year.
Site restoration
The provision for site restoration at balance date of $3,513,000 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. As
part of the restructuring in our Bathrooms & Kitchens and Door & Access Systems operating segments, a further $2,840,000 was provided.
Payments of $2,068,000 were made in the current financial year. The majority of the activity is expected to be completed by June 2013.
The remaining balance classified as non-current will be utilised when leased sites are exited.
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
24. cApitAL And reserves
Share capital
In thousands
On issue at 1 July – fully paid
Ordinary shares
AUD
2012
2011
2012
2011
301,525
301,103
397,844
396,539
Issue of shares under the employee share plan
481
422
1,086
1,305
On issue at 30 June – fully paid
302,006
301,525
398,930
397,844
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 are:
In thousands of AUD
2012
Interim 2012 ordinary
Final 2011 ordinary
Total amount
2011
Interim 2011 ordinary
Final 2010 ordinary
Total amount
Cents per share
Total amount
Franked
Date of payment
9.5
8.5
18.0
9.5
8.5
18.0
28,645
25,630
54,275
28,604
25,594
54,198
100%
100%
4th April 2012
6th Oct 2011
100%
100%
5th April 2011
6th Oct 2010
Franked dividends declared or paid during the year were franked at the tax rate of 30%.
After the balance sheet date the following dividends were approved by the directors. The dividends have not been provided for. The declaration
and subsequent payment of dividends has no income tax consequences.
In thousands of AUD
Final ordinary
Cents per share
Total amount
Franked
Date of payment
8.5
25,670
100%
4th Oct 2012
The financial effect of these dividends has not been brought to account in the financial statements for the financial year ended 30 June 2012
and will be recognised in subsequent financial reports.
71
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
24. cApitAL And reserves (cont.)
Dividend franking account
In thousands of AUD
30 per cent franking credits available to shareholders of GWA Group Limited
for subsequent financial years
The Company
2012
2011
14,722
27,513
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 balance date, but not recognised as a liability, is to reduce it by $11,001,000
(2011: $10,984,000). In accordance with the tax consolidation legislation, the Company as the head entity in the tax-consolidated group
has also assumed the benefit of $14,722,000 (2011: $27,513,000) franking credits.
25. 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.
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
25. FinAnciAL instruments And FinAnciAL risk mAnAGement (cont.)
Credit risk (cont.)
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 three major customers which comprise 50% of the trade receivables carrying amount at 30 June 2012 (2011: 47%).
At balance date there were no material uninsured concentrations of credit risk.
The carrying amount of financial assets represents the maximum credit exposure of the consolidated entity. The maximum exposure to credit
risk at balance date was:
In thousands of AUD
Cash and cash equivalents
Trade receivables
Employee share loans
Commodity contracts used for hedging
Forward exchange contracts used for hedging
2012
30,528
80,549
5,407
-
18,495
134,979
2011
36,573
103,609
5,296
788
19,585
165,851
The ageing of 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 61-120 days
Past due 120+ days
Less accrued rebates and credit claims
There were no trade receivables with re-negotiated terms.
2012
Receivable
2012
Impairment
2011
Receivable
2011
Impairment
65,154
28,528
1,255
1,043
2,568
(17,999)
80,549
(70)
(61)
(35)
(312)
(1,188)
-
(1,666)
87,130
32,575
2,770
1,432
3,703
(24,001)
103,609
(238)
(104)
(64)
(206)
(1,588)
-
(2,200)
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)/reversal
Impairment losses applied
Acquired through business combinations
Disposals
Effect of movements in foreign exchange
Balance at 30 June
Liquidity risk
2012
(2,200)
(231)
646
-
122
(3)
2011
(4,751)
177
2,641
(277)
-
10
(1,666)
(2,200)
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.
73
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
25. FinAnciAL instruments And FinAnciAL risk mAnAGement (cont.)
Liquidity risk (cont.)
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
2012
Non-derivative financial liabilities
Carrying
amount
Contractual
cash flows
Less than
6 months
6–12
months
1–2
years
3–5
years
5+
years
Unsecured cash advance facilities
(205,000)
(279,454)
Trade and other payables
(45,069)
(45,069)
(12,515)
(45,021)
(12,515)
(25,030)
(224,394)
(5,000)
(48)
-
-
Derivative financial liabilities
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
Forward exchange contracts
designated as hedges – inflow
(3,096)
(2,026)
(806)
(599)
(559)
(62)
-
-
-
-
-
-
(18,610)
(18,610)
(18,610)
18,495
18,495
18,495
-
-
-
-
-
-
-
-
-
-
-
-
Total at 30 June 2012
(253,280)
(326,664)
(58,457)
(13,162)
(25,589)
(224,456)
(5,000)
2011
Non-derivative financial liabilities
Unsecured cash advance facilities
(234,656)
(297,532)
(8,307)
(8,307)
(16,615)
(229,647)
(34,656)
Trade and other payables
(50,111)
(50,111)
(49,771)
(311)
(29)
-
(452)
(122)
(111)
(177)
(42)
Derivative financial liabilities
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
Forward exchange contracts
designated as hedges – inflow
(450)
(605)
788
(605)
(605)
788
788
(20,241)
(20,241)
(20,241)
19,585
19,585
19,585
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total at 30 June 2011
(285,690)
(348,568)
(58,673)
(8,729)
(16,821)
(229,689)
(34,656)
The unsecured cash advance facilities are split between three year and five year terms. The periods in which the cash flows associated with
derivatives arise match the periods of profit and loss impact.
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
25. 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 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 3.86% to 5.42% (2011: 5.05% - 5.42%). At 30 June 2012, the consolidated
entity had interest rate swaps in operation with a notional contract amount of $125,000,000 (2011: $125,000,000). An additional
$25,000,000 swap will commence in the next financial year which will replace an existing maturing swap.
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 2012 was $3,096,000 recognised as a fair value derivative liability. (2011: $450,000 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 cash advance facilities
Bank balances
Call deposits
Fixed rate financial instruments
Interest rate swap derivatives
Total
2012
Notional
value
2012
Carrying
amount
2011
Notional
value
2011
Carrying
amount
(205,000)
(205,000)
(234,656)
(234,656)
12,998
17,530
12,998
17,530
14,216
22,357
14,216
22,357
(174,472)
(174,472)
(198,083)
(198,083)
125,000
(49,472)
(3,096)
(177,568)
125,000
(73,083)
(450)
(198,533)
(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
2012
2011
(2,622)
-
2,622
-
2,690
-
(2,690)
-
(1,152)
702
450
-
1,170
-
(1,170)
-
75
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
25. FinAnciAL instruments And FinAnciAL risk mAnAGement (cont.)
Market risk (cont.)
a) Interest rate risk (cont.)
(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 cash advance facilities (AUD)
Unsecured cash advance facilities (USD)
Bank balances
Interest rate swap derivatives
Call deposits variable rate
Call deposits fixed rate
Decrease of 100 basis points
Unsecured cash advance facilities (AUD)
Unsecured cash advance facilities (USD)
Bank balances
Interest rate swap derivatives
Call deposits variable rate
Call deposits fixed rate
(b) Foreign currency risk
2012
2011
(2,519)
(2,442)
(25)
130
1,141
269
8
(996)
2,519
9
(130)
(1,141)
(267)
(8)
982
(57)
142
1,168
290
46
(853)
2,442
52
(142)
(1,168)
(290)
(46)
848
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 date. The consolidated entity classifies its
forward exchange contracts hedging forecasted transactions as cash flow hedges and states them at fair value.
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
25. FinAnciAL instruments And FinAnciAL risk mAnAGement (cont.)
Market risk (cont.)
b) Foreign currency risk (cont.)
(i) Exposure to currency risk
In thousands of AUD equivalent
Currency transaction risk
2012
Trade receivables
Trade payables
Cash
Net balance sheet exposure
Estimated forecast sales
Estimated forecast purchases
Net forecast transaction exposure
Forward exchange contracts
Net exposure 30 June 2012
Foreign exchange rates at balance date
2011
Trade receivables
Trade payables
Cash
Net balance sheet exposure
Estimated forecast sales
Estimated forecast purchases
Net forecast transaction exposure
Forward exchange contracts
Net exposure 30 June 2011
Foreign exchange rates at balance date
Currency translation risk
2012
Net assets
2011
Net assets
USD
NZD
EUR
285
(1,120)
2,030
1,195
-
(32,795)
(32,795)
15,602
(15,998)
1.0191
485
(1,265)
458
(322)
4,829
(39,288)
(34,459)
14,946
(19,835)
1.0739
-
1,485
-
(49)
1,669
1,620
8,983
(4,422)
4,561
(1,762)
4,419
1.2771
-
(3)
323
320
9,551
(5,489)
4,062
(1,312)
3,070
1.2953
1,708
2,623
-
(839)
553
(286)
-
(5,943)
(5,943)
1,050
(5,179)
0.8092
101
(1,274)
517
(656)
142
(8,139)
(7,997)
3,241
(5,412)
0.7405
-
-
77
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
25. 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 statement of financial position 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 cash advance facilities
Trade payables and accrued expenses
Estimation of fair values
Carrying
amount
2012
30,528
85,439
Fair
value
2012
30,528
85,439
(3,096)
(3,096)
-
-
18,495
(18,610)
(205,000)
(46,393)
(138,637)
-
-
18,495
(18,610)
(205,000)
(46,393)
(138,637)
Carrying
amount
2011
36,573
110,694
(450)
788
(605)
19,585
(20,241)
(234,656)
(55,126)
(143,438)
Fair
value
2011
36,573
110,694
(450)
788
(605)
19,585
(20,241)
(234,656)
(55,126)
(143,438)
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) Loans and borrowings
The notional amount of the interest-bearing loans is deemed to reflect the fair value. The interest-bearing loans are split between three year
and five year terms.
(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 Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
25. 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 2012 plus an adequate constant credit spread to discount financial
instruments. The interest rates used are as follows:
Derivatives
Employee share loans and other loans
Loans and borrowings
(vi) Fair value hierarchy
2012
2011
3.14% - 3.58%
4.88% - 5.07%
7.40% - 7.80%
6.65% - 7.80%
5.36% - 5.66%
2.37% - 7.18%
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 Level 1 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)
In thousands of AUD
30 June 2012
Commodity contracts used for hedging
Forward exchange contracts used for hedging
Interest rate swaps used for hedging
Commodity contracts used for hedging
Forward exchange contracts used for hedging
Interest rate swaps used for hedging
30 June 2011
Commodity contracts used for hedging
Forward exchange contracts used for hedging
Interest rate swaps used for hedging
Commodity contracts used for hedging
Forward exchange contracts used for hedging
Interest rate swaps used for hedging
Level 1
Level 2
Level 3
Total
-
-
-
-
-
-
-
-
788
-
-
788
(605)
-
-
(605)
-
18,495
-
18,495
-
(18,610)
(3,096)
(21,706)
-
19,585
-
19,585
-
(20,241)
(450)
(20,691)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,495
-
18,495
-
(18,610)
(3,096)
(21,706)
788
19,585
-
20,373
(605)
(20,241)
(450)
(21,296)
79
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
26. 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
2012
12,401
28,411
5,431
46,243
2011
12,872
20,013
2,878
35,763
The consolidated entity leases warehouse, factory and office facilities and motor vehicles under operating leases. The warehouse, factory
and office facility leases typically run for a period of 3 to 8 years, with an option to renew the lease after that date. None of the leases include
contingent rentals. During the financial year ended 30 June 2012, $14,111,000 (2011: $13,308,000) was recognised as an expense in
profit or loss in respect of operating leases.
27. cApitAL commitments
In thousands of AUD
Capital expenditure commitments
Plant and equipment
Contracted but not provided for and payable:
Within one year
28. continGencies
Environmental remediation
2012
2011
4,111
13,514
In previous financial years, the consolidated entity 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, a wholly owned subsidiary
of the ultimate parent, GWA Group Limited. The Eagle Farm site was previously occupied by Corille Limited (formerly Rover Mowers Limited)
and was exited in a prior financial year following the sale of the Rover Mowers business.
The remediation activities at the Revesby site were substantially completed during the 2012 financial year and on-going monitoring will be
required. The remediation activities at the Eagle Farm site were completed during the 2012 financial year. The remediation provision at
30 June 2012 is $1,092,000 which the directors consider adequate.
Brivis evaporative cooler recall
Since the acquisition of Brivis in April 2010, the consolidated entity has continued product recalls commenced by the former owner, Carrier,
for Brivis evaporative coolers manufactured between August 2000 and November 2003 due to defective components. The total cost of the
product recall cannot be reliably estimated at this stage. The Brivis purchase agreement provides that Carrier is responsible for product liability
and recall costs above a specified threshold with an overall cap on Carrier’s liability. The directors believe the provision at 30 June 2012 of
$1,064,000 in respect of potential product liability and product recall costs is adequate.
29. 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 30 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 2012, is set
out in the table on the following page.
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
29. deed oF cross GuArAntee (cont.)
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
Share-based payments, net of income tax
Retained profits at end of the year
Statement of financial position
In thousands of AUD
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Other
Total current assets
Receivables
Intercompany receivables
Investments
Deferred tax assets
Property, plant and equipment
Intangible assets
Other
Total non-current assets
Total assets
Liabilities
Trade and other payables
Income tax payable
Employee benefits
Provisions
Total current liabilities
Loans and borrowings
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
2012
48,211
(9,597)
38,614
42,191
(54,275)
(264)
26,266
2011
93,081
(27,435)
65,646
30,743
(54,198)
-
42,191
2012
2011
29,085
96,936
89,428
1,537
2,496
219,482
4,747
35,213
11,435
17,418
74,579
379,543
3,521
526,456
745,938
67,486
-
13,433
13,857
94,776
205,000
12,337
8,330
225,667
320,443
425,495
398,930
299
26,266
425,495
34,070
121,359
100,228
-
2,974
258,631
4,659
31,430
11,948
16,929
88,715
394,290
4,171
552,142
810,773
75,079
10,281
15,615
13,782
114,757
234,656
14,131
8,193
256,980
371,737
439,036
397,844
(999)
42,191
439,036
81
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
30. consoLidAted entities
Parent entity
GWA Group Limited
Subsidiaries
Austral Lock Pty Ltd
Brivis Climate Systems Pty Ltd
Canereb Pty Ltd
Caroma Holdings Limited
Caroma Industries Limited
Caroma Industries (NZ) Limited
Caroma International Pty Ltd
Caroma USA Inc
Corille Limited
Dorf Clark Industries Ltd
Dorf Industries (NZ) Ltd
Dux Manufacturing Limited
G Subs Pty Ltd
Gainsborough Hardware Industries Limited
Gliderol International Pty Limited
GWA Finance Pty Limited
GWA Group Holdings Limited
GWAIL (NZ) Ltd
GWA Taps Manufacturing Limited
GWA Trading (Shanghai) Co Ltd
Industrial Mowers (Australia) Limited
Mainrule Limited
McIlwraith Davey Pty Ltd
Sebel Furniture (Hong Kong) Ltd
Sebel Furniture Limited
Sebel Furniture Limited (NZ)
Sebel Furniture Holdings Pty Ltd
Starion Tapware Pty Ltd
Stylus Pty Ltd
Warapave Pty Ltd
GWA Group Limited ∕ ∕ 2012 AnnuAL report
Parties to cross
guarantee
Country of
incorporation
Ownership interest
2012
2011
Y
Y
Y
N
Y
Y
N
Y
N
Y
Y
N
Y
Y
Y
Y
Y
Y
N
Y
N
Y
N
Y
N
Y
N
Y
Y
Y
N
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
USA
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
China
Australia
New Zealand
Australia
Hong Kong
Australia
New Zealand
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%
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
31. pArent entity discLosures
As at, and throughout, the financial year ended 30 June 2012 the parent company of the consolidated entity was GWA Group 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
Company
2012
2011
81,676
-
81,676
2,775
585,340
-
151,442
398,930
2,413
32,555
433,898
29,002
-
29,002
1,138
511,888
8,970
106,037
397,844
2,802
5,205
405,851
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 (2011: 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
(2011: 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 (2011: nil). Further details of the Deed of Cross Guarantee and the subsidiaries subject to the Deed are disclosed in Note 29.
83
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
32. reconciLiAtion oF cAsh FLoWs From operAtinG Activities
In thousands of AUD
Cash flows from operating activities
Profit for the period
Adjustments for:
Depreciation
Amortisation
Share-based payments
Foreign exchange (gains)/losses
Net financing costs
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
Decrease in trade and other receivables
Decrease in inventories
Decrease in trade and other payables
Decrease in provisions and employee benefits
Net interest paid
Income taxes paid
Net cash from operating activities
33. reLAted pArties
Key management personnel compensation
The key management personnel compensation included in ‘personnel expenses’ (see note 7) are as follows:
In AUD
Short-term employee benefits
Post-employment benefits
Other long term benefits
Termination benefits
Share-based payments
2012
2011
39,655
63,359
12,851
6,369
(771)
(1,298)
14,247
4,319
(9,632)
11,256
76,996
21,941
3,835
(2,967)
(920)
98,885
(15,979)
(22,407)
60,499
12,838
5,615
922
1,580
15,175
422
184
28,622
128,717
13,764
7,679
(22,310)
(1,771)
126,079
(16,551)
(20,970)
88,558
2012
2011
5,980,847
6,478,529
463,822
202,124
50,000
344,678
7,041,471
490,658
601,689
-
763,624
8,334,500
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.
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
33. reLAted pArties (cont.)
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
L Patterson
W Saxelby
Balance
1 July 2011
Balance
30 June 2012
Interest not
charged in the
reporting period
Highest balance
in period
1,320,000
245,496
616,073
725,600
798,008
227,496
580,073
671,600
82,420
18,466
46,689
54,549
1,320,000
245,496
616,073
725,600
No loans were made to key management personnel or their related parties during the year (2011: 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
Opening balance
Closing
balance
Interest not
charged in the
reporting period
Number in
group at
30 June
Total for key management personnel 2012
Total for key management personnel 2011
2,907,169
3,153,632
2,277,177
2,907,169
202,124
201,689
4
4
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 $78,769 (2011: $122,118) from Great Western Corporation Pty Ltd, a company
of which Mr R 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 $296,413 (2011: $193,554) 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 or to their related parties at reporting date
arising from these transactions were as follows:
In AUD
Trade creditors
2012
38,060
2011
26,723
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.
85
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
33. reLAted pArties (cont.)
Movements in shares
The movement during the reporting period in the number of ordinary shares in GWA Group Limited held, directly, indirectly or beneficially,
by each key management person, including their related parties, is as follows:
Held at 1 July
2011
Granted as
compensation
Purchases
Sales
30 June 2012
Held at
Directors: non-executive
R Anderson
G McGrath
W Bartlett
D McDonough
P Birtles
J Mulcahy
Executive directors
P Crowley
R Thornton
Executives
G Oliver
W Saxelby
L Patterson
P Crossley
G Welsh
18,399,803
150,000
30,914
100,495
15,000
25,000
750,000
116,313
174,907
320,000
200,000
-
-
-
-
-
-
-
-
177,500
17,500
27,500
50,000
27,500
15,000
20,000
5,000
-
-
-
-
20,000
-
-
-
-
-
-
-
-
-
-
-
-
-
(177,500)
(5,119)
-
(20,000)
-
-
-
18,404,803
150,000
30,914
100,495
15,000
45,000
750,000
128,694
202,407
350,000
227,500
n/a
n/a
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 2012 is listed in the Directors’ Report.
GWA Group Limited ∕ ∕ 2012 AnnuAL report
notes to the Consolidated
finanCial statements
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
33. reLAted pArties (cont.)
Movements in shares (cont.)
Held at
1 July 2010
Granted as
compensation
Purchases
Sales
30 June 2011
Held at
Directors: non-executive
D Barry
(Retired 28 October 2010)
R Anderson
G McGrath
W Bartlett
D McDonough
P Birtles
(Appointed 24 November 2010)
J Mulcahy
(Appointed 24 November 2010)
Executive directors
P Crowley
R Thornton
Executives
G Oliver
W Saxelby
L Patterson
N Evans
12,877,399
18,399,803
150,000
15,914
60,495
n/a
n/a
750,000
112,313
174,907
300,000
240,739
14,338
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,000
40,000
-
-
-
4,000
-
20,000
-
-
-
-
-
-
-
-
-
-
-
-
-
(40,739)
(14,338)
n/a
18,399,803
150,000
30,914
100,495
15,000
25,000
750,000
116,313
174,907
320,000
200,000
-
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 2012 was 20,404,813 (2011: 20,282,432).
34. subsequent events
On 14 June 2012, the consolidated entity entered into a scheme implementation agreement (SIA) to acquire all of the shares of Q Technology
Group Ltd (QTG). Subsequent to 30 June 2012, the SIA was terminated by the parties due to a condition precedent in the SIA becoming
incapable of satisfaction. On 16 July 2012, the consolidated entity signed an indicative non-binding heads of agreement with QTG for the
acquisition of API Services and Solutions Pty Ltd (API) for $14 million on a debt free basis. API is a supplier of safes, locks, alarms and
locksmithing services to commercial premises. The consolidated entity is continuing its discussions with QTG on the acquisition of API.
Other than the matter noted above, to the Director’s best knowledge, there are no events that have arisen subsequent to 30 June 2012
that will, or may, significantly affect the operation or results of the consolidated entity.
87
direCtors’ deClaration
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
1.
In the opinion of the directors of GWA Group 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 group’s financial position as at 30 June 2012 and of its performance for the financial year ended
on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
(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.
There are reasonable grounds to believe that the Company and the group entities identified in Note 29 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 group
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 2012.
The directors draw attention to Note 1(a) to the consolidated financial statements, which includes a statement of compliance with
International Financial Reporting Standards.
2.
3.
4.
Dated at Brisbane on 14 August 2012.
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 Group Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2012 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, 14 August 2012
Greg Boydell
Partner
GWA Group Limited ∕ ∕ 2012 AnnuAL report
independent auditor’s report
to the memBers of gwa group limited
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
report on the FinAnciAL report
We have audited the accompanying financial report of GWA Group
Limited (the company), which comprises the consolidated statement
of financial position as at 30 June 2012, and consolidated statement
of comprehensive income, consolidated statement of changes in
equity and consolidated statement of cash flows for the year ended
on that date, notes 1 to 34 comprising a summary of significant
accounting policies and other explanatory information and the
directors’ declaration of the Group comprising the Company and the
entities it controlled at the year’s end or from time to time during the
financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of
the financial report that gives a true and fair view in accordance with
Australian Accounting Standards and the Corporations Act 2001 and
for such internal control as the directors determine is necessary to
enable the preparation of the financial report that is free from material
misstatement whether due to fraud or error. In Note 1, the directors
also state, in accordance with Australian Accounting Standard AASB
101 Presentation of Financial Statements, that the financial statements
of the Group comply 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 of the financial report that gives a true and fair
view 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,
a true and fair view which is consistent with our understanding of
the Group’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 Group is in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position
as at 30 June 2012 and of its performance for the year
ended on that date; and
(ii) complying with Australian Accounting Standards
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 on pages
29 to 38 of the directors’ report for the year ended 30 June 2012.
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 Group Limited for
the year ended 30 June 2012, complies with Section 300A of the
Corporations Act 2001.
KPMG
Sydney, 14 August 2012
Greg Boydell
Partner
89
other statutory information as at 13 august 2012
GWA Group 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 13 August 2012, 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
1,834
5,785
2,985
2,269
122
12,995
973,824
17,346,642
22,781,112
48,590,892
212,313,044
302,005,514
The number of shareholders with less than a marketable parcel of 197 shares is 458.
%
0.32
5.74
7.54
16.09
70.30
100.00
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 13 August 2012:
Shareholder
HGT Investments Pty Limited
Number of Shares
18,410,000
% Shares on Issue
6.10
GWA Group Limited ∕ ∕ 2012 AnnuAL report
other statutory information as at 13 august 2012
GWA Group Limited And its controLLed entities
ABN 15 055 964 380
20 LArGest shArehoLders As At 13 AuGust 2012
Shareholder
J P Morgan Nominees Australia Limited
National Nominees Limited
HGT Investments Pty Ltd
HSBC Custody Nominees (Australia) Limited
KFA Investments Pty Ltd
Citicorp Nominees Pty Limited
Erand Pty Ltd
RBC Investor Services Australia Nominees Pty Limited
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