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5
2015
ANNUAL
REPORT
FY15 PERFORMANCE HIGHLIGHTS
EARNINGS
$72.8 million
Normalised earnings before interest and
tax (EBIT) from continuing operations
13% to $72.8 million
Bathrooms & Kitchens EBIT 14%
Door & Access Systems EBIT 14%
SUCCESSFUL DIVESTMENT
of non-core businesses (Dux, Brivis, Gliderol)
and exit from vitreous china manufacturing
FINANCIAL POSITION
continues to strengthen:
Continuing operations’ cashflow
from operations up 62%
Net debt down 37% on prior year
NET PROFIT
$45.2 million
Normalised net profit from continuing
operations 19% to $45.2 million
SUCCESSFUL EXECUTION OF STRATEGY
to focus on core Bathrooms & Kitchens and
Door & Access Systems to capitalise on
improving construction activity
REPORTED NET LOSS
of $16.2 million includes loss on sale/
impairments related to divested businesses
and restructuring costs primarily due to exit
of manufacturing
CONTENTS
Five Year Financial Summary
Company Profile and Our Mission
Chairman’s Review
Managing Director’s Review of Operations
Health and Safety
GWA Bathrooms & Kitchens
GWA Door & Access Systems
1
2
4
6
10
12
13
Board of Directors
Directors’ Report
Financial Report
Other Statutory Information
Shareholder Information
14
16
32
78
79
FIVE YEAR
FINANCIAL SUMMARY
Continuing operations
2010/11(1)
$’000
2011/12(1)
$’000
2012/13(1)
$’000
2013/14(1)
$’000
2014/15(1)
$’000
Revenue from continuing operations
726,367
602,128
565,365
399,394
426,218
Earnings before interest, tax, depreciation,
amortisation (EBITDA) and significant items(3)
EBITDA margin (%)
Depreciation and amortisation
Earnings before interest, tax (EBIT) and significant items(3)
EBIT margin (%)
Interest expense (net)
Normalised profit before tax(3)
(%)
Tax expense
Effective tax rate (%)
Normalised profit after tax(3)
Significant items after tax
125,243
17.2
(18,087)
107,156
14.8
94,228
15.6
87,168
15.4
76,819
19.2
(18,864)
(20,398)
(12,328)
75,364
12.5
66,770
11.8
64,491
16.1
(15,175)
(14,247)
(13,324)
(11,201)
91,981
12.7
61,117
10.2
53,446
9.5
53,290
13.3
81,734
19.2
(8,970)
72,764
17.1
(7,329)
65,435
15.4
(28,622)
(15,565)
(14,115)
(15,452)
(20,278)
31.1
25.5
63,359
45,552
–
621
Net profit after tax from continuing operations
63,359
46,173
Basic earnings per share (cents)
Normalised earnings per share (cents)(2)
21.0
21.0
15.3
15.1
Group (continuing and discontinued operations)
Net profit after tax from continuing operations
Loss from discontinued operations (net of tax)
Net profit / (loss) after tax for the period
Net cash from operating activities
Capital expenditure
Net debt
Shareholders’ equity
Interest cover (times)
Gearing (net debt / (net debt + equity) (%)(4)
Return on shareholders’ equity (%)
Dividend payout ratio (%)
Dividend per share (cents)
Franking (%)
Capital return (cents)(5)
Share price (30 June) ($)
Dividend yield at 30 June share price (%)
Number of employees
63,359
–
63,359
88,558
24,727
198,083
439,995
8.3
31.0
14.4
85.7
18.0
100.0
–
2.75
6.5
2,150
46,173
(6,518)
39,655
60,499
25,798
174,472
426,984
6.6
29.0
9.3
136.4
18.0
100.0
–
2.10
8.6
1,788
26.4
39,331
(6,941)
32,390
10.6
12.9
29.0
37,838
(6,664)
31,174
10.2
12.4
31.0
45,157
(34,796)
10,361
3.4
14.8
32,390
–
31,174
(12,578)
10,361
(26,544)
32,390
18,596
(16,183)
63,349
14,703
162,243
426,742
33,898
5,570
149,385
425,989
43,505
5,062
94,763(4)
305,894
6.5
27.5
7.6
113.2
12.0
100.0
–
2.40
5.0
1,680
8.5
26.1
4.4
90.3
5.5
100.0
–
2.63
2.1
1,681
12.8
23.7(4)
(5.3)
–
6.0(5)
76.7
22.8(5)
2.28
2.6
1,183
(1)
(2)
(3)
(4)
(5)
The Dux Hot Water (Dux) and Brivis Heating and Cooling (Brivis) businesses were sold during FY15. Additionally, GWA entered into an agreement to sell Gliderol Garage Doors (Gliderol)
in FY15 and the sale was completed on 31 July 2015. Accordingly, the operating activities of Dux, Brivis and Gliderol were classified as discontinued operations in FY15 and presented
separately from the results of the continuing operations. The FY14 results have been re-presented to be comparable with FY15. FY11 to FY13 have not been re-presented and include the
operating activities of Dux, Brivis and Gliderol (from 31 January 2011) as part of continuing operations. In addition, the results of the Sebel Furniture and Caroma North America businesses
are included in FY11 as part of continuing operations. Sebel Furniture and Caroma North America were divested during FY12 and were disclosed as discontinued operations in FY12.
Excludes significant items.
Normalised profit before significant items is a non-IFRS financial measure reported to provide a greater understanding of the underlying business performance of the Group.
The disclosures are extracted or derived from the financial report for the year ended 30 June 2015 and have not been subject to review or audit. The non-IFRS financial
measures included in this table exclude significant items that are detailed in Note 6 of the financial report.
Net debt reflects the Group’s borrowings and bank guarantees less cash (including cash classified within assets held for sale at 30 June 15).
A capital return of 22.8 cents per share and a special dividend of 6.0 cents per share from the Brivis and Dux net sale proceeds were paid to shareholders on 15 June 2015.
1
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 Group has
manufacturing, sales and distribution facilities located
across Australia and a branch office in New Zealand.
GWA is a member of the ASX 200 index of listed
Australian companies.
GWA operates a central-led business with corporate functions
supporting two business divisions focused on customers in their
target market segments. GWA’s business divisions currently comprise:
GWA Bathrooms & Kitchens is Australia’s foremost designer,
manufacturer, importer and distributor of residential and commercial
bathroom and kitchen products. The product range is distributed under
Australian brands including Caroma, Dorf, Fowler, Stylus, Clark and
international brands including Hansa, Schell, Virtu, EMCO and Sanitron.
GWA Door & Access Systems is a leading Australian designer,
manufacturer, importer and distributor of a comprehensive range of
access and security systems for use in residential and commercial
premises. The product range is distributed under Australian brands
including Gainsborough, Trilock, Renovator, Austral Lock and
international brands including Salto, Hillaldam and Eco Schulte.
GWA Door & Access Systems was expanded in 2012 to include
API Locksmiths which is an Australian supplier of security and
access control systems and locksmithing services to major
commercial enterprises.
GWA has grown since listing as a result of the strong performance
of the core building fixtures and fittings businesses and through
successful acquisitions. The Group remains committed to growing
shareholder wealth through organic growth initiatives in target market
segments and acquisitions that add value to its core businesses by
supporting expansion into new markets or providing access to new
products and solutions.
GWA GROUP LIMITED • 2015 ANNUAL REPORT OUR
MISSION
To be Australia’s
leading supplier of
products and solutions
to the residential and
commercial building
markets
WHAT WE WILL DO
We will be efficient and easy to deal with.
We recognise that time is precious to both our external and
internal customers and is a source of value and sustainable
competitive advantage.
We recognise markets are changing and will deliver products
and solutions that save time for tradesmen, builders and
across commercial projects.
We will refocus our business units on their target market
segments to ensure they have unmatched understanding of
customer needs, able to reach and influence the key decision
makers in these segments.
We will free up our business units to focus on their markets
by leveraging corporate functions which will enable:
Increased innovation and market insights;
Closer customer engagement and information
via group information systems;
Supply chain efficiencies and responsiveness;
A supportive culture and pipeline of appropriately
skilled management; and
Unmatchable scale.
We will pursue acquisitions which leverage our existing
market relationships and scale.
3
CHAIRMAN’S
REVIEW
FY15 was a transformative year for GWA as the
company implemented its strategy to focus on the
core Bathrooms & Kitchens and Door & Access
Systems businesses.
The strategy has resulted in the phased exit of manufacturing of
vitreous china and plastic sanitaryware products, the divestment of
non-core businesses, together with a successful return of capital and
special dividend to GWA shareholders.
STRATEGY
Following a detailed review of GWA’s operations last year, the company
successfully implemented a number of initiatives to refocus the group
on the core Bathrooms & Kitchens and Door & Access Systems
businesses where we have strong, profitable and market-leading
positions. These initiatives included:
• The sale of the Brivis Climate Systems business;
• The sale of the Dux Hot Water business;
• The sale of the Gliderol Garage Doors business; and
Your Board believes GWA is well positioned to capitalise on our strong,
market-leading presence in our core markets to deliver improved value
for shareholders over the medium term.
• The phased exit from manufacturing of vitreous china and plastic
sanitaryware products at the Wetherill Park and Norwood factories
and the subsequent sale of the Wetherill Park site.
FINANCIAL OVERVIEW
Normalised EBIT from Continuing Operations1 in FY15 was
$72.8 million, an increase of 13 per cent on the prior year.
Net sales revenue from Continuing Operations increased by
7 per cent to $426.2 million from FY14.
The increase in earnings and revenue was predominantly driven by
ongoing improvements in the Bathrooms & Kitchens business where
normalised EBIT increased by 14 per cent to $83.3 million.
GWA’s normalised net profit after tax from Continuing Operations
(before significant items) increased by 19 per cent to $45.2 million.
The company incurred one-off restructuring costs and costs relating
to plant closures which were classified as Significant Items.
As a result, net profit after tax from Continuing Operations
(including the impact of Significant Items) was $10.4 million
compared to $31.2 million in FY14.
On a reported basis, including Continuing and Discontinued
Operations after Significant Items, GWA reported an after tax loss of
$16.2 million compared to net profit of $18.6 million in the prior year.
The final aspect of the implementation of this strategy is the
current restructuring of group operations to drive greater focus and
accountability across the divisions and to ensure our cost base is
realigned to adjust for the business structure going forward.
GWA now has a much clearer focus on the core Bathrooms & Kitchens
and Door & Access Systems businesses where we believe shareholder
returns will be maximised.
This focus also enables the company to invest in product innovation
and to selectively invest in organic and other value accretive
opportunities across the core businesses.
DIVIDENDS AND CAPITAL MANAGEMENT
Following the sale of the non-core businesses, the Board was pleased
to be able to return 28.8 cents per share to shareholders through a
return of capital of 22.8 cents per share and a partially-franked special
dividend of 6 cents per share paid on 15 June 2015.
GWA’s financial position remains strong with net debt at 30 June 2015
of $95 million compared to $149 million in the previous year. Our
financial metrics comprising leverage, gearing, and interest cover ratios
continue to strengthen and remain consistent with investment grade.
The company successfully refinanced its syndicated bank facility during
the year which provides additional financial flexibility for the group.
1 Continuing Operations exclude the Brivis Climate Systems and Dux Hot Water businesses which were divested during the year and the Gliderol Garage Doors
business which was divested on 31 July 2015 and is classified as an asset held for sale in the FY15 financial report.
GWA GROUP LIMITED • 2015 ANNUAL REPORT Normalised EBIT from continuing operations
$m
Net Debt
$m
14/15
13/14
12/13
11/12
10/11
0
14/15
13/14
12/13
11/12
10/11
20
40
60
80
100
120
0
50
100
150
200
250
Normalised EBIT from continuing operations of $72.8 million in FY15
represents an increase of 13% on the prior year following the strong trading
performance of the Bathrooms & Kitchens division.
The Group’s financial metrics remain strong with net debt at the end
of June 2015 of $94.8 million, a reduction of 37% from June 2014.
EXECUTIVE REMUNERATION
GWA’s remuneration policies continue to be assessed with the
independent advice of Guerdon Associates who were engaged by the
Board for the FY16 executive remuneration review. We aim to provide
remuneration to executives which is fair and sufficient to attract and
retain a high quality management team with the requisite experience,
knowledge, skills and judgement required for the business.
In order to achieve this objective, the key principle is that fixed
remuneration for executives varies between the median and third
quartiles relative to companies of comparable size and scope.
The fixed remuneration for Managing Director, Peter Crowley has been
frozen since 2011 and remains frozen. In addition, Mr Crowley did not
receive any short term incentive (STI) payments for FY15 due to the
Group’s net loss position. The Bathrooms & Kitchens division achieved
their STI financial targets for FY15 reflecting their strong trading
performance and no other divisional or corporate STI financial targets
were achieved in FY15.
SAFETY
I am pleased to report continuing progress in the company’s safety
performance resulting in a further 11 per cent reduction in the total
injury frequency rate in FY15. This represents the tenth consecutive
year of improvement reflecting our ongoing commitment to creating
an injury free work environment.
On behalf of the Board, I acknowledge and thank Peter, his executive
team and all members of the GWA team for their contribution over
the past year. It has been a significant year of transformation for the
group and as a result, I believe we now have the right focus and
organisational and capital structure to capitalise on improving dwelling
construction activity to build our competitive position and deliver
improved returns to shareholders.
The financial position of the Group is supported by our strong cash
flow generation; during FY16 the Board will continue to consider
available capital management initiatives with a view to maximising
shareholder returns. Separately, the Board expects to resume ordinary
dividends from the interim dividend for FY16, subject of course to
prevailing market and trading conditions.
CEO SUCCESSION
Having successfully implemented the group’s strategy review,
Peter Crowley announced his intention to retire as Managing
Director from 30 June 2016.
For the past 12 years, Peter has provided strong and dedicated
leadership to GWA and on behalf of the Board, I personally
acknowledge Peter’s significant contribution to the company.
The Board was pleased to announce the appointment of Tim Salt
to succeed Peter as Managing Director. Tim will join the company
in September 2015, initially as Executive General Manager of the
Bathrooms & Kitchens business and will work with Peter on an orderly
transition to the role of Managing Director.
Tim has a long and successful track record in building high
performance and results-oriented cultures, most recently as the
Managing Director of Diageo in Australia and New Zealand and we
look forward to his contribution to GWA.
DIVERSITY
The Board acknowledges the significant benefits that arise from
a diverse workforce and has a Diversity Policy which is available
on the Group’s website at www.gwagroup.com.au. A number of
measurable objectives have been approved by the Board to promote
and encourage diversity, particularly the improvement of female
representation within the workforce. We are pleased with the increase
in the overall percentage of female employees in the Group in FY15
including an increase of females in management roles. The Board is
also mindful of the need to increase diversity of the Board.
The Board supports the recommendations of the ASX Corporate
Governance Council on diversity and has provided the required
diversity disclosures in its Corporate Governance Statement.
The Group lodged its Workplace Gender Equality Report with the
Workplace Gender Equality Agency in May 2015 and the report is
available on the Group’s website at www.gwagroup.com.au under
Gender Equality Reporting.
5
MANAGING
DIRECTOR’S
REVIEW OF
OPERATIONS
Management focus during FY15 was to implement
our strategy to divest non-core businesses, exit
manufacturing of specific product categories and
refocus on servicing our target market segments
in our core businesses in Bathrooms & Kitchens
and Door & Access Systems.
As a result, GWA’s portfolio has now been streamlined and our focus
for FY16 remains on ensuring the core businesses can build on the
progress achieved in FY15 to capitalise on an expected increase in
construction activity to deliver improved financial results.
MARKET ACTIVITY
Residential construction activity in Australia increased throughout
the year, however the multi-residential segment continues to grow
at a faster rate than other segments.
Total new dwelling commencements are forecast to have increased
by 16 per cent on a moving annual total (MAT) basis to the end of
June 20151. However, this was driven by the medium and high
density dwelling segment which increased by 25 per cent compared
to detached houses which increased by 10 per cent.
Dwelling completions, which typically lag commencements by six to
nine months, also increased during the year but were also skewed
towards the medium and high density segment where completions
increased by 31 per cent compared to detached housing completions
which are forecast to have increased by 14 per cent on a MAT basis
to the end of June 2015.
GWA’s products are typically sold at the completions stage of the
building cycle and we therefore remain encouraged by the continued
increase in dwelling commencements over the past year which are
expected to flow through to completions in FY16.
Market activity for home alterations and additions, which represents
the key renovation market segment for GWA, is forecast to have
increased by 3 per cent to June 2015.
Meanwhile, non-residential building activity is estimated to have
remained relatively flat in FY15.
FINANCIAL RESULTS – CONTINUING OPERATIONS
A$ million
Sales Revenue
FY14
399.4
FY15 % change
426.2
+7%
Normalised EBIT
64.5
72.8
+13%
Normalised EBIT Margin
16.1%
17.1%
Normalised NPAT (pre Sig. Items)
NPAT (after Sig. Items)
37.8
31.2
45.2
10.4
+19%
(67%)
During a year of significant restructuring for the company, GWA’s
Continuing Operations2 (before Significant Items) delivered an
improved financial result.
Revenue from Continuing Operations increased by 7 per cent to
$426.2 million, reflecting an improvement in Bathrooms & Kitchens’
sales of 8 per cent and an increase in sales from Door & Access
Systems of 4 per cent compared to the prior year.
Normalised EBIT from Continuing Operations (before Significant
Items) increased by 13 per cent to $72.8 million, driven by a
14 per cent increase in EBIT from Bathrooms & Kitchens, partially
offset by a decline in earnings from Door & Access Systems of
14 per cent compared to the previous year.
Further information on segment earnings is provided on page 8.
1 Source for Dwelling Commencements, Completions, Alterations and Additions
and Non-residential Building Activity is BIS Shrapnel.
2 Continuing Operations exclude the Brivis Climate Systems and Dux Hot Water
businesses which were divested during the year and the Gliderol Garage Doors
business which was divested on 31 July 2015 and is classified as an asset held
for sale in the FY15 financial report.
GWA GROUP LIMITED • 2015 ANNUAL REPORT Chart 1 – New Dwelling Activity (2003-2015)
Approvals
Commencements
Completions
Source: BIS Shrapnel – August 2015
s
r
e
b
m
u
N
l
a
u
n
n
A
g
n
i
v
o
M
240,000
220,000
200,000
180,000
160,000
140,000
120,000
Jun-03
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Normalised net profit after tax from Continuing Operations (before
Significant Items) increased by 19 per cent to $45.2 million due to
higher EBIT and also a 35 per cent reduction in net interest expense
as a result of the company’s lower debt position.
FINANCIAL RESULTS – CONTINUING AND
DISCONTINUED OPERATIONS
A$ million
Sales Revenue
FY14
578.0
FY15 % change
547.8
Operating cashflow from Continuing Operations improved by
62 per cent on the prior year to $81.7 million, due to higher EBITDA
and also from more efficient working capital utilisation compared
to the prior year. FY14 included an increase in inventory levels in
the Gainsborough business and Bathrooms & Kitchens which was
restored to more sustainable levels in FY15 driving the working
capital improvement.
The company’s strategy to exit manufacturing in Bathrooms &
Kitchens resulted in a one-off restructuring charge of $39.3 million
which was treated as a Significant Item in Continuing Operations. In
the second half of the year, the company commenced a restructure
of group operations to realign the company’s cost base to adjust for
divested businesses and to drive greater focus and accountability
across the group which resulted in a restructuring charge of
$10 million being recorded as a Significant Item.
Total Significant Items from Continuing Operations after tax were
$34.8 million.
As a result, net profit after tax from Continuing Operations after
Significant Items was $10.4 million compared to $31.2 million in
the prior year.
(5%)
+3%
+6%
n/m
Normalised EBIT
72.3
74.3
Normalised EBIT Margin
12.5%
13.6%
Normalised NPAT (pre Sig. Items)
Reported NPAT (after Sig. Items)
43.7
18.6
46.2
(16.2)
n/m – not meaningful
The divestment of non-core businesses to support the company’s
strategy to focus on the core Bathrooms & Kitchens and Door &
Access Systems businesses resulted in the company incurring
Significant Items after tax from Discontinued Operations of
$27.6 million including the loss on sale on divested businesses
and the non-cash impairment charge against the Gliderol business
of $24 million.
On a reported basis, (including Continuing and Discontinued
Operations after Significant Items), GWA reported an after tax loss of
$16.2 million compared to net profit of $18.6 million in the prior year.
GWA returned 28.8 cents per share to shareholders; that return was
effected through a return of capital of 22.8 cents per share and a
partially-franked special dividend of 6 cents per share paid on
15 June 2015.
No final dividend will be paid due to the lack of retained earnings
at 30 June 2015.
7
FINANCIAL POSITION AND CAPITAL MANAGEMENT
GWA remains in a strong financial position with net debt of
$95 million at 30 June 2015 compared to $149 million in the
prior year. The reduction in net debt reflects increased EBITDA,
the proceeds received from divested businesses and the sale of the
Wetherill Park site, partially offset by the successful return of capital
and special dividend paid to shareholders in FY15.
Credit metrics have continued to improve with the company’s
gearing ratio (net debt/net debt plus equity) of 23.7 per cent
compared to 26.1 per cent in the previous year and leverage ratio
(net debt/EBITDA) of 1.1 times compared to 1.7 times previously.
The company’s lower debt and improved earnings is reflected in
the improved interest cover ratio (EBITDA/net interest) which at
30 June 2015 was 12.8 times compared to 8.5 times last year.
GWA also successfully refinanced its syndicated banking facility to a
three year revolving $225 million facility which matures in October 2017.
Normalised EBIT of $83.3 million increased by 14 per cent on the
prior year driven predominantly by improved volume and pricing
across most product categories, partially offset by increased costs.
The company remains focused on improving volume growth across
all categories with a specific focus on tapware where we have
implemented new pricing strategies, warranties and incentives,
supported by new display and point of sale solutions to improve
performance in this segment. New product releases, including Epic,
Viridian and Kip received stronger traction in the market towards the
end of the year, providing a stronger platform for FY16.
Door & Access Systems
A$ million
Sales Revenue
Normalised EBIT
FY14
92.8
8.4
FY15 % change
96.2
7.2
+4%
(14%)
Financial Position and Capital Management
Normalised EBIT Margin
9.1%
7.5%
190
170
150
130
110
90
70
50
14
12
10
8
6
4
2
0
FY12
FY13
FY14
Dec FY15
FY15
Net Debt
Interest Cover (times)
Leverage (times)
SEGMENT RESULTS – CONTINUING OPERATIONS
Bathrooms & Kitchens
A$ million
Sales Revenue
FY14
306.6
FY15 % change
330.0
+8%
Normalised EBIT
73.0
83.3
+14%
Normalised EBIT Margin
23.8%
25.2%
The Bathrooms & Kitchens division delivered improved revenue and
earnings during a year of significant strategic restructuring which
included the divestment of the Dux Hot Water business and the full
exit of manufacturing at Wetherill Park and phased exit from Norwood.
Revenue increased by 8 per cent to $330 million reflecting increased
volumes in most product categories and price increases to mitigate
the impact of the lower Australian dollar.
Revenue in the Door & Access Systems division increased by
4 per cent to $96.2 million on the prior year.
Earnings were impacted by flat volume and mix in the Gainsborough
business and higher foreign exchange charges for product purchases
from the lower Australian dollar, resulting in normalised EBIT of
$7.2 million compared to $8.4 million last year.
Earnings were also impacted by a one-off increase in Gainsborough
stock provisions compared to the prior year, partially offset by an
improvement in earnings in the API business.
STRATEGY
The company announced in July 2014 that following a detailed
strategic review, GWA would focus on the core target market segments
of Bathrooms & Kitchens and Door & Access Systems where it has
strong market positions and identified future opportunities to deliver
improved shareholder returns.
Accordingly, the company identified the Dux Hot Water and Brivis
Climate Systems businesses as non-core and successfully completed
the divestment of these businesses during the year.
The company also announced that it would proceed with the sale of
the Gliderol Garage Doors business which was successfully completed
on 31 July 2015.
In order to enhance our competitiveness in the cost effective supply
of value added products to our customers, GWA further announced
that it would cease manufacturing of vitreous china and plastic
sanitaryware products at the Wetherill Park and Norwood factories
and transition to sourcing from established overseas suppliers.
FY15 Bathrooms & Kitchens Volume and Net Sales
% change
Sanitaryware
Tapware
Kitchens &
Laundry
Baths &
Spas
Volume
Net Sales
0.3%
5.6%
3.0%
7.6%
6.6%
10.0%
(2.2%)
8.6%
The result of these strategic initiatives is that GWA now has a much
more simplified structure to concentrate our focus and resources on
the key segments of the market where we already have market-leading
positions, strong brands and therefore greater opportunities to increase
returns and shareholder value.
This is complemented by the company’s ongoing strong financial
position which enables GWA to continue our investment in systems
and product innovation in these core segments.
GWA GROUP LIMITED • 2015 ANNUAL REPORT The company’s financial position remains robust with the ability to
generate strong operating cashflow across the business. As a result,
the company will continue to consider available capital management
initiatives with a view to maximising shareholder returns. Separately,
the Board expects to resume ordinary dividends from the interim
dividend for FY16, subject of course to prevailing market and
trading conditions.
While external market conditions are expected to assist in improved
financial performance in FY16, the risks to this outlook include a
delay in dwelling commencements flowing through to completions,
a significant reduction in the Australian dollar impacting price of
imported products not able to be recovered through price increases
and unforeseen disruptions impacting product supply from offshore
suppliers leading to lower sales and loss of market share.
GWA expects to provide an update on market conditions at
the company’s Annual General Meeting in October 2015.
To support that strategy we are now realigning the cost base
to ensure the company is fit for purpose.
Specifically, that requires a more efficient cost base to reflect
the simplified business but also a structure that fosters greater
accountability and faster decision making to ensure we are meeting
customers’ needs and can reach and influence key decision makers
in our core markets.
Management was required to make difficult decisions in
implementing this strategy which has resulted in a number
of people leaving the business.
Our team across GWA has responded to these challenges and
I want to acknowledge and thank them for their efforts.
SUSTAINABILITY AND CARBON REDUCTION
GWA remains committed to reducing energy, carbon emissions,
water and waste across the Group operations. GWA reports its
Group carbon emissions annually under the Federal Government’s
NGER Scheme and the reports can be accessed on GWA’s website
at www.gwagroup.com.au under Carbon Reporting. The FY15
total carbon emissions from GWA’s controlled facilities is expected
to be significantly lower than the previous financial year due to a
combination of site closures, the divestments of Dux and Brivis and
carbon reduction initiatives.
HEALTH AND SAFETY
The company maintained its strong focus on improving the health
and safety of our people which was reflected in improved performance
for FY15.
The company’s Total Injury Frequency Rate (TIFR) reduced by
11 per cent to 5.54 for the year driven by a significant improvement
in the Door & Access Systems division.
The company’s Injury Severity Rate (ISR) improved slightly on the
prior year and is now at its lowest level since FY10.
While we welcome the improvement in these lag indicators, our
focus will continue to be on preventing incidents before they happen,
consistent with our goal to remove risks and create an injury free
work environment.
FUTURE PROSPECTS AND RISKS
The increase in dwelling commencements during FY15 is expected
to flow through to increased dwelling completions in FY16 which,
together with renovations activity, is a key driver of demand for
GWA’s products.
GWA’s strategy is to ensure its core businesses in Bathrooms &
Kitchens and Door & Access Systems are well positioned to capitalise
on improving market trends for dwelling commencements and build
their competitive position to deliver increased financial returns.
In the meantime, the organisational restructure is designed to
deliver a more effective operational model through overhead and
supply chain efficiencies to fund investment in selected organic
growth opportunities.
9
HEALTH
AND SAFETY
GWA continues to ensure that it provides a safe
workplace for its employees, contractors, visitors
The collective sum of MTIFR plus LTIFR results in the Total Injury
Frequency Rate (TIFR) for GWA.
At the start of FY15 the GWA executive team set a target of 5.5%
year on year improvement for TIFR versus the FY14 actual results.
The actual improvement in TIFR performance in FY15 was 11% which
was significantly better than the target. This was an excellent outcome
and represents the 10th consecutive year that GWA has improved
TIFR performance, demonstrating the Group’s ongoing commitment
to an injury free workplace.
Highlights within the GWA divisions during FY15 include:
•
The Group Injury Severity Rate (ISR) reduced for the 3rd
consecutive year. This is the best result since 2011 however the
reduction in FY15 was less than 1% compared to the prior year
and the target of 2,600 was not met; and
•
GWA Door & Access Systems achieved a 42% improvement
in TIFR in FY15 than their target result.
FY16 WHS improvement objectives and projects are planned
to be met through continuation of the FY15 initiatives including:
• The implementation in FY16 of an integrated GWA WHS
management system and an integrated GWA national WHS team
managed at Group level rather than business unit level. This should
further drive efficiency and improved safety performance; and
• FY16 TIFR target of a further 3% reduction versus FY15 results
by continuing to focus on hazard identification, regular audits and
SafetyOne implementation.
and customers in an efficient and compliant manner.
To highlight the importance placed by GWA on the proactive
management of workplace health and safety (WHS), the Group Risk
Manager prepares a monthly Group Risk Report for the Board and
attends the May and November Audit and Risk Committee meetings
to present the Operational Risk Report. The reporting includes
Group WHS performance, improvement plans and compliance to
regulations. An audit plan, consistent with the Group’s WHS objectives,
is presented annually for approval by the Audit and Risk Committee for
the new financial year.
The major project for FY15 has been planning for the introduction
of an integrated GWA WHS management system called
SafetyOne. SafetyOne integrates 10 key elements of WHS and
will be implemented in FY16. Consistent with an integrated WHS
management system, the management structure of Group WHS will
transition from the business units to a GWA central-led structure with
a National WHS Manager.
WORK HEALTH AND SAFETY PERFORMANCE
GWA measures a range of balanced safety performance indicators.
Proactive indicators such as number of hazards identified, risk
assessments undertaken and actions issued and completed on
time are recorded for each GWA site.
Three key measures of safety outcomes are:
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
3.
Injury Severity Rate which measures the number of hours
for a lost time injury per million hours worked.
GWA GROUP LIMITED • 2015 ANNUAL REPORT SafetyOne integrates 10 key elements of workplace
health and safety and will be implemented in FY16.
1
COMMITMENT
2
STRATEGIC
PLANNING
10
WHS
PERFORMANCE
REVIEW
9
INFORMATION
MANAGEMENT
8
EDUCATION &
TRAINING
GWA WHS
MANAGEMENT
SYSTEM
3
CONSULTATION &
COMMUNICATION
4
RISK
MANAGEMENT
7
INCIDENT
MANAGEMENT
6
EMERGENCY
MANAGEMENT
5
CONTRACTOR
MANAGEMENT
30
20
10
0
20
15
10
5
0
GWA Group Total Injury Frequency Rate (TIFR)
GWA Group Lost Time Injury Frequency Rate (LTIFR)
8
6
4
2
0
2008/09
2009/10
2010/11
2011/12 2012/13 2013/14 2014/15
2008/09
2009/10
2010/11
2011/12 2012/13 2013/14 2014/15
GWA Group Medical Treatment Injury Frequency Rate (MTIFR)
GWA Group Injury Severity Rate (ISR)
2008/09
2009/10
2010/11
2011/12 2012/13 2013/14 2014/15
5000
4000
3000
2000
1000
0
2008/09
2009/10
2010/11
2011/12 2012/13 2013/14 2014/15
11
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
supply chain operations.
HEAD OFFICE LOCATION
GWA Bathrooms & Kitchens
Caroma Industries Limited
Level 1, 7-9 Irvine Place
Bella Vista NSW 2153
AUSTRALIA
Telephone: 61 2 8825 4400
Facsimile: 61 2 8825 4567
www.caroma.com.au
specify.caroma.com.au
www.fowler.com.au
www.dorf.com.au
www.stylus.com.au
www.clark.com.au
SEGMENT PERFORMANCE
Continuing Operations A$M
Sales Revenue
Normalised EBIT*
EBIT Margin %
Return on Funds Employed %
* excludes significant items
FY14
306.6
73.0
23.8%
18.5%
FY15 % Change
+8%
+14%
330.0
83.3
25.2%
22.5%
BUSINESS DESCRIPTION
GWA Bathrooms & Kitchens is Australia’s foremost designer,
manufacturer, importer and distributor of residential 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 baths and shower
trays. Tapware, showers and accessories, stainless steel sinks and
laundry tubs.
MAJOR BRANDS
Owned: Caroma, Dorf, Fowler, Stylus, Clark
Distributed: Hansa, Schell, EMCO, Virtu, Sanitron
OPERATING LOCATIONS
Australia, New Zealand, export markets
MAJOR MARKETS
New residential dwellings, renovation, replacement and commercial
markets in Australia, New Zealand and selected international markets.
GWA GROUP LIMITED • 2015 ANNUAL REPORT
MAJOR MARKETS
Residential 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 and access system
technologies to suit residential 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 high levels of customer service.
HEAD OFFICE LOCATION
GWA Door & Access Systems
Gainsborough Hardware
Industries Limited
31-33 Alfred Street
Blackburn VIC 3130
AUSTRALIA
API Services and Solutions
Pty Limited
248 Normanby Road
South Melbourne VIC 3205
AUSTRALIA
Telephone: 61 3 9877 1555
Facsimile: 61 3 9894 1599
Telephone: 131KEY(539)
Facsimile: 61 3 9644 5887
www.gainsboroughhardware.com.au
www.apisec.com.au
www.ausloc.com
SEGMENT PERFORMANCE
Continuing Operations A$M
Sales Revenue
Normalised EBIT*
EBIT Margin %
FY14
92.8
8.4
9.1%
FY15 % Change
96.2
7.2
7.5%
+4%
(14%)
Return on Funds Employed %
15.6%
13.2%
*excludes significant items
BUSINESS DESCRIPTION
GWA Door & Access Systems is a leading Australian designer,
manufacturer, importer and distributor of a comprehensive range
of access and security systems for use in residential and commercial
premises. The division comprises two business units including:
• Gainsborough Hardware which is a leading Australian designer,
manufacturer, importer and distributor of a comprehensive range
of residential and commercial door hardware and fittings, including
security products.
• API Locksmiths which is a national supplier of security and
access control systems and locksmithing services to major
commercial enterprises.
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. Commercial locksmithing
services for security systems and safes, supply and installation of
electronic access control systems and associated products including
CCTV, alarms and intercoms.
MAJOR BRANDS
Owned: Gainsborough, Trilock, Renovator, Austral Lock,
API Locksmiths
Distributed: Salto, Hillaldam, Eco Schulte
OPERATING LOCATIONS
Australia, export markets
13
BOARD OF
DIRECTORS
BOARD OF DIRECTORS
DARRYL MCDONOUGH
BBUS (ACTY), LLB (HONS), SJD, FCPA, FAICD
Independent Chairman and Non-Executive Director
• Expertise: Experienced public company director and lawyer
• Special Responsibilities: Chairman of Board and Nomination
Committee and member of Remuneration and Audit and
Risk Committees
Mr McDonough who is currently transitioning to full-time non executive
director roles was appointed Deputy Chairman and Non-Executive
Director of GWA Group Limited in 2009 and was appointed Chairman
in October 2013. 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.
JOHN MULCAHY PHD (CIVIL ENGINEERING), FIE AUST
Independent Deputy Chairman and Non-Executive Director
• Expertise: Civil Engineer and experienced public company director
•
Special Responsibilities: Member of Remuneration and
Nomination Committees
Mr Mulcahy was appointed a Non-Executive Director of GWA Group
Limited in 2010 and Deputy Chairman in October 2013. He is a
Fellow of the Institute of Engineers and is a Non-Executive Director
of Mirvac Group Limited, Coffey International Limited and ALS Limited.
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*
• ALS Limited since 2012*
*denotes current directorship
BILL BARTLETT FCA, CPA, FCMA, CA (SA)
Independent Non-Executive Director
• Expertise: Chartered Accountant, actuarial, insurance and
financial services
• Special Responsibilities: Chairman of Remuneration and Audit
and Risk 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 and Risk 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 former 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
GWA GROUP LIMITED • 2015 ANNUAL REPORT ROBERT ANDERSON
PETER CROWLEY BA BECON FAICD
Independent Non-Executive Director
Managing 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 BIRTLES BSC, ACA
Independent Non-Executive Director
• Expertise: Chartered Accountant, retail, financial and operational
• Special Responsibilities: Member of Audit and Risk 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 company, and the period in which the
directorship has been held:
• Super Retail Group Limited since 2006*
*denotes current directorship
•
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;
1982 Various roles with Queensland Cement Limited and its parent
company Holderbank culminating in General Management
responsibilities within Australia and South-East Asia.
.
RICHARD THORNTON CA BCOM (ACC) 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.
15
DIRECTORS’
REPORT
AS AT 30 JUNE 2015
Your directors present their report on the consolidated
entity of GWA Group Limited (the Group) and the
entities it controlled during FY15.
DIRECTORS
The following persons were directors of the Group during the financial
year and up to the date of this report. Directors were in office this
entire period unless otherwise stated.
D D McDonough, Chairman and Non-Executive Director
J F Mulcahy, Deputy Chairman and Non-Executive Director
P C Crowley, Managing Director
R M Anderson, Non-Executive Director
W J Bartlett, Non-Executive Director
P A Birtles, Non-Executive Director
R J Thornton, Executive Director
Details of the directors’ qualifications, experience and special
responsibilities are outlined in the director profiles 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 FY15, and the period for
which each directorship has been held, are outlined in the director
profiles 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 outlined in the director profiles in the Annual Report.
DIRECTORS’ INTERESTS
The relevant interest of each director in the share capital of the Group
as notified by the directors to the Australian Securities Exchange in
accordance with Section 205G(1) of the Corporations Act 2001 as
at the date of this report is:
Director
D D McDonough
J F Mulcahy
P C Crowley*
R M Anderson
W J Bartlett
P A Birtles
R J Thornton*
Total**
Ordinary Shares
118,300
40,950
459,550
7,387,783
30,207
13,650
65,975
8,116,415
* 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 section 5.2.1 of the
Remuneration Report.
** Section 5.3.3 of the Remuneration Report 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 17,234,489
shares (last year 18,878,094 shares). Please note that the balances at
30 June 2015 have been adjusted for the share consolidation approved
by shareholders at a General Meeting on 29 May 2015.
DIRECTORS’ MEETINGS
The number of meetings of directors (including meetings of
Committees of directors) held during FY15 and the number of
meetings attended by each director is outlined in the table on
the following page.
GWA GROUP LIMITED • 2015 ANNUAL REPORT Director
Board
Audit and Risk
Committee
Remuneration
Committee
Nomination
Committee
D D McDonough
J F Mulcahy
P C Crowley(1)
R M Anderson
W J Bartlett
P A Birtles
R J Thornton(2)
A
16
16
16
16
16
16
16
B
16
16
16
16
16
15
16
A
4
–
–
–
4
4
–
B
4
–
–
–
4
4
–
A
2
2
–
–
2
–
–
B
2
2
–
–
2
–
–
A
1
1
–
–
1
–
–
B
1
1
–
–
1
–
–
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
PRINCIPAL ACTIVITIES
The principal activities during the year of the consolidated entity were
the research, design, manufacture, import and marketing of building
fixtures and fittings to residential and commercial premises and the
distribution of these various products through a range of distribution
channels in Australia, New Zealand and selected international markets.
EVENTS SUBSEQUENT TO REPORTING DATE
On 31 July 2015, the consolidated entity completed the divestment of
Gliderol International Pty Ltd to Reliance Doors Pty Ltd for $7 million,
subject to a working capital adjustment. An impairment charge against
the Gliderol business of $24.2 million is recorded as a significant item
in the FY15 financial statements.
The consolidated entity completed the divestment of non-core
businesses in FY15 through the sale of Dux Manufacturing Limited and
related entity in December 2014 and Brivis Climate Systems Pty Ltd
in February 2015. A contract was entered into for the sale of Gliderol
International Pty Ltd on 29 June 2015 which successfully completed on
31 July 2015; refer Events Subsequent to Reporting Date. There have
been no other significant changes in the nature of the activities of the
consolidated entity during the year.
OPERATING AND FINANCIAL REVIEW
The Operating and Financial Review for the consolidated entity during
the financial year ended 30 June 2015 is provided in the Managing
Director’s Review of Operations, and forms part of this Directors’ Report.
DIVIDENDS
Dividends paid or declared by the Group to shareholders since the
end of the previous financial year were:
Other than the matter discussed above, there has not arisen in the
interval between the end of the financial year and the date of this
report any item, transaction or event of a material and unusual
nature likely, in the opinion of the directors of the Group, to affect
significantly the operations of the consolidated entity, the results of
those operations, or the state of affairs of the consolidated entity, in
future financial years.
LIKELY DEVELOPMENTS
Likely developments and expected results of the operations of the
consolidated entity are provided in the Managing Director’s Review
of Operations.
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.
Declared and paid during FY15
ENVIRONMENTAL REGULATION
Dividends
Final 2013/14
Ordinary
Cents per
share
Total
Amount
$’000
5.5
16,859
Special 2014/15
6.0
18,392
Franked
Date of
Payment
Fully
Franked
8 October
2014
Partly
Franked
15 June
2015
Franked dividends declared and paid during the year were franked
at the corporate tax rate of 30%.
The directors have not declared a final dividend for FY15.
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 FY15.
17
DIRECTORS’ REPORT (CONT.)
AS AT 30 JUNE 2015
INDEMNIFICATION AND INSURANCE OF DIRECTORS
AND OFFICERS
Indemnification
The Group’s constitution provides that, to the extent permitted by
the law, every current (and former) director or secretary of the Group
shall be indemnified out of the assets of the Group 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 Group, 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 Group or
related body corporate.
Insurance Premiums
The Group has paid premiums in respect of insurance contracts which
provide cover against certain liabilities of every current (and former)
director and officer of the Group 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 Group 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 Group
and its controlled entities.
NON-AUDIT SERVICES
During the year KPMG, the consolidated entity’s auditor, has
performed certain other services in addition to the audit and
review of the financial statements.
The Board has considered the non-audit services provided during the
year by the auditor and in accordance with written advice provided
by resolution of the Audit and Risk Committee, is satisfied that the
provision of those non-audit services during the year by the auditor is
compatible with, and did not compromise, the auditor independence
requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services were subject to the corporate governance
procedures adopted by the consolidated entity and have been
reviewed by the Audit and Risk Committee to ensure they do not
impact the integrity and objectivity of the auditor; and
•
the non-audit services provided do not undermine the general
principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants, as they did not
involve reviewing or auditing the auditor’s own work, acting in a
management or decision making capacity for the Group, acting
as an advocate for the Group or jointly sharing risks and rewards.
Details of the amounts paid to the auditor of the consolidated entity,
KPMG, and its network firms for audit and non-audit services provided
during the year are outlined in Note 8 of the financial statements.
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 FY15.
Rounding
The Group 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.
REMUNERATION REPORT – AUDITED
Introduction
The report covers the following matters for FY15:
1. Board role in setting remuneration strategy and principles;
2. Relationship between remuneration policy and Group performance;
3. Description of non-executive director remuneration;
4. Description of executive remuneration;
5. Details of director and executive remuneration; and
6. Key terms of employment contracts.
1. BOARD ROLE IN SETTING REMUNERATION
STRATEGY AND PRINCIPLES
GWA’s remuneration strategy is designed to provide remuneration that
is fair and able to attract and retain management and directors with
the experience, knowledge, skills and judgement required for 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 operational scope to GWA.
The Board engages with shareholders, management and other
stakeholders to continuously refine and improve executive and director
remuneration policies and practices.
The Board’s Nomination Committee is responsible for determining
the remuneration arrangements for the non-executive directors, with
the annual maximum aggregate amount approved by shareholders.
The Board’s 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
the approval of the Board or management.
During the reporting period, the Remuneration Committee obtained
market data for the FY16 executive remuneration review and non-
executive director remuneration and advice and analysis regarding
performance measures from Guerdon Associates. Guerdon Associates
does not provide other services to the Group and is otherwise
independent. No remuneration recommendations as defined under
Division 1, Part 1.2.98 (1) of the Corporations Act 2001, were made
by Guerdon Associates.
In response to feedback from shareholders and following receipt
of advice from Guerdon Associates, important changes have been
implemented to remuneration in FY15 which are consistent with the
overall Group remuneration strategy. The changes are outlined in
section 1.1.
GWA GROUP LIMITED • 2015 ANNUAL REPORT 1.1 Executive remuneration – FY15 changes
The performance requirements under the Group’s long term incentive
plan (LTI) have been changed for grants of Performance Rights to
executives during FY15. The key concerns raised by shareholders were
that the performance requirements under the EPS hurdle were not
sufficiently challenging for executives compared to market expectations
of the Group’s future EPS growth and that a significant proportion of
Performance Rights will vest at average performance levels.
The changes that have been made are outlined in section 4.4 and
apply to grants of Performance Rights to executives in the FY15 year.
In essence the changes are that:
• EPS growth is assessed relative to growth in dwelling completions
obtained from the Australian Bureau of Statistics as it is believed that
growth in dwelling completions is a valid proxy for overall growth of
the market for the Group’s products. A strong historical correlation
exists between the Group’s EPS performance and dwelling
completions. It is also considered that assessing EPS growth against
dwelling completions growth will permit a fairer assessment of the
performance of management relative to market opportunity; and
• Return on Funds Employed (ROFE) replaced relative TSR as the
second LTI performance measure. As a measure of capital efficiency,
the use of ROFE, together with the modified EPS growth hurdle will
permit a more complete assessment of management performance.
The Board is satisfied that measuring EPS growth relative to market
growth as reflected in dwelling completions provides a more robust
benchmark for assessing relative performance than the relative TSR
hurdle used in previous LTI grants. The relative TSR peer group was
comprised of companies exposed to different business cycles, with
no prospect that enough ASX-listed competitors could be included to
validly assess management performance. EPS growth more directly
focuses on factors management can influence, so that results will be
less likely to fluctuate with general market sentiment.
1.2 Managing Director Retirement
During June 2015, the Group announced the retirement of
the Managing Director, Mr Peter Crowley, on 30 June 2016.
Mr Tim Salt will join the Group on 7 September 2015 as Executive
General Manager of Bathrooms & Kitchens and will transition to
the role of Managing Director from 1 July 2016. Details of Mr Salt’s
remuneration arrangements as Managing Director have yet to be
determined and will be advised to the market on his appointment.
The Board will seek market data from an external remuneration
adviser in determining Mr Salt’s remuneration arrangements as
Managing Director.
Mr Crowley will continue to maintain his full remuneration package
and benefits until his retirement on 30 June 2016.
1.3 FY16 Remuneration
The Board has approved a reduction in non-executive director
remuneration effective from 1 July 2015. The changes are within
the annual aggregate maximum amount approved by shareholders
and ensure non-executive director remuneration is in line with peer
companies. The changes are outlined in further detail in section 3.1.
The Board has also determined that the fixed remuneration for the
Managing Director and other executives will be frozen for FY16.
2. RELATIONSHIP BETWEEN REMUNERATION POLICY
AND GROUP 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:
• Normalised earnings before interest and tax (EBIT);
• Return on funds employed (ROFE); and
• Earnings Per Share (EPS) growth relative to growth in dwelling
completions.
Remuneration for all executives varies with performance on these
key measures together with achievement of key personal goals which
underpin delivery of the financial outcomes, and are linked to the
consolidated entity’s performance review process.
The following is a summary of key statistics for the Group over the last
five years:
Continuing
Operations
Normalised
EBIT(a)
($m)
Normalised
EPS(a)
(cents)
Total
DPS
(cents)
Capital
Return(c)
(cents)
Share
Price
($)
2010/11(b)
107.2
2011/12(b)
2012/13(b)
2013/14(b)
75.4
66.8
64.5
2014/15(b)
72.8
Notes:
21.0
15.1
12.9
12.4
14.8
18.0
18.0
12.0
5.5
6.0
–
–
–
–
2.75
2.10
2.40
2.63
22.8
2.28
(a) excludes significant items.
(b) FY14 performance has been re-presented to exclude the discontinued
operations in FY15. FY11 to FY13 have not been re-presented. Please refer to
the Five Year Financial Summary on page 1 for further details.
(c) a capital return of 22.8 cents per share from the Brivis and Dux net sale
proceeds was paid to shareholders on 15 June 2015.
The remuneration and incentive framework focuses executives on
sustaining short term operating performance coupled with moderate
long term strategic growth.
During FY15, the Group implemented the strategic review announced
in 2014 in order to improve long term shareholder returns. This
resulted in changes to the organisational structure and the refocus
on the Group’s core operations, Bathrooms & Kitchens and Door &
Access Systems, and divestment of non-core operations, Brivis, Dux
and Gliderol. The successful divestments of Dux and Brivis enabled
the Group to return $88.3 million ($0.288 per share) to shareholders
in June 2015 from the sale proceeds as outlined in the table.
The Group incurred significant restructuring costs in FY15 from the
closure of the vitreous china factory at Wetherill Park, phased exit of
the plastics factory at Norwood and initiatives to adjust the Group’s
cost base for the divested businesses and capture supply chain
efficiencies. These initiatives supported the implementation of the
strategic review and were essential for the Group to reduce cost and
improve competitiveness.
19
DIRECTORS’ REPORT (CONT.)
AS AT 30 JUNE 2015
The successful execution of the Group’s strategy were included as
performance objectives of the Managing Director and executives under
the STI plan; refer to the Managing Director’s key performance goals
and outcomes in section 2.1.
The Group’s core Bathrooms & Kitchens business performed strongly
in FY15 through focus on its target customer segments and the
improvement in market activity leading to increased demand for
its products. Lead indicators suggest continued growth in market
activity in FY16 and together with the benefits from the FY15 strategy
implementation and restructuring, are expected to assist with
improved financial performance in FY16.
The remuneration and incentive framework has allowed the Group
to respond to cyclical dwelling construction activity. STI payments
related to performance improvement, strategy implementation and
restructuring has encouraged management to respond quickly and
make long term decisions to sustain competitiveness and improve
profitability. This has placed the Group in a strong position to take
advantage of the current upswing in market activity.
2.1 Managing Director’s key performance goals and outcomes
An assessment of the Managing Director’s key performance goals
and financial targets subject to STI incentive payments for FY15 is
provided in the following table. Although the Group achieved strong
normalised EBIT growth from continuing operations in FY15, given
the net loss position recorded by the Group, the Board following a
recommendation from the Remuneration Committee has determined
that the Managing Director will not receive any STI payments relating
to the achievement of performance goals in FY15. In addition, the
Managing Director has not received any STI payments relating to
the achievement of financial targets in FY15; refer to the Managing
Director’s remuneration structure in section 4.1.1.
The Managing Director has achieved a number of the performance
goals in FY15 as outlined in the following table.
FY15 Goals
Results
Assessment
Operational goals
Achieve leading safety
performance to work towards
an injury free workplace.
The total injury frequency rate (TIFR) of 5.5 in FY15 was an improvement on the targeted
TIFR of 5.8 and represents an 11% improvement on the prior year. The outcome continues
the Group’s strong safety performance and demonstrates the commitment to an injury
free workplace.
Improved working capital
management to maximise
operating cash flow.
A strong cash flow performance was achieved in FY15 through the focus on working capital
management. Plans have been successfully implemented to reduce the higher stock levels
from FY14 and through improved debtor collections and claims management processes.
Develop plans to adjust the
Group cost base for the
divested businesses and
new Group strategy.
Strategy and growth goals
To further support the new Group strategy, plans were developed in FY15 to re-align the
cost base to adjust for the divested non-core businesses and further capture supply chain
efficiencies. The Group incurred $11.6 million in restructuring costs in FY15 for this initiative
to ensure alignment of the cost base with the new Group strategy and business configuration.
Complete the organisational
structure to support the new
Group strategy including
recruitment for key GWA
executive roles.
The appointment of key GWA executive roles was completed in FY15 to improve capability
and support the new Group strategy approved by the Board in 2014. The Group and divisional
strategies have been finalised, the non-core businesses have been divested, a cultural change
program has been implemented and a new Board reporting process has been established to
reflect the new Group strategy.
Progress the divestments
of the non-core businesses
and assets identified in the
strategic review.
Develop detailed plans for the
closure of Wetherill Park and
Norwood factories.
The sale of the non-core Dux and Brivis businesses successfully completed in FY15, and
the sale of Gliderol completed on 31 July 2015. The net proceeds of Dux and Brivis of
$88.3 million were returned to shareholders in June 2015. Following the sale of Gliderol an
impairment charge of $24.2 million was taken against the Gliderol business in FY15. The value
of Gliderol was impacted by its continued underperformance. The sale of the Wetherill Park
property completed in FY15 following the closure of the factory.
In October 2014 the Group announced the closure of the vitreous china factory at Wetherill
Park and phased exit of manufacturing at the plastics factory at Norwood with transition of
product supply to established overseas suppliers. The Wetherill Park factory was closed in
December 2014 and the phased exit of the Norwood factory remains on track for closure by
2017. Product supply has been transitioned to offshore suppliers with risk mitigation plans in
place to address any issues.
GWA GROUP LIMITED • 2015 ANNUAL REPORT FY15 Goals
Results
Assessment
Business Development goals
Develop business growth plans
for Bathrooms & Kitchens
and Door & Access Systems
businesses.
Financial targets
STI financial
performance targets.
Bathrooms & Kitchens achieved a strong trading performance in FY15 through focus on its
target customer segments and improvement in market activity. B&K continues to develop
innovative products and solutions to maintain market leadership. The performance of Door &
Access Systems was disappointing in FY15 due to the underperformance of Gainsborough and
Gliderol (now divested). Plans are in place to improve Gainsborough’s performance in FY16.
For FY15 the ‘stretch’ normalised EBIT and ROFE financial performance targets for Bathrooms
& Kitchens have been achieved reflecting the division’s strong trading performance. No other
STI financial performance targets have been achieved by corporate and divisional executives
in FY15 as outlined in the Remuneration Tables in section 5.1.
= Fully achieved
= Partially achieved
= Not achieved
3. DESCRIPTION OF NON-EXECUTIVE DIRECTOR REMUNERATION
There has been no change to 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 Group to ensure non-executive directors maintain
their independence.
At the 2004 Annual General Meeting, shareholders approved non-executive director fees up to an annual maximum aggregate amount of
$1.095 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.
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 Group matters.
The benchmarking survey from Guerdon Associates in July 2015 sampled the same companies used for executive remuneration benchmarking
and found the base Board fees received by the non-executive directors are positioned at the 59th percentile.
Retirement benefits other than statutory superannuation are not available for non-executive directors.
3.1 FY16 Remuneration
The Board has approved a reduction in non-executive director remuneration effective from 1 July 2015 as follows:
• The Chairman’s remuneration will reduce to $280,000 (including statutory superannuation);
• For all other non-executive directors, remuneration will reduce to $120,000 (including statutory superannuation);
• Committee membership fees will no longer be paid apart from an extra fee of $10,000 for the Chairman of a Committee; and
• The Nomination and Remuneration Committees will be combined.
The proposed changes bring the non-executive director remuneration in line with the peer group median based on the market benchmarking
data provided by Guerdon Associates for the FY16 remuneration review. Following the changes, total non-executive director remuneration
will reduce to $780,000 (including statutory superannuation) for FY16 representing a 16% reduction from the prior year; please refer to the
Remuneration Tables in section 5.1 for FY15 non-executive director remuneration.
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 comprises a short term
incentive (STI) which provides rewards for performance over a 1 year period and a long term incentive (LTI) which provides rewards for performance
over a 3 year period. The maximum total remuneration that can be provided to an executive is capped, with incentive payments expressed as a
percentage of total fixed remuneration. Total fixed remuneration for the purposes of incentives includes superannuation and non-monetary benefits.
The remuneration structure implemented for the executives, including the Managing Director, recognises the short term challenges posed by
operating in the cyclical Australian building industry, ability to sustain competitiveness, deliver value and growth in mature markets and maintain
operating cash flows for dividends.
21
DIRECTORS’ REPORT (CONT.)
AS AT 30 JUNE 2015
4.1.1 Managing Director remuneration structure
The FY15 incentives structure for the Managing Director is provided
in the following table:
Maximum
STI as % of
fixed remuneration
Maximum LTI
as % of fixed
remuneration (grant
date fair value)
Maximum total
performance pay
as % of fixed
remuneration
80
40
120
Managing
Director
2014/15
The FY15 STI components for the Managing Director are provided in the
following table:
Managing
Director
Personal Goals as
maximum % of
fixed remuneration
Financial Targets as
maximum % of
fixed remuneration
Maximum STI
as % of fixed
remuneration
2014/15
40
40
80
STI payments for the Managing Director for FY15 were subject to first
passing an acceptable net profit after tax gateway.
The FY15 total performance pay outcomes for the Managing Director, as
reflected in the Remuneration Tables, are provided in the following table:
Managing
Director
STI*
LTI**
Total
Achievement
of STI and LTI
as % of fixed
remuneration
Forfeiture of STI
and LTI as % of
fixed remuneration
Total potential
performance pay
as % of fixed
remuneration
–
–
–
80
20
100
80
20
100
* Due to the Group’s net loss position for FY15 the Managing Director will not
receive any STI payments relating to the achievement of personal goals and
financial targets in FY15; see Managing Director’s key personal goals and
outcomes in section 2.1
** 50% of the Performance Rights for the 2012 LTI grant were forfeited in FY14
4.1.2 Other Executives remuneration structure
The FY15 incentives structure for other executives is provided in the
following table:
Other
Executives
Maximum
STI as % of
fixed remuneration
Maximum LTI
as % of fixed
remuneration
(grant date fair
value)
Maximum total
performance pay
as % of fixed
remuneration
2014/15
50
30
80
The FY15 STI components for the other executives are provided in the
following table:
Other
Executives
Personal Goals as
maximum % of
fixed remuneration
Financial Targets as
maximum % of
fixed remuneration
Maximum STI
as % of fixed
remuneration
2014/15
20
30
50
4.1.3 Actual remuneration received by executives for FY15
The table on the opposite page sets out the actual value of
remuneration received by the executives for FY15, derived from the
various components of their remuneration during FY15.
This table differs from the more detailed remuneration disclosures in
the Remuneration Tables in section 5.1 due to the exclusion of LTI
amounts not vested or reversal of accounting expenses associated
with any LTI grants.
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.
The level of fixed remuneration is set:
•
•
•
to retain proven performers with difficult to source experience;
to attract external recruits with depth and breadth of expertise
usually acquired while working with larger companies; and
in recognition of the short term challenges posed by cyclical factors
and the focus on conserving market leadership, cash flow and
dividends where opportunities for outperformance and subsequent
incentive payments are more limited.
The Board targets the setting of fixed remuneration for executives
between the median and third quartiles or higher if warranted by
superior performance and relative to companies of comparable
size and operational scope to GWA. The comparator companies are
primarily from the consumer discretionary and industrial sectors.
Based on an independent survey by Guerdon Associates for the
FY16 executive remuneration review, the fixed remuneration for most
executive positions at GWA are above market benchmark levels for
companies of comparable operational scope and size to GWA. The 20
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. Judgement 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 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. Consistent with this approach, the Managing Director’s fixed
remuneration has been frozen since 2011 and remains frozen. For
FY16, the Board has determined that the fixed remuneration for the
Managing Director and other executives will be frozen.
4.2.1 Managing Director’s fixed remuneration
Based on an independent survey by Guerdon Associates for the
FY16 executive remuneration review, the fixed remuneration of the
Managing Director is positioned at the 84th percentile for companies
of comparable size and operational scope to GWA. The percentile
positioning has reduced in recent years following the freeze on the
Managing Director’s fixed remuneration that was implemented in
2011 and remains in place. No STI payment will be received by the
Managing Director for FY15 due to the Group’s net loss position; refer
to the Remuneration Tables in section 5.1.
Mr Peter Crowley will retire as Managing Director on 30 June 2016.
During his 12 years of service, the Managing Director has been
GWA GROUP LIMITED • 2015 ANNUAL REPORT Actual remuneration received by executives for FY15
Short Term
Incentive
$(b)
Long Term
Incentive (Earned)
$(c)
Termination
Benefits
$
Fixed
Remuneration
$(a)
1,593,475
409,376
136,537
145,640
257,947
383,076
426,567
519,342
464,433
–
77,813
–
60,000
106,666
80,000
–
260,483
–
4,336,393
584,962
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
1,593,475
487,189
136,537
205,640
364,613
463,076
426,567
779,825
464,433
4,921,355
Executives
FY15
P Crowley
R Thornton
P Gibson
S Mitchell
S Ralphsmith
K Veitch
I Brannan(d)
L Patterson(d)
C Camillo(d)
Total
Notes:
(a) Fixed remuneration includes base salary, non-monetary benefits and superannuation.
(b) Represents the STI payments awarded for FY15 inclusive of deferred amounts. These amounts, exclusive of the deferred amounts, will be paid in FY16.
(c) There were no vesting of LTI grants in FY15 due to non-achievement of performance hurdles; refer section 5.2.1 Performance Rights. Excludes the value
of any unvested LTI grants expensed or reversed during FY15.
(d) Mr Ian Brannan and Mr Celeste Camillo ceased employment during FY15. Mr Les Patterson ceased employment in FY16.
instrumental in the restructuring of the Group to compete in the
cyclical Australian building industry with the high Australian dollar
reducing the competitiveness of local manufacturing and increasing
import competition. To provide a sound legacy for his successor,
the Managing Director has successfully implemented the major
strategic review announced in 2014 with significant changes to
the organisational structure and refocus on the core operations,
Bathrooms & Kitchens and Door & Access Systems, and divestment
of non-core operations, Brivis, Dux and Gliderol.
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 Group’s financial year to
30 June 2015. 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. 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 FY15.
The deferred component will be subject to further testing by the Board
to confirm the integrity of the achievement of the STI financial targets
following finalisation of the FY16 audited financial statements. If the
Board is satisfied then the deferred component will be paid to the
executives in September 2016 together with interest at market rates.
However, if the Board is not satisfied then the STI payment will be
subject to forfeiture.
4.3.2 STI performance requirements
4.3.2.1 Personal Goals
The personal goals set for each executive includes achievement
of key milestones to improve or consolidate the Group or business
unit’s strategic position; the goals vary with the individual’s role,
risks and opportunities.
The achievement of personal goals reinforces the Group’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 Group.
Personal goals include both measurable financial goals and
measurable business improvement goals. The measurable financial
goals 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.
23
DIRECTORS’ REPORT (CONT.)
AS AT 30 JUNE 2015
Assessment of the personal goals STI component for FY15 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
following input from the Board and with the outcomes approved by
the Remuneration Committee. The personal goals of the executives
for FY16 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,
including periods where troughs in the building industry cycle mean
financial performance is consequently weaker. The Group 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 Group’s performance management process.
4.3.2.2 Financial Performance Targets
For FY15, STI financial performance targets are based on normalised
Earnings Before Interest and Tax (EBIT) and Return On Funds
Employed (ROFE) targets as determined by the Remuneration
Committee. The use of normalised EBIT and ROFE as the basis of
STI financial targets is aimed at ensuring executives are accountable
for delivering both profit and working capital improvements.
The Board is of the view that a combination of normalised EBIT and
ROFE targets are an effective basis for STI targets as they are currently
key metrics used in the business.
The normalised EBIT and ROFE targets are weighted equally and
assessed separately and on an aggregated basis for divisional and
corporate executives. Normalised is before significant items and ensures
the STI targets are reflective of underlying trading performance.
Under the STI framework, a divisional executive may receive an STI
payment if divisional financial targets are achieved, although the
overall corporate financial targets may not have been achieved, 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) that ensure management is motivated while
reflecting 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 FY15.
For FY15, Bathrooms & Kitchens achieved their normalised EBIT
and ROFE STI financial targets at the ‘stretch’ level reflecting the
strong performance of the business. No other divisional or corporate
STI financial targets were achieved by the executives. 50% of the
STI incentive payment has been deferred for Bathrooms & Kitchens
executives and will be subject to further testing and potential clawback
under the STI plan rules. This is reflected in the STI cash bonus
amounts in the Remuneration Tables in section 5.1.
The deferred component of the STI incentive payment for FY14
for Bathrooms & Kitchens executives was tested by the Board in
August 2015 to confirm the integrity of the achievement of the STI
financial targets in FY14. Following satisfaction with the testing, the
Board approved the payment of the deferred component to Bathrooms
& Kitchens executives together with interest at market rates.
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 Group 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, and reflects what the Board considers is
a reasonable period to require and test the sustainability of earnings
accretion from investments and working capital improvement given
the nature of the business.
The LTI is provided as Performance Rights, with each right entitling the
holder to an ordinary share in the Group (or in limited cases to a cash
payment), subject to meeting financial performance hurdles and the
holder remaining in employment with the Group 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. Until
that time, the participants have no right to dividends or voting rights
on unvested Performance Rights. If the performance hurdles are
not met then the Performance Rights are cancelled. The LTI rules
do not allow for re-testing of the performance hurdles after the initial
performance period.
The performance hurdles for the LTI are selected by the Remuneration
Committee. The basis of the grants of Performance Rights to
executives is as follows:
• 50% of the Performance Rights are subject to an Earnings Per
Share (EPS) growth hurdle relative to dwelling completions growth
(which is a relative performance requirement); and
• 50% of the Performance Rights are subject to a Return
On Funds Employed (ROFE) hurdle (which is an absolute
performance requirement).
The EPS performance hurdle is calculated as net profit after tax as
set out in the Group’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 and the reasons for it will be disclosed. Dwelling
GWA GROUP LIMITED • 2015 ANNUAL REPORT completions growth is sourced independently from BIS Shrapnel.
Threshold performance is required to be above dwellings completions
growth, ensuring management has to do better than market growth
through the business cycles.
4.4.2.1 EPS Hurdle
The performance hurdles and vesting proportions for the EPS
performance measure that applied to the FY15 LTI grant is outlined
in the following table:
The ROFE performance hurdle is calculated by reference to the
Group’s audited accounts. Threshold performance is required to be
above the Group’s Weighted Average Cost of Capital (WACC), which
takes into account the minimum return required by investors given
the perceived risk of the investment.
A participant may not dispose of the ordinary shares issued under the
LTI until the seventh anniversary of the grant date (for the FY15 LTI
grant) and the shares are subject to a holding lock upon issue. This
ensures that executives retain a suitable shareholding in the Group.
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 Group 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 Group, relevant policies and regulations, the extent of the
executives Group shareholdings as a multiple of fixed remuneration
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.
In the event of a change of control, the Board will determine in
its discretion the extent to which outstanding Performance Rights
granted to executives will vest and be exercised into ordinary shares.
In exercising its discretion the Board will consider whether the
vesting conditions are unlikely to be satisfied and the outstanding
Performance Rights should lapse. If the Board makes the decision
that not all outstanding Performance Rights will vest on a change of
control, then all remaining Performance Rights will lapse.
For the FY15 LTI grant, the proportion of Performance Rights that can
vest will be calculated and the shares will vest in August 2017 subject
to achieving the performance hurdles. If the performance hurdles are
not met then the Performance Rights are cancelled.
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.
The maximum number of outstanding Performance Rights granted
to executives must not exceed 5% of the total number of shares on
issue by the Group. The total number of outstanding Performance
Rights granted to executives at 30 June 2015 was 1,573,000 which
represent 0.6% of the Group’s total issued shares.
4.4.2 LTI performance requirements
For the FY15 LTI grant, the performance hurdles continue to provide
for vesting scales graduated with performance and demanding
performance hurdles.
GWA Group Limited EPS compound
annual growth rate (CAGR) relative
to dwelling completions growth over
three year performance period
Proportion of
Performance Rights
to Vest if EPS growth
hurdle is met
EPS CAGR less than
dwelling completions CAGR
EPS CAGR exceeding
dwelling completions CAGR
0%
12.5%
EPS CAGR exceeding dwelling
completions CAGR up to 6%
Straight line vesting
between 12.5% and 50%
EPS CAGR equal to dwelling
completions CAGR plus 6% or higher
50%
(i.e. 50% of total grant)
For the FY15 LTI grant, EPS growth is measured over the three years
from 1 July 2014 to 30 June 2017. The EPS hurdle is calculated as
net profit after tax, as set out in the Group’s annual audited financial
statements, divided by the weighted average number of ordinary
shares on issue. The base year EPS for the FY15 LTI grant was
14.3 cents per share.
The Board exercised its discretion to adjust the base year EPS by
excluding the significant items in FY14. This adjustment made the
performance hurdle more demanding as it increased the base year
EPS from 6.1 cents to 14.3 cents to ensure the hurdle was reflective
of underlying trading performance.
The dwelling completions number is obtained from BIS Shrapnel,
is based on Australian Bureau of Statistics (ABS) data, and
represents national moving annual total dwelling completions including
conversions. The base year dwelling completions number for the
year ended 31 March 2014 for the purposes of the FY15 LTI grant is
153,011. Note that the EPS growth over this period will be measured
on a lag basis against ABS dwelling completions statistics from
1 April 2014 to 31 March 2017. Research indicates that earnings
growth correlations with dwelling completions on a lag basis is a
robust method for fair performance assessment.
4.4.2.2 ROFE Hurdle
The performance hurdles and vesting proportions for the ROFE
performance measure that applied to the FY15 LTI grant is outlined
in the following table:
GWA Group Limited ROFE
over three year performance period
Proportion of
Performance Rights
to Vest if ROFE
hurdle is met
ROFE less than 15% per annum
ROFE equal to 15% per annum
0%
12.5%
ROFE between 15% and
18% per annum
ROFE equal to 18% or
higher per annum
Straight line vesting
between 12.5% and 50%
50%
(i.e. 50% of total grant)
25
DIRECTORS’ REPORT (CONT.)
AS AT 30 JUNE 2015
The ROFE hurdle is calculated as earnings before interest and tax
(EBIT) divided by funds employed. Funds employed is calculated as
net assets minus cash plus borrowings. The Board has discretion to
make reasonable adjustments to the EBIT figure where it is unduly
distorted by significant or abnormal events. The use of any discretion
and the reasons for it will be disclosed.
5. DETAILS OF DIRECTOR AND EXECUTIVE REMUNERATION
5.1 Remuneration Tables
Details of the nature and amount of each element of remuneration
for each director of the Group and other key management personnel
(KMP) for the year ended 30 June 2015 are provided in the
Remuneration Tables on the opposite page.
Notes to the Remuneration Tables
(a) Salary and fees represents base salary and includes the
movement in annual leave provision.
(b) The Short Term Incentive (STI) cash bonus is for the performance
during the financial year ended 30 June 2015 based on the
achievement of personal goals and financial performance targets.
Bathrooms & Kitchens achieved their ‘stretch’ STI financial
performance targets in FY15 and in accordance with the STI plan
rules, 50% of the amount has been deferred and will be subject
to further testing in FY16 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.
(c) The short term non-monetary benefits include the provision of
motor vehicles, salary continuance and life insurance and any
applicable fringe benefits tax thereon.
(d) The Long Term Incentive (LTI) Plan was approved by shareholders
at the 2008 Annual General Meeting. The outstanding
Performance Rights at 30 June 2015 were granted to executives
in each of the years 30 June 2013, 2014 and 2015 and are
subject to vesting conditions and the achievement of specified
performance hurdles over the three year performance periods.
During FY15, 50% of the Performance Rights in respect of the
2012 LTI grant lapsed as the TSR hurdle was not achieved.
50% of the Performance Rights in respect of the 2012 LTI grant
lapsed in FY14 as the EPS hurdle was not achieved. The fair value
of the Performance Rights granted in 30 June 2013 and 2014
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. The fair value of the Performance Rights
granted in 30 June 2015 was calculated using Black Scholes
model valuation methodology for the EPS and ROFE hurdles
and allocated to each financial year evenly over the three year
performance period. If the specified performance hurdles are
not achieved, then no benefits will be received by the executives
under the LTI plan and the Performance Rights are cancelled.
(e) Mr Darryl McDonough was appointed Chairman of GWA Group
Limited on 30 October 2013 following the retirement of the former
Chairman, Mr Geoff McGrath. Mr John Mulcahy was appointed
Deputy Chairman of GWA Group Limited on that date.
(f) The Managing Director, Mr Peter Crowley’s fixed remuneration has
been frozen since 2011 and remains frozen; refer Section 4.2.1
for further details. Due to the Group’s net loss position in FY15 the
Managing Director will not receive any STI payment relating
to the achievement of personal goals in FY15; refer Section 2.1
for further details including Mr Crowley’s key performance goals
and outcomes. The STI corporate financial performance targets
for FY15 were not achieved and no amount is included in
Mr Crowley’s remuneration in respect of the achievement of
STI financial performance targets.
(g) Mr Celeste Camillo ceased employment on 2 February 2015
following the completion of the sale of Brivis Climate Systems
Pty Ltd.
(h) Mr Les Patterson ceased employment on 1 July 2015. As part of
the termination arrangements, Mr Patterson received $647,121
representing 12 months salary on termination of employment
and the Performance Rights held by Mr Patterson in respect of
the 2013 LTI grant will test on 18 August 2015 in accordance
with the terms of the grant and LTI plan rules. The remaining
Performance Rights held by Mr Patterson lapsed in FY15 on
cessation of employment; refer section 5.2.1 Performance Rights.
Mr Patterson received an STI cash bonus for achieving personal
goals and for Bathrooms & Kitchens achieving their ‘stretch’ STI
financial performance targets in FY15.
(i)
(j)
Mr Sean Mitchell commenced employment on 16 February 2015
and as part of his employment arrangements, Mr Mitchell is
entitled to a guaranteed STI cash bonus of $60,000 for FY15.
Mr Sean Ralphsmith commenced employment on
5 November 2014 and as part of his employment
arrangements, Mr Ralphsmith is entitled to a guaranteed
STI cash bonus of $106,666 for FY15.
(k) Totals in FY15 are higher than FY14 due to a combination of
factors, including a higher number of KMP in FY15, changes in
LTI accounting treatments and a re-organisation in FY15 to align
with the new Group strategy approved by the Board. The changes
resulted in new executive KMP positions and incumbents with
greater responsibility, with higher market rates than executive
positions and their incumbents in the prior structure. For the
actual remuneration received by executives for FY15 please refer
to the table in Section 4.1.3.
GWA GROUP LIMITED • 2015 ANNUAL REPORT y
r
a
l
a
S
s
e
e
F
&
$(a)
319,221
253,947
150,010
138,225
107,829
83,563
142,918
143,313
123,500
123,841
Non-Executive Directors
D McDonough
Chairman
(Appointed 30 October 2013)(e)
J Mulcahy
Deputy Chairman
(Appointed 30 October 2013)(e)
R Anderson
Non-Executive Director
W Bartlett
Non-Executive Director
P Birtles
Non-Executive Director
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
Total – Non-Executive
Directors
2015
843,478
2014
742,889
Short-term
Long-term
Post-employment
h
s
a
C
I
T
S
s
u
n
o
B
y
r
a
t
e
n
o
M
-
n
o
N
$(b)
$(c)
-
e
r
a
h
S
f
o
e
u
l
a
V
s
d
r
a
w
A
d
e
s
a
B
$(d)
e
c
i
v
r
e
S
g
n
o
L
e
v
a
e
L
$
n
o
i
t
a
u
n
n
a
s
t
fi
e
n
e
B
-
r
e
p
u
S
n
o
i
t
a
n
i
m
r
e
T
s
t
fi
e
n
e
B
$
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
35,000
34,999
15,746
14,089
10,243
34,509
15,002
14,607
12,964
12,623
88,955
– 110,827
Executive Directors
P Crowley
Managing Director (f)
R Thornton
Executive Director
Total – Directors
Remuneration
Executives
P Gibson, Group Chief
Financial Officer
(Appointed 27 April 2015)
S Mitchell, Group General
Manager – Supply Chain
(Appointed 16 February 2015)(i)
S Ralphsmith, Executive
General Manager – GWA
Door & Access Systems
(Appointed 5 November 2014)(j)
K Veitch, Group General
Manager – People, Culture
& Communications
(Appointed 1 July 2014)
I Brannan, Chief
Financial Officer
(Ceased employment
13 March 2015)
L Patterson, Chief
Executive – GWA
Bathrooms & Kitchens
(Ceased employment
1 July 2015)(h)
C Camillo, General
Manager – Brivis
(Ceased employment
2 February 2015)(g)
Total – Executives
Remuneration
Total – Directors
and Executives
Remuneration (k)
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015 1,389,031
– 130,334
501,407
26,114
50,000
2014 1,397,179 313,420 119,418
235,433
27,349
50,000
2015
2014
387,059
77,813
367,264
79,522
1,825
1,364
97,007
47,542
8,746
9,780
18,783
17,774
2015 2,619,568
77,813 132,159
598,414
34,860 157,738
– 3,620,552
2014 2,507,332 392,942 120,782
282,975
37,129 178,601
– 3,519,761
2015
2014
2015
2014
142,426
–
–
–
145,474
60,000
–
–
2015
245,437 106,666
–
–
365,746
80,000
–
389,038
–
–
–
–
–
–
–
–
–
–
–
–
29,080
–
29,080
–
29,080
–
2,368
(159,540)
522,440
91,677
1,856
96,820
–
–
–
–
–
–
–
–
–
–
4,226
–
11,461
–
24,797
–
18,783
–
21,153
24,600
497,369 260,483
517,872 146,522
3,804
2,905
27,800
(34,836)
30,000
65,692
12,114
24,999
424,239
–
6,232
15,373 (127,337)
20,416
278,449
94,500
13,681
52,573
11,183
24,999
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2015 2,209,729 507,149
12,404
(29,127) (162,173) 130,836
– 2,668,818
2014 1,318,761 332,699
18,442
215,085
23,297
74,598
– 1,982,882
2015 4,829,297 584,962 144,563
569,287 (127,313) 288,574
– 6,289,370
2014 3,826,093 725,641 139,224
498,060
60,426 253,199
– 5,502,643
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
–
–
–
–
–
–
–
–
–
–
23.9
25.6
29.6
24.3
–
–
36.2
–
33.4
–
–
–
–
–
–
–
–
–
–
–
0
25
38
40
–
–
100
–
100
–
–
–
–
–
–
–
–
–
–
–
100
75
62
60
–
–
0
–
0
–
l
a
t
o
T
$
354,221
288,946
165,756
152,314
118,072
118,072
157,920
157,920
136,464
136,464
932,433
853,716
2,096,886
2,142,799
591,233
523,246
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
146,652
–
246,015
–
405,980
–
493,609
22.1
40
60
–
253,019
737,393
784,620
770,104
338,923
475,385
–
–
25.6
36.7
27.6
4.5
30.9
–
–
68
4
46
–
40
–
–
32
96
54
–
60
27
DIRECTORS’ REPORT (CONT.)
AS AT 30 JUNE 2015
5.2 Share based payments
5.2.1 Performance Rights
The following table shows details of the Performance Rights granted to key management personnel during the year ended 30 June 2015 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
P Gibson
Group Chief Financial Officer
(Appointed 27 April 2015)
S Mitchell, Group General
Manager – Supply Chain
(Appointed 16 February 2015)
S Ralphsmith, Executive
General Manager – GWA
Door & Access Systems
(Appointed 5 November 2014)
K Veitch, Group General
Manager – People, Culture &
Communications
(Appointed 1 July 2014)
I Brannan, Group Chief
Financial Officer
(Ceased employment 13 March 2015)
L Patterson, Chief Executive –
GWA Bathrooms & Kitchens
(Ceased employment 1 July 2015)
C Camillo
General Manager – Brivis
(Ceased employment 2 February 2015)
2015
2014
2013
2012
2015
2014
2013
2012
2015
2014
2013
2012
2015
2014
2013
2012
2015
2014
2013
2012
2015
2014
2013
2012
2015
2014
2013
2012
2015
2014
2013
2012
2015
2014
2013
2012
230,000
200,000
345,000
260,000
45,000
40,000
65,000
45,000
–
–
–
–
25 February 2015
24 February 2014
25 February 2013
17 February 2012
25 February 2015
24 February 2014
25 February 2013
17 February 2012
–
–
–
–
44,000
25 February 2015
–
–
–
–
–
–
44,000
25 February 2015
–
–
–
–
–
–
44,000
25 February 2015
–
–
–
–
55,000
96,000
–
–
50,000
90,000
55,000
–
30,000
52,000
–
–
–
–
–
24 February 2014
25 February 2013
–
–
24 February 2014
25 February 2013
17 February 2012
–
24 February 2014
25 February 2013
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
50
–
–
–
50
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
–
–
100
–
50
–
100
–
–
456,021
372,000
676,200
375,700
89,222
74,400
127,400
65,025
–
–
–
–
2.72
3.12
1.70
2.35
2.72
3.12
1.70
2.35
–
–
–
–
87,239
2.72
–
–
–
–
–
–
87,239
2.72
–
–
–
–
–
–
87,239
2.72
–
–
–
–
102,300
188,160
–
–
93,000
176,400
79,475
–
55,800
101,920
–
–
–
–
–
3.12
1.70
–
–
3.12
1.70
2.35
–
3.12
1.70
–
* 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
$2.72 being the volume weighted average price of the Group’s shares calculated over the 20 trading days after the Group’s Annual General Meeting on 24 October
2014. The grant dates and corresponding fair values per right in the table have been determined in accordance with Australian Accounting Standards. Fair values
have been calculated using the Black Scholes model valuation methodology for the EPS and ROFE hurdles. The fair value of rights issued during the year under the
EPS hurdle was $1.98 per right and the ROFE hurdle was $1.98 per right.
GWA GROUP LIMITED • 2015 ANNUAL REPORT All of the rights carry an exercise price of nil. The rights granted on
25 February 2013, 24 February 2014 and 25 February 2015 will
vest on the date of the release to the Australian Securities Exchange
of the Group’s annual audited financial statements for the years
30 June 2015, 2016 and 2017 respectively, subject to the
achievement of the performance hurdles. The rights granted to
Mr Crowley and Mr Thornton were approved by shareholders at the
2012, 2013 and 2014 Annual General Meetings in accordance with
ASX Listing Rule 10.14.
Rights were forfeited where an employee ceased employment
with the Group during the year in accordance with the rules of
the LTI Plan. For the rights granted to key management personnel
on 17 February 2012, the Group did not achieve the EPS and TSR
hurdles for the performance period of 1 July 2011 to 30 June 2014.
The rights subject to the EPS hurdle lapsed in FY14 resulting in the
forfeiture of 292,500 rights with a value of $538,200. The rights
subject to the TSR hurdle lapsed in FY15 resulting in the forfeiture
of 292,500 rights with a value of $307,125. The number of rights
outstanding at 30 June 2015 also represents the balance yet to vest.
5.3 Key management personnel transactions
5.3.1 Loans to key management personnel and their related parties
No loans were made to key management personnel or their related
parties during the year ended 30 June 2015 (2014: nil).
currently transitioning to full-time non-executive director roles having
notified of his retirement as a partner of Clayton Utz in accordance
with that firm’s requirements. Mr McDonough has not been involved in
providing any of the legal services to the Group, nor has he influenced
the selection of legal adviser by the Group as that is a matter for
management. The Group also uses other legal providers. The amounts
were billed by Clayton Utz based on normal market rates for such
services and were due and payable under normal payment terms.
For further details of the legal services provided by Clayton Utz,
please refer to the disclosures in the Group’s Corporate Governance
Statement under Independence of Directors.
The consolidated entity purchased components and tooling of
$46,326 (2014: $67,905) from Great Western Corporation Pty
Ltd, a company of which Mr Richard Thornton is a non-executive
director. Mr Thornton had no involvement with the purchasing of the
components and tooling from Great Western Corporation Pty Ltd and
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
2015
351,174
2014
116,391
5.3.2 Other key management personnel transactions with the Group
or its controlled entities
The consolidated entity incurred legal fees of $1,924,342
(2014: $712,246) from Clayton Utz, a legal firm of which
Mr Darryl McDonough is an equity partner. Mr McDonough is
From time to time, key management personnel of the Group 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.
29
DIRECTORS’ REPORT (CONT.)
AS AT 30 JUNE 2015
5.3.3 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 2014
Granted as
compensation
Purchases
Sales
Share
Consolidation(a)
Held at
30 June 2015
Directors: non-executive
D McDonough
J Mulcahy
R Anderson
W Bartlett
P Birtles
Executive directors
P Crowley
R Thornton
Executives
P Gibson (Appointed 27 April 2015)
S Mitchell
(Appointed 16 February 2015)
S Ralphsmith
(Appointed 5 November 2014)
K Veitch (Appointed 1 July 2014)
I Brannan
(Ceased employment 13 March 2015)
L Patterson
(ceased employment 1 July 2015)
C Camillo
(Ceased employment 2 February 2015)
Note:
107,905
45,000
18,060,801
33,194
15,000
480,000
58,694
n/a
n/a
n/a
n/a
–
77,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
22,095
–
–
–
–
25,000
13,806
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(11,700)
(4,050)
118,300
40,950
(1,625,469)
16,435,332
(2,987)
(1,350)
(45,450)
(6,525)
–
–
–
–
–
30,207
13,650
459,550
65,975
–
–
–
–
n/a
(6,975)
70,525
–
n/a
(a)
The balances at 30 June 2015 have been adjusted for the share consolidation approved by shareholders at a General Meeting on 29 May 2015. On the effective
date of 9 June 2015, the share capital of the Company was consolidated through the conversion of every one fully paid ordinary share in the Company into
0.9100 fully paid ordinary shares in the Company.
Held at
1 July 2013
Granted as
compensation
Purchases
Sales
Held at
30 June 2014
Directors: non-executive
D McDonough
J Mulcahy
R Anderson
W Bartlett
P Birtles
G McGrath
(retired 30 October 2013)
Executive Directors
P Crowley
R Thornton
Executives
I Brannan
L Patterson
C Camillo
G Oliver
(Ceased employment 11 October 2013)
107,905
45,000
18,404,803
33,194
15,000
150,000
330,000
43,694
–
52,500
–
244,175
–
–
–
–
–
–
150,000
15,000
–
25,000
–
25,000
–
–
–
–
–
–
–
–
–
–
–
–
–
107,905
45,000
344,002
18,060,801
–
–
–
-
-
–
–
–
33,194
15,000
n/a
480,000
58,694
–
77,500
–
n/a
GWA GROUP LIMITED • 2015 ANNUAL REPORT The relevant interest of each director in the share capital of the
Group 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 2015 is listed in the Directors’ Report
under Directors’ Interests.
During the reporting period, there were no shares granted to
key management personnel as compensation (2014: 215,000).
The aggregate number of shares held by key management
personnel or their related parties at 30 June 2015 was
17,234,489 (2014: 18,878,094).
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
Group or Mr Crowley wishes to terminate employment for any reason,
three months notice of termination is required. The Group 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 Group, Mr Crowley will be entitled to
receive payment of twelve months salary.
For the other specified executives, the Group is required to give
reasonable notice of termination of up to six months. The Group
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 Group, unless the Board
determines otherwise.
This Directors’ Report is made out in accordance with a resolution
of the directors:
Darryl D McDonough
Peter C Crowley
Chairman
Managing Director
Brisbane, 18 August 2015
31
GWA GROUP LIMITED
FINANCIAL REPORT
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
ABN 15 055 964 380
CONTENTS
Consolidated statement of profit or loss and other 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
Significant items
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 liabilities
16 Deferred tax assets and liabilities
17 Property, plant and equipment
18
Intangible assets
37
45
47
49
49
49
50
50
50
51
52
53
53
53
53
54
55
56
19 Trade and other payables
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
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
Independent Auditor’s Report to the members of GWA Group Limited
33
34
35
36
57
58
59
59
61
61
63
70
70
71
71
73
74
75
75
75
76
76
77
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2015
In thousands of AUD
Continuing operations
Sales revenue
Cost of sales
Gross profit
Other income
Selling expenses
Administrative expenses
Other expenses
Operating profit
Finance income
Finance expenses
Net finance costs
Profit before tax
Tax expense
Profit from continuing operations
Discontinued operations
Loss from discontinued operations, net of tax
(Loss)/profit
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign subsidiaries, net of tax
Cash flow hedges, net of tax
Other comprehensive income/(loss), net of tax
Total comprehensive (loss)/income
Earnings Per Share (cents)
Total
Basic
Diluted
Continuing operations
Basic
Diluted
Note
2015
2014 Restated*
2
4
5
9
10
3A
11
11
11
11
426,218
(249,268)
176,950
5,065
(59,560)
(43,572)
(57,649)
21,234
935
(8,264)
(7,329)
13,905
(3,544)
10,361
(26,544)
(16,183)
(9)
827
818
(15,365)
(5.30)
(5.30)
3.39
3.38
399,394
(236,101)
163,293
933
(55,988)
(41,324)
(11,774)
55,140
683
(11,884)
(11,201)
43,939
(12,765)
31,174
(12,578)
18,596
844
(1,619)
(775)
17,821
6.09
6.06
10.21
10.16
33
*Refer to Note 3 Discontinued Operations and Note 11 Earnings Per Share.
The statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June
In thousands of AUD
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Assets classified as held for sale
Total current assets
Non-current assets
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
Liabilities associated with assets classified as held for sale
Total current liabilities
Non-current liabilities
Loans and borrowings
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
(Accumulated losses)/retained earnings
Total equity
Note
2015
2014
12
13
14
3D
16
17
18
19
21
15
23
3D
20
21
23
24
24
33,043
63,885
83,498
2,502
15,339
29,873
83,015
113,053
2,068
–
198,267
228,009
22,103
13,937
316,549
322
352,911
551,178
47,599
7,559
8,857
40,891
6,023
110,929
125,000
9,337
18
134,355
245,284
305,894
337,942
(51)
(31,997)
305,894
13,906
97,022
368,690
673
480,291
708,300
61,265
11,748
3,471
9,802
–
86,286
175,000
13,241
7,784
196,025
282,311
425,989
408,100
(1,241)
19,130
425,989
The statement of financial position should be read in conjunction with the accompanying notes.
The assets and liabilities of the Dux Hot Water (Dux) and Brivis Heating and Cooling (Brivis) businesses are excluded from the statement
of financial position as at 30 June 2015. The assets and liabilities associated with the Gliderol business are classified as held for sale as at
30 June 2015. The 30 June 2014 statement of financial position includes the assets and liabilities of Dux, Brivis and Gliderol, which are
summarised in Note 3 Discontinued Operations.
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380GWA GROUP LIMITED • 2015 ANNUAL REPORT CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2015
In thousands of AUD
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Cash generated from operations
Interest and facility fees paid
Interest received
Income taxes paid
Net cash from operating activities
32
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Acquisition of property, plant and equipment
Acquisition of intangible assets
Proceeds from business disposals, net of transaction costs
Net cash from investing activities
Cash flows from financing activities
Repayment of employee share loans
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Capital return to shareholders
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate changes
Cash within Assets Held for Sale on the Statement of Financial Position
Cash and cash equivalents at 30 June
12
The statement of cash flows is to be read in conjunction with the accompanying notes.
Note
2015
2014
610,596
(548,445)
62,151
(8,319)
935
(11,262)
43,505
33,059
(3,344)
(1,718)
88,599
116,596
–
105,000
(155,000)
(35,251)
(70,273)
(155,524)
4,577
29,873
(80)
(1,327)
33,043
649,233
(595,099)
54,134
(11,319)
683
(9,600)
33,898
6,738
(4,270)
(1,300)
–
1,168
263
15,000
(35,000)
(18,392)
–
(38,129)
(3,063)
32,757
179
–
29,873
The cash flows of the Dux Hot Water (Dux) and Brivis Heating and Cooling (Brivis) businesses are included in the consolidated statement of
cash flows for the year ended 30 June 2015 only for the part of the year that they were owned by GWA Group Limited and its controlled entities.
The 30 June 2014 consolidated statement of cash flows includes Dux and Brivis for the full year and has not been re-stated. Accordingly, the
consolidated statement of cash flows for the years ended 30 June 2015 and 30 June 2014 are not comparable.
35
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2015
In thousands of AUD
Balance at 1 July 2014
Total comprehensive income for the year
Loss for the year
Other comprehensive income
Exchange differences on translation of
foreign subsidiaries, net of tax
Cash flow hedges, net of tax
Total other comprehensive income
Total comprehensive loss
Transaction with owners, recorded
directly in equity
Share-based payments, net of tax
Dividends declared
Capital return to shareholders net of tax
Total transactions with owners
Balance as at 30 June 2015
(70,158)
(70,158)
337,942
For the year ended 30 June 2014
Share
capital
Translation
reserve
408,100
(1,141)
Hedging
reserve
(1,908)
Equity
compensation
reserve
Retained
earnings
Total
1,808
19,130
425,989
–
–
–
–
–
–
–
–
(9)
–
(9)
(9)
–
–
–
–
–
–
827
827
827
–
–
–
–
(1,150)
(1,081)
–
–
–
–
–
(16,183)
(16,183)
–
–
–
(9)
827
818
(16,183)
(15,365)
372
–
–
372
2,180
307
(35,251)
–
679
(35,251)
(70,158)
(34,944)
(104,730)
(31,997)
305,894
Balance at 1 July 2013
408,100
(1,985)
(289)
1,866
19,050
426,742
Total comprehensive income for the year
Profit for the year
Other comprehensive income
Exchange differences on translation of
foreign subsidiaries, net of tax
Cash flow hedges, net of tax
Total other comprehensive loss
Total comprehensive income
Transaction with owners, recorded
directly in equity
Share-based payments, net of tax
Dividends declared
Total transactions with owners
Balance as at 30 June 2014
–
–
–
–
–
–
–
–
–
844
–
844
844
–
–
–
–
–
(1,619)
(1,619)
(1,619)
–
–
–
–
–
–
–
–
18,596
18,596
–
–
–
18,596
844
(1,619)
(775)
17,821
(58)
–
(58)
(124)
(18,392)
(18,516)
(182)
(18,392)
(18,574)
408,100
(1,141)
(1,908)
1,808
19,130
425,989
The statement of changes in equity is to be read in conjunction with the accompanying notes.
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380GWA GROUP LIMITED • 2015 ANNUAL REPORT
1. SIGNIFICANT ACCOUNTING POLICIES
GWA Group Limited (the ‘Company’) is a for-profit company domiciled
in Australia. The consolidated financial report of the Company for the
financial year ended 30 June 2015 comprises the Company and its
subsidiaries (together referred to as the ‘consolidated entity’). The
principal activities of the consolidated entity during the year 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, New Zealand and selected international markets.
The financial report was authorised for issue by the directors on
18 August 2015.
(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 for
derivative financial instruments that are measured at fair value.
The Company is of a kind referred to in ASIC Class Order 98/100
dated 10 July 1998 and in accordance with that Class Order,
amounts in the financial report and Directors’ Report have been
rounded off to the nearest thousand dollars, unless otherwise stated.
The preparation of a financial report requires management to make
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets, liabilities,
income and expenses. The estimates and associated assumptions
are based on historical experience and various other factors that
are believed to be reasonable under the circumstances, the results
of which form the basis of making the judgements about carrying
values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only
that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
In particular, information about significant areas of estimation
uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amount recognised in the
financial statements are described in the following notes:
• note 18 – measurement of the recoverable amounts of
intangible assets
• note 22 – 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) Changes in accounting policies, disclosures,
standards and interpretations
(i)
Standards and Interpretations affecting amounts reported
in the current period
The following new and revised Standards and Interpretations have
been adopted by the consolidated entity for the first time for the year
ended 30 June 2015:
• AASB 2012-3 Amendments to Australian Accounting Standards –
Offsetting Financial Assets and Financial Liabilities
• Interpretation 21 Levies
• AASB 2013-3 Amendments to AASB 136 – Recoverable Amount
Disclosures for Non-Financial Assets
• AASB 2013-9 Amendments to Australian Accounting Standards –
Conceptual Framework, Materiality and Financial Instruments
• AASB 2014-1 Amendments to Australian Accounting Standards
– Part A: Annual Improvements 2010-2012 and 2011-2013
Cycles; Part B: Defined Benefit Plans: Employee Contributions
(Amendments to AASB 119), and Part C: Materiality
• AASB 1031 Materiality (2013)
The initial adoption of each of the above Standards, Interpretations
and revisions has not had a material impact on the amounts reported
in the consolidated annual financial report but may affect the
accounting for future transactions or arrangements.
(ii)
Standards and Interpretations issued but not yet adopted
At the date of authorisation of the consolidated financial statements, the
following Standards and Interpretations were issued but not yet effective.
37
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c) Changes in accounting policies, disclosures, standards and interpretations (continued)
(ii)
Standards and Interpretations issued but not yet adopted (continued)
Standard/Interpretation
AASB 9 Financial Instruments (December 2010), AASB 2010-7
Amendments to Australian Accounting Standards arising from AASB 9
(December 2010), AASB 2012-6 Amendments to Australian Accounting
Standards – Mandatory Effective Date of AASB 9 and Transition Disclosures,
AASB 2014-1 Amendments to Australian Accounting Standards
AASB 2014-4 Amendments to Australian Accounting Standards –
Clarification of Acceptable Methods of Depreciation and Amortisation
AASB 15 Revenue from Contracts with Customers and AASB 2014-5
Amendments to Australian Accounting Standards arising from AASB 15
AASB 2014-9 Amendments to Australian Accounting Standards –
Equity Method in Separate Financial Statements
AASB 2015-1 Amendments to Australian Accounting Standards –
Annual Improvements to Australian Accounting Standards 2012-2014 Cycle
AASB 2015-2 Amendments to Australian Accounting Standards –
Disclosure Initiative: Amendments to AASB 101
AASB 2015-3 Amendments to Australian Accounting Standards arising
from the Withdrawal of AASB 1031 Materiality
Effective for the
annual reporting period
beginning on
Expected to be initially
applied in the financial
year ending
1 January 2018
(Applies on a modified
retrospective basis)
30 June 2019
1 January 2016
30 June 2017
1 January 2017
30 June 2018
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2015
30 June 2016
The consolidated entity is assessing the potential impact of the above Standards and Interpretations issued but not yet adopted on its
consolidated financial statements however they are not expected to have a significant impact on the consolidated financial statements in future
reporting periods.
(d) Basis of consolidation
(i) Business combinations
The consolidated entity accounts for business combinations using the acquisition method when control is transferred to the consolidated entity.
The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that
arises is tested annually for impairment. Transaction costs are expensed as incurred.
(ii) Subsidiaries
Subsidiaries are entities controlled by the consolidated entity. The consolidated entity controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial
statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on
which control ceases.
(iii) Transaction eliminated on consolidation
Intra-group balances and transactions, and unrealised income and expense arising from intra-group transactions, are eliminated.
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(e) 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 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 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 as part of
the gain or loss on disposal.
(f) 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 (g)).
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.
(g) 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 hedge 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 variation in cash flows that could
ultimately affect reported profit or loss.
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.
39
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) Hedging (continued)
(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 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 as 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.
Purchased software that is integral to the functionality of the related
equipment is capitalised as part of that equipment.
When 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:
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.
• buildings
• plant and equipment
• motor vehicles
40 years
3-15 years
4-8 years
(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.
(h) Property, plant and equipment
Items of property, plant and equipment are measured at cost less
accumulated depreciation and impairment losses. Cost includes
expenditure that is directly attributable to the acquisition of the asset.
The cost of self-constructed assets includes the cost of materials,
direct labour, the initial estimate, where relevant, of the costs of
dismantling and removing the items and restoring the site on which
they are located, and an appropriate proportion of production
overheads.
The residual value, the useful life and the depreciation method
applied to an asset are reassessed annually.
(i)
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 recognised in
profit or loss 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.
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(l) Cash and cash equivalents
(i)
Intangible assets (continued)
(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 assets to which it relates. All other expenditure is expensed
as incurred.
(vi) Amortisation
Amortisation is recognised in profit or loss on a straight-line basis
over the estimated useful lives of intangible assets unless such lives
are indefinite. Intangible assets with an indefinite useful life are
systematically tested for impairment at each balance 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:
nil
4 years
• software
• brand names
• trade names
• designs
• patents
• customer relationships 8 years
15 years
10-20 years
3-19 years (based on patent term)
(j) Trade and other receivables
Trade and other receivables are initially measured at fair value and
subsequently at their amortised cost less impairment losses.
(k) 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.
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.
(m) Impairment
(i) Non-derivative financial assets
Financial assets measured at amortised cost
The consolidated entity considers evidence of impairment for financial
assets measured at amortised cost (loans and receivables) 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.
Available-for-sale financial assets
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.
41
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(iii) Transaction costs
(m) Impairment (continued)
(ii) Non-financial assets
The carrying amounts of the consolidated entity’s non-financial
assets, other than 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 at least 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 own 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 of CGU’s. Subject
to an operating segment ceiling test, CGU’s 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 CGU’s that are expected to
benefit from the synergies of the combination.
Impairment losses are recognised in profit of loss. Impairment losses
recognised in respect of CGU’s are allocated first to reduce the
carrying amount of any goodwill allocated to the CGU (or group of
CGU’s), 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.
(n) 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.
Transaction costs of an equity transaction are accounted for as a
deduction from equity, net of any related income tax benefit.
(o) 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.
(p) 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.
(ii) Other long-term employee benefits
The consolidated entity’s net obligation in respect of long-term
employee benefits is the amount of future benefit that employees
have earned in return for their service in the current and prior
periods. The benefit 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
Short-term employee benefits are expensed as the related service
is provided. A liability is recognised for the amount expected to be
paid if the consolidated entity has a present legal or constructive
obligation to pay this amount as a result of past service provided by
the employee and the obligation can be estimated reliably.
(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 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.
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(t) Expenses
(q) 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.
(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.
(r) Trade and other payables
Trade and other payables are initially measured at fair value and
subsequently at their amortised cost.
(s) Revenue
(i) 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 which is
typically when goods are delivered to the customer, 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.
(i) Costs of goods sold
Cost of goods sold comprises the cost of manufacturing 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.
(iii) Net financing costs
Net financing costs comprise interest payable on borrowings
calculated using the effective interest method, interest receivable on
funds invested and gains and losses on hedging instruments that are
recognised in profit or loss. Borrowing costs are expensed as incurred
unless they relate to qualifying assets. Interest income is recognised
in profit or loss as it accrues, using the effective interest method.
(u) 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.
43
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 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.
(w) Earnings Per Share
The consolidated entity presents basic and diluted Earnings Per
Share (EPS) data for its ordinary shares. Basic EPS is calculated
by dividing the profit or loss attributable to ordinary shareholders
of the Company by the weighted average number of ordinary
shares outstanding during the period. Diluted EPS is determined by
adjusting the profit or loss attributable to ordinary shareholders and
the weighted average number of ordinary shares outstanding for the
effects of all dilutive potential ordinary shares.
(x) 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 profit or loss and other comprehensive
income is re-presented as if the operation had been discontinued
from the start of the period.
(y) 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.
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(u) Income tax (continued)
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.
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-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.
(v) Goods and services tax
Revenue, expenses and assets are recognised net of the amount
of goods and services tax (GST), except where the amount of
GST incurred is not recoverable from the taxation authority. In
these circumstances, the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense.
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT 2. OPERATING SEGMENTS
The consolidated entity has two continuing 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, basins, plastic cisterns, tapware, baths, kitchen sinks,
laundry tubs and bathroom accessories.
• Door & Access Systems – This segment includes the sale of door locks and levers and supply and maintenance of commercial
door systems.
Discontinued operations include the water heaters (Dux Hot Water), ducted heating and climate control systems (Brivis Heating & Cooling)
and garage doors and openers (Gliderol Garage Doors) businesses. The sale of water heaters was previously reported within the Bathrooms
& Kitchens segment. Ducted heating and climate control systems was previously reported within the Heating & Cooling segment. The sale of
garage doors and openers was previously reported within the Door & Access Systems segment. Refer to note 3 for further information regarding
discontinued operations.
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.
Bathrooms
& Kitchens
Door & Access
Systems
Discontinued
operations
Total
In thousands of AUD
2015
2014
Restated
2015
2014
Restated
2015
2014
2015
2014
External sales revenue
330,015
306,560
96,203
92,834
121,564
178,600
547,782
577,994
Inter-segment revenue
–
–
635
260
–
349
635
609
Total sales revenue
330,015
306,560
96,838
93,094
121,564
178,949
548,417
578,603
Segment profit before significant
items and tax
Impairment losses on
non-financial assets
Supplier compensation payment
(525)
(2,542)
–
–
83,291
72,970
7,239
8,443
1,528
7,809
92,058
89,222
–
–
–
–
–
–
–
–
–
–
(24,204)
(17,000)
(24,204)
(17,000)
–
(3,634)
–
–
–
–
–
–
(525)
(2,542)
(3,634)
4,253
(40,764)
–
–
–
–
4,253
(40,764)
–
–
–
(545)
(1,660)
96
(1,229)
(2,380)
(2,126)
(2,829)
(5,015)
45,710
68,768
7,335
7,214
(28,690)
(11,317)
24,355
64,665
Loss on sale of discontinued
operations
Restructuring income –
gains on disposal of property
Restructuring costs
Other restructuring and
significant items
Segment profit/(loss)
before income tax
Depreciation
Amortisation
Capital expenditure
4,360
6,932
–
903
–
1,087
964
406
513
915
379
421
2,787
787
1,700
4,349
924
3,032
8,111
1,193
3,116
12,196
1,303
4,540
Reportable segment assets
408,294
435,715
Reportable segment liabilities
66,609
42,350
63,555
12,433
67,275
12,207
10,490
151,110
482,339
654,100
6,023
37,754
85,065
92,311
45
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2. OPERATING SEGMENTS (CONTINUED)
Reconciliations of reportable segment revenues, profit or loss, assets and liabilities
In thousands of AUD
Revenues
Total revenue for reportable segments
Elimination of inter-segment revenue
Elimination of discontinued operations
Consolidated revenue – continuing operations
Profit
Total profit for reportable segments
Elimination of discontinued operations
Other significant items
Restructuring expenses: corporate
Unallocated amounts: corporate expenses
Profit from operating activities
Net financing costs
Consolidated profit before tax – 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
2015
2014
548,417
(635)
(121,564)
426,218
578,603
(609)
(178,600)
399,394
24,355
28,690
(2,427)
(11,619)
(17,765)
21,234
(7,329)
13,905
482,339
68,839
551,178
85,065
160,219
245,284
64,665
11,317
(3,460)
(503)
(16,879)
55,140
(11,201)
43,939
654,100
54,200
708,300
92,311
190,000
282,311
* Corporate assets include cash and cash equivalents, tax assets and treasury financial instruments at fair value. Corporate liabilities include loans and borrowings,
tax liabilities and treasury financial instruments at fair value.
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
2015
2014
8,111
509
8,620
1,193
2,734
3,927
3,116
1,946
5,062
12,196
619
12,815
1,303
3,445
4,748
4,540
1,030
5,570
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT 2. OPERATING SEGMENTS (CONTINUED)
Geographical Segments
The business segments are managed on a worldwide basis, but operate mainly in one geographical area being Australia. A sales office is also
operated in New Zealand. Sales revenue from geographical areas outside Australia comprised only 6% of the consolidated entity’s total sales
revenue for the current year (2014: 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.
Australia
New Zealand
Consolidated
In thousands of AUD
External sales revenue
Non-current assets*
2015
402,474
326,255
2014
376,572
461,625
2015
23,744
4,553
2014
22,822
4,760
2015
426,218
330,808
2014
399,394
466,385
* Non-current assets exclude financial instruments and deferred tax assets.
Major customers
The consolidated entity conducts business with 3 customers where the net revenue generated from each customer exceeds 10% of
the consolidated entity’s net revenue. Net revenue from these customers represent $68,519,000 (2014: $67,823,000), $63,265,000
(2014: $62,883,000) and $59,209,000 (2014: $54,979,000) respectively of the consolidated entity’s total net revenues for the current year
of $426,218,000 (2014: $399,394,000). The revenues from these customers are reported in the Bathrooms & Kitchens and Door & Access
Systems segments.
3. DISCONTINUED OPERATIONS
During the year ended 30 June 2015, the Dux Hot Water business was sold with an effective date of 19 December 2014 and the Brivis Heating
& Cooling business was sold with an effective date of 2 February 2015.
Additionally, the consolidated entity entered into an agreement to sell the Gliderol business on 29 June 2015. The sale of Gliderol was
completed on 31 July 2015, refer to Note 34 Subsequent Events. The assets and liabilities associated with the Gliderol business are classified
as held for sale as at 30 June 2015.
The operating activities of these businesses were not discontinued or classified as held for sale at 30 June 2014. The comparative statement
of comprehensive income has therefore been re-presented to show the discontinued operations separately from continuing operations.
A. Results of discontinued operations
For the year ended 30 June
In thousands of AUD
Revenue
Expenses
Loss from operating activities
Tax benefit/(expense) on operating activities
Loss from operating activities, net of tax
Impairment loss recognised on the re-measurement to fair value less costs to sell – Gliderol
Tax benefit on impairment loss – Gliderol
Loss on sale of the discontinued operations
Loss for the year
Basic profit /(loss) per share (cents per share)
Diluted profit /(loss) per share (cents per share)
2015
121,564
(122,416)
(852)
112
(740)
(24,204)
2,034
(3,634)
(26,544)
(8.69)
(8.69)
2014
178,600
(189,917)
(11,317)
(1,261)
(12,578)
–
–
–
(12,578)
(4.12)
(4.12)
47
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3. DISCONTINUED OPERATIONS (CONTINUED)
B. Cash flows from discontinued operations
For the year ended 30 June
In thousands of AUD
Net cash from operating activities
Net cash from investing activities
Net cash from discontinued operations
C. Effect of disposal of Dux Hot Water and Brivis on the financial position of the consolidated entity
As at 30 June 2015
In thousands of AUD
Trade and other receivables
Inventories
Property, plant and equipment
Net deferred tax assets
Intangible assets
Other assets
Trade and other payables
Provisions
Employee benefits
Net assets and liabilities
Disposal costs
Consideration proceeds
Cash and cash equivalents disposed of
Net cash inflow
D. Assets and liabilities of disposal group held for sale: Gliderol
As at 30 June
In thousands of AUD
Cash
Trade and other receivables
Inventories
Income tax receivable
Other
Assets held for sale
Trade and other payables
Provisions
Employee benefits
Liabilities held for sale
2015
2,290
86,533
88,823
2014
14,854
(3,136)
11,718
Total
Dux & Brivis
(17,452)
(19,916)
(39,784)
(3,179)
(35,761)
(242)
12,309
9,440
5,570
(89,015)
(9,813)
(98,828)
95,203
(9)
95,194
2015
1,327
5,492
4,904
2,494
1,122
15,339
(3,822)
(479)
(1,722)
(6,023)
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT
4. OTHER INCOME
In thousands of AUD
Foreign currency gains – realised
Foreign currency gains – unrealised
Other – scrap income, royalties, bad debts recovered
Restructuring income – gains on disposal of property
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
Significant items – expenses
6. SIGNIFICANT ITEMS
In thousands of AUD
Restructuring costs
Restructuring income – gains on disposal of property
Supplier exit compensation
Corporate transformation costs
Total significant items before tax
Tax benefit
Net significant items after tax
Note
2015
2014
6
Note
6
Note
(i)
(i)
(ii)
(iii)
5
–
807
4,253
5,065
2015
1,132
734
–
55,783
57,649
2015
52,633
(4,253)
723
2,427
51,530
(16,734)
34,796
39
373
521
–
933
2014
1,928
–
495
9,351
11,774
2014
3,391
–
2,941
3,019
9,351
(2,687)
6,664
(i) Restructuring costs
In October 2014 GWA announced its plans to restructure its manufacturing activities following a detailed review of its operations. This resulted in
decisions to phase out the Norwood plastics operation in Adelaide over the next three years, and cease production in the Wetherill Park vitreous china
manufacturing facility by the end of calendar 2014. The consolidated entity incurred costs associated with this of $41,000,000 (2014: $3,391,000).
In June 2015 GWA announced that it will be restructuring its group operations to drive greater focus across its businesses, realign the cost base
to adjust for the divested businesses, and further capture supply chain efficiencies. An expense of $11,600,000 has been recognised in respect
of the expected costs associated with the restructuring.
In April 2015, GWA announced the sale and leaseback of its Wetherill Park facility. A gain of $4,253,000 was recognised during the current year.
(ii) Supplier exit compensation
In prior reporting periods, the Bathrooms & Kitchens business conducted a supply chain review and determined it would exit arrangements with
a number of overseas suppliers and focus on building strategic relationships with a few core suppliers. During the year ended 30 June 2014, a
former China sanitaryware supplier threatened legal action for breach of contract. Although the consolidated entity denied liability, management
determined a compensation payment to the supplier of $2,941,000 was in the best interests of the consolidated entity to settle the dispute and
focus on the strategic supply relationships. During the year ended 30 June 2015, a further $723,000 of costs were incurred with respect to the
settlement of this dispute.
(iii) Corporate transformation costs
In the prior year, the Board approved and completed a strategic review of the Group focus and structure. Opportunity for future growth and
shareholder returns were identified in the target market segments of the Bathrooms & Kitchens and Door & Access Systems businesses.
During the current year, costs of $2,427,000 were incurred in relation to the execution of this review (2014: $3,019,000).
49
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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. AUDITOR’S REMUNERATION
In AUD
Auditor 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
Overseas KPMG Firms:
Taxation services
9. NET FINANCING COSTS
In thousands of AUD
Finance income
Interest income on call deposits
Other
Finance expense
Interest expense on financial liabilities
Interest expense on swaps
Facility fees on financial liabilities
Establishment fee amortisation
Other
Net financing costs
2015
2014
99,931
679
100,610
112,689
609
113,298
2015
2014
457,233
–
15,000
472,233
455,000
3,500
14,000
472,500
5,300
7,380
31,504
36,804
17,815
25,195
2015
2014
843
92
935
3,786
991
2,809
630
48
8,264
7,329
601
82
683
5,172
1,727
4,261
720
4
11,884
11,201
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT
10. INCOME TAX EXPENSES
Recognised in the statement of profit or loss and other comprehensive income
In thousands of AUD
Current tax expense
Current year
Adjustments for prior years
Deferred tax (benefit)/expense
Origination and reversal of temporary differences
Tax expense from continuing operations
Tax (benefit)/expense from discontinued operations
Total expense in statement of profit or loss and other comprehensive income
Numerical reconciliation between tax expense and pre-tax net profit
In thousands of AUD
Profit from continuing operations before tax
Loss from discontinued operations before tax
(Loss)/profit before tax
Tax (benefit)/expense using the domestic rate of 30% (2014: 30%)
Tax (benefit)/expense due to:
Non-deductible expenses
Non-deductible impairment loss
Non-deductible/(deductible) net share-based payments
Effect of tax rate in foreign jurisdictions
Net accounting loss on disposal of capital gains tax assets not recognised
(Carried forward tax losses utilised)/tax losses not recognised
Building depreciation allowance
Rebateable research and development
Under/(over) provided in prior years
Income tax expense on pre-tax net profit
Deferred tax recognised directly in equity
In thousands of AUD
Derivatives
Capital return costs
2015
2014
12,759
978
13,737
(10,193)
3,544
(2,146)
1,398
2015
13,905
(28,690)
(14,785)
(4,435)
384
5,227
204
(128)
(237)
(86)
(15)
(312)
602
796
1,398
2015
354
(92)
262
12,611
(30)
12,581
184
12,765
1,261
14,026
2014
43,939
(11,317)
32,622
9,787
97
5,100
(17)
(123)
–
88
(16)
(635)
14,281
(255)
14,026
2014
(694)
–
(694)
51
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. EARNINGS PER SHARE
The calculation of basic and diluted earnings per phare has been based on the following profit attributable to ordinary shareholders.
Profit attributable to ordinary shareholders – basic/diluted
In thousands of AUD
Continuing operations
Profit before significant items
Net significant items
Profit for the year from continuing operations
Discontinued operations
Profit before significant items
Net significant items
Loss for the year from discontinued operations
(Loss)/profit for the year
Basic Earnings Per Share
2015
2014
45,157
(34,796)
10,361
1,009
(27,553)
(26,544)
(16,183)
37,838
(6,664)
31,174
5,938
(18,516)
(12,578)
18,596
The calculation of basic Earnings Per Share has been based on the following weighted average number of shares outstanding.
Weighted average number of ordinary shares (basic)
In thousands of shares
Issued ordinary shares at 1 July
Effect of share consolidation*
Weighted average number of ordinary shares at 30 June
Diluted Earnings Per Share
2015
306,534
(1,209)
305,325
2014
306,534
(1,209)
305,325
The calculation of diluted Earnings Per Share has been based on the following weighted average number of ordinary shares outstanding
adjusted for the effects of all dilutive potential ordinary shares.
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)
2015
305,325
1,533
306,858
2014
305,325
1,584
306,909
At 30 June 2015, 1,573,000 shares were excluded from the diluted weighted average number of ordinary shares calculation because their
effect would have been anti-dilutive.
*Effect of share consolidation
On 29 May 15, GWA shareholders approved a consolidation of the Company’s share capital through the conversion of each fully paid ordinary
share in GWA into 0.9100 fully paid ordinary shares. Upon the completion of the share consolidation, the number of the Company’s shares on
issue reduced from 306,533,770 to 278,947,986 (refer to note 24 for further details). This reduction is reflected in the calculation of the weighted
average number of ordinary shares at 30 June 15. The weighted average number of ordinary shares at 30 June 14 has been re-calculated as if
the share consolidation had occurred on the same date in the prior year in order to present earning per share on a consistent basis year-on-year.
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT
11. EARNINGS PER SHARE (CONTINUED)
Earnings Per Share
Basic Earnings Per Share
Diluted Earnings Per Share
Basic Earnings Per Share (excluding significant items)
Diluted Earnings Per Share (excluding significant items)
Earnings Per Share from continuing operations
Basic Earnings Per Share
Diluted Earnings Per Share
Basic Earnings Per Share (excluding significant items)
Diluted Earnings Per Share (excluding significant items)
12. CASH AND CASH EQUIVALENTS
In thousands of AUD
Bank balances
Call deposits
Cash and cash equivalents in the statement of cash flows
2015
cents
(5.30)
(5.30)
15.12
15.04
3.39
3.38
14.79
14.72
2015
10,873
22,170
33,043
2014
cents
6.09
6.06
14.34
14.26
10.21
10.16
12.39
12.33
2014
12,117
17,756
29,873
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
Net trade receivables
Forward exchange contracts used for hedging (net receivable)
Other
2015
62,540
328
1,017
63,885
2014
81,347
–
1,668
83,015
The consolidated entity’s exposure to credit and currency risk and impairment loss 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
15. CURRENT TAX LIABILITIES
2015
3,617
173
79,708
83,498
2014
21,188
1,210
90,655
113,053
The current tax liability for the consolidated entity of $8,857,000 (2014: $3,471,000) 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 liability initially recognised by the members in the tax-consolidated group.
53
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
2015
1
1,677
2,090
4,834
11,856
3,019
23,477
(1,374)
22,103
2014
268
1,632
2,214
7,495
6,164
3,047
20,820
(6,914)
13,906
2015
(633)
(634)
–
–
–
(107)
(1,374)
1,374
–
2014
(1,646)
(5,111)
–
–
–
(157)
(6,914)
6,914
–
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 from foreign jurisdictions
2015
(632)
1,043
2,090
4,834
11,856
2,912
22,103
–
22,103
2015
20,771
76
2014
(1,378)
(3,479)
2,214
7,495
6,164
2,890
13,906
–
13,906
2014
6,541
162
The deductible capital 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 14
Recognised
in income
Recognised
in equity
(1,378)
(3,479)
2,214
7,495
6,164
2,890
13,906
746
4,522
122
(2,144)
5,943
297
9,486
–
–
–
–
–
(262)
(262)
Reclassified
to Assets/
Liabilities
Held for Sale
Balance
30 June 15
–
–
(246)
(517)
(251)
(13)
(1,027)
(632)
1,043
2,090
4,834
11,856
2,912
22,103
Balance
1 July 13
Recognised in
income
Recognised in
equity
Balance
30 June 14
(664)
(4,395)
3,093
7,349
6,348
3,333
15,064
(714)
916
(879)
146
(184)
(1,137)
(1,852)
–
–
–
–
–
694
694
(1,378)
(3,479)
2,214
7,495
6,164
2,890
13,906
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT Land and
buildings
Plant and
equipment Motor Vehicles
Work in
progress
17. PROPERTY, PLANT AND EQUIPMENT
In thousands of AUD
Cost
Balance at 1 July 2014
Additions
Disposal of discontinued operations
(Dux and Brivis)
Other disposals
Transfers
Effect of movements in exchange rates
Balance at 30 June 2015
57,635
263
(24,584)
(33,314)
–
–
–
173,887
3,028
(48,853)
(1,567)
485
(28)
126,952
Balance at 1 July 2013
57,498
176,625
Additions
Disposals
Transfers
Effect of movements in exchange rates
199
(62)
–
–
3,464
(6,918)
593
123
Balance at 30 June 2014
57,635
173,887
Depreciation and impairment losses
Balance at 1 July 2014
Depreciation
Depreciation charged against restructuring
provision
Disposal of discontinued operations
(Dux and Brivis)
Other disposals
Impairment loss
Effect of movements in exchange rates
Balance at 30 June 2015
Balance at 1 July 2013
Depreciation
Disposals
Effect of movements in exchange rates
(9,086)
(817)
(127,290)
(7,699)
–
(1,542)
2,338
7,565
–
–
–
(7,974)
(1,158)
46
–
31,826
1,416
(10,386)
33
(113,642)
(120,735)
(11,411)
4,958
(102)
Balance at 30 June 2014
(9,086)
(127,290)
Carrying amounts
At 30 June 2015
At 1 July 2014
At 30 June 2014
At 1 July 2013
–
48,549
48,549
49,524
13,310
46,597
46,597
55,890
729
–
(76)
(132)
–
(1)
520
1,051
54
(379)
–
3
729
(576)
(104)
–
52
116
(10)
2
(520)
(604)
(246)
277
(3)
(576)
–
153
153
447
Total
233,974
3,344
(74,000)
(35,013)
–
(29)
128,276
1,723
53
(487)
–
(485)
–
804
1,763
236,937
553
–
(593)
–
4,270
(7,359)
–
126
1,723
233,974
–
–
–
–
–
(177)
–
(136,952)
(8,620)
(1,542)
34,216
9,097
(10,573)
35
(177)
(114,339)
–
–
–
–
–
627
1,723
1,723
1,763
(129,313)
(12,815)
5,281
(105)
(136,952)
13,937
97,022
97,022
107,624
55
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18. INTANGIBLE ASSETS
In thousands of AUD
Cost
Balance at 1 July 2014
Additions
Disposal of discontinued operations
(Dux and Brivis)
Effects of movements in exchange rates
Trade names,
designs,
patents and
customer
relationships
Goodwill
Total
24,354
101
50,914
–
417,629
1,718
(11,558)
(20,834)
(38,483)
–
–
(21)
Software
Brand names
33,573
1,617
(91)
–
308,788
–
(6,000)
(21)
Balance at 30 June 2015
35,099
302,767
12,897
30,080
380,843
Balance at 1 July 2013
Additions
Effect of movements in exchange rates
32,677
308,746
23,947
50,914
416,284
896
–
–
42
404
3
–
–
1,300
45
Balance at 30 June 2014
33,573
308,788
24,354
50,914
417,629
Amortisation and impairment losses
Balance at 1 July 2014
Amortisation
Amortisation charged to restructuring provision
Disposal of discontinued operations
(Dux and Brivis)
Impairment loss
Balance at 30 June 2015
Balance at 1 July 2013
Amortisation for the year
Impairment losses
Effect of movements in foreign exchange
Balance at 30 June 2014
Carrying amounts
At 30 June 2015
At 1 July 2014
At 30 June 2014
At 1 July 2013
(26,469)
(2,798)
(55)
13
(1,326)
(30,635)
(23,024)
(3,445)
–
–
(26,469)
4,464
7,104
7,104
9,653
–
–
–
–
–
–
–
–
–
–
–
(5,470)
(1,129)
–
2,709
(5,695)
(9,585)
(4,166)
(1,303)
–
(1)
(17,000)
–
–
–
(7,074)
(24,074)
–
–
(17,000)
–
(48,939)
(3,927)
(55)
2,722
(14,095)
(64,294)
(27,190)
(4,748)
(17,000)
(1)
(5,470)
(17,000)
(48,939)
302,767
308,788
308,788
308,746
3,312
18,884
18,884
19,781
6,006
33,914
33,914
50,914
316,549
368,690
368,690
389,094
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT 18. INTANGIBLE ASSETS (CONTINUED)
Carrying value of brand names and goodwill for each cash generating unit and segment
In thousands of AUD
CaromaDorf
Dux*
Bathrooms & Kitchens
API Locksmiths
Gainsborough
Gliderol*
Door & Access Systems
Heating & Cooling*
2015
284,168
–
284,168
4,556
20,049
–
24,605
–
308,773
2014
284,188
6,000
290,188
4,556
20,049
7,075
31,680
20,834
342,702
* During the year ended 30 June 2015, the Dux Hot Water business and Brivis heating and cooling business were sold. The consolidated entity also entered into a
binding agreement to sell the Gliderol business on 29 June 2015 and as a result the assets of the Gliderol business have been reclassified to Assets Held for Sale
at 30 June 2015. Refer to Note 3 Discontinued Operations and Note 34 Subsequent Events for further information.
Impairment testing for brand names and goodwill
The recoverable amount of the Gliderol cash generating unit at 30 June 2015 was based on fair value less estimated costs of disposal.
The fair value reflects the purchase price agreed with the buyer (subject to working capital adjustments).
For cash generating units other than Gliderol, the recoverable amounts of all brand names and goodwill assessed at 30 June 2015 based
on internal value in use calculations and no impairment was identified (2014: $nil).
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% (2014: 2.5%) in calculating terminal values of the units, which does not exceed the
long-term average growth rate for the industry.
• Pre-tax discount rates between 14.4% – 14.5% were used (2014: 14.3% – 14.9%).
The key assumptions relate to dwelling completions, economic activity and market share. The values assigned to the key assumptions represent
management’s assessment of future trends in the Bathrooms & Kitchens and Door & Access Systems industries and are based on both external
sources and internal sources (historical data). The recoverable amount of the cash generating units exceeds their carrying values at
30 June 2015 and there are no reasonably possible changes in any of the key assumptions that would cause the cash generating units’ carrying
amounts to exceed their recoverable amount.
19. TRADE AND OTHER PAYABLES
In thousands of AUD
Trade payables and accrued expenses
Forward exchange contracts used for hedging (net payable)
Interest rate swaps used for hedging
Non-trade payables and accrued expenses
2015
43,964
–
1,872
1,763
47,599
The consolidated entity’s exposure to currency risk and liquidity risk related to trade and other payables are disclosed in note 25.
2014
57,179
1,205
1,521
1,360
61,265
57
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
2015
125,000
2014
175,000
In thousands of AUD
Unsecured cash advance facilities
Unsecured cash advance facilities
Currency
AUD
AUD
Year of
maturity
2015
Face value
2016
2017
–
125,000
125,000
2015
Carrying
amount
2014
Face value
2014
Carrying
amount
–
175,000
175,000
125,000
125,000
–
–
175,000
175,000
Financing facilities
In thousands of AUD
Standby letters of credit
Bank guarantees
Unsecured cash advance facility
Facilities utilised at reporting date
Standby letters of credit
Bank guarantees
Unsecured cash advance facility
Facilities not utilised at reporting date
Standby letters of credit
Bank guarantees
Unsecured cash advance facility
Unsecured cash advance facility
2015
2,000
7,044
225,000
234,044
–
4,133
125,000
129,133
2,000
2,911
100,000
104,911
2014
2,000
7,196
275,000
284,196
–
4,258
175,000
179,258
2,000
2,938
100,000
104,938
On 17 October 2014, GWA Finance Pty Limited successfully completed the refinancing of its syndicated banking facility. The facility now
comprises a single three year revolving facility of $225 million which matures in October 2017. The loan is denominated in Australian dollars,
bears 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 agreement.
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.
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT
21. EMPLOYEE BENEFITS
Current
In thousands of AUD
Liability for annual leave
Liability for long-service leave
Non-current
Liability for long-service leave
2015
5,888
1,671
7,559
2014
9,374
2,374
11,748
9,337
13,241
Defined contribution superannuation funds
The consolidated entity makes contributions to defined contribution superannuation funds. Contributions are charged against income as they
are made based on various percentages of each employee’s gross salaries. The amount recognised as expense was $8,936,000 for the financial
year ended 30 June 2015 (2014: $9,769,000).
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), subject
to meeting certain financial performance hurdles and the holder remaining in employment with the Company until the nominated vesting date.
The performance hurdles in relation to the 2014/15 year are subject to financial performance conditions which measure growth in Earnings Per
Share (EPS) relative to dwelling completions growth and Return on Funds Employed (ROFE) (2013/14 year: performance hurdles were subject
to financial performance conditions that measured Total Shareholder Returns (TSR) compared to a peer group of companies and growth in EPS).
The performance hurdles are challenging but 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.
For performance rights granted to executives in the 2014/15 year, the performance hurdles and vesting proportions for the EPS performance
measure is outlined in the table below.
EPS Compound Annual Growth rate (CAGR) relative to dwelling
completions growth over three year performance period
Proportion of Performance Rights to Vest if EPS growth hurdle is met
EPS CAGR less than dwelling completions CAGR
EPS CAGR exceeding dwelling completions CAGR
0%
12.5%
EPS CAGR exceeding dwelling completions CAGR up to 6%
Straight line vesting between 12.5% and 50%
EPS CAGR equal to dwelling completions CAGR plus 6% or higher
50% (i.e. 50% of total grant)
For performance rights granted to executives in the 2014/15 year, the performance hurdles and vesting proportions for the ROFE performance
measure is outlined in the table below.
GWA Group Limited ROFE over three year performance period
Proportion of Performance Rights to Vest if ROFE hurdle is met
ROFE less than 15% per annum
ROFE equal to 15% per annum
ROFE between 15% and 18% per annum
ROFE equal to 18% of higher per annum
0%
12.5%
Straight line vesting between 12.5% and 25%
50% (i.e. 50% of total grant)
59
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 22. SHARE-BASED PAYMENTS (CONTINUED)
For performance rights granted to executives in the 2013/14 year, the performance hurdles and vesting proportions for the EPS performance
measure 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)
For performance rights granted to executives in the 2013/14 year, the performance hurdles and vesting proportions for the TSR performance
measure are 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 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 section of the Directors’ Report.
Tranche
Grant date
Expiry date
Balance at
beginning of
the year
Granted
during
the year
Cancelled
during the
year
Vested
during the
year
Forfeited
during the
year
Balance at
end of the
year
Number
Number
Number
Number
Number
Number
2015
(i)
(ii)
(iii)
(iv)
2014
(i)
(ii)
(iii)
(iv)
Fair value
17/02/2012
30/06/2014
25/02/2013
30/06/2015
24/02/2014
30/06/2016
292,500
892,000
540,000
–
–
–
25/02/2015
30/06/2017
–
507,000
–
(166,000)
(200,000)
–
1,724,500
507,000
(366,000)
–
–
–
–
–
(292,500)
–
–
–
–
726,000
340,000
507,000
(292,500)
1,573,000
21/02/2011
30/06/2013
17/02/2012
30/06/2014
25/02/2013
30/06/2015
290,000
585,000
972,000
–
–
–
24/02/2014
30/06/2016
–
540,000
–
–
(80,000)
–
(290,000)
–
–
–
–
(292,500)
–
–
–
292,500
892,000
540,000
1,847,000
540,000
(80,000)
(290,000)
(292,500)
1,724,500
During the current financial year 507,000 performance rights were granted to employees (2014: 540,000) at a weighted average fair value of
$1.98 (2014: $1.86).
For the 30 June 2015 financial year, the fair value of the performance rights granted subject to the EPS and ROFE hurdles was determined by
using a Black Scholes Model. When determining the fair values it was assumed the Company would have a dividend yield of 4.72%, the risk
free rate was 1.87% and annualised share price volatility was 30.0% for the Company.
The fair value of the performance rights granted will be allocated to each financial year evenly over the specified three year performance period.
The amount recognised as personnel expenses in the current financial year was $679,000 (2014: $609,000). Refer to the Remuneration
Report section of the Directors’ Report for further details.
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT 23. PROVISIONS
In thousands of AUD
Balance at 1 July 2014
Provisions made during the year
Provisions used during the year
Disposal of discontinued operations
Transfers between provisions
Reclassification to assets held for Sale
Balance at 30 June 2015
Current
Non-current
Warranties
Warranties
Restructuring
13,056
3,007
(3,723)
(9,440)
–
(362)
2,538
2,538
–
2,538
1,440
50,617
(19,788)
–
284
(82)
32,471
32,453
18
32,471
Site
restoration
1,616
–
–
–
(284)
–
1,332
1,332
–
1,332
Product
liability
1,094
1,546
(814)
–
–
–
1,826
1,826
–
1,826
Other
380
8,979
(6,582)
–
–
(35)
2,742
2,742
–
2,742
Total
17,586
64,149
(30,907)
(9,440)
–
(479)
40,909
40,891
18
40,909
The provision for warranties relates to future warranty expense on products sold during the current and previous financial years. Following the
disposal of the Dux Hot Water and Brivis businesses, the major warranty expense relates to sanitaryware and tapware products. The provision is
based on estimates made from historical warranty data associated with similar products and services. The consolidated entity expects to expend
the majority of the provision in the next financial year.
Restructuring
The restructuring provision relates to the estimated costs of redundancies, site closures and product rationalisation related to business
restructuring. The majority of the provision is expected to be utilised in the next financial year.
Product liability
The provision for product liability relates to the estimated costs arising from open product liability claims for Brivis product defect issues.
Refer to note 28 for further details.
24. CAPITAL AND RESERVES
Share capital
In thousands
On issue at 1 July – fully paid
Capital return net of tax
Share consolidation
On issue at 30 June – fully paid
Ordinary shares
AUD
2015
306,534
–
(27,586)
278,948
2014
306,534
–
–
306,534
2015
408,100
(70,158)
–
337,942
2014
408,100
–
–
408,100
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.
61
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 24. CAPITAL AND RESERVES (CONTINUED)
Return of Funds to Shareholders and Share consolidation
On 15 June 2015, GWA completed a return of funds to shareholders of $88,282,000 ($0.288 per fully paid ordinary share) comprising a
capital return of $69,890,000 ($0.228 per fully paid ordinary share) and a partly franked special dividend of $18,392,000 ($0.06 per fully paid
ordinary share). The return of funds to shareholders was completed following the resolutions of shareholders passed at the General Meeting on
29 May 2015.
The capital return of $69,890,000 is reflected as a reduction in the value of the Company’s issued share capital in the current year.
The ATO confirmed by a class ruling in June 2015 that the return of capital did not constitute a dividend for Australian income tax purposes.
On 29 May 15, GWA shareholders also approved a consolidation of the Company’s share capital through the conversion of each fully paid
ordinary share in GWA into 0.9100 fully paid ordinary shares. The share consolidation occurred with effect from Tuesday 9 June 2015.
Upon the completion of the share consolidation, the number of the Company’s shares on issue reduced from 306,533,770 to 278,947,986.
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:
2015
Special 2015
Final 2014 ordinary
Total amount
2014
Interim 2014 ordinary
Final 2013 ordinary
Total amount
Costs per share
(In AUD cents)
Total amount
(In thousands
of AUD)
6.0
5.5
11.5
–
6.0
6.0
18,392
16,859
35,251
–
18,392
18,392
Franked
Date of Payment
76.65%
100%
15th June 2015
8th Oct 2014
–
100%
–
4th Oct 2013
Franked dividends declared or paid during the year were franked at the tax rate of 30%.
As noted above, the Company paid a dividend of $18.392 million on 15 June 2015. This was paid out of the parent entity’s current year profit
at the time in accordance with the Corporations Act 2001.
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT 24. CAPITAL AND RESERVES (CONTINUED)
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
2015
7,157
2014
5,943
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.
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 risk 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 Audit and Risk 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 Audit and Risk Committee
is assisted in its oversight role by the Internal Audit function. The Internal Audit function conducts both regular and ad hoc reviews of risk
management controls and procedures. The results of the reviews are reported to the Audit and Risk 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 Board’s 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. Goods are sold subject to retention of title clauses in most circumstances.
The consolidated entity does not require collateral in respect of financial assets.
The consolidated entity maintains an allowance for impairment that represents its estimate of incurred losses in respect of trade receivables.
Transactions involving derivative financial instruments are with counterparties with sound credit ratings. Given their high credit ratings,
management does not expect any counterparty to fail to meet its obligations.
The consolidated entity has three major customers which comprise 45% of the trade receivables carrying amount at 30 June 2015
(2014: 44%). At balance date there were no material uninsured concentrations of credit risk.
63
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 25. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
Credit risk (continued)
The carrying amount of financial assets represents the maximum credit exposure of the consolidated entity. The maximum exposure to credit
risk at balance date was:
In thousands of AUD
Cash and cash equivalents
Net trade receivables
Other receivables
2015
33,043
62,540
1,017
96,600
2014
29,873
81,347
1,668
112,888
The ageing of trade receivables for the consolidated entity at balance date is as follows:
In thousands
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.
2015
Receivable
2015
Impairment
2014
Receivable
2014
Impairment
53,402
25,496
828
306
233
(17,502)
62,763
–
–
–
(43)
(180)
–
(223)
64,351
39,510
2,129
784
1,632
(25,736)
82,670
(100)
(86)
(20)
(51)
(1,066)
–
(1,323)
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 written back/(recognised)
Provisions used during the year
Disposal of Brivis and Dux businesses
Reclassification Liabilities Held for Sale
Other transfer
Effect of movements in foreign exchange
Balance at 30 June
2015
(1,323)
738
48
162
175
(23)
–
(223)
2014
(1,489)
(268)
436
–
–
–
(2)
(1,323)
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT 25. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
Liquidity risk
Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they fall due. The consolidated entity
prepares cash flow forecasts and maintains financing facilities with a number of institutions to ensure sufficient funds will be available to meet
obligations without incurring excessive costs. The cash flows of the consolidated entity are controlled by management and reported monthly to
the Board who is ultimately responsible for maintaining liquidity.
The contractual maturities of financial liabilities and derivatives that are cash flow hedges of the consolidated entity, including estimated interest
payments are as follows:
Maturity analysis
In thousands of AUD
2015
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
(125,000)
(136,469)
(2,458)
(2,458)
(4,915)
(126,638)
Trade and other payables
(45,727)
(45,727)
(45,727)
–
–
–
Derivative financial liabilities
Interest rate swaps designated
as hedges
Forward exchange contracts
designated as hedges – net inflow
(1,872)
(2,135)
(710)
(583)
(744)
(98)
328
328
328
Total at 30 June 2015
(172,271)
(184,003)
(48,567)
(3,041)
(5,659)
(126,736)
2014
Non-derivative financial liabilities
Unsecured cash advance facilities
(175,000)
(193,292)
(4,472)
(4,472)
(8,944)
(175,404)
Trade and other payables
(58,539)
(58,539)
(58,491)
(48)
–
–
Derivative financial liabilities
Interest rate swaps designated
as hedges
Forward exchange contracts
designated as hedges – net outflow
(1,521)
(1,899)
(509)
(435)
(646)
(309)
(1,205)
(1,205)
(1,205)
–
–
–
Total at 30 June 2014
(236,265)
(254,935)
(64,677)
(4,955)
(9,590)
(175,713)
–
–
–
–
–
–
–
–
–
The unsecured cash advance facilities mature in October 2017 (2014: the unsecured cash advance facilities were 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.
65
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 25. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
Market risk
Market risk is the risk that changes in market prices such as interest rates and foreign exchange rates will affect the consolidated entity’s 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
Finance 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 2 years and have fixed swap rates ranging from 3.11% to 3.50% (2014: 3.37% to 4.98%). At 30 June 2015, the consolidated
entity had interest rate swaps in operation with a notional contract amount of $125,000,000 (2014: $125,000,000).
The consolidated entity classifies interest rate swaps as cash flow hedges and states them at fair value.
The net fair value of swaps at 30 June 2015 of $1,872,000 was recognised as a fair value derivative liability (2014: $1,521,000 fair value
derivative liability).
(i) Profile
At balance date the consolidated entity’s interest bearing financial instruments were:
In thousands
Variable rate financial instruments
Unsecured cash advance facilities
Bank balances
Call deposits
Fixed rate financial instruments
Interest rate swap derivatives
Total
2015
Notional value
2015
Carrying amount
2014
Notional value
2014
Carrying amount
(125,000)
10,873
22,170
(91,957)
125,000
33,043
(125,000)
10,873
22,170
(91,957)
(175,000)
(175,000)
12,117
17,756
12,117
17,756
(145,127)
(145,127)
(1,872)
(93,829)
125,000
(20,127)
(1,521)
(146,648)
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT 25. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
Market risk (continued)
(a)
Interest rate risk (continued)
(ii) Fair value sensitivity analysis for fixed rate instruments
The consolidated entity does not account for fixed rate financial assets and liabilities at fair value through profit or loss. Therefore a change
in interest rates at the reporting date would not affect profit or loss.
A change of 100 basis points in interest rates at balance date would have affected the consolidated entity’s 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
2015
2014
(1,808)
(97)
1,905
–
1,921
–
(1,921)
–
(2,484)
963
1,521
–
2,334
–
(2,334)
–
(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)
Bank balances
Interest rate swap derivatives
Call deposits variable rate
Decrease of 100 basis points
Unsecured cash advance facilities (AUD)
Bank balances
Interest rate swap deliverables
Call deposits variable rate
2015
2014
(1,509)
40
1,234
328
93
1,509
(40)
(1,234)
(328)
(93)
(2,000)
34
1,369
227
(370)
2,000
(34)
(1,369)
(227)
370
67
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 25. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
Market risk (continued)
(b) Foreign currency risk
The consolidated entity is exposed to foreign currency risk on sales, purchases and asset and liability holdings that are denominated in a
currency other than the respective functional currencies of its subsidiaries. The consolidated entity is also exposed to foreign currency risk on
retranslation of the financial statements of foreign subsidiaries. The currencies giving rise to this risk are primarily USD, NZD, EUR and RMB.
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. The estimated forecast sales and
purchases in the tables below are for the six month period after the balance date.
(i) Exposure to currency risk
In thousands of AUD
Currency transaction risk
2015
Trade payables
Cash
Net balance sheet exposure
Estimated forecast sales
Estimated forecast purchases
Net forecast transaction exposure
Forward exchange contracts
Net exposure 30 June 2015
Foreign exchange rates at balance date
2014
Trade payables
Cash
Net balance sheet exposure
Estimated forecast sales
Estimated forecast purchases
Net forecast transaction exposure
Forward exchange contracts
Net exposure 30 June 2014
Foreign exchange rates at balance date
Currency translation risk
2015
Net liabilities
2014
Net assets/(liabilities)
USD
NZD
EUR
RMB
(4,747)
1,227
(3,520)
–
(61,372)
(61,372)
31,250
(33,642)
0.7680
(2,350)
5
(2,345)
–
(47,219)
(47,219)
37,686
(11,878)
0.9420
–
–
(1)
445
444
13,875
(4,398)
9,477
(3,320)
6,601
1.1294
(1)
4
3
11,802
(5,491)
6,311
(3,485)
2,829
1.0761
(3,009)
2,524
(641)
57
(584)
–
(2,930)
(2,930)
–
(3,514)
0.6866
(318)
4
(314)
–
(3,212)
(3,212)
–
(3,526)
0.6906
–
–
(465)
595
130
(9,388)
(9,388)
4,931
(4,327)
4.7661
(90)
1
(89)
–
(6,123)
(6,123)
2,566
(3,646)
5.8466
(209)
(313)
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT 25. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
Market risk (continued)
(b) Foreign currency risk (continued)
(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 and profit and loss is not material.
Fair values
The fair value of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position is as follows:
In thousands of AUD
Cash and cash equivalents
Trade and other receivables
Interest rate swaps:
Liabilities
Forward exchange contracts:
Assets/(liabilities)
Unsecured cash advance facilities
Trade and other payables
(c) Estimation of fair values
Carrying amount
2015
Fair value
2015
Carrying amount
2014
33,043
63,557
33,043
63,557
29,873
83,015
Fair value
2014
29,873
83,015
(1,872)
(1,872)
(1,521)
(1,521)
328
(125,000)
(45,727)
(75,671)
328
(125,000)
(45,727)
(75,671)
(1,205)
(175,000)
(58,539)
(123,377)
(1,205)
(175,000)
(58,539)
(123,377)
The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected in the table.
(i) Derivatives
Forward exchange contracts are marked to market by discounting the contractual forward price and deducting the current spot rate. For interest rate
swaps broker quotes are obtained. These quotes are back tested using discounted cash flow techniques. Where discounted cash flow techniques are
used, estimated future cash flows are based on management’s best estimates and the discount rate is a market related rate for a similar instrument
at the balance sheet date. Where other pricing models are used, inputs are based on market related data at the balance sheet date.
(ii) Loans and borrowings
The notional amount of the interest-bearing loans is deemed to reflect the fair value. The interest-bearing loans have a three year term.
(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)
Interest rates used for determining fair value
The consolidated entity uses the government yield curve as of 30 June 2015 plus an adequate constant credit spread to discount financial
instruments. The interest rates used are as follows:
Derivatives
Loans and borrowings
2015
2014
2.10% – 2.75%
2.64% – 3.28%
2.92% – 3.45%
4.50% – 4.85%
69
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 25. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
Fair values (continued)
(c) Estimation of fair values (continued)
(v) Fair value hierarchy
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)
Level 1
Level 2
Level 3
Total
In thousands of AUD
30 June 2015
Forward contracts used for hedging
Interest rate swaps used for hedging
30 June 2014
Forward contracts used for hedging
Interest rate swaps used for hedging
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
–
–
–
–
–
–
328
(1,872)
(1,544)
(1,205)
(1,521)
(2,726)
–
–
–
–
–
–
2015
15,764
27,914
92
43,770
328
(1,872)
(1,544)
(1,205)
(1,521)
(2,726)
2014
13,374
23,255
1,029
37,658
The consolidated entity leases various plant and equipment, property and motor vehicles under operating leases. These leases typically run for a
period of 2 to 8 years, with an option to renew the lease after that date. None of these leases include contingent rentals.
During the financial year ended 30 June 2015, $15,419,000 (2014: $15,347,000) 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
Between one and five years
2015
2014
2,009
601
2,610
2,114
–
2,114
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT 28. CONTINGENCIES
Brivis Product Defect Issues
Following the sale of Brivis to Rinnai on 2 February 2015, GWA Group Limited (GWA) continues to remain responsible for the liability and
management of the known Brivis product defect issues. These products were subject to recalls commenced by the former owner, Carrier,
for Brivis evaporative coolers manufactured between August 2000 and November 2003 due to defective components. GWA has provided an
indemnity to Rinnai in the sale agreement for these issues.
A dispute exists between GWA and Carrier for the recovery of costs and breach of warranty associated with the Brivis product defect issues
under the Brivis purchase agreement dated March 2010. A progress claim in the amount of $2,876,000 (excluding GST) was submitted to
Carrier in June 2015 under the Brivis purchase agreement. No payment has been received from Carrier to date and the matter remains under
dispute. GWA has not recognised the progress claim against Carrier.
Provision has been made in respect of GWA’s obligations that are known to exist and can be reliably measured at 30 June 2015. The provision
is the current best estimate of the costs arising from open product liability claims. There are, however, a number of aspects relating to this
matter which have not been finalised including the potential for future product liability claims and the resolution of the dispute with Carrier.
At the date of this report, it is not possible to determine when all of these aspects will be finalised and potential outcomes.
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’ reports.
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 profit or loss and other 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 2015, is set out in the table below.
Summarised statement of profit or loss and other comprehensive income and retained profits
In thousands of AUD
Sales revenue
Cost of sales
Gross profit
Operating expenses
Finance income
Finance expenses
Profit before tax
Tax expense
Profit after tax from continuing operations
Loss after tax from discontinued operations (refer Note 3)
Net (loss)/profit
Total comprehensive (loss)/income, net of tax
Retained earnings at beginning of year
Dividends recognised during the year
Share-based payments, net of tax
(Accumulated losses)/retained earnings at end of the year
2015
410,393
(236,057)
174,336
(153,906)
933
(8,251)
13,112
(3,932)
9,180
(26,072)
(16,892)
(16,892)
15,348
(35,251)
307
(36,488)
2014
Restated
379,029
(224,099)
154,930
(100,464)
681
(11,883)
43,264
(11,337)
31,927
(12,355)
19,572
19,572
14,292
(18,392)
(124)
15,348
71
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
29. DEED OF CROSS GUARANTEE (CONTINUED)
Statement of financial position
In thousands of AUD
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Assets classified as held for sale
Total current assets
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
Liabilities associated with assets classified as held for sale
Total current liabilities
Intercompany payables
Loans and borrowings
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
(Accumulated losses)/retained earnings
Total equity
2015
2014
31,328
60,599
80,924
2,486
15,339
190,676
–
11,113
21,879
13,774
312,507
318
359,591
550,267
46,445
9,496
7,516
40,891
6,023
110,371
2,993
125,000
9,334
18
137,345
247,716
302,551
337,942
1,097
(36,488)
302,551
27,938
123,629
109,925
2,054
–
263,546
36,023
11,113
13,776
57,939
364,625
673
484,149
747,695
103,981
2,859
11,685
9,802
–
128,327
–
175,000
13,236
7,784
196,020
324,347
423,348
408,100
(100)
15,348
423,348
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT 30. CONSOLIDATED ENTITIES
Parent entity
GWA Group Limited
Subsidiaries
API Services and Solutions Pty Limited
Austral Lock Pty Ltd
Brivis Climate Systems Pty Ltd*
Canereb Pty Ltd
Caroma Holdings Limited
Caroma Industries (NZ) Limited
Caroma International Pty Ltd
Corille Limited
Dorf Clark Industries
Dorf Industries (NZ) Ltd
Dux Manufacturing Ltd*
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
McIlwraith Davey Pty Ltd
Sebel Furniture Holdings Pty Ltd
Starion Tapware Pty Ltd
Stylus Pty Ltd
Warapave Pty Ltd*
Parties to cross
guarantee
Country of
incorporation
Ownership interest
2015
2014
Y
Y
Y
N
N
Y
N
Y
Y
Y
N
N
Y
Y
Y
Y
Y
N
Y
N
Y
Y
Y
Y
Y
N
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
China
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
–
100%
100%
100%
100%
100%
100%
100%
–
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
–
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
* These entities were sold or classified as held for sale during the year ended 30 June 2015, refer to Note 3. Dux Manufacturing Ltd and Brivis Climate Systems Pty Ltd
were released from their obligations under the Deed by executing Notices of Disposal on 19 December 2014 and 2 February 2015 respectively.
73
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31. PARENT ENTITY DISCLOSURES
As at, and throughout, the financial year ended 30 June 2015 the parent company of the consolidated entity was GWA Group Limited.
In thousands of AUD
Results of the parent entity
Profit for the year
Other comprehensive income
Total comprehensive income for the year
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
2015
17,712
–
17,712
–
643,089
–
301,590
337,942
2,180
1,377
341,499
Company
2014
18,089
–
18,089
–
627,810
2,822
199,294
408,100
1,807
18,609
428,516
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
Apart from the contingent liability referenced in note 28, the directors are not aware of any contingent liabilities of the parent entity
as at reporting date (2014: $nil).
Capital expenditure commitments
The parent entity has not entered into contractual commitments on behalf of wholly-owned subsidiaries for the acquisition of property,
plant or equipment as at reporting date (2014: $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 (2014: $nil). Further details of the Deed of Cross Guarantee and the subsidiaries subject to the Deed are disclosed in Notes 29 and 30.
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED • 2015 ANNUAL REPORT
32. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
In thousands of AUD
Cash flows from operating activities
(Loss)/profit for the year
Adjustments for:
Depreciation
Amortisation
Share-based payments
Foreign exchange loss/(gains) unrealised
Net financing costs
Impairment loss
(Gain)/loss on sale of property, plant & equipment and intangible assets
Loss on sale of discontinued operations
Income tax expense
Operating profit before changes in working capital and provisions
Decrease in trade and other receivables
Decrease/(increase) in inventories
Increase in trade and other payables
Increase in provisions and employee benefits
Net interest paid
Income taxes paid
Net cash from operating activities
33. RELATED PARTIES
Key management personnel compensation
2015
2014
(16,183)
18,596
8,620
3,927
679
734
7,329
24,204
(7,265)
3,634
1,398
27,077
(4,627)
64
2,418
37,219
62,151
(7,384)
(11,262)
43,505
12,815
4,748
(235)
(373)
11,201
17,000
635
–
14,026
78,413
(1,007)
(32,717)
8,515
930
54,134
(10,636)
(9,600)
33,898
The key management personnel compensation included in ‘personnel expenses’ (see note 7) are as follows:
In AUD
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
Other long term employee benefits
2015
5,558,823
288,574
–
569,287
(127,312)
6,289,372
2014
5,059,721
294,123
349,195
421,685
(58,187)
6,066,537
Individual directors and executives compensation disclosures
Information regarding individual and executives compensation is provided in the Remuneration Report section of the Directors’ Report.
34. SUBSEQUENT EVENTS
Further to the announcement on 29 June 2015 regarding the sale of Gliderol, the sale was successfully completed on 31 July 2015.
Other than the matter noted above, to the directors’ best knowledge, there are no events that have arisen subsequent to 30 June 2015
that will, or may, significantly affect the operation or results of the consolidated entity.
75
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DIRECTORS’ DECLARATION
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 2015 and of its performance for the financial year ended
on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
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 2015.
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 18 August 2015.
Signed in accordance with a resolution of the directors:
Darryl D McDonough
Director
Peter C 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 2015 there have been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Sydney 18 August 2015
Greg Boydell
Partner
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380GWA GROUP LIMITED • 2015 ANNUAL REPORT
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF GWA GROUP LIMITED
REPORT ON THE FINANCIAL REPORT
Independence
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 2015, and consolidated statement
of profit or loss and other 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.
In conducting our audit, we have complied with the independence
requirements of the Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a) The financial report of GWA Group Limited 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 2015 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 in pages 18 to 31
of the directors’ report for the year ended 30 June 2015. 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 2015, complies with Section 300A of the
Corporations Act 2001.
KPMG
Sydney 18 August 2015
Greg Boydell
Partner
77
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES ABN 15 055 964 380
OTHER STATUTORY INFORMATION AS AT 17 AUGUST 2015
STATEMENT OF SHAREHOLDING
In accordance with the Australian Securities Exchange Listing Rules, the directors state that, as at 17 August 2015, 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
1,638
4,131
1,825
1,317
80
8,991
750,429
11,424,071
13,247,648
27,733,438
225,792,400
278,947,986
%
0.27
4.10
4.75
9.94
80.94
100.00
The number of shareholders with less than a marketable parcel of 217 shares is 565.
VOTING RIGHTS
The voting rights attached to shares are as set out in clause 9.20 of the Company’s Constitution. Subject to that clause, at General Meetings
of the Company:
1. On a show of hands, every person present as a member, proxy, attorney or representative of a member has one vote; and
2. On a poll, every person present as a member, proxy, attorney or representative of a member, has one vote for each fully paid share.
SUBSTANTIAL SHAREHOLDERS
The following information is extracted from the Company’s Register of Substantial Shareholders as at 17 August 2015:
Shareholder
Ellerston Capital Limited
Investors Mutual Limited
AMP Limited
Number of Shares*
% Shares on Issue
40,097,992
20,490,910
14,299,586
14.37%
7.35%
5.13%
* The share balances have been adjusted for the share consolidation effective on 9 June 2015
20 LARGEST SHAREHOLDERS AS AT 17 AUGUST 2015
Shareholder
Number of Shares
% Shares on Issue
J P Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
RBC Investor Services Australia Nominees Pty Limited
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