Annual
Report
2021
In this
report
14
Directors’
Report
2
Five Year
Financial
Summary
3
Company
Profile
7
Managing
Director’s
Review of
Operations
36
Financial
Report
5
Chairman’s
Report
12
Board of
Directors
82
Other
Statutory
Information
83
Shareholder
Information
FY21 Performance Highlights
GWA delivers net profit of $42.3 million before significant items
Continued operational discipline in response to challenging market conditions
in the first half, followed by a stronger result in the second half as residential
construction activity improved
Solid full year result provides momentum into FY22
NORMALISED1 FROM CONTINUING OPERATIONS
A$ million excludes significant items
› Strong financial position
maintained with balance sheet
metrics and operating cash
flow remaining solid, ensuring
GWA remains well positioned as
market conditions improve
› The continued delivery of
integration synergies and
enhanced geographical revenue
and earnings diversification
reinforces the success of the
Methven acquisition
› New ranges of taps, showers,
accessories and sanitaryware
were launched, leveraging
GWA’s centres of excellence in
Auckland and Sydney
› GWA has evolved its strategy
with the aim to be the trusted
and integrated solutions partner
in the delivery of sustainable
water solutions for bathrooms,
kitchens and laundries
› Sustainability is fundamental
to how GWA conducts business
by operating in a sustainable
manner and by providing
leading edge sustainable
water saving solutions for the
built environment
1 Normalised is before $(7.3)m in significant items (after tax).
2 Reported result includes $(7.3)m in significant items (after tax) relating to costs associated with the consolidation of New Zealand
warehouses, sale of the China plant, Methven integration costs, and Enterprise Resource Planning (ERP)/Customer Relationship
Management (CRM) system project costs.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 1
REVENUE$405.7 million 1.8%EBITDA$88.4 million 4.1%EBIT$68.5 million 4.7%REPORTED2 NET PROFIT AFTER TAX FOR THE PERIOD $35.1 millionNPAT$42.3 million 5.8%OPERATING CASH FLOW$78.3 million 28.5%EPS$16.0c per share 1.0c per shareFINAL DIVIDEND 6.5 cents per share, full-year dividend12.5 cents per share, fully franked Five Year Financial Summary
CONTINUING OPERATIONS(1)
2016/17
$’000
2017/18
$’000
2018/19(7)
$’000
2019/20(7)
$’000
2020/21(7)
$’000
Revenue from continuing operations
350,437
358,622
381,730
398,704
405,736
Earnings before interest, tax, depreciation,
amortisation (EBITDA) and significant items(2)
EBITDA margin (%)
Depreciation and amortisation
78,423
22.4
80,171
22.4
92,986
92,206
88,401
24.4
23.1
21.8
(4,122)
(3,929)
(14,869)
(20,366)
(19,919)
Earnings before interest, tax and significant items (EBIT)(2)
74,301
76,242
78,117
71,840
68,482
EBIT margin (%)
Interest (net)
21.2
21.3
(5,338)
(4,813)
20.5
(5,811)
18.0
16.9
(8,644)
(8,019)
Normalised profit before tax(2)
68,963
71,429
72,306
63,196
60,463
(%)
Tax expense on normalised profit
Normalised effective tax rate (%)
Normalised profit after tax(2)
Significant items after tax
Net profit after tax from continuing operations
Profit from discontinued operations (net of income tax)
Net profit after tax for the period
Net cash from operating activities
Capital expenditure
Net debt(3)
Shareholders' equity
OTHER RATIOS AND STATISTICS
Interest cover (times)(4)
Gearing: net debt/(net debt + equity) (%)(8)
Return on shareholders' equity (%)
Dividend payout ratio – Group (%)(5)
Dividend payout ratio – Normalised Continuing (%)(5)
Dividend per share (cents)(6)
Franking (%)
Share price (30 June) ($)
Dividend yield at 30 June share price (%)
Number of employees
Basic earnings per share (cents) – Group
Basic earnings per share (cents) – Continuing
Normalised basic earnings per share (cents) – Continuing
19.7
19.9
18.9
15.9
14.9
(19,712)
(21,290)
(21,467)
(18,273)
(18,140)
28.6
29.8
29.7
28.9
30.0
49,251
50,139
–
–
50,139
4,113
50,839
(7,597)
43,242
50,802
44,923
42,323
(1,037)
(7,267)
43,886
35,056
–
–
54,252
94,044
43,886
35,056
39,158
12,475
97,729
67,630
60,952
78,298
4,326
12,317
5,147
141,930
144,841
104,804
49,251
4,420
53,671
57,171
5,281
79,756
320,603
333,401
286,756
279,731
296,611
17.1
19.9
16.7
81.1
88.4
16.5
100
3.15
5.2
760
20.3
18.7
18.7
19.6
22.7
16.3
87.4
94.7
18.0
100
3.40
5.3
757
20.6
19.0
19.0
23.5
27.5
32.8
51.9
96.0
18.5
100
3.42
5.4
665
35.6
16.4
19.3
13.6
28.4
15.7
69.2
67.6
11.5
100
2.77
4.2
629
16.6
16.6
17.0
15.5
21.5
11.8
94.6
78.1
12.5
100
2.77
4.5
578
13.3
13.3
16.0
(1) The Door and Access Systems’ business was sold with an effective
(3) Net debt reflects the Group’s borrowings and bank guarantees less
date of 3 July 2018. Accordingly, the operating activities of Door
and Access Systems were classified as discontinued in FY18 and
FY17, and presented separately from the results of continuing
operations. Continuing operations includes the contribution from
Methven from the effective date of acquisition, 10 April 2019.
(2) 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 reports 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 the relevant
years’ financial reports.
cash (including cash classified within assets held for sale).
(4) Interest cover (times) is calculated using EBITDA excluding non-
recurring significant items divided by net interest expense.
(5) Dividend payout ratio is calculated as the Dividend per share (cents)
divided by the relevant Basic EPS. Basic EPS is calculated using the
weighted average number of ordinary shares at 30 June.
(6) Dividend per share includes ordinary and special dividends.
(7) AASB16 Leases and the May 2020 IFRS Intepretation Committee
decision on ‘Multiple Tax Consequences of Recovering an Asset’ have
been adopted from 1 July 2019 (FY20), with retrospective restatement
of FY19 made. FY17-FY18 has not been restated.
(8) Equity for the purposes of gearing excludes the retained earnings
impact from the adoption of the May 2020 IFRS Intepretation
Committee decision on ‘Multiple Tax Consequences of Recovering
an Asset’.
2 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Company Profile
We make life better for all our stakeholders
GWA Group Limited (GWA) listed on the Australian Securities
Exchange in May 1993. GWA is a leading innovator, designer
and supplier of product solutions, services and intelligent
technology focused on the delivery of sustainable water
solutions for bathrooms, kitchens and laundries.
We own and distribute market-leading brands and state of
the art product solutions across our ranges of sanitaryware,
tapware, showers, basins, baths, kitchen sinks, laundry tubs,
bathroom/kitchen accessories and valves. We have an
intelligent bathroom system incorporating IoT smart water
management solutions.
GWA operates a central-led business with corporate
functions supporting our sustainable water solutions
business. We have sale and distribution facilities across
our primary end markets of Australia, New Zealand, United
Kingdom and China.
We are highly respected within the building industry for
innovation, water efficiency and safety, product reliability
and quality, technical expertise and superior service.
We maintain cost efficient long-term supply agreements
with selected, exclusive manufacturing partners across Asia
and Europe. GWA has an experienced senior management
team in R&D, design, brand building, customer engagement,
supply and distribution.
GWA remains committed to growing shareholder value
through our focus on making everyday water experiences
extraordinary within our sustainable water solutions
business which has strong market positions, market-leading
brands and significant growth opportunities.
GWA is a member of the ASX 300 index of listed
Australian companies.
OUR PURPOSE
OUR STRATEGY
OUR CULTURAL PILLARS
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 3
OUR BRANDSMaking everyday water experiences extraordinary – today, and for tomorrow.To be the trusted and integrated solutions partner in the delivery of sustainable water solutions for bathrooms, kitchens and laundries.We are one team We are customer focused We care for each other Strategy on a Page
Making everyday water experiences extraordinary —
today, and for tomorrow.
STRATEGY
To be the trusted and integrated solutions partner in the delivery of sustainable water solutions
for bathrooms, kitchens and laundries.
FOCUS
1
2
3
4
5
Deliver great
customer
experiences.
Win the
plumber.
Innovate
through
design and
partnerships.
Grow our
after-market
offerings.
Focus on
strategic
growth
opportunities.
FOUNDATION
DIGITAL
Investment in digital opportunities
to deliver a superior customer
experience.
CATEGORY SOLUTIONS
ALIGNED ORGANISATION
Clearly structured brand portfolio
and sustainable product mix.
The right people in the right roles,
focused on the right outcomes.
OUR CULTURAL PILLARS
We are one team.
We are customer focused.
We care for each other.
4 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Chairman’s Report
GWA’s performance during the year reflected the
Company’s continued disciplined response to the impact
of weaker construction markets in the first half, followed
by a stronger result in the second half as residential
construction activity showed signs of improvement.
FY21 RESULTS
Revenue increased by 1.8 per cent, reflecting improved
residential conditions in the second half partially offset by
continued weakness in the Australian Commercial segment.
Sales in our New Zealand and international businesses
continued to increase strongly in the second half,
demonstrating the enhanced diversity and scale the
successful acquisition and integration of Methven has
brought to the Company.
Normalised Group EBIT before significant items declined
by 4.7 per cent to $68.5 million compared to $71.8 million
for the prior year. Earnings were impacted by the ongoing
decline in the higher-margin Commercial segment, only
partially offset by our continued cost-out and supply
chain efficiency initiatives and improved residential
construction activity.
Normalised Group Net Profit After Tax was $42.3 million
compared to $44.9 million for the prior year.
Reported Net Profit After Tax for the year was $35.1 million
which includes significant items of $7.3 million after tax.
STRONG BALANCE SHEET MAINTAINED — FULL YEAR
DIVIDEND UP 9 PER CENT ON PRIOR YEAR
Net debt as at 30 June 2021 was $104.8 million which was
28 per cent below the prior year’s total of $144.8 million.
GWA maintains total Group facilities of $267 million while
financial metrics, including leverage, gearing and interest
cover ratios all remain solid and have improved year
on year.
In line with the Company’s dividend policy, the Board
declared a final dividend of 6.5 cents per share, bringing
the full-year dividend to 12.5 cents per share fully-franked,
compared with 11.5 cents per share for the prior year. The
full year dividend represents a normalised payout ratio
of 78 per cent and reported dividend payout ratio of
95 per cent.
The Company’s Dividend Reinvestment Plan will not be
offered to shareholders for the final dividend.
NEW MANAGING DIRECTOR
The Board was pleased to welcome the appointment of
Urs Meyerhans as Managing Director and CEO effective
1 July 2021.
Urs is a skilled executive who brings extensive international
industry experience in fast moving consumer goods,
manufacturing, professional services, mining, engineering
and construction in Australia, Europe, USA, and
Asia Pacific.
Urs was acting CEO from 1 March 2021 until 1 July 2021
and in a relatively short period impressed the Board
with his commitment to openness, attention to detail
and an unrelenting focus on the future of the business.
He demonstrated he possesses the skills, knowledge,
aptitude, attitude and capability to lead the management
team to deliver future success for GWA’s shareholders.
On behalf of the Board I thank former Managing Director
and CEO, Tim Salt, for his contribution to the business and
wish him success in his new endeavours.
CONTINUED FOCUS ON SUSTAINABILITY
GWA is committed to sustainable practices throughout
our operations and we continue to work with our
key stakeholders and communities to deliver on
that commitment.
A major achievement during the year was the successful
accreditation of all GWA sites to the global safety standard,
ISO45001.
Safety Homecoming training is now in its fourth year and
includes all employees across Australia, New Zealand and
for the first time the United Kingdom. Safety Homecoming
is an internal safety awareness/training programme
involving safety workshops with all employees.
GWA measures a range of balanced safety performance
indicators. We are focused on identifying, implementing
and monitoring our activities to ensure we eliminate unsafe
acts and practices.
GWA’s Total Injury Frequency Rate has trended lower since
FY18 and demonstrated a significant reduction in FY20
to 0.9. Despite our ongoing focus on safety, there was a
disappointing increase in the rate to 4.3 in FY21, primarily
as a result of an increase in manual handling injuries.
Additional manual handling training has been implemented
to reduce this. Workplace safety remains an ongoing focus
for the Board and the Group’s executives.
GWA is committed to promoting diversity and inclusion
through the implementation of policies and initiatives
to achieve a diverse workforce. Females comprised 43
per cent of GWA’s overall workforce for the year which
represented an increase from 42 per cent for the prior year.
We remain focused on those areas of sustainability where
we believe we can make the most impact. For GWA that
includes providing innovative sustainable solutions for
the built environment with a clear focus on sustainable
water solutions.
During FY21, we continued the roll-out of our intelligent
bathroom system, Caroma Smart Command® which has
now been installed in 127 sites – up from 49 in the prior year.
Meanwhile, in response to ongoing concerns relating to
reducing risks of transmission and driving more hygienic
outcomes for bathroom users, GWA launched Caroma
GermGard®. This is a unique, proprietary antimicrobial
formula that kills 99 per cent of bacteria it comes
into contact with when applied to products. Caroma
GermGard® is applicable for households and commercial
premises, particularly in care applications such as hospitals,
aged care facilities and accessible or ambulant bathrooms.
GWA will publish its third Sustainability Report in
September 2021 providing further details on our policies
and initiatives in these areas.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 5
EXECUTIVE REMUNERATION
Net Debt ($m)
20/21
19/20
18/19
17/18
16/17
0
40
80
120
160
GWA’s strong financial position has been maintained, ensuring the
Company is well positioned as markets improve. Net debt as at
30 June 2021 was $104.8 million which was 28 per cent below the
prior year’s total of $144.8 million.
Dividend per share (cents)
20/21
19/20
18/19
17/18
16/17
0
5
10
15
20
In line with GWA’s dividend policy, the Board declared a final
dividend of 6.5 cents per share, bringing the full-year dividend to
12.5 cents per share fully-franked, compared with 11.5 cents per share
for the prior year.
Normalised EBIT from Continuing Operations ($m)
20/21
19/20
18/19
17/18
16/17
40
50
60
70
80
80
Normalised EBIT declined by 4.7 per cent to $68.5 million compared
to $71.8 million for the prior year. Revenue, EBIT and EBIT margin
increased in the second half over the first half which provides positive
momentum into FY22.
During the year, the Board determined the remuneration
arrangements for the incoming Managing Director,
Mr Urs Meyerhans, who was appointed on 1 July 2021.
The remuneration arrangements for Mr Meyerhans signaled
a significant change in the variable remuneration mix for
FY22 with a greater weighting being placed on long-term
incentives coupled with a focus on short-term financial
targets and critical non-financial KPIs.
This change has been extended to the members of
the Executive team for FY22. The Board believes the
changes will provide better alignment between executive
remuneration outcomes and long-term shareholder wealth
creation. Full details of the changes are included in the
Remuneration Report.
The Group’s remuneration framework is fit for purpose and
aligned with our growth strategy and market practice. The
Board seeks to remunerate executives on a fair basis that
is sufficient to attract and retain a high-quality Executive
team with the requisite experience, knowledge, skills
and judgement required to grow 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.
Fixed remuneration for executives was frozen for FY21.
Due to the disciplined response to weaker markets in
the first half of FY21, followed by an improved financial
performance in the second half of FY21 and successful
execution of key business activities, the executives were
eligible for Short-Term Incentive payments. The financial
performance was achieved despite the continuing negative
impacts of COVID-19.
CONCLUSION
The significant degree of restructuring GWA has
undertaken over the past number of years has simplified
our business, reduced our cost base, and strengthened our
supply chain capability.
As a result, the business maintains strong operational
leverage to an expected improvement in the residential
detached construction markets in FY22.
While the timing of any recovery in Commercial
construction activity in Australia remains uncertain, our
order bank remains strong and we are well placed to
capitalise on an eventual improvement in this segment.
The ongoing effects of COVID-19 lockdowns, particularly
in Sydney/NSW and Melbourne/Victoria, continue
to create uncertainty regarding potential impacts on
construction markets.
The business continues to be supported by a solid balance
sheet and strong cashflow generation which enables the
continued generation of returns to shareholders.
I want to acknowledge and thank Urs, our executive
leadership team and all employees across the Group for
their significant contribution over the year.
Our employees have continued to manage a difficult
operating environment by supporting each other and
our customers during the year and I commend them for
their efforts.
To our shareholders, thank you for your continuing support
of GWA.
6 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Managing Director’s
Review of Operations
I am delighted to present my first Review of Operations as
Managing Director and CEO of GWA Group.
Since joining the company in March 2021, I have been
greatly impressed by the calibre of our people and their
unwavering dedication to delivering outstanding services
and products for our customers.
Despite the limitations of COVID-19, I have travelled to
as many sites and visited as many of our customers and
suppliers as possible.
Those visits have reinforced my firm belief that GWA
retains a strong competitive advantage with market-
leading brands, superior quality products, and a history and
ongoing capability of delivering innovative water solutions
for the built environment.
We remain well placed to leverage this capability and I look
forward to sharing the progress of our strategy to deliver
earnings momentum and shareholder returns over the
medium term.
SUMMARY OF FY21
FY21 was a challenging year; however, continued
operational discipline and improved residential construction
activity enabled GWA to deliver an improved performance
in the second half over the first half of FY21.
This provides a strong platform for GWA to leverage the
expected improvement in detached residential construction
markets in FY22.
GWA continues to enhance the diversity of its revenue and
earnings base with strong growth in our New Zealand and
International businesses.
Our commercial forward order bank continues to
strengthen and while the timing of commercial project
commencements remains uncertain, GWA is well
positioned to leverage a turnaround in this segment.
Notwithstanding the weaker overall markets in FY21, GWA
continued to generate strong cashflow and retains its solid
financial position.
That has enabled an increase in the full year dividend to
12.5 cents per share fully-franked.
HEALTH & SAFETY
A key focus of the Group’s safety strategy during the
year was the transition to ISO45001, which is recognised
as the global best practice safety standard. All GWA
sites have been successfully accredited to this standard.
The standardisation of operating procedures to deliver a
consistent and measurable approach to safety across the
Group was a significant undertaking and this was achieved
through the dedicated efforts of our personnel.
Following an improvement in the Total Injury Frequency
Rate since FY18, and a significant reduction in FY20, we
experienced an increase in the rate from 0.9 in FY20 to
4.3 in FY21, primarily as a result of an increase in manual
handling injuries, which is a disappointing result. We are
renewing our focus on behaviours and have implemented
customised training strategies, revised our standard
operating procedures and trained staff to address the root
causes to reduce manual handling injuries.
GWA recorded a Medically Treated Injury Frequency Rate
of 0.0 for FY21.
FY21 GROUP FINANCIAL RESULTS
NORMALISED — EXCLUDES SIGNIFICANT ITEMS
A$ million
(Excludes Significant Items)
Revenue
EBITDA
EBIT
EBIT Margin (%)
NPAT
FY20
398.7
92.2
71.8
18.0%
44.9
FY21 % change
405.7
88.4
68.5
1.8%
(4.1)%
(4.7)%
16.9% (1.1)ppts
42.3
(5.8)%
Group normalised results exclude significant items. In FY21
significant items were $9.5 million (pre-tax) and included
costs associated with the consolidation of New Zealand
warehouses, sale of the China plant, Methven integration
costs, and Enterprise Resource Planning (ERP)/Customer
Relationship Management (CRM) system project costs.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 7
Group revenue increased by 1.8 per cent to $405.7 million,
reflecting improved residential construction activity in
Australia in the second half and continued sales
momentum in the New Zealand and United Kingdom
businesses, partially offset by the decline in the Commercial
segment in Australia due to delays caused by COVID-19.
Group revenue increased by 5.7 per cent while Group
EBIT lifted by 13.4 per cent in 2H FY21 compared to 1H
FY21. Group EBIT margin in 2H FY21 increased by 120
basis points to 17.5 per cent compared to the first half,
demonstrating GWA’s positive leverage to improving
market conditions.
Revenue in Australia declined by 1 per cent for the year
with 1H FY21 sales down 6.2 per cent compared to 1H FY20,
followed by an improvement in the second half with 2H
FY21 sales increasing by 9.3 per cent on 1H FY21.
The retail-focused merchant channel continued to out-
perform the trade/commercial channel while sales to the
builders’ segment increased in 2H FY21 as a result of the
increase in residential detached housing activity.
However, sales in the commercial and multi residential
segments continued to be soft.
The New Zealand and International markets performed
well with revenue up 14.5 and 12.4 per cent respectively,
continuing the strong momentum from the first half.
The growth in these markets demonstrates the success
of the Methven acquisition in driving enhanced scale and
diversification across the group.
Normalised Group EBIT before significant items declined
by 4.7 per cent to $68.5 million compared to $71.8 million
for the prior year.
Volume and mix were impacted by COVID-19, primarily
in 1H FY21. In addition, the continued decline in the
commercial segment in Australia impacted product mix
as this segment represents a higher margin category
for GWA.
Price increases of approximately 5 per cent were
implemented from August 2020, which partially mitigated
the impact of the weaker Australian dollar on product
costs. The average A$/US$ exchange rate for FY21 was
69.3 cents compared to 70.8 cents for the prior year.
GWA successfully mitigated $7 million of the EBIT
decline through the delivery of the previously announced
$3 million in Methven synergies and supply chain savings
of $4 million.
EBIT margin was 16.9 per cent compared to 18.0 per cent
for the prior year. The reduction in margin primarily reflects
the decline in the commercial segment which is a higher
margin segment.
Notwithstanding the full year decline in earnings, revenue,
EBIT and EBIT margin increased in the second half over the
first half which provides positive momentum into FY22.
FULL YEAR DIVIDEND 12.5 CENTS, FULLY FRANKED
The Board declared a final dividend of 6.5 cents per share,
fully-franked, bringing the full-year dividend to 12.5 cents
per share, fully-franked compared to 11.5 cents per share for
the prior year.
The record date for entitlement to receive the final
dividend will be 8 September 2021 with the payment date
of 6 October 2021.
The full-year dividend represents a payout ratio of
normalised profit of 78 per cent and reported profit of 95
per cent, and is consistent with our policy to pay dividends
in the range of 65-85 per cent of net profit after tax.
The policy strikes the appropriate balance of providing
immediate returns to shareholders and maintaining the
Company’s strong financial position for current conditions
and for continued investment in growth opportunities.
As part of the Company’s capital management approach,
the Dividend Reinvestment Plan will not be offered to
shareholders for the FY21 final dividend.
STRONG FINANCIAL POSITION MAINTAINED
GWA’s balance sheet metrics remain strong, ensuring the
Company remains well positioned as markets improve.
Net debt as at 30 June 2021 was $104.8 million which was
28 per cent below the prior year’s total of $144.8 million.
GWA’s credit metrics remain solid. The Company’s gearing
ratio of net debt/net debt plus equity was 21.5 per cent
compared to 28.4 per cent at 30 June 2020 and leverage
ratio of net debt/EBITDA of 1.4 times compared to 1.9 times
at 30 June 2020.
GWA’s interest cover ratio of EBITDA/net interest was
15.5 times at 30 June 2021, an increase from 13.6 times for
the prior year.
Total Group facilities are $267 million, comprising a
multicurrency revolving facility of $227 million which
matures in November 2023 and a $40 million revolving
bilateral facility which is due to mature in October 2021.
The Company plans to seek an extension of the bilateral
facility in Q1 FY22.
8 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
CONTINUED SOLID CASH GENERATION
GWA continues to generate strong operating cashflow,
notwithstanding the weaker market conditions, particularly
in the first half of the year.
Cashflow from operations in FY21 increased by 16 per cent
to $103.1 million compared to $88.6 million in the prior year.
Cash conversion remains strong with the cash conversion
ratio being cashflow from operations divided by normalised
EBITDA of 117 per cent.
Capital expenditure and other investing activities was
$8.0 million in FY21 reflecting the timing of some projects
given the continuing impact of COVID-19 restrictions and
the expensing of ERP/CRM system project costs.
The Group’s capital expenditure programme remains
focused on growth initiatives to drive revenue enhancing
opportunities and cost efficiencies.
SUCCESSFUL METHVEN ACQUISITION AND
INTEGRATION
The continued delivery of integration synergies and
enhanced geographical revenue and earnings diversification
reinforces the success of the Methven acquisition.
Methven sales increased with strong growth in the United
Kingdom providing further earnings and revenue diversity
and enhanced scale.
Cost synergy targets have been realised with $3.0 million
achieved during the year, bringing the total synergies
achieved during FY20/FY21 to over $6 million.
Separately, and as previously advised, the New Zealand
distribution network was reduced from two warehouses to
one with Caroma and Methven deliveries in New Zealand
consolidated to one invoice to improve customer experience.
The Methven China plant was divested in March 2021.
Additional annualised benefits of $3 million are expected
to flow from FY22 with one-off costs of $4 million incurred
in FY21.
KEY BUSINESS ACTIVITIES
During the year new ranges of taps, showers, accessories
and sanitaryware were launched, leveraging the Company’s
centres of excellence in Auckland and Sydney.
This range includes Caroma GermGard® antibacterial
glazing to sanitaryware products to capitalise on
consumers’ heightened concerns over safety and hygiene.
GWA’s touchless intelligent bathroom system, Caroma
Smart Command®, continues to resonate with customers
in the Commercial segment. Caroma Smart Command®
includes a set of Bluetooth-enabled, touchless bathroom
products which enable monitoring and management of
water usage in commercial buildings. The system has now
been successfully installed in 127 sites across Australia/
New Zealand; up from 49 installations in the prior year.
In FY21, 17 sites were migrated to the cloud solution with
further migrations planned for FY22.
GWA continues to build engagement with key merchant
partners through joint business planning and agreed
business plans. This collaboration has resulted in enhanced
ranging of key Caroma and Methven brands both in-store
and behind merchant trade counters.
While the commercial segment remains subdued, GWA’s
commercial forward order book remains strong and is
14 per cent ahead of the prior year. Given the temporary
slow-down in particular sub-segments such as retail and
offices, GWA has refocused on areas which provide near
term growth opportunities including, education, health and
commercial renovation and replacement. These categories
now represent 38 per cent of the commercial order bank
compared to 32 per cent in the prior year.
STRATEGY
GWA has evolved its strategy with the aim to be the
trusted and integrated solutions partner in the delivery
of sustainable water solutions for bathrooms, kitchens
and laundries.
GWA is focused on five key strategic pillars to support
that objective.
These include: delivering great customer experiences by
being easy to do business with and consistent quality
delivery; win the plumber by connecting, deepening and
leveraging our plumbing relationships; innovating through
design and partnerships by leveraging our in-house
capability and global partnerships to modernise our
portfolio to realise value; grow our after market offerings
by building a comprehensive after-market capability;
and focusing on strategic growth opportunities through
a disciplined and targeted investment in local and
international markets.
I look forward to sharing the progress of this strategy with
shareholders as we seek to deliver further sustainable value
over the medium term.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 9
FY22 MARKET OUTLOOK
GWA expects continued momentum in residential
detached activity during FY22 from improved consumer
sentiment, increased dwelling approvals, new housing
loans, higher housing turnover and Government stimulus
(HomeBuilder).
Renovation and Replacement activity (both residential and
commercial) is expected to be stable or slightly positive for
the year.
Commercial completions are however expected to remain
subdued in FY22. Growth in education and health is
expected to be offset by declines in offices and retail.
As confidence and activity increases in the Commercial
segment, GWA remains well placed to capitalise on the
improvement.
The Multi-Residential segment is expected to decline
further as a result of lower net migration resulting from
international border closures and travel restrictions.
The above commentary is dependent on the effects of
the COVID-19 lockdowns, particularly in Sydney/NSW
and Melbourne/Victoria, and the uncertainty thereby
created in construction markets. GWA continually monitors
these impacts and, to the extent possible, will adjust its
operations accordingly.
The Company’s focus in FY22 remains on generating
profitable share growth through customer and consumer
initiatives.
This includes new product development focused on new
bathroom ranges in Caroma (GermGard®, inVogue and
Livewell) ranges and Methven showerware.
Agreed business plans have been implemented with major
merchants targeting enhanced product ranging in core
categories.
GWA continues to focus on leveraging the touchless/
hygiene benefit of Caroma Smart Command® with further
installations and cloud applications expected in FY22,
including showcasing the system at the Australian Pavilion
at the Dubai World Expo to be held later this year.
The Company’s cost base was further reduced in FY21
and an additional $3 million in supply chain savings will be
delivered from FY22.
Price increases of ~3 per cent were implemented across
Australia/New Zealand on 1 July 2021 which, together
with an expected foreign exchange benefit, should offset
expected increases in freight costs for FY22.
GWA maintains strong operational leverage to the market
upturn underpinned by ongoing operational discipline.
GWA monitors keys risks to its future prospects and
implements measures to mitigate these risks, where
possible, which are outlined in Appendix 2 to this report.
The Company will provide an update on trading at the
Company’s Annual General meeting on 29 October 2021.
THE GWA GLOBAL TEAM
The FY21 financial year has presented a number of
challenges for GWA Group. The above achievements are
testimony to our dedicated and hardworking staff.
Wherever I go I see the commitment of our people to
deliver superior solutions to our customers. I would like
to thank my management team and everyone across the
company for their continuing contribution to the success
of GWA Group.
APPENDIX 1 — FY21 GROUP RESULTS
GROUP REPORTED RESULTS — INCLUDES SIGNIFICANT
ITEMS
A$ million
Revenue
EBITDA
EBIT
NPAT
Earnings Per Share (cents)
FY20
FY21 % change
398.7
405.7
1.8%
90.7
70.3
43.9
16.6c
78.9
(13.0)%
59.0
(16.1)%
35.1
(20.1)%
13.3c
(3.3)c
10 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
APPENDIX 2 — RISK MATERIALITY TABLE
GWA’s keys risks to its future prospects, and measures to mitigate these risks, where possible, are outlined in the
following table:
Risk
Monitoring and Mitigation
A significant deterioration in
building activity impacting sales
growth and margins.
A significant movement in the
Australian dollar impacting the
price of imported products
leading to changes in market
pricing to maintain profitability.
Unforeseen disruptions
impacting product supply from
offshore suppliers leading to
reputational damage, lower sales
and loss of market share.
Security risks around external
threats to the digital network,
IT systems and data could
potentially result in adverse
operational, financial and
reputational impacts through
possible system failures and
security/cyber breaches.
Workplace health and safety
risks could potentially result in
physical injury to employees,
contractors or others, or
damage to the Company’s
reputation.
GWA monitors building activity and this is factored into the company’s monthly
reporting, forecasting, annual budget and planning processes.
Approximately 61 per cent of GWA’s revenue is generated from the Renovation and
Replacements segment in Australia which is the largest and most stable segment of
the overall market.
GWA’s forward order book for commercial projects remains solid and is growing with
several major projects secured.
Since the end of the financial year, the New South Wales and Victorian governments
announced new restrictions on business, requiring amongst other things, the cessation
of all construction activities in specified areas in Sydney in response to rising cases of
coronavirus. This is in addition to a range of varying restrictions on public movement in
Australia. The Directors’ continue to assess the uncertain and evolving impact of these
restrictions on GWA’s operations.
GWA monitors foreign exchange rates closely and adopts appropriate mitigation
strategies. Approximately 55 per cent of US dollar exposure is hedged for FY22.
GWA’s contracts with major customers include provisions for pricing changes based
on significant movements in the Australian dollar.
GWA has exclusive long-term supply partnerships with experienced offshore suppliers.
GWA’s supply chain processes include dual-sourcing strategies and access to safety
stock to mitigate the risk of supplier disruption.
GWA has its own employees located in Asia working directly with its supply partners.
The COVID-19 pandemic has led to challenges with container and shipping availability
increasing freight costs and product supply lead times. Mitigations are in place to deal
with these issues.
GWA has established a formal IT security risk and governance framework to address
any gaps.
A cyber breach simulation exercise was held by management during FY21 to test and
refine business continuity plans.
GWA is currently implementing new Enterprise Resource Planning and Customer
Relationship Management systems with enhanced security and protection technologies
with go live scheduled for FY22.
Aligned with its cultural pillar of “We care for each other”, GWA remains committed to
continuous improvement in workplace health and safety performance.
GWA has implemented comprehensive safety systems and processes, communications
with and training of employees, and increased diligence in identifying and removing
safety risks.
GWA achieved ISO45001 International Safety Standard certification across all sites
during FY21.
Major global event (e.g., war,
pandemic) impacting GWA’s
ability to operate, including
workforce, supply chain and
customer service disruptions.
GWA has comprehensive crisis management and business continuity plans in place for
dealing with major global and domestic events. These were successfully activated to
address the COVID-19 pandemic.
The plans guide GWA’s response to COVID-19 and are continually reviewed to ensure
they remain effective.
Adverse impact of climate
change on the GWA business.
GWA is a low emissions intensity entity as its business activities are less carbon
intensive than other sectors.
The physical risks of climate change on the GWA business are regularly assessed with
risk mitigation and contingency plans in place including insurance.
Refer to GWA’s Sustainability Reports for further information.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 11
Board of Directors
DARRYL McDONOUGH
BBUS (ACTY), LLB (HONS), SJD, FCPA, FAICD
PETER BIRTLES
BSC, ACA, MAICD
INDEPENDENT CHAIRMAN AND
NON-EXECUTIVE DIRECTOR
Expertise: Experienced non-executive director
Special Responsibilities: Chairman of Board and
member of Nomination and Remuneration and
Audit and Risk Committees
Mr McDonough was appointed Deputy Chairman and
Non-Executive Director of GWA Group Limited in 2009
and Chairman on 31 October 2013. He has over 30 years
of experience as a director and as a corporate 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. He 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: Engineer, banker and experienced
public company director
Special Responsibilities: Chairman of Nomination
and Remuneration Committee
Mr Mulcahy was appointed a Non-Executive Director
of GWA Group Limited in 2010 and Deputy Chairman
effective 1 November 2013. He is a Fellow of the Institute
of Engineers and is Chairman of Mirvac Group Limited
and a Non-Executive Director of 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 listed companies for the time
periods noted:
• ALS Limited since 2012*
• Mirvac Group Limited since 2009*
* denotes current directorship
12 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
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 2010. He is a Chartered Accountant
and is the former 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. He is Chairman of Universal
Store Holdings Limited and a director of Metcash Limited,
Apparel Group (Hong Kong) Limited, APG & Co Pty Ltd
and Good360 Australia Pty Ltd.
During the past three years Mr Birtles has served as a
director of the following listed companies for the time
periods noted:
• Universal Store Holdings Limited since November 2020*
• Metcash Limited since August 2019*
• Super Retail Group Limited 2006 – 2019
URS MEYERHANS
FCPA, MAICD
MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER
Mr Meyerhans was appointed Managing Director and Chief
Executive Officer of GWA Group Limited on 1 July 2021.
He was formerly the Acting Chief Executive Officer of GWA
Group Limited from 1 March 2021.
Mr Meyerhans has international industry experience in
fast moving consumer goods (FMCG), manufacturing,
professional services, mining, engineering and construction
in Australia, Europe, USA and Asia Pacific. Mr Meyerhans
served as President of Tetra Tech Asia Pacific and Chief
Executive Officer of Coffey International Limited (Coffey)
from 2017 to 2020.
Previous roles have included Chief Operating Officer and
Finance Director of Coffey, Finance Director of Wattyl
Limited as well as executive roles with United Group
Limited and WMC Resources Limited.
Mr Meyerhans is a graduate of the School of Business
Executive Program at Stanford University, and a member of
the Australia Institute of Company Directors and Fellow of
CPA Australia.
JANE McKELLAR
BA, MA (HONS), GAICD
STEPHEN GODDARD
BSC (HONS), MSC
INDEPENDENT NON-EXECUTIVE DIRECTOR
INDEPENDENT NON-EXECUTIVE DIRECTOR
Special Responsibilities: Member of Nomination
and Remuneration Committee
Special Responsibilities: Chairman of Audit
and Risk Committee
Ms McKellar was appointed a Non-Executive Director
of GWA Group Limited on 28 October 2016. She is an
experienced Non-Executive Director in both public and
private companies in Australia and the USA, with key
contributions in customer-focused business transformation,
harnessing digital technology, and brand and marketing
strategies to enhance business performance. Her executive
experience includes senior roles with Unilever, NineMSN,
Microsoft, Elizabeth Arden and Stila Corp. She is presently
a Non-Executive Director at ASX listed Freedom Foods
Group Limited and McPherson’s Limited and, is also on the
Board of the NRMA.
During the past three years Ms McKellar has served as
a director of the following listed companies for the time
periods noted:
• Freedom Foods Group Limited since May 2020*
• McPherson’s Limited since 2015*
• Automotive Holdings Group Limited 2015 – 2019
ALISON BARRASS
BSC, DipMA
INDEPENDENT NON-EXECUTIVE DIRECTOR
Expertise: Extensive experience in FMCG Sector,
governance leadership and innovation
Ms Barrass was appointed a Non-Executive Director
of GWA Group Limited on 24 May 2019. She is a highly
experienced executive across private and publicly-listed
organisations and was most recently the Chair of Methven
Ltd, a leading New Zealand-based business which was
acquired by GWA in April 2019. Her career has included
significant marketing and business transformation roles
with major FMCG companies, including CEO roles with
both Goodman Fielder New Zealand and Griffins Foods.
She is currently a Non-Executive Director of Spark NZ,
Zespri Limited, Rockit International and Chair of Tom and
Luke Limited and Babich Wines Limited.
During the past three years Ms Barrass has served as a
director of the following listed companies for the time
periods noted:
• Spark NZ Limited since 2016*
• Methven Limited 2012 – 2019
* denotes current directorship
Mr Goddard was appointed a Non-Executive Director
of GWA Group Limited on 28 October 2016. He has
more than 30 years’ retail experience having held senior
executive positions with some of Australia’s major retailers.
His executive experience includes Finance Director and
Operations Director for David Jones, founding Managing
Director of Officeworks, and various senior management
roles with Myer. He is Chairman of JB Hi-Fi Limited. He is
also a Non-Executive Director and Chairman of the Audit
and Risk Committee of both Accent Group Limited and
Nick Scali Limited and a former Non-Executive Director
and Chairman of the Audit and Risk Committees of Pacific
Brands Limited and Surfstitch Group Limited.
During the past three years Mr Goddard has served as
a director of the following listed companies for the time
periods noted:
• Nick Scali Limited since March 2018*
• Accent Group Limited since November 2017*
• JB Hi-Fi Limited since August 2016*
RICHARD THORNTON
CA BCOM (ACC) LLB (HONS) LLM
EXECUTIVE DIRECTOR AND COMPANY SECRETARY
Expertise: Chartered Accountant with extensive
governance and finance experience
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 has
extensive leadership, governance and risk management
experience as a long-serving executive at GWA Group
Limited having served over 19 years with the business.
He is a Non-Executive Director of HGT Investments Pty Ltd,
and Great Western Corporation, a diversified Australian
private group.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 13
D D McDonough, Chairman and Non-Executive Director
J F Mulcahy
J F Mulcahy, Deputy Chairman and Non-Executive Director
U B Meyerhans
Directors’ Report
as at 30 June 2021
Your directors present their report on the consolidated
entity of GWA Group Limited (the Group) and the entities
it controlled during FY21.
DIRECTORS
The following persons were directors of the Group during
the financial year and up to the date of this report unless
otherwise stated.
U B Meyerhans, Managing Director and Chief Executive
Officer (appointed 1 July 2021)
P A Birtles, Non-Executive Director
J M McKellar, Non-Executive Director
S T Goddard, Non-Executive Director
A J Barrass, Non-Executive Director
R J Thornton, Executive Director and Company Secretary
T R Salt, Managing Director and Chief Executive Officer
(resigned 26 February 2021)
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 FY21,
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.
14 | GWA GROUP LIMITED | 2021 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
P A Birtles
J M McKellar
S T Goddard
A J Barrass
R J Thornton*
Total**
Notes:
Ordinary Shares
155,234
40,950
-
38,650
10,977
10,000
-
272,311
528,122
* The executive director, Mr R J Thornton, is a holder of Performance
Rights under the GWA Group Limited Long Term Incentive Plan. For
details of the Performance Rights held, please refer to section 7.2.1 of
the Remuneration Report.
** Section 7.3.3 of the Remuneration Report sets out the number of
shares held directly, indirectly or beneficially by key management
personnel or their related entities at balance date as prescribed in
Accounting Standard AASB 124, this being 869,006 shares (2020:
1,194,301 shares).
DIRECTORS’ MEETINGS
The number of meetings of directors (including meetings
of Committees of directors) held during FY21 and the
number of meetings attended by each director is outlined
in the following table:
Board
Audit and Risk
Committee
Nomination and
Remuneration
Committee
A
12
12
3
12
12
12
12
11
8
B
12
12
3
12
12
12
12
11
8
A
4
–
–
4
–
4
–
–
–
B
4
–
–
4
–
4
–
–
–
A
5
5
–
–
5
–
–
–
–
B
5
5
–
–
5
–
–
–
–
Director
D D McDonough
J F Mulcahy
U B Meyerhans1
P A Birtles
J M McKellar
S T Goddard
A J Barrass
R J Thornton2
T R Salt3
Notes:
A. Number of meetings held during the time the director held
office during the year including meetings of the non-executive
directors only
B. Number of meetings attended
1. U B Meyerhans was appointed as Acting Chief Executive Officer on
1 March 2021 and Managing Director and Chief Executive Officer on
1 July 2021.
2. R J Thornton attends Committee meetings as Company Secretary.
3 . T R Salt resigned as Managing Director and Chief Executive Officer
on 26 February 2021.
PRINCIPAL ACTIVITIES
The principal activities during the year of the consolidated
entity were the research, design, import and marketing of
building fixtures and fittings to residential and commercial
premises and the distribution of various products through
a range of distribution channels in Australia, New Zealand,
United Kingdom and China.
There have been no 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 FY21 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:
DECLARED AND PAID DURING FY21
Dividends
Final
2019/20
Ordinary
Interim
2020/21
Ordinary
Cents
per
Share
Total
Amount
$’000
Franked
Date of
Payment
3.5
9,238
Fully
Franked
16 October
2020
6.0
15,851
Fully
Franked
18 March
2021
Franked dividends declared and paid during the year were
franked at the corporate tax rate of 30%.
DETERMINED AFTER END OF FY21
After the balance date the following dividend was
determined by the directors. The dividend has not been
provided and there are no income tax consequences at
30 June 2021.
Dividend
Final
2020/21
Ordinary
Cents
per
Share
Total
Amount
$’000
Franked
Date of
Payment
6.5
17,238
Fully
Franked
6 October
2021
The financial effect of the final dividend has not been
brought to account in the financial statements for FY21
and will be recognised in subsequent financial reports.
The record date for the FY21 final dividend is 8 September
2021 and the dividend payment date is 6 October 2021.
The Dividend Reinvestment Plan will not be offered to
shareholders for the final dividend.
EVENTS SUBSEQUENT TO
REPORTING DATE
Since the end of the financial year, the New South Wales
and Victorian governments announced new restrictions
on business, requiring amongst other things, the cessation
of construction activities in specified areas in Sydney in
response to rising cases of COVID-19. This is in addition
to a range of varying restrictions on public movement in
Australia. The directors’ continue to assess the uncertain
and evolving impact of these restrictions on the Group’s
operations.
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.
ENVIRONMENTAL ISSUES
The Group’s operations are not regulated by any
significant environmental regulation under a law of
the Commonwealth or of a State or Territory.
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 result 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.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 15
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,
did not perform any non-audit services.
The Board has considered the non-audit services provided,
if applicable, during the year 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 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 21 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 FY21.
ROUNDING
The Group is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument
2016/191 relating to the rounding of amounts in the
Directors’ Report. Amounts in the Directors’ Report have
been rounded in accordance with that Instrument to the
nearest thousand dollars, unless otherwise stated.
Remuneration Report
INTRODUCTION
The directors of GWA Group Limited present this
Remuneration Report for the period ended 30 June 2021.
The Remuneration Report outlines the Group’s
remuneration strategy and principles, explains how
the Group’s FY21 performance has driven executive
remuneration outcomes, and provides the details of
specific remuneration arrangements that apply to Key
Management Personnel (KMP) in accordance with section
300A of the Corporations Act 2001 (Cth) (Corporations
Act) and applicable accounting standards.
Sections 2 to 8 of this Remuneration Report, excluding
Section 7.1.1, have been audited by the Group’s External
Auditor, KPMG, as required by section 308(3c) of the
Corporations Act 2001 (Cth).
The structure of the Remuneration Report is outlined below:
1.
Message from the Remuneration and Nomination
Committee;
2. Key Management Personnel and senior executives;
Board role in setting remuneration strategy and
3.
principles;
4. Relationship between remuneration policy and Group
performance;
5. Description of non-executive director remuneration;
6. Description of executive remuneration;
7. Details of director and executive remuneration; and
8. Key terms of employment contracts.
1. MESSAGE FROM THE REMUNERATION
AND NOMINATION COMMITTEE (RNC)
The RNC is pleased to present shareholders with the FY21
Remuneration Report. This report outlines GWA’s approach
to remuneration for its executives and in particular, the link
between GWA’s strategy and its remuneration framework
and the link between performance and executive reward.
GWA’s performance during FY21 reflected the Company’s
continued disciplined response to the impact of weaker
construction markets in the first half, followed by a
stronger result in the second half as detached residential
construction activity improved. GWA responded to these
challenges with a focus on operational and cost discipline
and made significant progress against its strategic
objectives which have strengthened the Company’s
competitive position for the expected improvement in
market conditions in FY22, subject to COVID-19 impacts.
The Company is in strong financial health to navigate
through these uncertain times. The incentive outcomes
for the Managing Director and other Executive Leadership
Team (ELT) members for FY21 reflected GWA’s financial
performance and progress with executing the Group’s
strategy. While market conditions were difficult,
management continues to respond to the unforeseen
impacts of COVID-19 in ensuring the health, safety and
wellbeing of staff and taking actions to control costs and
create a stronger growth platform.
16 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
This report outlines how GWA’s performance has driven
the remuneration outcomes for executives. The RNC
had oversight of the performance and remuneration
arrangements of the Managing Director and the other
ELT members during FY21, together with the Group’s
remuneration framework and incentive plans. The RNC
ensures that the financial reward for executives is aligned
with performance and shareholders’ interests.
GWA’s remuneration framework reflects our approach
to providing remuneration which is fair and equitable to
attract and retain talented individuals necessary to deliver
our strategy, while aligning the interests of executives and
shareholders.
At the centre of our remuneration framework are:
• challenging financial and non-financial measures to
assess performance and focus executives on key
operational and strategic objectives critical to GWA’s
long-term success;
incentive plans that align reward for executives to
shareholder wealth creation over the short and
medium term;
•
• ability for the Board to exercise its discretion to adjust
or ‘clawback’ executive reward where business and
operational risks have not been adequately managed;
and
2. KEY MANAGEMENT PERSONNEL
(KMP) AND SENIOR EXECUTIVES
KMP are as defined by the Accounting Standard AASB 124
Related Party Disclosures (AASB 124). Following a review
of senior executives against the criteria for determining
executive KMP, the names and titles of the Group’s KMP
for FY21 are detailed in the table below.
TABLE 1: KEY MANAGEMENT PERSONNEL
Name
Position
Term as KMP
Non-Executive Directors
D McDonough
J Mulcahy
Chairman and
Non-Executive Director
Deputy Chairman and
Non-Executive Director
P Birtles
Non-Executive Director
J McKellar
Non-Executive Director
S Goddard
Non-Executive Director
A Barrass
Non-Executive Director
Executive Directors
Full year
Full year
Full year
Full year
Full year
Full year
R Thornton
Executive Director and
Company Secretary
Full year
• best practice governance in determining remuneration
Other Executive KMP
arrangements and outcomes that are fair and reasonable
taking into consideration community and shareholder
expectations.
During FY21, the Board determined the remuneration
arrangements for the incoming Managing Director,
Mr Urs Meyerhans, who was appointed on 1 July 2021.
The remuneration arrangements for Mr Meyerhans signaled
a significant change in the variable remuneration mix
for FY22 to a greater weighting to long-term incentives
coupled with a focus on short-term financial targets
and critical non-financial KPIs. The changes have been
extended to the other ELT members for FY22 together
with a number of other changes which the Board believes
will provide better alignment of executive remuneration
outcomes and long-term shareholder wealth creation.
Further details of the FY22 executive remuneration
changes are outlined in section 3.2 and will be provided
in the FY22 Remuneration Report to be available in
August 2022.
U Meyerhans1
Acting Chief Executive
Officer
From
1 March 2021
P Gibson
C Reil2
Group Chief Financial
Officer
Group General Manager
– People & Performance
Full year
Full year
Former Executive KMP
Managing Director
and Chief Executive Officer
To
26 February
2021
T Salt
Note:
1. U Meyerhans was appointed as Managing Director and Chief
Executive Officer on 1 July 2021.
2. C Reil resigned as Group General Manager — People & Performance
on 2 July 2021.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 17
The Group’s non-KMP senior executives are set out in
the table below. These senior executives are not KMP as
defined by AASB 124.
3.1 GWA’S REMUNERATION GOVERNANCE FRAMEWORK
GWA BOARD
TABLE 2: NON-KMP SENIOR EXECUTIVES
Name
Position
Non-KMP Senior Executives
Term as senior
executive
• Overall responsibility for the remuneration strategy
and outcomes for the Group; and
• Reviews and, as appropriate, approves recommendations
from the Remuneration and Nomination Committee.
A Mortimer
CEO New Zealand
and Global Supply Chain
Full year
WITH ADVICE FROM:
C Norwell
General Manager Sales
Full year
P Oliver
Group General Manager —
People & Performance
From
3 May 2021
M Hayes
General Manager Marketing
A Larson
General Manager Technology
& Transformation
From
24 May 2021
From
11 August
2020
3. BOARD ROLE IN SETTING
REMUNERATION STRATEGY
AND PRINCIPLES
The Board has overall responsibility for reviewing,
approving and monitoring GWA’s remuneration strategy
and outcomes including for the directors and executives.
The strategy is designed to provide remuneration that
is fair and equitable and is designed to attract and
retain directors and management with the experience,
knowledge, skills and judgement required for success.
The Board also engages with all stakeholders to
continuously refine and improve director and executive
remuneration policies and practices.
The Board delegates some aspects of the review and
monitoring process to the Nomination and Remuneration
Committee. The charter for the Nomination and
Remuneration Committee is available on the Company’s
website at www.gwagroup.com.au under Corporate
Governance Policies.
REMUNERATION AND NOMINATION COMMITTEE
Review of the:
• Group’s executive remuneration and incentive policies
and schemes;
• Remuneration framework for non-executive directors;
• MD and other executives’ remuneration packages
and performance objectives;
• Evaluation of MD performance;
• MD and other executives’ development plans;
• Group’s recruitment, retention and termination policies
and procedures;
• Group’s superannuation arrangements; and
• Diversity policy and assessing progress against objectives.
INDEPENDENT EXTERNAL ADVISERS
• Provide independent advice, information and
recommendations relevant to remuneration decisions;
• The Remuneration and Nomination Committee receives
information from independent external advisers related to
remuneration market benchmark data and analysis for the
annual executive fixed remuneration review; and
• There were no remuneration recommendations received
from the external adviser during the year.
BASED ON:
REMUNERATION PRINCIPLES
• Align and contribute to GWA’s key strategic business
objectives and desired business outcomes;
• Align executives’ remuneration with the interests
of securityholders;
• Assist GWA in attracting executives and retaining the
best talent required to execute the business strategy;
• Support GWA’s performance based culture against
business plans and shareholder returns; and
• Be fair, equitable and easy to understand.
18 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
3.2 FY22 EXECUTIVE REMUNERATION CHANGES
3.2.1 FY22 Managing Director variable remuneration
During FY21, the Board engaged an independent
remuneration consultant, Guerdon Associates, to review
the remuneration arrangements for the incoming Managing
Director and Chief Executive Officer, Mr Urs Meyerhans,
who was appointed on 1 July 2021. Refer section 8.1
Managing Director remuneration for details of
Mr Meyerhans’ remuneration arrangements which were
disclosed to the market on 29 June 2021. For details of
Mr Meyerhans’ remuneration arrangements as Acting
Chief Executive Officer during FY21, refer note (e) to the
Remuneration Tables in section 7.1.
As part of the review the Board decided that the variable
remuneration mix for the Managing Director and other
executives’ will be changed for FY22 with a greater
weighting to long-term incentives coupled with a continued
focus on short-term financial and critical non-financial KPIs.
The changes ensure that the Managing Director and other
executives are focused on both short and long-term results
aligned with the strategy but with an emphasis on long-
term profitable growth delivery and thereby shareholder
value creation.
As a consequence of the departure of the former Managing
Director, the Board put in place a retention scheme for
senior executives and key management to provide stability.
The retention scheme provides for the payment of a
retention bonus representing 25% of fixed remuneration
with 50% of that amount to be paid on or about 31 March
2022 and the balance on or about 30 September 2022
subject to satisfactory performance as determined by
the Board. No retention bonus is payable in respect
of the whole amount if the participant resigns or their
employment is terminated before 31 March 2022 or in
respect of the second amount if the participant resigns or
their employment is terminated before 30 September 2022.
The amounts accrued to 30 June 2021 are included in the
Remuneration Tables in section 7.1.
The amounts paid under the retention bonus scheme will
be set out in the FY22 and FY23 Remuneration Reports.
The retention bonus scheme has not been incorporated
into the tables in sections 3.2.2 and 3.2.3 or in sections
6.1.2 and 6.1.4 as it is considered to be neither fixed nor
performance related remuneration.
Further details of the FY22 executive remuneration
changes will be provided in the FY22 Remuneration
Report to be available in August 2022.
The tables in section 3.2.1 and 3.2.2 outline the changes
to the Managing Director and other executives’ variable
remuneration mix for FY22.
structure
The FY22 incentives structure for the Managing Director is
provided in the following table:
Maximum STI
as % of fixed
remuneration
Maximum LTI1
as % of fixed
remuneration
(grant date
fair value)
Maximum total
performance
pay as %
of fixed
remuneration
50%
150%
200%
Managing
Director
FY22
The FY22 STI components for the Managing Director are
provided in the following table:
Financial Targets2
as maximum
% of fixed
remuneration
Critical Non-
Financial KPIs3
as maximum
% of fixed
remuneration
Maximum STI
as % of fixed
remuneration
40%
10%
50%
Managing
Director
FY22
Note:
1. The Managing Director’s LTI grant for FY22 will require shareholder
approval at the Annual General Meeting in October 2021.
2. Following the achievement of the STI financial targets, 25% of the
financial component (i.e. maximum of 10%) will be deferred and
subject to further testing by the Board following finalisation of the
FY23 audited financial statements.
3. Critical non-financial KPIs have been established for the Managing
Director at the beginning of FY22 covering key areas such as
health and safety, customer experience, employee engagement and
strategy achievement.
3.2.2 FY22 Other Executives’ variable remuneration
structure
The FY22 incentives structure for other executives is
provided in the following table:
Maximum STI
as % of fixed
remuneration
Maximum LTI1
as % of fixed
remuneration
(grant date
fair value)
Maximum total
performance
pay as %
of fixed
remuneration
40%
60%
100%
Other
Executives
FY22
The FY22 STI components for other executives are
provided in the following table:
Financial Targets2
as maximum
% of fixed
remuneration
Critical Non-
Financial3 KPIs
as maximum
% of fixed
remuneration
Maximum STI
as % of fixed
remuneration
30%
10%
40%
Other
Executives
FY22
Note:
1. The Executive Director’s LTI grant for FY22 will require shareholder
approval at the Annual General Meeting in October 2021.
2. Following the achievement of the STI financial targets, 25% of the
financial component (i.e. maximum of 7.5%) will be deferred and
subject to further testing by the Board following finalisation of the
FY23 audited financial statements.
3. Critical non-financial KPIs have been established for the other
executives at the beginning of FY22 covering key areas such as
health and safety, customer experience, employee engagement
and strategy achievement.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 19
3.2.3 Managing Director and other executives’ remuneration
mix for FY22
The components of remuneration for the Managing
Director and other executives’ for FY22 at ‘target’ and
‘stretch’ performance are provided in the following table:
FY22 Managing Director Remuneration Mix
At target
Performance dependent
57%
18%
4%
21%
At stretch
Performance dependent
34%
13% 3%
50%
FY22 Other Executives’ Remuneration Mix1
At target
Performance dependent
For the FY23 LTI plan and in following years, the Board’s
current preference is to re-introduce a second performance
measure of Earnings Per Share (EPS) growth. The
introduction of this second performance measure would
be in addition to retaining the relative TSR measure and its
introduction would be subject to prevailing conditions at
that time. Shareholders will be kept informed on this issue.
3.3 FY22 EXECUTIVE FIXED REMUNERATION
Given the ongoing impact of COVID-19 and uncertain
market conditions, the Board has determined that
executive fixed remuneration for FY22 will remain
frozen, subject to two exceptions to align with market
benchmark levels. This will be reflected in the FY22
Remuneration Report.
69%
17%
4% 10%
4. RELATIONSHIP BETWEEN
At stretch
Performance dependent
50%
16% 4%
30%
Fixed
STI (cash)
STI (deferred)
LTI2
Note:
1. Includes the average remuneration of KMP and other executives’
excluding the Managing Director.
2. At target and at stretch performance LTI based on 25% and 100%
vesting respectively.
3.2.4 FY22 Short-Term Incentive Plan Targets
The Board has decided to simplify the Short-Term Incentive
(STI) financial targets for FY22 under the STI plan to
include the adoption of Earnings Before Interest and Tax
(EBIT) as the single financial target. EBIT is an effective
basis for STI financial targets as it is currently a key metric
used in the business and aligned with the Group’s strategy.
Due to the ongoing uncertainty caused by the impacts
of the COVID-19 pandemic, the EBIT target to trigger STI
payments will be set by the Board after first quarter FY22
trading results are known. The EBIT target will provide for a
graduated pay-out range based on performance between
threshold and stretch levels.
The Board has the discretion to normalise the EBIT
measure where it is unduly distorted by significant or
abnormal events, and in order to ensure that the measure
reflects underlying trading performance. Any adjustments
to normalise the EBIT measure, and the reasons for any
adjustments, will be disclosed.
3.2.5 FY22 Long-Term Incentive Plan Targets
As outlined in section 6.4 Long-Term Incentive (LTI), for the
FY21 LTI plan the Board decided on a single performance
measure of relative Total Shareholder Return (TSR) due
to the ongoing uncertainty caused by the impacts of
the COVID-19 pandemic. The COVID-19 pandemic has
weighed heavily on construction markets which has
resulted in difficulty in accurately forecasting the business
performance for the next three year period. For the FY22
LTI plan, the Board decided to continue with a single
performance measure of relative TSR. That decision
was taken after considering various alternatives and
incorporating independent expert advice.
REMUNERATION POLICY AND
GROUP PERFORMANCE
Remuneration is linked to performance by:
• Applying challenging financial and non-financial
measures to assess performance;
• Ensuring that these measures focus management
on operational and strategic business objectives that
create shareholder value while balancing short-term
and medium/longer term shareholder value creation.
GWA measures performance on the following key
corporate measures:
• Earnings before interest and tax (EBIT);
• Return on funds employed (ROFE);
• Total shareholder return (TSR).
The Board has the discretion to normalise the EBIT and
ROFE measures where they are unduly distorted by
significant or abnormal events, and in order to ensure
that the measures reflect underlying trading performance.
Examples include the impact of restructuring costs or other
non-recurring expenses or income to ensure management
is not discouraged from undertaking initiatives in the
long-term interests of shareholders.
Any adjustments to normalise the EBIT and ROFE
measures, and the reasons for any adjustments,
will be disclosed.
In FY21, the EBIT and ROFE measures under the STI plan
were normalised (i.e. exclude) $9.5 million in significant
items (pre-tax) relating to costs associated with the
consolidation of New Zealand warehouses, sale of the
China plant, Methven integration costs, and Enterprise
Resource Planning/Customer Relationship Management
system project costs.
For the FY19 LTI grant (performance period for the 3 years
to 30 June 2021) to be tested in August 2021, the impact
of the adoption of the May 2020 IFRS Interpretation
Committee decision (refer Note 1c to the 30 June 2020
financial statements) will be excluded from ROFE i.e. the
resulting deferred tax liability (DTL) will be added back to
net assets. This ensures there is no unintended benefit for
the executives with the testing of the ROFE hurdle.
20 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Remuneration for all executives varies with performance
on the key EBIT, ROFE and TSR measures together with
achievement of their measurable personal KPI objectives,
which underpin delivery of the financial outcomes, and are
linked to the Group’s performance review process.
The following graph shows the Group’s relative TSR
performance over the five-year period from 1 July 2016 to
30 June 2021 compared to the ASX 300 Accumulation
Index. The ASX 300 Accumulation Index comprises the top
300 stocks on the Australian Securities Exchange based on
liquidity and size and includes GWA. During FY20 and FY21
there was significant volatility in GWA’s share price due to
the impact of COVID-19 and uncertain market conditions.
Total Shareholders Return (TSR) Chart for GWA vs ASX 300 Acc Index
From 1 July 2016 to 30 June 2021
GWA
ASX 300 Acc Index
140%
120%
100%
80%
60%
40%
20%
0%
-20%
1 Jul
2016
1 Jan
2017
1 Jul
2017
1 Jan
2018
1 Jul
2018
1 Jan
2019
1 Jul
2019
1 Jan
2020
1 Jul
2020
1 Jan
2021
30 Jun
2021
The following is a summary of key statistics for the Group over the last five years:
Financial Year
2016/17
2017/18(b)
2018/19(b)(c)
2019/20(c)(d)
2020/21(c)(d)
Notes:
EBIT(a)
($m)
80.6
76.2
78.1
71.8
68.5
EPS(a)
(cents)
20.3
19.0
19.3
17.0
16.0
Total DPS
(cents)(c)
Share Price
(30 June)
($)
Market Capitalisation
(30 June)
($m)
16.5
18.0
18.5
11.5
12.5
3.15
3.40
3.42
2.77
2.77
831.4
897.4
902.7
731.1
734.6
(a) Excludes significant items.
(b) FY18 and FY19 represent continuing operations and exclude the
discontinued operations of the Door & Access Systems’ business
(including the gain on sale) which was sold on 3 July 2018. FY17
includes the results of the Door & Access Systems’ business.
(c) FY19 to FY21 includes the results of Methven Limited from the date
of acquisition (10 April 2019).
(d) FY20 and FY21 performance was negatively impacted by COVID-19
resulting in business interruption from lockdown restrictions in
various geographies and challenging market conditions.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 21
Total dividend per share (cents)
FY21
FY20
FY19
FY18
FY17
0
5
10
15
20
The remuneration and incentive framework aims to focus
executives on sustaining short-term operating performance
coupled with investment in long-term strategic growth in
the markets in which the business operates.
Group Revenue for FY21 increased on the prior year
reflecting improved detached residential construction in
Australia in the second half and sales momentum in the
international businesses. The Group’s Normalised1 profit
declined due to the impact of COVID-19 on the commercial
segment in Australia resulting in project delays and weaker
activity. The focus on operational and cost discipline during
FY21 ensured the Company was able to manage through
the short-term challenges and continue to invest in its
growth strategy.
The Group is in a strong financial position to manage
through the current challenging environment and is well
placed to leverage an expected improvement in residential
market activity in FY22, subject to COVID-19 impacts. The
earnings performance for FY21 enabled the Board to pay
an increased full year fully franked dividend of 12.5 cents
per share for FY21 representing a dividend pay-out ratio of
reported profit of 95% and normalised profit of 78% which
is in line with the Company’s dividend policy.
The Group has continued its progress in FY21 against its
strategic objectives to enhance the operating performance
of the business and to maximise returns to shareholders
over time. The progress against the strategy is outlined in
the Managing Director’s Review of Operations.
The successful execution of the Group’s strategy was
included in executives’ measurable personal goals and
reflected in the financial performance targets under the
STI and LTI plans for FY21; refer sections 6.3 Short-Term
Incentive and 6.4 Long-Term Incentive.
The remuneration and incentive framework has focused
executives on responding appropriately to the challenging
market conditions in FY21 which included the ongoing
impacts of COVID-19. It has encouraged management to
respond quickly and make long-term decisions to sustain
competitiveness ensuring that the Group is well placed to
maximise returns through the market cycle.
1
Normalised is before $9.5 million in significant items (pre-tax)
relating to costs associated with the consolidation of New Zealand
warehouses, sale of the China plant, Methven integration costs, and
Enterprise Resource Planning/Customer Relationship Management
system project costs.
22 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
5. DESCRIPTION OF NON-EXECUTIVE
DIRECTOR REMUNERATION
Fees for non-executive directors are fixed and are not
linked to the financial performance of the Group to ensure
that non-executive directors maintain their independence.
At the 2018 Annual General Meeting, shareholders
approved an increase in non-executive director fees to
an annual maximum aggregate amount of $1,350,000
including statutory superannuation. This increase was
to allow for new director appointments over time in
accordance with the Board succession plans.
The actual fees paid to the non-executive directors are
outlined in the Remuneration Tables in section 7.1 and are
based on the following:
• Board Chair $280,000 (including superannuation);
• Other non-executive directors $120,000 (including
superannuation); and
• Committee Chair $10,000 (including superannuation).
There have been no changes to these amounts since FY16.
Non-executive director remuneration comprises base
fees and statutory superannuation, plus an additional fee
for chairing a Board Committee (where applicable). The
payment of committee fees recognises the additional time
commitment required by a chair of a Board committee.
Non-executive directors are not able to participate in the
executive incentive schemes.
The Nomination and Remuneration 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.
Retirement benefits other than statutory superannuation
are not available for non-executive directors.
The Board does not require its non-executive directors to
hold GWA shares, however the holding of shares is actively
encouraged. For details of the non-executive director
shareholdings, please refer to section 7.3.3.
6. DESCRIPTION OF EXECUTIVE
REMUNERATION
6.1 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) plan
which provides rewards for performance over a 1-year
period, and a long-term incentive (LTI) plan 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 executives,
including the Managing Director, recognises the short-
term challenges posed by operating in the cyclical housing
industry, ability to sustain competitiveness, deliver value
and growth in mature markets and maintain operating cash
flows for dividends.
6.1.1 GWA’s Executive Remuneration Structure for FY21
Objective
Attract and retain
best talent
Reward current year
performance
Reward long-term
performance
Fixed
Variable (at risk)
Remuneration
Components
Delivery
FY21 Approach
Fixed Remuneration
Short Term
Incentive (STI)
Long Term
Incentive (LTI)
• Base Salary
• Non-monetary benefits
• Superannuation
• Annual cash payment
subject to performance
• Portion deferred for one
year and paid in cash
• Annual grant of
Performance Rights
vesting after 3 years
subject to performance
• Fixed remuneration
targeted between median
and 75th percentile of
comparator group
• Benchmark companies
of similar size and
operational scope
STI performance measures
(at maximum):
• Gateway: Revenue and
EBIT at 95% of target
• Financial targets (60%):
EBIT and ROFE
• Personal targets (40%):
measureable personal KPIs
LTI performance measures:
• 3 year performance
period
• Performance hurdles
(100%):
– TSR (relative measure)
Note:
1
The former Managing Director’s remuneration structure for FY21 was the same as the other executives, however the remuneration mix was different
as outlined in section 6.1.2. For details of the incoming Managing Director, Mr Urs Meyerhans’ remuneration arrangements for FY22 including the
changes to remuneration mix please refer to section 8.1.
In addition to the above structure, as outlined in Section
3.2, in FY21 the Board put in place a retention scheme for
senior executives and key management to provide stability.
The Board is of the view that EBIT is an effective basis for
STI financial targets as it is currently a key metric used in
the business and aligned with the Group’s strategy. ROFE
is a key target in driving returns on capital employed
in excess of the cost of capital, but will not be used as
a metric for the FY22 STI plan; refer section 3.2 FY22
Executive Remuneration Changes for further details.
Due to the market uncertainty from the COVID-19
pandemic, the Board conducted a review with an external
remuneration advisor regarding the appropriate measures
for the FY21 LTI grant to executives. Based on this review,
a decision was made that the performance measure for
the FY21 LTI grant would be solely based on relative TSR.
This is a change from the FY20 LTI grant where the LTI
performance measures were 50% TSR and 50% ROFE.
The Board will continue with a single performance measure
of relative TSR for the FY22 LTI grant. Please refer to
section 3.2 FY22 Executive Remuneration Changes for
further details.
6.1.2 Former Managing Director and other executives’
remuneration mix for FY21
The components of remuneration for the former Managing
Director and other executives’ for FY21 at ‘target’ and
‘stretch’ performance are provided in the following table.
Please note that the variable remuneration mix for the
incoming Managing Director and other executives’ will be
changed for FY22 with a greater weighting to long-term
incentives coupled with a focus on short-term financial and
critical non-financial KPIs. Please refer to section 3.2 FY22
Executive Remuneration Changes for further details.
FY21 Managing Director Remuneration Mix
At target
Performance dependent
57%
22%
7%
14%
At stretch
Performance dependent
36%
18%
9%
37%
FY21 Other Executives’ Remuneration Mix1
At target
Performance dependent
68%
20%
7% 5%
At stretch
Performance dependent
56%
19%
8%
17%
Fixed
STI (cash)
STI (deferred)
LTI2
Note:
1 . Includes the average remuneration of KMP and other executives’
excluding the Managing Director.
2. At target and at stretch performance LTI based on 25% and 100%
vesting respectively.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 23
Given the impact of COVID-19 and uncertain market
conditions, the fixed remuneration for executives in
FY21 was frozen. The temporary COVID-19 executive
salary reductions in Q4 FY20 equivalent to 20% of fixed
remuneration were ceased as planned with normal salaries
resuming on 1 July 2020. As there were no adjustments to
executive salaries for FY21, there was no need to conduct
a market benchmarking exercise. However, based on a
market benchmarking report provided by an independent
remuneration adviser for the FY20 executive remuneration
review, the fixed remuneration for most executive positions
at GWA are comparable to market benchmark levels for
companies of comparable operational scope and size to
GWA, having regard to market capitalisation and revenue.
The 19 listed peer companies included in the FY20 survey
provided reliable and robust statistical remuneration
benchmarking and shared some common attributes with
GWA, however, few direct competitors and good position
matches exist for precise remuneration positioning. The
Board therefore exercises judgement 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.
6.3 SHORT-TERM INCENTIVE (STI)
6.3.1 STI overview
The STI plan provides for an annual payment that varies
with performance measured over the Group’s financial year
to 30 June 2021. The STI is aligned to shareholder interests
as executives will only become entitled to the majority
of payments if profitability improves, with maximum
incentive payments above the target level linked directly
to shareholder value creation. As noted in section 6.1, the
maximum STI that can be earned is capped.
Financial gateways are in place to ensure a minimum
level of financial performance is achieved before any
STI payments (both financial and personal goals) are
awarded to executives. The gateways represent 95% of
at target Revenue and EBIT. If both gateways have not
been achieved, then the executives are not eligible for
an STI payment.
The STI payment is made in cash after finalisation of the
annual audited financial statements. 50% of the financial
target component of the STI is deferred for executives that
achieve their STI financial targets. The deferred component
is subject to further testing by the Board to confirm the
integrity of the achievement of the STI financial targets
following finalisation of the following year’s audited
financial statements. If the Board is satisfied the deferred
component will be paid to executives together with
nominal interest at market rates. However, if the Board
is not satisfied the deferred component will be subject
to forfeiture.
6.1.3 FY21 Former Managing Director variable
remuneration structure
The FY21 incentives structure for the former 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
75%
100%
175%
Managing
Director
FY21
The FY21 STI components for the former Managing
Director are provided in the following table:
Financial Targets
as maximum
% of fixed
remuneration
Personal Goals
as maximum
% of fixed
remuneration
Maximum STI
as % of fixed
remuneration
50%
25%
75%
Managing
Director
FY21
6.1.4 FY21 Other Executives’ variable
remuneration structure
The FY21 incentives structure for other executives 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
50%
30%
80%
Other
Executives
FY21
The FY21 STI components for other executives are provided
in the following table:
Financial Targets
as maximum
% of fixed
remuneration
Personal
Goals as
maximum
% of fixed
remuneration
Maximum STI
as % of fixed
remuneration
30%
20%
50%
Other
Executives
FY21
6.2 FIXED REMUNERATION
Fixed remuneration is the sum of base salary, non-monetary
benefits and superannuation. The level of fixed
remuneration is set:
•
•
•
to retain proven performers who possess difficult to
source experience;
to attract external recruits with depth and breadth of
expertise usually acquired while working with larger
companies;
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, Industrial and Material sectors.
24 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
6.3.2 STI performance requirements
6.3.2.2 Personal Goals
6.3.2.1 Financial Performance Targets
For FY21, STI financial performance targets are based
on Earnings Before Interest and Tax (EBIT) and Return
On Funds Employed (ROFE) targets as determined by
the Board. The use of EBIT and ROFE as the basis of
STI financial targets is aimed at ensuring executives are
accountable for delivering both profit and return on
funds improvements.
The Board is of the view that EBIT is an effective basis
for STI financial targets as it is currently a key metric used
in the business and aligned with the Group’s strategy.
ROFE is a key target in driving returns on capital employed
in excess of the cost of capital, but will not be used as
a metric for the FY22 STI plan; refer section 3.2 FY22
Executive Remuneration Changes for further details. The
EBIT and ROFE targets are weighted equally for divisional
and corporate executives and adjusted for normalisation if
applicable; refer section 4.
The ‘target’ and ‘stretch’ STI financial targets are
determined by the Board 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 ‘target’ and ‘stretch’ levels is rewarded on a straight-
line basis between ‘target’ achievement and ‘stretch’
achievement.
The Board retains the right to vary from policy if required.
However, any variation from policy and the reasons for
it will be disclosed. There was no variation from policy in
setting the STI financial performance targets for FY21.
6.3.2.1.1 FY21 STI Financial Performance Outcomes
Due to the disciplined response to weaker markets in
the first half of FY21, followed by an improved financial
performance in the second half and successful execution
of key business activities, the executives met the gateway
hurdles and were eligible for STI payments (both financial
and personal goals) at the ‘stretch’ level for FY21 performance.
The following table provides an overview of the STI metrics
for FY21 and outcomes:
Financial Metric
Gateway
FY21 STI Outcomes
Net Sales
Achieved
n/a
EBIT
ROFE
Achieved
Achieved at ‘stretch’ level
n/a
Achieved at ‘stretch’ level
The STI performance outcomes for FY21 were aligned
with shareholders’ interests as profit performance was
maximised in a challenging market enabling higher
dividend payments to shareholders, with a stronger
platform for future growth and shareholder wealth creation.
This outcome is reflected in the Remuneration Tables in
section 7.1.
The personal goals set for each executive include
achievement of key milestones to improve or consolidate
the Group or business unit’s strategic position. The
personal goals vary with the individual’s role, risks and
opportunities and are aligned with the Group’s strategic
plan and corporate priorities. Achievement of personal
goals accounts for a maximum of 25% for the Managing
Director and 20% of the other executives’
fixed remuneration. 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 Nomination and
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 and
business improvement goals. The measurable financial
goals are financial outcomes which the individual aims to
achieve through their effort and that of their team and
influence on the wider business. Examples may include
achieving working capital reductions, sales/margin targets
or cost reduction targets. The measurable business
improvement goals are outcomes which drive sustainable
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,
enhancing sustainability, delivering a major project on time
and budget, market share and productivity improvements
or implementing a significant change or strategic initiative.
Assessment of the personal goals STI component is
determined following a formal performance review process
for each executive. The performance reviews for executives
are conducted semi-annually by the Managing Director
with the annual outcomes reviewed and approved by the
Board. The personal goals for executives for the following
year are established at the performance reviews and
reviewed and approved by the Board.
The Managing Director’s performance review is conducted
semi-annually by the Chairman following input from the
Board and with the outcomes reviewed and approved
by the Board. An assessment of key performance goals
subject to STI incentive payments for FY21 is provided in
section 6.3.2.2.1.
The inclusion of personal goals in the remuneration
structure ensures that executives can be recognised for
improved business performance, including periods where
troughs in the housing industry cycle mean financial
performance is consequently weaker across the sector.
The reward for achievement of personal goals provides
specific focus on responding to changes in goals are a key
part of the Group’s performance management process.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 25
6.3.2.2.1 Key performance goals and outcomes
An assessment of key performance goals and financial targets subject to STI incentive payments for FY21 is provided in the
following table:
FY21 Goals
Performance
Personal Objectives
Achieve leading workplace
health and safety (WHS)
performance with the aim
of an injury free workplace.
Measures:
• Safety culture and
initiatives
• Leading safety measures
(safety interactions,
hazards reported, site
inspections, actions
closed)
• Lagging safety measures
(MTIFR, LTIFR, TIFR)
• COVID-19 response
Executing and delivering
the business strategy
and FY21 operating plan
including the integration
of Methven. Deliver
the growth strategy in
accordance with the
horizon plans.
Measures:
• Integration of Methven
• Growth strategy
execution
• Caroma Smart
Command® installations
Build employee
engagement and culture
and embed purpose
and values to deliver the
strategy. Continue to
increase diversity with a
focus on increasing female
representation.
Measures:
• Gender diversity
• Leadership and
development
Financial targets
Ownership and accountability for safety exists at all levels in the business
with “Caring For Each Other” central to the Group’s cultural pillars. During
FY21 the Group continued its progress on implementing the safety strategy.
This strategy focuses on leadership and behavioural aspects of safety together
with identifying and mitigating physical risks in our operations. Whilst the
TIFR increased to 4.3 in FY21 which was disappointing, the Group has made
significant progress with its safety agenda with the second successive year of
zero medically treated injuries through a focus on implementing preventative
measures at each site. An important initiative during FY21 was the updating of
policies and procedures and the accreditation of all GWA sites to the global
best practice safety standard ISO45001 which demonstrates the commitment
of the Group to the health and safety of workers with a compliant and effective
workplace health and safety system. The Group has continued to ensure the
health, safety and wellbeing of staff during the COVID-19 pandemic through its
well-established practice of supporting flexible work, enabling all office based
staff to work from home. Warehouse staff continued to work on site as essential
workers with COVID safety protocols in place.
Long-term growth plans have been developed for the Group in order to
accelerate growth and improve shareholder returns. The plans outline growth
initiatives to strengthen the core business, build emerging businesses and
create growth options into the future in line with the Group’s sustainable water
solutions strategy. The integration of Methven remains on track with synergies
delivered in excess of the business case and with strong sales and earnings
growth in Methven NZ and UK during FY21. In addition, the NZ distribution
network was fully integrated and Methven China plant successfully divested
during FY21 to realise future benefits. The Group released new ranges of
innovative products during FY21 with enhanced ranging with merchants
across key Caroma and Methven brands and a focus on digital engagement
with customers. The Group made solid progress with its touchless intelligent
bathroom system, Caroma Smart Command® (CSC). The number of installations
of CSC increased to 127 sites in FY21, up from 49 installations in the prior year.
CSC continues to represent a significant growth opportunity for the Group.
The Group continues to implement programs to drive a high performance
culture and to encourage staff to perform their best while upholding GWA’s
Cultural Pillars. There is an active Culture Council which is led by the Managing
Director who champions programs aligned to GWA’s Cultural Pillars. Increasing
the gender diversity of the Group’s talent continues to be a focus and the
percentage of female employees increased to 43% globally. In Australia, the
percentage of women increased to 43% as reported in the Group’s 2021
Workplace Gender Equality Report which is available on the Group’s website at
www.gwagroup.com.au under Gender Equality Reporting. The Group received
notification that it is compliant with the Workplace Gender Equality Act 2012.
The Group continues to invest in the development of its people through
leadership and training programs which provide the knowledge, skills and
support to enable staff to perform at their best.
Assessment
On target
On target
On target
STI financial performance
targets
Measures:
• Revenue and EBIT
financial gateways
• EBIT and ROFE
financial targets
Due to the disciplined response to weaker markets in the first half of FY21,
followed by an improved financial performance in the second half and successful
execution of key business activities, the Managing Director and other executives
met the gateway hurdles and were eligible for STI payments (both financial and
personal goals) for FY21 at the ‘stretch’ level. Profit performance was maximised
in a challenging market enabling higher dividend payments to shareholders,
with a stronger platform for future growth and shareholder wealth creation.
This outcome is reflected in the Remuneration Tables in section 7.1.
Above
target
On target
Above target
Below target
26 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
For the FY21 LTI grant, a participant may not dispose of the
ordinary shares issued under the LTI until Board approval
has been obtained and the shares are subject to a holding
lock upon issue. This was to ensure that executives retain
a suitable shareholding in the Group. 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 executive’s Group shareholdings as a
multiple of fixed remuneration, and such other factors as it
considers relevant to the application. No applications from
participants to dispose of the shares were received by the
Board in FY21.
In accordance with the LTI plan rules, 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 at 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 cancelled. 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
be cancelled.
For the FY21 LTI grant, the proportion of Performance
Rights that can vest will be calculated when the shares
vest in August 2023 subject to achieving the performance
hurdle. If the performance hurdle is not met the
Performance Rights will be cancelled.
The clawback provisions under the LTI plan enable the
Board to reduce or ‘claw back’ benefits under the LTI
(including unvested Performance Rights, shares, proceeds
of shares or cash amounts) if the Board considers that
action is justified in the circumstances. This includes where
an executive has committed an act of fraud, defalcation or
gross misconduct.
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 2021 was 1,578,819 which represents 0.6% of the
Group’s total issued shares.
6.4
LONG-TERM INCENTIVE (LTI)
6.4.1 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 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,
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, the participants may exercise the Performance
Rights at no cost before their expiry seven years after the
grant date. 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 plan 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
Board. For the FY21 LTI grant, the basis of the grants
of Performance Rights to executives is 100% of the
Performance Rights are subject to a single performance
measure being Total Shareholder Return (TSR) which is a
relative performance requirement. TSR is a key measure on
which the Group’s strategic plan is focused and ensuring
LTI rewards are contingent on this measure is consistent
with the Board’s approved strategy.
As outlined in the Company’s 2020 Notice of Annual
General Meeting, the Board considered the setting of
performance targets for the FY21 LTI grant in the context
of the ongoing impacts of the COVID-19 pandemic. There
were significant challenges with predicting the impact of
the pandemic on the construction market and the level of
activity, and therefore accurately forecasting ROFE for the
next three year period.
As a result, the Board decided that ROFE was not a
suitable second performance measure for the FY21
LTI grant. After considering various alternatives and
incorporating independent expert advice, the Board
decided to retain the relative TSR measure with the existing
comparator group as a single performance measure.
The Board’s decision was specific to the FY21 LTI grant
and was in response to the uncertain economic
environment at that time and subject to prevailing
conditions a second measure would be considered for
future LTI grants. For further details of the proposed LTI
plan changes for FY22, please refer to section 3.2 FY22
Executive Remuneration Changes.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 27
6.4.2 LTI performance requirements
For the FY21 LTI grant, the single performance measure
provides for vesting scales graduated with performance
and demanding performance requirements.
6.4.2.1 TSR hurdle
The performance hurdle and vesting proportions for the
TSR performance measure that applies to the FY21 LTI
grant is outlined in the following table:
TSR of GWA Group Limited
relative to TSRs of Comparator
Companies
Proportion of
Performance Rights to Vest
if TSR hurdle is met
Less than the 50th percentile
Equal to 50th percentile
0%
25%
Between the 50th percentile
and 75th percentile
Straight line vesting
between 25% and 100%
75th percentile or higher
100% (i.e. 100% of total grant)
The group of comparator companies for the TSR hurdle
includes a bespoke group of twenty domestic ASX listed
companies exposed to similar economic, market, and/or
financial factors.
GWA and the comparator companies operate in a number
of different sectors (e.g. Industrial, Material, Consumer
Discretionary) and the choosing of one sector or industry
will not provide a comprehensive list of related companies.
To ensure an adequate number of comparator companies
is included for the TSR hurdle, the Board has selected
companies outside the building supplies and construction
materials industry, but subject to similar external influences.
The group of comparator companies for the FY21 LTI grant
is as follows:
James Hardie Industries PLC, Fletcher Building Ltd, Boral
Ltd, Adelaide Brighton Ltd, Brickworks Ltd, Super Retail
Group Ltd, CSR Ltd, ARB Corp Ltd, Bapcor Ltd, Breville
Group Ltd, Asaleo Care Ltd, GUD Holdings Ltd, Cedar
Woods Properties Ltd, Decmil Group Ltd, Simonds Group
Ltd, Hills Ltd, Fleetwood Corp Ltd, Accent Group Ltd, Pact
Group Holdings Ltd, Reece Ltd
The Board has discretion to adjust the comparator group
to take into account events including, but not limited to,
takeovers, mergers, de-mergers and similar transactions
that might occur over the performance period. The Board
reviews the comparator group on an annual basis to ensure
they remain relevant and to ensure potential new peers are
considered for inclusion.
7.
DETAILS OF DIRECTOR AND
EXECUTIVE REMUNERATION
7.1 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
2021 are provided in the following Remuneration Tables.
28 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Short-term
Long-term
Post-employment
s
e
e
F
&
y
r
a
a
S
l
s
u
n
o
B
h
s
a
C
I
T
S
y
r
a
t
e
n
o
M
-
n
o
N
$(a)
$(b)(i)
$(c)
-
e
r
a
h
S
f
o
e
u
a
V
l
s
d
r
a
w
A
d
e
s
a
B
$(d)
i
e
c
v
r
e
S
g
n
o
L
e
v
a
e
L
$
2021
258,306
2020
244,997
2021
117,650
2020
111,150
2021
108,600
2020
102,600
2021
108,600
2020
102,600
2021
117,650
2020
111,150
2021
108,600
2020
102,600
2021
819,406
2020
775,097
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
n
o
i
t
a
u
n
n
a
r
e
p
u
S
s
t
fi
e
n
e
B
$
21,694
21,003
12,350
12,350
11,400
11,400
11,400
11,400
12,350
12,350
11,400
11,400
80,594
79,903
–
–
–
–
–
–
–
–
–
–
–
–
–
–
n
o
i
t
a
n
m
r
e
T
i
s
t
fi
e
n
e
B
$
l
a
t
o
T
$
280,000
266,000
130,000
123,500
120,000
114,000
120,000
114,000
130,000
123,500
120,000
114,000
–
–
–
–
–
–
–
–
–
–
–
–
– 900,000
–
855,000
d
e
s
a
b
e
c
n
a
m
r
o
f
r
e
p
f
o
n
o
i
t
r
o
p
o
r
P
n
o
i
t
a
r
e
n
u
m
e
r
s
u
n
o
B
h
s
a
C
I
T
S
r
a
e
y
n
i
d
e
t
s
e
v
s
u
n
o
B
h
s
a
C
I
T
S
r
a
e
y
n
i
d
e
t
i
e
f
r
o
f
%(j)
%
%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2021
1,083,690 600,000 2,548
581,574 107,989
16,665 1,000,000 3,392,466
35
100
–
2020
967,514
– 4,277
676,736
–
25,000
2021
393,684
231,299
5,051
108,841
6,325
21,694
2020
369,520
– 4,254
110,404
6,344
21,003
–
–
–
1,673,527
766,894
511,525
40
41
22
–
100
100
–
–
100
2021 2,296,780 831,299 7,599
690,415 114,314
118,953 1,000,000 5,059,360
2020
2,112,131
–
8,531
787,140
6,344 125,906
– 3,040,052
2021
342,333 150,000
434
2020
–
–
–
–
–
–
–
16,499
–
–
–
509,266
29
100
–
–
–
2021
733,654 423,583
8,918
199,653
12,498
25,000
–
1,403,306
41
100
–
–
–
2020
701,848
– 10,440
202,361 64,758
25,000
– 1,004,407
20
–
100
2021
412,680 237,206
2,910
111,457
2020
373,012
– 4,792
112,948
–
–
25,000
–
789,253
41
100
–
25,000
–
515,752
22
–
100
2021
1,488,667 810,789 12,262
311,110 12,498
66,499
– 2,701,825
2020 1,074,860
– 15,232
315,309 64,758
50,000
–
1,520,159
2021 3,785,447 1,642,088 19,861
1,001,525 126,812
185,452 1,000,000 7,761,185
2020
3,186,991
– 23,763 1,102,449
71,102
175,906
– 4,560,211
Non-Executive Directors(f)
D McDonough,
Chairman
J Mulcahy,
Deputy Chairman
P Birtles,
Non-Executive Director
J McKellar,
Non-Executive Director
S Goddard,
Non-Executive Director
A Barrass,
Non-Executive Director
Total – Non-Executive
Directors Remuneration
Executive Directors(g)
T Salt,
Managing Director
(resigned 26 February 2021)(h)
R Thornton,
Executive Director
Total —
Directors Remuneration
Executives(g)
U Meyerhans,
Acting Chief Executive Officer
(appointed 1 March 2021)(e)
P Gibson,
Group Chief Financial Officer
C Reil,
Group General Manager —
People & Performance
(resigned 2 July 2021)
Total —
Executives Remuneration
Total — Directors
and Executives
Remuneration
Notes to the Remuneration Tables:
(a) Salary and fees represent base salary and includes the movement in annual leave provision. Executive fixed remuneration was frozen for FY21.
(b) Due to the disciplined response to weaker markets in the first half of FY21, followed by an improved financial performance in the second half and
successful execution of key business activities, the Managing Director and other executives met the gateway hurdles and were eligible for STI
payments (both financial and personal goals) at the ‘stretch’ level for FY21 performance.
(c) The short-term non-monetary benefits include insurance and other minor benefits including any applicable fringe benefits tax.
(d) The Long-Term Incentive (LTI) plan was approved by shareholders at the 2008 Annual General Meeting. The outstanding Performance Rights at
30 June 2021 were granted to executives in FY19, FY20 and FY21 (as applicable) and are subject to vesting conditions and the achievement of
specified performance hurdles over the three year performance periods. During FY21, 93% of the Performance Rights granted to executives in
respect of the FY18 LTI grant vested as the TSR hurdle was fully achieved and ROFE hurdle was partially achieved. The fair values of the Performance
Rights granted in FY19, FY20 and FY21 were calculated using Black Scholes Model (ROFE hurdle) and Monte Carlo Simulation (TSR hurdle) valuation
methodologies 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) As advised to the market on 1 March 2021, the Acting Chief Executive Officer’s, Mr Urs Meyerhans’, remuneration arrangements comprise fixed
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 29
remuneration of $1 million per annum and a bonus at the complete discretion of the Board based on Mr Meyerhans’ performance. At the
conclusion of FY21 the Board determined a bonus of $150,000 for Mr Meyerhans which was paid in July 2021. For details of Mr Urs Meyerhans’
FY22 remuneration arrangements as Managing Director, please refer to section 8.1. The Managing Director’s total remuneration for FY22 was
aligned with the market median in relation to a group of 18 peer companies of comparable operational scope and size to GWA based on the
market benchmark data provided by an independent expert adviser, Guerdon Associates.
(f) Non-executive director remuneration has remained frozen since FY16 (excluding the pay reduction of 20% during Q4 FY20 to assist in
managing costs during COVID-19). The total non-executive director remuneration is within the annual aggregate maximum amount approved by
shareholders. For details of non-executive director remuneration, please refer to section 5.
(g) The fixed remuneration for executives in FY21 was frozen. The temporary COVID-19 executive salary reductions in Q4 FY20 equivalent to 20% of
fixed remuneration were ceased as planned with normal salaries resuming on 1 July 2020. For the actual remuneration received by the executives
for FY21, please refer to the table in section 7.1.1.
(h) The termination arrangements for the former Managing Director, Mr Tim Salt, comprised the payment of 12 months’ salary in line with his
employment contract and statutory entitlements. The Board waived the requirement for Mr Salt to serve his one year’s notice period under his
employment contract by making payment of 12 months’ salary in lieu. The Board also approved STI payments to Mr Salt totalling $600,000 for
FY21. Mr Salt’s outstanding performance rights under the LTI plan will remain subject to the performance hurdles after termination on a pro-rata
basis with a proportion forfeited based on service period. Refer section 7.2.1 Performance Rights for details of the proportion forfeited during FY21.
(i) Short term bonus is inclusive of the accounting accrual for the retention bonus scheme as disclosed in Section 3.2 for Mr Richard Thornton,
Mr Patrick Gibson and Ms Cara Reil.
(j) Performance based remuneration does not include the retention bonus scheme.
7.1.1
Actual remuneration received by executives for FY21
The following table sets out the actual value of remuneration received by executives for FY21, derived from the various
components of their remuneration during FY21. This table differs from the more detailed statutory remuneration disclosures
in the Remuneration Tables in section 7.1 due to the exclusion of LTI amounts not vested and the reversal of accounting
expenses associated with LTI grants, accruals for the retention bonus scheme, and movements in leave entitlements, and is
therefore unaudited.
FY21
Executive KMP
T Salt, Managing Director(d)
(resigned 26 February 2021)
U Meyerhans, Acting Chief Executive
Officer(e) (appointed 1 March 2021)
R Thornton, Executive Director
P Gibson, Group Chief Financial Officer
C Reil, Group General Manager —
People & Performance
(resigned 2 July 2021)
Total
Non-KMP senior executives
Total(f)
Notes:
Fixed
Remuneration
$(a)
Short Term
Incentive
$(b)
Long Term
Incentive (Earned)
$(c)
Termination
Benefits
$
Total
$
975,193
600,000
389,432
1,000,000
2,964,625
333,766
414,590
758,918
150,000
204,770
375,000
–
79,973
146,037
422,910
210,000
81,711
–
–
–
–
483,766
699,333
1,279,955
714,621
2,905,377
1,539,770
697,153
1,000,000
6,142,300
1,327,027
630,834
156,468
–
2,114,329
(a) Fixed remuneration represents amounts actually paid to executives during FY21 and includes base salary, non-monetary benefits and
superannuation.
(b) Due to the improved financial performance in the second half of FY21 and successful execution of key business activities during the year,
the executives met the gateway hurdles and were eligible for STI payments (both financial and personal goals) at the ‘stretch’ level for FY21
performance.
(c) The performance hurdles for the FY18 LTI grant were tested during FY21 and partially achieved; refer section 7.2.1 Performance Rights. Excludes
the value of any unvested LTI grants expensed or reversed during FY21.
(d) For details of Mr Tim Salt’s termination arrangements refer to footnote (h) of section 7.1.
(e) For details of Mr Urs Meyerhans’ remuneration arrangements as Acting Chief Executive Officer refer to footnote (e) of section 7.1 and as Managing
Director from 1 July 2021 refer to section 8.1.
(f) Aggregate remuneration of Non-KMP senior executives as listed in section 2 table 2.
30 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
7.2 SHARE BASED PAYMENTS
7.2.1 Performance Rights
The following table shows details of the Performance Rights granted to key management personnel during the year ended
30 June 2021 and in prior years that affects compensation in this or future reporting periods.
Year
of
grant
Number
of rights
granted
%
vested
in year
%
forfeit
in year
Fair value
of rights at
grant date
$*
Issue price used
to determine
number of
rights granted
Grant date*
Executive Directors
T Salt, Managing Director
(resigned 26 February 2021)
2021
355,872
7 December 2020
2020 329,000
14 February 2020
2019
220,000
18 February 2019
–
–
–
2018
224,000
19 February 2018
93%
R Thornton, Executive Director
2021
43,723
7 December 2020
2020
40,500
14 February 2020
45,000
18 February 2019
46,000
19 February 2018
93%
7%
Executives
P Gibson, Group Chief
Financial Officer
2021
80,071
7 December 2020
2020
74,000
14 February 2020
C Reil, Group General Manager
— People & Performance
(resigned 2 July 2021)
Note:
83,000
18 February 2019
84,000
19 February 2018
93%
7%
160,259
44,840
7 December 2020
2020
41,500
14 February 2020
46,000
18 February 2019
–
–
–
–
–
–
47,000
19 February 2018
93%
7%
85,196
130,725
118,450
89,669
2019
2018
2019
2018
2021
2019
2018
67%
676,157
44%
1,036,350
11%
7%
–
–
–
566,500
427,358
83,074
127,575
115,875
87,761
–
–
–
–
–
–
–
–
–
152,135
233,100
213,725
2.81
3.04
2.73
2.68
2.81
3.04
2.73
2.68
2.81
3.04
2.73
2.68
2.81
3.04
2.73
2.68
* The issue price used to determine the number of Performance Rights offered to key management personnel during FY21 was $2.81 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 30 October 2020.
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 ROFE hurdle and Monte Carlo simulation for the TSR
hurdle. The fair value of rights issued during the year under the TSR hurdle was $1.90 per right.
All the rights carry an exercise price of nil. The rights granted on 18 February 2019, 17 February 2020 and 7 December 2020
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 2021, 2022 and 2023 respectively, subject to the achievement of the performance hurdles. The rights
granted to Mr Thornton and Mr Salt were approved by shareholders at the 2018, 2019 and 2020 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 unless the Board determined otherwise.
The number of rights outstanding at 30 June 2021 represents the balance yet to be tested.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 31
7.2.2 Status and key dates of LTI awards
The following table shows the status and key dates for Performance Rights granted to key management personnel under the
LTI plan.
Grant Date
19 February 2018
Valuation
Per Right1
Performance
Testing Windows
Expiry Date
(if hurdle not met)
Performance Status2
17 August 2020
Tranche A (TSR)
$1.43
Tranche B
(ROFE)
$2.38
27 October 2017
to 17 August 2020
(Tranche A)
1 July 2017
to 30 June 2020
(Tranche B)
Tranche A (TSR): Performance condition
met at 76th percentile resulting in
maximum 100% vesting of the grant.
Tranche B (ROFE): Performance
condition met at an average of 18.4%
per annum resulting in maximum 86%
vesting of the grant.
18 February 2019
Tranche A (TSR)
$2.23
Tranche B
(ROFE)
$2.92
14 February 2020
Tranche A (TSR)
$2.71
Tranche B
(ROFE)
$3.54
7 December 20203 Tranche A (TSR)
$1.90
Notes:
26 October 2018
to 16 August 2021
(Tranche A)
1 July 2018
to 30 June 2021
(Tranche B)
25 October 2019
to August 2022
(Tranche A)
1 July 2019
to 30 June 2022
(Tranche B)
30 October 2020
to August 2023
(Tranche A)
16 August 2021
Performance testing not yet commenced.
August 2022
Performance testing not yet commenced.
August 2023
Performance testing not yet commenced.
1. The value of performance rights at grant date calculated in accordance with AASB 2 Share-based Payments. Valuations were performed by a third
party, PWC for the FY18 grant and Deloitte for the FY19 to FY21 grants.
2. To ensure an independent TSR measurement, GWA engages the services of an external organisation, Deloitte, to assist with determining
performance under the TSR hurdle. In addition, GWA’s external auditor, KPMG, is engaged to perform agreed upon procedures to assist with ROFE
measurement and the accuracy of LTI vesting outcomes.
3. Due to the uncertainty in the market from the COVID-19 pandemic, the Board decided that the performance measure for the FY21 LTI grant would
be solely based on TSR. Refer section 6.4 Long-Term Incentive for further details.
7.3 KEY MANAGEMENT PERSONNEL TRANSACTIONS
7.3.1 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 2021 (2020: nil).
7.3.2 Other key management personnel transactions with the Group or its controlled entities
There were no other key management personnel transactions with the Group or its controlled entities during the year ended
30 June 2021 (2020: nil).
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.
32 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
7.3.3 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:
Non–Executive Directors
D McDonough
J Mulcahy
P Birtles
J McKellar
S Goddard
A Barrass
Executive Directors
T Salt (resigned 26 February 2021)
R Thornton
Executives
U Meyerhans (appointed 1 March 2021)
P Gibson
C Reil (resigned 2 July 2021)
Non–Executive Directors
D McDonough
J Mulcahy
P Birtles
J McKellar
S Goddard
A Barrass
Executive Directors
T Salt
R Thornton
Executives
P Gibson
C Reil
Held at
1 July 2020
Granted as
compensation
Purchases
Sales
30 June 2021
Held at
150,000
40,950
38,650
3,054
10,000
–
512,570
229,577
n/a
209,500
–
–
–
–
–
–
–
208,096
42,734
–
78,036
43,663
5,234
–
–
7,923
–
–
–
–
–
9,685
–
–
–
–
–
–
–
–
–
–
–
–
155,234
40,950
38,650
10,977
10,000
–
n/a
272,311
–
297,221
43,663
Held at
1 July 2019
Granted as
compensation
Purchases
Sales
30 June 2020
Held at
150,000
40,950
38,650
3,054
10,000
–
298,070
185,577
129,000
–
–
–
–
–
–
–
214,500
44,000
80,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
150,000
40,950
38,650
3,054
10,000
–
512,570
229,577
209,500
–
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 2021 is listed in the Directors’
Report under Directors’ Interests.
During the FY21 reporting period, there were 372,529 shares vested to key management personnel as compensation
(2020: 339,000). The aggregate number of shares held by key management personnel or their related parties at
30 June 2021 was 869,006 (2020: 1,194,301).
8. KEY TERMS OF EMPLOYMENT CONTRACTS
8.1 MANAGING DIRECTOR REMUNERATION
The remuneration arrangements for Mr Urs Meyerhans as Managing Director and Chief Executive Officer were advised to
the market on 29 June 20211. The arrangements were determined by the Board following the provision of market data from
an independent external adviser, Guerdon Associates. Based on the benchmark data, Mr Meyerhans’ total remuneration was
aligned with the market median in relation to a group of 18 peer companies of comparable operational scope and size to
GWA. For details of Mr Meyerhans’ remuneration arrangements as Acting Chief Executive Officer during FY21, refer note (e)
to the Remuneration Tables in section 7.1.
1
Due to the continuing market uncertainty from the COVID-19 pandemic, the Board decided on a single performance measure of relative TSR for the
FY22 LTI grant to the Managing Director. Please refer to section 3.2 FY22 Executive Remuneration Changes for further details.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 33
The following is a summary of Mr Meyerhans’ remuneration package for FY22:
• Total Fixed Remuneration (TFR) comprising salary, superannuation and all other benefits other than incentive plans
of $1,000,000;
• Participation in GWA’s Short-Term Incentive (STI) plan
– STI opportunity of 50% of TFR based on Mr Meyerhans meeting Board approved Key Performance Indicator (KPI)
objectives, including both financial and critical non-financial KPIs.
• Participation in GWA’s Long-Term Incentive (LTI) plan:
– LTI opportunity of 150% of TFR over a three year performance period and subject to achievement of a single
performance hurdle of relative Total Shareholder Return (TSR).
The remuneration arrangements for Mr Meyerhans represent a change in the structural elements of the approach to
executive remuneration with a heavier weighting being placed on long-term incentives coupled with a continued focus on
short-term financial and critical non-financial KPIs. Please refer to section 3.2 FY22 Executive Remuneration Changes for
further details.
8.2 NOTICE AND TERMINATION PAYMENTS
The specified executives in the Directors’ Report including the Managing Director, Mr Urs Meyerhans, are on
open-ended contracts.
The employment contract for Mr Meyerhans provides that if either the Group or Mr Meyerhans wishes to terminate
employment for any reason, no less than one year’s written notice of termination is required. The Group retains the right to
immediately terminate the employment contract of Mr Meyerhans by making payment equal to twelve months salary in lieu
of providing notice.
For the other specified executives, the Group or the executives are required to give no less than three months notice of
termination of employment for any reason. The Group retains the right to immediately terminate the employment contracts
of the executives by making payment equal to three months salary 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 Board. Shareholder approval is required for termination payments in excess of twelve
months salary.
8.3 TREATMENT OF INCENTIVES ON TERMINATION
The following table shows the treatment of incentives on termination of employment in the various circumstances shown.
Circumstances
Short term incentive1
Immediate termination
for cause
No STI payable and clawback provisions may
apply (including deferred STI)
Long term incentive –
unvested Performance Rights
Performance Rights are forfeited
Resignation
Board discretion to award STI on a pro-rata
basis (including deferred STI)
Performance Rights are forfeited unless Board
determines otherwise
Notice by Company,
good leaver, retirement,
redundancy, death or
permanent disability
Board discretion to award STI on a pro-rata
basis (including deferred STI)
Board discretion to allow awards to vest or
remain subject to performance hurdles after
termination on a pro-rata basis
Change of control
STI will be paid on a pro-rata basis
The Board has discretion to allow awards
to vest on a change of control of GWA
(e.g. a takeover or merger).
Notes:
1. Any STI payments will be paid according to the normal annual STI payment time frame (i.e. payment timing will not be accelerated).
The Directors’ Report is made out in accordance with a resolution of the directors:
Darryl D McDonough
Chairman
16 August 2021
Urs B Meyerhans
Managing Director
34 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
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 of GWA Group Limited for the financial year ended 30
June 2021 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
Trent Duvall
Partner
Sydney, 16 August 2021
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International
Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the
independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 35
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
Notes to the Consolidated Financial Statements
GWA Group Limited Financial Report
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
ABN 15 055 964 380
CONTENTS
NOTES
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
Notes to the Consolidated Financial Statements
37
38
39
40
41
1. Significant accounting policies
2. Operating segments
3.
Income and expenses
4. Income tax expenses
5. Earnings per share
6. Cash and cash equivalents
7. Trade and other receivables
8.
Inventories
9. Deferred tax assets and liabilities
10. Property, plant and equipment
11. Intangible assets
12. Right-of-use assets and lease liabilities
13. Trade and other payables
14. Employee benefits
15. Provisions
16. Loans and borrowings
17. Share capital and reserves
18. Financial instruments and financial risk management
19. Share-based payments
20. Related parties
21. Auditor’s remuneration
22. Commitments
23. Consolidated entities
24. Deed of cross guarantee
25. Parent entity disclosures
26. Subsequent events
Directors’ Declaration
Independent Auditor’s Report
To the Shareholders of GWA Group Limited
41
43
45
47
49
50
50
51
51
53
55
57
59
59
59
60
61
63
71
72
73
73
74
75
77
77
78
79
36 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June
In thousands of AUD
Profit or loss
CONTINUING OPERATIONS
Sales revenue
Cost of sales
Gross profit
Other income
Selling expenses
Administrative expenses
Other expenses(i)
Operating profit
Finance income
Finance expenses
Net financing costs
Profit before tax
Income tax expense
Profit from continuing operations
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign subsidiaries,
net of tax
Cashflow hedges, net of tax
Other comprehensive income, net of tax
Total comprehensive income for the period
EARNINGS PER SHARE (CENTS)
Total
– Basic
– Diluted
Continuing operations excluding Methven integration costs
and ERP/CRM and project costs
– Basic
– Diluted
Note
2021
2020
3(a)
3(c)
3(b)
3(d)
3(f)
3(f)
4
5
5
5
5
405,736
(241,660)
164,076
1,387
(50,844)
(45,929)
(9,737)
58,953
21
(8,040)
(8,019)
50,934
(15,878)
35,056
477
2,705
3,182
38,238
13.3
13.2
16.0
15.9
398,704
(237,432)
161,272
2,892
(53,781)
(38,020)
(2,066)
70,297
156
(8,800)
(8,644)
61,653
(17,767)
43,886
(1,740)
(3,120)
(4,860)
39,026
16.6
16.5
17.0
16.9
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.
Other expenses includes $9.5m (pre-tax) of Methven integration and Enterprise Resource Planning/Customer Relationship Management (ERP/CRM) project
(i)
costs. Refer to Note 3(d).
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 37
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
Consolidated Statement of Financial Position
As at
In thousands of AUD
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Other
Total current assets
NON-CURRENT ASSETS
Deferred tax assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Financial asset at fair value
Total non-current assets
Total assets
CURRENT LIABILITIES
Trade and other payables
Loans and borrowings
Employee benefits
Income tax payable
Lease liabilities
Provisions
Derivative financial instruments
Total current liabilities
NON-CURRENT LIABILITIES
Deferred tax liability
Trade and other payables
Loans and borrowings
Lease liabilities
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Retained earnings
Total equity
Note
30 June 2021
30 June 2020
6
7
8
18
9
10
11
12
18
13
16
14
4
12
15
18
9
13
16
12
14
15
17
42,634
56,425
70,019
686
2,922
172,686
15,347
21,534
420,619
57,118
2,835
517,453
690,139
51,271
25,000
5,623
3,859
11,813
4,737
1,413
103,716
102,760
734
121,106
54,685
4,378
6,149
289,812
393,528
296,611
311,294
(2,349)
(12,334)
296,611
32,359
56,628
78,782
–
3,772
171,541
15,990
24,830
421,226
67,833
–
529,879
701,420
43,699
27,000
5,120
137
11,458
6,438
4,315
98,167
102,846
696
148,400
63,138
4,310
4,132
323,522
421,689
279,731
307,790
(5,758)
(22,301)
279,731
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
38 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES Consolidated Statement of Cash Flows
For the year ended 30 June
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
Lease interest paid
Interest received
Income taxes paid
Net cash from operating activities
6(b)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment
Acquisition of property, plant and equipment
Acquisition of intangible assets
Acquisition of financial assets
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing
Repayment of borrowings
Dividends paid
Repayment of lease liability
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate changes
Cash and cash equivalents at 30 June
Note
2021
2020
455,549
(358,317)
97,232
(4,780)
(2,739)
21
(11,436)
78,298
1
(3,584)
(1,563)
(2,835)
(7,981)
37,747
(67,000)
(21,585)
(8,695)
(59,533)
10,784
32,359
(509)
42,634
461,319
(374,567)
86,752
(5,431)
(2,683)
159
(17,845)
60,952
35
(10,044)
(2,308)
–
(12,317)
293,145
(293,827)
(46,191)
(8,384)
(55,257)
(6,622)
39,637
(656)
32,359
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 39
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
Consolidated Statement of Changes in Equity
For the year ended 30 June 2021
In thousands of AUD
Note
Share
capital
Translation
reserve
Hedging
reserve
Equity
compensation
reserve
Retained
earnings
Total
Balance as at 1 July 2020
307,790
(4,139)
(2,971)
1,352
(22,301)
279,731
Total comprehensive income
for the period
Profit for the period
Other comprehensive income
Exchange differences on translation
of foreign subsidiaries, net of tax
Cash flow hedges, net of tax
17
Total other comprehensive income
Total comprehensive income
Transaction with owners, recorded
directly in equity
Share-based payments, net of tax
Dividends paid and issue of shares
under the Dividend Reinvestment Plan
Total transactions with owners
–
–
–
–
–
–
3,504
3,504
–
477
–
477
477
–
–
–
–
–
2,705
2,705
2,705
–
–
–
Balance at 30 June 2021
311,294
(3,662)
(266)
–
–
–
–
–
35,056
35,056
–
–
–
477
2,705
3,182
35,056
38,238
227
–
227
–
(25,089)
(21,585)
227
1,579
(25,089)
(21,358)
(12,334)
296,611
For the year ended 30 June 2020
In thousands of AUD
Balance as at 1 July 2019
Total comprehensive income
for the period
Profit for the period
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 income
Transaction with owners,
recorded directly in equity
Share-based payments, net of tax
Dividends paid
Total transactions with owners
Balance at 30 June 2020
Share
capital
Translation
reserve
Hedging
reserve
Equity
compensation
reserve
Retained
earnings
Total
307,790
(2,399)
149
1,212
(19,996)
286,756
–
–
–
–
–
–
–
–
(1,740)
–
(1,740)
(1,740)
–
–
–
–
–
(3,120)
(3,120)
(3,120)
–
–
–
–
–
–
–
–
43,886
43,886
–
–
–
43,886
(1,740)
(3,120)
(4,860)
39,026
140
–
140
–
(46,191)
(46,191)
140
(46,191)
(46,051)
307,790
(4,139)
(2,971)
1,352
(22,301)
279,731
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
40 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES Notes to the Consolidated Financial Statements
SECTION I: OVERVIEW
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 2021 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, 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.
The financial report was authorised for issue by the directors on
16 August 2021.
(a) Statement of compliance
The financial report is a general purpose financial report which
has been prepared in accordance with Australian Accounting
Standards (‘AASB’) 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 (‘IFRS’) 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 financial report is prepared on the historical cost basis
except for derivative financial instruments which are measured
at fair value.
The Company is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Report) Instrument 2016/191
dated 24 March 2016 and in accordance with that Instrument,
amounts in the financial report and Directors’ Report have been
rounded 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. Information about significant areas of estimation
uncertainty and critical judgements in applying accounting
policies that have the most significant effect on the amounts
recognised in the financial statements are described in the
following notes:
• Note 11 — measurement of the recoverable amounts of
intangible assets
• Note 18 — valuation of financial instruments
The accounting policies set out in this consolidated financial
report have been applied consistently to all periods presented.
The accounting policies have been applied consistently by all
entities in the consolidated entity. The entity has elected not to
early adopt any accounting standards or amendments.
Certain comparative information included in note disclosures
have been amended in these financial statements to conform to
the current year presentation.
(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 2021:
• AASB 2018-6 Definition of a Business — Amendments to
AASB 3
• AASB 2018-7 Definition of Material — Amendments to IAS 1
and IAS 8
• AASB 2019-1 Amendments to The Conceptual Framework
for Financial Reporting
• AASB 2019-3 Interest Rate Benchmark Reform —
Amendments to AASB 9, AASB 139 and AASB 7
• AASB 2019-5 Amendments to Australian Accounting
Standards — Disclosure of the Effect of New IFRS
Standards Not Yet Issued in Australia
• Annual Improvements to IFRS Standards 2018-2020
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 41
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION I: OVERVIEW (CONTINUED)
1. Significant accounting policies (continued)
(c) Changes in accounting policies, disclosures,
standards and interpretations (continued)
(ii) Standards and Interpretations issued but not yet effective
At the date of authorisation of the consolidated financial
statements, the following Standards and Interpretations were
issued but not yet effective.
Effective for
the annual
reporting
period
beginning on
Expected to
be initially
applied in
the period
ending
1 January 2021
30 June 2022
1 January 2022
30 June 2023
1 January 2023
30 June 2024
AASB 2020-8 — Interest
Rate Benchmark (IBOR)
Reform — Phase 2
Amendments to AASB 4,
AASB 7, AASB 9, AASB 16
and AASB 139
AASB 2020-3 — Narrow
Scope amendments
to AASB 16, AASB 137
and AASB 3. Annual
improvements to AASB
16, AASB 1, AASB 9 and
AASB 141
AASB 2020-1 Classification
of Liabilities as Current
or Non-current —
Amendments to IAS 1
AASB 2021-2 Disclosure
of accounting policies and
definition of accounting
estimates
The consolidated entity is assessing the potential impact of the
above standards and interpretations issued but not yet effective
on its consolidated financial statements.
(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 a business
combination shall be measured at fair value, which shall be
calculated as the sum of the business combination date fair
values of the assets transferred by the acquirer, the liabilities
incurred by the acquirer to former owners of the acquiree
and the equity issued by the acquirer, and the amount of any
non-controlling interest in the acquiree. Transaction costs are
expensed as incurred.
42 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
(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 results and balances
of subsidiaries are included in the consolidated financial
statements from the date on which control commences until
the date on which control ceases.
(iii) Transactions eliminated on consolidation
Intra-group balances and transactions, and unrealised income
and expense arising from intra-group transactions, are eliminated.
(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 date
the fair value was determined.
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.
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. Foreign exchange differences
arising on retranslation at balance date are recognised in
other comprehensive income, and presented in the foreign
currency translation reserve (FCTR) in equity. Hedge instrument
movements of a hedge of a net investment in a foreign
operation is also recognised in the FCTR to the extent the
hedge is effective.
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.
1 January 2023
30 June 2024
(ii) Financial statements of foreign operations
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION I: OVERVIEW (CONTINUED)
SECTION II: RESULTS FOR THE YEAR
2. Operating segments
The consolidated entity has one continuing reportable segment,
Water Solutions. This segment includes the sale of vitreous china
toilet suites, basins, plastic cisterns, taps and showers, baths,
kitchen sinks, laundry tubs, domestic water control valves, smart
products and bathroom accessories. The CEO reviews internal
management reports on a monthly basis.
Information regarding the results of each reportable segment
is included below. Performance is measured based on segment
profit before interest and income tax (‘EBIT’), and excludes
Methven integration and ERP/CRM project costs, in line with
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 segment relative to other entities that operate in
these industries.
1.
Significant accounting policies (continued)
(f) Current vs non-current classification
The consolidated entity presents assets and liabilities in
the consolidated statement of financial position based on
current/non-current classification.
An asset is current when it is:
• Expected to be realised or intended to be sold or consumed
in the normal operating cycle;
• Expected to be realised within twelve months after the
reporting period;
• Held primarily for trading; or
• Cash and cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve
months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
•
•
It is expected to be settled in the normal operating cycle;
It is due to be settled within twelve months after the
reporting period;
• Held primarily for trading; or
• There is no unconditional right to defer the settlement of the
liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current
assets and liabilities.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 43
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION II: RESULTS FOR THE YEAR (CONTINUED)
2. Operating segments (continued)
In thousands of AUD
For the year ended 30 June
Sales revenue
Segment EBIT
Depreciation (property, plant and equipment)
Depreciation (right of use assets)
Amortisation
Capital expenditure
As at 30 June
Reportable segment assets
Reportable segment liabilities
Reconciliation of profit
For the year ended 30 June
Total EBIT for reportable segment
Methven integration and ERP/CRM project costs(i)
Operating profit from continuing operations
(i) Integration and project costs
In thousands of AUD
For the year ended 30 June
Integration costs
ERP/CRM project costs
Total integration and project costs
Income tax benefit
Integration and project costs, net of tax
Geographical information
Water Solutions
2021
2020
405,736
398,704
68,482
71,840
5,960
11,901
2,540
5,147
690,139
393,528
2021
68,482
(9,529)
58,953
2021
4,732
4,797
9,529
(2,262)
7,267
5,303
12,956
2,107
12,317
701,420
421,689
2020
71,840
(1,543)
70,297
2020
1,543
–
1,543
(506)
1,037
In thousands of AUD
Australia
New Zealand
Other
Consolidated
For the year ended 30 June
2021
2020
2021
2020
2021
2020
2021
2020
External sales revenue
Non-current assets
319,831
323,183
464,917
470,869
54,186
26,773
47,319
31,719
28,202
405,736
398,704
37,588
25,763
21,422
517,453
529,879
The revenue information above is based on the geographical location of customers. Non-current assets are based on the
geographical location of the assets.
44 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION II: RESULTS FOR THE YEAR (CONTINUED)
2. Operating segments (continued)
Major customers
The consolidated entity conducts business with three customers (2020: four) where the net revenue generated from each customer
exceeds 10% of the consolidated entity’s net revenue. Net revenue from these customers was:
In thousands of AUD
For the year ended 30 June
Customer 1
Customer 2
Customer 3
Income and Expenses
3.
(a) Sales revenue
In thousands of AUD
Sales revenue
2021
2020
88,842
65,618
52,354
85,091
64,545
49,456
2021
2020
405,736
398,704
Sales revenue is recognised on the satisfaction of each performance obligation the consolidated entity has with its customers, and
is measured based on an allocation of the contract’s transaction price. The consolidated entity’s key performance obligation is the
delivery of goods to its customers with typical payment terms of 30 days. Key components of the transaction price include the price
for the goods, along with rebates and stock return estimates.
Refer to Note 2 geographical information for disaggregated revenue information.
(b) Other income
In thousands of AUD
Foreign currency gains
Other — scrap income, royalties
Government grant income (employment assistance funding)
2021
370
983
34
1,387
2020
968
876
1,048
2,892
Government grant income relates to employment assistance funding provided by governments in response to the coronavirus.
These grants have been recognised in other income where there is reasonable assurance that the grant will be received and all
attached conditions will be complied with.
(c) Cost of sales
In thousands of AUD
Cost of sales
2021
2020
241,660
237,432
Cost of sales comprises the cost of manufacturing and purchase of goods including supply chain costs such as freight and
warehousing.
(d) Other expenses
In thousands of AUD
Methven integration and ERP/CRM project costs
Foreign currency losses
Other
Note
2
2021
9,529
208
–
2020
1,543
94
429
9,737
2,066
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 45
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION II: RESULTS FOR THE YEAR (CONTINUED)
3.
Income and Expenses (continued)
(e) Personnel expenses
In thousands of AUD
Wages and salaries — including superannuation contributions, annual leave and long service leave
Equity-settled share-based payment transactions
2021
74,844
1,381
76,225
2020
69,554
1,431
70,985
Defined contribution superannuation funds
The consolidated entity makes contributions to defined contribution superannuation funds. A defined contribution superannuation
fund is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal
or constructive obligation to pay further amounts. Obligations for contributions to defined contribution superannuation funds are
recognised as an employee benefit expense in profit or loss in the periods during which the services are rendered by employees.
The amount recognised as an expense was $4,084,000 for the financial year ended 30 June 2021 (2020: $3,948,000) for
continuing operations.
(f) Net financing costs
In thousands of AUD
Finance income
Interest expense on financial liabilities
Interest expense on swaps
Fees on financial liabilities including amortisation
Interest on lease liabilities
Finance expense
Net financing costs
2021
21
3,691
1,224
386
2,739
8,040
2020
156
4,910
910
297
2,683
8,800
8,019
8,644
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.
46 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION II: RESULTS FOR THE YEAR (CONTINUED)
4. Income tax expenses
In thousands of AUD
Current tax expense
Current year
Adjustments for prior years
Deferred tax (expense)/benefit
Origination and reversal of temporary differences
Total tax expense for the consolidated entity
Numerical reconciliation between tax expense and pre-tax profit
Profit before tax for the consolidated entity
Tax expense using the domestic rate of 30%
Tax expense/(benefit) due to:
Non-deductible expenses
Effect of tax rate in foreign jurisdictions
Non-deductible integration costs
Rebateable research and development
Other items
Under/(over) provided in prior years
Income tax expense on pre-tax profit for the consolidated entity
Deferred tax recognised directly in equity
In thousands of AUD
Cash flow hedges
Share buy-back costs
Current tax liability
In thousands of AUD
Current tax liability
2021
2020
16,233
29
16,262
(384)
15,878
50,934
15,280
75
(180)
595
(165)
244
15,849
29
15,878
2021
941
–
941
2021
3,859
17,792
(945)
16,847
920
17,767
61,653
18,496
256
(178)
71
(129)
196
18,712
(945)
17,767
2020
(1,396)
2
(1,394)
2020
137
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 47
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION II: RESULTS FOR THE YEAR (CONTINUED)
4. Income tax expenses (continued)
Income tax
Tax expense comprises current and deferred tax. Current and deferred taxes are recognised in profit or loss except to the extent
that they relate to a business combination, or items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable
also includes any tax liability arising from the declaration of dividends.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
•
•
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss;
temporary differences related to investments in subsidiaries and associates and jointly controlled entities to the extent that it is
probable that they will not reverse in the foreseeable future;
•
taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax
rates enacted or substantively enacted at the reporting date.
In determining the amount of current and deferred tax, the consolidated entity takes into account the impact of uncertain tax
positions and whether additional taxes and interest may be due. The consolidated entity believes that its accruals for tax liabilities
are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior
experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events.
New information may become available that causes the consolidated entity to change its judgements 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.
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.
The current tax liability for the consolidated entity represents the amount of income taxes payable. In accordance with 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.
Goods and Services Tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of
GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the
taxation authorities 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 taxation authorities are classified as operating cash flows.
48 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION II: RESULTS FOR THE YEAR (CONTINUED)
5. Earnings per share
In cents
Total
– Basic
– Diluted
Continuing operations excluding Methven integration costs
and ERP/CRM project costs
– Basic
– Diluted
2021
13.3
13.2
16.0
15.9
2020
16.6
16.5
17.0
16.9
Basic earnings per share (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.
The calculation of basic and diluted EPS has been based on the following profit attributable to ordinary shareholders.
Profit attributable to ordinary shareholders — basic and diluted
In thousands of AUD
Continuing operations
Profit before Methven integration and ERP/CRM project costs
Methven integration and ERP/CRM project costs
Profit for the year
2021
2020
42,323
(7,267)
35,056
44,923
(1,037)
43,886
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 new shares issued under the DRP
Weighted average number of ordinary shares
2021
263,948
374
264,322
2020
263,948
–
263,948
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 new shares issued under the DRP
Effect of performance rights on issue
2021
264,322
374
1,227
2020
263,948
–
1,306
Weighted average number of ordinary shares (diluted)
265,923
265,254
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 49
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION II: RESULTS FOR THE YEAR (CONTINUED)
6. Cash and cash equivalents
(a) Balances
In thousands of AUD
Bank balances
Cash and cash equivalents
2021
42,634
42,634
2020
32,359
32,359
Cash and cash equivalents comprise cash balances and call deposits with an original maturity date of three months or less.
The consolidated entity’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in
Note 18.
(b) Reconciliation of cash flows from operating activities to net profit
In thousands of AUD
Profit for the year
Adjustments for:
Depreciation
Amortisation
Net share-based payments
Unrealised foreign exchange loss/(gain)
Loss/(gain) on sale of PP&E and intangible assets
Other non-cash movements
Changes in assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
Decrease/(increase) in prepayments
Increase/(decrease) in trade payables and accrued expenses
Increase/(decrease) in deferred taxes and in taxes payable
Increase/(decrease) in provisions and employee benefits
Net cash flows from operating activities
7. Trade and other receivables
In thousands of AUD
Net trade receivables
Other
2021
35,056
17,861
2,540
133
37
(32)
111
203
8,763
850
7,610
4,279
887
78,298
2021
55,399
1,026
56,425
2020
43,886
18,259
2,107
(75)
(713)
429
(1,298)
14,429
(3,521)
478
(11,759)
(1,288)
18
60,952
2020
56,080
548
56,628
Trade receivables are initially measured at the transaction price determined under AASB 15 (refer to Note 3(a)) and subsequently
measured at amortised cost using the effective interest rate (EIR) method and are subject to impairment. Impairment losses are
recognised in profit or loss and reflected in an allowance account against trade receivables.
The consolidated entity recognises an allowance for expected credit losses (ECLs) for trade receivables. ECLs are based on the
difference between the contractual cash flows due in accordance with the contract and all the cash flows expected to be received,
discounted at an approximation of the original EIR.
The consolidated entity applies a simplified approach in calculating ECLs. Therefore, the consolidated entity does not track changes
in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The consolidated entity has
established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to
the debtors and the economic environment.
The consolidated entity’s exposure to credit and currency risk and impairment loss related to trade and other receivables are
disclosed in Note 18.
50 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION III: ASSETS AND LIABILITIES (CONTINUED)
8.
Inventories
In thousands of AUD
Raw materials and consumables
Work in progress
Finished goods
2021
822
134
69,063
70,019
2020
4,268
181
74,333
78,782
Inventories are measured at the lower of cost and net realisable value.
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.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and
selling expenses. The future estimated recoverability of inventory was determined with consideration of excess inventory volumes
(i.e. ageing analysis), discontinued product lines and risk weightings applied by management with reference to their assessment of
recovery rates.
9. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
In thousands of AUD
Property, plant & equipment
Non-indefinite life intangibles
Indefinite life intangibles
Inventories
Employee benefits
Provisions
Leases
Other items
Tax assets/(liabilities)
Set off of tax
Net tax assets/(liabilities)
Assets
Liabilities
Net
2021
889
648
–
5,000
2,947
3,019
2,225
4,188
18,916
(3,569)
15,347
2020
1,141
660
2021
(1,668)
(1,123)
2020
(1,273)
(960)
2021
(779)
(475)
2020
(132)
(300)
–
(102,760)
(102,846)
(102,760)
(102,846)
4,661
2,816
2,914
1,449
4,831
–
–
–
–
–
–
–
–
(778)
(249)
5,000
2,947
3,019
2,225
3,410
4,661
2,816
2,914
1,449
4,582
18,472
(106,329)
(105,328)
(87,413)
(86,856)
(2,482)
3,569
2,482
–
–
15,990
(102,760)
(102,846)
(87,413)
(86,856)
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 51
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION III: ASSETS AND LIABILITIES (CONTINUED)
9. Deferred tax assets and liabilities (continued)
In thousands of AUD
Property, plant & equipment
Non-indefinite life intangibles
Indefinite life intangibles
Inventories
Employee benefits
Provisions
Leases
Other items
In thousands of AUD
Property, plant & equipment
Non-indefinite life intangibles
Indefinite life intangibles
Inventories
Employee benefits
Provisions
Leases
Other items
Balance
1 July 20
Recognised
in income
Recognised
in equity
Exchange
differences
Balance
30 June 21
(132)
(300)
(102,846)
4,661
2,816
2,914
1,449
4,582
(86,856)
(612)
(165)
–
354
123
99
765
(217)
347
–
–
–
–
–
–
–
(941)
(941)
(35)
(10)
86
(15)
8
6
11
(14)
37
(779)
(475)
(102,760)
5,000
2,947
3,019
2,225
3,410
(87,413)
Balance
1 July 19
Recognised
in income
Recognised
in equity
Exchange
differences
Balance
30 June 20
424
(45)
(102,842)
4,294
2,934
3,070
652
4,183
(87,330)
(539)
(257)
–
386
(110)
(132)
787
(988)
(853)
–
–
–
–
–
–
–
1,394
1,394
(17)
2
(4)
(19)
(8)
(24)
10
(7)
(67)
(132)
(300)
(102,846)
4,661
2,816
2,914
1,449
4,582
(86,856)
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
2021
15,203
–
2020
15,203
–
The deductible capital losses accumulated at balance date do not expire under current tax legislation. Refer to Note 4 for the
consolidated entity’s accounting policy on deferred tax.
52 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION III: ASSETS AND LIABILITIES (CONTINUED)
10. Property, plant and equipment
In thousands of AUD
Cost
Balance at 1 July 2020
Additions
Disposals
Transfers
Exchange rate movements
Balance at 30 June 2021
Balance at 1 July 2019
Additions
Disposals
Transfers
Exchange rate movements
Balance at 30 June 2020
Accumulated depreciation
Balance at 1 July 2020
Depreciation
Disposals
Exchange rate movements
Balance at 30 June 2021
Balance at 1 July 2019
Depreciation
Disposals
Exchange rate movements
Balance at 30 June 2020
Carrying amounts
As at 30 June 2021
As at 30 June 2020
Plant and
equipment
Work in
progress
48,866
1,919
(1,679)
1,792
(17)
50,881
47,311
11,507
(9,466)
681
(1,167)
48,866
(25,903)
(5,960)
507
4
(31,352)
(28,849)
(5,303)
8,205
44
(25,903)
1,867
1,930
–
(1,792)
–
2,005
2,342
232
–
(681)
(26)
1,867
–
–
–
–
–
–
–
–
–
–
Total
50,733
3,849
(1,679)
–
(17)
52,886
49,653
11,739
(9,466)
–
(1,193)
50,733
(25,903)
(5,960)
507
4
(31,352)
(28,849)
(5,303)
8,205
44
(25,903)
19,529
22,963
2,005
1,867
21,534
24,830
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 53
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION III: ASSETS AND LIABILITIES (CONTINUED)
10. Property, plant and equipment (continued)
Recognition and measurement
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
where they are located, and an appropriate proportion of overheads. 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.
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.
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.
Depreciation
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. The estimated useful lives in the current and comparative periods are as follows:
• plant and equipment 3-15 years
The residual value, the useful life and the depreciation method applied to an asset are reassessed annually.
Impairment
The carrying values of property, plant and equipment are reviewed for impairment at each reporting date, with the recoverable
amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The
recoverable amount of property, plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating
unit to which the asset belongs, unless the asset’s value in use can be estimated to be close to its fair value.
An impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount.
The asset or cash-generating unit is then written down to its recoverable amount. Impairment losses are recognised in profit or loss.
54 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION III: ASSETS AND LIABILITIES (CONTINUED)
11. Intangible assets
In thousands of AUD
Cost
Balance at 1 July 2020
Additions
Disposals
Exchange rate movements
Balance at 30 June 2021
Balance at 1 July 2019
Additions
Disposals
Exchange rate movements
Balance at 30 June 2020
Accumulated amortisation
Balance at 1 July 2020
Amortisation
Disposals
Exchange rate movements
Balance at 30 June 2021
Balance at 1 July 2019
Amortisation
Disposals
Exchange rate movements
Balance at 30 June 2020
Carrying amounts
As at 30 June 2021
As at 30 June 2020
Software
Brand names
33,045
346,855
433
(373)
5
33,110
31,618
1,615
(178)
(10)
33,045
(30,117)
(1,835)
223
(5)
(31,734)
(28,748)
(1,423)
52
2
(30,117)
–
–
320
347,175
346,968
–
–
(113)
346,855
–
–
–
–
–
–
–
–
–
Trade names,
designs
and patents
5,027
1,144
(135)
(12)
6,024
5,007
291
(168)
(103)
5,027
(520)
(705)
135
9
(1,081)
–
(684)
160
4
(520)
Goodwill
Total
66,936
451,863
–
–
189
67,125
1,577
(508)
502
453,434
67,246
450,839
–
–
(310)
66,936
–
–
–
–
–
–
–
–
–
–
1,906
(346)
(536)
451,863
(30,637)
(2,540)
358
4
(32,815)
(28,748)
(2,107)
212
6
(30,637)
1,376
2,928
347,175
346,855
4,943
4,507
67,125
66,936
420,619
421,226
Recognition and measurement
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and any accumulated impairment losses.
The cost of an intangible asset acquired in a business combination is its fair value as at the date of acquisition. Goodwill acquired in
business combinations is initially measured at cost being the excess of the cost of the business combination over the consolidated
entity’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities.
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.
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.
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and
understanding, is recognised in the profit or loss as incurred. Expenditure incurred in developing, maintaining or enhancing brand
names is recognised in the Income Statement in the year in which it is incurred.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 55
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION III: ASSETS AND LIABILITIES (CONTINUED)
11. Intangible assets (continued)
Capitalisation of configuration and customisation costs in SaaS arrangements
Software-as-a-service (‘SaaS’) arrangements are service contracts providing the Company with the right to access the cloud
provider’s application software over the contract period. As such, the Group does not receive a software intangible asset for this
right to use at the contract commencement date and associated costs are recognised as an operating expense when the services
are received.
In implementing SaaS arrangements, the Company develops software code that either enhances, modifies or creates additional
capability of existing software and connects with the SaaS arrangement cloud-based application, or develops software code
that meets the definition of and recognition criteria of an intangible asset in accordance with AASB 138 Intangible Assets and
International Financial Reporting Standards Interpretations Committee’s (IFRIC) Configuration or customisation costs in a cloud
computing arrangement — April 2021 agenda decision. This requires the application of judgement including determining whether
the developed software code is distinct or not from the underlying use of the application software. Costs that do not meet either of
these criteria are recognised as an operating expense.
Amortisation
Amortisation is recognised in the Income Statement on a straight-line basis over the estimated useful lives of intangible assets
unless such lives are indefinite. 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:
• goodwill
• brand names
• software
•
trade names
• designs
• patents
indefinite
indefinite
3-5 years
10-20 years
15 years
3-19 years (based on patent term)
Brand names are not amortised as the directors believe that they have an indefinite useful life.
Impairment
Intangible assets with finite lives are assessed for impairment whenever there is an indication that the intangible asset may be impaired.
Intangible assets with an indefinite useful life are tested for impairment annually, or more frequently if events or changes in
circumstances indicate that the carrying value is impaired.
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 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 or 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 or 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 CGU’s) 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.
Carrying value of brand names and goodwill for each cash generating unit
In thousands of AUD
Water Solutions
2021
414,300
2020
413,791
56 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION III: ASSETS AND LIABILITIES (CONTINUED)
11. Intangible assets (continued)
Impairment testing for brand names and goodwill
The recoverable amounts of Water Solutions’ brand names and goodwill were assessed as at 30 June 2021 based on internal value in
use calculations and no impairment was identified (2020: 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 names and goodwill are attached and was based on the following assumptions:
• Cash flows were projected based on actual operating results and business plans of the units, with projected cash flows 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 2.3% (2020: 2.7%) in calculating the terminal value, which does not exceed the
long-term average growth rate for the industry.
• A pre-tax discount rate of 8.8% was used (2020: 9.1%).
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 Water Solutions industry and are based on both external
sources and internal sources (historical data).
The recoverable amount of the CGU exceeds its carrying values as at 30 June 2021 and there are no reasonably possible changes
in any of the key assumptions that would cause the CGU’s recoverable amount to be less than its carrying amount. Sensitivities
included reasonably possible changes in the discount rate and considered the economic uncertainties due to the coronavirus
pandemic based on information to date.
12. Right-of-use assets and lease liabilities
For the year ended 30 June
In thousands of AUD
Right of use assets
Balance as at 1 July
Additions to right-of-use assets
Modification of right-of-use assets
Depreciation for the period
Exchange rate movements
Balance as at 30 June
Lease liabilities
Balance as at 1 July
Additions to lease liabilities
Modification of lease liabilities
Accretion of interest
Payments made
Exchange rate movements
Balance as at 30 June
Current lease liabilities
Non-current lease liabilities
2021
2020
67,833
1,600
(473)
(11,901)
59
57,118
(74,596)
(1,015)
491
(2,739)
11,434
(73)
48,288
32,340
–
(12,956)
161
67,833
(52,668)
(30,145)
–
(2,683)
11,067
(167)
(66,498)
(74,596)
(11,813)
(54,685)
(66,498)
(11,458)
(63,138)
(74,596)
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 57
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION III: ASSETS AND LIABILITIES (CONTINUED)
12. Right-of-use assets and lease liabilities (continued)
The following table sets out the maturity analysis of lease payments showing the undiscounted lease payments to be made after the
reporting date (and therefore differs from the carrying amount of lease liabilities).
In thousands of AUD
Less than one year
One to two years
Two to five years
More than five years
Total
2021
2020
14,246
12,948
33,318
22,498
83,010
13,904
11,767
29,905
29,608
85,184
Recognition and Measurement
The consolidated entity enters into non-cancellable lease contracts, largely for the use of office and warehouse facilities. The leases
typically run for a period of three to ten years.
The consolidated entity recognises a right-of-use asset and a lease liability at the lease commencement date.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability, adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred, and an estimate for site restoration, less
any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight line method from commencement date to the end of the lease
term, unless the lease transfers ownership of the underlying asset to the consolidated entity by the end of the lease term or the cost
of the right-of-use asset reflects that the consolidated entity will exercise a purchase option. In that case the right-of-use asset will
be depreciated over the useful life of the underlying asset. The right-of-use asset is also adjusted for certain remeasurements of the
lease liability, and for any impairment losses recognised.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the consolidated entity’s incremental borrowing rate (adjusted to reflect the lease terms, for example, the lease
period). The consolidated entity assesses whether it is reasonably certain to exercise the extension options, and if so, includes the
option period into the calculation of the lease liability.
The lease liability is remeasured when there is a change in future payments arising from a change in an index or rate, or if there is a
changed assessment as to whether it will exercise an extension option.
The consolidated entity has elected not to recognise right-of-use assets and lease liabilities for leases of low value and/or those that
are short term.
The principal component of leased payments forms part of financing cash flows, and the interest component forms part of
operating cash flows in the statement of cash flows.
In thousands of AUD
For the year ended 30 June
Amounts recognised in the profit or loss statement
Interest on lease liabilities
Depreciation of right-of-use assets
Payments made for low value leases
Amounts recognised in the statement of cash flows
Payments of lease liability principal
Payments of lease liability interest
58 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
2021
2020
2,739
11,901
889
15,529
(8,695)
(2,739)
(11,434)
2,683
12,956
752
16,391
(8,384)
(2,683)
(11,067)
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION III: ASSETS AND LIABILITIES (CONTINUED)
13. Trade and other payables
In thousands of AUD
Current
Trade payables and accrued expenses
Non-current
Trade payables and accrued expenses
2021
2020
51,271
43,699
734
696
Trade and other payables are initially measured at fair value and subsequently at their amortised cost.
The consolidated entity’s exposure to currency risk and liquidity risk related to trade and other payables are disclosed in Note 18.
14. Employee benefits
In thousands of AUD
Current
Liability for annual leave
Liability for long service leave
Non-current
Liability for long service leave
2021
2020
4,528
1,095
5,623
4,065
1,055
5,120
4,378
4,310
Short-term employee 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.
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 using market yields at the
reporting date on corporate bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows.
15. Provisions
In thousands of AUD
Balance at 1 July 2020
Additional provisions made/(written back)
Provisions used
Exchange rate differences
Balance at 30 June 2021
Current
Non-current
Warranties
Restructuring
Site
restoration
4,439
151
–
–
4,590
3,157
1,433
4,590
1,342
3,723
(3,681)
–
1,384
1,384
–
1,384
4,320
439
(291)
12
4,480
127
4,353
4,480
Other
469
–
(37)
–
432
69
363
432
Total
10,570
4,313
(4,009)
12
10,886
4,737
6,149
10,886
Recognition and Measurement
A provision is recognised when the consolidated entity has a present legal or constructive obligation as a result of a past event that
can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions
are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and, where appropriate, the risks specific to the liability.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 59
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION III: ASSETS AND LIABILITIES (CONTINUED)
15. Provisions (continued)
Warranties
The provision for warranties relates to future warranty expenses on products sold during the current and previous financial years.
A provision for warranties is recognised when the underlying products or services are sold. The provision is based on estimates
made from historical warranty data and a weighting of all possible outcomes against their associated probabilities.
Restructuring
The restructuring provision relates to the estimated costs of redundancies, site closures and product rationalisation related to
business 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.
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.
SECTION IV: FUNDING AND RISK MANAGEMENT
16. 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, refer to Note 18.
In thousands of AUD
Current — unsecured bilateral loan facilities
Non-current — unsecured syndicated loan facilities
Facilities available
Unsecured loan facilities
Bank guarantees and standby letters of credit
Facilities utilised at reporting date
Unsecured loan facilities
Bank guarantees and standby letters of credit
Facilities not utilised at reporting date
Unsecured loan facilities
Bank guarantees and standby letters of credit
2021
25,000
121,106
146,106
266,670
7,258
273,928
146,106
1,332
147,438
120,564
5,926
126,490
2020
27,000
148,400
175,400
283,400
7,125
290,525
175,400
1,800
177,200
108,000
5,325
113,325
Recognition and Measurement
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 using the effective interest rate (EIR) method. The EIR amortisation is
included as finance costs in profit or loss.
Unsecured loan facility
On 18 November 2020, the consolidated entity successfully completed the refinance of its syndicated banking facility. The facility
comprises a single three year multicurrency revolving facility of $226,670,000 which matures in November 2023. For the period
8 April 2020 to 17 November 2020 the facility was $243,340,000. For the period 11 October 2019 to 7 April 2020 the facility was
$210,000,000. For the period 10 April 2019 to 10 October 2019 the facility was $250,000,000.
60 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION IV: FUNDING AND RISK MANAGEMENT (CONTINUED)
16. Loans and borrowings (continued)
On 18 September 2020, the consolidated entity extended its one year multicurrency revolving bilateral facility of $40,000,000
which now matures in October 2021.
The consolidated entity has unsecured bank loans of $146,106,000 drawn at 30 June 2021 (30 June 2020: $175,400,000). The
notional amount of the interest-bearing loans is deemed to reflect the fair value. The facilities were drawn in the following currencies:
In thousands of AUD
AUD
NZD
GBP
USD
2021
110,000
30,000
3,000
2,000
2020
142,000
30,000
3,000
–
The loan bears interest at market rates and interest is typically payable every 30 to 90 days. The consolidated entity partially hedges
its exposure to variable interest rates through interest rate swap transactions (refer Note 18(d)).
Bank guarantee and standby letter of credit facilities
The bank guarantee and standby letter of credit facilities are committed facilities available to be drawn down under the facility
agreement. The limits are specified in the facility agreement.
17. Share capital and reserves
Share capital
Number of shares
AUD
Ordinary shares
In thousands
On issue at 1 July — fully paid
FY20 Final Dividend — Dividend Reinvestment Plan
FY21 Interim Dividend — Dividend Reinvestment Plan
2021
263,948
248
1,009
2020
263,948
–
–
On issue at 30 June — fully paid
265,205
263,948
2021
307,790
648
2,856
311,294
2020
307,790
–
–
307,790
Ordinary Shares
Ordinary shares are classified as equity. Incremental costs (transaction costs) directly attributable to the issue of ordinary shares are
recognised as a deduction from equity, net of any tax effects.
Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax benefit.
The Company has neither authorised capital or par value in respect of its issued shares.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the retranslation of the financial statements of
foreign operations where their functional currency is different from the presentation currency of the reporting entity, as well as from
the retranslation of liabilities that hedge the Company’s net investment in a foreign subsidiary.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments
related to hedged transactions that have not yet occurred.
In thousands of AUD – Net of tax
Opening balance at 1 July 2020
Reclassed to P&L
Change in fair value
Closing balance at 30 June 2021
(2,971)
1,650
1,055
(266)
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 61
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION III: ASSETS AND LIABILITIES (CONTINUED)
17. Share capital and reserves (continued)
Equity compensation reserve
The equity compensation reserve represents the fair value of the cumulative net charges of performance rights granted
(refer Note 19).
Dividends
Dividends recognised in the current year are:
Costs per share
(In cents)
Total amount
(In thousands of AUD)
Franked
Date of Payment
2021
Interim 2021 ordinary
Final 2020 ordinary
Total amount
2020
Interim 2020 ordinary
Final 2019 ordinary
Total amount
6.0
3.5
9.5
8.0
9.5
17.5
15,851
9,238
25,089
21,116
25,075
46,191
100%
100%
20th April 2021
16th October 2020
100%
100%
4th March 2020
4th September 2019
Dividends are recognised as a liability in the period in which they are declared. Franked dividends declared or paid during the year
were franked at the tax rate of 30%.
After the balance date the following dividends were determined by the directors. These will be paid out of the parent entity’s
retained earnings in accordance with the Corporations Act 2001. The dividends have not been provided for as at the balance date.
The determination and payment of the dividend has no income tax consequences.
Final 2021 ordinary
Costs per share
(In cents)
6.5
Total amount
(In thousands
of AUD)
17,238
Franked
100%
Date of Payment
6th October 2021
The financial effect of these dividends has not been brought to account in the financial statements for the financial year ended
30 June 2021 and will be recognised in subsequent financial reports.
Dividend franking account
In thousands of AUD
30 per cent franking credits available to shareholders of GWA Group Limited for
subsequent financial years (i.e. prior to payment of final 2021 ordinary dividend.)
The Company
2021
11,229
2020
9,759
The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:
(a) franking credits/debits that will arise from the payment/settlement of the current tax liabilities/assets; and
(b) franking debits that will arise from the payment of dividends recognised as a liability at year-end.
The above franking account balance will decrease following the payment of the final dividend determined subsequent to balance date.
62 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION IV: FUNDING AND RISK MANAGEMENT (CONTINUED)
18. Financial instruments and financial risk management
(a) Policies
Exposure to credit, interest rate and currency risks arise in the normal course of the consolidated entity’s business. Derivative
financial instruments are used to hedge exposures 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 Finance Risk Committee, which is responsible for developing and monitoring risk management policies. The Finance
Risk Committee is required to report regularly to the Audit and Risk Committee 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 value by monitoring the performance of the consolidated entity by reference to the
return on funds employed. The Board defines return on funds employed as operating profit (earnings before interest and tax)
divided by net assets after adding back net debt and net AASB 16 Leases balances.
There were no changes to the Board’s approach to capital management during the year.
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 re-measurement 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.
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.
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 hedged items. For a cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should
present an exposure to variation in cash flows that could ultimately affect reported profit or loss.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 63
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION IV: FUNDING AND RISK MANAGEMENT (CONTINUED)
18. Financial instruments and financial risk management (continued)
(a) Policies (continued)
Derivative financial instruments (continued)
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.
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.
Changes in the fair value of separable embedded derivatives are recognised immediately in profit or loss.
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.
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.
(b) 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 some 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. To date, the economic uncertainties caused by the coronavirus pandemic have not led to any losses in respect of
trade receivables.
Transactions involving derivative financial instruments are with counterparties with sound credit ratings. Given their sound credit
ratings, management does not expect any counterparty to fail to meet its obligations.
The consolidated entity has three major customers which comprise 61% of the trade receivables carrying amount at 30 June 2021
(2020: four customers comprising 65% of trade receivables).
64 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION IV: FUNDING AND RISK MANAGEMENT (CONTINUED)
18. Financial instruments and financial risk management (continued)
(b) 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
The ageing of gross trade receivables for the consolidated entity at balance date was as follows:
In thousands of AUD
Not yet due
Past due 0-30 days
Past due 31-60 days
Past due 61-120 days
Past due 120+ days
Less accrued rebates
2021
42,634
55,399
1,026
99,059
2021
53,926
18,144
735
163
47
(17,582)
55,433
There were no trade receivables with re-negotiated terms.
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 losses written back/(recognised)
Provisions used during the year
Balance at 30 June
2021
(27)
(12)
5
(34)
2020
32,359
56,080
548
88,987
2020
58,203
14,389
446
250
195
(17,376)
56,107
2020
(71)
(44)
88
(27)
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 65
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION IV: FUNDING AND RISK MANAGEMENT (CONTINUED)
18. Financial instruments and financial risk management (continued)
(c) 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
2021
Non-derivative financial liabilities
Carrying
amount
Contractual
cash flows
0-6
months
6-12
months
1-2 years
2-5 years
5+ years
Unsecured cash advance facilities
(146,106)
(154,902)
(26,852)
(1,852)
(3,703)
(122,495)
Trade and other payables
(52,005)
(52,509)
(51,535)
–
(506)
(351)
–
(117)
Lease liabilities
(66,498)
(83,010)
(7,123)
(7,123)
(12,948)
(33,318)
(22,498)
Derivative financial instruments
Interest rate swaps used for hedging (net)
(1,413)
(1,413)
(365)
(365)
(532)
(151)
Forward exchange contracts used for
hedging (net)
686
686
583
103
–
–
–
–
Total at 30 June 2021
(265,336)
(291,148)
(85,292)
(9,237)
(17,689)
(156,315)
(22,615)
2020
Non-derivatives financial liabilities
Unsecured cash advance facilities
(175,400)
(182,515)
(28,552)
(1,552)
(3,105)
(149,306)
–
Trade and other payables
(44,395)
(44,899)
(44,197)
–
(117)
(351)
(234)
Lease liabilities
(74,596)
(85,184)
(6,952)
(6,952)
(11,767)
(29,905)
(29,608)
Derivative financial instruments
Interest rate swaps used for hedging (net)
(2,940)
(2,940)
(597)
(448)
(896)
(999)
Forward exchange contracts used for
hedging (net)
(1,375)
(1,375)
(1,031)
(344)
–
–
–
–
Total at 30 June 2020
(298,706)
(316,913)
(81,329)
(9,296)
(15,885)
(180,561) (29,842)
(d) 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 Risk Committee.
(i)
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 in Australia, New Zealand and
the United Kingdom.
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 and New Zealand dollars, have been entered into to achieve an appropriate mix of
fixed and floating rate exposure.
As at 30 June 2021, the consolidated entity had interest rate swaps in operation with a notional contract amount of $118,613,000
(2020: $118,686,000). These swaps have fixed rates ranging from 0.43% to 1.56% (2020: 0.88% to 2.30%) and mature over the next
three years.
66 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION IV: FUNDING AND RISK MANAGEMENT (CONTINUED)
18. Financial instruments and financial risk management (continued)
(d) Market risk (continued)
The consolidated entity classifies interest rate swaps as cash flow hedges and states them at fair value.
The net fair value of swaps as at 30 June 2021 of $1,413,000 was recognised as a fair value derivative liability (2020: $2,940,000
liability). No hedge ineffectiveness was recognised, and therefore the full movement in the value of the hedging instrument was
recognised in Other Comprehensive Income.
Profile
At balance date the consolidated entity’s interest bearing financial instruments were:
In thousands of AUD
Variable rate financial instruments
Unsecured cash advance facilities
Cash
Fixed rate financial instruments
Interest rate swap derivatives
Total
2021
Notional
value
(146,106)
42,634
2021
Carrying
amount
2020
Notional
value
2020
Carrying
amount
(146,106)
(175,400)
(175,400)
42,634
32,359
32,359
(103,472)
(103,472)
(143,041)
(143,041)
118,613
15,141
(1,413)
143,686
(104,885)
645
(2,940)
(145,981)
Sensitivity analysis
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and
borrowings affected, after the impact of hedge accounting, with all other variables held constant.
The impact on the consolidated entity’s profit is affected through the impact on floating rate borrowings and derivatives.
The impact on the consolidated entity’s other comprehensive income (‘OCI’) is due to changes in the fair value of interest
rate swap contracts designated as cash flow hedges.
The assumed movement in basis points for the interest rate sensitivity analysis is considered reasonably possible given the market
forecasts available at the reporting date and the current economic environment in which the consolidated entity operates.
In thousands of AUD – Higher/(Lower)
AUD denominated loans
+25 basis points (2020: +50 basis points)
-10 basis points (2020: -25 basis points)
NZD denominated loans
+25 basis points (2020: +50 basis points)
-25 basis points (2020: -25 basis points)
GBP denominated loans
+25 basis points (2020: +50 basis points)
-10 basis points (2020: -25 basis points)
USD denominated loans
+25 basis points
-10 basis points
(i) Other Comprehensive Income: cash flow hedges, net of tax
2021
Post Tax
Profit
(65)
26
(16)
16
(10)
4
(5)
2
2021
OCI(i)
348
(139)
90
(90)
–
–
–
–
2020
Post Tax
Profit
(160)
80
(67)
34
(17)
8
–
–
2020
OCI(i)
458
(865)
128
(255)
–
–
–
–
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 67
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION IV: FUNDING AND RISK MANAGEMENT (CONTINUED)
18. Financial instruments and financial risk management (continued)
(d) Market risk (continued)
(ii) 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 currencies giving rise to this risk are primarily USD
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 up to 12 months after the balance date.
Forward exposure for the 12 months after the
balance date covered by forward exchange contracts
AUD:USD
AUD:RMB
GBP:USD
NZD:AUD
2021
36%
40%
70%
70%
2020
74%
71%
82%
67%
The consolidated entity classifies forward exchange contracts as cash flow hedges and states them at fair value. The net fair value of
contracts as at 30 June 2021 of $686,000 was recognised as a fair value derivative asset (2020: $1,375,000 liability).
The consolidated entity is also exposed to foreign currency risk on retranslation of the financial statements of foreign subsidiaries
into AUD. The currencies giving rise to this risk are NZD, GBP and RMB. The consolidated entity hedges this exposure by holding net
borrowings in foreign currencies, and designates these as net investment hedges.
Sensitivity analysis
The following table demonstrates the impact of reasonably possible exchange rate movements with all other variables held
constant. However, 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 on the consolidated entity’s other comprehensive income (‘OCI’) is due to changes in the fair value of forward exchange
contracts designated as cash flow hedges, as well as from changes in the net borrowings in foreign currencies designated as net
investment hedges (these movements will offset the translation of the financial statements foreign subsidiaries into AUD).
The assumed movement in exchange rates for the sensitivity analysis is considered reasonably possible given the market forecasts
available at the reporting date and the current economic environment in which the consolidated entity operates.
The impact on foreign currency monetary assets and liabilities not designated as cash flow hedges are not material.
In thousands of AUD – Higher/(Lower)
USD
10% increase in USD:AUD — OCI (cash flow hedges, net of tax)
(2020: 20% increase in USD:AUD)
10% decrease in USD:AUD — OCI (cash flow hedges, net of tax)
10% increase in USD:GBP — OCI (cash flow hedges, net of tax)
(2020: 20% increase in USD:GBP — OCI)
10% decrease in USD:GBP — OCI (cash flow hedges, net of tax)
RMB
10% increase in RMB:AUD — OCI (cash flow hedges, net of tax)
(2020: 20% increase in RMB:AUD – OCI)
10% decrease in RMB:AUD — OCI (cash flow hedges, net of tax)
NZD
10% increase in NZD:AUD — OCI (cash flow hedges, net of tax)
10% decrease in NZD:AUD — OCI (cash flow hedges, net of tax)
10% increase in NZD:AUD — OCI (net investment hedge, net of tax)
10% decrease in NZD:AUD — OCI (net investment hedge, net of tax)
GBP
10% increase in GBP:AUD — OCI (net investment hedge, net of tax)
10% decrease in GBP:AUD — OCI (net investment hedge, net of tax)
68 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
2021
2020
1,861
(1,523)
749
(915)
1,639
(1,341)
(1,662)
1,359
(2,172)
1,777
(430)
352
10,709
(3,894)
1,683
(612)
4,083
(1,485)
(663)
525
(2,180)
1,784
(348)
285
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION IV: FUNDING AND RISK MANAGEMENT (CONTINUED)
18. Financial instruments and financial risk management (continued)
(e) Fair values
The carrying value of financial assets and liabilities as at 30 June 2021 equalled fair value (30 June 2020: equalled fair value). The fair
values of financial instruments were estimated using the following methods and assumptions.
(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
Interest-bearing loans bear interest at market rates. Accordingly, the notional amount of the interest-bearing loans is deemed to
reflect the fair value.
(iii) Trade and other receivables/payables
All current receivables/payables are either repayable within twelve months or repayable on demand. Non-current payables relate to
a supplier contractual obligation. Accordingly, the notional amount is deemed to reflect the fair value.
(iv) Financial asset at fair value
The investment in an unlisted company is accounted as a financial asset at fair value through other comprehensive income
(‘FVOCI’) following an irrevocable decision made at initial recognition. The fair value of the financial asset is based on the equity
price established in the most recent round of equity financing and consideration of any other key changes in the investment which
requires a level of judgement.
(v) Interest rates used for determining fair value
The consolidated entity uses the government yield curve as at the balance date plus an adequate constant credit spread to discount
financial instruments. The interest rates used are as follows:
Derivatives
Loans and borrowings denominated in AUD
Loans and borrowings denominated in NZD
Loans and borrowings denominated in GBP
Loans and borrowings denominated in USD
(vi) Fair value hierarchy
2021
2020
0.1% — 1.0%
0.2% — 0.4%
1.8% — 2.0%
2.1% — 2.3%
1.9% — 2.0%
1.9% — 2.0%
1.5% — 1.7%
1.6% — 1.8%
1.5% — 1.7%
–
The consolidated entity recognises the fair value of its financial instruments and financial asset at fair value using the level 2 and
level 3 valuation methods respectively. 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).
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 69
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION IV: FUNDING AND RISK MANAGEMENT(CONTINUED)
18. Financial instruments and financial risk management (continued)
(e) Fair values (continued)
(vi) Fair value hierarchy (continued)
In thousands of AUD
30 June 2021
Forward contracts used for hedging
Interest rate swaps used for hedging
Investment in unlisted entity
30 June 2020
Forward contracts used for hedging
Interest rate swaps used for hedging
Level 1
Level 2
Level 3
Total
–
–
–
–
–
–
–
686
(1,413)
–
(727)
(1,375)
(2,940)
(4,315)
–
–
2,835
2,835
–
–
–
686
(1,413)
2,835
2,108
(1,375)
(2,940)
(4,315)
70 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION V. OTHER INFORMATION
19. 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 performance rights granted to the 2021, 2020 and 2019 financial years are subject to
financial performance conditions which measure growth in Return on Funds Employed (ROFE) and/or Total Shareholder Return
(TSR) compared to a peer group of companies. The performance hurdles are challenging but achievable and focus executives on
sustained long term growth consistent with shareholder wealth creation.
The Plan runs over a three year performance period and the rights will only vest if the performance hurdles are achieved. If the
vesting conditions and performance hurdles are achieved, ordinary shares will be issued to the participants at no cost. If the
performance hurdles are not met, then the rights are cancelled.
For performance rights granted to executives for the 2021 financial 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 100%
75th percentile or higher
100%
For the performance rights granted to executives for the 2020 and 2019 financial year, the performance hurdles and vesting
conditions for the ROFE and TSR performance measures are outlined in the tables below.
GWA Group Limited ROFE over three year
performance period
Proportion of Performance Rights to Vest
if ROFE hurdle is met
ROFE less than 16% per annum
ROFE equal to 16% per annum
0%
12.5%
ROFE between 16% and 19% per annum
Straight line vesting between 12.5% and 50%
ROFE equal to 19% or higher per annum
50% (i.e. 50% of total grant)
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%
12.5%
Between the 50th percentile and 75th percentile
Straight line vesting between 12.5% and 50%
75th percentile or higher
50% (i.e. 50% of total grant)
Recognition and Measurement
The grant date fair value of performance rights granted to employees is recognised as a personnel expense, with a corresponding
increase in equity (equity compensation reserve), evenly over the specified three year 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 market based 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 | 2021 ANNUAL REPORT | 71
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION V. OTHER INFORMATION (CONTINUED)
19. Share-based payments (continued)
Fair Value
During the year 827,073 performance rights were granted to employees (2020: 749,500) at a weighted average fair value of $1.90
(TSR) (2020: $2.71 (TSR) and $3.54 (ROFE)).
The fair value of the performance rights granted subject to the TSR hurdle for vesting was determined by using a Monte Carlo
simulation. When determining the fair values it was assumed the Company would have a dividend yield of 3.69%, the risk free rate
was 0.12% and annualised share price volatility was 38% for the Company and its comparator companies listed for the TSR hurdle.
The amount recognised as personnel expenses (Note 3(e)) in the current financial year was $1,381,000 (2020: $1,431,000).
For further details of the Long Term Incentive (Equity) Plan, refer to the Remuneration Report section of the Directors’ Report.
In number of
performance rights
Grant date
Expiry date
Balance at
beginning of
the year
Granted
during
the year
Vested
during
the year
Forfeited
during
the year
Balance at
end of
the year
2021
2020
19/02/2018
30/06/2020
18/02/2019
30/06/2021
14/02/2020
30/06/2022
7/12/2020
30/06/2023
24/02/2017
30/06/2019
19/02/2018
30/06/2020
18/02/2019
30/06/2021
14/02/2020
30/06/2022
537,000
532,000
672,500
–
1,741,500
461,222
537,000
617,000
–
1,615,222
–
–
–
827,073
827,073
–
–
–
749,500
749,500
–
–
–
(498,873)
(38,127)
(24,444)
(146,222)
–
507,556
526,278
(282,088)
544,985
(498,873)
(490,881)
1,578,819
(461,222)
–
–
–
–
–
–
537,000
(85,000)
532,000
(77,000)
672,500
(461,222)
(162,000)
1,741,500
20. Related parties
Key management personnel compensation
The key management personnel compensation included in personnel expenses (Note 3(e)) are as follows:
In AUD
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
Other long term employee benefits
2021
5,447,396
185,452
1,000,000
1,001,525
126,812
7,761,185
2020
3,214,647
175,906
–
1,102,449
71,102
4,564,104
Information regarding individual key management personnel compensation is provided in the Remuneration Report section of the
Directors’ Report.
72 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION V. OTHER INFORMATION (CONTINUED)
21. Auditor’s remuneration
In AUD
The auditor of GWA Group Limited is KPMG Australia.
Audit services
KPMG Australia:
Audit and review of financial reports
Other assurance services
Overseas KPMG Firms:
Audit of financial reports
Overseas non-KPMG audit firms:
PwC — audit of financial reports
PwC — other assurance services
Total audit services
Other services
Network firm of overseas non-KPMG audit firms:
PwC — internal audit services
PwC — other services
Total other services
2021
2020
269,400
58,000
30,000
357,400
79,000
–
79,000
351,200
16,000
18,500
385,700
122,600
12,200
134,800
436,400
520,500
161,000
21,000
182,000
261,000
25,000
286,000
22. Commitments
Expenditure commitments for software, plant and equipment purchases and major projects contracted but not provided for are
payable as follows:
In thousands of AUD
Less than one year
2021
6,669
6,669
2020
942
942
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 73
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
SECTION V. OTHER INFORMATION (CONTINUED)
23. Consolidated entities
Parent entity
GWA Group Limited
Subsidiaries
Austral Lock Pty Ltd(a)
Canereb Pty Ltd(a)
Caroma Holdings Limited
Caroma Industries Limited
Caroma Industries (NZ) Limited(c)
Caroma International Pty Ltd
Caroma Singapore Pte Ltd
Caroma Middle East FZCO
Corille Limited(a)
Deva Tap Company Ltd
Dorf Clark Industries(a)
G Subs Pty Ltd(a)
GWA Finance Pty Limited
GWA Group Holdings Limited
GWAIL (NZ) Ltd(d)
GWA Taps Manufacturing Limited(a)
GWA Trading (Shanghai) Co Ltd
Heshan Methven Bathroom Fittings Co.(b)
Industrial Mowers (Australia) Limited(a)
Methven Australia Pty Limited
Methven Hotel Solutions Pty Ltd(a)
Methven Limited(c)
Methven UK Limited
Methven USA Inc(e)
McIlwraith Davey Pty Ltd(a)
Plumbing Supplies (NZ) Ltd(c)
Sebel Furniture Holdings Pty Ltd
Starion Tapware Pty Ltd(a)
Stylus Pty Ltd(a)
Parties
to cross
guarantee
Country
of incorporation
Ownership Interest
2021
2020
Y
Australia
N
N
Y
Y
N
N
N
N
N
N
N
N
Y
Y
N
N
N
N
N
Y
N
N
N
N
N
N
N
N
N
Australia
Australia
Australia
Australia
New Zealand
Australia
Singapore
UAE
Australia
United Kingdom
Australia
Australia
Australia
Australia
New Zealand
Australia
China
China
Australia
Australia
Australia
New Zealand
United Kingdom
USA
Australia
New Zealand
Australia
Australia
Australia
0%
0%
100%
100%
100%
100%
100%
100%
0%
100%
0%
0%
100%
100%
100%
0%
100%
0%
0%
100%
0%
0%
100%
0%
0%
0%
100%
0%
0%
100%
100%
100%
100%
100%
100%
100%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(a) Entities entered into liquidation on 23 June 2020 and were liquidated during the year ended 30 June 2021.
(b) Entity was sold on 10 March 2021. The results and net loss on the sale is immaterial to the results of the Group for the year ended 30 June 2021.
The net loss on sale is included within the Methven integration costs as disclosed in Note 3(d).
(c) Entities were amalgamated and renamed as GWA Group (NZ) Limited during the year ended 30 June 2021.
(d) Entity was renamed as GWA Group Holdings (NZ) Limited during the year ended 30 June 2021.
(e) Entity liquidated during the year ended 30 June 2021.
74 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION V. OTHER INFORMATION (CONTINUED)
24. 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 23 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 2021, is set out in the table below.
Summarised statement of profit or loss and other comprehensive income
In thousands of AUD
Sales revenue
Cost of sales
Gross profit
Operating expenses
Finance income
Finance expenses
Profit before tax
Tax expense
Profit from continuing operations, net of tax
Net profit
Other comprehensive income, net of tax
Total comprehensive income, net of tax
Retained earnings at beginning of the year
Net profit
Dividends received during the year
Dividends paid during the year
Retained earnings at end of the year
2021
319,831
(186,855)
132,976
(100,029)
1,074
(7,736)
26,285
(8,200)
18,085
18,085
2,931
21,016
427,762
18,085
–
(25,089)
420,758
2020
323,263
(189,937)
133,326
(70,952)
1,717
(8,693)
55,398
(17,135)
38,263
38,263
(3,056)
35,207
347,659
38,263
88,031
(46,191)
427,762
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 75
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES SECTION V. OTHER INFORMATION (CONTINUED)
24. Deed of cross guarantee (continued)
Statement of financial position
In thousands of AUD
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Total current assets
Investments
Intercompany receivable
Deferred tax assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Loans and borrowings
Employee benefits
Income tax payable
Lease liabilities
Provisions
Derivative financial instruments
Total current liabilities
Deferred tax liabilities
Loans and borrowings
Lease liabilities
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
76 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
2021
2020
29,090
45,419
54,395
2,374
131,278
465,632
36,515
12,787
17,573
385,717
50,460
968,684
1,099,962
37,697
25,000
4,671
4,659
11,175
2,748
1,413
87,363
100,590
121,106
48,469
4,266
4,922
279,353
366,716
733,246
311,294
1,194
420,758
733,246
20,777
44,466
60,029
3,128
128,400
449,313
73,218
12,511
20,971
386,140
59,429
1,001,582
1,129,982
32,616
27,000
4,151
715
11,005
4,700
4,738
84,925
100,569
148,400
54,976
4,201
3,324
311,470
396,395
733,587
307,790
(1,965)
427,762
733,587
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES Notes to the Consolidated Financial Statements
SECTION V. OTHER INFORMATION (CONTINUE)
25. Parent entity disclosures
As at, and throughout, the financial year ended 30 June 2021 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
Equity of the parent entity
Share Capital
Equity compensation reserve
Retained earnings
Total equity
Parent entity contingencies
The Company
2021
2020
(1,192)
–
(1,192)
300
862,661
–
419,162
311,294
1,578
130,628
443,500
78,775
–
78,775
446
885,212
–
419,162
307,790
1,352
156,908
466,050
The directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future
sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.
Contingent liabilities
The directors are not aware of any contingent liabilities of the parent entity as at reporting date (2020:$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 (2020: $nil).
Parent entity guarantees
The parent entity in the ordinary course of business has guaranteed the performance of certain contractual commitments entered
into by 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. Further details of the Deed of Cross
Guarantee and the subsidiaries subject to the Deed are disclosed in Notes 23 and 24.
26. Subsequent events
Since the end of the financial year, the New South Wales and Victorian governments announced new restrictions on business,
requiring amongst other things, the cessation of construction activities in specified areas in Sydney in response to rising cases of
coronavirus. This is in addition to a range of varying restrictions on public movement in Australia. The Directors continue to assess
the uncertain and evolving impact of these restrictions on GWA’s operations.
To the Directors’ best knowledge, there are no events that have arisen subsequent to 30 June 2021 that will, or may, significantly
affect the operation or results of the consolidated entity.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 77
Notes to the Consolidated Financial StatementsGWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
Directors’ Declaration
In the opinion of the directors of GWA Group Limited (the Company):
1.
The consolidated financial statements and notes, and the Remuneration Report in the Directors’ Report, are in accordance
with the Corporations Act 2001 including:
a) giving a true and fair view of the financial position of the consolidated entity as at 30 June 2021 and of its performance
for the year ended on that date; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001;
2.
3.
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 23 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;
4. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Managing
Director and the Chief Financial Officer for the financial year ended 30 June 2021; and
5.
The directors draw attention to Note 1(a) to the consolidated financial statements which includes a statement of compliance
with International Financial Reporting Standards (IFRS).
Dated on 16 August 2021.
Signed in accordance with a resolution of the directors:
Darryl D McDonough
Director
Urs B Meyerhans
Director
78 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES
Independent Auditor’s Report
To the Shareholders of GWA Group Limited
Report on the audit of the Financial Report
OPINION
We have audited the Financial Report of GWA Group
Limited (the Company).
The Financial Report comprises:
• Consolidated Statement of Financial Position as at 30 June 2021;
In our opinion, the accompanying Financial Report of
the Company is in accordance with the Corporations
Act 2001, including:
•
giving a true and fair view of the Group’s financial
position as at 30 June 2021 and of its financial
performance for the year ended on that date; and
• complying with Australian Accounting Standards
and the Corporations Regulations 2001.
BASIS FOR OPINION
• 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 then ended;
• Notes including a summary of significant accounting policies; and
• Directors’ Declaration.
The Group consists of the Company and the entities it controlled at the
year-end or from time to time during the financial year.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report
section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical
responsibilities in accordance with the Code.
KEY AUDIT MATTERS
The Key Audit Matters we identified is:
• Valuation of Inventory.
Key Audit Matters are those matters that, in our professional judgement,
were of most significance in our audit of the Financial Report of the
current period.
These matters were addressed in the context of our audit of the Financial
Report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
VALUATION OF INVENTORY $70.0M
Refer to Note 8 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The valuation of inventory is a key audit matter as
inventory is a significant asset in the financial report
and the net realisable value is impacted by the building
industry cycles, changes in consumer preferences
and economic instability as a result of the coronavirus
pandemic. This necessitated an additional focus on
excess and discontinued inventory SKU’s (stock keeping
unit) and judgemental valuation assumptions.
These conditions gave rise to additional audit effort,
including greater involvement by our senior team
members, to gather evidence over the estimation of the
valuation of inventory.
Our procedures included:
• We assessed the accuracy of previous Group forecasts by inventory
SKU by comparing forecast demand to actual sales in the prior period.
This informed our evaluation of forecasts incorporated in the inventory
provision calculation in the current year;
• We tested the completeness of inventory identified as excess or fast
moving and discontinued as follows:
» We assessed the Group’s calculation for identifying excess
inventory. We did this by performing our own calculation based
on sales data for the last 12 months and comparing the results.
We considered the impact on our audit of any exceptions. Where
relevant, we obtained underlying documentation from the Group
to evaluate exceptions; and
» We compared inventory SKU’s to be discontinued to the approved
discontinued inventory report used by the Group in assessing the
recoverable value of inventory;
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,
a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member
firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 79
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES Independent Auditor’s Report
To the Shareholders of GWA Group Limited (continued)
VALUATION OF INVENTORY $70.0M
Refer to Note 8 to the Financial Report
The key audit matter
How the matter was addressed in our audit
We focused on the following elements of the Group’s
estimation of the valuation of inventory:
• We assessed the write off history for the last 3 years against the
provision to determine the adequacy of the inventory provision;
• Criteria for categorisation of inventory SKU’s by risk,
such as discontinued, new products, excess or fast
moving range, as they attribute different values due
to the differing provision policy rates;
• Expected forecast demand which is based on
the last 12 months’ sales, as this determines the
categorisation of inventory SKU’s as excess or fast
moving; and
• Assessing the impact of inventory sold in the current
year below cost.
• We independently developed an expected inventory valuation range
by considering the following:
»
Inventory turnover rate by inventory SKU;
» Recovery rates achieved historically when selling discontinued
inventory. We considered the historical quantum recovered
compared to the original cost; and
» Overall recoveries achieved for sales recorded below original cost;
• We compared our estimated inventory valuation range to the
inventory value recorded by the Group; and
• We tested a sample of inventory items to purchase invoices and sales
invoices to determine the recoverability and valuation of inventory in
line with accounting standards.
OTHER INFORMATION
Other Information is financial and non-financial information in GWA Group’s annual reporting which is provided in addition to the
Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any
form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider
whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise
appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we
have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report.
RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL REPORT
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001
•
implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is
free from material misstatement, whether due to fraud or error
• assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of
accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic
alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL REPORT
Our objective is:
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due
to fraud or error; and
•
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian
Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards
Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report.
80 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES Independent Auditor’s Report
To the Shareholders of GWA Group Limited (continued)
REPORT ON THE REMUNERATION REPORT
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of GWA Group
Limited for the year ended 30 June 2021, complies with
Section 300A of the Corporations Act 2001.
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 responsibilities
We have audited Sections 2 to 8 (excluding Section 7.1.1) of the
Remuneration Report included in pages 16 to 34 of the Directors’ Report
for the year ended 30 June 2021.
Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing
Standards.
KPMG
Trent Duvall
Partner
Sydney, 16 August 2021
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 81
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES Other Statutory Information
as at 16 August 2021
STATEMENT OF SHAREHOLDING
In accordance with the Australian Securities Exchange Listing Rules, the directors state that, as at 16 August 2021, 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
1,700
3,169
1,432
1,076
68
7,445
Ordinary Shares
728,248
8,748,773
10,614,480
23,340,328
221,773,284
265,205,113
%
0.27
3.30
4.00
8.80
83.62
100.00
The number of shareholders with less than a marketable parcel of 174 shares is 532.
VOTING RIGHTS
The voting rights attached to shares are as set out in clause 9.20 of the Company’s Constitution. Subject to that clause, at General
Meetings of the Company:
1. On a show of hands, every person present as a member, proxy, attorney or representative of a member has one vote; and
2. On a poll, every person present as a member, proxy, attorney or representative of a member, has one vote for each fully paid share.
SUBSTANTIAL SHAREHOLDERS
The following information is extracted from the Company’s Register of Substantial Shareholders as at 16 August 2021:
Shareholder
The Vanguard Group, Inc
Franklin Resources, Inc
Mitsubishi UFJ Financial Group, Inc
20 LARGEST SHAREHOLDERS AS AT 16 August 2021
Shareholder
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
HGT Investments Pty Ltd
KFA Investments Pty Ltd
National Nominees Limited
JMB Investments Pty Ltd
Mr Peter Zinn
Ashberg Pty Ltd
Theme (No 3) Pty Ltd
ITA Investments Pty Ltd
Dabary Investments Pty Ltd
BNP Paribas Noms Pty Ltd
CJZ Investments Pty Ltd
BNP Paribas Nominees Pty Ltd
Eidde Pty Ltd
Mr Michael John McFadyen
HSBC Custody Nominees (Australia) Limited
Brispot Nominees Pty Ltd
Citicorp Nominees Pty Limited
Number of Shares
% Shares on Issue
15,925,463
15,804,194
13,400,514
6.03%
5.99%
5.05%
Number of Shares
52,984,135
% Shares on Issue
19.98
47,380,129
31,458,711
10,000,000
9,200,684
7,366,128
6,884,655
5,898,176
5,887,783
5,100,000
4,688,628
3,178,986
2,928,274
2,841,565
2,407,055
2,019,940
1,975,734
1,917,977
1,421,864
1,343,000
17.87
11.86
3.77
3.47
2.78
2.60
2.22
2.22
1.92
1.77
1.20
1.10
1.07
0.91
0.76
0.74
0.72
0.54
0.51
Total
206,883,424
78.01
82 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES Shareholder Information
Annual General Meeting
Dividend Reinvestment Plan
The Annual General Meeting of GWA Group Limited will be held
via a virtual platform at https://web.lumiagm.com/ on Friday 29
October 2021 commencing at 10:00am (AEST). Shareholders
will be mailed their Notice of Annual General Meeting and Proxy
Form during September 2021.
Shareholder Enquiries
Shareholders with enquiries about their shareholding or
dividend payments should contact the Company’s share
registry, Computershare Investor Services Pty Limited,
on 1300 850 505 or write to GPO Box 2975 Melbourne
Victoria Australia 3001. Alternatively, you can view details
of your holding or make changes to your personal information
online at www.investorcentre.com.
Change of Address
Shareholders who have changed their address should
immediately notify the Company’s share registry in writing
or update your details online at www.investorcentre.com.
If you are a CHESS sponsored holder and wish to change
your address, please contact your broker.
Consolidation of Shareholdings
Shareholders who wish to consolidate their separate
shareholdings into one holding should complete a Request
to Consolidate Holdings Form which can be downloaded at
www.investorcentre.com. If you are a CHESS sponsored
holder and wish to consolidate your holdings, please contact
your broker.
Annual Reports
Annual Reports are made available to shareholders on the
Company’s website at www.gwagroup.com.au. Shareholders
wishing to be mailed a copy of the Annual Report should
notify the Company’s share registry in writing or update your
communication preferences online at www.investorcentre.com.
Shareholders who have elected to receive the Notice of Annual
General Meeting and Proxy Form via post will include details on
accessing the online Annual Report.
Dividends
Dividends are determined by the Board having regard to the
financial circumstances of the Company. Dividends are normally
paid twice annually following the release of the Company’s
half and full year financial results to the market. The latest
dividend details can be found on the Company’s website
at www.gwagroup.com.au.
Direct Credit of Dividends
To minimise cost and ensure fast and efficient payment of
dividends to shareholders, the Company mandates direct credit
for payment of dividends. Dividends may be paid directly to
a bank, building society or credit union account in Australia.
Payments are electronically credited on the dividend payment
date and confirmed by an advice mailed to shareholders on that
date, or emailed where shareholders have requested this form of
communication. Direct credit application forms can be obtained
by contacting the Company’s share registry or can be updated
online at www.investorcentre.com.
The Dividend Reinvestment Plan was suspended by the Board
in August 2021. At the present time the Company has access to
sufficient capital to meet its funding requirements. The Board
keeps this position under review.
Securities Exchange Listing
The Company’s shares are listed on the Australian Securities
Exchange under the ASX code: GWA. Details of the trading
activity of the Company’s shares are published in most daily
newspapers, generally under the abbreviation GWA Grp.
Shareholder Timetable 2021
30 June
Financial year end
16 August
FY21 full year results and final
dividend announcement
7 September
Ex dividend date for final dividend
8 September
Record date for determining final
dividend entitlement
24 September
Notice of Annual General Meeting
and Proxy Form mailed to shareholders
6 October
Final dividend paid
27 October
Proxy returns close 10:00am AEST
29 October
Annual General Meeting
31 December
Half year end
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 83
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES Head Office Locations
GWA GROUP LIMITED
Building 3B, 188 Holt Street
Pinkenba QLD 4008
AUSTRALIA
GPO Box 1411
Brisbane QLD 4001
Telephone 61 7 3109 6000
Facsimile 61 7 3852 2201
www.gwagroup.com.au
GWA BATHROOMS & KITCHENS
AUSTRALIA
GWA BATHROOMS & KITCHENS
UNITED KINGDOM
Methven UK Limited
Methven Experience Centre
3/3A Stone Cross Court
Yew Tree Way, Golborne, Warrington,
WA3 3JD
UNITED KINGDOM
Telephone 0800 195 1602
www.methven.com/uk
www.deva-uk.com
GWA BATHROOMS & KITCHENS
CHINA
GWA Trading (Shanghai) Co Ltd
Rm 1503, 15/F, Block 2, Ganghui Office
No.3 Hongqiao Road
Xujiahui, Xuhui
Shanghai 200030
P.R. CHINA
Telephone 0086 21 22502100
www.methven.com.cn
Caroma Industries Limited
Level 24, 100 Mount Street
North Sydney NSW 2060
AUSTRALIA
PO Box 343
Liverpool NSW 1871
Telephone 61 2 8825 4400
Facsimile 61 2 8825 4567
www.caroma.com.au
specify.caroma.com.au
www.smartcommand.com.au
www.methven.com/au
www.dorf.com.au
www.clark.com.au
www.flexispray.com.au
GWA BATHROOMS & KITCHENS
NEW ZEALAND
GWA Group (NZ) Limited
41 Jomac Place
Avondale AUCKLAND 1026
NEW ZEALAND
Telephone +64 9 829 0429
www.methven.com/nz
www.caroma.co.nz
84 | GWA GROUP LIMITED | 2021 ANNUAL REPORT
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES Group Bankers
Commonwealth Bank of Australia
Australia and New Zealand Banking Group
HSBC Bank Australia
Corporate Directory
Directors
D D McDonough, Chairman
J F Mulcahy, Deputy Chairman
U B Meyerhans, Managing Director
P A Birtles, Non-Executive Director
J M McKellar, Non-Executive Director
A J Barrass, Non-Executive Director
S T Goddard, Non-Executive Director
R J Thornton, Executive Director
Chief Financial Officer
P A Gibson
BA, FCMA, CGMA, FAICD, FCG (CS, CGP)
Auditor
KPMG
Level 38, Tower Three
International Towers Sydney
300 Barangaroo Avenue
Sydney NSW 2000
AUSTRALIA
Telephone +61 2 9335 7000
Facsimile +61 2 9335 7001
Share Registry
Computershare Investor Services
Pty Limited
Level 1, 200 Mary Street
Brisbane QLD 4000
AUSTRALIA
Company Secretary
R J Thornton
CA, BCom (Acc), LLB (Hons), LLM
GPO Box 2975
Melbourne VIC 3001
AUSTRALIA
(within Australia) 1300 850 505
(outside Australia) +61 3 9415 4000
www.computershare.com.au
Registered Office
Building 3B, 188 Holt Street
Pinkenba QLD 4008
AUSTRALIA
Telephone +61 7 3109 6000
Facsimile +61 7 3852 2201
www.gwagroup.com.au
ASX code: GWA
GWA GROUP LIMITED | 2021 ANNUAL REPORT | 85
GWA GROUP LIMITED AND ITS CONTROLLED ENTITIES Building 3B, 188 Holt Street
Pinkenba QLD 4008
AUSTRALIA
Telephone: 61 7 3109 6000
Facsimile: 61 7 3852 2201
Website: www.gwagroup.com.au