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Bassett Furniture Industries2023
ANNUAL
REPORT
MAKING
LIFE BETTER
THROUGH
INNOVATION
IN EVERYDAY
WATER
EXPERIENCES
02
03
FY23 PERFORMANCE HIGHLIGHTS
FIVE YEAR SUMMARY
04 COMPANY PROFILE
05 STRATEGY ON A PAGE
06 CHAIRMAN’S REPORT
08
MANAGING DIRECTOR’S REVIEW OF OPERATIONS
12 BOARD OF DIRECTORS
14 DIRECTORS’ REPORT
39
40
82
LEAD AUDITOR’S INDEPENDENCE DECLARATION
FINANCIAL REPORT
INDEPENDENT AUDITOR’S REPORT
87 OTHER STATUTORY INFORMATION
88 SHAREHOLDER INFORMATION
89 HEAD OFFICE LOCATIONS
89 CORPORATE DIRECTORY
FY23
> Disciplined execution
and cost management
drives 2H improvement –
EBIT up 6.5% on 1HFY23.
> Cashflows from
operations more than
doubled from prior year
to $99.6 million.
> Achieved excellent
progress in delivering
strategic initiatives.
01
GWA GROUP LIMITED | 2023 ANNUAL REPORT FY23 PERFORMANCE
HIGHLIGHTS
The Company delivered a
solid result for FY23 within
a rapidly evolving operating
environment that comprised
two distinct halves.
The first half of the year was
impacted by the decline in activity
in the residential renovation and
replacement segment, destocking
by one merchant partner, and
unexpected higher domestic freight
costs which were somewhat offset
by lower ocean freight rates.
GWA initiated a rapid and agile
response to these conditions.
Revenue in the second half increased
in Australia and the UK (on a constant
currency basis) but was unfortunately
offset by lower sales in New Zealand
where the economy is in recession.
Notwithstanding the rapidly changing
economic conditions we made
excellent progress on our key strategic
deliverables. This provides a stronger
platform for medium term growth and
shareholder returns.
1
Normalised earnings before interest and tax excludes
significant items after tax for FY23 ($1m); FY22 ($12.1m).
2 Normalised net profit after tax excludes significant items
after tax for FY23 ($1m); FY22 ($12.1m).
02
TOTAL SALES $411.9 million 1.6%REPORTED EBIT$69.0 million 15.7%REPORTED NPAT$43.2 million 22.7%FINAL DIVIDEND 7c per share, fully frankedNORMALISED EBIT1$70.4 million 5.9%NORMALISED NPAT2 $44.1 million 6.6%EBIT MARGIN17.1% FY22: 17.9%FULL YEAR DIVIDEND 13c per share, fully franked GWA GROUP LIMITED | 2023 ANNUAL REPORT FIVE YEAR
SUMMARY
CONTINUING OPERATIONS(1)
2018/19
$’000
2019/207
$’000
2020/217
$’000
2021/227
$’000
2022/237
$’000
Revenue from continuing operations
381,730
398,704
405,736
418,717
411,840
Earnings before interest, tax, depreciation, amortisation
and significant items2
EBITDA margin (%)
Depreciation and amortisation
92,986
92,206
88,401
94,610
89,099
24.4
23.1
21.8
22.6
21.6
(14,869)
(20,366)
(19,919)
(19,761)
(18,648)
Earnings before interest, tax and significant items (EBIT)2
78,117
71,840
68,482
74,849
70,451
EBIT margin (%)2
Interest (net)
Normalised profit before tax2
Normalised profit before tax (%)
Tax expense on normalised profit
Normalised effective tax rate (%)
Normalised profit after tax2
Significant items after tax
Net profit after tax from continuing operations
Profit from discontinued operations (net of income tax)
Net profit after tax for the period
Net cash from operating activities
Capital expenditure
Net debt3
Shareholders' equity
OTHER RATIOS AND STATISTICS
Interest cover (times)4
Leverage ratio4
Gearing: net debt/(net debt + equity) (%)8
Return on shareholders' equity (%)
Dividend payout ratio — Group (%)5
Dividend payout ratio — Normalised Continuing (%)5
Dividend per share (cents)6
Franking (%)
Share price (30 June) ($)
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
20.5
18.0
16.9
17.9
17.1
(5,811)
(8,644)
(8,019)
(7,233)
(8,082)
72,306
63,196
60,463
67,616
62,369
18.9
15.9
14.9
16.1
15.1
(21,467)
(18,273)
(18,140)
(20,351)
(18,226)
29.7
28.9
30.0
30.1
29.2
50,839
(7,597)
43,242
50,802
94,044
67,630
4,326
44,923
(1,037)
42,323
(7,267)
47,265
44,143
(12,086)
(988)
43,886
35,056
35,179
43,156
–
–
–
–
43,886
60,952
12,317
35,056
78,298
5,147
35,179
13,988
2,408
43,156
72,882
2,220
141,930
144,841
104,804
138,248
117,008
286,756
279,731
296,611
303,826
305,540
23.5
1.6
27.5
32.8
51.9
96.0
18.5
100
3.42
5.4
665
35.6
16.4
19.3
13.6
1.9
28.4
15.7
69.2
67.6
11.5
100
2.77
4.2
629
16.6
16.6
17.0
15.5
1.4
21.5
11.8
94.6
78.1
12.5
100
2.77
4.5
578
13.3
13.3
16.0
18.3
1.7
26.2
11.6
113.1
84.2
15.0
100
1.97
7.6
550
13.3
13.3
17.8
13.3
1.5
23.0
14.1
79.8
78.3
13.0
100
1.75
7.4
516
16.3
16.3
16.6
1
2
The Door and Access Systems’ business has been sold with an effective
date of 3 July 2018. Accordingly, the operating activities Door and
Access Systems were classified as discontinued in FY18 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.
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.
3
Net debt reflects the Group’s borrowings and bank guarantees less cash
(including cash classified within assets held for sale).
4
5
6
7
8
Interest cover (times) is calculated using EBITDA excluding non-
recurring other significant items divided by net interest expense.
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.
Dividend per share includes ordinary and special dividends.
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 retrospectively restatement
of FY19 made. FY18 has not been restated.
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’.
03
GWA GROUP LIMITED | 2023 ANNUAL REPORT Making life better through
innovation in everyday
water experiences.
OUR
PURPOSE
To be the trusted and
integrated solutions
partner in the delivery
of sustainable water
solutions for bathrooms,
kitchens and laundries.
OUR
STRATEGY
OUR
CULTURAL
PILLARS
We are one team.
We are customer focused.
We care for each other.
COMPANY
PROFILE
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 Internet of Things (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 and the United Kingdom.
We are highly respected within the building industry
for innovation, water efficiency and safety, technical
expertise and our product reliability and quality.
We maintain quality and cost efficient long-term supply
agreements with selected, exclusive manufacturing
partners across Asia and Europe. GWA has a
senior management team experienced in design,
research and development, 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 a strong market
position, market-leading brands and significant
growth opportunities.
GWA is a member of the ASX 300 index of listed
Australian companies.
Our brands
04
GWA GROUP LIMITED | 2023 ANNUAL REPORT
STRATEGY
ON A PAGE
MAKING LIFE BETTER
THROUGH INNOVATION IN
EVERYDAY WATER EXPERIENCES
STRATEGY
To be the trusted and integrated solutions partner in the delivery of
sustainable water solutions for bathrooms, kitchens and laundries.
1
WIN THE
PLUMBER
Connect, deepen and
leverage plumbing
industry relationships.
2
FOCUS
3
4
INNOVATE THROUGH
DESIGN & PARTNERSHIPS
GROW OUR AFTER-
MARKET OFFERINGS
FOCUS ON STRATEGIC
GROWTH OPPORTUNITIES
Leverage in-house capability
and global partnerships to
fast-track value creation and
portfolio modernisation.
Build a comprehensive
after-market capability.
Disciplined and targeted
investment in local and
international markets.
FOUNDATION
CUSTOMER EXPERIENCE Integrated customer experience with structured brands and category portfolios.
DIGITAL Investment in digital opportunities to deliver a superior customer experience.
ENVIRONMENTAL, SOCIAL, GOVERNANCE A sustainable business that drives value and fuels growth.
ALIGNED ORGANISATION 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.
05
GWA GROUP LIMITED | 2023 ANNUAL REPORT CHAIRMAN’S
REPORT
Rising interest rates, a continuing inflationary
trend and weaker activity in the key residential
renovation and replacement segment provided
challenges to the business in FY23.
Management responded with disciplined execution and
cost management and continued to execute our strategy
for sustainable, medium-term growth.
The Company’s ongoing strong financial position and
continued cashflow generation ensures GWA remains
well positioned to navigate near term challenges while
delivering strong shareholder returns.
FY23 RESULTS
The Company’s Dividend Reinvestment Plan will not be
offered to shareholders for the final dividend.
Net debt as at 30 June 2023 was $117million which
was down 15 per cent from the prior year, reflecting
lower inventory in the second half and improvement in
operating cashflows.
The Group continues to maintain its strong financial
position to support investment in future growth initiatives.
SAFETY AND SUSTAINABILITY
We remain committed to sustainable practices
throughout our operations and continue to work with
our key stakeholders and communities to deliver on
our commitment.
The first half of FY23 showed promise but that
promise evaporated towards the end of calendar 2022.
Nonetheless the Group reported a 23 per cent increase in
statutory net profit to $43.2 million for the year.
We incurred two very minor injuries in our New Zealand
business which resulted in a disappointing increase in
the Total Injury Frequency Rate for FY23 following a
significant improvement in the prior year.
Group revenue declined to $411.8 million with revenue in
the second half of FY23 increasing in Australia and the
UK on a constant currency basis, but with the increase
unfortunately offset by lower sales in New Zealand where
the economy went into recession.
Importantly management’s focus on operational discipline
and cost control delivered a 6.5 per cent improvement in
earnings in the second half compared to the first half of
the year.
STRONG FINANCIAL POSITION
GWA is in a very strong financial position enabling the
Group to manage challenging market conditions while
continuing to deliver strong returns for shareholders.
In line with the Company’s dividend policy, the Board
declared a final dividend of 7 cents per share fully-
franked, bringing the full-year dividend to 13 cents
per share, fully-franked. The FY23 full year dividend
represents a normalised payout ratio of 78 per cent and
reported dividend payout ratio of 80 per cent of net
profit. This dividend compares to a full year dividend of
15 cents per share for FY22.
We continue our focus on enhancing our safety
performance measurement with a shift in emphasis
towards measuring leading indicators of safety risk such
as worker insights as opposed to lag indicators.
The GWA Annual Report will be accompanied by our
first ESG Report replacing the previous Sustainability
Report. The report highlights our ongoing efforts to
integrate sustainability and responsible practices into our
operations. The format of the report has transitioned to
an ESG style report focussing on environmental, social
and governance, as we take steps to begin to align with
the frameworks published by the Task Force on Climate-
related Financial Disclosures and Global
Reporting Initiative.
EXECUTIVE REMUNERATION
Fixed remuneration for executives in FY23 remained
unchanged from FY22 with the exception of our Group
supply chain executive given the increased scope and
responsibility of that role.
The FY23 STI plan continued to adopt EBIT as a single
financial target. The Board believes EBIT is an effective
basis for STI financial targets as it is currently a key metric
used in the business and aligns with the Group’s strategy.
From FY23 the Board re-introduced earnings per share
(EPS) growth (CAGR over three-year performance
period) as a second performance measure for the LTI Plan
in addition to retaining the relative TSR measure.
06
GWA GROUP LIMITED | 2023 ANNUAL REPORT BOARD CHANGES
As previously advised to shareholders the Board
undertook a formal review to consider Board renewal and
appointments, assisted by external advisers Hattonneale.
Stephen Goddard retired from the Board on
30 June 2023. Stephen was appointed a non-executive
director of GWA in 2016 and served as the Chair of
the Audit & Risk Committee. I wish to acknowledge
and thank Stephen for his outstanding service and
exceptional contribution to GWA.
I would also like to acknowledge the very valuable
contribution of Jane McKellar, who is retiring from the
Board by rotation at GWA’s 2023 Annual General Meeting
in October. Jane also joined the Board in 2016 and served
as a member of the People & Culture Committee.
Stephen’s and Jane’s support and expert guidance were
valued, and on behalf of the Board we wish them well
with their future endeavours.
In FY23, the Board appointed Stephen Roche, Bernadette
Inglis and Patria Mann as Non-Executive Directors of GWA.
CONCLUSION
Amidst a challenging operating environment in FY23,
GWA delivered a solid financial result.
On behalf of the Board, I wish to acknowledge and thank
Urs Meyerhans and the executive leadership team and
all our employees across the Group for their significant
contribution over the year.
I also thank shareholders for their continuing support
of GWA.
Darryl McDonough
Chairman
07
GWA GROUP LIMITED | 2023 ANNUAL REPORT
MANAGING DIRECTOR’S
REVIEW OF OPERATIONS
OVERVIEW
GWA delivered a solid result for FY23 within
a challenging operating environment that
comprised two distinct halves.
We commenced the financial year with strong sales
but incurred unexpected higher domestic freight rates
and fuel surcharges partially offset by a reduction in
international freight rates. In the later part of calendar
year 2022 the performance was further negatively
impacted by destocking by one merchant and the decline
in building activity primarily in the residential renovation
and replacement segment in Australia.
The decline in market activity continued in the
second half, both in Australia and more particularly in
New Zealand which entered recession.
GWA initiated a rapid and agile response to these
conditions. Our focus on operational discipline and
cost management resulted in an improved second half
performance compared to the first half. This resulted in
increased earnings and margin, with significantly improved
operating cashflow in the second half of the year.
As a result, GWA continued to deliver returns to
shareholders with a full year dividend of 13 cents per
share fully-franked.
Meanwhile we continued to implement our strategy for
growth, achieving considerable progress and momentum
in core areas of our strategic plan. This provides
a stronger platform for medium term growth and
shareholder returns.
HEALTH & SAFETY
During the year all GWA sites were re-certified to the
industry standard ISO 45001.
GWA incurred two minor injuries in the first half in our
New Zealand business which resulted in an increase in the
Total Injury Frequency Rate (TIFR) for FY23 to 4.0 from
1.9 in the prior year.
In addition to lag indicators, we are increasingly shifting
our emphasis towards lead indicators which we believe
are more relevant in preventing workplace incidents.
This includes the worker insight frequency rate which
measures reported worker insights per million hours
worked. It is pleasing to report that we more than
doubled worker insights in FY23, a clear indication of our
continued commitment to safety.
During the period we updated our risk profile assessment
to include psychosocial risks. We are also evolving our
safety approach to respond to changing ways of working,
including hybrid work arrangements.
PROACTIVE AND AGILE RESPONSE TO
MARKET CHALLENGES
GWA responded to the ongoing market challenges with
a proactive and agile approach to cost management
and also by adjusting our operating model to align to
market conditions.
As a result, cost savings delivered in the second half
assisted to deliver improved earnings at higher margin
despite lower revenue.
The Company continued to adopt proactive management
of inventory levels, while maintaining the quality of stock
holdings to support product availability for customers.
This resulted in a reduction in working capital and
significant improvement in operating cashflow together
with improved customer service delivery.
The Company also realigned its Australian sales
organisation to a State structure to enable the Company
to respond more quickly to local sales opportunities with
localised solutions.
GROUP FINANCIAL RESULTS
Reported — includes significant items
Group reported results include significant items.
In FY23 significant items were $1.4 million (pre-tax),
including costs associated with aligning the Company’s
cost base to the operating environment and
rightsizing the organisation. FY22 significant items were
$15.2 million (pre-tax) including costs associated with the
implementation of the ERP/CRM system and closure of
the Asian sales operation.
08
GWA GROUP LIMITED | 2023 ANNUAL REPORT A$ million
(Reported —
Includes Significant Items)
Revenue
EBIT
EBIT Margin (%)
NPAT
FY23
411.8
69.0
16.8%
43.2
FY22 % change
418.7
(1.6%)
59.7
+15.7%
14.3% +2.5ppts
35.2
+22.7%
Normalised — excludes significant items
A$ million
(Excludes Significant Items)
Revenue
EBIT
EBIT Margin (%)
NPAT
FY23
411.8
70.4
17.1%
44.1
FY22 % change
418.7
74.8
(1.6%)
(5.9%)
17.9% (0.8ppts)
47.3
(6.6%)
Group revenue declined by 1.6 per cent to $411.8 million.
Revenue in Australia declined by 1.2 per cent for the year
with first half revenue impacted by a decline in residential
renovation and replacement activity and merchant
destocking in the second quarter.
Despite continued weakness in the residential renovation
and replacement segment, revenue in the second half
increased slightly on the first half, including a price
increase of 4 per cent implemented from 1 April 2023.
GWA’s commercial forward order bank remains strong
and increased by 12.4 per cent in value on the start of
the year which continues to create a strong platform for
future growth in the commercial new build and renovation
and replacement segment.
Revenue in New Zealand declined by 4.4 per cent on the
prior year. Sales in the second half declined by 19 per cent
from the first half reflecting weaker market conditions as
the New Zealand economy entered recession. However,
revenue in the fourth quarter increased by 1.9 per cent
(constant currency) including the price increase of 5 per
cent implemented from 1 March 2023.
While reported revenue in International markets declined
by 1.5 per cent in FY23, sales revenue in constant currency
increased by 3.7 per cent for the year.
Normalised Group EBIT declined by 5.9 per cent
compared to the prior year to $70.4 million.
Volumes were impacted by the decline in the residential
renovation and replacement segment in Australia,
destocking from one merchant in the first half and market
weakness in New Zealand.
The Group incurred unexpected higher domestic freight
rates (fuel surcharges) introduced in the first half which
were only partially offset by a moderation in international
sea freight costs in the second half. Additional costs were
incurred in New Zealand in the first half from the use of
an external third party for warehousing and storage due
to space restrictions in our New Zealand facilities.
As detailed above, GWA responded quickly and with
agility to the challenging market conditions by aligning
our cost base to the market conditions and through
continued operational cost discipline and
market execution.
This resulted in an improvement in Normalised Group
EBIT of 6.5 per cent in the second half compared to the
first half with a corresponding increase in Normalised
Group EBIT margin to 17.7 per cent in the second half
from 16.5 per cent in the first half.
STRONG IMPROVEMENT IN CASHFLOW
FROM OPERATIONS
GWA continued to proactively manage inventory levels
which resulted in a significant reduction in working capital
compared to the prior year.
As a result, cashflow from operations in FY23 doubled to
$99.6 million from $49.6 million in the prior year.
Cash conversion remains strong with the cash conversion
ratio (cashflow from operations / normalised EBITDA) of
112 per cent.
Capital expenditure and other investing activities was
$2.2 million for FY23 which was steady on the prior year.
The Group’s capital expenditure programme remains
focused on growth initiatives to drive revenue growth
opportunities and cost efficiencies.
FULL YEAR DIVIDEND OF 13.0 CENTS PER SHARE
FULLY FRANKED
The Board declared a final dividend of 7 cents per share,
fully-franked, bringing the full-year dividend to 13 cents
per share, fully-franked.
The record date for entitlement to receive the final
dividend will be 21 August 2023 with the payment date
of 5 September 2023. The full-year dividend represents a
payout ratio of normalised net profit of 78 per cent and
reported profit of 80 per cent.
As part of the Company’s capital management approach,
the Dividend Reinvestment Plan will not be offered to
shareholders for the final dividend.
09
GWA GROUP LIMITED | 2023 ANNUAL REPORT MANAGING DIRECTOR’S
REVIEW OF OPERATIONS (CONTINUED)
GWA’S FINANCIAL POSITION REMAINS STRONG
Net debt as at 30 June 2023 was $117.0 million, 15 per cent
lower than 30 June 2022 and reflected the reduction in
working capital and improved operating cashflow.
GWA’s credit metrics improved on the prior year and
remain solid. The Company’s gearing ratio (net debt/
net debt plus equity) was 23.0 per cent compared to
26.2 per cent at 30 June 2022 and leverage ratio (net
debt/EBITDA) was 1.5 times compared to 1.7 times at
30 June 2022.
GWA’s syndicated banking facility comprises a single
three-year multicurrency revolving facility of $180 million
which matures in November 2024.
GWA also maintains a separate $40 million one-year
multi-currency revolving bilateral facility which matures
in October 2023. This is being reviewed as part of our
ongoing treasury management.
EXCELLENT PROGRESS IN GROWTH STRATEGY
GWA continued to make excellent progress in our
strategy which is focused on being a trusted and
integrated solutions partner in the delivery of sustainable
water solutions for bathrooms, kitchens and laundries.
We are implementing measures to connect, deepen and
leverage our plumbing industry relationships with a focus
on delivering trusted and valued services and solutions
to plumbers.
During FY23 we extended our reach with Australian/
New Zealand plumbers with 20,000 plumbers now
signed up. In addition, we have provided 6,700 plumbers
with technical services and training. GWA launched the
Caroma Plumber’s hub which provides plumbers with the
knowledge, tools and support to select, install, maintain
and repair Caroma products correctly and efficiently.
It enables plumbers to have a direct line of communication
with an experienced Caroma technical support team to
provide enhanced efficiency in the selection, procurement,
and installation of Caroma products.
We continued to develop solutions to enhance our
customer experience and make it easier for customers
to do business with us. The new ERP launched across
Australia and New Zealand in FY22 now allows for
consistent and improved reporting, while service levels
continue to improve with DIFOT in Australia/New Zealand
increasing to 78 per cent. We will continue to focus on
this important measure moving into FY24.
GWA launched a number of new products during the
period with our vitality index (percentage of sales from
new products launched in the last 2 years) exceeding
10 per cent for the year.
Products launched during the period included new
entry-level tapware, showers and accessories to grow
our share in builders and affordable housing markets and
the continued expansion of our independent living range,
Livewell, in the aged care sector. GWA also launched a
coloured sink range to refresh our kitchen product offer
and added commercial tapware products to capture
growing demand in the education and public amenities sector.
FY24 OUTLOOK AND PRIORITIES
GWA expects increased demand for commercial new
build in health and aged care and commercial repair
and renovation, while the existing pipeline in residential
detached housing should support a solid level of
completions in that segment into the first half of FY24.
GWA also expects increased activity in multi residential,
social and affordable housing and build to rent categories.
However, demand activity in residential renovation and
replacement is expected to remain subdued.
Within that operating environment GWA will continue its
disciplined execution with a strong focus on aligning its
cost base to revenue, matching inventory levels to market
demand with continued targeted investment in entry
level products and customer experience centres across
Australia and New Zealand. Within our overall strategic
framework we will achieve this by focussing on our two
key identified priorities being customer first initiative with
our merchant partners and targeting profitable volume
growth in existing and new markets and customers,
including increasing share of wallet across the
plumber network.
GWA monitors key risks to its future prospects and
implements measures to mitigate these risks, where
possible, which are outlined in the Appendix to
this review.
THE GWA TEAM
I would like to thank my executive team and the entire
GWA team for their support and contributions during
a year where the business had to proactively adjust to
changing market conditions.
The continued focus and progress of our strategy would
not be possible without the commitment and passion of
our team.
Urs Meyerhans
Managing Director and Chief Executive Officer
10
GWA GROUP LIMITED | 2023 ANNUAL REPORT APPENDIX — RISK MATERIALITY TABLE
Risk
Monitoring and Mitigation
A significant deterioration in
building activity impacting
sales growth and margins.
GWA monitors building activity and this is factored into the company’s forecasting, annual budget and
planning processes.
Approximately 60% of GWA’s revenue is generated from the Renovation and Replacement segment in
Australia which is the largest segment of the overall market.
GWA’s forward order book for commercial projects remains solid and is growing with several major
projects secured.
In addition, GWA’s corporate strategy incorporates opportunities for GWA to expand beyond current
segments, categories and markets.
A significant movement in the
GWA monitors foreign exchange rates closely and adopts appropriate mitigation strategies.
Australian dollar impacting the
Approximately 50% of US dollar exposure is hedged at US$0.68 for FY24.
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.
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 multiple proven offshore suppliers, many of
whom have diverse capabilities and would be able to assist in the event of any disruption.
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 and is actively diversifying its regional supply base.
While the global supply chain landscape has stabilised post COVID-19, it continues to evolve because
of changing market conditions and government policies, armed conflict and extreme weather events.
GWA’s business continuity plans are updated frequently to mitigate these issues.
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.
GWA has established a formal IT security risk and governance framework to mitigate the risks being
faced by GWA.
GWA recently implemented a new Enterprise Resource Planning and Customer Relationship
Management systems across its operations in Australia and New Zealand, with enhanced security
and protection technologies. In FY23 GWA’s cyber strategy was focussed on network security
segmentation and uplift, raising Cyber awareness and risk culture in GWA, Data Loss Prevention and
Customer Privacy Information protection.
In addition, GWA carries out disaster recovery and business continuity planning each year to test the
effectiveness of its ability to respond to security and cyber risks. In FY23 this included a tabletop
exercise to test GWA’s business continuity plan in the context of a simulated Cyber-attack scenario.
Workplace health and safety
risks could potentially
result in physical injury to
employees, contractors or
others, or damage to the
Company’s reputation.
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 has also
increased its focus on the management of mental health issues, given the impact of COVID-19 and the
significant workplace changes which occurred because of the pandemic.
Group-wide WHS Operational Risks have been identified and a risk mitigation program is in place with
each risk sponsored by an Executive. All GWA UK, Aust and NZ sites are certified to ISO 45001:2018
(occupational health and safety management system).
Major global event (e.g., war,
pandemic) impacting GWA’s
ability to operate, including
workforce, supply chain and
customer service disruptions.
Adverse impact of
environmental or social risks
on the GWA business.
GWA has comprehensive crisis management and business continuity plans in place for dealing with
major global and domestic events. These were activated to address recent global events such as the
COVID-19 pandemic and conflict in Ukraine.
The plans guide GWA’s response to events outside of the control of GWA and are continually reviewed
to ensure they remain effective.
GWA is committed to managing environmental and social risks by embedding ESG principles as a
foundation pillar of the corporate strategy. In addition, GWA has an ESG Steering Committee to oversee
the progress and execution of GWA’s ESG program.
The physical risks of climate change on the GWA business are regularly assessed with risk mitigation
and contingency plans in place. GWA’s supply chain comprises internationally diverse manufacturing
hubs, transport (shipping), storage, distribution and logistics. To mitigate the environmental risks
associated with extreme weather events, GWA has implemented dual-sourcing strategies enabling it to
source goods from multiple locations. GWA also carries up to about two months’ safety stock in GWA’s
geographically diverse distribution centres.
On the social front GWA carries out ongoing ethical sourcing and modern slavery analysis, and has
engaged independent third party providers to complement its existing internal audit program on
product suppliers. GWA believes the overall risk level to be low given the scope and location of GWA’s
operations, the maturity of its supply partner relationships and the diligence applied by GWA to identify
and manage risks in the business. In December 2022, GWA’s latest Modern Slavery Statement was
lodged with the Australian Border Force.
Refer to GWA’s 2023 ESG Report for further information on GWA’s initiatives supporting broader ESG
value creation opportunities, and risk management of GWA’s environmental and social impacts.
11
GWA GROUP LIMITED | 2023 ANNUAL REPORT BOARD OF
DIRECTORS
DARRYL McDONOUGH
BBUS (ACTY), LLB (HONS), SJD, FCPA
Independent Chairman and Non-Executive Director
• Expertise: Experienced non-executive director
• Special Responsibilities: Chairman of Board and
member of People & Culture and Audit & Risk
Committees
Mr McDonough was appointed Chairman on
31 October 2013. He has more than 35 years’ experience
as a director and as a corporate lawyer. He has served as
a director of a number of public companies.
JOHN MULCAHY
PHD (CIVIL ENGINEERING), FIE AUST
Independent Deputy Chairman and Non-Executive
Director
• Expertise: Engineer, banker and experienced public
company director
• Special Responsibilities: Member of the People &
Culture 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 a Non-Executive Director of ALS
Limited, Zurich Australia Limited and Orix Australia. He
is the former Chairman of Mirvac Group Limited, and a
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 from 2009 to 2022
*denotes current directorship
12
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
manufacturing and distribution, 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, CISL
Independent Non-Executive Director
• Expertise: international brand and consumer marketing
and sales; public company non-executive director
• Special Responsibilities: Member of People & Culture
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 Chief
Marketing Officer and/or CEO roles with Unilever,
NineMSN, Microsoft, Elizabeth Arden and Stila Corp.
She is presently a Non-Executive Director at ASX listed
Noumi 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:
• Noumi Limited since May 2020*
• McPherson’s Limited since 2015*
*denotes current directorship
GWA GROUP LIMITED | 2023 ANNUAL REPORT RICHARD THORNTON
CA, BCOM (ACC), LLB (HONS), LLM
BERNADETTE INGLIS
BBUS, MBA, GAICD, INSEAD GRADUATE
Non-Executive Director
• Expertise: Chartered Accountant with extensive
governance, risk management and finance experience
• Special Responsibilities: Member of the Audit & Risk
Committee
Non-Executive Director
• Expertise: Extensive Commercial leadership with
deep expertise in business transformation, emerging
technologies and strategy development and execution
• Special Responsibilities: Chair of the People & Culture
Mr Thornton was appointed a Non-Executive Director
of GWA Group Limited on 3 June 2022. He joined GWA
Group Limited in 2002, and was the Company Secretary
between 2003 and 2022 and an Executive Director
between 2009 and 2022. 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. He has extensive
leadership, governance and risk management experience
as a longstanding GWA senior executive, having served
over 20 years with the business until his appointment as a
Non-Executive Director in June 2022.
He is a Director of HGT Investments Pty Ltd and Great
Western Corporation, a diversified Australian private group.
STEPHEN ROCHE
BBUS (FINANCE & BANKING), FAICD
Independent Non-Executive Director
• Expertise: Extensive strategy, business development
and supply chain experience
• Special Responsibilities: Member of the Audit & Risk
Committee
Mr Roche was appointed a Non-Executive Director
of GWA Group Limited on 28 October 2022. He is
an experienced director with ASX listed enterprises,
family companies and not for profit organisations, and
is currently a non-executive director of Baby Bunting
Limited, Myer Family Investments Pty Ltd and the
Adelaide Football Club. His executive experience includes
Managing Director of Bridgestone Australia & New
Zealand, and Managing Director & CEO of Australian
Pharmaceutical Industries Limited.
During the past three years Mr Roche has served as a
director of the following listed companies for the time
periods noted:
• Blackmores Limited from September 2021 to August
2023
• Baby Bunting Limited since September 2021*
*denotes current directorship
Committee
Ms Inglis was appointed a Non-Executive Director of
GWA Group Limited on 9 November 2022. She is a highly
expert executive with over 20 years’ experience in financial
services. Bernadette has been a successful business leader
in retail banking, wealth management and insurance, and
has held senior executive roles across core corporate
services functions in national and regional organisations.
Bernadette is currently the Group CEO of NGM Group,
one of Australia’s largest customer-owned, multi-brand
financial institutions. Bernadette has significant experience
delivering business transformation and growth to drive
customer value, including through emerging technologies,
execution of strategy and fostering partnerships.
Bernadette also brings non-executive director experience
across a broad spectrum, including arts, education,
infrastructure and charitable foundations.
PATRIA MANN
BEC, FAICD
Independent Non-Executive Director
• Expertise: Experienced non-executive director with
extensive audit, risk management and governance
experience
• Special Responsibilities: Chair of Audit & Risk
Committee
Ms Mann was appointed a Non-Executive Director of GWA
Group Limited on 1 January 2023. She has more than 20
years’ board experience across various sectors. Patria is
currently a non-executive director, and member of the
Audit & Risk Committees, of Ridley Corporation Limited,
EVT Limited and Bega Cheese Limited. She qualified as a
Chartered Accountant and was a former Partner of KPMG.
During the past three years Ms Mann has served as a
director of the following listed companies for the time
periods noted:
• Ridley Corporation Limited since March 2008*
• EVT Limited since October 2013*
• Bega Cheese Limited since September 2019*
*denotes current directorship
13
GWA GROUP LIMITED | 2023 ANNUAL REPORT DIRECTORS’ REPORT
AS AT 30 JUNE 2023
The directors present their report on the
consolidated entity consisting of GWA Group
Limited (the Company
entities at the end of, or during, the financial
year ended 30 June 2023 (together, the Group
the Group).
Company) and its controlled
DIRECTORS
The following persons were directors of the Company
during the financial year and up to the date of this report
unless otherwise stated.
Darryl McDonough, Chairman and Independent,
Non-Executive Director
John Mulcahy, Deputy Chairman and Independent,
Non-Executive Director
Urs Meyerhans, Managing Director and
Chief Executive Officer
Alison Barrass, Independent, Non-Executive Director
(until 28 October 2022)
Stephen Goddard, Independent, Non-Executive Director
(until 30 June 2023)
Jane McKellar, Independent, Non-Executive Director
Richard Thornton, Non-Executive Director
Stephen Roche, Independent, Non-Executive Director
(from 28 October 2022)
Bernadette Inglis, Independent, Non-Executive Director
(from 9 November 2022)
Patria Mann, Independent, Non-Executive Director
(from 1 January 2023)
Details of directors’ qualifications, experience and special
responsibilities are outlined in the director profiles in this
Annual Report.
Details of the directorships of other listed companies
held by each director in the three years prior to the end
of FY23, and the period for which each directorship has
been held, are outlined in the director profiles in the
Annual Report.
The information referred to in the director profiles forms
part of this Directors’ Report.
COMPANY SECRETARY
ERNIE LAGIS
BBus LLB (Hons), LLM, CertGov&RiskMgt
Ernie has an extensive career in legal, governance
and company secretariat. Ernie most recently led the
company secretariat, legal and insurance functions for the
Asia Pacific operations of Tetra Tech Inc, including Tetra
Tech Coffey. He began his career as a lawyer with Ashurst
(formerly Blake Dawson).
DIRECTORS’ INTERESTS
The relevant interest of each director in the share
capital of the Company as notified by the directors to
the Australian Securities Exchange in accordance with
Section 205G(1) of the Corporations Act 2001 as at the
date of this report is:
Director
Darryl McDonough
John Mulcahy
Urs Meyerhans**
Stephen Goddard
Bernadette Inglis
Patria Mann
Jane McKellar
Stephen Roche
Richard Thornton***
Total****
Notes:
Ordinary Shares*
170,000
40,950
155,217
10,000
–
10,000
13,034
70,000
349,561
818,762
*
**
The number of shares held refers to shares held either directly or
indirectly by the relevant director.
Urs Meyerhans also holds 1,249,063 Performance Rights. For
details of the Performance Rights held, please refer to sections
7.2 and 7.3 of the Remuneration Report.
*** As at the date of this report, and as a former executive director
of the Company until 3 June 2022, Richard Thornton also holds
55,040 Performance Rights. For details of the Performance
Rights held, please refer to sections 7.2 and 7.3 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 987,232 shares (2022:
789,941 shares).
14
GWA GROUP LIMITED | 2023 ANNUAL REPORT DIRECTORS’ MEETINGS
The number of directors’ meetings (including meetings
of Committees of directors) held during FY23, and the
number of meetings attended by each director is outlined
in the following table:
OPERATING AND FINANCIAL REVIEW
The Operating and Financial Review for the consolidated
entity during FY23 is provided in the Managing Director’s
Review of Operations, and forms part of this
Directors’ Report.
Director
Board
Audit & Risk
Committee
People
& Culture
Committee
Darryl McDonough
John Mulcahy
Urs Meyerhans
Alison Barrass1
Stephen Goddard
Jane McKellar
Richard Thornton
Stephen Roche2
Bernadette Inglis3
Patria Mann4
Notes:
A
11
11
11
6
11
11
11
5
5
4
B
11
11
11
4
11
11
11
5
5
4
A
4
–
–
–
4
–
4
1
–
2
B
4
–
–
–
4
–
4
1
–
2
A
4
4
–
–
–
4
–
–
1
–
B
4
4
–
–
–
4
–
–
1
–
A
B
1
2
3
4
Number of meetings held during the time the director held office
during the year including meetings of the non-executive
directors only
Number of meetings attended during the period the director was
a member of the Board or relevant Committee
Alison Barrass ceased being a non-executive director of the
Company on 28 October 2022.
Stephen Roche was appointed a non-executive director of the
Company on 28 October 2022.
Bernadette Inglis was appointed a non-executive director of the
Company on 9 November 2022.
Patria Mann was appointed a non-executive director of the
Company on 1 January 2023.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the financial
year were the research, design, import and marketing
of building fixtures and fittings to residential and
commercial premises, and the distribution and installation
of various products through a range of distribution and
customer channels in Australia, New Zealand and selected
international markets.
There have been no significant changes in the nature
of the activities of the consolidated entity during the
financial year.
STATE OF AFFAIRS
There have been no significant changes in the Group’s
state of affairs during the financial year.
DIVIDENDS
Dividends paid or declared by the Group to shareholders
since the end of the previous financial year were as follows.
DECLARED AND PAID DURING FY23
Dividends
Final 2021/22
Ordinary
Interim
2022/23
Ordinary
Cents
per
Share
Total
Amount
$’000
Franked
Percentage
8.0
21,216
100%
Date of
Payment
6 September
2022
6.0
15,912
100%
7 March 2023
Franked dividends declared and paid during the year
were franked at the corporate tax rate of 30%.
DETERMINED AFTER END OF FY23
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 as at
30 June 2023.
Dividend
Final 2022/23
Ordinary
Cents
per
Share
Total
Amount
$’000
Franked
Percentage
7.0
18,564
100%
Date of
Payment
5 September
2023
The financial effect of the final dividend has not been
brought to account in the financial statements for FY23
and will be recognised in subsequent financial reports.
The record date for the FY23 final dividend is 21 August
2023 and the dividend payment date is 5 September
2023. The Dividend Reinvestment Plan will not be offered
to shareholders for the final dividend.
EVENTS SUBSEQUENT TO
REPORTING DATE
Excepting the dividend declared after the end of FY23,
as described above, there has not arisen in the interval
between the end of the financial year and the date of
this report any item, transaction or event of a material
and unusual nature likely, in the opinion of the directors
of the Company, 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.
15
GWA GROUP LIMITED | 2023 ANNUAL REPORT DIRECTORS’ REPORT (CONTINUED)
LIKELY DEVELOPMENTS
Likely developments and expected results of the
operations of the Group are provided in the Managing
Director’s Review of Operations.
Further information on likely developments and expected
results of the operations of the Group has not been included
in this report because the directors believe it would be likely
to result in unreasonable prejudice to the Group.
ENVIRONMENTAL REGULATIONS
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 Company’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.
In accordance with the Company’s constitution, the
Company has entered into a Deed of Indemnity, Insurance
and Access with each of the Company’s directors and
company secretary. No director or officer of the Company
has received benefits under an indemnity from the
Company during or since the end of the financial year.
INSURANCE PREMIUMS
The Company has paid a premium in respect of a
contract insuring current and former directors, company
secretaries and executives of the Company and its
subsidiaries against liability that they may incur as
an officer of the Company or any of its subsidiaries,
including liability for costs and expenses incurred by
them in defending civil or criminal proceedings involving
them as such officers, with certain exceptions. It is a
condition of the insurance contract that no details of the
premiums payable or the nature of the liabilities insured
are disclosed.
NON-AUDIT SERVICES
During the year KPMG, the Group’s lead auditor,
undertook a marketing expense benchmarking exercise.
The Board has considered the non-audit services
provided by KPMG and 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 & 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 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 FY23.
PROCEEDINGS ON BEHALF OF THE
COMPANY
No application has been made under section 237 of the
Corporations Act (Cth) in respect of the Company, and
there are no proceedings that a person has brought or
intervened in on behalf of the Company under
that section.
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.
16
GWA GROUP LIMITED | 2023 ANNUAL REPORT REMUNERATION REPORT
INTRODUCTION
The directors of GWA Group Limited present this
Remuneration Report for the period ended 30 June
2023. The Remuneration Report outlines the Group’s
remuneration strategy and principles, explains how
the Group’s FY23 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.
The structure of the Remuneration Report is
outlined below:
1. Message from the People & Culture Committee;
2. Key Management Personnel;
3.
Board role in setting remuneration strategy and
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 PEOPLE &
CULTURE COMMITTEE (P&CC)
In this report the P&CC outlines GWA’s approach to
remuneration for its executives and in particular, identifies
the link between GWA’s strategy and its remuneration
framework and importantly the link between performance
and executive reward.
In summary:
• FY23 was challenged by operational matters beyond
GWA’s control including depressed construction
market; inflation; increasing interest rates weighing on
consumer spending.
• Disciplined execution of cost management to respond
to market challenges.
• Financial position remains strong.
• Medium and longer term strategy remains the focus to
take advantage of opportunities in FY24 and beyond.
• No STI payments awarded for FY23.
GWA’s performance during FY23 was heavily impacted by
the challenging market conditions in the construction sector,
particularly in relation to renovation and replacement, as
well as inflationary pressures with consequential interest
rate rises which placed further pressure on business and
consumer spending and sentiment. GWA responded to
these challenges with an ongoing focus on operational and
cost discipline and made significant progress against its
strategic objectives which have positioned us favorably to
capitalise on opportunities in FY24 and beyond.
The Company is in strong financial health due to a
disciplined focus in FY23 on cost management and
operational efficiencies. The short-term incentive
outcomes for the Managing Director and other Executive
Leadership Team (ELT) members for FY23 reflected the
difficult market conditions in the construction sector and
did not meet the criteria for payment.
The P&CC had oversight of the performance and
remuneration arrangements of the Managing Director and
the other ELT members during FY23, together with the
Group’s remuneration framework and incentive plans. The
P&CC 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, motivate 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
the following:
• 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
• best practice governance in determining remuneration
arrangements and outcomes that are fair and
reasonable taking into consideration community and
shareholder expectations.
2.
KEY MANAGEMENT PERSONNEL
(KMP)
KMP are as defined by the Accounting Standard AASB
124 Related Party Disclosures (AASB 124).
The KMP for FY23 remains consistent with FY22 to
include all eight current Executives for the full FY23 year,
together with each of the Directors.
17
GWA GROUP LIMITED | 2023 ANNUAL REPORT DIRECTORS’ REPORT (CONTINUED)
3.
BOARD ROLE IN SETTING
REMUNERATION STRATEGY
AND PRINCIPLESS
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 competitive and equitable and is designed to attract,
motivate, and retain directors and executives with the
experience, knowledge, skills, and commitment 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 People & Culture Committee.
The charter for the People & Culture Committee is available
on the Company’s website at www.gwagroup.com under
Corporate Governance Policies.
Table 1: Key management personnel (KMP)
Name
Position
Term as KMP
Non-Executive Directors
D McDonough
Chairman and Non-
Executive Director
J Mulcahy
Deputy Chairman and
Non-Executive Director
A Barrass
Non-Executive Director
Full year
Full year
Until
28 October
2022
S Goddard
Non-Executive Director
Full year
J McKellar
Non-Executive Director
Full year
R Thornton
Non-Executive Director
Full year
B Inglis
Non-Executive Director
S Roche
Non-Executive Director
P Mann
Non-Executive Director
Effective
9 November
2022
Effective
28 October
2022
Effective
1 January
2023
Executive Directors
U Meyerhans
Managing Director and
Chief Executive Officer
Full Year
Other Executive KMP
Full year
Effective
24 April
2023
Until
19 December
2022
M Hayes
E Lagis
Group General Manager,
Marketing
Full year
Company Secretary and
General Counsel
R Patel
Chief Information Officer
A Larson
Chief Information Officer
C Norwell
P Oliver
C Scott
C Sunaryo
Group General Manager,
Sales — Aust, UK & Asia
Full year
Group General Manager,
People & Performance
Full year
Group Chief Financial
Officer
Full year
Group General Manager,
Supply Chain & Innovation Full year
18
GWA GROUP LIMITED | 2023 ANNUAL REPORT 3.1
GWA’S REMUNERATION GOVERNANCE
FRAMEWORK
3.2
FY24 EXECUTIVE REMUNERATION
CHANGES
PEOPLE & CULTURE COMMITTEE
Managing Director
GWA BOARD
• Overall responsibility for the remuneration strategy
and outcomes for the Group; and
• Reviews and, as appropriate, approves
recommendations from the People & Culture Committee.
WITH ADVICE FROM:
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
• Provides independent advice, information and
recommendations relevant to remuneration decisions;
• The People & Culture 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.
For FY24 the Board approved to maintain the two LTI
performance hurdles in place in FY23, which are relative
TSR and absolute EPS growth (CAGR over 3–year
performance period). LTI performance rights granted will
be split evenly to these two performance hurdles.
Maximum LTI
As % of fixed
remuneration
150%
60%
Maximum total
performance pay
(STI and LTI)
As % of fixed
remuneration
200%
100%
Other ELT
TSR
For the FY24 LTI grant, the below proposed relative TSR
measure group is as follows:
James Hardie Industries PLC, Fletcher Building Ltd,
Boral Ltd, Adbri Limited, Brickworks Ltd, Super Retail
Group Ltd, CSR Ltd, ARB Corp Ltd, Bapcor Ltd, Breville
Group Ltd, GUD Holdings Ltd, Cedar Woods Properties
Ltd, Decmil Group Ltd, Simonds Group Ltd, Hills Ltd,
Fleetwood Ltd, Accent Group Ltd, Pact Group Holdings
Ltd, Reece Ltd, Wagner Holding Ltd.
This aligns with the previously assigned peer group
in FY23, except for Hills Ltd, now excluded due to the
company’s shares being suspended in May 2023 and
entering voluntary administration in June 2023.
The TSR hurdle and the proportion of performance rights
to vest if the TSR hurdle is met are summarised below:
TSR of GWA Group Limited
relative to TSR of Comparator
Companies
Proportion of Performance
Rights to vest if TSR hurdle
is met
Less than the 50th percentile
50% percentile
0%
25%
Between 50% and 75%
percentile
Straight line vesting
between 25% and 100%
BASED ON:
75th percentile or higher
100%
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, competitive and easy to understand.
EPS (CAGR OVER 3–YEAR PERFORMANCE PERIOD)
The EPS hurdle and the proportion of performance rights
to vest if the EPS hurdle is met are summarised below:
EPS (CAGR) of
GWA Group Limited
Less than 5%
Equal to 5%
Between 5% and 10%
Proportion of Performance
Rights to vest if EPS hurdle
is met
0%
25%
Straight line vesting
between 25% and 100%
10% and higher
100%
19
GWA GROUP LIMITED | 2023 ANNUAL REPORT DIRECTORS’ REPORT (CONTINUED)
3.2.1
FY24 Managing Director variable remuneration
structure.
The FY24 incentives structure for the Managing Director
remains unchanged from FY23 and 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%
150%
200%
Managing
Director
FY24
The FY24 STI components for the Managing Director are
provided in the following table:
Note:
1
2
Following the achievement of the STI financial targets, 25% of the
financial component will be deferred until the Board approves
the FY25 audited financial statements to verify the integrity of
achieving the results.
Critical non-financial KPIs have been established for the other
executives at the beginning of FY24 covering key areas such
as health and safety, customer first, profitable volume growth,
employee engagement, ESG roadmap deliverables and
strategy achievement.
3.2.3
Managing Director and member of the Executive
team remuneration mix for FY24.
The components of remuneration for the Managing Director
and other executives’ for FY24 remains unchanged from
FY23 and are provided in the following table.
FY24 Managing Director Remuneration Mix
Financial Targets2
as maximum
% of fixed
remuneration
Critical Non-
Financial KPIs3
as maximum
% of fixed
remuneration
Performance dependent
34%
13%
3%
50%
% of fixed
remuneration
FY24 Executives’ Remuneration Mix2
40%
10%
50%
Performance dependent
50%
16%
4%
30%
Managing
Director
FY24
Note:
The Managing Director’s LTI grant for FY24 will require
shareholder approval at the Annual General Meeting on 30
October 2023.
Fixed
STI (cash)1
STI (deferred)1
LTI1
Note:
Following the achievement of the STI financial targets, 25% of the
financial component will be deferred until the Board approves
the FY25 audited financial statements to verify the integrity of
achieving the results.
1
2
STA and LTI are based on 100% vesting.
Includes the average remuneration Executives’ excluding the
Managing Director.
1
2
3
3.2.4 FY24 Short-Term Incentive Plan Targets
The Board has decided to maintain the Short-Term
Incentive (STI) financial targets for FY24 under the STI
plan 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 business metric
and aligned with the Group’s strategy.
The Board has the discretion to normalise the EBIT
measure where it is unduly distorted by significant or
abnormal events, 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.
STI payments for non-financial KPI’s will be at the Board
discretion if the financial threshold is not met. 25% of the
payment applicable to achievement of the financial target
to be deferred until the Board approves the FY25 audited
financial statements to verify the integrity of achieving
the results.
Critical non-financial KPIs have been established for the
Managing Director at the beginning of FY24 covering key areas
such as health and safety, customer first, profitable volume
growth, employee engagement, ESG roadmap deliverables and
strategy achievement.
3.2.2
FY24 Member of Executive team variable
remuneration structure
The FY24 incentives structure for members of the
executive team remains unchanged from FY23 and 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
40%
60%
100%
Other
Executives
FY24
The FY24 STI components for the executive team are
provided in the following table:
Financial Targets1
as maximum
% of fixed
remuneration
Critical Non-
Financial2 KPIs
as maximum
% of fixed
remuneration
Maximum STI
as % of fixed
remuneration
30%
10%
40%
Other
Executives
FY24
20
GWA GROUP LIMITED | 2023 ANNUAL REPORT 3.2.5 FY24 Long-Term Incentive Plan Targets
As outlined in section 6.4 Long-Term Incentive (LTI),
for the FY23 LTI plan the Board re-introduced a second
performance measure of Earnings Per Share (EPS)
growth (CAGR over 3-year performance period). The
introduction of this second performance measure is in
addition to retaining the relative TSR measure.
For FY24 the two measures of relative TSR and EPS will
remain in place.
3.3
FY24 EXECUTIVE FIXED REMUNERATION
For FY24 there was one adjustment to the fixed
remuneration for the Group General Manager People &
Performance role of $10,000 per annum in line with an
internal equity review. During the FY24 the Board will
seek external advice on the level and structures of the
remuneration framework for the KMP.
4.
RELATIONSHIP BETWEEN
REMUNERATION POLICY AND
GROUP PERFORMANCE
Remuneration is linked to performance by:
• Applying challenging financial and non-financial
measures to assess performance;
• Ensuring that these measures focus executives on
strategic and operational business objectives that
create shareholder value while balancing short-term
and medium/longer term shareholder value creation.
GWA measures performance on the following key
corporate measures:
• Earnings Before Interest and Tax (EBIT);
• Total Shareholder Return (TSR)
• Earnings Per Share (EPS) growth (introduced in FY23)
The Board has the discretion to normalise the EBIT
and EPS measures where they are unduly distorted
by significant or abnormal events, to ensure that the
measures reflect underlying trading performance.
Examples include the impact of restructuring costs
or other non-recurring expenses or income, to ensure
management is not discouraged from undertaking
initiatives in the long-term interests of shareholders.
Any adjustments to normalise the EBIT and EPS
measures, and the reasons for any adjustments, will
be disclosed.
Remuneration for all executives varies with performance
on the key EBIT, EPS and TSR measures together with
achievement of their measurable personal KPI objectives,
which underpin delivery of the financial outcomes, and
are linked to the Group’s performance review process.
The Total Shareholder Return (TSR) hurdle for the FY20
LTI grant was not met, accordingly those performance
rights lapsed.
The following is a summary of key statistics for the Group
over the last five years:
Financial Year
2018/19(b)(c)
2019/20(c)(d)
2020/21(c)(d)
2021/22(c)(d)
2022/23(c)
Notes:
EBIT(a)
($m)
78.1
71.8
68.5
74.8
70.5
EPS(a)
(cents)
Total DPS
(cents)
Share Price
(30 June)
($)
Market Capitalisation
(30 June)
($m)
19.3
17.0
16.0
17.8
16.6
18.5
11.5
12.5
15.0
13.0
3.42
2.77
2.77
1.97
1.75
902.7
731.1
734.6
522.5
464.1
(a) Excludes significant items.
(b) 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.
(c) FY19 to FY23 includes the results of Methven Limited from the date of acquisition (10 April 2019).
(d) FY20 to FY22 performance was negatively impacted by COVID-19 resulting in business interruption from lockdown restrictions in various
geographies and challenging market conditions.
21
GWA GROUP LIMITED | 2023 ANNUAL REPORT DIRECTORS’ REPORT (CONTINUED)
The remuneration and incentive framework are designed
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.
The Group’s Normalised EBIT was down 5.9% year on
year due softening market conditions particularly in the
residential repair and renovation sector.
The Group remains in a strong financial position. While
the residential repair & renovation segment is expected
to remain subdued, continued momentum is expected
in residential detached completions through H1 of
FY24 with increasing activity in commercial new build
and renovation and multi residential. The earnings
performance for FY23 enabled the Board to pay a full
year fully franked dividend of 13 cents per share for FY23
representing a dividend pay-out ratio of reported profit of
80% and normalised profit of 78% which is in line with the
Company’s dividend policy.
The Group has continued its progress in FY23 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 FY23; refer sections 6.3 Short-Term
Incentive and 6.4 Long-Term Incentive.
The remuneration and incentive framework focused
executives on responding appropriately to the challenging
market conditions in FY23 which saw a significant
slowdown in residential repair and renovation activity
as a consequence of consecutive interest rate increases
by Central Banks in the markets in which we operate. It
has encouraged management to respond quickly and
make medium term decisions to sustain competitiveness
ensuring that the Group is well placed to maximise
returns through the market cycle.
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 eligible to
participate in the executive incentive schemes.
The People & Culture Committee, from time to time,
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.
22
GWA GROUP LIMITED | 2023 ANNUAL REPORT 6.1.1
GWA’s Executive Remuneration Structure for FY23
Objective
Attract and retain
best talent
Reward current year
performance
Reward long-term
performance
Fixed
Variable (at risk)
Remuneration
Components
Fixed Remuneration
Short Term
Incentive (STI)
Long Term
Incentive (LTI)
Delivery
FY23 Approach
• 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 three 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:
• Gateway: EBIT measure
• Financial target
(30-40%) EBIT
• Personal targets (10%):
measureable personal
KPIs.
LTI performance measures:
• 3 year performance
period
• 2 Performance hurdles
– Relative TSR (50%)
– EPS (50%)
The Board is of the view that EBIT is an effective basis
for the STI financial target as it is currently a key business
metric aligned with the Group’s strategy.
6.1.2
Managing Director and other executives’
remuneration mix for FY23
The components of remuneration for the Managing
Director and other executives’ for FY23 are provided in
the following table.
FY23 Managing Director Remuneration Mix
Performance dependent
34%
13%
3%
50%
FY23 Other Executives’ Remuneration Mix2
Performance dependent
50%
16%
4%
30%
Fixed
STI (cash)1
STI (deferred)1
LTI1
Note:
1
2
STI and LTI are based on 100 per cent vesting.
Includes the average remuneration Executives’ excluding the
Managing Director.
6.1.3
FY23 Managing Director variable remuneration
structure
The FY23 incentives structure for the Managing Director
is provided in the following table:
Maximum STI
as % of fixed
remuneration
Maximum LTI
as % of fixed
remuneration
(grant date
fair value)
Maximum total
performance
pay as %
of fixed
remuneration
50%
150%
200%
Managing
Director
FY23
The FY23 STI components for the 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
40%
10%
50%
Managing
Director
FY23
23
GWA GROUP LIMITED | 2023 ANNUAL REPORT DIRECTORS’ REPORT (CONTINUED)
6.1.4
FY23 Other Executives’ variable remuneration
structure
The FY23 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
40%
60%
100%
Other
Executives
FY23
The FY23 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%
10%
40%
Other
Executives
FY23
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 with the relevant and
required executive experience and competence;
• 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 required focus on long-term
growth.
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.
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 2023. The STI is aligned to shareholder interests
as executives will only become entitled to most payments
if profitability improves year on year, 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. If the gateway has not been
achieved, then the executives are not eligible for an
STI payment related to financials. The Board has
absolute discretion in exercising any power or discretion
concerning the STI and any payments accordingly made
as they relate to the Executive.
The STI payment is made in cash after finalisation
of the annual audited financial statements. 25% of
the financial 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.
6.3.2 STI performance requirements
6.3.2.1 Financial Performance Targets
For FY23, STI financial performance target is based on
Earnings Before Interest and Tax (EBIT) as determined
by the Board. The use of EBIT as the sole basis of STI
financial targets is aimed at ensuring executives are
accountable for delivering profit improvements. The
Board is of the view that EBIT is an effective basis for STI
financial targets as it is currently a key business metric
and aligned with the Group’s strategy.
The ‘gateway’ and ‘maximum’ STI financial targets are
determined by the Board at the beginning of the financial
year following approval of the budget by the Board.
The budget performance levels are taken into
consideration in setting the financial targets, however
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 ‘gateway’ and ‘maximum’ levels
is rewarded on a straight-line basis.
24
GWA GROUP LIMITED | 2023 ANNUAL REPORT 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
FY23 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 the
economic cycle, as well as on continuous performance
improvement. Hence the personal goals are a key part of
the Group’s performance management process.
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 FY23.
6.3.2.1.1 FY23 STI Financial Performance Outcomes
Due to the downturn in the market and difficult
conditions throughout FY23, the financial targets set for
the executives were not met, hence STI payment relating
to the financial outcomes was not triggered.
6.3.2.2 Personal Goals
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 10% for the
Managing Director and 10% 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 People & Culture 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, volume growth and productivity
improvements or implementing a significant change or
strategic initiative.
25
GWA GROUP LIMITED | 2023 ANNUAL REPORT DIRECTORS’ REPORT (CONTINUED)
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 FY23
is provided in the following table:
FY23 Goals
Performance
Assessment
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 (worker
insights, safety interactions, site
inspections, actions closed)
To continue to build on the
capabilities of the Executive team
and GWA staff by implementing
specific learning and development
programs across the company
Drive overall improvement
of the recently implemented
ERP system and develop
business advantages from that
development
Deliver on specific projects (Win
the Plumber, Innovation through
Design and Partnership, Digital
and Customer Experience)
as part of the 5-year Board
endorsed strategy
ESG — Establish an approved
ESG roadmap with measurable
targets
Financial targets
STI financial performance targets
Measures:
EBIT financial gateway
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 FY23 the
Group continued its progress on implementing the WHS strategy. This strategy
focuses on fostering a safety culture through strong leadership at all levels,
ongoing coaching, structured training and embedding of reporting through
reward and recognition programs. The Groups Safety Management System is
regularly audited internally for the purpose of continuous improvement and
remains ISO 45001 certified. The Group has exceeded the target set in relation
to reporting of Worker Insights achieving a 1,402 insights per million hours
against set target of 1,200. The Group proactively conducted a Psychosocial
Risk Assessment and continues to support the health, safety, and psychological
wellbeing of staff through its well-established programs. and practices around
flexible work, EAP support, Mental Health First Aid, Resilience training and other
support and referral programs.
Individual development programs for members of the ELT have been
developed and are being implemented. Corporate Learning and
Development plans have been developed and bespoke programs were
deployed aligned with our Leadership Competency framework at frontline
and self-leadership levels.
Above target
On target
The system has been embedded into the organisation achieving significant
improvements in system stability and insight (value) reporting. This includes
consistent measure of DIFOT across ANZ and improving this important
measure to 85%.
On target
On target
Pleasing progress has been made across a number of key projects.
Win the Plumber
• Achieved registration of 20,000 plumbers during FY23
• Provided technical services/training to more than 6,500 individual plumbers.
Innovation through Design and Partnership
• Implemented and delivered a NPD program in support of the strategy
launching a Builders Range entry level taps offering and updating core
product ranges.
Digital
• Successfully launched a digital app “Caroma Plumbers’ Hub” to increase
ease of doing business for the plumbing community.
Customer Experience
• A detailed Brand roadmap was developed with planned execution in FY24.
During the year an Executive-led ESG steering committee was formed who
developed a 2-3 year ESG roadmap which was approved by Board.
For FY23 a revised external ESG report is being published.
On target
Despite the disciplined response to softening market conditions throughout FY23
and successful execution of key business activities, the Managing Director and
other executives did not meet the financial gateway hurdles and were therefore not
eligible for STI payments (both financial and personal goals) for FY23 (refer section
6.3.2.1.1). Profit performance was maximised in a challenging market enabling a full
dividend of 13c/share to be paid to shareholders, with a stronger platform for future
growth and shareholder wealth creation.
Below target
26
GWA GROUP LIMITED | 2023 ANNUAL REPORT The executive leadership team have delivered against all
of their personal objectives during FY23, however due to
not meeting the financial hurdles, the Board determined
that no payment will be made for achieving the
personal targets.
6.4
LONG-TERM INCENTIVE (LTI)
6.4.1
LTI two hurdles — TSR and EPS for FY23
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 FY23 LTI grant, the basis of the grants
of Performance Rights to executives is subject to two
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
ensures LTI rewards are contingent on this measure is
consistent with the Board’s approved strategy.
• Earnings Per Share (EPS) growth (CAGR over 3-year
performance period).
For the FY23 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 FY23.
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 FY23 LTI grant, the proportion of Performance
Rights that can vest will be calculated when the shares
vest in August 2025 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 circumstance. 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 as at 30 June 2023 was 2,865,004 which
represents 1.1% of the Group’s total issued shares.
6.4.2 LTI performance requirements
6.4.2.1 TSR hurdle
The TSR hurdle and the proportion of performance rights
to vest if the TSR hurdle is met are summarised below:
TSR of GWA Group Limited
relative to TSRs of Comparator
Companies
Proportion of
Performance Rights to Vest
if TSR hurdle is met
Less than the 50th percentile
50% percentile
Between 50% and
75% percentile
0%
25%
Straight line vesting
between 25% and 100%
75th percentile or higher
100%
27
GWA GROUP LIMITED | 2023 ANNUAL REPORT DIRECTORS’ REPORT (CONTINUED)
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 proposed peer group (19 in total) for the FY24 LTI
grant is as follows (unchanged since FY22 with the
exception of excluding Hills Ltd, now excluded due to
the company’s shares being suspended in May 2023 and
entering voluntary administration in June 2023):
James Hardie Industries PLC, Fletcher Building Ltd, Boral
Ltd, Adbri Limited, Brickworks Ltd, Super Retail Group
Ltd, CSR Ltd, ARB Corp Ltd, Bapcor Ltd, Breville Group
Ltd, GUD Holdings Ltd, Cedar Woods Properties Ltd,
Decmil Group Ltd, Simonds Group Ltd, Fleetwood Ltd,
Accent Group Ltd, Pact Group Holdings Ltd, Reece Ltd,
Wagner Company 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.
6.4.2.2 EPS hurdle
For the FY23 LTI grant, 50% of the performance rights
were subject to a EPS hurdle (50% subject to TSR as per
6.4.2.1). The performance hurdles and vesting proportions
for the EPS performance measure that applies to the
FY23 LTI grant is outlined in the following table:
The EPS performance hurdle is calculated by reference
to the Group’s audited accounts. The EPS hurdle is
calculated in accordance with the Accounting Standards.
The Board has discretion to make reasonable adjustments
to the profit component of the calculation where it is
unduly distorted by significant or abnormal events, and
in order to ensure that it reflects underlying trading
performance. The use of any discretion and the reasons
for it will be disclosed.
6.4.2.3 ROFE hurdle
For the FY20 LTI grant, 50% of the performance rights
were subject to a ROFE hurdle (50% subject to TSR as per
6.4.2.1). The performance hurdles and vesting proportions
for the ROFE performance measure that applies to the
FY20 LTI grant is outlined in the following table:
GWA Group Limited
ROFE over three-year
performance period
Proportion of Performance
Rights to Vest if ROFE
hurdle is met
ROFE less than 16% per annum
ROFE equal to 16% per annum
0%
12.5%
ROFE between 16%
and 19% per annum
ROFE equal to 19%
or higher per annum
Straight line vesting
between 12.5% and 50%
50%
(i.e., 50% of total grant)
The ROFE performance hurdle is calculated by
reference to the Group’s audited accounts. The ROFE
hurdle is calculated as earnings before interest and
tax (EBIT) divided by funds employed and adjusted
for normalisation if applicable; refer section 4. Funds
employed is calculated as net assets minus cash plus
borrowings and net AASB16 Leases balances.
The Board has discretion to make reasonable adjustments
to the EBIT figure where it is unduly distorted by
significant or abnormal events, and in order to ensure that
it reflects underlying trading performance. The use of any
discretion and the reasons for it will be disclosed.
GWA Group Limited
EPS growth over three
year performance period
Proportion of Performance
Rights to Vest if EPS
hurdle is met
7.
DETAILS OF DIRECTOR AND
EXECUTIVE REMUNERATION
EPS less than 5% per annum
EPS equal to 5% per annum
EPS between 5%
and 10% per annum
EPS equal to 10%
or higher per annum
0%
25%
Straight line vesting
between 25% and 100%
100%
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 2023 are provided in the following
Remuneration Tables.
28
GWA GROUP LIMITED | 2023 ANNUAL REPORT Short-term
Long-term
Post-
employment
s
e
e
F
&
y
r
a
a
S
l
y
r
a
t
e
n
o
M
-
n
o
N
s
u
n
o
B
h
s
a
C
I
T
S
—
s
u
n
o
B
I
T
S
d
e
r
r
e
f
e
D
-
e
r
a
h
S
f
o
e
u
a
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l
s
d
r
a
w
A
d
e
s
a
B
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c
v
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e
S
g
n
o
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e
v
a
e
L
n
o
i
t
a
u
n
n
a
r
e
p
u
S
s
t
fi
e
n
e
B
$(a)
$(c)
$(b)(h)
$(b)
$(d)
$(k)
$
n
o
i
t
a
n
m
r
e
T
i
s
t
fi
e
n
e
B
$
l
a
t
o
T
$
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
r
a
e
y
n
i
d
e
t
s
e
v
s
u
n
o
B
I
T
S
r
a
e
y
n
i
d
e
t
i
e
f
r
o
f
s
u
n
o
B
I
T
S
%(i)
%
%
Non-Executive
Directors(f)
D McDonough,
Chairman
J Mulcahy,
Deputy Chairman
A Barrass,
Non-Executive
Director
(retired 28 October
2022)(m)
S Goddard,
Non-Executive
Director
(retired 30 June
2022)
B, Inglis, Non-
Executive Director
(appointed 9
November 2022)
P Mann, Non-
Executive Director
(appointed 1
January 2023)
J McKellar,
Non-Executive
Director
S Roche, Non-
Executive Director
(appointed 28
October 2022)
R Thornton,
Non-Executive
Director(j)
Total —
Non-Executive
Directors
Remuneration
Executive Directors
U Meyerhans,
Managing Director
and Chief Executive
Officer(e)
Total — Directors
Remuneration(l)
2023
273,677
2022
280,000
2023
116,350
2022
117,000
2023
53,700
2022
108,000
2023
116,350
2022
117,000
2023
69,259
2022
2023
–
55,192
2022
–
2023
107,400
2022
108,000
2023
72,426
2022
–
2023
107,400
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– (70,678)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,323
–
13,650
13,000
6,300
12,000
13,650
13,000
8,125
–
6,475
–
12,600
12,000
8,497
–
12,600
2022
375,952
5,595
144,139
27,311
34,987
15,934 22,938
2023
971,754
–
–
– (70,678)
– 88,220
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
280,000
280,000
130,000
130,000
60,000
120,000
130,000
130,000
77,384
–
61,667
–
120,000
120,000
80,923
–
49,322
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
626,856
29
98
989,296
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2
2022 1,105,952
5,595 144,139
27,311
34,987 15,934 72,938
– 1,406,856
2023
1,007,115
2,528
–
– 383,033
–
27,500
–
1,420,176
27
–
100
2022
1,018,653
2,238 391,000 97,000 241,877
–
27,500
–
1,778,268
41
98
2
2023 1,978,869 2,528
–
– 312,355
– 115,720
– 2,409,472
2022 2,124,605
7,833 535,139 124,311 276,864 15,934 100,438
– 3,185,124
29
GWA GROUP LIMITED | 2023 ANNUAL REPORT
DIRECTORS’ REPORT (CONTINUED)
Short-term
Long-term
Post-
employment
s
e
e
F
&
y
r
a
a
S
l
y
r
a
t
e
n
o
M
-
n
o
N
s
u
n
o
B
h
s
a
C
I
T
S
—
s
u
n
o
B
I
T
S
d
e
r
r
e
f
e
D
-
e
r
a
h
S
f
o
e
u
a
V
l
s
d
r
a
w
A
d
e
s
a
B
i
e
c
v
r
e
S
g
n
o
L
e
v
a
e
L
n
o
i
t
a
u
n
n
a
r
e
p
u
S
s
t
fi
e
n
e
B
$(a)
$(c)
$(b)(h)
$(b)
$(d)
$(k)
$
n
o
i
t
a
n
m
r
e
T
i
s
t
fi
e
n
e
B
$
2023
372,500
2,347
–
–
61,286
2022
369,344
1,335
127,300
29,100
38,701
2023
366,346
2,420
2022
29,288
217
–
–
–
–
22,585
–
2023
179,372
2,402
(42,105)
–
(92,794)
2022
393,461
2,797
193,494
29,100
65,747
–
–
–
–
–
–
27,500
27,500
27,500
1,964
12,646
25,000
2023
426,769
1,445
9,178
–
20,115
7,749
27,500
2022
437,500
1,263
224,937
33,829
54,650
7,751
27,500
2023
376,708
2,709
–
–
59,753
2022
378,032
1,877
124,117
28,373
37,733
2023
2022
73,175
524
–
–
2023
498,855
3,142
–
–
–
–
–
–
–
–
79,671
2022
248,595
776
77,984
17,827
25,155
–
–
–
–
–
–
25,292
23,568
15,115
–
35,145
14,810
2023
387,671
3,124
4,441
–
45,439
20,202
26,138
2022
231,317
2,490
148,621
25,463
53,020 (38,688)
31,078
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
l
a
t
o
T
$
463,633
593,280
418,851
31,469
59,521
709,599
492,756
787,430
464,462
593,700
88,814
–
616,813
385,147
487,015
453,301
2023
2,681,396
18,113 (28,486)
–
196,055
27,951
196,836
2022
2,087,537
10,755
896,453 163,692
275,006 (30,936)
151,420
2023 4,660,265 20,641
(28,486)
–
508,410
27,951 312,556
2022
4,212,142
18,588 1,431,592 288,003
551,870 (15,002) 251,858
–
–
–
–
3,091,865
3,553,927
5,501,337
6,739,051
Executives(g)
M Hayes,
Group General
Manager —
Marketing
E Lagis, Company
Secretary and
General Counsel
(appointed 6 June
2022)
A Larson, Chief
Information Officer
(resigned 19
December 2022)
C Norwell, Group
General Manager —
Sales (AU,
UK and Asia)
P Oliver, Group
General Manager
— People &
Performance
R Patel, Chief
Information Officer
(appointed 17 April
2023)
C Scott, Group Chief
Financial Officer
(appointed
10 January 2022)
C Sunaryo, Group
General Manager —
Supply & Innovation
(KMP from
1 August 2021)
Total —
Executives
Remuneration(l)
Total — Directors
and Executives
Remuneration(l)
30
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
r
a
e
y
n
i
d
e
t
s
e
v
s
u
n
o
B
I
T
S
r
a
e
y
n
i
d
e
t
i
e
f
r
o
f
s
u
n
o
B
I
T
S
%(i)
%
%
13
33
5
–
–
31
4
30
13
32
–
–
13
31
9
42
–
98
–
–
–
98
–
98
–
98
–
–
–
98
–
98
100
2
100
–
100
2
100
2
100
2
100
–
100
2
100
2
GWA GROUP LIMITED | 2023 ANNUAL REPORT
Notes to the Remuneration Tables:
(a) Salary and fees represent base salary and includes the movement in annual leave provision.
(b) Despite the disciplined response to softening market conditions throughout FY23 and successful execution of key business activities, the
Managing Director and other executives did not meet the financial gateway hurdles and were therefore not eligible for STI payments (both
financial and personal goals). Refer to Section 6.3.1 for details on the deferred STI component.
(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 as at 30 June 2023 were granted to executives in FY21, FY22 and FY23 (as applicable) and are subject to vesting conditions and the
achievement of specified performance hurdles over the three year performance periods. The fair values of the Performance Rights granted in
FY21, FY22 and FY23 were calculated using Black Scholes Model (ROFE and EPS hurdle) and Monte Carlo Simulation (TSR hurdle) valuation
methodologies and allocated to each financial year evenly over the three-year performance period. If the 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. During FY23,
0% of the Performance Rights granted to executives in respect of the FY20 LTI grant vested, and the reversal is included in the table above
where applicable.
(e) For details of Mr. Urs Meyerhans’ remuneration arrangements as Managing Director, please refer to section 8.1. The Managing Director’s total
remuneration in 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 most executives in FY23 was frozen with one exception to reflect additional responsibilities in the role undertaken.
For the actual remuneration received by the executives for FY23, please refer to the table in section 7.1.1.
(h) Short term bonus is inclusive of the accounting accrual for the retention bonus scheme as disclosed in FY22 Remuneration Report for
Mr. Alex Larson (reversal of prior accrual), Mr. Craig Norwell and Ms. Caroline Sunaryo.
(i) Performance based remuneration does not include the retention bonus scheme.
(j)
Mr. Richard Thornton’s was Executive Director and Company Secretary to 3 June 2022, and Non-Executive Director from 3 June 2022.
All performance-based remuneration relates to the period to 3 June 2022. Refer to Note 1 to Table 1 of Section 2 for details.
(k) Long service leave remuneration is based on the movement in long service leave provision.
(l)
Total Directors remuneration and Total Executive Remuneration reported has decreased largely due to nil FY23 STI, partly offset by the timing
of Executive appointments.
(m) Ms. Alison Barrass received an ex-gratia payment equivalent to 2 months fees in recognition of her past service.
31
GWA GROUP LIMITED | 2023 ANNUAL REPORT DIRECTORS’ REPORT (CONTINUED)
7.1.1
Actual remuneration received by executives.
The following table sets out the actual value of remuneration received by executives for FY23, derived from the various
components of their remuneration during FY23. 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.
FY23
U Meyerhans, Managing Director and Chief
Executive Officer(d)
M Hayes, Group General Manager —
Marketing
E Lagis, Company Secretary and
General Counsel (appointed 6 June 2022)
A Larson, Chief Information Officer
C Norwell, Group General Manager —
Sales
P Oliver, Group General Manager —
People & Performance
R Patel, Chief Information Officer
(appointed 17 April 2023)
C Scott, Group Chief Financial Officer
(appointed 10 January 2022)
C Sunaryo, Group General Manager —
Supply & Innovation (KMP from 1 August 2021)
Total
Notes:
Fixed
Remuneration
$(a)
1,002,528
Short Term
Incentive
$(b)
–
1,002,238
488,000
402,347
393,002
383,959
29,447
189,068
402,797
466,445
466,263
392,709
384,377
82,575
–
523,142
249,442
405,624
323,323
3,848,397
–
156,400
–
–
–
206,400
58,125
239,940
–
152,490
–
–
–
95,811
28,125
164,975
86,250
3,250,889
1,504,016
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Long Term
Incentive
(Earned)
$(c)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
1,002,528
1,490,238
402,347
549,402
383,959
29,447
189,068
609,197
524,570
706,203
392,709
536,867
82,575
–
523,142
345,253
433,749
488,298
3,934,647
4,754,905
(a) Fixed remuneration represents amounts actually paid to executives and includes base salary, non-monetary benefits, and superannuation.
(b) Despite the disciplined response to softening market conditions throughout FY23 and successful execution of key business activities, the
Managing Director and other executives did not meet the financial gateway hurdles and were therefore not eligible for STI payments (both
financial and personal goals) for FY23. Short term incentive is inclusive of the retention bonus scheme paid during FY23 as disclosed in FY22
Remuneration Report for Mr. Craig Norwell and Ms. Caroline Sunaryo.
(c) The performance hurdles for the FY20 LTI grant were tested during FY23 and 0% vested; refer section 7.2.1 Performance Rights. Excludes the
value of any unvested LTI grants expensed or reversed during FY23.
(d) For details of Mr. Urs Meyerhans’ remuneration arrangements as Managing Director refer to section 8.1.
32
GWA GROUP LIMITED | 2023 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 2023 and in prior years that affects compensation in this or future reporting periods.
Year
of
grant
Number
of rights
granted
Grant date
%
vested
in year
%
forfeit
in year
Fair value
of rights
at grant
date
$(a)
Issue price
used to
determine
number of
rights granted
Executive Directors
U Meyerhans,
Managing Director
R Thornton,
Non-Executive Director
(Executive Director to
3 June 2022)
Executives
M Hayes, Group General
Manager — Marketing
E Lagis, Company Secretary
and General Counsel
A Larson, Chief
Information Officer
(resigned 19 December 2022)
2023
707,547
28 October 2022
2022
541,516
6 December 2021
2023
–
–
2022
88,709
6 December 2021
2021
43,723
7 December 2020
2020
40,500
14 February 2020
2023
113,208
28 October 2022
2022
86,643
6 December 2021
2023
113,208
28 October 2022
2022
2023
–
–
–
–
2022
86,643
6 December 2021
2021
42.705
7 December 2020
C Norwell, Group General
Manager — Sales
2023
131,604
28 October 2022
2022
100,722
6 December 2021
2021
49,644
7 December 2020
2020
46,000
14 February 2020
2023
110,377
28 October 2022
2022
84,477
6 December 2021
2023
–
–
2023
147,170
28 October 2022
2022
112,635
29 June 2022
2023
118,868
28 October 2022
2022
2021
75,812
6 December 2021
12,011
7 December 2020
2020
11,000
14 February 2020
P Oliver, Group General
Manager — People &
Performance
R Patel, Chief Information
Officer (appointed 17 April 2023)
C Scott, Group Chief
Financial Officer
C Sunaryo, Group General
Manager — Supply &
Innovation
Note:
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
97%
1,020,990
725,631
–
118,870
83,074
127,575
–
–
–
–
–
163,359
116,102
163,359
–
–
100%
116,102
100%
81,140
–
–
–
189,905
134,967
94,324
100%
144,900
–
–
–
–
–
–
–
–
159,274
113,199
–
212,366
150,931
171,527
101,588
22,821
100%
34,650
2.12
2.77
–
2.77
2.81
3.04
2.12
2.77
2.12
–
–
2.77
2.81
2.12
2.77
2.81
3.04
2.12
2.77
–
2.12
2.77
2.12
2.77
2.81
3.04
(a) The issue price used to determine the number of Performance Rights offered to key management personnel during FY23 was $2.12 being the
volume weighted average price of the Group’s shares calculated over the 10 trading days from the Group’s FY22 results release on 15 August
2022. 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 and EPS hurdle and Monte
Carlo simulation for the TSR hurdle. The fair value of rights issued during the year under the EPS hurdle was $1.69 and under the TSR hurdle
was $1.20 per right.
33
GWA GROUP LIMITED | 2023 ANNUAL REPORT DIRECTORS’ REPORT (CONTINUED)
All the rights carry an exercise price of nil. The rights granted on 7 December 2020, 6 December 2021 and 28 October
2022 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 2023, 2024, and 2025 respectively, subject to the achievement of the
performance hurdles.
The rights granted to Mr. Thornton and Mr. Meyerhans were approved by shareholders at the 2020, 2021 and 2022 Annual
General Meetings (as applicable) 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.
The number of rights outstanding as at 30 June 2023 represents the balance yet to be tested.
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
14 February 2020
Valuation
Per Right1
Tranche A
(TSR) $2.71
Tranche B
(ROFE) $3.54
7 December 20203 Tranche A
(TSR) $1.90
6 December 20213 Tranche A
(TSR) $1.34
28 October 2022
Tranche A
(TSR) $1.20
Tranche B
(EPS) $1.69
Notes:
Performance
Testing Windows
Expiry Date
(if hurdle not met)
Performance Status2
August 2022
Tranche A (TSR): Performance condition
was below the 50th percentile resulting
in 0% vesting of the grant.
Tranche B (ROFE): Performance
condition was below the 16% hurdle,
resulting in 0% vesting of the grant.
August 2023
Performance testing not yet commenced.
August 2024
Performance testing not yet commenced.
August 2025
Performance testing not yet commenced.
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)
29 October 2021
to August 2024
(Tranche A)
1 July 2022 to
30 June 2025
(Tranche A)
1 July 2022 to
30 June 2025
(Tranche B)
1
2
3
The value of performance rights at grant date calculated in accordance with AASB 2 Share-based Payments. Valuations were performed by a
third party, Deloitte.
To ensure an independent TSR measurement, GWA engages the services of an external organisation, Deloitte, to assist with determining
performance under the TSR hurdle.
Due to the uncertainty in the market from the COVID-19 pandemic, the Board decided that the performance measure for the FY21 and FY22
LTI grant would be solely based on TSR. Refer section 6.4 Long-Term Incentive for further details.
34
GWA GROUP LIMITED | 2023 ANNUAL REPORT 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 2023
(2022: 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 2023 (2022: 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 and are trivial or domestic in nature.
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:
Held at
1 July 2022
Granted as
compensation
Purchases
Sales
30 June 2023
Held at
Non-Executive Directors
D McDonough
J Mulcahy
A Barrass
S Goddard (retired 30 June 2023)
B Inglis (appointed 9 November 2022)
P Mann (appointed 1 January 2023)
J McKellar
S Roche (appointed 28 October 2022)
R Thornton
Executive Directors
U Meyerhans
Executives
M Hayes
E Lagis
A Larson (resigned 19 December
2022)
C Norwell
P Oliver
R. Patel (appointed 17 April 2023)
C Scott
C Sunaryo
170,000
40,950
–
10,000
n/a
n/a
13,034
n/a
299,561
65,217
–
–
–
150,663
–
n/a
1,866
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
10,000
–
70,000
50,000
90,000
–
4,100
–
–
–
–
11,841
–
–
–
–
–
-
–
–
–
–
–
–
–
–
–
–
–
170,000
40,950
–
10,000
–
10,000
13,034
70,000
349,561
155,217
–
4,100
n/a
150,663
–
–
13,707
–
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 2023 is listed in the
Directors’ Report under Directors’ Interests.
During FY23, nil shares vested to key management personnel as compensation (2022: nil). The aggregate number of
shares held by key management personnel or their related parties as at 30 June 2023 was 987,232 (2022: 789,941).
35
GWA GROUP LIMITED | 2023 ANNUAL REPORT DIRECTORS’ REPORT (CONTINUED)
7.3.4 Movements in performance rights
The movement during the reporting period in the number of performance rights in GWA Group Limited held by each key
management person is as follows:
Held at
1 July 2022
Granted
during
the year
Vested
during
the year
Forfeited
during
the year
Held at
30 June 2023
Non-Executive Directors
R Thornton1
Executive Directors
U Meyerhans
Executives
M Hayes
E Lagis
A Larson (resigned 19 December 2022)
C Norwell
P Oliver
R Patel (appointed 17 April 2023)
C Scott
C Sunaryo
94,415
–
541,516
707,547
86,643
–
129,348
196,366
84,477
n/a
112,635
98,823
113,208
113,208
–
131,604
110,377
–
147,170
118,868
–
–
–
–
–
–
–
–
–
(39,375)
55,040
–
–
–
(129,348)
(46,000)
–
–
–
(11,000)
1,249,063
199,851
113,208
n/a
281,970
194,854
–
259,805
206,691
1 All performance rights held by Mr. Richard Thornton relate to his role up to 3 June 2022 as Executive Director and Company Secretary.
8.
8.1
KEY TERMS OF EMPLOYMENT CONTRACTS
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 2021(i). 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.
The following is a summary of Mr. Meyerhans’ remuneration package for FY23:
• Total Fixed Remuneration (TFR) of $1,000,000 comprising salary, superannuation, and all other benefits other than
incentive plans and minor fringe benefits;
• 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 two
performance hurdles of relative Total Shareholder Return (TSR) and Earnings Per Share (EPS).
(i) 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 FY23 Executive Remuneration Changes for further details.
36
GWA GROUP LIMITED | 2023 ANNUAL REPORT 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 six 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 six 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.
37
GWA GROUP LIMITED | 2023 ANNUAL REPORT DIRECTORS’ REPORT (CONTINUED)
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
14 August 2023
Urs B Meyerhans
Managing Director
38
GWA GROUP LIMITED | 2023 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 2023 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Trent Duvall
Partner
Sydney
14 August 2023
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.
39
GWA GROUP LIMITED | 2023 ANNUAL REPORT
FINANCIAL
REPORT
GWA Group Limited and its controlled entities
ABN 15 055 964 380
41
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
42 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
43 CONSOLIDATED STATEMENT OF CASH FLOWS
44 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
45 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
45
47
49
51
53
54
54
55
55
57
59
61
63
63
63
64
65
67
75
76
77
77
78
78
80
80
Significant accounting policies
Operating segments
Income and expenses
Income tax expenses
Earnings per share
Cash and cash equivalents
Trade and other receivables
Inventories
Deferred tax assets and liabilities
Property, plant and equipment
Intangible assets
Right-of-use assets and lease liabilities
Trade and other payables
Employee benefits
Provisions
Loans and borrowings
Share capital and reserves
Financial instruments and financial risk management
Share-based payments
Related parties
Auditor’s remuneration
Commitments
Consolidated entities
Deed of cross guarantee
Parent entity disclosures
Subsequent events
81 DIRECTORS’ DECLARATION
82
INDEPENDENT AUDITOR’S REPORT TO THE
SHAREHOLDERS OF GWA GROUP LIMITED
40
GWA GROUP LIMITED | 2023 ANNUAL REPORT GWA Group Limited and its controlled entities
CONSOLIDATED STATEMENT OF PROFIT OF 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 will not be reclassified subsequently to profit or loss:
Note
2023
2022
3(a)
3(c)
3(b)
3(d)
3(f)
3(f)
4
411,840
(253,653)
418,717
(256,902)
158,187
1,349
(47,304)
(41,547)
(1,636)
69,049
668
(8,750)
(8,082)
60,967
(17,812)
43,155
161,815
1,942
(47,542)
(41,058)
(15,485)
59,672
22
(7,255)
(7,233)
52,439
(17,260)
35,179
Net change in fair value of financial assets, net of tax
(1,720)
100
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
1,407
(4,069)
(4,382)
38,773
(510)
8,499
8,089
43,268
5
5
16.3
16.1
13.3
13.2
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the
accompanying notes.
(i) In the current year, $1.4m (pre-tax) of costs was incurred in relation to organisation restructuring. Other expenses in the prior year includes $15.2m
(pre-tax) of costs incurred in relation to the Group’s Enterprise Resource Planning / Customer Relationship Management (ERP / CRM) project, and
closure of the China sales operation. Refer to Note 3(d).
41
GWA GROUP LIMITED | 2023 ANNUAL REPORT
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
Derivative financial instruments
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
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 2023
30 June 2022
6
7
8
18
9
10
11
12
18
18
13
16
14
4
12
15
9
13
16
12
14
15
17
43,443
60,458
88,136
206
3,418
195,661
3,149
14,515
418,409
42,303
5,691
520
484,587
680,248
45,574
35,000
5,495
3,567
11,709
4,509
105,854
93,076
211
124,092
41,764
4,297
5,414
268,854
374,708
305,540
31,440
70,394
108,845
4,785
2,951
218,415
2,455
16,978
418,430
49,969
6,846
2,935
497,613
716,028
66,042
20,000
5,786
1,615
11,161
3,666
108,270
95,007
597
148,328
49,808
4,188
6,004
303,932
412,202
303,826
311,294
1,176
(6,930)
305,540
311,294
5,489
(12,957)
303,826
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
42
GWA GROUP LIMITED | 2023 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
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment
Acquisition of intangible 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
2023
2022
477,590
(381,174)
96,416
(6,620)
(2,150)
668
(15,432)
72,882
(1,945)
(275)
(2,220)
65,000
(75,000)
(37,128)
(11,222)
(58,350)
12,312
31,440
(309)
43,443
444,584
(405,376)
39,208
(4,883)
(2,426)
22
(17,933)
13,988
(1,708)
(700)
(2,408)
92,000
(68,797)
(35,802)
(9,950)
(22,549)
(10,969)
42,634
(225)
31,440
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes
43
GWA GROUP LIMITED | 2023 ANNUAL REPORT
GWA Group Limited and its controlled entities
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the year ended 30 June 2023
In thousands of AUD
Note
Share
capital
Translation
reserve
Hedging
reserve
Asset
revaluation
reserve
Equity
compensation
reserve
Retained
earnings
Total
Balance as at 1 July 2022
311,294
(4,172)
8,233
100
1,328
(12,957) 303,826
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
Net change in fair value
of financial assets
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
–
–
–
–
–
–
–
–
–
–
1,407
–
–
–
–
(4,069)
–
–
–
–
(1,720)
1,407
1,407
(4,069)
(4,069)
(1,720)
(1,720)
–
–
–
–
–
–
43,155
43,155
–
–
–
–
1,407
(4,069)
(1,720)
(4,382)
43,155
38,773
–
–
–
–
–
–
–
–
–
69
–
69
–
69
(37,128)
(37,128)
(37,128)
(37,059)
Balance at 30 June 2023
311,294
(2,765)
4,164
(1,620)
1,397
(6,930) 305,540
For the year ended 30 June 2022
In thousands of AUD
Share
capital
Translation
reserve
Hedging
reserve
Asset
revaluation
reserve
Equity
compensation
reserve
Retained
earnings
Total
Balance as at 1 July 2021
311,294
(3,662)
(266)
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 assets
17
Net change in fair value
of financial assets
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
–
–
–
–
–
–
–
–
–
–
(510)
–
–
–
–
8,499
–
(510)
(510)
8,499
8,499
–
–
–
–
–
–
–
–
–
–
100
100
100
–
–
1,579
(12,334)
296,611
–
–
–
–
–
-
35,179
35,179
–
–
–
–
(510)
8,499
100
8,089
35,179
43,268
(251)
–
(251)
–
(35,802) (35,802)
(251)
(35,802) (36,053)
Balance at 30 June 2022
311,294
(4,172)
8,233
100
1,328
(12,957) 303,826
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes
44
GWA GROUP LIMITED | 2023 ANNUAL REPORT GWA Group Limited and its controlled entities
SECTION I: OVERVIEW
1.
SIGNIFICANT ACCOUNTING
POLICIES
GWA Group Limited (the ‘Company’) is a for-profit
company domiciled in Australia, limited by shares,
which are publicly traded on the Australian Securities
Exchange (‘ASX’) under the ASX code ‘GWA’.
The consolidated financial report of the Company
for the financial year ended 30 June 2023 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 14 August 2023.
(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
(‘AUD’) 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 and
financial assets 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 8 — valuation of inventories
• 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)
(i)
Changes in accounting policies, disclosures,
standards and interpretations
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 2023:
• AASB 2020-3 — Narrow Scope amendments
to AASB 116, AASB 137 and AASB 3. Annual
improvements to AASB 16, AASB 1, AASB9 and
AASB 141.
The initial adoption of these Standards and
Interpretations have not had a material impact on
the amounts reported or disclosures made in the
consolidated financial statement.
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SECTION I: OVERVIEW (CONTINUED)
1.
(c)
(ii)
Changes in accounting policies, disclosures,
standards and interpretations (continued)
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
2023
30 June
2024
1 January
2023
30 June
2024
1 January
2023
30 June
2024
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
AASB 2021-5 Amendments
to AASs — Deferred Tax
related to Assets and
Liabilities arising from a
Single Transaction
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)
(i)
Basis of consolidation
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.
46
(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)
(i)
Foreign currency
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.
(ii)
Financial statements of foreign operations
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.
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT 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 the consolidated
entity’s reportable primary and secondary segments
is included below. Performance is measured based on
segment profit before interest and income tax (‘EBIT’) and
excludes certain project costs (e.g. FY22 costs in relation to
the Group’s ERP / CRM project), 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.
47
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT 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
Reconciliation of profit
Total EBIT for reportable segment
Project costs(i)
Operating profit from continuing operations
(i) Project costs
In thousands of AUD
ERP / CRM project costs
Closure of Asia sales operation
Organisation restructure
Total project costs, pre-tax
Income tax benefit
Total project costs, net of tax
As at 30 June
Reportable segment assets
Reportable segment liabilities
Geographical information
Water Solutions
2023
2022
411,840
70,451
5,051
11,801
1,796
2,220
70,451
(1,402)
69,049
–
–
1,402
1,402
(414)
988
680,248
374,708
418,717
74,849
6,202
11,784
2,042
2,408
74,849
(15,177)
59,672
10,284
4,893
–
15,177
(3,091)
12,086
716,028
412,202
In thousands of AUD
Australia
New Zealand
Other
Consolidated
For the year ended 30 June
2023
2022
2023
2022
2023
2022
2023
2022
External sales revenue
336,352
340,625
43,050
45,173
32,438
32,919
411,840
418,717
Non-current assets
440,920
448,989
24,411
24,311
19,256
24,313
484,587
497,613
The revenue information above is based on the geographical location of customers. Non-current assets are based on the
geographical location of the assets.
48
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION II: RESULTS FOR THE YEAR (CONTINUED)
2. OPERATING SEGMENTS (CONTINUED)
Major customers
The consolidated entity conducts business with four customers (2022: 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
Customer 4
3.
(a)
INCOME AND EXPENSES
Sales revenue
In thousands of AUD
Sales revenue
2023
2022
97,088
56,829
48,565
41,389
95,401
64,026
50,113
43,029
2023
411,840
2022
418,717
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, in accordance with AASB 15
Revenue from Contracts with Customers. 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 (estimated based on customer contracts) and stock return estimates, which are recognised
as revenue at the time of delivery.
Refer to Note 2 geographical information for disaggregated revenue information.
(b)
Other income
In thousands of AUD
Foreign currency gains
Government grant income
Other — scrap income, royalties
2023
376
619
354
1,349
2022
48
929
965
1,942
Government grant income is recognised as 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
2023
2022
253,653
256,902
Cost of sales comprises the cost of manufacturing and purchase of goods including supply chain costs such as freight
and warehousing.
The amount of inventories recognised as an expense (within cost of sales) during the period was $194,360,000
(2022: $205,599,000).
(d)
Other expenses
In thousands of AUD
Project costs
Foreign currency losses
Other
Note
2
2023
1,402
218
16
2022
15,177
305
3
1,636
15,485
49
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION II: RESULTS FOR THE YEAR (CONTINUED)
3.
(e)
INCOME AND EXPENSES (CONTINUED)
Personnel expenses
In thousands of AUD
Wages and salaries — including superannuation contributions, annual leave
and long service leave
Equity-settled share-based payment transactions
2023
2022
67,166
69
73,831
(252)
67,235
73,579
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 $4,208,000 for the financial
year ended 30 June 2023 (2022: $4,076,000) for continuing operations.
(f)
Net financing costs
In thousands of AUD
Finance income
Finance expense
Interest expense on financial liabilities
Interest (income) / expense on swaps
Fees on financial liabilities including amortisation
Interest on lease liabilities
Net financing costs
2023
668
8,803
(2,385)
182
2,150
8,750
8,082
2022
22
3,601
852
376
2,426
7,255
7,233
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.
50
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION II: RESULTS FOR THE YEAR (CONTINUED)
4.
INCOME TAX EXPENSES
Recognised in profit or loss
For the year ended 30 June
In thousands of AUD
Current tax expense
Current year
Adjustments for prior years
Deferred tax benefit / (expense)
Origination and reversal of temporary differences
Tax expense 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 project 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
Financial assets at fair value
Current tax liability
In thousands of AUD
Current tax liability
2023
2022
18,038
39
18,077
(265)
17,812
60,967
18,290
131
(182)
–
(275)
(191)
17,773
39
17,812
2023
(1,665)
(695)
(2,360)
2023
3,567
15,771
(31)
15,740
1,520
17,260
52,439
15,732
103
64
1,075
(180)
497
17,291
(31)
17,260
2022
3,619
–
3,619
2022
1,615
51
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT
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 in the countries where the Company and its subsidiaries operate in, 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.
52
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION II: RESULTS FOR THE YEAR (CONTINUED)
5.
EARNINGS PER SHARE
In cents
Total
– Basic
– Diluted
Continuing operations excluding project costs
– Basic
– Diluted
2023
2022
16.3
16.1
16.6
16.5
13.3
13.2
17.8
17.7
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 project costs
Project costs, net of tax (Note 2)
Profit for the year
2023
2022
44,143
(988)
43,155
47,265
(12,086)
35,179
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
Weighted average number of ordinary shares
2023
265,205
265,205
2022
265,205
265,205
The calculation of diluted earnings per share has been based on the following weighted average number of ordinary
shares outstanding adjusted for the effects of all dilutive potential ordinary shares.
Weighted average number of ordinary shares (diluted)
In thousands of shares
Weighted average number of ordinary shares (basic)
Effect of performance rights on issue
Weighted average number of ordinary shares (diluted)
2023
265,205
2,490
267,695
2022
265,205
1,619
266,824
53
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT
SECTION III: ASSETS AND LIABILITIES
6.
CASH AND CASH EQUIVALENTS
(a)
Balance
In thousands of AUD
Bank balances
Cash and cash equivalents
2023
43,443
43,443
2022
31,440
31,440
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) on sale of PP&E and intangible assets
Deferred tax recognised directly in equity
Other non-cash movements
Changes in assets and liabilities:
Decrease / (increase) in trade and other receivables
Decrease / (increase) in inventories
(Increase) in prepayments
(Decrease) / increase in trade payables and accrued expenses
(Decrease) / increase 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
2023
43,155
16,852
1,796
69
602
(6)
2,360
(1,053)
9,936
20,709
(467)
(20,468)
(674)
71
72,882
2023
59,701
757
60,458
2022
35,179
17,986
2,042
251
165
(5)
(3,619)
(1,610)
(13,969)
(38,826)
(29)
14,771
2,895
(1,243)
13,988
2022
69,285
1,109
70,394
Trade receivables are initially measured at the transaction price determined under AASB 15 Revenue from Contracts
with Customers (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.
54
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION III: ASSETS AND LIABILITIES (CONTINUED)
8.
INVENTORIES
In thousands of AUD
Raw materials and consumables
Work in progress
Finished goods
2023
320
196
87,620
88,136
2022
184
140
108,521
108,845
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 or disposal 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.
During the year $122,000 (2022: $132,000) of inventories were recycled, and a $502,000 (2022: $95,000 net decrease)
net decrease in the provision for inventories was recognised.
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
Assets
Liabilities
Net
2023
213
701
–
4,471
2,885
2,645
2,934
3,580
2022
616
675
2023
(1,725)
(746)
2022
(1,707)
(958)
2023
(1,512)
(45)
2022
(1,091)
(283)
–
(102,833)
(102,667)
(102,833)
(102,667)
4,051
2,936
2,454
2,753
2,922
–
–
–
–
–
–
–
–
(2,052)
(3,627)
4,471
2,885
2,645
2,934
1,528
4,051
2,936
2,454
2,753
(705)
Tax assets / (liabilities)
17,429
16,407
(107,356)
(108,959)
(89,927)
(92,552)
Set off of tax
(14,280)
(13,952)
14,280
13,952
–
–
Net tax assets / (liabilities)
3,149
2,455
(93,076)
(95,007)
(89,927)
(92,552)
55
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION III: ASSETS AND LIABILITIES (CONTINUED)
9.
DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
Movement in temporary differences during the year
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 22
Recognised in
income
Recognised in
equity
Exchange
differences
Balance
30 June 23
(1,091)
(283)
(102,667)
4,051
2,936
2,454
2,753
(705)
(92,552)
(433)
230
-
406
(43)
197
191
(205)
343
-
-
-
-
-
-
-
2,360
2,360
12
8
(1,512)
(45)
(166)
(102,833)
14
(8)
(6)
(10)
78
(78)
4,471
2,885
2,645
2,934
1,528
(89,927)
Balance
1 July 21
Recognised in
income
Recognised in
equity
Exchange
differences
Balance
30 June 22
(779)
(475)
(102,760)
5,000
2,947
3,019
2,225
3,410
(272)
197
–
(939)
(16)
(569)
520
(485)
(87,413)
(1,564)
–
–
–
–
–
–
–
(3,619)
(3,619)
(40)
(5)
93
(10)
5
4
8
(11)
44
(1,091)
(283)
(102,667)
4,051
2,936
2,454
2,753
(705)
(92,552)
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
2023
15,203
3,434
2022
15,203
1,312
The deductible 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.
56
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT
SECTION III: ASSETS AND LIABILITIES (CONTINUED)
10. PROPERTY, PLANT AND EQUIPMENT
In thousands of AUD
Cost
Balance at 1 July 2022
Additions
Disposals
Transfers
Exchange rate movements
Balance at 30 June 2023
Balance at 1 July 2021
Additions
Disposals
Transfers
Exchange rate movements
Balance at 30 June 2022
Accumulated depreciation
Balance at 1 July 2022
Depreciation
Disposals
Exchange rate movements
Balance at 30 June 2023
Balance at 1 July 2021
Depreciation
Disposals
Exchange rate movements
Balance at 30 June 2022
Carrying amounts
As at 30 June 2023
As at 30 June 2022
Plant and
equipment
Work in
progress
52,278
1,190
(219)
1,076
170
54,495
50,881
1,644
(1,024)
938
(161)
52,278
(36,475)
(5,051)
213
(51)
(41,364)
(31,352)
(6,202)
993
86
(36,475)
1,175
1,281
–
(1,076)
4
1,384
2,005
108
–
(938)
–
1,175
–
–
–
–
–
–
–
–
–
–
Total
53,453
2,471
(219)
–
174
55,879
52,886
1,752
(1,024)
–
(161)
53,453
(36,475)
(5,051)
213
(51)
(41,364)
(31,352)
(6,202)
993
86
(36,475)
13,131
15,803
1,384
1,175
14,515
16,978
57
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT 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.
58
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION III: ASSETS AND LIABILITIES (CONTINUED)
11.
INTANGIBLE ASSETS
In thousands of AUD
Cost
Balance at 1 July 2022
Additions
Disposals
Exchange rate movements
Balance at 30 June 2023
Software
Brand names
33,699
374
(24,610)
65
9,528
346,674
–
–
885
347,559
Balance at 1 July 2021
33,110
347,175
Additions
Disposals
Exchange rate movements
618
–
(29)
Balance at 30 June 2022
33,699
–
–
(501)
346,674
Accumulated amortisation
Balance at 1 July 2022
Amortisation
Disposals
Exchange rate movements
Balance at 30 June 2023
Balance at 1 July 2021
Amortisation
Disposals
Exchange rate movements
(32,795)
(639)
24,610
(64)
(8,888)
(31,734)
(1,103)
–
42
Balance at 30 June 2022
(32,795)
–
–
–
–
–
–
–
–
–
–
Trade names,
designs
and patents
5,953
14
(39)
73
6,001
6,024
144
(78)
(137)
5,953
(1,916)
(1,157)
37
(19)
(3,055)
(1,081)
(939)
72
32
(1,916)
Goodwill
Total
66,815
–
–
449
67,264
453,141
388
(24,649)
1,472
430,352
67,125
453,434
–
–
(310)
66,815
–
–
–
–
–
–
–
–
–
–
762
(78)
(977)
453,141
(34,711)
(1,796)
24,647
(83)
(11,943)
(32,815)
(2,042)
72
74
(34,711)
Carrying amounts
As at 30 June 2023
As at 30 June 2022
Recognition and measurement
640
904
347,559
346,674
2,946
4,037
67,264
66,815
418,409
418,430
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.
59
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT 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 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
60
2023
414,823
2022
413,489
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT
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 2023 based on
internal value in use calculations and no impairment was identified (2022: 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 business unit, with projected
cash flows to five years before a terminal value was calculated.
• Management used a constant growth rate of 2.3% (2022: 2.2%) in calculating the terminal value, which does not
exceed the long-term average growth rate for the industry.
• A pre-tax discount rate of 11.7% was used (2022: 9.9%).
Key assumptions include management’s forecast of construction market activity, market share and economic conditions
(e.g. inflationary impacts to product costs). 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 value as at 30 June 2023 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.
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
Depreciation for the period
Exchange rate movements
Balance as at 30 June
Lease liabilities
Balance as at 1 July
Additions to lease liabilities
Accretion of interest
Payments made
Exchange rate movements
Balance as at 30 June
Current lease liabilities
Non-current lease liabilities
2023
2022
49,969
4,058
(11,801)
77
42,303
(60,969)
(3,499)
(2,150)
13,372
(227)
57,118
4,755
(11,784)
(120)
49,969
(66,498)
(4,730)
(2,426)
12,376
309
(53,473)
(60,969)
(11,709)
(41,764)
(53,473)
(11,161)
(49,808)
(60,969)
61
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT
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
Recognition and measurement
2023
2022
13,517
11,830
26,565
6,886
58,798
13,316
12,170
30,349
13,574
69,409
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 (contracts typically have 3 to 6 years 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
62
2023
2022
2,150
11,801
743
14,694
(11,222)
(2,150)
(13,372)
2,426
11,784
882
15,092
(9,950)
(2,426)
(12,376)
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT
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
2023
2022
45,574
66,042
211
597
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
Short-term employee benefits
2023
2022
4,422
1,073
5,495
4,739
1,047
5,786
4,297
4,188
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 2022
Additional provisions made/(written back)
Provisions used
Exchange rate differences
Balance at 30 June 2023
Current
Non-current
Recognition and measurement
Warranties
Restructuring
Site
restoration
4,193
(458)
(81)
31
3,685
2,747
938
3,685
662
1,402
(1,332)
1
733
733
–
733
4,396
659
–
46
5,101
988
4,113
5,101
Other
419
–
(15)
–
404
41
363
404
Total
9,670
1,603
(1,428)
78
9,923
4,509
5,414
9,923
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.
63
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT
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 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
LOANS AND BORROWINGS
16.
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
Recognition and measurement
2023
35,000
124,092
159,092
220,000
7,343
227,343
159,092
1,373
160,465
60,908
5,970
66,878
2022
20,000
148,328
168,328
220,000
7,317
227,317
168,328
1,360
169,688
51,672
5,957
57,629
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.
64
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION IV: FUNDING AND RISK MANAGEMENT (CONTINUED)
16.
LOANS AND BORROWINGS (CONTINUED)
Unsecured loan facilities
On 21 October 2021 the consolidated entity successfully completed the refinance of its syndicated banking facility.
The facility comprises a single three year multicurrency revolving facility of $180,000,000 which matures in
October 2024. For the period 18 November 2020 to 20 October 2021 the facility was $226,670,000.
On 6 October 2022, the consolidated entity extended its one year multicurrency revolving bilateral facility
of $40,000,000 which now matures in October 2023.
The consolidated entity has unsecured bank loans of $159,092,000 drawn as at 30 June 2023 (30 June 2022:
$168,328,000). 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
NZD
GBP
2023
135,000
20,000
3,000
2022
145,000
20,000
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
In thousands
On issue at 1 July — fully paid
On issue at 30 June — fully paid
Ordinary Shares
Ordinary shares
Number of shares
(In thousands)
AUD
(In thousands)
2023
265,205
265,205
2022
265,205
265,205
2023
311,294
311,294
2022
311,294
311,294
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.
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.
65
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION IV: FUNDING AND RISK MANAGEMENT (CONTINUED)
17.
SHARE CAPITAL AND RESERVES (CONTINUED)
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
Reclassed to P&L
Change in fair value
Closing balance at 30 June
Equity compensation reserve
2023
8,233
5,220
(9,289)
4,164
2022
(266)
938
7,561
8,233
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:
Dividends paid
2023
Interim 2023 ordinary
Final 2022 ordinary
Total amount
2022
Interim 2022 ordinary
Final 2021 ordinary
Total amount
Costs per share
(In cents)
Total amount
(In thousands of AUD)
Franked
Date of Payment
6.0
8.0
14.0
7.0
6.5
13.5
15,912
21,216
37,128
18,564
17,238
35,802
100%
100%
7th March 2023
6th September 2022
100%
100%
4th March 2022
6th October 2021
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.
Dividends declared
Final 2023 ordinary
Costs per share
(In cents)
7.0
Total amount
(In thousands
of AUD)
18,564
Franked
Date of Payment
100%
5th September 2023
The financial effect of these dividends has not been brought to account in the financial statements for the financial year
ended 30 June 2023 and will be recognised in subsequent financial reports.
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GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT
SECTION IV: FUNDING AND RISK MANAGEMENT (CONTINUED)
17.
SHARE CAPITAL AND RESERVES (CONTINUED)
Dividend franking account
In thousands of AUD
30 per cent franking credits available to shareholders of GWA Group Limited for
subsequent financial years (i.e. prior to payment of final 2023 ordinary dividend.)
The Company
2023
12,907
2022
13,181
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.
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.
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 & 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 & 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 & 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 earnings growth and 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.
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GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION IV: FUNDING AND RISK MANAGEMENT (CONTINUED)
18.
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
(a)
Policies (continued)
Derivative financial instruments (continued)
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.
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, recent economic uncertainties driven by global events (e.g. inflation) have
not led to any material 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.
68
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION IV: FUNDING AND RISK MANAGEMENT (CONTINUED)
18.
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
(b)
Credit risk (continued)
The consolidated entity has four major customers which comprise 61% of the trade receivables carrying amount as at
30 June 2023 (2022: three customers comprising 57% of trade receivables).
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
2023
43,443
59,701
757
103,901
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
2023
53,450
20,300
78
1,067
3,525
(18,358)
60,062
2022
31,440
69,285
1,109
101,834
2022
64,592
23,036
2,242
473
593
(21,608)
69,328
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 (recognised) / written back
Provisions used during the year
Balance at 30 June
2023
(43)
(339)
21
(361)
2022
(34)
(13)
4
(43)
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GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION IV: FUNDING AND RISK MANAGEMENT (CONTINUED)
18.
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
Liquidity risk
(c)
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.
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
Carrying
amount
Contractual
cash flows
0-6
months
6-12
months
1-2 years
2-5 years
5+
years
2023
Non-derivatives financial liabilities
Unsecured cash advance facilities
(159,092)
(218,003)
(40,034)
(5,034)
(172,935)
–
Trade and other payables
(45,785)
(46,289)
(45,938)
–
(117)
(234)
–
–
Lease liabilities
(53,473)
(58,798)
(6,758)
(6,759)
(11,830)
(26,565) (6,886)
Derivative financial instruments
Interest rate swaps used for hedging
(net)
Forward exchange contracts used
for hedging (net)
5,691
5,906
1,448
1,147
1,461
1,850
206
206
174
32
–
–
–
–
Total at 30 June 2023
(252,453)
(316,978)
(91,108)
(10,614)
(183,421)
(24,949) (6,886)
2022
Non-derivatives financial liabilities
Unsecured cash advance facilities
(168,328)
(184,023)
(23,304)
(3,304)
(6,609)
(150,806)
Trade and other payables
(66,639)
(67,143)
(66,367)
–
(425)
(351)
–
–
Lease liabilities
(60,969)
(69,409)
(6,658)
(6,658)
(12,170)
(30,349) (13,574)
Derivative financial instruments
Interest rate swaps used for hedging (net)
6,846
6,998
1,300
1,295
2,385
2,018
Forward exchange contracts used for
hedging (net)
4,785
4,785
4,067
718
–
–
–
–
Total at 30 June 2022
(284,305)
(308,792)
(90,962)
(7,949)
(16,819)
(179,488) (13,574)
Market risk
(d)
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.
Interest rate risk
(i)
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 (typically to less than 50% for the next two year period). 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 2023, the consolidated entity had interest rate swaps in operation with a notional contract amount of
$118,377,000 (2022: $143,038,000). These swaps have fixed rates ranging from 0.43% to 2.74% (2022: 0.43% to 1.45%)
and mature over the next three years.
The consolidated entity classifies interest rate swaps as cash flow hedges and states them at fair value.
70
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION IV: FUNDING AND RISK MANAGEMENT (CONTINUED)
18.
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
(d)
(i)
Market risk (continued)
Interest rate risk (continued)
The net fair value of swaps as at 30 June 2023 of $5,691,000 was recognised as a fair value derivative asset
(2022: $6,846,000 asset). 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
2023
Notional
value
2023
Carrying
amount
2022
Notional
value
2022
Carrying
amount
Unsecured cash advance facilities
(159,092)
(159,092)
(168,328)
(168,328)
Cash
Fixed rate financial instruments
Interest rate swap derivatives
Total
Sensitivity analysis
43,443
(115,649)
43,443
(115,649)
31,440
31,440
(136,888)
(136,888)
118,377
2,728
5,691
(109,958)
143,038
6,150
6,846
(130,042)
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
+50 basis points (2022: +75 basis points)
-50 basis points (2022: -25 basis points)
NZD denominated loans
+50 basis points (2022: +75 basis points)
-50 basis points (2022: -25 basis points)
GBP denominated loans
+50 basis points (2022: +75 basis points)
-50 basis points (2022: -25 basis points)
(i) Other Comprehensive Income: cash flow hedges, net of tax
2023
Post Tax Profit
2023
OCI(i)
2022
Post Tax Profit
(21)
21
(32)
32
(20)
20
711
(711)
160
(54)
–
–
(37)
12
(47)
16
(28)
9
2022
OCI(i)
1,405
(468)
160
(54)
–
–
71
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT
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 (typically for at least 50% for the next six months). 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
2023
47%
54%
77%
71%
2022
51%
57%
41%
53%
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 2023 of $206,000 was recognised as a fair value derivative asset (2022: $4,785,000
asset). No hedge ineffectiveness was recognised, and therefore the full movement in the value of the hedging instrument
was recognised in Other Comprehensive Income.
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.
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18.
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
(d)
(ii)
Market risk (continued)
Foreign currency risk (continued)
In thousands of AUD — Higher/(Lower)
2023
2022
USD
10% increase in USD:AUD — OCI (cash flow hedges, net of tax)
(2022: 15% increase in USD:AUD)
10% decrease in USD:AUD — OCI (cash flow hedges, net of tax)
(2022: 15% decrease in USD:AUD)
10% increase in USD:GBP — OCI (cash flow hedges, net of tax)
(2022: 15% increase in USD:GBP)
10% decrease in USD:GBP — OCI (cash flow hedges, net of tax)
(2022: 15% decrease in USD:GBP)
RMB
10% increase in RMB:AUD — OCI (cash flow hedges, net of tax)
(2022: 15% increase in RMB:AUD)
10% decrease in RMB:AUD — OCI (cash flow hedges, net of tax)
(2022: 15% decrease in RMB:AUD)
NZD
10% increase in NZD:AUD — OCI (cash flow hedges, net of tax)
(2022: 15% increase in NZD:AUD)
10% decrease in NZD:AUD — OCI (cash flow hedges, net of tax)
(2022: 15% decrease in NZD:AUD)
10% increase in NZD:AUD — OCI (net investment hedge, net of tax)
(2022: 15% increase in NZD:AUD)
10% decrease in NZD:AUD — OCI (net investment hedge, net of tax)
(2022: 15% decrease in NZD:AUD)
GBP
10% increase in GBP:AUD — OCI (net investment hedge, net of tax)
(2022: 15% increase in GBP:AUD)
10% decrease in GBP:AUD — OCI (net investment hedge, net of tax)
(2022: 15% decrease in GBP:AUD)
(e)
Fair values
5,030
(4,116)
1,605
(1,313)
3,949
(3,231)
1,515
(1,852)
(1,429)
1,169
(444)
364
5,890
(4,353)
828
(612)
5,399
(3,991)
(1,501)
1,110
(2,228)
1,647
(411)
337
The carrying value of financial assets and liabilities as at 30 June 2023 equalled fair value (30 June 2022: 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.
73
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT
SECTION IV: FUNDING AND RISK MANAGEMENT(CONTINUED)
18.
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
(e)
Fair values (continued)
(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 or an independent valuation with
consideration of any other key changes in the investment which requires a level of judgement, with the changes in
the fair value being recognised in OCI.
(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
(vi)
Fair value hierarchy
2023
2022
3.3% – 4.9%
4.7% – 4.9%
5.1% – 5.3%
4.4% – 4.6%
1.8% – 3.9%
3.2% – 3.4%
3.4% – 3.6%
2.6% – 3.4%
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)
In thousands of AUD
30 June 2023
Forward contracts used for hedging
Interest rate swaps used for hedging
Investment in unlisted entity
30 June 2022
Forward contracts used for hedging
Interest rate swaps used for hedging
Investment in unlisted entity
Level 1
Level 2
Level 3
Total
–
–
–
–
–
–
–
–
206
5,691
–
5,897
4,785
6,846
–
11,631
–
–
520
520
–
–
2,935
2,935
206
5,691
520
6,417
4,785
6,846
2,935
14,566
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GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT
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 2023, 2022 and 2021 financial years are subject
to financial performance conditions which measure growth in Earnings Per Share (EPS) 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 2023, 2022 and 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 2023 financial year, the performance hurdles and vesting
conditions for the EPS performance measures are outlined in the tables below.
GWA Group Limited EPS
(CAGR Over 3-Year Performance Period)
Proportion of Performance Rights
to Vest if EPS hurdle is met
Less than 5%
Equal to 5%
Between 5 and 10%
10% and higher
Recognition and measurement
0%
25%
Straight line vesting between 25% and 100%
100%
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.
Fair value
During the year 1,514,330 performance rights were granted to employees (2022: 1,250,933) at a weighted average fair value
of $1.20 (TSR) (2022: $1.34 (TSR)).
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 7.25%,
the risk free rate was 3.26% and annualised share price volatility was 40% 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 a $69,029 debit
(2022: $251,649 credit).
75
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION V. OTHER INFORMATION (CONTINUED)
19.
SHARE-BASED PAYMENTS (CONTINUED)
In number of
performance
rights
2023
2022
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
14/02/2020 30/06/2022
383,820
7/12/2020 30/06/2023
361,313
6/12/2021
30/06/2024
1,189,330
–
–
–
28/10/2022
30/06/2025
–
1,514,330
1,934,463
1,514,330
18/02/2019
30/06/2021
14/02/2020 30/06/2022
507,556
526,278
7/12/2020 30/06/2023
544,985
–
–
–
6/12/2021
30/06/2024
–
1,250,933
1,578,818
1,250,933
–
–
–
–
–
–
–
–
–
–
(383,820)
–
(70,315)
290,998
(129,654)
1,059,676
–
1,514,330
(583,789)
2,865,004
(507,556)
–
(142,458)
383,820
(183,672)
361,313
(61,603)
1,189,330
(895,289)
1,934,463
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
Share-based payments
Other long term employee benefits
2023
4,652,420
312,556
508,410
27,951
2022
6,423,513
279,900
224,578
(92,259)
5,501,337
6,835,732
Information regarding individual key management personnel compensation is provided in the Remuneration Report
section of the Directors’ Report.
76
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT
SECTION V. OTHER INFORMATION (CONTINUED)
21. AUDITOR’S REMUNERATION
In AUD
2023
2022
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 auditors:
Audit and review of financial statements
Total audit services
Other services
KPMG Australia:
Other services
Other auditors(i):
Internal audit services
Other services
Total other services
360,700
17,000
39,200
416,900
54,000
54,000
359,000
16,000
39,200
414,200
83,000
83,000
470,900
497,200
56,937
–
–
–
56,937
203,000
44,000
247,000
(i)
In FY22, other auditors represented internal audit services provided by PwC (External auditors for Methven UK Limited). In FY23,
PwC continued to perform internal audit work for the Group, however ceased to be the external auditors for Methven UK Limited,
hence no disclosure required.
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
Between one and five years
2023
2,268
276
2,544
2022
2,519
–
2,519
77
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT
SECTION V. OTHER INFORMATION (CONTINUED)
23. CONSOLIDATED ENTITIES
Parent entity
GWA Group Limited
Subsidiaries
Caroma Holdings Limited
Caroma Industries Limited
Caroma International Pty Ltd
Caroma Middle East FZCO*
Caroma Singapore Pte Ltd
Deva Tap Company Ltd
GWA Finance Pty Limited
GWA Group Holdings Limited
GWA Group Holdings (NZ) Limited
GWA Group (NZ) Limited
GWA Trading (Shanghai) Co Ltd
Methven Australia Pty Limited
Methven ROI Limited
Methven UK Limited
Sebel Furniture Holdings Pty Ltd
* deregistered 22 March 2023
Parties to cross
guarantee
Country of
incorporation
Ownership Interest
2023
2022
Y
Y
Y
N
N
N
N
Y
Y
N
N
N
Y
N
N
N
Australia
Australia
Australia
Australia
UAE
Singapore
United Kingdom
Australia
Australia
New Zealand
New Zealand
China
Australia
Ireland
United Kingdom
Australia
100%
100%
100%
–
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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, as at 30 June 2023, is set out in the table below.
Summarised statement of profit or loss and other comprehensive income
In thousands of AUD for the year ended 30 June
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
78
2023
336,355
(198,885)
137,470
(69,520)
666
(5,014)
63,602
(17,920)
45,682
45,682
(3,582)
42,100
2022
340,625
(202,078)
138,547
(80,610)
1,047
(4,950)
54,034
(16,436)
37,598
37,598
8,223
45,821
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION V. OTHER INFORMATION (CONTINUED)
24. DEED OF CROSS GUARANTEE (CONTINUED)
Statement of financial position
As at 30 June
In thousands of AUD
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Other
Total current assets
Investments
Intercompany receivable
Derivative financial instruments
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
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
Retained earnings at beginning of the year
Net profit
Dividends paid during the year
Retained earnings at end of the year
2023
2022
35,746
49,819
63,939
206
3,102
152,812
466,895
35,505
5,873
11,645
388,600
36,242
944,760
1,097,572
34,603
35,000
4,194
3,566
11,866
3,479
92,708
88,548
124,092
35,245
4,782
4,144
256,811
349,519
748,053
311,294
5,651
431,108
748,053
422,554
45,682
(37,128)
431,108
23,591
57,706
84,369
4,785
2,411
172,862
466,895
37,361
6,411
13,815
385,031
44,027
953,540
1,126,402
49,553
20,000
4,082
1,498
11,860
2,550
89,543
92,859
148,328
42,988
4,883
4,788
293,846
383,389
743,013
311,294
9,165
422,554
743,013
420,758
37,598
(35,802)
422,554
79
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT SECTION V. OTHER INFORMATION (CONTINUED)
25.
PARENT ENTITY DISCLOSURES
As at, and throughout, the financial year ended 30 June 2023 the parent company of the consolidated entity was
GWA Group Limited.
In thousands of AUD
Results of the parent entity
Profit for the year
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
2023
2022
(4,663)
(4,663)
1,836
907,254
468
421,989
311,294
1,397
172,574
485,265
119,540
119,540
648
946,721
575
419,733
311,294
1,328
214,366
526,988
The directors are of the opinion that provisions are not required in respect of these matters below, 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 (2022: $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 (2022: $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
To the Directors’ best knowledge, there are no events that have arisen subsequent to 30 June 2023 that will, or may,
significantly affect the operation or results of the consolidated entity.
80
GWA Group Limited and its controlled entities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGWA GROUP LIMITED | 2023 ANNUAL REPORT
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 2023 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 2023; 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 14 August 2023.
Signed in accordance with a resolution of the directors:
Darryl D McDonough
Director
Urs B Meyerhans
Director
81
GWA Group Limited and its controlled entities GWA GROUP LIMITED | 2023 ANNUAL REPORT
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).
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 2023 and of its financial
performance for the year ended on
that date; and
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Financial Report comprises:
• Consolidated statement of financial position as at 30
June 2023
• 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
• 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.
Basis for opinion
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 these requirements.
47
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.
82
GWA GROUP LIMITED | 2023 ANNUAL REPORT Key Audit Matters
The Key Audit Matter we identified is:
• Valuation of finished goods 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 finished goods inventory ($87.6m)
Refer to Note 8 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The valuation of finished goods inventory is a
key audit matter given it is a significant asset in
the financial report and the net realisable value
is impacted by the building industry cycles and
changes in consumer preferences. This
necessitated an additional audit focus on
excess and discontinued inventory SKUs (stock
keeping unit). The most significant areas of
judgement we focused on was in assessing the
Group’s:
•
•
•
Expected forecast demand which is based
on previous sales, as the criteria for
categorisation of inventory SKUs by risk
(ageing analysis), such as discontinued or
excess as the Group attributes different
values due to the differing provision policy
rates;
The Group’s assessment of SKU recovery
rates based on the expected selling price of
inventory; and
•
Provision percentages (risk weightings) by
inventory category.
48
Our procedures included:
• Obtaining an understanding of the Group’s key
processes for the valuation of finished goods
inventory (net realisable value) and the Group’s
determination of discontinued inventory;
• Assessing the Group’s policies for the
valuation of finished goods inventory against
the requirements of the accounting standards
and our understanding of the business;
• Attending stocktakes in significant locations
and observing the Group’s processes;
• Assessing the accuracy of Group sales
forecasts by inventory SKU by comparing
forecast demand to actual sales for each
inventory SKU in the period. This informed our
evaluation of sales forecasts incorporated in
the inventory provision at 30 June 2023;
Testing the completeness of inventory SKUs
identified as discontinued or excess as
follows:
•
Assessing the Group's identification of
83
GWA GROUP LIMITED | 2023 ANNUAL REPORT Such judgements may have a significant impact
on the Group’s provision and therefore the
overall carrying value of finished good
inventories, necessitating additional audit effort.
excess inventory by independently
developing an expectation based on actual
sales data and comparing to the Group’s
results; and
•
Checking a sample of inventory SKUs to
be discontinued in the inventory provision
to sales management approval;
• Comparing the estimated selling or disposal
expenses to actual selling or disposal
expenses;
• Challenging the Group’s assumptions, such as
the Group’s assessment of recovery rates and
provision percentages by product category by:
• Using our understanding of the Group’s
business;
•
Independently developing 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 a
sample of sales recorded below original
cost;
•
Comparing the independently developed
expected inventory valuation range to the
inventory value recorded by the Group;
and
• Assessing the disclosures in the financial
report using our understanding obtained from
our testing and against the requirements of
the accounting standard.
49
84
GWA GROUP LIMITED | 2023 ANNUAL REPORT Other Information
Other Information is financial and non-financial information in GWA Group Limited’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.
50
85
GWA GROUP LIMITED | 2023 ANNUAL REPORT Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report
of GWA Group Limited for the year ended
30 June 2023, 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 the
Directors’ report for the year ended 30 June 2023.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
86
Trent Duvall
Partner
Sydney
14 August 2023
51
GWA GROUP LIMITED | 2023 ANNUAL REPORT OTHER STATUTORY INFORMATION
AS AT 14 AUGUST 2023
STATEMENT OF SHAREHOLDING
In accordance with the Australian Securities Exchange Listing Rules, the directors state that, as at 14 August 2023, 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
Rounding
Total
Ordinary Shareholders
1,838
3,234
1,429
1,323
84
Ordinary Shares
814,525
8,935,665
10,763,719
30,708,334
213,982,870
%
0.31
3.37
4.06
11.58
80.69
-0.01
7,908
265,205,113
100.00
The number of shareholders with less than a marketable parcel of 242 shares is 661.
VOTING RIGHTS
The voting rights attached to shares are as set out in rule 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 14 August 2023:
Shareholder
Perpetual Limited
Spheria Asset Management Pty Ltd
Mitsubishi UFJ Financial Group, Inc
20 LARGEST SHAREHOLDERS AS AT 14 August 2023
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
JMB INVESTMENTS PTY LTD
MR PETER ZINN
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