Reliance Worldwide Corporation Limited Annual Report 2019

← All annual reports

FY2019 Annual Report · Reliance Worldwide Corporation Limited

Loading PDF…

Reliance Worldwide Corporation Limited

Annual Report 2019

Reliance
Worldwide
Corporation
Limited

Annual Report
2019

Contents

Our values

S I M P L I C I T Y

I N N O V A T I O N

P A S S I O N

I N T E G R I T Y

R E L I A B I L I T Y

2
2

Our values

S I M P L I C I T Y

I N N O V A T I O N

P A S S I O N

I N T E G R I T Y

R E L I A B I L I T Y

Contents

Our Strategy

Financial Highlights

Chairman’s Report

Chief Executive Officer’s Report

Operating and Financial Review

Corporate Governance Statement

Financial Report

Directors’ Report

Remuneration Report

Auditor’s Independence Declaration

Consolidated Statement of Profit or Loss

and Other Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Directors’ Declaration

Independent Auditor’s Report

Shareholder Information

Corporate Directory

p.4

p.8

p.10

p.12

p.14

p.26

p.35

p.42

p.57

p.58

p.59

p.60

p.61

p.62

p.95

p.96

p.100

p.102

Reliance
Worldwide
Corporation
Limited

Annual Report
2019

Uniting our
family of brands

Our strategy summary
sets out our priorities

Our Purpose

Our Priorities

Our Growth Plan

Our Customers

Making our customers’

lives easier with clever

solutions for the built

environment

1. Accelerate

Achieve profitable growth in core

repair and maintenance markets in

North America, UK and Australia

Value
Proposition

Our family of innovative, integrated

products saves customers’ time

and makes their lives easier while

our unrivaled value creation

delivers stronger returns for our

distributor partners

2. Expand

Grow into adjacent plumbing, heating,

water quality and fluid technology

end markets

3. Access

Enter selected European, South

American and Asian geographies

Our Values

Passion

Innovation

Reliability

Integrity

Simplicity

shareholders

Growth Drivers

Demand

Taking greater ownership of driving end

user demand and owning the project with

our connected family of brands

Expanding availability by creating incredible

value for our distribution partners

Understanding customers and disrupting

markets with intelligent products and services

Smart acquisitions driving non-organic growth

Reach

Innovation

M&A

Our core competencies

People: We have the best capability

and ability in the industry to attract

and develop the best talent

Stewardship: A relentless focus

on positively impacting our society

and environment

Operations: Cost effective, timely

delivery supported by the ultimate

in customer service

Who

 Contractors

 Specifiers

 Distributor partners

 End users

 OEMs

Key segments

 Repair, Maintenance

 Fluid technology

and Improvement

 Air & pneumatics,

 New construction

 Automotive

blown fibre

Applications

 Meter to fixture, floor to ceiling

 Behind the wall

 Specialist industries

Results

Execution of our

strategy will result in

profitable growth and

value creation for our

Our Purpose

Our Priorities

Our Growth Plan

Our Customers

Making our customers’

lives easier with clever

solutions for the built

environment

1. Accelerate

Achieve profitable growth in core

repair and maintenance markets in

North America, UK and Australia

Value

Proposition

Our family of innovative, integrated

products saves customers’ time

and makes their lives easier while

our unrivaled value creation

delivers stronger returns for our

distributor partners

2. Expand

Grow into adjacent plumbing, heating,

water quality and fluid technology

end markets

3. Access

Enter selected European, South

American and Asian geographies

Our Values

Growth Drivers

Demand

Taking greater ownership of driving end

user demand and owning the project with

our connected family of brands

Reach

Expanding availability by creating incredible

value for our distribution partners

Innovation

Understanding customers and disrupting

markets with intelligent products and services

M&A

Smart acquisitions driving non-organic growth

Who
 Contractors

 End users

 Specifiers

 OEMs

 Distributor partners

Key segments

 Repair, Maintenance

 Fluid technology

and Improvement

 Air & pneumatics,

 New construction

 Automotive

blown fibre

Our core competencies

People: We have the best capability
and ability in the industry to attract

and develop the best talent

Stewardship: A relentless focus
on positively impacting our society

and environment

Operations: Cost effective, timely
delivery supported by the ultimate

in customer service

Applications

 Meter to fixture, floor to ceiling

 Behind the wall

 Specialist industries

Results

Execution of our

strategy will result in
profitable growth and

value creation for our

Passion

Innovation

Reliability

Integrity

Simplicity

shareholders

Reliance
Worldwide
Corporation
Limited

Annual Report
2019

Uniting our
family of brands

World-class quality

Outstanding engineering is what sets us apart. We
continually raise the bar with bold ideas, precision
production and rigorous testing. We are more than just
a manufacturer. We constantly set new standards in
concept design, assembly and production, while taking
great pride in our tailored ongoing customer support.

This is what makes us RWC.

Continued strong

sales growth

from Americas

Reliance
Worldwide
Corporation
Limited

Annual Report
2019

Financial Highlights

Net sales

$1.1 billion

+43% growth overall

+5.4% underlying growth on
comparable basis1,2

RWC delivered
record revenue
and earnings
for FY2019, including
first full year inclusion of
John Guest supported
by ongoing growth in the
Americas.

+80% growth1

1. Growth rates expressed

2. Comparable basis Net

3. Adjusted EBITDA and

4. Net Debt/EBITDA

as change over
comparative period for
the twelve months ended
30 June 2018

Sales growth calculated
excluding the impact of
translational FX in the
current period and one-off
events in both periods

Adjusted NPAT are non-
IFRS measures used by
RWC to assess operating
performance and defined
in the Operating and
Financial Review

(excluding acquisition
transaction costs and $10
million of costs to achieve
synergies)

Net sales

Continued strong
sales growth
from Americas

+17% growth1 overall

+8.3% underlying growth on
comparable business2

Adjusted EBITDA3

$263.2 million

+66% growth1

Net operating cash flow

$178.9
million

Adjusted NPAT3

+43% growth

$152.0 million

+80% growth1

Balance Sheet strength
Pro forma leverage ratio at

1.67x 4

Reliance
Worldwide
Corporation
Limited

Annual Report
2019

Chairman's Report

Chairman’s Report

Dear fellow shareholders,

On behalf of the Board,
I am delighted to present the 2019
annual report of Reliance Worldwide
Corporation Limited (“RWC”).

We reach the end of RWC’s third full year as a public

listed company in very good shape:
• we have an excellent management team,
enhanced by a number of senior additions during

the year; and
• we are well progressed in bedding down the
very significant acquisition completed in June

Performance
RWC delivered record revenue and earnings in

the year to 30 June 2019. Net sales were up 43%

to $1.1 billion. Net profit after tax was up 102% to

$133 million. Operating earnings were up 79% to
$243 million and Adjusted operating earnings1,
which is the measure we use to assess operating

performance, were up 66% to $263 million. Earnings

per share were up 38% and Adjusted earnings per
share2 were up 23%.

Dividends
During the year we declared fully franked dividends

totalling 9.0 cents per share and $71.1 million in

aggregate. This represents 53% of net profit after

tax, near the middle of the target payout range of

2018 of the John Guest group of businesses with

between 40% and 60% of NPAT and up 38% on the

performance in line with expectations and synergy

prior year.

realisation running well ahead of expectations.

With the addition of John Guest, as well as the

continued development of our other businesses,

RWC is today a much more robust and diverse group

of businesses than it was at the time of its 2016 IPO.

The change in the geographic mix of earnings

following recent acquisitions reduces RWC’s access

to franking credits. We currently expect future

dividends to be less than 50% franked.

Balance sheet
RWC continues to finance its activities

conservatively and to maintain a sound balance

sheet. Net debt at 30 June 2019 was $427 million.

This is higher than at the start of the financial year,

reflecting growth in business activities including

capital expenditure and working capital changes.

Health and Safety
RWC is committed to providing a safe and healthy

workplace. Our aim is zero harm. Health and safety

reporting is being standardised and enhanced, with

particular attention to leading indicators such as

near misses. This is a subject of special interest at

the Board.

Social responsibility
RWC will publish its first formal social responsibility

People
On behalf of the Board, I thank all RWC staff for

report in the coming year. The report will be regularly

their efforts this past year. Our strong performance

updated to show our progress in those areas of

despite a range of challenges and headwinds is the

greatest significance to RWC and its stakeholders.

strongest possible evidence of the calibre of people

Board composition
Jonathan Munz retired from the Board in March 2019

across the range of our businesses.

Whatever challenges this next year presents, your

after 33 years of involvement with the business,

Board will remain focused on delivering sustained

most recently as Chairman. Jonathan made an

and sustainable long term value as we continue to

enormous contribution to the development of RWC

execute on the opportunities already in front of us

into one of the world’s most valuable manufacturers

and to identify and pursue new ones.

of plumbing and heating solutions. The Board

thanks Jonathan for that contribution and wishes

him every success in the future.

Finally, thank you to all our investors for their

ongoing support. I look forward to meeting

shareholders at our Annual General Meeting on

The Board continues to review its composition. As

31 October 2019.

presently constituted, the Board considers itself

well equipped to discharge its responsibilities.

However, the Board also sees clear advantages in

increasing its diversity and has identified a range

of skills and experience that it believes could add

value. Significant time and resource has already

been invested in looking for potential new directors

who would add to the Board’s skills, experience and

diversity. That process will continue.

Stuart Crosby,

Chairman

1. Operating earnings are before interest, tax, depreciation and amortisation. Adjusted operating

2. Adjusted earnings per share measured

earnings represents Operating earnings before $17.4 million of one-time integration costs
incurred, a $2.4 million expense related to finalising the unwinding of a fair value adjustment
at acquisition date to John Guest inventory and a $0.9 million impact resulting from the
timing of revenue recognition following adoption of new accounting standard AASB 15.
Adjusted operating earnings is a non-IFRS measure used by the business to assess operating
performance.

using Adjusted net profit after tax which
reflects the effect of the adjustments
made to Operating Earnings referred to
in footnote 1.

Reliance
Worldwide
Corporation
Limited

Annual Report
2019

Chief Executive Officer’s Report

Dear Shareholders,

I am very pleased to report on
RWC’s financial and operational
performance for the year ended 30
June 20191.
This was a record financial year for RWC with

We recorded another year of strong net sales growth

in the Americas segment, particularly in the first

half, with underlying segment sales for the whole
year up 8%4. We continued to expand the range of
RWC, Holdrite and John Guest branded products

we sell through our Americas distribution channels.

In EMEA, sales growth was led by the first full year

inclusion of John Guest. Net sales in EMEA were $361

reported net profit after tax up 102% to $133 million.

million, including $301 million from net sales of John

The growth in earnings was due in large part to the

Guest products. Asia Pacific recorded sales growth

inclusion of John Guest for a full year, supported by

of 7% on the prior year, including sales from John

ongoing growth achieved in the Americas.

Guest products.

FY2019 financial review
For the 2019 financial year, net sales increased by
43% to $1.1 billion2, including John Guest. Net sales
growth, excluding John Guest was 5%. This revenue

performance led to adjusted operating earnings of
$263 million, which were up 66% on the prior year3.

The results were achieved despite several

headwinds which the Group faced during the

financial year. These included the absence of a

freeze in the southern parts of the USA, Brexit

uncertainty in the UK impacting demand in the

latter part of the financial year, higher copper

costs in the first half which impacted brass costs,

increased tariffs on goods imported from China into

the USA and a significant decline in new housing

commencements in Australia.

Delivering on John Guest
We made significant progress during the year in

combining John Guest and RWC in UK & Europe,

USA and Asia Pacific. A year on from the acquisition

we have successfully merged the businesses

and, importantly, delivered the first year earnings

benefits we targeted. Synergies achieved in the first

year exceeded $14 million, ahead of the target of

$10 million, and were over $20 million on a run rate

basis by the end of FY2019. We continue to expect

synergies of at least $30 million to be achieved on a

run rate basis by the end of FY2020.

From an organisational perspective, a critical

undertaking has been the cultural integration of

John Guest and RWC. A range of initiatives to drive

a shared culture built around collaboration and

accountability have been successfully undertaken

during the year which has been supported by a high

level of engagement from John Guest employees.

1. This report should be
read in conjunction
with the Operating
and Financial Review
which follows.

2. Net sales after
eliminating
intercompany sales.

Business strategy
We continue to be optimistic about the future of

our core businesses and excited by the growth

opportunities which new products will provide us.

We are achieving ongoing above market growth

rates for our core Speedfit business in the UK and

our SharkBite PTC fittings in North America. In

North America, Holdrite’s product suite is taking us

into residential and commercial new construction.

Through John Guest FluidTech fittings we have

gained access to new channels and customer

We intend continuing to invest in capability across

three broad areas in FY2020:
• new product development and commercialisation;
• operational performance improvement, with
senior people recruited to lead disciplines around

procurement, manufacturing operations efficiency,

supply chain and distribution logistics; and
• core group capabilities including, legal, finance,
technology, commercialisation and business

intelligence.

opportunities. We now have the ability to leverage

additional volume through these new channels

Our people
Delivering on the business opportunities we are

as well as via our existing distribution base, new

targeting will only be achieved through the strength

product development and from any acquisitions

of our team. We aim to provide a continually

which might be completed.

Looking even further into the future, we remain

excited about smart plumbing opportunities. We

firmly believe that plumbing systems will be fully

connected in the next several years. We are at

the forefront of this led by the Streamlabs leak

detection and usage-monitoring products, which

are gaining traction. Perhaps, more importantly, we

have developed the platform for a smart plumbing

system that will ultimately lay across our full

improving work environment at RWC. Over

the coming year we intend working on several

initiatives including further rolling out our employee

engagement process, based on the pilot we are

undertaking in the USA, and providing the most

inclusive environment we can so that everyone feels

welcome, involved and able to contribute to their

maximum potential. In the past year, we launched a

new group-wide intranet and we are committed to

further improving communications across the group.

product offering, from meter to fixture and floor to

The progress we have made in FY2019 could

ceiling.

Investing in product and capability
Research and development is a part of RWC’s DNA

and we increased our expenditure in the past year,

including work on core product enhancements. We

will be spending more on R&D again in FY2020 and

are excited by the opportunities this investment

presents for the long term.

only have been achieved through the collective

contribution from the great people we have at RWC.

I want to thank all our people for their efforts over

the last year. I believe they are executing at a very

high level - the best in the world in our industry in my

view. I am proud of what they have achieved. It really

is such a privilege for me to be part of this team.

Thank you for your continuing support. I look

forward to providing a further update at the Annual

General Meeting.

Heath Sharp,

Group Chief Executive Officer

3. Operating earnings are before interest, tax, depreciation and amortisation. Adjusted operating

earnings represent operating earnings before $17.4 million of one-time integration costs
incurred, a $2.4 million expense related to finalising the unwinding of a fair value adjustment
at acquisition date to John Guest inventory and a $0.9 million impact resulting from the
timing of revenue recognition following adoption of new accounting standard AASB 15.
Adjusted operating earnings is a non-IFRS measure used by the business to assess operating
performance.

4. Underlying net sales growth in the
Americas segment is calculated
excluding the impact in FY2018 of the
one-time rollout of stock to the second
half of the Lowe’s stores, the impact of a
freeze event in FY2018 and the effect of
movements in foreign exchange rates.

This Operating and Financial Review forms part of, and should be read in conjunction with, the statutory Directors’ Report for the year

ended 30 June 2019.

Review of results for the financial year

Year ended:

Net sales

Net sales – excluding John Guest

Net sales – John Guest

Reported EBITDA

Adjusted for one-time items:

John Guest integration/synergies costs expensed

John Guest transaction costs expensed

John Guest fair value inventory unwind

Impact of adopting new revenue accounting standard AASB 15

Adjusted EBITDA

Adjusted EBITDA – excluding John Guest

Adjusted EBITDA – John Guest

Reported net profit after tax

Adjusted net profit after tax2

Basic earnings per share

Adjusted earnings per share

n / m = not meaningful

30 June 2019

30 June 2018

($ million)

($ million)1

Variance

1,104.0

782.9

321.1

242.5

17.4

2.4

0.9

263.2

143.9

119.3

133.0

152.0

769.4

744.6

24.8

135.4

20.5

2.8

158.7

150.9

7.8

66.0

84.6

17.0 cents

19.4 cents

12.3 cents

15.8 cents

43%

n/m

79%

n/m

66%

(5%)

n/m

102%

80%

38%

23%

Net Sales movement – FY2018 to FY20193
(All values in A$ millions)

+$334.6 (+43.5%)

+$39.2 (+5.4%)

$295.1

$1,104.0

$769.4

$720.0

($49.4)

$39.2

$759.2

$2.8

$46.9

FY18
Reported

FY18
Vol
One Offs

FY18
Comparable

Underlying
Growth

FY19
Comparable

FY19
Vol
One Offs

John Guest

FY19
Reported

The Group completed the acquisition of John Guest on 13 June 2018. The acquisition date for accounting purposes is taken to be 23 May 2018 and
financial results for FY2018 included a contribution from the John Guest business from that date.
A reconciliation of Reported Net Profit after Tax to Adjusted Net Profit after Tax is appended to the Company’s results announcement dated 27
August 2019.
Volume one-offs in FY2018 included Lowe’s load in, USA freeze impacts, sales to John Guest prior to RWC ownership and discontinued product lines
in the UK; in FY2019 the volume one-offs were discontinued product lines in the UK.

Reliance Worldwide Corporation LimitedAnnual Report 2019Operating and Financial ReviewOPERATING AND FINANCIAL REVIEWNet sales for the year ended 30 June 2019 of $1,104.0 million were 43.5% higher than the prior year. Reported EBITDA for the year was

$242.5 million, an increase of 79.1% on the prior year. These increases reflect the first full year contribution from John Guest.

Core RWC net sales (excluding John Guest) were $782.9 million, 5.1% higher than for the prior year, driven by 8.6% growth in net sales

in the Americas segment. Net sales of John Guest products were $321.1 million, up 8.2% on the prior year.

Results for the year were also impacted by favourable foreign exchange movements for translation purposes, primarily a weaker

Australian dollar versus the US dollar. Excluding the impact of the favourable translational foreign exchange movement during the

year, prior year one-off items (particularly Lowe’s inventory load-in and USA freeze impacts) and John Guest sales, underlying net sales

growth in the core RWC business was 5.4%. Underlying sales for John Guest, excluding the impact of foreign currency movements and

the planned wind down of the automotive business, grew 6.2% year on year.

The John Guest business has been successfully integrated with RWC’s operations. The strength of the John Guest business in terms

of end-user connections, distribution partner relationships and engineering capabilities was demonstrated throughout its first

year of RWC ownership and reflected in its performance. The long-term growth potential of the business and the revenue synergy

opportunities continue to support the strategic rationale for the acquisition.

EBITDA for the year, adjusted for the following items, was $263.2 million (“Adjusted EBITDA”), an increase of 65.8% on the prior year.

Adjusted EBITDA includes John Guest related synergies of $14.2 million achieved during the period and excludes the following items:

$17.4 million of one-time integration costs incurred, a $2.4 million expense related to finalising the unwinding of a fair value adjustment

made at acquisition date to John Guest inventory and a $0.9 million EBITDA impact resulting from the timing of revenue recognition

following adoption of new accounting standard AASB 15.

Adjusted EBITDA of $263.2 million reflects primarily:

• Growth in net sales as described above ($94 million).

• A positive impact from John Guest related synergies achieved ($14 million).

• A net favourable impact from currency movements ($9 million).

• A negative impact on Cost of Goods Sold from net higher input costs, principally driven by higher copper costs (in the form of brass

bar) which flowed through the supply chain to production and wage inflation ($7 million).

• A negative impact from one-off supplier issues experienced in the Americas in the first half; these were resolved in the first half

with no material second half impact ($3 million).

• A net favourable impact from the absence of a one-time charge incurred in FY2018 resulting from reclassification of categories for

products imported to the USA in FY2018 and prior years, partly offset by higher tariff costs in FY2019 on products imported from

China to the USA that were not fully offset during the year ($2 million).

• The cost of continuing investment into research, development and commercialisation of new products (including Streamlabs and

associated Smart Plumbing products, water quality products and core plumbing and heating products of RWC, Holdrite and John

Guest) and general management depth and capability ($5 million).

Reported net profit after tax (“NPAT”) was $133.0 million, an increase of 102% on the prior year. The result was driven by:

• The impacts on Reported EBITDA described above.

• A higher net interest expense principally as a result of increased borrowings which partially funded the acquisition of John Guest in

June 2018.

• A lower effective income tax rate which reflects the changed geographic mix of earnings following recent acquisitions with a higher

proportion of earnings now achieved in countries with lower taxation rates than Australia.

Adjusted net profit after tax (“Adjusted NPAT”) was $152.0 million, an increase of 80% on the prior year. Adjusted NPAT reflects

the effect of the Adjusted EBITDA (which, in FY2019, adjusts Reported EBITDA for one-time John Guest integration costs, fair value

inventory unwind and the impact of the new AASB 15 revenue accounting standard).

OPERATING AND FINANCIAL REVIEWSegment Review

Americas

Year ended:

Net sales2

Net sales – excluding John Guest

Net sales – John Guest

Reported Segment EBITDA

Margin

Adjusted Segment EBITDA

Adjusted Margin

Adjusted Segment EBITDA – excluding John Guest

Adjusted Segment EBITDA – John Guest

30 June 2019

30 June 20181

(A$ million)

Variance

653.9

604.2

49.7

102.5

15.7%

105.3

16.1%

96.5

8.8

559.7

556.2

3.5

95.4

17.1%

96.0

17.2%

96.0

17%

n/m

(140bps)

10%

(110bps)

n/m

The Americas segment recorded continued sales growth. Reported net sales for the year were $653.9 million, an increase of 16.8% on

the prior year. Excluding John Guest, net sales were $604.2 million, an increase of 8.6% on the comparative period.

Reported net sales in the year also included the positive foreign exchange translation impacts of the lower Australian dollar relative

to the US dollar. The prior year included the positive impact of the one-time rollout of stock to the second half of the Lowe’s stores as

well as a freeze event. Adjusting for these items and movements in foreign exchange rates, underlying net sales growth in the Americas

was 8.3%.

Change in Net Sales – Americas Segment3
(All values in A$ millions)

+$94.2 (+16.8%)

+$43.3 (+8.3%)

$43.3

$562.5

$45.3

$46.1

$653.9

$559.7

($40.5)

$519.2

FY18
Reported

FY18
Vol
One Offs

FY18
Comparable

Underlying
Growth

FY19
Comparable

John Guest

FY19
Reported

Growth in net sales in the Americas segment was driven by continued end user demand for RWC’s products including core SharkBite

brass PTC fittings and accessories which continue to benefit from ongoing conversion of plumbers away from using traditional fittings

systems. Growth was also supported by an expanded range of products sold to The Home Depot in Canada, including PEX pipe and

The Group completed the acquisition of John Guest on 13 June 2018. The acquisition date for accounting purposes is taken to be 23 May 2018 and
financial results for FY2018 include a contribution from the John Guest business from that date.
Prior to elimination of inter-segment sales.

2.
3. Volume one-offs in FY2018 included Lowe’s load in and USA freeze impacts.

Reliance Worldwide Corporation LimitedAnnual Report 2019Operating and Financial ReviewOPERATING AND FINANCIAL REVIEWcrimp fittings, ensuring these outlets now offer the full SharkBite solution. Continued penetration into the residential new construction

and remodel markets through Holdrite, EvoPEX and other RWC residential plumbing products also contributed to growth.

Holdrite products continued to perform well within the commercial new construction market with revenue synergies achieved through

leveraging RWC distribution relationships to expand Holdrite’s product offering. Holdrite’s well-established position with end users in

the commercial sector is allowing RWC to sell additional products into that market with considerable further potential.

John Guest sales on a pro forma basis rose 9.2% after adjusting for sales to the automotive sector which declined in accordance with

the planned withdrawal from this market.

Three issues negatively impacted net sales in the second half of FY2019. The first was that a freeze event was not experienced in the

southern parts of the USA. It is estimated that the lack of a freeze event reduced net sales by between $12 million and $15 million in

FY2019.

Additionally, the second half was impacted by distributors working through the overstock of inventory from the first half, which had

been built up in anticipation of a freeze event with a pull-forward of orders into the first half. Third, growth in the remodel and new

housing construction markets also slowed in the second half with market conditions generally softer in the April to June quarter.

Reported EBITDA for the Americas segment was $102.5 million, 7.4% above the prior year, while Adjusted EBITDA was $105.3 million,

excluding $2.8 million of integration costs and purchase price accounting impacts, which was 9.7% ahead of the prior year.

Adjusted EBITDA margin was 16.1%, compared with 17.2% in the previous year. The result reflects the net impact of:

• Growth in net sales as described above, including John Guest net sales for the entire year.

• Favourable impact of foreign exchange rates on translation of revenues and earnings.

• Positive impact of John Guest related synergies.

• Net negative raw material inflation primarily related to higher copper costs in the year partly offset by lower resin costs.

•

Increased investment in the long-term growth of the business, primarily new product development and commercialisation costs.

• A net favourable impact from the absence of a one-time charge incurred in FY2018 resulting from reclassification of categories for

products imported to the USA in FY2018 and prior years, partly offset by higher tariff costs in FY2019 on products imported from

China to the USA that were not fully offset during the year.

Asia Pacific

Year ended:

Net sales2

Net sales – excluding John Guest

Net sales – John Guest

Reported Segment EBITDA

Margin

Adjusted Segment EBITDA

Adjusted Margin

Adjusted Segment EBITDA – excluding John Guest

Adjusted Segment EBITDA – John Guest

30 June 2019

30 June 20181

(A$ million)

Variance

249.1

234.0

15.1

48.1

19.3%

50.0

20.1%

47.0

3.0

232.0

230.9

1.1

52.4

22.6%

52.8

22.8%

52.5

0.3

n/m

(8%)

(330bps)

(5%)

(270bps)

(10%)

n/m

Asia Pacific recorded net sales of $249.1 million, an increase of 7.4% on the prior year, reflecting the first full year contribution from John

Guest product sales partially offset by weakness in the Australian new residential construction markets.

Sales to the Americas segment grew by 2.0%, a lower growth rate than in previous years due to the expansion of production capacity

in the USA.

2. Prior to elimination of inter-segment sales.

OPERATING AND FINANCIAL REVIEWExternal sales were down 3.3%, having been negatively affected by weaker sales into the new housing construction market in Australia

partly offset by modest growth in the rest of the Asia Pacific region. Reported sales also reflect the timing impact from a change in

revenue recognition that reduced sales by $1.8 million following adoption of the new accounting standard for revenue recognition

(AASB 15).

New housing commencements in Australia declined 7% in the twelve months ended 31 March 2019 and, for the quarter ended
31 March 2019, were 26% below the prior corresponding period overall with the multi-family sector down 42%.1 While Asia Pacific
accounts for only 13% of external net sales, approximately half of these external net sales are made in the more cyclical new

residential construction market. Moreover, most of those sales are to the multi-family segment of the market. As a result, external net

sales in Australia for FY2019 were $4.7 million lower than prior year.

The full year results for Asia Pacific were also impacted by delays in the release of two new product ranges which had been scheduled

to be launched into the Australian market in the first half of FY2019. While the issues related to the release of those new products were

resolved and the products have now been launched, the lack of revenue from this source meant that the headwinds from lower new

construction activity could not be fully offset.

John Guest sales in Asia Pacific performed well and were in line with expectations for the year.

Asia Pacific reported EBITDA contribution for the year was $48.1 million, a decrease of 8% on the prior year, while Adjusted EBITDA

was $50.0 million or 5% below the prior year, reflecting lower external sales. Segment EBITDA was also impacted by higher input

costs, including wage and energy inflation, partly offset by lower SG&A expense.

The ERP rollout was completed in March, with Asia Pacific now on the same platform as the Americas segment.

Europe, Middle East and Africa (“EMEA”)

Year ended:

Net sales3

Net sales – excluding John Guest

Net sales – John Guest

Reported Segment EBITDA

Margin

Adjusted Segment EBITDA

Adjusted Margin

Adjusted Segment EBITDA – excluding John Guest

Adjusted Segment EBITDA – John Guest

30 June 2019

30 June 20182

(A$ million)

Variance

360.9

60.1

300.8

95.8

26.5%

109.4

30.3%

1.8

107.6

81.1

60.9

20.2

8.3

10.2%

10.1

12.4%

2.6

7.5

345%

(1%)

n/m

(31%)

n/m

EMEA delivered strong growth led by the first full year inclusion of John Guest. The John Guest business achieved annual net sales

growth in FY2019 anticipated at the time of acquisition.

Net sales in EMEA were $360.9 million, including $300.8 million from John Guest products. Sales growth was driven by increases

in core UK plumbing and heating volumes, price rises and stronger Fluid Technology PTC (“FluidTech”) sales in Continental Europe.

Overall John Guest sales in EMEA grew 13.4%, including the impact of favourable foreign currency translation. On a constant currency

basis and excluding the impact of planned lower sales to the automotive sector, external sales grew 6.9%.

Net sales of core RWC products in the UK grew by 3.0% after normalising both FY2018 and FY2019 sales for discontinued product

lines. Reported net sales from core RWC products were $60.1 million, down 1.3% on the prior year. Sales of these products in the UK

were negatively impacted by a decision to exit certain product lines previously sold by the core RWC business, in particular thermal

interface units, in order to focus resources on more attractive growth opportunities identified for the expanded RWC/John Guest

combined group.

1. Source: Australian Bureau of Statistics.
2.

3. Prior to elimination of inter-segment sales.

Reliance Worldwide Corporation LimitedAnnual Report 2019Operating and Financial ReviewOPERATING AND FINANCIAL REVIEWThe RWC Spain business, which supplies PEXa pipe and related plastic fittings, increased sales but did not achieve the growth

anticipated for FY2019, reflecting lower than expected levels of demand across continental Europe as well as intense competition

from larger players.

Adjusted EBITDA contribution was $109.4 million, with the contribution from John Guest ahead of expectations. Realised synergies

achieved in the period following the John Guest acquisition totalled $14.2 million, of which $11.4 million were attributable to EMEA.

John Guest Integration

The integration of the John Guest business was substantially completed during the year. From an organisational perspective, a critical

undertaking has been the cultural integration of John Guest and RWC, with the two organisations having previously had different

approaches and ways of working. A range of initiatives to drive a shared culture built around collaboration and accountability were

successfully introduced during the year with a high level of engagement from John Guest employees.

Beyond this, our focus was on delivering on four priorities:

•

Improved delivery performance and reduced back orders for John Guest.

• Completion of the integration of RWC UK into John Guest UK and John Guest USA into RWC USA.

• Achieving near term synergies and pursuing general cost savings.

• Setting up for longer term revenue synergies.

Details of those four priorities and their implementation are described as follows:

Improve delivery performance and reduce back orders

A key opportunity identified at the time of due diligence was to lift customer service and bring down arrears in delivery of orders. We

approached this proactively and have seen significant progress with order arrears down 75% from a year ago. Progress was achieved

through the addition of new management personnel coupled with resources from the broader RWC business and higher stock levels.

These actions have been well received by our distribution partners. There remains further opportunity to improve performance in this

area to make John Guest easier to do business with and achieve RWC benchmark performance levels. This includes enhancing sales

and operations planning processes, articulating and delivering against a clear customer service proposition and lifting total output

from the existing manufacturing footprint.

Complete the integration of RWC UK into John Guest UK and John Guest USA into RWC USA

Integration of the RWC and John Guest UK businesses was essentially completed during the year. Management of RWC branded

product sales through the John Guest UK operations and sales teams went live in the first half as did the management of all back

office and support activities. Over the same time, the integration of the RWC and John Guest USA businesses was completed,

including the merger of all selling and marketing activities and the move into a new warehouse in New Jersey. John Guest USA

was successfully transitioned to RWC’s ERP platform. A project to migrate John Guest UK onto this platform has commenced with

completion targeted for the second half of FY2020.

Achieve near term synergies and pursue general cost savings

Synergies realised for the year were $14.2 million, ahead of the initial target of $10.0 million. Synergies achieved by the end of FY2019

exceeded $20 million per annum on a run rate basis (excluding one-off integration costs). The most significant of these has been the

savings achieved both in the UK and in the USA by combining administrative and support activities and driving greater efficiencies in

the John Guest operations and support functions. The cost of achieving these synergies was $17.4 million, higher than the previously

forecast level of $10.0 million as a result of a decision to accelerate the achievement of additional synergies. The focus going forward

continues to be on activities to achieve synergies, cost savings and customer service improvement. Further opportunities around

procurement and leveraging combined operational expertise are being pursued. Total annual synergies realisation is still expected to

exceed $30 million on a run rate basis by the end of FY2020.

Set-up for longer term revenue synergies

Revenue synergies remain a key part of the opportunity from the John Guest acquisition. The John Guest sales team in the UK has

begun to gain additional sales from the RWC catalogue. A new product range which integrates RWC valves with John Guest’s Speedfit

connections is scheduled to launch in the first half of calendar 2020. The FluidTech fittings will continue to drive growth in Continental

Europe in the water quality and beverage dispense markets and are also an important growth opportunity in the USA and Canada

where we can leverage the Americas strong distribution network. In addition, John Guest’s ProLock plastic PTC fittings will be launched

into the Mexico market in coming months.

OPERATING AND FINANCIAL REVIEWPotential Impacts of Brexit

We continue to actively monitor the potential outcomes of Brexit, using RWC’s Brexit Steering Committee established earlier in the

year. The committee is comprised of relevant senior managers and has engaged with a third-party advisor to ensure we have a clear

view of where the Brexit related impacts could occur, quantify those impacts where possible and develop appropriate mitigation plans.

Currently, the UK Government’s position on Brexit is that the country will leave the European Union (EU) on 31 October 2019. There

remains considerable uncertainty as to whether this will occur with or without a comprehensive negotiation having been completed

between the EU and Britain. As such, there are three scenarios we have contemplated as part of our contingency planning:

• Scenario 1: the date for Britain to leave the EU is delayed. This scenario would simply delay the choice between the other two

scenarios.

• Scenario 2: there is an agreement between the UK and the EU, or Brexit is stopped. In this case, it is assumed that current trading

arrangements between the UK and EU would continue without any material change or impact on RWC, particularly around tariffs.

• Scenario 3: the UK will leave on 31 October 2019 without concluding negotiations for ongoing trade terms. Under this “no deal”

Brexit scenario, it is assumed that trade between the UK and the EU would revert immediately to WTO rules and the associated

tariffs.

At the present time the potential impacts arising from Brexit are assessed as follows:

(i)

Impact on Demand

According to economic commentators, the current uncertainty around the timing and the final terms of the UK exit from the EU is

having a negative impact on overall economic activity in the UK, including slower growth in the construction sector. We believe that

this is impacting current demand for that segment of the RWC UK business that is exposed to new construction and remodel activity,

although it is noted that the majority of RWC sales in the UK are into the defensive repair and maintenance sector.

(ii)

Impact on Supply Chain

Impacts on our supply chain could include delays or disruptions to the flow of raw materials from the EU into the UK or finished goods

from the UK into the EU or the imposition of additional tariffs on such goods.

We do not currently anticipate a scenario under which we would need to make significant capital expenditures to fundamentally alter

our current supply chain by building new manufacturing or distribution facilities. However, given the potential for disruptions to the

flow of goods, particularly in the early days following Brexit, RWC has maintained incremental 2-4 weeks of raw materials in the UK

and we have also produced an incremental 2-4 weeks of finished good stock which is being held in RWC’s warehouse in Germany.

(iii) Tariffs

In the event of a “no deal” Brexit, it is expected that the UK Government will continue its current approach whereby a wide range of

imports into the UK are subject to a 0% tariff, including the plastics John Guest uses in manufacturing. Therefore, no material change

is expected in the cost of plastic imports.

For exports from John Guest to the EU, tariffs are likely to be applied by the EU if there is no deal, with the tariff rate set at 6.5% of the

value. It is estimated that this tariff would have a negative EBITDA impact of approximately GBP 1.9 million per annum, assuming that

the tariff impost cannot be offset by commensurate pricing changes.

(iv)

Impact on Foreign Exchange Rates

The fourth major area for potential impact is on foreign exchange rates and specifically the potential for volatility in the British Pound

that could impact the translation of net sales and EBITDA to Australian dollars. For FY2019 RWC had about GBP denominated sales

of approximately GBP 125 million to external customers in the UK (in the order of 20.5% of RWC’s total sales based on the average

exchange rate for FY2019 of GBP0.5527 per A$1.00) and GBP denominated EBITDA of approximately GBP 49.2 million (A$89

million). Adverse movement in the exchange rate of say 15% would therefore impact EBITDA by approximately A$11.6 million, being

less than 5% impact on total EBITDA.

The potential risks arising from Brexit continue to be monitored and evaluated. Plans and assessments will be adjusted accordingly as

more information becomes known.

Reliance Worldwide Corporation LimitedAnnual Report 2019Operating and Financial ReviewOPERATING AND FINANCIAL REVIEWGroup Performance Review

Dividend

A fully franked final dividend of 5.0 cents per share has been declared. Total dividends declared for the year ended 30 June 2019 are

9.0 cents per share totalling $71.1 million which represents 53.5% of NPAT. This is within the targeted pay-out range of 40% to 60%

of annual NPAT. Total dividends declared for FY2019 of 9.0 cents per share are 38.5% higher than the 6.5 cents per share declared in

FY2018.

Interim1

Final1

Amount payable or paid

Year ended
30 June 2019

Year ended
30 June 2018

Year ended
30 June 2019

Year ended
30 June 2018

Franked amount

4.0cps

5.0cps

$71.1m

3.5cps

3.0cps

$42.1m

100%

The record date for entitlement to the final dividend is 11 September 2019. The payment date is 11 October 2019.

Future dividends are likely to be only partly franked given the change in the geographic mix of earnings following recent acquisitions. It

is currently expected that future dividends will be less than 50% franked.

Health and Safety

RWC is committed to providing a safe and healthy workplace for all our employees and contractors. We aim for zero harm across

the group. A robust health and safety management system is maintained which assists in the identification of potential issues and

hazards and in the development of strategies and initiatives to mitigate the risk of harm. The company’s safety performance remains

the highest priority and is regularly reviewed by management and the Board.

During FY2019, we augmented the strength of our Group Operations team, with a clear remit on safety. We also added dedicated

safety personnel in each division, significantly increasing our experience and expertise in this critical area. Further enhancements were

made to our health and safety management approach with a priority being to bring John Guest on to the same reporting platform as

RWC. This is allowing safety monitoring to be done in a uniform manner across the group.

Actions to further deliver improvements in health and safety performance in FY2020 include increased safety leadership training, the

implementation of near-miss and hazard reporting (an important leading indicator), development of higher standards for incident

investigation and communication and the establishment of employee safety committees.

For the year ended 30 June 2019, RWC had a reportable incident rate of 1.17 per 100 employees compared with 2.4 in the prior year.

Capital Expenditure

Capital expenditure payments on property, plant, equipment, intellectual property and other intangibles acquired during the year

totalled $69.6 million, including $8.2 million to repair the roof of a manufacturing facility in Cullman, Alabama that received severe hail

damage in FY2018 and for which we previously received insurance proceeds. Excluding that amount, capital expenditure in the period

was $61.5 million, representing 5.6% of net sales, compared with $38.5 million in the prior year (5.0% of net sales). Of this amount,

$45.3 million was growth expenditure (including $4.3 million on intellectual property acquired during the year) and $4.8 million for

equipment maintenance expenditure. In addition, $11.4 million was spent on long term IT projects with the most significant of these

being the replacement ERP system in Asia Pacific.

Dividend per share calculated on 790,094,765 issued ordinary shares except for FY2018 interim dividend which is calculated on 525,000,000 issued
ordinary shares.

OPERATING AND FINANCIAL REVIEWCash Flow

Reported net cash inflow from operating activities for the year was $136.0 million ($80.1 million in the prior year). Cash flow from

operations, before John Guest-related non-recurring integration payments and tax paid, was $178.9 million, an increase of 43% on the
prior year. Working capital growth impacted operating cash flow conversion1 for the year (73.8% versus 92.2% in the prior year, with
90% conversion in the second half of FY2019). Working capital movements reflect:

•

Inventory increases to support growth.

• Planned inventory adjustments to improve service levels to John Guest customers.

• Additional inventory levels to mitigate potential Brexit risks.

• The expiry of a one-off payment terms incentive which impacted accounts receivable.

• Changes in payment terms to a supplier in exchange for a price reduction which impacted accounts payable.

Balance Sheet

RWC continues to maintain a sound balance sheet and conservative financial position.

Net debt at 30 June 2019 was $426.6 million (30 June 2018 – $388.0 million). The dollar increase over 30 June 2018 mainly reflects
net additional borrowings to fund growth in business activities, including the capital expenditure and working capital changes referred

to above.

Net debt to EBITDA excluding acquisition transaction costs and costs to achieve synergies was 1.67 times at 30 June 2019.

Strategy

RWC’s business fundamentals are stronger than ever

The fundamentals of RWC’s business are sound. Today we have solid core businesses in our two most important sales markets of

the USA and UK. Compared with three years ago, we also have a significantly more robust business with better diversity of end users,

channel partners, geographies, products, materials and technology. Our products are also available through a significantly greater

number of outlets around the world.

Our core businesses continue to have significant potential

The core revenue driver of the RWC business continues to be the repair, maintenance and remodel sectors in North America and

the UK. More than 85% of core SharkBite fittings and accessories sales in the USA are in the repair and maintenance segment. This

has been successfully augmented in the UK with the JG Speedfit plastic PTC fittings which are also primarily directed to the repair

and maintenance market. About 65% of John Guest sales are into that market segment. These fittings are supported by a range of

accessories and complementary pipe, valve and control products.

SharkBite brass PTC products, especially in North America, are still a leading opportunity. While SharkBite in North America now

represents a smaller proportion of our business as RWC has expanded, it nonetheless remains core and provides a solid foundation for

ongoing above market growth at attractive margins. With SharkBite’s market strength, scale and value proposition, there continues to

be a long runway of opportunity to achieve above market growth.

This has been reinforced by the experience of John Guest’s Speedfit product in the UK where users continue to be converted from

metal fittings to plastic PTC. Despite launching the Speedfit fitting 25 years ago, metal fittings still outsell plastic PTC on a unit basis.

We continue to augment the growth of our business through conversion from these traditional fittings methods. This bodes well for

the Speedfit business in the UK, but also confirms our positive outlook in North America for SharkBite PTC.

In Europe, we now have a business with the critical mass to deliver strong earnings and a platform for growth. Growing the FluidTech

business is an immediate revenue opportunity while in the medium term developing the appropriate strategy for plumbing and

heating, based on RWC’s products and experience and relationships from RWC will be a priority. Longer term, we will look to fully

leverage relationships with end users in the UK. We have real opportunities to expand further into residential new construction,

commercial pipe fittings and commercial valves.

FY19: Cash flow from operations to Reported EBITDA of $242.5 million.

Reliance Worldwide Corporation LimitedAnnual Report 2019Operating and Financial ReviewOPERATING AND FINANCIAL REVIEWWe are excited by the future potential we see in product extensions and new product areas

We continue to be optimistic about the future of our core businesses, while at the same time excited by the growth opportunities we

see beyond these. In North America, Holdrite’s product suite is taking us into residential and commercial new construction. Through

John Guest FluidTech fittings we have gained access to new channels and new OEM opportunities, with the ability to leverage volume

through our existing distribution base from new product development and M&A. The network we now have across the UK makes any

future bolt-on acquisitions more attractive and more strongly accretive.

Looking even further into the future, we are very excited about the smart plumbing opportunities with Streamlabs. We firmly believe

that plumbing systems will be fully connected in the next several years. We are at the forefront of this led by the Streamlabs leak

detection and usage-monitoring products, which are gaining traction. Perhaps, more importantly, we have developed the platform for

a smart plumbing system that will ultimately lay across our full product offering, from meter to fixture, and floor to ceiling.

We are investing in new product development and commercialisation to realise the potential from these new growth areas

In order to realise the potential of new products and product extensions, we are increasing our investment in new product

development and commercialisation. Research and development has been central to RWC’s success and this is continuing. As we

penetrate new markets – commercial construction, residential new construction, smart plumbing solutions – we are needing to

invest in sales and marketing capability and in new areas such as application development. With commercialisation of new products

becoming increasingly costly, particularly for entirely new product categories, we will also look to invest through M&A where we can

acquire products that add to RWC’s range.

We are also investing in organisational capability to deliver on this potential

Delivering on these opportunities will only be achieved through the strength of our team. We are making a deliberate investment in

people and capability in order to realise the potential from our existing business and future product development. This investment is

being made across three broad areas:

• We have invested in organisational capability around new product development and commercialisation, which are critical skill sets

required for our future growth.

• We have invested in capability to drive operational performance improvements across the business, with senior people recruited

to lead disciplines around procurement, manufacturing operations efficiency, supply chain and distribution logistics. We see

continuing opportunity to lower operating and manufacturing costs to ensure we remain cost competitive. This will be an area of

focus in FY2020.

• We have recently invested resources in core capabilities including operational improvement, legal, finance, technology,

commercialisation and business intelligence. The investment we have made has resulted in a step change in the level of group

cost but has provided RWC with the right level of support in these areas for a public company of our size and breadth. We do not

foresee any significant further cost growth in this area beyond FY2020.

FY2020 Outlook

For FY2020, we expect to achieve sales growth above that of the broader markets in which we operate. Historically, RWC has achieved

sales growth in excess of market growth through a combination of acquisitions, market share gains, conversion of end users from

traditional methods to RWC’s products and systems, distribution expansion, price and commercialisation of new products.

RWC will continue to pursue above market growth through all of these means where applicable, understanding that not each growth

lever is available in all markets every year. Commentary on the outlook for each of RWC’s regions is provided below with specific

reference to those levers expected to be of most significance in delivering FY2020 performance.

With respect to operating margins, RWC aims to use continuous improvement in its operations to offset cost inflation, with price gains,

where and when achievable, expected to contribute to EBITDA margin enhancement. We expect EBITDA margin expansion to be

achieved over time through fixed cost leverage.

Realised margin expansion in FY2020 will be partly offset by investment in new product development and commercialisation. This

investment supports RWC’s longer term strategy, which is centred on growth through product innovation and leveraging its powerful

distribution networks and strong brands to drive conversion and share gains in targeted product categories.

OPERATING AND FINANCIAL REVIEWAmericas

• Macro-economic outlook: conditions in the Americas are expected to be generally positive across RWC’s key segments, with
modest growth in residential new construction and continued growth in remodel activity levels, albeit at slightly lower levels

than in recent years. Ageing housing stock and the rising value of homes along with increasing frequency of bath and kitchen

renovations driven by fashion and design changes should continue to underpin volume growth.

• Conversion: the long-term growth potential of SharkBite PTC through the conversion of plumbers from more traditional fittings
systems to RWC’s more efficient, time saving methods remains sound. The demographic trend towards fewer skilled plumbers

also supports this view. We believe increased conversion applies not just to SharkBite but to a broad range of RWC products

including Holdrite installation systems and John Guest FluidTech.

• Product: we will continue to optimise and leverage new and previously acquired product lines through RWC’s distribution network

and will prioritise extending the market penetration of recently launched products including: StreamLabs, ProLock (John Guest),

Firestop, Holdrite’s pipe support products and EvoPEX.

• Distribution: RWC products are available at more than 23,000 outlets across North America. Beyond supporting our existing
customers and pursuing additional opportunities with expanded product ranges and new product categories, two market

segments will be more directly targeted in FY2020 through investment in sales force and marketing: commercial new construction

and residential remodelling. New distributor arrangements in Mexico will also be leveraged in FY2020 particularly for ProLock and

EvoPEX pipe and fittings.

• One of RWC’s USA wholesale distributors is expanding its own-brand or private-label strategy. RWC understands that this move

will include certain RWC SharkBite branded items. While affected stores cannot obtain SharkBite through their distribution

centres, they are able to purchase those items directly from RWC and we will continue to actively support those stores with their

existing SharkBite business. In addition, RWC expects that over time much of the revenue will shift to other distributors as end-use

professional plumbers look specifically for SharkBite when they purchase push-to-connect fittings. Consequently, the net impact

of this move is expected to be significantly less than one per cent of total group sales revenue.

Asia Pacific

• Macro-economic / market conditions: Australian new housing construction is expected to continue at lower levels than in recent

years with the risk of further decline, particularly in the multi-family segment.

• Conversion: Asia Pacific’s primary focus will be on maintaining key supplier status for Control Valves and PEX systems, maintaining

market leading customer and end user support and continuing customer conversion to PTC.

• Product: Asia Pacific’s longer-term goal remains to grow above market by commercialising select new products and systems to

support our expansive customer base. New product opportunities include the continued development of PEX piping systems and

expanded distribution of the Release Control Valve range.

• Distribution: the focus will be on providing world class execution and support in order to retain share in what is expected to be a

very competitive, challenging market place. Selective growth opportunities within the broader Asia Pacific region will continue to

be pursued.

EMEA

• Macro-economic / market conditions: Brexit uncertainty clouds the short-term outlook for the UK. Trading conditions at the end
of FY2019 were noticeably softer than earlier in the year and this trend has continued in the first two months of FY2020. The

longer term outlook for repair and remodelling activity is seen as positive, with little sensitivity to the overall construction cycle.

Continental European GDP growth rates are expected to remain low, although RWC sales growth is not tied directly to overall

economic activity.

• Conversion: FY2020 is expected to deliver growth in core plumbing volumes despite a weak UK market with share gains via push-

to-connect conversion and through driving under-floor heating and extended product ranges.

• Product: continued product development and innovation will help drive conversion from traditional systems to PTC in the plumbing
and heating markets in the UK and to further grow John Guest’s position in the drinks and water dispense markets. Additionally, we

will continue to work with OEM customers and innovate within the UK cylinders, boiler and water heater segment.

• Distribution: Further improving UK customer service through supplying on time and in full should help to increase market share and
revenue. Within the UK, there will continue to be a focus on growing exposure to the commercial new construction market and new

residential construction. Revenue synergy opportunities include selling traditional RWC products through John Guest channels

and utilising RWC’s distribution channels to drive sales of John Guest product. Within Continental Europe, the priority is on both

continuing to grow the FluidTech business while also pursuing selected plumbing product and OEM opportunities.

Reliance Worldwide Corporation LimitedAnnual Report 2019Operating and Financial ReviewOPERATING AND FINANCIAL REVIEWFY2020 Earnings Guidance

RWC earnings guidance will now be provided on a Net Profit after Tax (“NPAT”) basis, rather than EBITDA. We believe that NPAT is a

more complete measure of performance than EBITDA as it reflects the cost and efficiency of capital invested in the business as well

as operating performance. The use of NPAT will also facilitate comparison of year-over-year performance following the introduction of

the new accounting standard AASB 16 Leases. This standard removes the classification of leases as either operating leases or finance

leases and introduces a single, on-balance sheet accounting model for leases.

Application of AASB 16 will apply to RWC with effect from 1 July 2019. The estimated impact on FY2020 EBITDA from applying AASB

16 will be an increase of approximately $15 million. There is expected to be no material impact on NPAT from the adoption of AASB 16

as there will be substantially offsetting increases to depreciation and interest expense.

RWC currently expects NPAT for FY2020 to be in the range of $150 million to $165 million. This corresponds to an EBITDA range of

$280 million to $305 million, inclusive of the effect of AASB16 referred to above. Performance within this range will be contingent on

the following factors:

Revenue

• No material deterioration in economic activity levels from current conditions in key markets.

• Broadly stable repair and remodel activity in the USA, together with a broadly neutral new residential construction.

•

In Australia, new housing construction to continue at lower levels than in recent years.

In the UK, short term disruption from Brexit but with the market otherwise flat to slightly positive.

Costs

• Stable input costs, with the average copper cost expected to be no higher than US$6,200 per tonne over the full year.

•

Increased SG&A reflecting the investment in new product development and organisation capability referred to previously.

• No further increases in tariffs or import duties in the USA.

• Delivery of John Guest synergies, which are expected to exceed $30 million on a run rate basis by the end of FY2020.

Financial

• No significant changes to prevailing foreign exchange rates.

The most significant external determinants of performance in FY2020 are expected to be the extent of Brexit disruption in the UK,

economic and construction market conditions in other key markets, raw material costs, and foreign currency impacts on translation of

foreign currency earnings into Australian dollars.

Capital expenditure is expected to be in the range of $65 million to $75 million. Approximately half of this will be in growth initiatives

including production expansion in the USA and UK and new product development globally, with the balance predominantly split

between maintenance capital and IT investment including a new ERP system for EMEA.

Working capital as a percentage of sales is expected to be slightly lower than for FY2019.

In terms of earnings phasing, RWC expects first half earnings to represent around 45% and second half earnings to be around 55% of

full year NPAT. The phasing reflects key budget assumptions, including seasonality of the John Guest business and the timing of John

Guest synergies delivery.

OPERATING AND FINANCIAL REVIEWThe Board of Directors is responsible for the overall corporate governance of Reliance Worldwide Corporation Limited

(“the Company”) and its controlled entities (together “the Group”). The Board monitors the operational and financial position and

performance of the Group and oversees its business strategy, including approving the strategic objectives, plans and budgets of the

Group. The Board is committed to optimising performance and building sustainable value for shareholders. In conducting business

with these objectives, the Board seeks to ensure that the Group is appropriately managed to protect and enhance shareholder

interests and that the Group, its Directors, officers and personnel operate in an appropriate environment of corporate governance.

Accordingly, the Board has created a framework for managing the Group, including adopting relevant internal controls, risk

management processes and corporate governance policies and practices that it believes are appropriate for the Group’s business and

that are designed to promote responsible management and conduct of the Group.

The Australian Securities Exchange (“ASX”) Corporate Governance Council has developed and released its Corporate Governance

Principles and Recommendations 3rd edition (“ASX Recommendations”) for entities listed on the ASX in order to promote investor

confidence and to assist companies to meet stakeholder expectations. This Corporate Governance Statement outlines the key

aspects of the Company’s governance framework and governance practices which are consistent with the ASX Recommendations

unless stated otherwise. The ASX has released a 4th edition of its Corporate Governance Principles and Recommendations which will

apply to the Company from the financial year commencing 1 July 2020 (“4th edition”). This Corporate Governance Statement does not

specifically address the requirements of the 4th edition. The Company is assessing the requirements of the 4th edition to determine

any impact on its governance framework and practices.

Details of the key policies and practices and the charters for the Board and each of its Committees are available on the Company’s

website at www.rwc.com.

This statement has been approved by the Board of Reliance Worldwide Corporation Limited and is current at 26 September 2019.

Board and management

The Board has adopted a written charter to provide a framework for its effective operation. The Board Charter sets out details of the

Board’s composition, its role and responsibilities, the expected relationship and interaction between the Board and management,

details of the responsibilities and functions expressly reserved to the Board and those authorities which are delegated by the Board to

management and Board Committees. A copy of the charter can be viewed on the Company’s website.

The Board’s role is to:

•

represent and serve the interests of shareholders by overseeing and appraising the Group’s strategies, policies and performance.

This includes overseeing the financial and human resources the Group has in place to meet its objectives and reviewing

management performance;

• protect and optimise Group performance and build sustainable value for shareholders in accordance with any duties and

obligations imposed on the Board by law and the Company’s Constitution and within a framework of prudent and effective

controls that enable risk to be assessed and managed;

•

set, review and ensure compliance with the Company’s values and governance framework (including establishing and observing

high ethical standards); and

•

ensure shareholders are kept informed of the Group’s performance and major developments affecting its state of affairs.

The management function is delegated by the Board to the CEO (and to other officers to whom the management function is properly

delegated by the CEO). A delegation of authority document has been approved by the Board. Management must supply the Board

with information in a form, timeframe and quality that will enable the Board to discharge its duties effectively. Directors are entitled to

request additional information at any time when they consider it appropriate.

Appointment of Directors

The Company has a formal agreement in place with each Director setting out the terms of their appointment. Directors have rights of

access to relevant Company documents, management and Company advisors to assist in the performance of their duties.

The process for selecting directors for appointment to the Board is overseen by the Nomination and Remuneration Committee. The

Nomination and Remuneration Committee undertakes appropriate checks on any potential candidates before a person is appointed

by the Board or put forward to shareholders as a candidate for election as a director. The Company provides shareholders with

all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. This information is

provided in the notice for the Annual General Meeting. Once appointed, the Nomination and Remuneration Committee oversees

processes to support a director’s induction and ongoing professional development and training opportunities. Ongoing professional

Reliance Worldwide Corporation LimitedAnnual Report 2019Corporate Governance StatementCORPORATE GOVERNANCE STATEMENTdevelopment and training activities for directors may include visits to operational facilities, new product demonstrations presented by

the development team and management presentations.

The Board collectively and each Director individually has the right to seek independent professional advice at the Company’s expense,

subject to the approval of the Chairman or the Board as a whole.

Structure of the Board and Director independence

The composition of the Board at the date of this report is:

Stuart Crosby, Independent, Non-executive Chairman

Heath Sharp, Managing Director and Group Chief Executive Officer

Russell Chenu, Independent, Non-executive Director

Ross Dobinson, Independent, Non-executive Director

Sharon McCrohan, Independent, Non-executive Director

Details of the experience, qualifications and length of service of each current director are set out in the Directors’ Report.

The Board comprises a majority of independent directors. A director is considered to be independent where he or she is independent

of management and is free of any business or other relationship which could materially interfere with, or could reasonably be

perceived to interfere with, the exercise of their unfettered and independent judgement. The Board Charter sets out guidelines to assist

in considering the independence of Directors and the Board has adopted a definition of independence that is based on box 2.3 in the

ASX Recommendations. The Board will consider the materiality of any given relationship on a case-by-case basis. The Board reviews

the independence of each Non-Executive Director in light of information disclosed to it.

The Board considers that each of Russell Chenu, Stuart Crosby, Ross Dobinson and Sharon McCrohan are independent for the

purposes of the ASX Recommendations. Heath Sharp is not independent as he is an executive.

Board skills and experience

The Board seeks to have a mix of skills, personal attributes and experience amongst its members which is appropriate for the

requirements of the Company and to maximise its effectiveness in meeting its responsibilities for corporate governance and oversight.

The current Board composition provides the necessary experience and skills to meet the Company’s current needs. This includes

relevant business and industry experience, financial management and corporate governance knowledge. The skills matrix below sets

out the mix of skills and diversity that the Board currently has and is looking to achieve in its membership.

Strategic priorities/areas

Skills matrix

Industry experience

•

Industry and market experience

• Workplace health and safety

• Understanding of manufacturing
technology requirements, product
development and innovation

Growth & financial
management

• Business strategy, including identification

• Financial acumen and reporting

of risks and opportunities

• Debt and equity capital markets

•

International experience relevant to the
Group’s operations and expansion plans,
with a focus on North America, Europe and
Asia Pacific

Governance

• Board experience, including listed

• Social responsibility and sustainability

companies

• Remuneration and human resources

• Corporate governance and regulatory

• Succession planning

compliance

The Board is committed to reviewing the performance of non-executive directors and the Board as a whole. Annually, the Board,

with the assistance of the Nomination and Remuneration Committee, undertakes a performance evaluation of individual directors,

Board Committees, the CEO and the Board itself. A formal review was undertaken during July and August 2019 which took the form

of a questionnaire seeking written feedback from each of the directors about the effectiveness and performance of the Board and its

Committees. Analysis of the data indicates that the Board and Committees are considered to be operating effectively.

CORPORATE GOVERNANCE STATEMENTCommittees of the Board

The Board has established the following Committees to assist in discharging its responsibilities:

• Audit and Risk Committee

• Nomination and Remuneration Committee

Each Committee is governed by a Board approved charter setting out its duties and responsibilities. Copies of each charter can be

viewed on the Company’s website.

Each Committee is chaired by an independent director and comprises only independent Non-executive Directors. Details of the

relevant qualifications and experience of the members of each Committee, the number of times each Committee met throughout the

reporting period and the attendance of each Committee member at those meetings are set out in the Directors’ Report.

The members of each Committee at the date of this report are:

Audit and Risk Committee

Russell Chenu (chair)

Ross Dobinson

Sharon McCrohan

Nomination and Remuneration Committee

Stuart Crosby (chair)

Ross Dobinson

Sharon McCrohan

The Audit and Risk Committee’s responsibilities include overseeing the Company’s:

•

relationship with the external auditor and the external audit function generally;

internal audit function generally;

• preparation of the financial statements and reports;

•

financial controls and systems; and

• process of identification and management of risk, including matters relating to taxation risk.

The responsibilities of the Nomination and Remuneration Committee include:

•

reviewing and recommending to the Board remuneration and employment arrangements for the CEO and the Non-Executive

Directors;

•

reviewing and approving remuneration and employment arrangements for the CEO’s direct reports;

• overseeing the operation of the Company’s employee equity incentive plans and recommending to the Board whether offers are to

be made under any or all of the Company’s employee equity incentive plans in respect of a financial year;

• approving the appointment of remuneration consultants for the purposes of the Corporations Act;

•

reviewing and recommending to the Board the Remuneration Report prepared in accordance with the Corporations Act for

inclusion in the annual Directors’ Report;

•

reviewing and facilitating shareholder and other stakeholder engagement in relation to the Company’s remuneration policies and

practices;

• assisting the Board in developing a Board skills matrix;

•

reviewing and recommending to the Board the size and composition of the Board including reviewing Board succession plans;

reviewing and recommending to the Board the criteria for nomination as a Director and the membership of the Board more

generally;

• assisting the Board in relation to the performance evaluation of the Board, its Committees and individual Directors;

•

ensuring that processes are in place to support Director induction and ongoing education and regularly reviewing the effectiveness

of these processes;

•

in accordance with the Diversity Policy, reviewing the measurable objectives for achieving gender diversity set by the Board on an

annual basis and recommending any changes to the Board; and

• on an annual basis, reviewing the relative proportion of women and men on the Board, in senior executive positions and in the

workforce at all levels of the Group.

Reliance Worldwide Corporation LimitedAnnual Report 2019Corporate Governance StatementCORPORATE GOVERNANCE STATEMENTCompany Secretary

The Company Secretary is accountable directly to the Board, through the Chairman, on all matters to do with the proper functioning of

the Board. The Company Secretary is responsible for coordination of all Board and Committee business, including agendas, meeting

papers, minutes, communication with regulatory bodies and the ASX, and all statutory and other filings. The Company Secretary also

supports the Board and its Committees on governance matters in conjunction with senior executives. All Directors have direct access

to the Company Secretary.

Diversity

The Company recognises that people are its most important asset and is committed to the maintenance and promotion of workplace

diversity. Diversity drives the Company’s ability to attract, retain, motivate and develop the best talent, create an engaged workforce,

deliver the highest quality services to its customers and continue to grow the business. The Board has formally approved a Diversity

Policy in order to address the representation of women in senior management positions and on the Board and to actively facilitate

a more diverse and representative management and leadership structure. The policy sets out the manner in which the Company’s

diversity strategies will aim to achieve the objectives of the policy. A copy of the policy is available on the Company’s website at

www.rwc.com.

The Company’s vision for diversity incorporates a number of different factors, including gender, ethnicity, disability, age and educational

experience. The Diversity Policy includes requirements for the Board to set measurable objectives for achieving gender diversity and to

assess annually both the objectives and the Company’s progress in achieving them.

The Board, through the Nomination and Remuneration Committee, continues to have a focus on achieving a balanced representation

of women in senior roles and on the Board. This includes a process of active assessment and recruitment of female representation on

the Board.

The Company has submitted its Workplace Gender Equality Public Report for its Australian operations in compliance with the

Workplace Gender Equality Act 2012 (Cth). A copy can be viewed at www.wgea.gov.au. The Group’s total number of employees at

30 June 2019 was 2,342 of which 810 (34.5%) were female. Women are represented in professional and support roles across all

departments.

Measurable Diversity Objectives

The following table sets out approved diversity objectives for FY2019, key plans for achieving those objectives and progress to date

towards implementing the plans. These plans and objectives will continue to be pursued during the 2020 financial year.

CORPORATE GOVERNANCE STATEMENTObjectives

Plans

Progress to date

Promote a culture of diversity,
inclusion and opportunity

• Continuing focus on increasing female
representation at Board and senior
management level.

• Continuing to review Board composition,
including undertaking an active search for
additional directors.

•

Introduce an annual engagement survey
to give all employees the opportunity to
provide feedback on issues and potential
barriers to a diverse and inclusive
workplace.

• Consider documenting a formal workplace

level inclusion and diversity policy.

• Consider establishing an inclusion and

diversity council to focus on developing a
strong pipeline of diverse talent.

•

Introduce appropriate education and
development programs to raise knowledge
and understanding of the benefits of
diversity practices.

• RWC has partnered with a diversity

consulting firm, to develop an inclusion
and diversity road map. The consulting
firm is holding diagnostic interviews
with employees from all regions and
levels of the organisation to gather their
input for consideration into the build
out of RWC’s diversity road map. The
roadmap is expected to define inclusion
and diversity as being broader than only
gender considerations. Recommendations
are expected to be received by the fourth
quarter of 2019.

•

Inclusion and Diversity Council was
established in August 2018.

• Updated Corporate values introduced

which include integrity and inclusiveness.

• The Americas region piloted an Employee
Engagement Survey in September 2018. A
global roll out of the survey is expected to
be undertaken in the next 12 months.

• Whistleblower program has been

introduced, including an Ethics Hotline
service and case management system.
This program assists RWC in promoting
a safe and inclusive workplace while
providing employees with an avenue to
speak up in confidence.

Recruitment and selection
processes to seek out
candidates from diverse
backgrounds

• Promote RWC as a diverse employer with

• Diversity Council is considering setting

an inclusive culture.

• Develop inclusive recruiting practices.

specific goals around recruiting, with an
initial focus on executive appointments.
For example, a minimum percentage to be
included in the selection pool to comprise
diverse candidates. Final selection will
continue to be merit based.

Provide flexible work practices

• Review the paid parental leave policies for

• During FY2019, 24 employees commenced

each country.

• Track the percentage of females taking
parental leave that return to work.

• Continue developing policies supporting

and implementing defined flexible working
arrangements.

maternal (12), paternal (11) or shared
parental leave (1). Five employees taking
maternal leave have since returned to
work, six remain on leave and there is one
non-returning employee. All employees
who took paternal or shared parental
leave have returned to work.

• Workplace policies continuing to be

reviewed for consistency. Now including
John Guest policies. Differences in
legislative requirements across countries.

Reliance Worldwide Corporation LimitedAnnual Report 2019Corporate Governance StatementCORPORATE GOVERNANCE STATEMENTAct ethically and responsibly

The Board recognises the need to observe the highest standards of ethics, integrity and behaviour. Accordingly, the Board has adopted

a formal Code of Conduct which outlines how the Company expects its senior executives, employees and Directors to behave during

the course of their employment in dealing with employees, suppliers and customers. Business must be conducted honestly and

ethically, applying best skills and judgment, and for the benefit of customers, employees, shareholders and the Company alike. People

should be treated with dignity and respect as part of creating an inclusive and supportive workplace. The key aspects of the Code of

Conduct are to:

•

comply with all Company and Group policies, procedures, rules and regulations;

• be honest and fair in dealings with customers, clients, co-workers, Group management and the general public;

• protect from unauthorised use any information, records or other materials acquired during the course of employment with the

Group; and

•

respect the Group’s ownership of assets and property.

A copy of the Code of Conduct is available on the Company’s website. The key aspects of this code are reflected in policy handbooks

provided to employees.

The Group recently embraced a new statement of vision and values. While the statement may be new, the commitment to upholding

the Group’s values is an enduring part of our culture. These core values embrace integrity, support, inclusiveness and accountability.

The Group maintains an absolute commitment to ensuring its people always act in a manner that is consistent with all relevant laws,

rules and regulations governing the workplace. Together these are designed to guide the way the Group does business on a daily basis

and also the way people treat each other in the workplace. We believe that living these values every day delivers a more productive

and effective workplace which assists us to recruit the level of talent we continually strive to bring into the Group.

In addition to the Code of Conduct, the Board has approved governance policies to guide expectations for behaviour, actions and

commercial relationships. These include a Continuous Disclosure Policy, External Audit Policy, Non-Audit Services Policy, Diversity

Policy and a Securities Dealing Policy. The Board has also approved a Tax Governance Framework which sets out the Company’s

approach to tax risk management and governance, tax strategy and dealing with revenue authorities in jurisdictions in which the Group

has operations. The Group is committed to paying the correct amount of tax in jurisdictions in which it operates.

External Auditor

The Company’s external auditor, KPMG, was appointed in 2016. KPMG representatives are invited to all meetings of the Audit and Risk

Committee and receive the papers for each meeting. A KPMG representative attends the Company’s Annual General Meeting and is

available to answer questions from shareholders relevant to the conduct of the audit and the preparation and content of the auditor’s

report.

The Company has an approved External Audit Policy which governs the appointment and assessment of the external auditor, auditor

independence and rotation of the audit partner. The Company has also adopted a policy on non-audit services which may be provided

by the external auditor. The external auditor is prohibited from providing services which would create a real or perceived threat to audit

independence. The Audit and Risk Committee monitors compliance with the policy with delegated authority for approving certain

non-audit services up to specified limits granted to the Group Chief Financial Officer.

KPMG provides an independence declaration which is included in the Directors’ Report issued with each annual and half year financial

report. The declaration states KPMG’s view on whether or not it has contravened auditor independence requirements set out in the

Corporations Act 2001 or any applicable professional code of conduct in relation to the audit. KPMG’s declaration for the year ended

30 June 2019 states its view that there have not been any such contraventions.

Continuous Disclosure obligations

The Company has adopted a Continuous Disclosure Policy which sets out procedures aimed at ensuring the Company fulfils its

obligations in relation to the timely disclosure of material price-sensitive information. The Company has an obligation to keep the

market fully informed of any information it becomes aware of concerning the Company which may have a material effect on the price

or value of the Company’s securities, subject to certain exceptions. A copy of the Continuous Disclosure Policy is available on the

Company’s website.

CORPORATE GOVERNANCE STATEMENTA Disclosure Committee has been formed to oversee and monitor compliance with the Continuous Disclosure Policy. The Disclosure

Committee comprises the Chairman, Group Chief Executive Officer, Group Chief Financial Officer, Company Secretary and Head of

Investor Relations. Responsibilities of the Disclosure Committee include:

•

ensuring the Company complies with its continuous disclosure requirements;

reviewing information which is brought to its attention to determine if there is a disclosable matter and, if so, whether any Listing

Rule non-disclosure exception applies;

• overseeing and coordinating disclosure of information to the ASX, analysts, brokers, shareholders, the media and the public;

•

establishing and maintaining the Company’s disclosure policies and procedures and ensuring that there is an adequate system in

place for the disclosure of all material information to the ASX and other authorities in a timely fashion; and

•

educating management and staff on the Company’s disclosure policies and procedures.

Communicating with Shareholders

The Company aims to communicate all important information relating to its shareholders in a timely manner. The Company also

recognises that potential investors and other interested stakeholders may wish to obtain information about the Company from time to

time. To achieve this, the Company communicates information through a range of forums and publications, including the Company’s

website, shareholder meetings, ASX announcements, annual reports and presentations. The Company also has in place an investor

relations program to facilitate two-way communication with investors. The process for communicating with shareholders and other

parties is documented in the Continuous Disclosure Policy. Shareholders have an option to receive communications electronically by

providing relevant details to the Company’s share registry. The website also contains a facility for shareholders to direct questions to

the Company.

The Board encourages the attendance and participation of shareholders at general meetings. Notices of meetings, including proposed

resolutions, are issued in advance of meetings in accordance with legal requirements and allow for shareholders to send written

questions to the Company’s external auditor where applicable.

Recognising and managing risk

The Audit and Risk Committee assists the Board with and makes recommendations on matters relating to risk management

responsibilities. The Committee’s primary role with respect to risk management and compliance is to review and report to the Board

that:

• adequate policies and processes have been designed and implemented to manage identified risks;

• a regular program of audits is undertaken to test the adequacy of and compliance with prescribed policies; and

• proper remedial action is undertaken to redress areas of weakness.

The Company’s risk management framework is reviewed at least annually by the Committee to satisfy itself that the framework

continues to be sound. Management is responsible for the development and implementation of effective risk management and

internal compliance and control systems based on the risk management policies adopted by the Board. This includes having robust

processes in place to identify and then manage key business risks. Progress reports on the Enterprise Risk Framework are presented to

the Audit and Risk Committee for consideration.

The Board receives a written declaration from the CEO and CFO prior to approving the Company’s financial statements for a reporting

period. The declaration includes statements from the CEO and the CFO that, in their opinion, the financial records have been properly

maintained and the financial statements comply with appropriate accounting standards and give a true and fair view of the financial

position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and

internal control which is operating effectively in all material respects.

Internal Audit

An internal audit function has been established to evaluate and provide recommendations to improve the effectiveness of the

Company’s risk management, internal control and governance processes. Internal audit functions are provided by internal resources

with assistance from an independent externally appointed provider where considered appropriate. The head of the internal audit

function has direct access to the Chairman of the Audit and Risk Committee and provides reports to the Committee on progress and

achievements against an approved internal audit work program.

Reliance Worldwide Corporation LimitedAnnual Report 2019Corporate Governance StatementCORPORATE GOVERNANCE STATEMENTEconomic, environmental and social sustainability risks

Economic sustainability risks

The Group is exposed to economic sustainability risks associated with its business activities. Details of key economic sustainability

risks and how these are managed are discussed in the Material Business Risks section of the Directors’ Report for the year ended 30

June 2019.

Environmental and social sustainability risks

The Group has exposure to environmental and social sustainability risks. Manufacturing operations primarily involve brass forging

and machining, PEX extrusion, plastic moulding and product assembly. The manufacture of the Group’s products involves the use of

heavy machinery and hazardous processes. There may be an incident or accident at a facility that results in serious injury or damage

to property, which in turn may result in a penalty being imposed by a regulatory authority, an interruption of manufacturing operations,

a worker’s compensation claim, a work health and safety claim or a claim for damages. Such claims or events may not be covered by

insurance or may exceed insured limits. They may also adversely impact business reputation. Any such occurrences could therefore

adversely impact the Group’s operations and profitability. The Group seeks to manage and minimise the impact of these risks through

health and safety initiatives along with operational and product initiatives.

In terms of health and safety initiatives, the Group is committed to providing a safe and healthy workplace for all our employees and

contractors. We aim for zero harm across the group. A robust health and safety management system is maintained which assists in

the identification of potential issues and hazards and in the development of strategies and initiatives to mitigate the risk of harm. The

Group’s safety performance remains the highest priority and is regularly reviewed by management and the Board. During FY2019, we

augmented the strength of our Group Operations team, with a clear remit on safety. We also added dedicated safety personnel in

each division, significantly increasing our experience and expertise in this critical area. Actions to further deliver improvements in health

and safety performance in FY2020 will include increased safety leadership training, the implementation of near-miss and hazard

reporting (an important leading indicator), development of higher standards for incident investigation and communication and the

establishment of employee safety committees.

Historically, the environmental impact of our processes has been minimal and the Company believes it meets current environmental

standards in all material respects. Manufacturing operations have to date not been significantly affected by environmental laws and

regulations.

The Group’s operations and properties are subject to environmental protection laws and regulations, including those regulating

air emissions, water discharges, waste management and disposal and workplace safety. If the Group were to breach or otherwise

fail to comply with any such law or regulation, the cost of curing a breach or resolving associated enforcement actions initiated by

government authorities could be substantial and may materially reduce the Group’s profit in a given reporting period. The Group

adopts appropriate risk management and internal control processes to minimise the risk of breaching these laws and regulations.

The Company believes that it operates its business in compliance with all regulatory and government requirements including

environmental, health and safety, workplace and related regulations. The Group carries out required procedures with the aim of

ensuring compliance with all applicable safety and product performance regulations.

Operational initiatives undertaken by the Group in recent years include:

• working with equipment manufacturers to introduce more efficient production processes into next generation machinery;

•

installation of LED lighting at manufacturing facilities and solar panels in some locations;

focusing on recycling of unused raw materials to reduce wastage (for example, brass swarf is collected and returned to our

suppliers to recycle back into new bars);

recycling programs introduced to reduce landfill, including use of shrink-wrapping and cardboard recycling;

implementing water recycling in assembly applications to reduce energy costs; and

identifying better ways to ship products to reduce the number of deliveries leading to less transportation requirements and lower

greenhouse emissions.

CORPORATE GOVERNANCE STATEMENTFrom a product perspective, the Group continues to develop and refine products that will mitigate potential water damage and

wasted water, improve safety, wellbeing and energy efficiency (thereby reducing energy costs) and enable more effective and efficient

installation and product operation. The Group invests extensively in research and development at facilities in Australia, the UK and

the USA to achieve these aims. For example, the Streamlabs range has been developed specifically to mitigate water damage and

wastage. Holdrite’s range includes products which reduce water consumption and attenuate noise from pipe systems. The Group’s

range of water pressure, temperature and thermostatic mixing valves are intended to protect and safeguard hot water systems while

creating safe and comfortable homes and workspaces.

The Group also actively participates in local communities and aims to support social issues and causes identified by its employees.

Community involvement occurs through corporate donations, sponsorships, fund raising and employee participation.

Further information on the Group’s governance, operations, approach to social responsibility and involvement in communal activities

is available on the Company’s website.

The Company is in the process of preparing a social responsibility report for release during FY2020.

Remuneration

Details of the Company’s key remuneration policies and practices, Non-executive Director remuneration, senior executive remuneration

and the employment terms of executive Key Management Personnel are discussed in the annual Remuneration Report. Details of the

Company’s long term incentive plan, which provides for equity based remuneration, are also set out in the Remuneration Report. The

performance of Key Management Personnel and other senior executives during FY2019 has been subject to review and evaluation.

Discussions have been held with relevant executives.

Dealing in Securities

The Securities Dealing Policy is intended to explain the types of conduct in relation to dealings in securities that are prohibited by

law and establish procedures for the buying and selling of securities that protect the Company, Directors and employees against the

misuse of unpublished information, which could materially affect the price or value of the Company’s securities. The policy sets out

when and how dealing in the Company’s securities may or may not occur. Hedging of equity received by senior executives under the

long term incentive plan is not permitted prior to vesting. A copy of the policy is available on the Company’s website.

Reliance Worldwide Corporation LimitedAnnual Report 2019Corporate Governance StatementCORPORATE GOVERNANCE STATEMENTDIRECTORS’ REPORT
For the year ended 30 June 2019

The Directors present their report together with the Financial Report comprising Reliance Worldwide Corporation Limited (“the

Company”) and its controlled entities (together “RWC” or “the Group”) for the financial year ended 30 June 2019 (“reporting period”)

and the Auditor’s report thereon.

The following sections, which are presented separately, form part of and are to be read in conjunction with this Directors’ Report:

• Operating and Financial Review; and

• Remuneration Report

Directors

The Directors of the Company at any time during or since the end of the reporting period were:

Stuart Crosby (Chairman)

Appointed

11 April 2016

Heath Sharp (Group Chief Executive Officer and Managing Director)

19 February 2016

Russell Chenu

Ross Dobinson

Sharon McCrohan

11 April 2016

27 February 2018

Jonathan Munz was a Director of the Company during the reporting period until 4 March 2019 when he retired from the Board.

Details of the experience and qualifications of Directors in office at the date of this report are:

Stuart Crosby

Independent Non-Executive Chairman

Chairman of Nomination and Remuneration Committee

Mr. Crosby was appointed Chairman on 4 March 2019. Mr. Crosby was the Chief Executive Officer and President of Computershare

Limited for nearly eight years until June 2014. Mr. Crosby previously held a number of senior executive positions across the

Computershare business. Prior to joining Computershare, Mr. Crosby worked for the Australian National Companies and Securities

Commission, the Hong Kong Securities and Futures Commission and at ASX Limited. Mr. Crosby is Chair of AMES Australia.

Other listed company directorships in the past 3 years: None

Heath Sharp

Group Chief Executive Officer and Managing Director

Mr. Sharp was appointed Group Chief Executive Officer in 2015. He joined RWC in 1990 as a Design Engineer in the Brisbane based

Product Development team. He has worked in each international division of the business throughout his career, holding senior

management positions in Engineering, Product Management, Sales and Operations. He was appointed General Manager of the Cash

Acme facility in Alabama following its acquisition by RWC in 2002. He returned to lead the Australian division in late 2004, the largest

operation at the time. Mr Sharp moved back to the USA in 2007 to re-join the US business and steer its rapid growth in RWC’s largest

market. Mr. Sharp held the roles of President of the USA business and global Chief Operating Officer prior to his current role as Group

Chief Executive Officer. Mr. Sharp holds a Bachelor of Mechanical Engineering degree from the University of Southern Queensland.

Other listed company directorships in the past 3 years: None

DIRECTORS’ REPORT
For the year ended 30 June 2019

Russell Chenu

Independent Non-Executive Director

Chairman of Audit and Risk Committee

Mr. Chenu is an experienced corporate and finance professional who held senior finance and management positions with a number

of ASX listed companies. His last executive role was Chief Financial Officer of James Hardie Industries plc from 2004 to 2013. He is

currently a Director of James Hardie Industries plc, CIMIC Group Limited and Metro Performance Glass Limited.

Mr. Chenu holds a Bachelor of Commerce from University of Melbourne and an MBA from Macquarie Graduate School of

Management, Australia.

Other listed company directorships in the past 3 years:

CIMIC Group Limited (since June 2014)

James Hardie Industries plc (since August 2014)

Metro Performance Glass Limited (since July 2014)

Ross Dobinson

Independent Non-Executive Director
Member of Audit and Risk Committee

Member of Nomination and Remuneration Committee

Mr. Dobinson has a background in venture capital and investment banking and is currently the Managing Director of TSL Group Ltd.

He is a founder, former CEO and current Non-Executive Chairman of ASX listed Acrux Limited. Mr. Dobinson was previously a director

of ASX listed companies Starpharma Holdings Limited and Roc Oil Company Limited, a former Chairman of ASX listed Palla Pharma

Limited (formerly TPI Enterprises Limited) and a former Director of Racing Victoria Limited.

Mr. Dobinson holds a Bachelor of Business (Accounting) from the Queensland University of Technology.

Other listed company directorships in the past 3 years:

Acrux Limited (since 1998)

Sharon McCrohan

Independent Non-Executive Director

Member of Audit and Risk Committee

Member of Nomination and Remuneration Committee

Ms. McCrohan is an experienced media and strategic communications consultant with a career spanning almost 30 years.

Ms. McCrohan has been an advisor to Federal and State government leaders and cabinets, private sector boards, sporting bodies,

statutory authorities, charities and government agencies. Ms. McCrohan has extensive experience in media and communications,

policy development, government and stakeholder relations and executive team leadership. Ms. McCrohan is a non-executive director

of Racing Victoria Limited and the Ovarian Cancer Research Foundation Board.

Ms. McCrohan holds a Bachelor of Arts (Journalism) from Royal Melbourne Institute of Technology.

Other listed company directorships in the past 3 years: None

Company Secretary

David Neufeld

Mr. Neufeld has been Company Secretary since 1 April 2016. He has worked in chartered accounting and corporate organisations for over

35 years and has nearly 15 years’ experience as Company Secretary and Chief Financial Officer of ASX listed companies. Mr. Neufeld

has extensive experience in financial and management reporting, corporate compliance, governance and risk management, audit and

business acquisitions and divestments. Mr. Neufeld holds a Bachelor of Commerce (Honours) from University of Melbourne and is a

member of Chartered Accountants - Australia & New Zealand and The Australian Institute of Company Directors.

Reliance Worldwide Corporation LimitedAnnual Report 2019Directors’ ReportDIRECTORS’ REPORT
For the year ended 30 June 2019

Director Meetings

The number of Board meetings and meetings of Board Committees held and the number of meetings attended by each of the

Directors of the Company during the reporting period are listed below.

Director

Russell Chenu

Stuart Crosby

Ross Dobinson

Sharon McCrohan

Jonathan Munz

Heath Sharp

Board Meetings

Audit and Risk Committee
Meetings

Nomination and
Remuneration
Committee Meetings

Held1

Attended1

Held1

Attended1

Held1

Attended1

–

Directors who are not members of Board Committees have a standing invitation to attend Committee meetings and do attend from

time to time. The above table only reflects attendance at Committee meetings by members of the relevant Committees.

Environmental Regulation and Performance

RWC’s manufacturing operations have to date not been adversely affected by environmental laws and regulations. Environmental and

social sustainability are core to RWC’s operations and important to its strategy. RWC seeks to minimise the impact of its operations on

the environment through initiatives such as minimising waste by recycling production materials. Manufacturing operations primarily

involve brass forging and machining, PEX extrusion, plastic moulding and product assembly. Historically, the environmental impact of

these processes has been minimal and RWC believes it meets current environmental standards in all material respects.

Principal Activities

The principal activities of RWC are the design, manufacture and supply of high quality, reliable and premium branded water flow,

control and monitoring products and solutions for the plumbing and heating industry.

Significant Changes in the State of Affairs

There were no significant changes in the affairs of RWC during the reporting period.

Material Business Risks

Set out in the table below are:

• a summary of specific material business risks which could impact upon RWC’s ability to achieve its business objectives and/or its

financial results and position; and

• management plans to mitigate against each risk.

1. Number of meetings held and attended during the period the Director was a member of the Board or Committee.

DIRECTORS’ REPORT
For the year ended 30 June 2019

The list is provided in no particular order and is not exhaustive.

Risk

Description

Management plans

RWC is exposed to
changes in general
economic conditions,
legislation and
regulation which may
impact activity in
RWC’s end-markets.

Loss of customer risk

Foreign currency risk

• RWC’s financial performance is largely
dependent on activity in the residential
and commercial repair and renovation and
new construction end-markets in the North
American, Asia Pacific and European regions.
Activities in these end-markets are impacted
by changes in general economic conditions;
and to legislation and regulation (for example,
changes to plumbing codes; tariff rates and
import duties; and Brexit). Activities in the
repair end-market may also be impacted by
extreme weather events.

• A prolonged downturn in general economic

conditions either globally or in any geographic
region in which RWC operates may impact
demand for plumbing services in RWC’s end-
markets, thereby decreasing demand for RWC’s
products and services.

• Any such downturn may have a material

adverse impact on RWC’s operations and
financial results.

• There can be no guarantee that key customers
will continue to purchase the same or similar
quantities of RWC’s products as they have
historically. Competition, including the price
of competing products relative to RWC’s
products, could impact upon demand for
RWC’s products.

• The loss of any of RWC’s key customers or a

significant reduction in the volume of products
purchased by one or more key customers may
adversely impact RWC’s financial performance.

• RWC’s results are impacted by exchange rate
movements. In particular exposure to USD,
GBP, Euro and Yuan.

• Furthermore, as RWC expands globally, it

becomes exposed to additional currencies and
a higher proportion of its net sales, profitability,
cash flows and financial position will be
affected by exchange rate movements.

• Processes in place to be able to respond to

changes in conditions and adjust production,
delivery and raw materials purchasing
requirements as well as manage operating
and overhead costs as considered necessary
and appropriate. Key economic indicators
are monitored for data which will assist the
business in being proactive in its decision
making.

• Continuing focus on differentiated products
and solutions as well as customer service.

•

Investment in research and development to
provide innovative products and remain the
supplier of choice.

• Continue business expansion and sales activity

to diversify the customer base.

• RWC does not typically hedge its foreign

exchange exposures. RWC currently benefits
from a partial “natural hedge” against key
currency movements as Australia’s sales to
the USA are denominated in US dollars and
the majority of raw materials and components
purchased by Australia for use in production for
the USA are denominated in US dollars.

• Consideration is given to alternative strategies

to manage foreign exchange risk as the
business expands and exposure to other
currencies increases.

Reliance Worldwide Corporation LimitedAnnual Report 2019Directors’ ReportDIRECTORS’ REPORT
For the year ended 30 June 2019

Risk

Description

Management plans

Events affecting
manufacturing
or delivery capability

• The equipment and management systems
necessary for the operation of RWC’s
manufacturing facilities may break down,
perform poorly, fail or be impacted by a fire
or major weather event (such as a snow
storm, tornado, cyclone or flood) resulting in
manufacturing delays, increased manufacturing
costs or an inability to meet customer demand.

• Events could also arise which impact upon

RWC’s ability to ship and deliver product from
its facilities in a timely manner.

• Any significant or sustained interruption to

RWC’s manufacturing or delivery processes
may adversely impact RWC’s net sales and
profitability.

Materials supply and
price risk

• Any adverse change in RWC’s ability to procure
raw materials, a material increase in the cost
of raw materials or any increase in indirect
production costs would result in an increase in
RWC’s overall costs. RWC’s profitability could
be adversely impacted if it is unable to pass on
such cost increases to its customers.

• RWC has 15 manufacturing facilities located
in four countries. This geographic dispersion
reduces the impact on total production output
if an adverse event occurs at one or more of the
sites.

• RWC has established long term machine
maintenance support programs with key
suppliers.

• RWC carries stores of key maintenance

spare parts to support timely repairs and
maintenance.

•

Investment in high quality machinery and
extensive operator training to enable machine/
operator substitution in the event of machinery
breakdown.

• Safety hazard training undertaken and
appropriate onsite procedures in place.

• Business interruption insurance in place.

• RWC aims to have appropriate agreements in

place with major suppliers.

• Active management of procurement processes.

• Continuing program to “dual source” key

materials and components to enable price
verification and reduce risk of supplier
concentration.

• RWC periodically benchmarks prices for key

material/product supply.

Impact of product
recalls, product
liability claims or
claims against RWC
where a product has
not been correctly
installed by a third
party.

Key personnel risk

• RWC is exposed to the risk of product recalls

• Continuing investment in production

and product liability claims where a defect in a
product sold or supplied by RWC or incorrectly
installed by a third-party contractor could result
in, results in or is alleged to have resulted in,
personal injury or property damage.

• RWC may suffer loss as a result of claims for
which it is not insured or if cover is denied or
exceeds available limits.

• RWC’s success depends on the continued
active participation of its key personnel.

•

If RWC were to lose any of its key personnel
or if it were unable to employ additional or
replacement personnel, its operations and
financial results could be adversely affected.

technology and quality control processes to
minimise the risk of product defects.

• RWC maintains rigorous quality assurance
accreditation in all of its manufacturing/
distribution locations. These quality systems
are regularly audited by external third parties.

•

Investment in training of professional
contractors on correct installation and use of
products.

• Maintain appropriate insurance policies.

• RWC seeks to employ high quality personnel
who are remunerated by market competitive
arrangements.

• Historically, there is a good record of retaining

key staff.

Cyber security

• Technological advancements and risks of

•

IT security policies and recovery plans in place.

cyber-crime can impact the integrity of RWC’s
IT systems and make them vulnerable to attack
if appropriate security measures are not in
place.

• Ongoing system monitoring and testing,
including review of security protocols.

• Appropriate insurance policies.

• Alerts and reminders sent to employees.

DIRECTORS’ REPORT
For the year ended 30 June 2019

Dividends

A fully franked final dividend of 3.0 cents per share for the financial year ended 30 June 2018 was paid to eligible shareholders on

11 October 2018.

A fully franked interim dividend of 4.0 cents per share for the financial year ended 30 June 2019 was paid to eligible shareholders on

29 March 2019.

Since the end of the reporting period, the Directors have resolved to declare a final dividend for the financial year ended 30 June 2019

of 5.0 cents per share. The dividend will be franked to 100%. The record date for entitlement to the dividend is 11 September 2019. The

dividend is payable to eligible shareholders on 11 October 2019.

The aggregate dividends paid or payable for the financial year ended 30 June 2019 total $71.1 million (2018 - $42.1 million).

The Company does not have a dividend reinvestment plan.

Events subsequent to reporting date

The Directors are not aware of any matter or circumstance that has occurred since the end of the reporting period that has significantly

affected or may significantly affect the operations of RWC, the results of those operations or the state of affairs of RWC in subsequent

financial reporting periods which has not been covered in this report or the financial statements.

Likely Developments and Prospects

Details of likely developments for RWC and prospects for future financial reporting periods are contained in the Operating and

Financial Review.

Share Options

Details of options granted under the Company’s Equity Incentive Plan are set out in the Remuneration Report. No other share options

have been granted by the Company at the date of this report.

Directors’ interests

Details of Directors’ interests in the Company’s issued securities are set out in the Remuneration Report.

Indemnification and Insurance of Officers

The Company’s Constitution provides that the Company may indemnify any current or former Director, Secretary or executive officer of

the Company or of a subsidiary of the Company out of the property of the Company against every liability incurred by a person in that

capacity whether civil or criminal or of an administrative or investigatory nature in which the person becomes involved because of that

capacity.

In accordance with the provisions of the Corporations Act 2001, the Company has a Directors’ and Officers’ Liability policy which

covers all past, present or future Directors, Secretaries and executive officers of the Company and its controlled entities. The terms of

the policy specifically prohibit disclosure of details of the amount of the insurance cover and the premium paid.

The indemnification and insurances are limited to the extent permitted by law.

Reliance Worldwide Corporation LimitedAnnual Report 2019Directors’ ReportDIRECTORS’ REPORT
For the year ended 30 June 2019

Audit and Non-Audit Services

Fees paid or payable by RWC for services provided by KPMG, the Company’s auditor, during the reporting period were:

KPMG Australia

Audit services

Other assurance and non-audit services

• Tax compliance

• Other services

Total remuneration paid to KPMG Australia

Overseas KPMG offices

Audit services

Other assurance and non-audit services

• Tax compliance

Total remuneration paid to overseas KPMG offices

Total remuneration to KPMG

2019

398,600

99,300

30,000

527,900

398,100

217,600

615,700

1,143,600

The Directors, in accordance with advice from the Audit and Risk Committee which has considered the non-audit services provided

by KPMG during the financial year ended 30 June 2019, are satisfied that the provision of those non-audit services is compatible

with the general standard of independence for auditors imposed by the Corporations Act 2001 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 Company and have been reviewed by

the Audit and Risk Committee to ensure they do not impact the integrity and objectivity of the auditor; and

•

the non-audit services provided do not undermine the general principles relating to auditor’s independence as set out in APES110 -

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 Company, acting as an advocate for the Company or jointly sharing risks and

rewards.

Lead auditor’s independence declaration under Section 307C of the Corporations Act 2001

The lead auditor’s independence declaration set out on page 57 forms part of this Directors’ Report.

Rounding off

In accordance with the Australian Securities and Investments Commission Corporations (Rounding in Financial/Directors’ Reports)

Instrument 2016/191 values are rounded to the nearest thousand dollars, unless otherwise stated. Where an amount is $500 or less

the amount is rounded to zero, unless otherwise stated.

This report is made in accordance with a resolution of the Directors.

Stuart Crosby

Chairman

Melbourne

27 August 2019

Heath Sharp

Group Chief Executive Officer and Managing Director

REMUNERATION REPORT
For the year ended 30 June 2019 (audited)

(a)

Introduction

The Directors present the Remuneration Report of the Reliance Worldwide Corporation Limited group (“RWC” or “the Group”) for the

financial year ended 30 June 2019 (“FY2019” or “the reporting period”). This Remuneration Report forms part of the Directors’ Report

and has been audited in accordance with the requirements of the Corporations Act 2001 (Cth).

The Remuneration Report sets out remuneration arrangements for the Key Management Personnel (“KMP”) of RWC for the reporting

period. Under Australian Accounting Standards, the term KMP refers to directors (both non-executive directors and executive

directors) and those persons having the authority and responsibility for planning, directing and controlling the activities of RWC,

directly or indirectly.

All KMP held their positions for the entire period covered by this report unless otherwise stated. The KMP for the year ended 30 June

2019 were:

Name

Non-Executive Directors

Russell Chenu

Stuart Crosby

Ross Dobinson

Sharon McCrohan

Jonathan Munz1

Senior Executives

Heath Sharp

Gerry Bollman

Executive Position

Managing Director and Group Chief Executive Officer (“CEO”)

Group Chief Financial Officer (“CFO”)

For the remainder of this Remuneration Report, KMP are referred to as either Non-Executive Directors or Senior Executives as set out in

the above table.

(b) Remuneration framework and governance

The Board believes that the Company’s success depends upon the performance of all employees and that remuneration policies

should be structured to deliver positive benefits for the Company, shareholders and employees.

The Nomination and Remuneration Committee is responsible for reviewing and recommending to the Board the remuneration

arrangements for the CEO, the CEO’s direct reports, the Chairman and Non-Executive Directors. The Committee also oversees the

operation of the Company’s Equity Incentive Plan (“Plan”) and makes recommendations to the Board about whether or not offers are

to be made under the Plan.

In discharging its responsibilities, the Nomination and Remuneration Committee must have regard to the following policy objectives:

•

remuneration structures are to be equitable and aligned with the long term interests of the Company and its shareholders;

• attract and retain skilled executives, especially in the main markets where RWC operates (e.g. North America); and

•

structure short term and long term incentives that are challenging and linked to the creation of sustainable shareholder returns.

The Nomination and Remuneration Committee comprises only Non-Executive Directors and is chaired by an independent Director.

The Committee’s Charter is available on the Company’s website at www.rwc.com and further information regarding the Committee is

set out in the Company’s Corporate Governance Statement.

Remuneration consultants and other advisors

The Nomination and Remuneration Committee may seek independent advice from remuneration consultants and other advisors on

various remuneration related matters to assist it in performing its duties and in making recommendations to the Board. Remuneration

consultants and other advisors are required to engage directly with the Chairman of the Nomination and Remuneration Committee

as the first point of contact. During FY2019, consultants were engaged to provide benchmarking analysis and commentary on the

quantum of fees payable to Non-Executive Directors, including the Chairman. No remuneration recommendations were received from

remuneration consultants or other advisors during the reporting period.

1. Until 4 March 2019.

Reliance Worldwide Corporation LimitedAnnual Report 2019Remuneration ReportREMUNERATION REPORT
For the year ended 30 June 2019 (audited)

Review of remuneration strategy

During the 2019 financial year, the Nomination and Remuneration Committee focused on:

•

reviewing remuneration arrangements of executives, including Senior Executives, with a focus on the balance of fixed and variable

components, with the aim of providing competitive remuneration packages to attract and retain high calibre executives; and

•

‘at risk’ variable remuneration arrangements being appropriately aligned with business strategies and outcomes.

The Nomination and Remuneration Committee and the Board believe that the current remuneration framework adequately balances

the need to attract and retain the best people to run our business while ensuring that remuneration is linked clearly to shareholder

returns and remains comparable with an appropriate peer group. The Nomination and Remuneration Committee intends to maintain

this focus during FY2020.

Non-Executive Director remuneration

In order to maintain director independence, the remuneration of Non-Executive Directors is not linked to Company performance and is

currently comprised solely of cash fees (including applicable superannuation). This allows the Board to focus on governance and both

short and long-term strategy. Refer section (e) for further details.

The Company’s remuneration policy for Non-Executive Directors aims to ensure that the Company can attract and retain suitably

qualified and experienced Non-Executive Directors having regard to:

•

the level of fees paid to non-executive directors of other major Australian companies;

the size and complexity of RWC’s multi-national operations; and

the responsibilities and work requirements of Board members.

Senior Executive remuneration

The Board, through the Nomination and Remuneration Committee, is responsible for designing and reviewing remuneration policies

which align the remuneration of executives with the long term interests of shareholders. Remuneration packages for Senior Executives

are set to properly reflect a Senior Executive’s duties and responsibilities and to be competitive in attracting, retaining and motivating

appropriately qualified and experienced people capable of managing the Group’s operations and achieving its business objectives.

Remuneration arrangements are regularly reviewed with regard to various factors, including key performance objectives, an appraisal

process and relevant comparable information.

Senior Executive remuneration packages comprise:

•

fixed remuneration, represented by a base salary and contributions to superannuation or pension funds, as applicable;

eligibility for short term incentive (“STI”) awards subject to approved criteria being met with the Board retaining a negative

discretion in approving the award; and

•

‘at risk’ long term incentives (“LTI”).

Refer section (f) for further details.

REMUNERATION REPORT
For the year ended 30 June 2019 (audited)

(d) Company performance

The following table shows the financial performance of the Group during the financial periods ended 30 June 2016 to 30 June

2019. It is not possible to address the statutory requirement that the Company provides a five-year discussion of the link between

performance and reward in this Remuneration Report as the Company has been listed since April 2016.

Key performance indicators

Sales revenue ($m)

Reported EBITDA ($m)

Adjusted EBITDA ($m)2

Net profit before tax ($m)

Net profit (loss) after tax ($m)

Adjusted net profit (loss) after tax ($m)3

Share price at beginning of year ($)

Share price at end of year ($)

Financial year interim and final dividends declared ($)

Total dividends declared/NPAT ratio (%)

Basic earnings (loss) per share (cents)7

Diluted earnings (loss) per share (cents)7

FY2019

FY2018

FY2017

FY20161

1,104.0

242.5

263.2

176.7

133.0

152.0

5.364

3.524

71.1

53.5

17.0

16.8

769.4

135.4

150.9

99.3

66.0

78.6

3.345

5.364

42.1

63.8

12.3

12.1

601.7

120.7

96.3

65.6

3.095

3.345

31.5

48.0

12.5

12.4

98.3

17.3

0.8

(1.6)

2.875,6

3.095

–

(0.30)

RWC delivered record sales revenue and earnings in FY2019. The results were driven by the first full year contribution from John Guest,

following the acquisition which completed in June 2018, and continued growth in the Americas. The integration of the John Guest

business following acquisition has progressed well with first year earnings and synergy benefits achieved to at least the level expected.

Adjusted EBITDA for FY2019 was negatively impacted by several factors which are described in the separate Operating and Financial

Review. As a consequence of these factors Adjusted EBITDA, while a record result, did not meet the budgeted target for FY2019.

Total dividends declared for FY2019 represent 53.5% of NPAT which is within the intended payout ratio of 40% to 60% of NPAT.

Senior Executives did not receive a short term incentive award for FY2019. Refer section (f) below.

(e) Non-Executive Directors’ fees and arrangements

The Board, in accordance with the terms of the Company’s Constitution, has determined the remuneration to which each Non-

Executive Director is entitled for services as a Director. The total aggregate amount provided to all Non-Executive Directors for their

services as Directors in any financial year must not exceed the amount fixed by the Company at a general meeting of shareholders.

This maximum aggregate amount is presently fixed at $1.5 million as approved by shareholders at the 2018 Annual General Meeting.

Non-Executive Directors’ fees for FY2019 were:

Chairman - $300,000 (from 4 March 2019)

Base Non-Executive Director’s Fee - $130,000

Chair of Audit and Risk Committee - additional $50,000 (total $180,000)

Chair of Nomination and Remuneration Committee – additional $25,000 (total $155,000)

All fees include applicable superannuation.

1.
2.

FY2016 information covers the period from the Company’s IPO on 29 April 2016 through to 30 June 2016.
Adjusted EBITDA for FY2019 is Reported EBITDA before John Guest one-time integration/synergies costs incurred, final unwinding of a fair value
adjustment made at acquisition date to John Guest inventory and the impact in connection with timing of revenue recognition following adoption
of AASB 15; Adjusted EBITDA for FY2018 is Reported EBITDA before John Guest contribution and transaction costs expensed. Adjusted EBITDA is a
non-IFRS measure used by RWC to assess operating performance and has not been subject to audit or review.
Adjusted Net profit (loss) after tax for FY2019 and FY2018 reflects the reconciliation items (tax effected) which determine Adjusted EBITDA for each
of those periods. Adjusted NPAT is a non-IFRS measure used by RWC to assess operating performance and has not been subject to audit or review.

4. 790,094,765 issued ordinary shares.
5. 525,000,000 issued ordinary shares.
6. The share price disclosed as being at the beginning of the year in FY2016 was the share price on listing (29 April 2016).
7. Based on weighted average number of shares for the reporting period.

Reliance Worldwide Corporation LimitedAnnual Report 2019Remuneration ReportREMUNERATION REPORT
For the year ended 30 June 2019 (audited)

Fees payable to Non-Executive Directors were reviewed during FY2019, including fees payable to the Chairman. The review took into

account the size and scale of RWC’s business, the time commitment required from non-executive directors, particularly Committee

chairs, and that fees are payable to the Company Chairman from 4 March 2019. The Nomination and Remuneration Committee took

into account benchmarking analysis and commentary obtained from an independent consultant, which included comparison with

a peer group of ASX listed companies. Following the review, the Committee recommended a fee of $300,000 per annum (including

applicable superannuation) be paid to the Chairman and that no change be made to base Non-executive Director fees or Committee

fees. The Board approved the recommendation.

The fees set out above will continue to apply in FY2020, subject to any further review and recommendation to the Board by the

Nomination and Remuneration Committee.

Mr. Munz, Chairman until 4 March 2019, had waived his entitlement to any Non-Executive Director and committee fees for the initial

three years following the Company’s listing on the ASX.

No additional fees are payable to committee members other than to the Chairs of those committees as set out above.

Mr. Crosby has waived his entitlement to the additional fee for chairing the Nomination and Remuneration Committee with effect from

4 March 2019. This follows his appointment as Chairman of the Company.

Any Non-Executive Director who performs extra services, makes any special exertions for the benefit of the Company or who

otherwise performs services which, in the opinion of the Board, are outside the scope of the ordinary duties of a Non-Executive

Director, may, as determined by the Board, be remunerated for those services out of funds of the Company. No such fees were paid

or are payable for FY2019. Non-Executive Directors may also be reimbursed for travel and other expenses incurred in attending to the

Company’s affairs, including attending and returning from general meetings of the Company or meetings of the Board or committees

of the Board.

There are no retirement benefit schemes for Non-Executive Directors other than applicable statutory superannuation contributions.

(f) Senior Executive remuneration structure

Fixed Remuneration

The terms of employment for the Senior Executives contain:

• a fixed annual remuneration component comprising base salary and applicable superannuation/pension fund contributions; and

• other approved benefits (which may include items such as motor vehicles or vehicle allowances, mobile phone, travel allowances

and health cover).

Senior Executives are offered competitive fixed remuneration which seeks to ensure that RWC can both attract and retain a leadership

team capable of managing the complex issues facing the Group, whilst still ensuring parity with market levels. The Board considers

the USA to be the most comparable market for benchmarking remuneration arrangements for Senior Executives as the Group’s global

headquarters are in the USA and Senior Executives are based there. Consideration is also given to the multinational nature of RWC’s

operations, the industry in which RWC operates and the size of the business.

Short term incentive

STI is designed to be evaluated based on the achievement of agreed key performance conditions by Senior Executives. The key

performance conditions are outlined below and relate to the overall performance of the Group and relevant individual performance.

Following the end of the financial year, the Nomination and Remuneration Committee reviews and makes recommendations to

the Board as to whether or not STI awards should be made to eligible Senior Executives. The following criteria were applied by the

Nomination and Remuneration Committee in determining if a STI award should be made to Senior Executives for FY2019:

Objective

Nature

STI awards are determined by the Board following satisfaction of specific performance conditions.

50% payable in cash after release of the audited annual results and 50% deferred into shares in the

Company. Shares will be acquired on-market after release of the audited annual results and will be

subject to a holding lock for 12 months, with dividends accruing to the employee.

On Target Entitlement

CEO: 60% of base fixed remuneration (40.0% measured against RWC financial performance and

20.0% measured against personal Key Performance Indicators (“KPIs”), both as described below)

CFO: 25% of base fixed remuneration (17.5% measured against RWC financial performance and 7.5%

measured against personal KPIs, both as described below)

REMUNERATION REPORT
For the year ended 30 June 2019 (audited)

Maximum Entitlement

CEO: 120% of base fixed remuneration (80.0% measured against RWC financial performance and

40.0% measured against personal KPIs, both as described below).

CFO: 50% of base fixed remuneration (35.0% measured against RWC financial performance and

15.0% measured against personal KPIs, both as described below).

Performance criteria

Budgeted EBITDA

The relevant portion of the STI award subject to financial performance will be measured by reference

to constant dollar performance against budgeted EBITDA (adjusted to exclude non-budgeted material
changes (for example, acquisitions) (“Budget”). The following vesting scale applies:

% of Budget achieved

0-95% of Budget

% of STI to be granted

Nil

Between 95% and 100% of Budget

Straight line pro-rating from Nil to On Target

Entitlement

100% of Budget

100% of On Target entitlement

Between 100% and 120% of Budget

Straight line pro-rating from On Target

Entitlement to Maximum Entitlement

120% of Budget

100% of Maximum Entitlement

The Board considers the disclosure of the Budget set for the STI grant to be commercially sensitive

information and that disclosure of this Budget would not be in the Company’s and shareholders’ best

interests. EBITDA was chosen as the financial performance condition as it is monitored by the Board to

measure the operating performance of the business as well as being clearly defined and measurable.

EBITDA and Budgeted EBITDA are compared on a like for like basis.

Personal KPIs

The relevant portion of the STI award subject to personal KPIs will be measured by scorecard

performance against role specific objectives to be settled with each Senior Executive annually.

Non-financial objectives are set to measure Senior Executive performance against RWC’s business

strategies and core values. Examples of role specific objectives which may apply are team

development, business development, product development, risk management, cost control, culture,

safety and diversity.

Non-financial KPIs are chosen to encourage the achievement of personal business goals consistent

with the Group’s overall objectives including succession planning and management bench strength,

ensuring a safe working environment with a diverse workforce, strategic growth and the expansion of

RWC’s business activities and product development.

A combination of financial and non-financial performance criteria are chosen because the Board

believes that there should be a balance between short term financial measures and more strategic

non-financial measures which, in the medium to longer term, will ultimately drive future growth and

returns for shareholders.

Assessment of

performance

Following the end of the financial year, performance against the budgeted EBITDA measure is assessed

by the Nomination and Remuneration Committee based on the Company’s audited financial results.

Performance against personal KPIs is assessed annually as part of the broader performance review

process for the CEO and CFO. These KPIs are assessed quantitatively against pre-determined

benchmarks, where appropriate.

These methods of assessing performance are chosen as they are, as far as practicable, objective,

measurable and capable of being independently audited.

Clawback

Defined criteria are in place to prevent inappropriate benefits being paid. In such circumstances, the

Board may determine that allocated shares may be forfeited and/or require the Senior Executive to

pay as a debt any part of the net proceeds of a sale of awarded shares, cash payment or dividends

provided in respect of an STI award.

Reliance Worldwide Corporation LimitedAnnual Report 2019Remuneration ReportREMUNERATION REPORT
For the year ended 30 June 2019 (audited)

The Group’s Adjusted EBITDA for FY2019 was less than 95% of Budget meaning the financial criteria component for Senior Executives

to receive an STI award was not satisfied. The Board accepted a recommendation from Senior Executives that an STI award not be

granted for FY2019 notwithstanding achievement of Personal KPIs.

Long term incentive

The Company established the Equity Incentive Plan to assist in the motivation, retention and reward of eligible employees. The Plan

is designed to align the interests of employees with the interests of shareholders by providing an opportunity for eligible employees to

receive an equity interest in the Company. The Plan provides flexibility for the Company to grant rights, options and/or restricted shares as

incentives, subject to the terms of individual offers and the satisfaction of performance conditions approved by the Board from time to time.

Details of Restricted Shares and Share Rights which have been granted to Senior Executives are set out in section (g). A summary of

the terms of Options granted to Senior Executives are set out below.

LTI Options Grants made to the following Senior Executives:

Heath Sharp, Group Chief Executive Officer (“CEO”) in FY2016

Gerry Bollman, Group Chief Financial Officer (“CFO”) in FY2017

Type of award

CEO: 4,000,000 options (“CEO Options”).

CFO: 1,307,190 options (“CFO Options”)

Each of the CEO Options and CFO Options entitles the holder to acquire an ordinary share in

the Company subject to meeting specific vesting conditions and payment of the exercise price.

The CEO Options and CFO Options were granted for nil consideration as they form part of the

Senior Executives’ remuneration.

Performance Period

CEO Options: From the date of the listing (29 April 2016) until 30 June 2022.

Vesting conditions

CEO Options: The CEO Options will vest and become exercisable subject to the satisfaction of

a gateway hurdle and two performance conditions.

CFO Options: Five years from the date of commencement of employment (5 December 2016).

CFO Options: The CFO Options will vest and become exercisable subject to the satisfaction of

a service period hurdle and a performance condition.

The Board considers these vesting conditions to be an appropriate combination of stretch

financial hurdles directly linked to the Group’s performance and reflecting shareholder interests;

and as a mechanism which assists in the retention of the Senior Executives.

1. Gateway hurdle (CEO) and service hurdle (CFO)

None of the CEO Options will vest unless the CEO remains employed by the Group until

30 June 2022.

None of the CFO Options will vest unless the CFO remains employed by the Group at the

expiration of 5 years from the date of commencement of employment (5 December 2016).

2. Performance conditions

CEO Options: In addition to the gateway hurdle, the CEO Options are subject to two

performance conditions as follows:

• 30% of the CEO Options (“NPAT Options”) were subject to a net profit after tax (“NPAT”)

performance condition, which was based on the Company meeting or exceeding its pro

forma NPAT forecast for the year ended 30 June 2017 of $62.6 million, as stated in the

Prospectus dated 18 April 2016 (“NPAT Hurdle”). This condition has been satisfied; and

•

70% of the CEO Options (“CEO TSR Options”) will be subject to a relative total shareholder

return (“TSR”) performance condition, which compares the TSR performance of the

Company since listing with the TSR performance of each of the entities in a comparator

group over the period from 29 April 2016 to 30 June 2021 (“TSR Hurdle”).

REMUNERATION REPORT
For the year ended 30 June 2019 (audited)

Vesting conditions (continued)

CFO Options: In addition to the service period hurdle, the CFO Options are subject to a relative

TSR performance condition, which compares the TSR performance of the Company since

listing with the TSR Hurdle.

The percentage of CEO TSR Options and CFO Options that vest in relation to the TSR Hurdle, if

any, will be determined by reference to the following vesting schedule:

Relative TSR Ranking

% of options that vest subject to the TSR Hurdle

Below 50th percentile

50th percentile

Nil

50%

Between 50th and 75th percentile

Pro rata straight line vesting between 50% to 100%

75th percentile or above

100%

The number of CEO TSR Options and CFO Options that vest and become exercisable, if any,

will be determined shortly after the end of the Performance Period. Any options that remain

unvested will lapse immediately.

NPAT was chosen as a performance condition for the NPAT Options as it measures the net

profit of the business and is used to determine the earnings per share achieved for the relevant

reporting period.

TSR measures the growth in the Company’s share price together with the value of dividends

over the period from the date of listing to 30 June 2021 (assuming that all those dividends

are reinvested into new shares) against the Company’s chosen comparator group, being

companies comprising the ASX200 index, excluding mining and energy companies. The

comparator group may be adjusted by the Board or Nomination and Remuneration Committee

in their reasonable discretion to take into account corporate actions, including but not limited to

takeovers, mergers, de-mergers or de-listings.

Relative TSR has been chosen because, in the opinion of the Board, it provides the most direct

link to shareholder return. No reward is achieved unless the Company’s TSR is higher than

the median of this comparator group. The starting point for measuring the Company’s TSR

performance is the $2.50 issue price for the shares issued under the Prospectus for the IPO

in 2016.

Process for assessing the

Calculation of NPAT and achievement against the NPAT Hurdle was determined based on the

vesting conditions

audited FY2017 financial results.

Relative TSR performance will be independently assessed against a peer group comprising

constituents of the S&P ASX 200 Index (excluding mining and energy companies) in

accordance with pre-determined TSR methodology. No retesting is permitted.

The gateway hurdle and the service condition, as applicable, will be satisfied if the Senior

Executive remains employed by the Group at the relevant date.

Exercise of Options

Options will vest and become exercisable if the relevant vesting conditions have been met.

CEO Options: The CEO may exercise any vested CEO Options by 30 June 2031. After 30 June

2031, any unexercised CEO Options will lapse.

CFO Options: The CFO may exercise any vested CFO Options until 5 December 2024. After

5 December 2024, any unexercised CFO Options will lapse.

Voting and dividend rights

Options do not carry any voting or dividend rights prior to vesting and exercise.

Reliance Worldwide Corporation LimitedAnnual Report 2019Remuneration ReportREMUNERATION REPORT
For the year ended 30 June 2019 (audited)

Cessation of employment

CEO:

If the CEO ceases to be employed by the Group, any unvested CEO Options will lapse unless

the Board determines otherwise in its absolute discretion.

If CEO Options have vested but are unexercised:

• Where the CEO is terminated for cause, the vested CEO Options will lapse unless the Board

determines otherwise; and

• Where the CEO ceases employment for any other reason, the vested CEO Options will

remain on foot for the original exercise period.

CFO:

If the CFO ceased employment within the first twelve months of his employment (or was under

notice), all CFO Options would have lapsed unless the Board determined otherwise.

Where the CFO ceases employment after the first 12 months from the date of commencing

employment and either:

•

the employer terminates without cause (with notice given after the initial 12 month

employment period); or

•

the CFO terminates for good reason (with notice given after the initial 12 month employment

period),

then a pro rata number of unvested CFO Options will vest and become exercisable based on

the relevant part of the service period hurdle achieved and will apply subject to the TSR Hurdle

to the date notice is given having been met.

Where:

•

the employer terminates the CFO’s employment for cause; or

the CFO terminates without good reason after the first twelve months of his employment

but before the end of the service period hurdle,

the CFO will forfeit all rights to CFO Options unless the Board determines otherwise.

If employment ceases by reason of death or disability then the Board shall at its discretion vest

the CFO Options in full or in part.

Change of control

Where there is likely to be a change of control, the Board has the discretion to accelerate

vesting of some or all of the CEO Options and CFO Options. If a change of control occurs before

the Board exercises its discretion, a pro-rata portion of the options (equal to the portion of the

relevant Performance Period that has elapsed up to the change of control) will vest. The Board

retains a discretion to determine whether the remaining unvested options will vest or lapse.

Clawback

Defined criteria are in place to prevent inappropriate benefits being paid. In such circumstances,

the Board may determine that unvested, and/or vested but unexercised, options will lapse;

shares allocated upon exercise of options will be forfeited; and/or require the Senior Executive

to pay as a debt any part of the net proceeds of a sale of awarded shares, cash payment or

dividends provided in respect of an award made under the Plan.

Exercise Price for Options Granted

Option holder

Heath Sharp

Gerry Bollman

Original Exercise Price per Option

Adjusted Exercise Price per Option1

$2.50

$3.06

$2.32

$2.88

Further details of the number of Options held by Senior Executives are set out in section (i).

Exercise price adjusted in accordance with ASX Listing Rule 6.22 and the terms of issue of the Options following the 1 for 1.98 pro rata Entitlement
Offer which completed in June 2018. The calculations were independently verified.

REMUNERATION REPORT
For the year ended 30 June 2019 (audited)

Remuneration Mix

During FY2019, the remuneration mix for Senior Executives was:

Senior Executive

Fixed remuneration (%)

STI (%)

Heath Sharp

Gerry Bollman

68.2

60.8

–

LTI (%)

31.8

39.2

The percentage of ‘at risk’ LTI assumes all applicable performance conditions are achieved in full. Details of Senior Executive

remuneration are set out in section (l) below.

Senior Executive remuneration structure for FY2020

The Board has approved that fixed remuneration for Senior Executives for FY2020 be set at:

CEO: US$ 1,339,000 plus benefits (FY2019 US$1,300,000 plus benefits); and

CFO: US$ 824,100 plus benefits (FY2019 US$800,000 plus benefits)

There are no other changes to the remuneration structure of Senior Executives for FY2020.

Benchmarking analysis obtained for FY2018 remuneration arrangements indicated that the remuneration of both the CEO and CFO

was below the median of the relevant benchmark peer group. For the CEO, it was also well below the mean of the benchmark peer

group. Further benchmark analysis was not obtained during FY2019. The Board does not believe the conclusions of the previous

analysis will have materially changed.

(g) Restricted Shares and Share Rights

Restricted Shares

Mr. Bollman (“CFO”) was appointed the Group Chief Financial Officer on 5 December 2016. On commencement of his employment

with the Group, Mr. Bollman was offered 680,272 restricted shares under the Plan. The offer was made in recognition of incentives

forgone from his previous employer and to align Mr. Bollman’s interests with the interests of shareholders and other executives from a

performance and reward perspective.

There is a vesting condition which requires the CFO to remain employed by the Group until the expiration of 5 years from the date of

commencement of employment (5 December 2016). Continued service was chosen as a vesting condition as it reflects the need to

retain Mr. Bollman as CFO during the Group’s period of growth and expansion and to encourage stability at the Senior Executive level.

The CFO cannot deal in the restricted shares until the vesting condition is satisfied. There are no voting or dividend rights attaching to

these shares prior to vesting. The restricted shares will be awarded at no cost to Mr. Bollman if the vesting conditions are met.

The Restricted Shares would have been forfeited if the CFO had ceased employment within the first twelve months of his employment

(or was under notice). That condition ceased to apply on 5 December 2017. Following the expiration of this condition, if the CFO ceases

employment and either:

•

the employer terminates without cause (with notice given after the initial 12 month employment period); or

the CFO terminates for good reason (with notice given after the initial 12 month employment period),

the CFO will be entitled to a pro rata portion of the restricted shares based on the length of his period of service and the restrictions

attached to those restricted shares will cease.

The CFO will forfeit all rights to his restricted shares grant, unless the Board determines otherwise, where:

•

the employer terminates the CFO’s employment for cause; or

the CFO terminates without good reason after the first twelve months of his employment but before the end of the service period.

The Board has discretion to vest all or some of the restricted shares if the CFO ceases employment due to death or disability.

During FY2019, no restricted shares vested or were forfeited. If the minimum vesting condition is not met, the minimum possible value

of the grant is $nil. The maximum possible value of the grant at the calculation date (1 November 2016) was $2.0 million based on a

price of $2.94 per share, being the closing share price for the Company’s shares on that date. The price for the Company’s shares at the

vesting date will determine the value of the grant at that time.

Reliance Worldwide Corporation LimitedAnnual Report 2019Remuneration ReportREMUNERATION REPORT
For the year ended 30 June 2019 (audited)

Rights to Shares

The Board has approved that nominated, eligible executives and employees, including Senior Executives, be invited to participate in

the Plan as a means of attracting, retaining and motivating key employees in the Group. Participants are granted rights to be awarded

fully paid ordinary shares in the Company (“Rights”) in accordance with the rules of the Plan and subject to the offer terms (“Offer”).

Each Right entitles the participant to one ordinary share in the Company on vesting. An Offer constitutes a long term incentive

component of the participant’s remuneration from the grant date until the end of the vesting period. Rights are granted at no cost and

there will be no amount payable on vesting. There are no voting or dividend rights attaching to Rights prior to vesting.

The number of unvested Rights which had been granted by the Company to all participants at 30 June 2019 was 6,276,939 (30 June

2018 - 3,295,730). Rights granted to Senior Executives at 30 June 2019 were 1,234,800 (30 June 2018 – nil). Further details of Rights

granted to Senior Executives are set out below.

The opening and closing number of all unvested Rights granted at 30 June 2019 is reconciled as follows:

Granted and unvested at 30 June 2018

Granted during FY2019 with the following vesting dates:

27 August 2023

30 October 2023

14 November 2023

31 December 2023

9 April 2024

6 May 2024

13 May 2024

Total granted during FY2019

Forfeited or Cancelled

Unvested at 30 June 2019

Number of Rights

3,295,730

1,825,800

987,800

20,000

178,000

98,000

58,600

70,700

3,238,900

(257,691)

6,276,939

No Rights vested during the reporting period or have subsequently vested.

Vesting conditions for all grants of Rights include a continuous service period. In addition, 1,810,200 granted Rights (“Performance

Rights”) are also subject to performance conditions to be eligible to vest. The number of Performance Rights which will be eligible to

vest will be determined at the end of a two-year performance period on the Performance Period Measurement Date by reference to

the performance conditions set out below. Any Performance Rights which do not vest will automatically lapse.

Details of Performance Conditions for Performance Rights

Objective

The Company announced the acquisition of the issued shares of John Guest Holdings Limited

in May 2018. The acquisition completed in June 2018. To ensure alignment, and to reward

certain participants in relation to the integration of the John Guest business, the performance

conditions set out below have been approved by the Board to determine the number of

performance rights which are eligible to vest.

Performance Period

Measurement Date

30 June 2020

Performance conditions

50% of the Performance Rights granted under the LTI offer are subject to financial

performance conditions. The remaining 50% of Performance Rights are subject to non-

financial performance conditions. Each are described below.

Financial conditions

Financial performance conditions are based on achieving financial targets in the base case

model for the John Guest acquisition (which was independently reviewed as part of the due

diligence process). These performance conditions and the Maximum Opportunity attributable

to each condition are:

REMUNERATION REPORT
For the year ended 30 June 2019 (audited)

Performance conditions

(continued)

Financial performance condition

Maximum Opportunity

FY2019 EBITDA of the John Guest group (excluding synergies)

FY2020 EBITDA of the John Guest group (excluding synergies)

Run rate synergies achieved by the end of FY2020

12.5%

25.0%

The Board considers the disclosure of the amounts of each of these targets to be commercially

sensitive information and that disclosure of these amounts would not be in the Company’s and

shareholders’ best interests. The following scale applies:

FY2019 John Guest EBITDA and
FY2020 John Guest EBITDA
(both excluding synergies)
% achieved

% of Performance Rights eligible to vest

0 to 95% of target

Nil

Between 95% and 100% of target

Straight line pro-rating from Nil to Maximum

100% or greater of target

Maximum Opportunity

Opportunity

Run rate synergies achieved
by the end of FY2020
% achieved

% of Performance Rights eligible to vest

0 to 90% of target

Nil

Between 90% and 100% of target

Straight line pro-rating from Nil to Maximum

100% or greater of target

Maximum Opportunity

Opportunity

Non-financial performance conditions

The relevant portion of the Performance Rights subject to non-financial criteria will be

assessed by the Board by reference to the following:

• Cultural integration

• European market penetration

•

Integrated business strength

• Cost of integration, both financial and organisational

Each of the criteria will be weighted equally.

Clawback

Defined criteria are in place to prevent inappropriate benefits being paid. In such circumstances,

the Board may determine that allocated shares may be forfeited and/or require the participant

to pay as a debt any part of the net proceeds of a sale of awarded shares, cash payment or

dividends provided in respect of an LTI offer.

Other key terms of the Rights grants

Cessation of employment

Unless the Board determines otherwise, if a participant ceases employment with the Group prior to the Vesting Date and any of the

following has occurred, then a pro rata portion of the unvested Rights may remain on foot and vest in the ordinary course as though

the participant had not ceased employment:

• The participant’s employment is terminated by RWC without cause; or

• The participant terminates employment for good reason.

The remainder of the Rights will lapse.

Reliance Worldwide Corporation LimitedAnnual Report 2019Remuneration ReportREMUNERATION REPORT
For the year ended 30 June 2019 (audited)

Change of control

In summary, in the event of a takeover bid or other transaction, event or state of affairs that in the Board’s opinion is likely to result

in a change in control of the Company or should otherwise be treated as a change of control event in accordance with rule 9 of the

Company’s Equity Incentive Plan Rules, the Board has a discretion to determine how the Rights should be treated for the purpose of

vesting.

Rights granted to Senior Executives

Senior Executives had been granted the following Rights at 30 June 2019 (30 June 2018 – nil):

Heath Sharp

Gerry Bollman

Vesting Date

30 October 2023

27 August 2023

Number of
Rights Granted

Fair value per Right
at Grant Date1

987,800

247,000

1,234,800

$4.29

$5.17

Rights granted to Senior Executives are subject to a 5 year continuous service period vesting condition and to the performance

conditions set out above. No Rights granted to Senior Executives were forfeited or cancelled during FY2019.

Shares purchased to meet vesting obligations

The Company has established a subsidiary, Reliance Employee Share Investments Pty Ltd (“Trustee”), to act as trustee of the Reliance

Employee Share Investments Trust. The Trustee will acquire RWC shares on-market on behalf of the Trust to meet any obligations

to deliver shares to a participant who satisfies the vesting conditions. The Trustee is also entitled to participate on behalf of the

Trust in certain equity raisings undertaken by the Company. During FY2019, the Trustee, on behalf of the Trust, acquired 2,000,000

shares on market at an average price of $3.72 per share. The total number of shares held in the Trust at 30 June 2019 was 7,389,834

(30 June 2018 – 5,389,834).

Vesting obligations will be met in accordance with the terms of the Plan rules.

(h) Service Agreements of Senior Executives

Employment and remuneration arrangements of the Senior Executives are formalised in written service agreements between the

Senior Executive and a member of the Group. The key terms and conditions of the employment contracts of the Senior Executives are

set out below, excluding remuneration arrangements which are presented in other sections of this report. Remuneration arrangements

were set after having regard to arrangements for comparable companies considered by size, industry and geography.

Heath Sharp, Managing Director and Global Chief Executive Officer

Term

Mr. Sharp is employed by Reliance Worldwide Corporation (a company in the Group which carries

on operations in the USA) for an initial period of four years from the date of listing (29 April 2016).

Thereafter, one year rolling periods unless either party provides 90 days’ notice of non-renewal.

Notice

Termination by the employer

• Mr. Sharp’s employment may be terminated by the employer without cause (excluding due to death

or disability) upon giving 90 days’ written notice; and

• may be terminated by the employer for cause at any time.

Termination by Heath Sharp

• Mr. Sharp may terminate his employment with good reason upon giving 90 days written notice and

allowing a subsequent cure period.

• Where he terminates without good reason, 12 months written notice is required to be provided.

1. Based on an independent valuation which used the Black Scholes model.

REMUNERATION REPORT
For the year ended 30 June 2019 (audited)

Termination payments1

• Where Mr. Sharp’s employment is terminated by the employer without cause, he is entitled to

24 months’ severance pay (inclusive of any notice period) plus accrued entitlements. This entitlement

period was set to take into account Mr. Sharp’s long standing continuous service with RWC at the time

of the IPO (and now nearly 30 years continuous service). He is also eligible for a pro rata bonus for the

days he was employed during the fiscal year and payment of health insurance premiums.

• Where the employer provides notice of non-renewal, he is entitled to his accrued entitlements and

12 months’ severance pay. He is also eligible for a pro rata bonus for the days he was employed

during the fiscal year and payment of health insurance premiums during the period of severance pay.

• Where Mr. Sharp provides notice of non-renewal, he is entitled to receive his accrued entitlements

(excluding any earned but unpaid performance bonus) and continuation of applicable welfare and

health benefits entitlements.

Restraint

Mr. Sharp’s employment agreement contains a restraint of trade, which operates for a maximum

period of 24 months following cessation of employment.

Gerry Bollman, Global Chief Financial Officer

Term

Notice

Mr. Bollman is employed by Reliance Worldwide Corporation (a company in the Group which carries on

operations in the USA). His employment agreement contains no fixed term.

Termination by the employer

• Mr. Bollman’s employment may be terminated by the employer without cause upon giving

three months written notice; and

• may be terminated by the employer for cause at any time.

Termination by Gerry Bollman

• Mr. Bollman may terminate his employment with good reason upon giving the employer written

notice within 90 days of an event occurring and allowing a subsequent cure period.

• Where he terminates his employment agreement without good reason, three months written notice

needs to be provided.

Termination payments1

• Where Mr. Bollman’s employment is terminated by the employer without cause or by him for good

reason, he is entitled to:

– 6 months’ severance pay where notice is given after the first year of employment and before

commencement of the fifth year of employment; and

– 12 months’ severance pay if notice is given after commencement of the fifth year of employment.

He will also receive payment of accrued entitlements and remain eligible for a pro rata bonus for the

days he was employed during the applicable fiscal year and payment of health insurance premiums.

• Where his employment is terminated due to death or disability, he is entitled to accrued entitlements

(including any earned but unpaid performance bonus), remains eligible for a pro rata bonus for the

days he was employed during the applicable fiscal year and to a continuation of applicable welfare

and health benefits entitlements.

• Where the employment agreement is terminated by the employer for cause or by Mr. Bollman

without good reason, then the employer shall have no further payment obligations other than for

accrued entitlements (excluding any earned but unpaid performance bonus) and continuation of

applicable welfare and health benefits entitlements.

Restraint

Mr. Bollman’s employment agreement contains a restraint of trade, which operates for a maximum

period of 12 months following cessation of employment.

The Corporations Act restricts the termination benefits that can be provided to KMP on cessation of their employment, unless shareholder approval is
obtained. The shareholders of the Company and of Reliance Worldwide Corporation, as applicable, have approved the giving of benefits to all current
and future members of KMP in connection with that person ceasing to hold a managerial or executive office (as defined in section 200AA of the
Corporations Act) in the Company or a related body corporate.

Reliance Worldwide Corporation LimitedAnnual Report 2019Remuneration ReportREMUNERATION REPORT
For the year ended 30 June 2019 (audited)

(i) Movements in Options held by Senior Executives

The following table sets out the movement during the reporting period of Options held by each Senior Executive (including their

related parties). No options were granted to Senior Executives during FY2019. No Options vested or were forfeited during the reporting

period and none of the Options are presently capable of being exercised.

Balance
at 1 July
2018

Granted
during
the year
number

Granted
during
the year
$ value

Name

Vested
number

Vested
$ value

Exercised
number

Exercised
$ value

Lapsed
number

Lapsed
$ value

%
Lapsed/
Forfeited

Balance
at 30 June
2019

Heath Sharp 4,000,000

Gerry Bollman 1,307,190

–

– 4,000,000

–

1,307,190

(j) KMP shareholdings

Movements in the number of shares held by Non-Executive Directors and Senior Executives directly, indirectly (through personally

related entities) or nominally during FY2019 are set out below.

Name

Russell Chenu

Stuart Crosby

Ross Dobinson

Sharon McCrohan

Jonathan Munz

Heath Sharp

Gerry Bollman3

Held at
1 July 2018

Net change1

Held at
30 June 2019

155,217

150,506

32,457

–

79,015,152

1,204,041

–

(79,015,152)

–

155,2172

150,5062

32,4572

–

1,204,041

–

(k) Other statutory disclosures

Material contracts with Related Parties

The Company and GSA Industries Pty Ltd, a wholly owned subsidiary of GSA Group and an entity associated with Jonathan Munz,

entered into a shared facilities and services agreement which came into effect on 29 April 2016 (“Shared Services Agreement”) under

which the Company shared premises with GSA Group in Melbourne and was permitted to use certain facilities, such as office space

and car parking, and have signage rights. The Shared Services Arrangement ceased on 30 April 2019. The Company paid an annual fee

of $100,000 (plus GST) to GSA Industries Pty Ltd for the use of these facilities and services. The Shared Services Agreement was on

terms that were more favorable to the Company than arm’s length terms.

There were no other material contracts between a KMP or a related party and the Company or any of its subsidiaries entered into

during the reporting period.

Loans with KMP

No KMP has entered into a loan made, guaranteed or secured, directly or indirectly, with or by the Company or any of its subsidiaries

during the reporting period.

1.
2.

Includes the purchase (sale) of shares during the reporting period and transfers in (out) upon becoming or ceasing to be a member of KMP.
Includes 20,000 shares received in April 2016 under specific arrangements for Non-Executive Directors in connection with the IPO, as stated in the
Prospectus.

3. Mr. Bollman has been offered 680,272 restricted shares as detailed in section (g).

l
a
t
o
T

d
e
s
a
b
e
r
a
h
S

5
s
t
n
e
m
y
a
p

g
n
o
l
r
e
h
t
O

y
r
o
t
u
t
a
t
s
m
r
e
t

s
t
i
f
e
n
e
b

n
o
i
t
a
u
n
n
a
r
e
p
u
S

r
e
h
t
O

-
n
o
N

t
n
e
m
y
o
l
p
m
e
-
t
s
o
P

m
r
e
T
t
r
o
h
S

s $
n
o
i
t
p
O

e
r
a
h
S

s $
t
h
g
R

e $
v
a
e
l

t $
n
e
m
y
o
l
p
m
e

s $
t
i
f
e
n
e
b

s $
u
n
o
b

e
c
v
r
e
s
g
n
o
L

t
s
o
P
r
e
h
t
O

n
a
l
p
n
o
i
s
n
e
p
r
o

m
r
e
t
t
r
o
h
s

y
r
a
t
e
n
o
m

h
s
a
c
I

T
S

h
t
i

w
e
c
n
a
d
r
o
c
c
a
n

d
n
a
t
c
A
s
n
o
i
t
a
r
o
p
r
o
C
e
h
t

r
e
d
n
u
d
e
r
i
u
q
e
r
s
e
r
u
s
o
l
c
s
d
y
r
o
t
u
t
a
t
s
e
h
t
s
e
d
u
l
c
n

e
b
a
t
e
h
T
w
o
e
b
t
u
o
t
e
s
e
r
a
P
M
K
f
o
r
e
b
m
e
m
h
c
a
e
f
o
n
o
i
t
a
r
e
n
u
m
e
r
e
h
t

f
o
s
l
i

a
t
e
D

T
R
O
P
E
R
N
O
T
A
R
E
N
U
M
E
R

)
d
e
t
i
d
u
a
(
9
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F

n
o
i
t
a
r
e
n
u
m
e
r
P
M
K

)
l
(

P
M
K
a
s
a
w
n
o
s
r
e
p
e
h
t
h
c
h
w
n

r
a
e
y
e
h
t

f
o
d
o
i
r
e
p
e
h
t
o
t
e
t
a
e
r
d
n
a
s
r
a

l
l

o
d
n
a

i
l

a
r
t
s
u
A
n

e
r
a
s
e
r
u
g
i
f

l
l

s
d
r
a
d
n
a
t
S
g
n
i
t
n
u
o
c
c
A
n
a

i
l

a
r
t
s
u
A

0
0
0
0
8
1

0
0
0
0
2
1

1
8
0
4
0
2

0
0
0
0
2
1

0
0
0
0
3
1

0
0
0
0
2
1

0
0
0
0
3
1

3
2
9
0
4

–

6
6
3
5
0
0
3

1
1
3
7
0
9
2

–

8
6
1
,
0
9
3

–

8
6
1
,
0
9
3

2
7
5
6
6
5

6
8
9
,
1
9
7
,
1

4
6
4
3
9
1

6
1
9
6
5
3

3
0
7
8
9
9
,
1

4
6
4
3
9
1

0
6
6
9
8
5

0
2
2
0
0
1
,
5

2
3
6
3
8
5

6
1
9
6
5
3

0
5
1
,
8
4
6
5

2
3
6
3
8
5

2
3
2
6
5
1
,
1

–

9
1
0
2
h
c
r
a
M
4

6
1
6
5
1

0
1
4
0
1

9
0
8
5
1

0
1
4
0
1

–

9
7
2
,
1
1

0
5
5
3

–

2
3
0
,
1
3

5
0
6
,
1
3

2
3
0
,
1
3

0
6
9
0
3

5
3
9
6
8

8
6
7
4
0
1

–

5
3
2
3
1

4
1
2
2
1

6
1
2
7

9
5
6
6

1
5
4
0
2

3
7
8
8
1

–

4
9
1
,
7
8
1

7
1
0
7
6
1

5
7
0
9
5

2
7
9
6
4

–

9
8
9
3
1
2

1
5
7
9
4
0
,
1

4
2
1
,
0
9
7
2

8
1
0
2
Y
F

9
6
2
6
4
2

–

8
9
7
6
3
5
3

9
1
0
2
Y
F

l
a
t
o
T

9
1
8
2
2
8

8
8
4
3
8
4
,
1

8
1
0
2
Y
F

–

6
5
2
8
1
1
,
1

9
1
0
2
Y
F

2
3
9
6
2
2

3
8
0
0
3
9

8
1
0
2
Y
F

4
n
a
m

l
l

o
B
y
r
r
e
G

h
s
a
C

y
r
a
l
a
s

s $
e
e
f
&

0
9
5
9
0
1

8
1
0
2
Y
F

0
9
5
9
0
1

8
1
0
2
Y
F

4
8
3
4
6
1

9
1
0
2
Y
F

u
n
e
h
C

l
l

e
s
s
u
R

s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N

2
7
2
8
8
1

9
1
0
2
Y
F

y
b
s
o
r
C
t
r
a
u
t
S

0
0
0
0
2
1

8
1
0
2
Y
F

0
0
0
0
3
1

9
1
0
2
Y
F

n
o
s
n
b
o
D
s
s
o
R

–

1
2
7
8
1
1

3
7
3
7
3

9
1
0
2
Y
F

n
a
h
o
r
C
c
M
n
o
r
a
h
S

8
1
0
2
Y
F

9
1
0
2
Y
F

8
1
0
2
Y
F

2
z
n
u
M
n
a
h
t
a
n
o
J

5
6
1
,
7
1
8
,
1

9
1
0
2
Y
F

3
p
r
a
h
S
h
t
a
e
H

s
e
v
i
t
u
c
e
x
E
r
o
n
e
S

y
b
s
o
r
C

.
r

M
9
1
0
2
h
c
r
a
M
4
m
o
r
f

a
p
0
0
0
0
0
3
$
f
o
s
e
e
f
n
a
m

r
i
a
h
C

l
i
t
n
u
)
a
p
0
0
0
5
5
1
$
g
n

i
l
l

a
t
o
t
(
s
e
e
f
n
a
m

r
i
a
h
C
e
e
t
t
i

m
m
o
C
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
n
o
i
t
a
n
m
o
N
s
u
p
s
e
e
f

r
o
t
c
e
r
i

D
e
v
i
t
u
c
e
x
e
-
n
o
N
e
s
a
B

f
o
r
e
b
m
e
m
a
e
b
o
t
d
e
s
a
e
c
z
n
u
M

.
r

M
6
1
0
2

l
i
r
p
A
9
2
n
o
X
S
A
e
h
t
n
o
g
n
i
t
s
i
l
s
y
n
a
p
m
o
C
e
h
t
g
n
w
o

’

l
l

o
f
s
r
a
e
y
e
e
r
h
t

a
i
t
i
n

e
h
t

r
o
f
s
e
e
f
e
e
t
t
i

m
m
o
c
r
o
r
o
t
c
e
r
i

D
e
v
i
t
u
c
e
x
E
-
n
o
N
y
n
a
o
t

t
n
e
m
e
l
t
i
t
n
e
s
h
d
e
v
a
w
z
n
u
M

.
r

9
1
0
2
h
c
r
a
M
4
m
o
r
f
e
e
t
t
i

m
m
o
C
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
n
o
i
t
a
n
m
o
N
e
h
t
g
n
i
r
i
a
h
c
r
o
f
e
e
f

a
n
o
i
t
i
d
d
a
e
h
t
o
t

t
n
e
m
e
l
t
i
t
n
e
s
h
d
e
v
a
w
s
a
h

.
l
l

u
f
n

t
s
e
v
s
t
n
e
m
e
l
t
i
t
n
e

l
l

a
s
e
m
u
s
s
a
d
n
a

;

d
e
t
n
a
r
g
s
n
o
i
t
p
o
d
n
a
s
t
h
g
i
r

f
o
e
t
a
d
t
n
a
r
g
t
a
e
u
a
v
r
i
a
f
e
h
t
n
o
d
e
s
a
b
d
o
i
r
e
p
g
n
i
t
r
o
p
e
r
e
h
t

r
o
f
e
s
n
e
p
x
e
g
n
i
t
n
u
o
c
c
a
e
h
t
s
t
c
e
l
f
e
R

s
n
o
i
t
u
b
i
r
t
n
o
c
n
a
p
n
o
s
n
e
p
g
n
d
u
l
c
n

s
t
i
f
e
n
e
b
s
u
p
0
0
0
0
0
3
,
1
$
S
U

s
n
o
i
t
u
b
i
r
t
n
o
c
n
a
p
n
o
s
n
e
p
g
n
d
u
l
c
n

s
t
i
f
e
n
e
b
s
u
p
0
0
0
0
0
8
$
S
U

f
o
n
o
i
t
a
r
e
n
u
m
e
r
d
e
x
i
f

a
u
n
n
A

f
o
n
o
i
t
a
r
e
n
u
m
e
r
d
e
x
i
f

a
u
n
n
A

9
1
0
2
h
c
r
a
M
4
n
o
P
M
K

Reliance Worldwide Corporation LimitedAnnual Report 2019Remuneration Report KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.Liability limited by a scheme approved under ProfessionalStandards Legislation.Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of Reliance Worldwide Corporation Limited I declare that, to the best of my knowledge and belief, in relation to the audit of Reliance Worldwide Corporation Limited for the financial year ended 30 June 2019 there have been: i.no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii.no contraventions of any applicable code of professional conduct in relation to the audit. KPM_INI_01 PAR_SIG_01 PAR_NAM_01 PAR_POS_01 PAR_DAT_01 PAR_CIT_01 KPMG Paul McDonald Partner Melbourne 27 August 2019

)

(

–

s $

–

s $

–

e $

–

t $

–

s $

–

s $

–

s $

–

s $

–

s $

–

)

(

’

;

AUDITOR’S INDEPENDENCE DECLARATION KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.Liability limited by a scheme approved under ProfessionalStandards Legislation.Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of Reliance Worldwide Corporation Limited I declare that, to the best of my knowledge and belief, in relation to the audit of Reliance Worldwide Corporation Limited for the financial year ended 30 June 2019 there have been: i.no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii.no contraventions of any applicable code of professional conduct in relation to the audit. KPM_INI_01 PAR_SIG_01 PAR_NAM_01 PAR_POS_01 PAR_DAT_01 PAR_CIT_01 KPMG Paul McDonald Partner Melbourne 27 August 2019

CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2019

Revenue from sale of goods

Cost of sales

Gross profit

Other income

Product development expenses

Selling, warehouse and marketing expenses

Administration expenses

Other expenses

Operating profit

Finance income

Finance costs

Net finance costs

Profit before tax

Income tax expense

Note

2019

$000

1,103,957

(638,518)

465,439

7,103

(18,943)

(148,364)

(104,856)

(1,217)

199,162

337

(22,761)

(22,424)

176,738

(43,721)

2018

$000

769,380

(452,413)

316,967

10,882

(17,721)

(111,239)

(84,122)

(3,667)

111,100

117

(11,911)

(11,794)

99,306

(33,315)

Profit for the period attributable to the Owners of the Company

133,017

65,991

Other Comprehensive profit

Items that may be classified to profit or loss:

Foreign currency translation differences

Cash flow hedges – effective portion of changes in fair value

Total comprehensive profit for the period attributable to the Owners

of the Company

6,627

–

19,877

(10,767)

139,644

75,101

cents

Earnings per share

Basic earnings per share attributable to ordinary equity holders

Diluted earnings per share attributable to ordinary equity holders

17.0

16.8

12.3

12.1

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportCONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2019

Assets

Current assets

Cash and cash equivalents

Trade and other receivables

Inventories

Other current assets

Total Current Assets

Non-Current

Property, plant and equipment

Deferred tax assets

Goodwill

Other intangible assets

Total Non-Current Assets

Total Assets

Liabilities

Current liabilities

Trade and other payables

Borrowings

Current tax liabilities

Employee benefits

Total Current Liabilities

Non-Current Liabilities

Borrowings

Deferred tax liabilities

Employee benefits

Total Non-Current Liabilities

Total Liabilities

Net Assets

Equity

Share capital

Reserves

Retained earnings/(accumulated losses)

Total Equity

Note

2019

$000

20181

$000

69,279

232,256

229,090

12,184

542,809

289,489

15,378

901,428

327,256

1,533,551

2,076,360

131,973

4,147

7,468

274,331

204,916

202,640

20,707

702,594

268,517

18,010

888,016

308,807

1,483,350

2,185,944

167,678

2,675

3,656

6,657

143,588

180,666

495,886

24,993

5,394

526,273

669,861

659,670

16,610

4,979

681,259

861,925

1,406,499

1,324,019

2,329,126

2,336,618

(1,081,061)

(1,092,945)

158,434

80,346

1,406,499

1,324,019

1. Comparative balances have been restated to reflect the final purchase price accounting for the John Guest acquisition. Refer to Note 4.

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2019

Share
Capital
$000

Note

Foreign
Currency
Translation
Reserve
$000

Share
Based
Payment
Reserve
$000

(Accumulated
Losses)/
Retained
Profits
$000

Hedging
Reserve
$000

Total
Equity
$000

Merger
Reserve
$000

Balance at 30 June 2017

1,261,371

(4,778)

(1,100,943)

832

Profit for the period

Foreign currency

translation reserve

Hedged transaction

Total comprehensive

income

Transactions with

owners of the Company

Purchase of treasury

Share based payments

Issue of ordinary shares

Capital raising costs

Dividends paid

Total transactions with

–

19,877

–

19,877

(8,584)

–

1,100,143

(16,312)

–

owners of the Company

1,075,247

–

(10,767)

48,264

204,746

65,991

–

19,877

(10,767)

–

(10,767)

65,991

75,101

–

2,834

–

2,834

–

(8,584)

2,834

1,100,143

(16,312)

(33,909)

(33,909) 1,044,172

Balance at 30 June 2018

2,336,618

15,099

(1,100,943)

3,666

(10,767)

80,346 1,324,019

Balance at 30 June 2018

2,336,618

15,099

(1,100,943)

3,666

(10,767)

80,346 1,324,019

Profit for the period

Foreign currency

translation reserve

Total comprehensive

income

Transactions with

owners of the Company

Purchase of treasury

Share based payments

Capital raising costs

Dividends paid

Total transactions with
owners of the Company

–

6,627

(7,444)

–

(48)

–

(7,492)

–

5,257

–

5,257

–

133,017

–

6,627

133,017

139,644

–

(7,444)

5,257

(48)

(54,929)

(57,164)

Balance at 30 June 2019

2,329,126

21,726

(1,100,943)

8,923

(10,767)

158,434 1,406,499

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportCONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2019

Cash flows from operating activities

Receipts from customers

Payments to suppliers and employees and for customer rebates

Income tax payments

Net cash from operating activities

Cash flows from investing activities

Purchase of property, plant and equipment

Proceeds from sale of property, plant and equipment

Purchase of intangibles

Transaction costs paid on acquisition of John Guest

Net cash outflow upon acquisition of business combinations

Net cash used in investing activities

Cash flows from financing activities

Proceeds from issue of shares

Purchase of treasury shares

Proceeds from borrowings

Repayment of borrowings

Dividends paid

Interest received

Interest paid

Debt raising costs paid

Capital raising costs paid

Note

2019

$000

1,083,709

(922,306)

(25,377)

136,026

(52,198)

258

(17,379)

–

2018

$000

746,318

(621,479)

(44,753)

80,086

(37,401)

1,202

(998)

(17,501)

(1,157,343)

(69,319)

(1,212,041)

–

(7,444)

95,392

(281,722)

(54,929)

337

(22,761)

–

(48)

1,100,143

(8,584)

705,670

(353,173)

(33,909)

117

(11,911)

(3,675)

(16,313)

Net cash from financing activities

(271,175)

1,378,365

Net change in cash and cash equivalents

Cash at the start of the year

Effect of movements in exchange rates

Cash and cash equivalents at the end of the year

Represented by:

Cash at bank

Cash and cash equivalents at the end of the year

(204,468)

274,331

(584)

69,279

246,410

25,593

2,328

274,331

69,279

274,331

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

Significant accounting policies

(a) Reporting Entity

Reliance Worldwide Corporation Limited (the “Company“ or “Reliance”) is a limited liability company which was incorporated on

19 February 2016 and is domiciled in Australia. The consolidated financial statements comprise the Company and its subsidiaries

(together referred to as the “Group”). The Company’s registered office is at 28 Chapman Place, Eagle Farm, Queensland 4009,

Australia.

The principal activities of the Group are the design, manufacture and supply of high quality, reliable and premium branded water

flow, control and monitoring products and solutions for the plumbing and heating industry.

(b) Statement of Compliance

The consolidated financial statements are general purpose financial statements which have been prepared in accordance

with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the

Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRS) and

interpretations adopted by the International Accounting Standards Board (IASB).

The Company is a for-profit entity. The financial statements were authorised for issue by the Board of Directors on 27 August 2019.

These consolidated financial statements:

•

comprise the Company and its subsidiaries, together referred to as the “Group”, for the reporting period ended 30 June 2019;

• have been prepared on a going concern basis using historical cost conventions;

• are presented in accordance with the Australian Securities and Investments Commission Corporations (Rounding in Financial/

Directors’ Reports) Instrument 2016/191 values are rounded to the nearest thousand dollars, unless otherwise stated;

• adopt all new and amended AASBs and Interpretations issued by the AASB that are relevant to the operations of the Group and

effective for reporting periods beginning on or before 1 July 2018; and

• do not early adopt any AASBs and Interpretations that have been issued or amended but are not yet effective.

Financial statements of subsidiaries are prepared using consistent accounting policies.

This note sets out details of accounting policies which aid the understanding of the financial statements as a whole. Accounting

policies which are specific to a particular income, expense or account balance are described in the note to which that policy relates.

(i) Principles of consolidation

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable

returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The

financial statements of subsidiaries are included in the consolidated financial statements from the date on which control

commences until the date on which control ceases.

(ii) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are

eliminated.

(d) Foreign Currency

The individual financial statements of each entity comprising the Group are presented in the currency of the primary economic

environment in which the entity operates (its functional currency). For the purposes of these consolidated financial statements,

Australian dollars is the presentation currency, which is also the functional currency of the Company. The functional currency of

each subsidiary is provided in Note 22.

(i)

Foreign currency transactions

In preparing the financial statements of each individual entity, transactions in currencies other than the entity’s functional currency

(foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting

period, monetary items denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items

carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value

was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the

exchange rates at the date of the transaction.

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20191.

Significant accounting policies (continued)

(ii) Foreign Operations

For the purpose of presenting these consolidated financial statements, the assets and liabilities of the Group’s foreign operations

are translated into Australian dollars using exchange rates prevailing at the end of the reporting period. Income and expense items

are translated at average exchange rates. Exchange differences arising, if any, are recognised in other comprehensive income and

accumulated in Net Investment within Foreign Currency Translation Reserve (“FCTR”). The FCTR comprises all foreign currency

differences arising from the translation of the financial statements of the foreign operations.

(e) Use of estimates and judgements

The preparation of consolidated financial statements in conformity with Australian Accounting Standards requires management

to make judgements, estimates and assumptions that affect the application of policies and 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 judgements about carrying

values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom

equal the related actual results.

Information about judgements and estimates made in applying accounting policies that may have a significant effect on amounts

recognised in the consolidated financial statements is included in the following notes:

• Recognition of deferred tax assets and availability of future taxable profits against which carry forward tax losses and timing

differences can be used (Note 8);

• Recoverability of trade and other receivables (Note 9);

• Estimation of net realisable value and possible obsolescence of inventories (Note 10);

• Recoverability of goodwill and unidentified other intangible assets (Note 12);

• Recoverability of other intangible assets (Note 13); and

• Fair values of assets and liabilities of acquired businesses (Note 4).

(f) Revenue recognition

(i) Sale of goods and services

Revenue is recognised when a customer obtains control of the goods or services. Group revenue is derived from the sale of

products. Under the terms of sale, the Group generally transfers control when the goods leave a distribution centre. In some cases,

control does not pass until the goods are received by the customer or delivered to the agreed point of delivery. For sales made

with a right of return, the amount of revenue recognised is adjusted for an estimate of the expected returns based on historical

experience.

From time to time the Group may provide rebates to customers in certain geographies, which gives rise to variable consideration.

Where rebates are based on the quantity or value of products sold, the Group uses historical data to estimate the rebate accrual,

which is classified as “contract liabilities” and presented within trade and other payables.

(g) Financial Instruments

(i) Non-derivative financial instruments: Recognition, Measurement, Classification and De-recognition

Non-derivative financial assets are classified into the following categories: (a) cash and cash equivalents and (b) trade and

other receivables. Non-derivative financial liabilities are classified into the following categories: (a) trade and other payables and

(b) borrowings.

Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially

recognised when the Group becomes a party to the contractual provisions of the instruments. A financial asset (unless it is a trade

receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at

fair value through the profit and loss (FVTPL), transaction costs attributable to its acquisition or issue. A trade receivable without a

significant financing component is initially measured at the transaction price.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20191.

Significant accounting policies (continued)

On initial recognition a financial asset is classified as measured at amortised cost, fair value through other comprehensive income

(FVOCI) or FVTPL. A financial asset is measured at amortised cost if it meets both of the following conditions and not designated

as FVTPL:

•

It is held within a business model whose objective is to hold assets to collect contractual cash flows;

Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the

principal amount outstanding.

The Group classifies and measures financial assets it has recognised at amortised cost. These assets are subsequently measured

at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign

exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit

or loss.

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as FVTPL if it is classified

as held for trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at

fair value. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest

expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised

in profit or loss.

Financial assets are derecognised when the contractual rights to cash flows from the financial asset expire or when the financial

asset and all the substantial risks and benefits are transferred. Financial liabilities are derecognised when they are extinguished,

discharged cancelled or they expire. On derecognition of a financial liability, the difference between the carrying amount

extinguished and the consideration paid is recognised in profit or loss.

(ii) Derivative financial instruments

The Group may hold derivative instruments to hedge its foreign currency risk exposures. Derivatives are initially measured at fair

value; any directly attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition,

derivatives are measured at fair value, any changes therein are generally recognised in profit or loss.

When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the

derivative is recognised in other comprehensive income and accumulated in the hedging reserve. Any ineffective portion of

changes in the fair value of the derivative is recognised immediately in profit or loss. The amount accumulated in equity is retained

in other comprehensive income and reclassified to profit or loss in the same period or periods during which the hedged forecast

cash flows affect profit or loss or the hedged item affects profit or loss.

(h) Operating leases

Operating lease payments for leases of assets where substantially all of the risks and benefits of ownership remain with the lessor

are recognised in the profit and loss account on a straight-line basis over the term of the lease. Assets that are subject of operating

leases are not recognised in the Group’s Statement of Financial Position.

(i) Goods and services tax (GST) - Australia

Revenues, expenses and assets are recognised net of the amount of GST except where the amount of GST incurred is not

recoverable from the Australian Taxation Office. In these circumstances, the GST is recognised as part of the cost of acquisition of

the asset or as part of the item of expense. Receivables and payables in the statement of financial position are shown inclusive of

GST. Cash flows are presented on a gross basis. The GST components arising from investing and financing activities are presented

as operating activities. Any commitments are disclosed net of GST.

(j) New accounting standards, interpretations and amendments adopted by the Group

The accounting policies and methods of computation applied by the Group in this Financial Report are consistent with those

applied by the Group in its Financial Report for the year ended 30 June 2018 other than for the adoption of new accounting

standards with initial application from 1 July 2018.

In this Financial Report, the Group has applied AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments
for the first time. The application of these standards does not have a material impact on the Group’s financial statements and no

impact on retained earnings has been recorded. Key elements of the Group’s transition assessment and new significant accounting

policies are set out below.

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20191.

Significant accounting policies (continued)

Several other amendments and interpretations apply for the first time in the financial year 2019 but do not have an impact on the

Financial Report of the Group.

AASB 15: Revenue from Contracts with Customers (“AASB 15”)

AASB 15 replaces all existing revenue requirements in Australian Accounting Standards and Interpretations, including AASB 118

Revenue, and applies to all revenue arising from contracts with customers unless the contracts are within the scope of other

accounting standards.

AASB 15 prescribes a five-step model to account for revenue arising from contracts with customers. Under AASB 15, revenue is

recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods

and services to a customer.

AASB 15 requires entities to exercise judgement, taking into consideration all relevant facts and circumstances when applying each

step of the model to contracts with customers. AASB 15 also specifies the accounting for incremental costs of obtaining a contract

and the costs directly related to fulfilling the contract.

The Group adopted AASB 15 using the cumulative effect method of initially applying the standard recognised at the date of initial

application (1 July 2018). Comparative information has not been restated and continues to be reported under AASB 118.

The application of AASB15 has not had a material impact on how the Group recognises revenue. Information on the disaggregation

of revenue by product group and by geography is provided in Note 3.

AASB 9: Financial Instruments (“AASB 9”)

AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement and sets out the requirements for classifying and
measuring financial instruments, impairment of financial assets and hedge accounting.

The Group has applied AASB 9 retrospectively with an initial application date of 1 July 2018.

(a) Classification and measurement

AASB 9 largely retains the existing requirements in AASB 139 for the classification and measurement of financial liabilities. However,

it eliminates the previous AASB 139 categories for financial assets of held to maturity, loans and receivables and available for sale.

The adoption of AASB 9 has not had a significant effect on the Group’s accounting policies relating to financial liabilities. In relation

to financial assets, trade and other receivables and cash and cash equivalents are now classified as amortised cost under AASB 9.

The Group has determined there is no material impact to the measurement of financial instruments required on the application of

AASB 9.

(b)

Impairment

AASB 9 introduces the concept of assessing expected credit losses in testing of financial assets. This concept replaces the

“incurred” loss concept under AASB 139. This change has, to date, had no material impact on the results of testing of financial

assets for impairment.

The Group does not generally enter into hedging relationships nor apply hedge accounting. Accordingly, the impact on transition of

the standard is not material.

New accounting standards, interpretations and amendments not yet adopted by the Group

The following standard has been published and is mandatory for the Group’s accounting periods beginning on 1 July 2019. The

Group has elected to not early adopt this standard.

AASB 16: Leases (“AASB 16”)

AASB 16 applies for financial periods beginning on or after 1 January 2019 and will be applied by the Group from 1 July 2019 using the

modified retrospective transition approach with no restatement of comparatives. AASB 16 removes the classification of leases as

either operating leases or finance leases and introduces a single, on-balance sheet accounting model for leases. Upon applying

AASB 16, the present value of lease commitments at that date will be recognised on the balance sheet as Right of Use Assets

(for leases with a term of more than 12 months unless the underlying asset is of low value) and be accounted for as non-financial

assets. A corresponding liability will be recognised for lease payment obligations and will be accounted for as financial liabilities.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20191.

Significant accounting policies (continued)

The Group has reviewed its current operating leases which are predominantly leases of property (office buildings, manufacturing

and warehousing facilities) and equipment. Many of the property leases have options to extend beyond the current committed

lease term. Lease payments relating to optional extension periods will be included in the lease liability for periods beyond 1 July

2019 only if it is reasonably certain to exercise these extension options. On application of the standard, the Group will recognise a

depreciation charge for right-of-use assets and interest expense on lease liabilities.

As at the reporting date, the Group has non-cancellable operating lease commitments of $123.3 million as disclosed in Note 23. On

adoption, AASB 16 will have a significant impact on the Group’s statement of financial position and statement of profit and loss.

Based on the information currently available, the Group has developed a model to calculate the estimated quantitative effect of

current lease arrangements under AASB 16 as at 1 July 2019, being the date of adoption. As a result of the calculations, Management

expect that there will be a material impact across the following line items in the statement of financial position:

• Recognition of lease liabilities: estimated range of $120 million to $130 million for the present value of the lease liability

• Recognition of right-of-use assets: estimated range of $120 million to $130 million for the corresponding right-of-use asset

The nature of expenses related to those leases will change from an operating expense (recognised within Cost of Sales,

Warehousing and Administration expenses) of approximately $15 million to recognition in FY2020 of a depreciation charge for

right-of-use assets of approximately $11 million and interest expense on outstanding lease liabilities of approximately $4 million

based on the Group’s current lease portfolio. The Group’s net profit after tax is not expected to be materially impacted over the

duration of the leases by applying AASB 16.

The model requires management to make some key judgements including the incremental borrowing rate used to discount lease

assets and liabilities and the lease term including potential rights and options for renewals. Current estimates are likely to change

at time of adoption and for the period ending 30 June 2020, mainly due to changes in incremental borrowing rates, changes in

management’s judgement to exercise rights of renewals under lease arrangements, changes to existing lease contracts and new

lease contracts entered into by the Group.

The Group does not expect the adoption of AASB 16 to impact its ability to comply with financial covenants contained in the

syndicated facility agreement described in Note 15.

Segment reporting

Segment information is presented in a manner which is consistent with the internal reporting to the Group Chief Executive Officer,

who is the chief operating decision maker in the allocation of resources and assessing the performance of the operating segments

of the Group.

The Group’s regionally based segments are based on geographical operation of the business and comprise:

• Asia Pacific, including Australia and New Zealand, Korea and China

• Americas, including the United States of America and Canada

• EMEA, including the United Kingdom, Spain, Italy, Germany, France, Czech Republic and Poland

Segment revenues, expenses, assets and liabilities are reported on a gross basis.

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2019,

4
4
9
5
8
1
,
2

0
6
3
6
7
0
2

)
3
2
6
0
4
3
,
1
(

)
6
7
7
4
0
4
,
1
(

3
0
7
5
0
5
,
1

2
2
1
,
9
2
3
,
1

4
7
3
4
2
1
,
1

7
2
7
2
1
1
,
1

5
2
4
4
4
6

6
0
9
0
2
7

5
6
0
2
5
2

1
8
3
8
1
3

5
2
9
,
1
6
8

1
6
8
9
6
6

)
3
2
6
0
4
3
,
1
(

)
6
7
7
4
0
4
,
1
(

7
6
6
,
1
4
2
,
1

2
8
2
7
1
8
,
1

4
1
7
8
8

6
0
9
7
5

6
6
6
,
1
2
8

0
1
8
0
9

1
0
5
0
5

9
3
6
8
0
1

)
1
1
7
0
2
(

)
3
0
9
3
(

1
5
2
8

4
2
8
5
9

9
4
4
5
9

2
7
4
2
0
1

5
7
3
2
5

4
3
1
,
8
4

l
a
t
o
T

8
1
0
2

0
0
0
$

9
1
0
2

0
0
0
$

8
1
0
2

0
0
0
$

9
1
0
2

0
0
0
$

n
o
i
t
a
n
m

i
l

7
6
9
6
1
3

9
3
4
5
6
4

2
8
8
0
1

3
0
1
,
7

)
7
6
6
3
(

)
7
1
2
,
1
(

)
1
2
7
7
1
(

)
3
4
9
8
1
(

)
9
3
2
,
1
1
1
(

)
4
6
3
8
4
1
(

)
2
2
1
,
4
8
(

)
6
5
8
4
0
1
(

0
0
1
,
1
1
1

2
6
1
,
9
9
1

–

0
8
3
9
6
7

7
5
9
3
0
1
,
1

–

)
3
2
4
3
0
1
(

)
2
9
9
9
5
1
(

)
3
1
4
2
5
4
(

)
8
1
5
8
3
6
(

3
2
4
3
0
1

2
9
9
9
5
1

0
8
3
9
6
7

7
5
9
3
0
1
,
1

)
3
2
4
3
0
1
(

)
2
9
9
9
5
1
(

r
e
h
t
O
/
e
t
a
r
o
p
r
o
C

8
1
0
2

0
0
0
$

9
1
0
2

0
0
0
$

A
E
M
E

8
1
0
2

0
0
0
$

9
1
0
2

0
0
0
$

8
1
0
2

0
0
0
$

9
1
0
2

0
0
0
$

8
1
0
2

0
0
0
$

9
1
0
2

0
0
0
$

s
a
c
i
r
e
m
A

c
i
f
i
c
a
P
a
i
s
A

–

8
2
8
6
7

2
6
5
0
1
3

7
9
5
7
5
5

8
8
7
0
5
6

5
5
9
4
3
1

7
0
6
2
4
1

s
r
e
m
o
t
s
u
c
l

a
n
r
e
t
x
e
m
o
r
F

3
0
3
4

1
3
1
,
1
8

3
7
3
0
5

0
1
1
,
2

7
0
1
,
3

0
1
0
7
9

2
1
5
6
0
1

s
t
n
e
m
g
e
s
r
e
h
t
o
m
o
r
F

5
3
9
0
6
3

7
0
7
9
5
5

5
9
8
3
5
6

5
6
9
,
1
3
2

9
1
1
,
9
4
2

s
e
u
n
e
v
e
r
t
n
e
m
g
e
S

)
7
9
7
4
5
(

)
8
3
7
,
1
0
2
(

)
7
5
5
6
4
3
(

)
2
1
2
0
2
4
(

)
2
8
4
4
5
1
(

)
0
6
5
6
7
1
(

4
3
3
6
2

7
9
1
,
9
5
1

0
5
1
,
3
1
2

3
8
6
3
3
2

3
8
4
7
7

9
5
5
2
7

s
e
a
s
f
o
t
s
o
C

t
i
f
o
r
p
s
s
o
r
G

e
u
n
e
v
e
R

0
9
6
,
1

6
1
8
2

9
2
1

8
8

7
9
8
6

3
8

6
6
1
,
2

6
1
1
,
4

e
m
o
c
n

r
e
h
t
O

)
d
e
u
n
i
t
n
o
c
(
g
n
i
t
r
o
p
e
r
t
n
e
m
g
e
S

9
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F

S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
D
E
T
A
D
L
O
S
N
O
C
E
H
T
O
T
S
E
T
O
N

–

)
1
8
7
,
1
(

)
0
6
7
,
1
(

)
4
3
6
,
1
1
(

)
3
3
4
2
1
(

)
6
0
3
4
(

)
0
5
7
4
(

s
e
s
n
e
p
x
e
t
n
e
m
p
o
e
v
e
d
t
c
u
d
o
r
P

)
8
4
3
(

)
4
9
6
9
(

)
3
8
9
9
3
(

)
0
8
0
3
8
(

)
4
4
5
9
8
(

)
5
6
4
8
1
(

)
9
8
4
8
1
(

s
e
s
n
e
p
x
e
g
n
i
t
e
k
r
a
m
d
n
a
g
n

i
l
l

e
S

)
0
1
8
2
2
(

)
6
7
0
7
(

)
9
3
4
9
(

)
0
1
0
0
4
(

)
2
0
5
8
3
(

)
6
1
8
3
4
(

)
1
7
3
3
1
(

)
4
5
9
3
1
(

s
e
s
n
e
p
x
e
n
o
i
t
a
r
t
s
n
m
d
A

–

)
7
2
1
(

)
7
4
5
(

)
2
5
1
,
3
(

)
4
2
(

)
8
8
3
(

)
1
5
6
(

s
e
s
n
e
p
x
e
r
e
h
t
O

)
0
2
1
,
1
2
(

)
3
0
6
4
(

2
2
4
5

5
8
9
6
7

9
7
6
3
8

9
4
9
7
8

9
1
1
,
3
4

1
3
8
8
3

)
s
s
o
l
(
/
t
i
f
o
r
p
g
n
i
t
a
r
e
p
o
t
n
e
m
g
e
S

4
6
3
5
3
1

7
2
5
2
4
2

)
7
7
6
0
2
(

)
2
0
1
,
7
3
(

)
2
8
5
3
(

)
3
6
2
6
(

7
1
1

7
3
3

)
1
1
9
,
1
1
(

)
1
6
7
2
2
(

)
5
1
3
3
3
(

)
1
2
7
3
4
(

1
0
4
7
3

8
9
1
,
2
5

0
4
3
5
6
4
,
1

3
7
1
,
8
1
5
,
1

–

)
9
7
3
0
1
(

)
4
9
4
,
1
1
(

)
0
7
2
(

)
8
4
1
(

)
2
6
2
,
1
(

)
4
1
1
,
1
1
(

5
2

–

5
2

–

)
5
(

)
9
5
(

)
8
4
3
(

5
8

)
9
3
(

)
9
5
6
(

4
0
3

–

)
1
3
8
2
(

)
7
8
1
,
8
1
(

)
3
9
6
8
(

)
7
7
0
0
1
(

)
4
9
0
9
(

)
9
9
7
8
(

)
4
5
6
(

)
7
7
0
3
(

)
5
4
4
4
(

)
2
6
1
(

)
5
0
5
(

s
t
e
s
s
a
e
b
g
n
a
t
n

)
7
2
1
,
2
1
(

)
5
6
5
9
(

)
4
9
2
,
1
(

)
0
3
3
3
2
(

)
4
5
7
6
(

3
8
5

)
0
4
1
,
3
1
(

)
9
0
4
,
1
1
(

e
s
n
e
p
x
e
x
a
t
e
m
o
c
n

2
9
3
2

2
9
6
2

7
2
3
2

0
2
8
,
1
2

2
4
9
2
2

8
4
2
3
2

0
4
7
9

8
3
4
4

t
n
e
m
p
u
q
e

d
n
a
t
n
a
p
y
t
r
e
p
o
r
p
o
t
s
n
o
i
t
i
d
d
A

g
n
d
u
l
c
x
e
s
t
e
s
s
a
t
n
e
r
r
u
c
-
n
o
N

2
6
8
3

9
8
8
4

6
0
0
9
6
9

1
0
5
9
6
9

2
4
3
0
6
3

1
3
2
6
1
4

0
3
1
,
2
3
1

2
5
5
7
2
1

d
e
r
r
e
f
e
d
d
n
a
s
t
e
s
s
a

a
c
n
a
n
i
f

r
e
h
t
o

s
t
i
n
u
g
n
i
t
a
r
e
n
e
g
h
s
a
c
t
n
a
v
e
e
r
e
h
t
o
t
d
e
t
a
c
o

l
l

a
n
e
e
b
e
v
a
h
d
e
t
i

m
L
s
g
n
d
o
H
t
s
e
u
G
n
h
o
J

f
o
n
o
i
t
i
s
u
q
c
a
e
h
t
n
o
d
e
s
n
g
o
c
e
r
s
t
e
s
s
a
s
e
b
g
n
a
t
n

4
e
t
o
N
o
t

r
e
f
e
R

n
o
i
t
i
s
u
q
c
a
t
s
e
u
G
n
h
o
J
e
h
t

r
o
f
g
n
i
t
n
u
o
c
c
a
e
c
i
r
p
e
s
a
h
c
r
u
p

a
n
i
f
e
h
t

t
c
e
l
f
e
r
o
t
d
e
t
a
t
s
e
r
n
e
e
b
e
v
a
h
s
e
c
n
a
a
b
e
v
i
t
a
r
a
p
m
o
C

n
o
i
t
a
s
i
t
r
o
m
a
d
n
a
n
o
i
t
a
c
e
r
p
e
d

x
a
t

,
t
s
e
r
e
t
n

e
r
o
f
e
b
t
i
f
o
r
p
g
n
i
t
a
r
e
p
o
s

A
D
T
B
E

t
n
a
p
y
t
r
e
p
o
r
p
f
o
n
o
i
t
a
c
e
r
p
e
D

s
e
i
t
i
l
i
b
a
i
l
t
n
e
m
g
e
S

s
t
e
s
s
a
t
n
e
m
g
e
S

A
D
T
B
E

t
n
e
m
p
u
q
e
d
n
a

f
o
n
o
i
t
a
s
i
t
r
o
m
A

e
m
o
c
n

e
c
n
a
n
F

s
t
s
o
c
e
c
n
a
n
F

s
t
e
s
s
a
x
a
t

d
n
a

l
l
i

w
d
o
o
G

s
e
t
o
N

3. Revenue

The major products from which the aforementioned segments derive revenue are:

• Fittings and Pipe – including plumbing fittings, piping and related products for the installation and repair of water reticulation

systems for domestic and commercial applications, pipe support systems and firestop solutions;

• Control Valves – including temperature and pressure relief valves for domestic and commercial storage hot water systems, non-

return isolating valves, pressure regulation valves, backflow prevention devices and specialist water safety valves;

• Thermostatic Products – including an extensive range of thermostatic mixing valves, tempering valves and thermostatic

cartridges for domestic and commercial applications; and

• Other Products – including underfloor heating components and kit systems, water meters, industrial pneumatic and hydraulic

fittings, water mains connection fittings and repair sleeves and fire safety system products.

Revenue by product group for the year ended 30 June 2019 is:

Fittings and pipe

Control valves

Thermostatics

Other Products

2019

$000

812,110

115,336

30,806

145,705

2018

$000

518,866

106,825

29,987

113,702

1,103,957

769,380

The Group had two significant customers each representing greater than 10% of the Group’s revenue in the 2019 financial year. Both

customers are in the Americas segment and contributed a combined $307.8 million of the Group’s revenue in the financial year.

Revenue by geography

Australia

United States of America

United Kingdom

Other

Business Combinations

2019

$000

120,197

609,772

254,254

119,734

2018

$000

126,802

526,923

71,147

44,508

1,103,957

769,380

In these financial statements, comparative balances have been restated under the requirements of accounting standards. The

following section explains the changes which have been reflected in the restated comparative balances.

Acquisition of John Guest Holdings Limited

The Group acquired all of the ordinary shares of John Guest Holdings Limited (“John Guest”) on 13 June 2018. The acquisition

accounting for this transaction has now been finalised, as reported in the 31 December 2018 interim financial report.

The final acquisition accounting resulted in net reclassifications between asset categories as follows:

• $23.2 million increase in “Property plant and equipment” with a corresponding decrease in “Goodwill on acquisition and

unidentified other intangible assets”.

• $0.2 million increase in identified “Intangible assets” with a corresponding decrease in “Goodwill on acquisition and other

unidentified other intangible assets”.

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20194

Business Combinations (continued)

The valuation techniques used for measuring the final fair value of material assets acquired for Property, plant and equipment,

intangible assets and inventories were as disclosed at 30 June 2018 when fair values were provisionally accounted for.

There was no material impact on the Group’s profit as a result of these changes.

Comparative financial information has been restated to reflect the finalisation of the acquisition accounting. The following table

summarises the changes made to the provisional acquisition accounting.

Fair value of net assets acquired

Identifiable assets

Cash and cash equivalents

Trade and other receivables

Inventories

Property, plant and equipment

Intangible assets

- Brand names

- Customer relationships

Total identifiable assets acquired

Identifiable liabilities

Trade and other payables

Borrowings

Employee entitlements

Tax liabilities

Total liabilities assumed

Net identifiable assets acquired

Provisional
fair value
recognised on
acquisition

Final fair
value
recognised on
acquisition

$000

90,230

60,107

31,220

117,338

214,687

17,217

530,799

64,871

32,127

1,749

1,570

100,317

430,482

90,230

60,107

31,220

140,529

214,687

17,393

554,166

64,871

32,127

1,749

1,570

100,317

453,849

Purchase consideration

1,236,806

Hedge loss from forward purchase contracts recognised in the

Goodwill calculation

Goodwill on acquisition and unidentified other intangible assets

10,767

817,091

10,767

793,724

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20195. Other income

Other income

2019

$000

7,103

2018

$000

10,882

Other income in 2018 included insurance recoveries of $5.3m associated with storm damage at manufacturing facilities in Cullman,

Alabama (USA).

Finance income and finance costs

The Group’s finance income and finance costs include:

•

Interest income

Interest expense

The Group records interest income and accrues interest expense for amounts receivable and payable at reporting date. Interest

income is recognised in the income statement on an accrual basis, using the effective interest method.

Interest income from cash and cash equivalents

Interest and borrowing expenses

Earnings per share

(a) Basic earnings per share

2019

$000

337

(22,761)

2018

$000

117

(11,911)

The calculation of basic earnings per share has been based on the following profit/(loss) attributable to ordinary shareholders and

weighted average number of shares.

2019

$000

133,017

2018

$000

65,991

Number of
shares
2019

Number of
shares
2018

790,094,765

541,437,841

(5,563,944)

(3,366,737)

784,530,821

538,071,104

cents

17.0

cents

12.3

Profit attributable to ordinary shareholders

Weighted average number of ordinary shares at 30 June (basic)

Issued ordinary shares (weighted average)

- Treasury shares (weighted average)

Basic earnings per share

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20197.

Earnings per share (continued)

(b) Diluted earnings per share

The calculation of diluted earnings per share has been based on the following profit attributable to ordinary shareholders and

weighted average number of shares after adjustment for the effects of all dilutive potential ordinary shares.

Profit attributable to ordinary shareholders

Changes in earnings arising from dilutive potential ordinary shares

Weighted average number of ordinary shares at 30 June (diluted)

Issued ordinary shares (weighted average)

- Effect of share options on issue

- Treasury shares (weighted average)

Diluted earnings per share

Income tax expense

2019

$000

133,017

–

133,017

2018

$000

65,991

–

65,991

Number of
shares
2019

Number of
shares
2018

790,094,765

541,437,841

5,307,190

(5,563,944)

(3,366,737)

789,838,011

543,378,294

cents

16.8

cents

12.1

Income tax expense comprises current and deferred tax. It is recognised in the consolidated Statement of Profit or Loss and Other

Comprehensive Income except to the extent that it relates to a business combination or items recognised directly in equity.

(i) Current tax

The tax currently payable is based on taxable profit for the reporting period. Taxable profit differs from profit before tax as reported

in the Consolidated Statement of Profit or Loss and Other Comprehensive Income because of items of income or expense that are

taxable or deductible in other years and items that are never taxable or deductible. The Group’s current tax is calculated using tax

rates that have been enacted or substantively enacted at the end of the reporting period.

(ii) Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated

Financial Statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are

generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary

differences to the extent that it is probable that taxable profits will be available against which those deductible temporary

differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the

initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable

profit nor the accounting profit.

Deferred tax assets are recognised for unused tax losses, unused 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 used. 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.

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 period. The measurement of deferred tax reflects the tax consequences that would

follow the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax

liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax

assets and tax liabilities on a net basis.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2019
8.

Income tax expense (continued)

(iii) Australian tax consolidated group

The Company and its Australian incorporated wholly owned subsidiaries have formed a tax consolidated group with effect from

3 May 2016 whereby the members of that group are taxed as a single entity. The head entity of the tax consolidated group is Reliance

Worldwide Corporation Limited. The head entity and each subsidiary member of the tax consolidated group is party to a Tax Sharing

Agreement and a Tax Funding Agreement whereby each member of that group is only liable for its contribution amount calculated in

accordance with the Agreement rather than being jointly and severally liable for group tax liabilities. At 30 June 2019, the Australian

Tax Consolidated Group has $5.8 million (2018: $15.5 million) franking credits available for subsequent reporting periods.

(iv) Estimates and judgements

The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required

in determining the Group’s provision for income taxes. There are many transactions and calculations undertaken during the ordinary

course of business for which the ultimate tax determination is uncertain. Where the final tax outcome of these matters is different

from the amounts that were initially recorded, such differences will impact the current and deferred tax provisions in the period in

which such determination is made.

(a) Reconciliation of prima facie tax expense to income tax expense recognised in the consolidated income statement

The major components that reconcile the expected income tax expense based on the Australian statutory rate of tax of the Group

at 30% to the reported actual income tax expense in the profit and loss are as follows:

Profit before income tax

Prima facie income tax expense at 30%

Tax effect of items which (increase)/decrease tax expense:

2019

$000

176,738

(53,021)

2018

$000

99,306

(29,792)

Effect of tax rates in foreign jurisdictions

9,734

(1,555)

Tax effect of amounts which are not deductible/(assessable) in calculating

taxable income:

Other non-deductible expenses

Re-measurement of deferred tax balances from US tax reforms

Changes in estimates related to prior years

Employee share incentive scheme

Other

(1,669)

–

3,788

(1,125)

(1,428)

(1,473)

1,553

(1,208)

(850)

Actual income tax expense reported in the consolidated statement of profit or loss

(43,721)

(33,315)

(b) Components of income tax:

2019

$000

(41,832)

(1,889)

(43,721)

2018

$000

(28,939)

(4,376)

(33,315)

Current tax

Deferred tax

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20198.

Income tax expense (continued)

2019

Deferred tax assets

Employee benefits

Other provisions and accruals

IPO costs deductible in future periods

Other items giving rise to deferred tax assets

Total

Deferred tax liabilities

Property, plant and equipment

Unrealised foreign exchange movements

Other items giving rise to a deferred tax liability

Total

2018

Deferred tax assets

Employee benefits

Other provisions and accruals

IPO costs deductible in future periods

Other items giving rise to deferred tax assets

Total

Deferred tax liabilities

Property, plant and equipment

Unrealised foreign exchange movements

Other items giving rise to a deferred tax liability

Total

Opening
Balance
$000

Recognised in
Profit or loss
$000

Foreign
Exchange
$000

Closing
Balance
$000

2,888

5,561

2,416

7,145

18,010

(10,092)

(5,913)

(605)

(16,610)

271

(1,208)

(2,524)

(3,396)

(1,136)

11,849

(9,206)

1,507

239

–

469

764

(330)

(9,259)

(301)

3,215

5,865

1,208

5,090

15,378

(11,558)

(3,323)

(10,112)

(9,890)

(24,993)

Opening
Balance
$000

Recognised in
Profit and loss
$000

Foreign
Exchange
$000

Closing
Balance
$000

2,907

7,055

3,625

4,705

18,292

(11,565)

(364)

(587)

(12,516)

(19)

(1,494)

(1,209)

2,440

(282)

1,473

(5,549)

(18)

(4,094)

–

2,888

5,561

2,416

7,145

18,010

(10,092)

(5,913)

(605)

(16,610)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 20199.

Trade and other receivables

Trade and other receivables are initially recognised at fair value and subsequently at amortised cost less any provision for doubtful

debts.

Trade receivables are generally due for settlement within 30 days, depending on the nature of the transaction and in line with industry

practice. Collectability of trade receivables is reviewed on an ongoing basis. The carrying amount of trade receivables is reduced

through the use of an allowance account and the amount of the loss is recognised in the Consolidated Statement of Profit or Loss and

Other Comprehensive Income.

Trade debtors

Less: provision for doubtful debts

Other debtors

At 30 June, the ageing of trade and other receivables that were not impaired is as follows:

Neither past due nor impaired

Past due 1 to 30 days

Past due 31 to 90 days

Over 90 days

Total

10.

Inventories

2019

$000

2018

$000

222,395

195,652

(103)

(92)

222,292

195,560

9,964

9,356

232,256

204,916

2019

$000

2018

$000

197,534

185,682

22,119

9,281

3,322

17,727

1,051

456

232,256

204,916

Inventories are measured at the lower of cost and net realisable value. Cost includes all expenses directly attributable to the

manufacturing process as well as an appropriate portion of related fixed and variable production overheads, based on normal

operating capacity. Costs are assigned on the basis of weighted average costs. Net realisable value is the estimated selling price in

the ordinary course of business less estimated costs of completion and any applicable selling expenses.

2019

$000

2018

$000

96,153

25,540

117,355

239,048

84,453

29,165

96,508

210,126

(9,958)

(7,486)

229,090

202,640

At cost

Raw materials and stores

Work in progress

Finished goods

Less: provision for diminution

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201911.

Property, plant and equipment

(i) Recognition and measurement

Each class of property, plant and equipment is measured at cost less, where applicable, accumulated depreciation and impairment

losses. Any gain or loss on disposal of an item of property, plant and equipment is included in the Statement of Profit or Loss and

Other Comprehensive Income.

(ii) Subsequent expenditure

Subsequent expenditure is only capitalised when it is probable that the future economic benefits associated with the expenditure will

flow to the Group.

(iii) Depreciation

Depreciation is recognised so as to write off the cost of property, plant and equipment (other than freehold land and properties under

construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values

and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on

a prospective basis.

The estimated useful lives of property, plant and equipment are as follows:

• Buildings

20 - 40 years

•

Leasehold improvements

5 - 40 years

• Plant and equipment

3 - 20 years

Property, plant and equipment are tested for impairment. Any impairment losses are recognised in the statement of profit or loss and

other comprehensive income.

Carrying amounts of:

Freehold land

Buildings

Leasehold improvements

Plant and equipment

2019

$000

215

97,111

5,255

20181

$000

204

91,761

4,274

186,908

172,278

289,489

268,517

1. Comparative balances have been restated to reflect the final purchase price accounting for the John Guest acquisition. Refer Note 4.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201911.

Property, plant and equipment (continued)

Freehold

Land

Buildings

Improvements

Leasehold

Plant and
Equipment1

2019

2018

$000

2019

$000

2018

$000

2019

$000

2018

$000

2019

$000

2018

$000

2019

$000

Total

2018

$000

Cost

Opening balance

204

Transfers

Acquired as

part of business
combinations2

Additions1

Disposals

Net effect

of change in

exchange rates

Closing balance

at 30 June

Accumulated

depreciation and

impairment

Opening balance

Depreciation

expense

Impairment

Disposals

Net effect

of change in

exchange rates

Closing balance

at 30 June

Net carrying

197

–

99,723

22,229

6,200

5,569

285,873

185,140 392,000

213,135

(3,192)

–

3,192

–

73,555

8,914

(272)

–

(81)

–

67,055

–

140,529

334

43,280

36,981

52,198

37,401

(909)

(35)

(12,791)

(4,473)

(13,972)

(4,508)

2,931

3,853

281

413

9,042

1,170

12,265

5,443

–

215

204

108,104

99,723

8,768

6,200

325,404

285,873

442,491

392,000

–

(7,962)

(3,867)

(3,426)

(2,517)

(112,095)

(95,242)

(123,483)

(101,626)

(2,163)

(812)

(832)

(875)

(34,107)

(18,990)

(37,102)

(20,677)

–

(4,308)

1,163

–

899

–

(4,308)

11,495

3,314

12,415

4,509

(889)

(138)

(154)

(66)

(3,789)

(1,177)

(4,832)

(1,381)

(10,993)

(7,962)

(3,513)

(3,426) (138,496)

(112,095) (153,002)

(123,483)

value at 30 June

215

204

97,111

91,761

5,255

2,774 186,908

173,778 289,489

268,517

The asset category includes capitalised amounts for assets which are under construction or not installed ready for use and are not depreciated.
At 30 June 2019, this amount is $26.4 million (2018: $24.6 million).

2. Comparative balances have been restated to reflect the final purchase price accounting for the John Guest acquisition. Refer to Note 4.

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201912. Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of

the acquired entity at the date of acquisition. Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is not

amortised. Instead, it is tested annually for impairment or more frequently if events or changes in circumstances indicate that it might

be impaired and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the

carrying amount of goodwill relating to the entity sold.

Opening balance

Acquired – Note 4

Foreign currency exchange differences

Carrying value

2019

$000

20181

$000

888,016

86,857

–

793,724

13,412

7,435

901,428

888,016

For the purpose of undertaking impairment testing, the Group has identified its cash generating units (CGUs). These are the smallest

group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. This

assessment has been determined by considering operating segments and areas of operation.

The total carrying value of goodwill at balance sheet date is $901.4 million. This has been allocated to the Asia Pacific, Americas and

EMEA operating segments based on which CGUs are expected to benefit from the relevant business combinations.

John Guest acquisition

Holdrite acquisition

Pre IPO-acquisitions

Total

$000

40,563

–

44,567

85,130

Asia Pacific

Americas

$000

162,251

45,607

–

EMEA

$000

608,440

–

Total

$000

811,254

45,607

44,567

207,858

608,440

901,428

Goodwill in respect of the Asia Pacific, Americas and EMEA CGUs has been tested for impairment. The Company has assessed this

goodwill and determined it is recoverable. The recoverable amount of the Group’s CGUs has been assessed utilising value in use

methodologies. The value in use assessment at 30 June 2019 was established using a discounted cash flow model which included the

following key assumptions:

• A 5-year forecast period with cash flow projections based on approved operating budgets.

• After tax discount rates ranging from 7.75% to 8.75%, based on cost of capital and business risk assessments

• Average revenue growth rate of 2.0% in Asia Pacific, 6.0% in Americas and 5% for EMEA based on business assessments.

• Terminal period growth rates ranging from 1.5% to 3.0% based on business assessments.

The value in use calculations are sensitive to changes in the above assumptions. The value in use will vary depending on the

assumptions and forecast data used in the impairment testing. Management performed sensitivity analysis to examine the effect

of a change in assumptions on the goodwill attributed to the operating segments. Based on current economic conditions and Cash

Generating Unit (“CGU”) performances there are no reasonably possible changes to key assumptions used in determination of CGU

recoverable amounts that would result in a material impairment to the Group.

1. Comparative balances have been restated to reflect the final purchase price accounting for the John Guest acquisition. Refer to Note 4.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201913. Other intangible assets

Reliance has intellectual property protection worldwide with over 1,500 trademark registrations, industrial designs and patents and

actively manages its intellectual property rights.

(i)

Intellectual property and licence fees

Intellectual property consists of technical drawings and certifications and is recorded at cost less accumulated amortisation and any

accumulated impairment losses. License fees relate to the accounting and reporting platform being implemented throughout the

Group. Intellectual property and license fees are amortised on a straight-line basis over a period of ten years.

(ii) Brand Names, Trade Names and trademarks

Brand names, Trade names and trademarks are registered names, symbols, words or other devices used in trade to indicate the source

of a product and distinguish it from other products. Brand names, trade names and trademarks do not have finite useful lives and are

not amortised.

(iii) Product technology

Technology based intangible assets relate to innovations or technological advances, such as patented technology. Technology based

intangible assets are amortised on a straight line basis over a period of up to twenty years.

(iv) Customer relationships and distribution agreements

Customer relationship based intangibles assets relate to established customer relationships and distribution agreements for the

supply of product. The intangible asset is amortised on a straight line basis over a period up to twenty years.

(v) Research and development

Research costs are charged to the profit or loss account as incurred. Development expenditure is only capitalised if it can be measured

reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends

to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognised in the profit and loss

as incurred. Subsequent to initial recognition, development expenditure is measured at cost less accumulated amortisation and any

accumulated impairment losses. The amortisation of development expenditure is allocated to other expenses as inventory is sold.

Intellectual
Property, Trade
Names, Brand
Names and
Trademarks

Product
Technology

Customer
Relationships

Licence
Fees, Software
and Other

2019

2018

2019

2018

2019

20181

2019

2018

2019

Total

20181

$000

Cost

Opening balance

248,211

27,009

29,286

28,007

28,694

10,617

11,038

9,256

317,229

74,889

Acquired – Note 4

– 214,687

Additions

Disposals

4,216

–

Foreign exchange

5,133

6,515

1,576

1,279

726

684

17,393

–

– 232,080

–

13,163

998

17,379

998

(287)

494

–

(287)

–

784

7,929

9,262

Closing balance

257,560

248,211

30,862

29,286

29,420

28,694

24,408

11,038 342,250 317,229

Accumulated

Amortisation

Opening balance

(728)

(464)

(1,684)

–

(636)

–

(5,374)

(4,033)

(8,422)

(4,497)

Amortisation

Disposals

Foreign exchange

Closing balance

Carrying Value

(892)

(422)

(1,684)

(1,608)

(1,450)

(491)

(2,237)

(1,061)

(6,263)

(3,582)

–

(55)

–

158

–

183

–

183

–

(121)

(76)

(33)

(145)

(283)

(280)

(492)

(343)

(1,675)

(728)

(3,489)

(1,684)

(2,119)

(636)

(7,711)

(5,374) (14,994)

(8,422)

255,885 247,483

27,373

27,602

27,301 28,058

16,697

5,664 327,256 308,807

1. Comparative balances have been restated to reflect the final purchase price accounting for the John Guest acquisition. Refer to Note 4.

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201914. Trade and other payables

Current:

Trade payables

Other creditors, accruals and provision for employee bonuses

2019

$000

2018

$000

63,179

61,089

68,794

106,589

131,973

167,678

15. Borrowings

Secured:

Bank Overdraft

Borrowings

Total secured borrowings

Current

Non-current

2019

$000

2018

$000

2019

$000

2018

$000

2019

$000

Total

2018

$000

–

2,675

495,886

659,670

495,886

662,345

2,675

495,886

659,670

495,886

662,345

The Company and certain of its subsidiaries are parties to a $750 million syndicated facility agreement (30 June 2018 - $750 million)

which is available for drawing by way of cash advances (“Facility”).

The Facility will mature as follows:

• Tranche A: $250m maturing 30 September 2021

• Tranche B: $250m maturing 30 September 2022

• Tranche C: $250m maturing 30 September 2023

The Facilities contain financial covenants which the Company is in compliance with.

The security provided to support the Facility is:

• Unlimited cross guarantees from each entity that comprises the Group, other than Reliance Worldwide Corporation (Europe)

S.L.U, subsidiaries of Reliance Worldwide Corporation Holdings (UK) Limited (formerly John Guest Holdings Limited) which are

not incorporated in the United Kingdom (refer Note 22) and other non-operating entities (Reliance Manufacturing Company (NZ)

Limited, Titon Limited (both of which are incorporated under the laws of New Zealand), Reliance Water Controls Limited (an entity

incorporated under the laws of England and Wales) and Reliance Employee Share Investments Pty Ltd (“Guarantors”);

• General security over all assets (or a specified list of assets) from each of the Guarantors, other than Reliance Worldwide

Corporation Underfloor Heating Limited (formerly Reliance Worldwide Corporation (UK) Limited) and certain of the intermediate

holding companies;

• Specific share security from Reliance Worldwide Holdings (USA) Corporation over its shares in Reliance Worldwide Corporation

(which carries on the Group’s operations in the USA);

• Specific share security from Reliance Worldwide Holdings (International) LLC over its shares in Reliance Worldwide Corporation

Holdings (UK) Limited and its rights under the acquisition agreement entered into in connection with the acquisition of Reliance

Worldwide Corporation Holdings (UK) Limited; and

• A real property mortgage from Reliance Worldwide Corporation over a property in Cullman, Alabama, USA.

The Facility has a variable interest rate which is based on a variable base rate plus a margin.

During June 2019, Reliance Worldwide Corporation (UK) Limited, a subsidiary company, entered into a GBP 15 million overdraft facility

which is secured by a guarantee provided by the Company. None of the facility had been drawn as at 30 June 2019.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201915. Borrowings (continued)

Changes in liabilities arising from financing activities

The table below shows cash and non-cash changes in borrowings for which cash flows were, or will be, classified as financing activities

in the Consolidated Statement of Cash Flows.

Opening Balance

Changes from financing cash flows

Current

2018

$000

Non-current

2019

$000

2018

$000

2019

$000

Total

2018

$000

423

659,670

260,539

662,345

260,962

2019

$000

2,675

Proceeds from drawdowns on Facility

–

95,392

705,670

95,392

705,670

Repayments of Facility

Interest paid

(2,704)

(22,761)

(423)

(279,018)

(353,173)

(281,722)

(353,596)

(11,911)

–

(22,761)

(11,911)

Total changes from financing cash flows

(25,465)

(12,334)

(183,626)

352,497

(209,091)

340,163

Other non-cash changes

Borrowings acquired (Note 4)

Transfers

Interest expense

Other including foreign exchange

movement

Closing balance

16. Employee benefits provision

Short and long term employee benefits

–

22,761

–

2,675

11,911

–

32,127

(2,675)

–

22,761

32,127

–

11,911

–

19,842

17,182

19,871

17,182

2,675

495,886

659,670

495,886

662,345

A liability is recognised for benefits accruing to employees in respect of leave entitlements in the period the related service is rendered.

Liabilities recognised in respect of short-term employee benefits are measured at their nominal values using the remuneration rate

expected to apply at the time of settlement. Liabilities recognised in respect of long-term employee benefits are measured as the

present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to

reporting date.

Current:

Current employee entitlements include benefits for wages, salaries and annual leave that are expected to be settled within twelve

months of the reporting date. The amounts represent present obligations resulting from employees’ services provided to reporting

date and are calculated at undiscounted rates based on current remuneration and wage rates including related on-costs such as

workers compensation, insurance and payroll tax.

Non-Current:

Non-current employee entitlements include leave benefits that employees have earned in return for their continued service, pursuant

to the Legislation and Regulations in the relevant jurisdictions. The entitlement is calculated using expected future increases in wage

and salary rates including related on-costs and expected settlement dates and is discounted back to present value.

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201916. Employee benefits provision (continued)

Employee entitlements
Opening balance

Acquired

Charged to profit or loss

Paid during the period

Foreign currency exchange differences

Reclassification

Closing balance

17.

Employee benefits expense

(i) Retirement benefits costs

Current

2018

$000

5,833

1,749

4,402

2019

$000

6,657

4,994

(4,396)

(4,908)

(326)

150

140

(559)

–

(27)

Non-current

2019

$000

2018

$000

4,979

4,084

–

768

–

1,107

(771)

–

559

2019

$000

11,636

5,762

Total

2018

$000

9,917

1,749

5,509

(4,722)

(5,679)

150

–

140

–

7,468

6,657

5,394

4,979

12,862

11,636

Payments to defined contribution retirement benefit plans are recognised as an expense when employees render the service entitling

them to the contributions.

(ii) Termination benefits

A liability for a termination benefit is recognised at the earlier of when the Group can no longer withdraw the offer of the termination

benefit and when the entity recognises any related restructuring costs.

(iii) Share based payments

The fair value of equity settled share-based payment awards granted to employees is recognised as an expense with a corresponding

increase in equity over the vesting period of the grant.

Employee benefits expenses recognised in the profit or loss account are:

Wages and salaries

Employee leave entitlements

Workers compensation premiums

Superannuation contributions

Payroll related taxes

Contract labour

Share based payment expense

Other payroll related expenses

Recovered in costs of goods sold

2019

$000

2018

$000

200,181

103,468

5,762

791

10,055

7,518

10,715

5,257

331

5,645

951

5,511

5,211

8,889

2,834

546

240,610

133,055

(64,950)

(23,618)

175,660

109,437

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201918. Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with financial institutions and other investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of change in value. Bank overdrafts are repayable
on demand and any bank overdraft is included as a component of cash and cash equivalents in the balance sheet.

(a) Reconciliation of cash

For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents include cash on hand and in banks, net of
outstanding bank overdrafts. Cash and cash equivalents at the end of the reporting period as shown in the Consolidated Statement of
Cash Flows can be reconciled to the related items in the Statement of Financial Position as follows:

Cash on hand and at bank comprises:

AUD

USD

GBP

EUR

NZD

CAD

KRW

PLN

CZK

ILS

Australian dollar

United States dollar

Pound Sterling

Euro

New Zealand dollar

Canadian dollar

South Korean Won

Polish Zloty

Czech Koruna

Israeli Shekel

Cash and cash equivalents in the Consolidated Statement of Cash Flows

(b) Reconciliation of cash flow from operations with profit from operations after income tax

Profit/(loss) from operations after income tax

Depreciation expense

Amortisation expense

(Profit)/loss on disposal of non-current assets

Share based payments

Provision for impairment – trade debtors

Provision for obsolescence – inventory

Transaction costs accounted for as investing cash flows

Interest expense accounted for as financing cash flows

Interest income accounted for as financing cash flows

Changes in operating assets and liabilities:

Trade and other receivables

Inventories

Prepayments

Trade and other payables

Tax balances

Employee entitlements

Net cash from operating activities

2019

$000

16,043

21,913

15,922

10,034

1,679

2,050

726

706

187

2018

$000

157,510

57,558

43,640

11,358

643

1,861

1,085

231

445

69,279

274,331

69,279

274,331

2019

$000

133,017

37,102

6,263

1,403

5,257

2,472

–

22,761

(337)

2018

$000

65,991

20,677

3,582

(194)

2,834

(103)

2,119

17,501

11,911

(117)

(27,351)

(25,383)

(28,922)

1,685

(36,905)

18,344

1,226

(6,546)

(6,922)

(5,577)

256

136,026

80,086

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201919. Share Capital

Share capital

Ordinary shares

Opening balance

Issued during the year

Capital raising costs incurred net of recognised tax benefit

Treasury shares (Note 20)

Total

Number of shares

Company

2019

2018

Number

2019

2018

790,094,765

525,000,000

2,336,617,934

1,261,370,989

–

265,094,765

–

1,100,143,275

–

(47,604)

(16,312,337)

(7,443,733)

(8,583,993)

790,094,765

2,329,126,597

2,336,617,934

Holders of ordinary shares are entitled to dividends as declared from time to time and are entitled to one vote per share at general

meetings of the Company.

20. Share based payments

The Company has established an Equity Incentive Plan (“Plan”) to assist in the motivation, retention and reward of eligible executives.
The Plan is designed to align the interests of employees with the interests of shareholders by providing an opportunity for eligible

employees to receive an equity interest in the Company. The Plan provides flexibility for the Company to grant rights, options and/or

restricted shares as incentives, subject to the terms of individual offers and the satisfaction of performance conditions determined by

the Board from time to time.

Options

The Company has granted 5,307,190 (30 June 2018 – 5,307,190) options under the Plan. Further details on the terms and conditions

of the options granted are provided in the Remuneration Report. Each option provides an entitlement to acquire an ordinary share in

Reliance Worldwide Corporation Limited upon payment of the exercise price and meeting certain vesting criteria. These options are

equity settled. The Company has not granted any other options.

Rights to Shares

The Board has approved that nominated, eligible executives and employees be invited to participate in the Plan. Participants are
granted rights to be awarded fully paid ordinary shares in the Company (“Rights”) in accordance with the rules of the Plan and subject
to the offer terms (“Offer”). An Offer constitutes a long-term incentive component of the participant’s remuneration from the grant
date until the end of the vesting period.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201920. Share based payments (continued)

At 30 June 2019, the number of unvested Rights which had been granted by the Company to all participants was 6,276,939

(30 June 2018 – 3,295,730) with the following vesting dates:

Granted and unvested at 30 June 2018

Granted during FY2019 with the following vesting dates:

27 August 2023

30 October 2023

14 November 2023

31 December 2023

9 April 2024

6 May 2024

13 May 2024

Total granted during FY2019

Forfeited or Cancelled

Unvested at 30 June 2019

Number of
Rights

3,295,730

1,825,800

987,800

20,000

178,000

98,000

58,600

70,700

3,238,900

(257,691)

6,276,939

Vesting conditions for all grants of Rights include a continuous service period. In addition, 1,810,220 granted Rights are also subject to

performance conditions to be eligible to vest. Details of these conditions are contained in the Remuneration Report. No Rights vested

during the reporting period or have subsequently vested.

Unless the Board determines otherwise, if a participant ceases employment with the Group prior to the vesting date and any of the

following has occurred then a pro rata portion of unvested Rights will remain on foot and vest in the ordinary course as though the

participant had not ceased employment:

• The participant’s employment is terminated by the Company without cause; or

• The participant terminates employment for good reason.

The remainder of the Rights will lapse.

The Company has established a subsidiary, Reliance Employee Share Investments Pty Ltd (“Trustee”) to act as trustee of the Reliance

Employee Share Investments Trust. The Trustee will acquire Reliance shares on-market on behalf of the Trust to meet any obligations

to deliver shares to a participant who satisfies the vesting conditions. During the reporting period the Trustee, on behalf of the Trust,

acquired 2,000,000 shares at an average price of $3.72 per share. The total number of shares held in the Trust at 30 June 2019 was

7,389,834. The cost of the shares acquired is accounted for as Treasury Shares and debited against Share Capital (Note 19).

Restricted Shares

The Company offered 680,272 restricted shares to Gerry Bollman, Group Chief Financial Officer, upon commencement

of his employment with the Group. Further details on the terms and conditions of the restricted shares are provided in the

Remuneration Report.

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201921. Reserves

Reserves

Foreign currency translation reserve:

Opening balance

Movement resulting from translation of financial statements of foreign subsidiaries

net of tax impacts

Merger reserve:

Opening balance

Share based payments reserve:

Opening balance

Share based payments expense

Hedging reserve

Opening balance

Hedging loss during the year

2019

$000

2018

$000

15,099

(4,778)

6,627

21,726

19,877

15,099

(1,100,943)

3,666

5,257

8,923

(10,767)

–

(10,767)

832

2,834

3,666

–

(10,767)

Total reserves

(1,081,061)

(1,092,945)

(a) Foreign currency translation reserve

The foreign currency translation reserve comprises all foreign currency differences arising from the translation of the financial

statements of foreign operations and the translation of foreign currency monetary items forming part of a net investment in a foreign

operation.

(b) Merger reserve

The Company, through a wholly owned subsidiary, acquired the entities that carry on the operations of Reliance Worldwide

Corporation in April and May 2016 (“Restructure”). The Directors elected to account for the effect of the Restructure as a common
control transaction in accordance with the provisions of AASB 3: Business Combinations. Consequently, the net assets acquired were
recorded at the carrying values that existed at the time of the transaction. The excess consideration over book value at acquisition date

is recorded in the Merger reserve.

The share based payments reserve is used to record the value of share based payments provided to employees, including Key

Management Personnel, as part of their remuneration.

(d) Hedging reserve

The hedging reserve records the effective portion of the cumulative change in the fair value of the hedging instruments used in cash

flow hedges.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201922. Group entities

Reliance Worldwide Corporation Limited was incorporated on 19 February 2016 and is the parent, and ultimate controlling entity of the

Group. The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance

with the accounting policies described in Note 1.

Country of
Incorporation

Class of
Shares

Equity
Holding
2019

Equity
Holding
2018

Functional
Currency

Name of Entity

Reliance Worldwide Group Holdings Pty Ltd

Reliance Worldwide Corporation (Aust.) Pty Ltd

Reliance Worldwide Pty Ltd

Reliance Employee Share Investments Pty Ltd

Reliance Worldwide Holdings (NZ) Limited

Reliance Worldwide Corporation (NZ) Limited

Reliance Manufacturing Company (NZ) Limited

Titon Limited

Reliance Worldwide Corporation (Canada) Inc

Reliance Worldwide Holdings (USA) Corporation

Reliance Worldwide Corporation

Streamlabs Inc

Reliance Worldwide Corporation (Europe) S.L.U.

Australia

New Zealand

Canada

America

Spain

Ordinary

Reliance Worldwide Holdings (UK) Limited

United Kingdom Ordinary

Reliance Worldwide Corporation Underfloor
Heating Limited1
Reliance Water Controls Limited

United Kingdom Ordinary

Reliance Worldwide Corporation (R.W.C Israel) Ltd

Israel

Ordinary

Reliance Worldwide Finance Limited

United Kingdom Ordinary

Reliance Worldwide Holdings (International) LLC

America

Ordinary

Reliance Worldwide Corporation
Holdings (UK) Limited2
John Guest International Ltd

John Guest Speedfit Ltd

John Guest Engineering Ltd
Reliance Worldwide Corporation (UK) Limited3
John Guest Connectors Ltd

John Guest Automotive Ltd
John Guest North America Holdings Inc4
John Guest USA Inc4
John Guest Automotive Inc4
John Guest Automotive GmbH

John Guest GmbH

John Guest SA

John Guest SRL

John Guest Pacific Ltd

John Guest Korea Ltd

John Guest (Shanghai) Trading Co. Ltd

John Guest S.L.

John Guest Czech S.R.O

John Guest Sp zoo

John Guest Automotive SRL

United Kingdom Ordinary

America

Germany

France

Italy

New Zealand

Korea

China

Spain

Ordinary

Czech Republic

Ordinary

Poland

Italy

Ordinary

Formerly Reliance Worldwide Corporation (UK) Limited

1.
2. Formerly John Guest Holdings Ltd
3. Formerly John Guest Ltd
4. Merged into the USA subsidiary Reliance Worldwide Corporation on 31 December 2018

100%

–

100%

AUD

NZD

CAD

USD

Euro

GBP

ILS

USD

GBP

USD

Euro

NZD

KRW

CNY

Euro

CZK

PLN

Euro

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201923. Expenditure commitments

(a)

Non-cancellable operating lease commitments contracted for at balance date but not recognised as liabilities in the

financial statements:

Payable not later than one year

Payable later than one year and not later than five years

Payable later than five years

2019

$000

14,747

50,235

58,327

2018

$000

13,829

44,519

41,504

123,309

99,852

(b) Capital expenditure commitments contracted for at balance date but not provided for in respect of plant and equipment:

Payable not later than one year

Payable later than one year and not later than five years

2019

$000

13,512

–

13,512

2018

$000

11,016

123

11,139

24. Contingent liabilities

The Company has agreed to provide guarantees for certain commitments made or entered into by subsidiary entities in the ordinary

course of business. The Company does not consider these guarantees to be material in the context of the Group’s business.

The Group has provided bank guarantees totalling $727,870 (2018: $317,000). During June 2019, the Company also provided a

guarantee to secure a GBP 15 million overdraft facility in the UK.

The Directors are not aware of any other material contingent liabilities at balance date or arising since the end of the financial period

which have significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of

affairs of the Group in subsequent financial periods.

25. Financial risk management

The Group is exposed to a range of financial risks, including market risk (which includes foreign currency risk, interest rate risk and

commodity price risk), liquidity risk and credit risk arising from its operating activities. The carrying amounts and estimated fair values

of the Group’s financial instruments recognised in the financial statements are materially the same.

The Audit and Risk Committee has the primary responsibility of overseeing and reporting to the Board on the Group’s risk

management systems and strategies. Various strategies and methods are used to manage different types of market risks that the

Group is exposed to, including:

Market risk

Group financial performance is largely dependent on activity in the residential and commercial repair and renovation and new

construction end-markets. Activities in these end-markets are impacted by changes in general economic conditions such as

movements in inflation and interest rates, the level of business spending and consumer confidence and changes to fiscal or monetary

policies, legislation and regulation (including plumbing codes). Activities in the repair end-market are also impacted by extreme

weather events.

The Group operates in different global regions which diversifies these risks.

Foreign exchange risk

Foreign exchange risk relates to the risk that the fair value of future cash flows of a financial instrument or a highly probable

transaction will fluctuate because of changes in foreign exchange rates. The Group is exposed to foreign exchange risk through

operating activities (sales and purchases made or derived in currencies other than the functional currency), intercompany financing

activities and investment in foreign subsidiaries (which transact in the local currency). The Group does not typically hedge its foreign

exchange exposures but may selectively utilise foreign exchange forward contracts to mitigate fluctuations in foreign exchange rates.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201925. Financial risk management (continued)

The Group’s balance sheet exposure of external receivables and payables balances for the major currency exposures at 30 June are

set out below in Australian dollar equivalents.

Spot exchange rate

Cash

Trade and other receivables

Trade and other payables

Interest bearing liabilities

Net external exposure

USD

2018

$000

GBP

2018

$000

EUR

2018

$000

2019

$000

2019

$000

2019

$000

0.7027

0.7405

0.5533

0.5607

0.6181

0.6334

4,218

40,062

3,808

3,344

–

(3,964)

(3,435)

(10)

–

4,062

39,971

–

3,088

–

(7)

–

1,176

625

633

(3,501)

(4,590)

–

3,081

(1,700)

(3,901)

The table below shows the effect on profit after income tax expense and total equity from major currency exposures, had the

exchange rates been 5% higher or lower than the year end rate.

At relevant 30 June 2019 rates

If foreign exchange rate - 5%

If foreign exchange rate + 5%

Interest rate risk

Increase/(decrease) in
profit after income tax

Increase/(decrease)
in equity

2019

$000

114

(125)

2018

$000

2,068

(1,871)

2019

$000

114

(125)

2018

$000

2,068

(1,871)

The Group is exposed to interest rate risk as it borrows funds at floating rates and interest is received on cash deposits at floating rates.

Interest rate risk is the risk that the Group will be adversely affected by movements in floating interest rates that will increase the cost

of floating rate debt. If the current interest rate was 1% higher the interest expense for the year would have increased by $4.7 million.

The Group’s exposure to interest rate risk on the cash and cash equivalents listed in the Consolidated Statement of Financial Position

and the interest bearing borrowings is disclosed in Note 18 and Note 15.

The Group has determined that if interest rates were to increase or decrease by 50 basis points it would have an immaterial impact on

the Group’s interest income on cash deposits.

Commodity price risk

Commodity price risk is the risk the cost of some key raw material inputs required for the Group’s products are correlated with the

underlying commodity price and, as such, fluctuates over time. The most material exposures for the Group are to the market price

of copper, which is used in the production of brass and to the cost of resins used in the production of plastics. The Group seeks to

manage changing input prices through price negotiations with customers following changes in the underlying commodity.

Liquidity risk

Liquidity risk arises from the ability of the Group to meet its financial liabilities and obligations as and when they fall due. The Group

monitors future financial commitments and intends to maintain sufficient cash reserves and headroom in its banking facilities to meet

these objectives on an on-going basis.

The Group prepares regular cash flow forecasts and monitors its liquidity to ensure it will always have sufficient cash to allow it to

meet liabilities as they fall due.

In addition to its operating cash at bank the Group has undrawn debt facilities available. Details of the debt facilities in place and their

terms are disclosed at Note 15.

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201925. Financial risk management (continued)

Total facilities available

Amount drawn at 30 June

Available at 30 June

2019

$000

2018

$000

750,000

752,675

495,886

662,345

254,114

90,330

In addition, the Group had cash and cash equivalents of $69.3m at 30 June 2019 (30 June 2018 - $274.3m).

The contractual maturity of the Group’s financial liabilities based on the financing arrangements in place at period end date are shown

in the table below:

2019

Financial liabilities

Trade and other payables

Bank borrowings

Total

2018

Financial liabilities

Trade and other payables

Bank borrowings

Total

Credit risk

Carrying
amount

Less than 1
year

$000

131,973

495,886

$000

131,973

–

627,859

131,973

1 to 2 years

2 to 5 years

$000

Total

$000

–

131,973

495,886

627,859

Carrying
amount

Less than 1
year

1 to 2 years

2 to 5 years

$000

Total

$000

167,678

662,345

2,675

830,023

170,353

–

167,678

659,670

662,345

659,670

830,023

Credit risk relates to the potential failure of the Group’s counterparties (such as customers or financial institutions) to meet their

obligations at the appropriate time. The maximum exposure at any time is equal to the carrying value of the financial assets. The

business seeks to monitor and manage counterparty risk through internal controls and protocols, including customer credit policies

and performing banking and financial activities with financial institutions. As such the Group does not seek collateral in respect of its

trade and other receivables.

At 30 June, the maximum exposure to credit risk for trade and other receivables by geographic region is as follows:

Americas

Asia Pacific

EMEA

Total

2019

Carrying
amount

$000

133,296

37,475

61,485

2018

Carrying
amount

$000

107,244

34,927

62,745

232,256

204,916

At 30 June 2019, the Group’s most significant customer accounted for $46.6 million of the trade debtors and receivables amount.

Further details of the Group’s trade receivables are included in Note 9.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201926. Key Management Personnel and Related Party Transactions

Under Australian Accounting Standards, the term Key Management Personnel refers to directors (both non-executive directors and

executive directors) and those persons having the authority and responsibility for planning, directing and controlling the activities of

the Group, directly or indirectly. The Key Management Personnel of the Group during the reporting period until the date of this report

are set out below. All Key Management Personnel held their positions for the entire reporting period unless otherwise noted.

Stuart Crosby

Independent Non-Executive Director, appointed Chairman from 4 March 2019

Jonathan Munz

Non-executive Chairman (until 4 March 2019)

Russell Chenu

Independent Non-Executive Director

Ross Dobinson

Independent Non-Executive Director

Sharon McCrohan

Independent Non-Executive Director

Heath Sharp

Managing Director and Group Chief Executive Officer

Gerry Bollman

Group Chief Financial Officer

(a) Key Management Personnel compensation

Details of the total remuneration of Key Management Personnel of the Group during the reporting period are:

Short term employee benefits

Post-employment benefits

Share based payments

Total

2019

2018

3,803,518

4,072,737

104,768

86,935

1,739,864

940,548

5,648,150

5,100,220

(b) Key Management Personnel transactions in shares and options

The total direct and indirect interests of Key Management Personnel, including their related parties, in the share capital and options of

the Company at 30 June 2019 are:

Jonathan Munz2

Russell Chenu

Stuart Crosby

Ross Dobinson

Sharon McCrohan

Heath Sharp

Gerry Bollman3

Total

Options1

Rights1

2019

2018

2019

2018

2019

2018

Number

–

79,015,152

155,217

150,506

32,457

–

1,204,041

4,000,000

987,800

–

1,307,190

247,000

1,542,221 80,557,373

5,307,190

1,234,800

–

At 30 June 2019, no Key Management Personnel had been offered or held any rights to be awarded shares other than as disclosed

above.

Details of movements in holdings during the period are disclosed in the Remuneration Report.

1 . Details of Options and Rights granted to Key Management Personnel are disclosed in the Remuneration Report.
2. Mr. Munz ceased to be a member of Key Management Personnel on 4 March 2019.
3. Mr. Bollman has been offered 680,272 restricted shares as detailed in the Remuneration Report.

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201926. Key Management Personnel and Related Party Transactions (continued)

The Company and GSA Industries Pty Ltd, a wholly owned subsidiary of GSA Group and an entity associated with Jonathan Munz,

entered into a shared facilities and services agreement which came into effect on 29 April 2016 (“Shared Services Agreement”) under

which the Company shared premises with GSA Group in Melbourne and was permitted to use certain facilities, such as office space

and car parking, and have signage rights. The Shared Services Arrangement ceased on 30 April 2019. The Company paid an annual fee

of $100,000 (plus GST) to GSA Industries Pty Ltd for the use of these facilities and services. The Shared Services Agreement was on

terms that were more favourable to the Company than arm’s length terms.

There were no other material contracts between a KMP or a related party and the Company or any of its subsidiaries entered into

during the reporting period.

Amounts recognised as an expense during the period

Rent and shared services expense

27. Audit Services

2019

$000

2018

$000

100

KPMG are the auditors of the Company. The total remuneration received, or due and receivable by KPMG from the Group is:

KPMG Australia

Audit services

Other assurance and non-audit services

–

Tax services

– Other services

Total remuneration paid to KPMG Australia

Overseas KPMG offices

Audit services

Tax services

Total remuneration paid to KPMG overseas

Total remuneration to KPMG

Total remuneration for audit services

Total remuneration for non-audit services

2019

2018

398,600

408,000

99,300

30,000

184,007

103,519

527,900

695,526

398,100

217,600

615,700

97,290

65,000

162,290

1,143,600

857,816

2019

2018

796,700

505,290

346,900

352,526

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201926. Key Management Personnel and Related Party Transactions (continued)

28. Deed of cross guarantee

The wholly-owned subsidiaries listed below are relieved from the Corporations Act 2001 requirements for preparation, audit and

lodgement of financial reports and Directors’ reports following the execution of a Deed of Cross Guarantee (“Deed”) on 29 June 2016.

The Deed complies with the relevant ASIC instrument/class order.

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 the Company is wound up.

The holding entity for the purpose of the Deed is Reliance Worldwide Corporation Limited.

The subsidiaries who are parties to the Deed are:

• Reliance Worldwide Group Holdings Pty Ltd; and

• Reliance Worldwide Corporation (Aust.) Pty Ltd.

A consolidated statement of comprehensive income, comprising the Company and controlled entities which are party to the Deed and

after eliminating all transactions between those entities, for the year ended 30 June 2019 and a Statement of Financial Position for the

same group for entities at balance date are set out below.

Statement of profit or loss and other comprehensive income

Revenue from sale of goods

Cost of sales

Gross profit

Other income

Product development expenses

Selling, warehouse and marketing expense

Administration expense

Other expenses

Operating profit

Finance income

Finance costs

Net finance costs

Dividend income

Profit before tax

Income tax expense

Profit for the period attributable to the Owners of the Company

Other Comprehensive profit

2019

$000

2018

$000

229,791

225,915

(163,000)

(157,477)

66,791

4,386

68,438

3,947

(4,044)

(4,306)

(15,777)

(17,206)

(16,384)

(14,448)

(318)

(119)

34,654

44,533

36,306

42,410

(11,493)

(10,378)

33,040

32,032

–

4,635

67,694

72,973

(20,933)

(23,446)

46,761

49,527

Cash flow hedges – effective portion of changes in fair value

–

(10,767)

Total comprehensive profit for the period attributable to the Owners of the Company

46,761

38,760

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201928. Deed of cross guarantee (continued)

Statement of financial position at 30 June 2019

Assets

Current assets

Cash and cash equivalents

Trade and other receivables

Inventories

Other current assets

Total Current Assets

Non-Current

Property, plant and equipment

Intercompany loans receivable

Deferred tax assets

Goodwill

Investment in subsidiaries

Other intangible assets

Total Non-Current Assets

Total Assets

Liabilities

Current liabilities

Trade and other payables

Current tax liabilities

Employee benefits

Total Current Liabilities

Non-Current Liabilities

Borrowings

Deferred tax liabilities

Employee benefits

Total Non-Current Liabilities

Total Liabilities

Net Assets

Equity

Share capital

Reserves

Retained profits/(Accumulated losses)

Total Equity

2019

$000

2018

$000

15,222

32,767

56,561

7,849

195,239

48,944

59,057

9,079

112,399

312,319

35,802

719,616

5,403

39,825

44,206

730,141

7,278

39,825

1,429,145

1,416,083

11,576

1,534

2,241,367

2,239,067

2,353,766

2,551,386

45,102

2,860

3,095

39,965

294

2,849

51,057

43,108

96,000

291,000

2,194

5,394

2,776

4,979

103,588

298,755

154,645

341,863

2,199,121

2,209,523

2,329,127

2,336,618

(166,053)

(171,310)

36,047

44,215

2,199,121

2,209,523

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 201929. Parent entity disclosure

As at, and throughout, the financial year ended 30 June 2019, the parent entity of the Group was Reliance Worldwide Corporation

Limited.

(a) Result of the parent entity

Profit/(Loss) for the period

Other comprehensive income

Total comprehensive profit/(loss) for the period

(b) Statement of financial position of the parent entity at 30 June

Assets

Current Assets

Non-Current Assets

Total Assets

Liabilities

Current Liabilities

Non-Current Liabilities

Total Liabilities

Net Assets

Equity

Share capital

Reserves

Retained profits /(Accumulated losses)

Total Equity

2019

$000

37,293

–

2018

$000

77,853

–

37,293

77,853

2019

$000

2018

$000

162,687

164,077

2,318,102

2,319,634

2,480,789

2,483,711

50,466

96,021

61,979

67,560

146,487

129,539

2,334,302

2,354,172

2,329,127

2,336,618

8,924

(3,749)

3,667

13,887

2,334,302

2,354,172

The Company has agreed to provide guarantees for certain commitments made or entered into by subsidiary entities in the ordinary

course of business. The Company does not consider these guarantees to be material in the context of the Group’s business. Refer to

Note 24.

(d) Parent entity capital commitments for acquisition of property plant and equipment

The Company did not enter into any material contracts to purchase plant and equipment during the year.

(e) Parent entity guarantees in respect of the debts to its subsidiaries

The Company has entered into a Deed of Cross Guarantee with the effect that it guarantees liabilities and obligations in respect of

some Australian subsidiaries in certain circumstances. Refer to Note 28.

30. Subsequent events

On 27 August 2019, the Directors resolved to declare a fully franked final dividend for the 2019 financial year of 5.0 cents per share.

The aggregate dividend payment amount is $39.5 million. The dividend will be paid to eligible shareholders on 11 October 2019. The

Company does not have a dividend reinvestment plan.

The Directors are not aware of any other matters or circumstances that have occurred since the end of the financial year that have

significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of

the Group in subsequent financial periods.

Reliance Worldwide Corporation LimitedAnnual Report 2019Financial ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2019In the opinion of the Directors of the Reliance Worldwide Corporation Limited (“the Company”):

(1) the consolidated financial statements and notes set out on pages 58 to 94, are in accordance with the Corporations Act 2001,

including:

(i) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for the financial year

ended on that date; and

(ii) complying with Australian Accounting Standards, other mandatory professional reporting requirements and the Corporations

Regulations 2001.

(2) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

(3) there are reasonable grounds to believe that the Company and the Group entities identified in Note 28 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 described in Note 28.

The Directors draw attention to Note 1 to the consolidated financial statements which includes a statement of compliance with

International Financial Reporting Standards.

The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer as required by Section 295A

of the Corporations Act 2001.

Signed in accordance with resolution of the Directors.

Stuart Crosby

Chairman

Melbourne

27 August 2019

Heath Sharp

Group Chief Executive Officer and Managing Director

DIRECTORS’ DECLARATIONFor the year ended 30 June 2019
Independent Auditor’s Report

Valuation of inventory ($229 million)

Refer to Note 10 Inventories to the Financial Report.

To the shareholders of Reliance Worldwide Corporation Limited

Report on the audit of the Financial Report

Opinion

We have audited the Financial Report of
Reliance Worldwide Corporation 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
2019 and of its financial performance for
the year ended on that date; and

complying with Australian Accounting
Standards
the Corporations
and
Regulations 2001.

The Financial Report comprises:

• Consolidated Statement of financial position as at 30

June 2019;

• Consolidated Statement of profit or loss and other
comprehensive income, Consolidated Statement of
changes in equity, and Consolidated Statement of
cash flows for the year then ended;

• Notes including a summary of significant accounting

policies; and

• Directors’ Declaration.

The Group consists of the Company and the entities it
controlled at the year-end or from time to time during
the financial year.

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 (the Code) that are relevant to our audit of the Financial Report in Australia.
We have fulfilled our other ethical responsibilities in accordance with the Code.

Key Audit Matters

The Key Audit Matter we identified is:

• Valuation of inventory

Key Audit Matters are those matters that, in our
professional judgement, were of most significance in our
audit of the Financial Report of the current period.

These matters were addressed in the context of our audit
of the Financial Report as a whole, and in forming our
opinion thereon, and we do not provide a separate
opinion on these matters.

KPMG, an Australian partnership and a member firm of the
KPMG network of independent member firms affiliated with
KPMG International Cooperative (“KPMG International”), a
Swiss entity.

Liability limited by a scheme
approved under Professional
Standards Legislation.

The key audit matter

How the matter was addressed in our audit

The valuation of inventory is a key audit matter as

Our audit procedures included:

a result of:

the extent of audit effort applied to address

computations, by significant product category,

the Group’s inventory volumes held across

in key regions. This includes checking inputs

multiple product categories

in multiple

into the costing computation, on a sample

manufacturing sites. The high volume of

basis, to external documentation such as

manufactured products across multiple

supplier invoices.

testing

costing methodology

and

regions leads to greater audit effort, as

inventory is tested at a regional level.

challenging the Group's approach for allocation

of overheads within the costing computation on

the extent of

judgement

involved

a sample basis by:

determining the recoverable value, particularly

in relation to slow moving or obsolete

inventory.

cost;

 examining the construct of the standard

•

the

inherent complexities

in applying a

standard cost of manufacturing to inventories

requires additional audit effort in assessing

certain products “at risk”.

•

 evaluating the underlying documentation

of the Group’s methodology and inquiring

with finance and operational personnel in

the Group

about

the

allocation

methodology applied; and

 comparing the allocation methodology to

our understanding of the business and the

criteria in the accounting standards.

understanding

the processes

the Group

undertakes to assess the slow moving and

obsolete

inventory,

including the Group’s

consideration of changes in market conditions,

and

its

implications

the valuation of

inventory.

assessing

the accuracy of

the Group’s

expected selling prices to inform our evaluation

the current expected selling prices

incorporated into the inventory valuation. We

did this by comparing a sample of previously

identified

slow moving

inventories

subsequent sales amounts achieved. This was

performed across various products and site

categories.

observing the condition of a sample of

inventory at physical inventory counts. We

traced the identification from the count to the

accounting records as they enter into the

inventory valuation.

challenging the identification of categories of

inventory at risk of net realisable value being

less than cost using:

 our observations of poorer condition

inventory from the inventory counts;

 the implications to saleability of inventory

given our understanding of the changing

Reliance Worldwide Corporation LimitedAnnual Report 2019Independent Auditor’s ReportINDEPENDENT AUDITOR’S REPORTIndependent Auditor’s Report

Valuation of inventory ($229 million)

Refer to Note 10 Inventories to the Financial Report.

The key audit matter

How the matter was addressed in our audit

The valuation of inventory is a key audit matter as
a result of:

•

the extent of audit effort applied to address
the Group’s inventory volumes held across
multiple product categories
in multiple
manufacturing sites. The high volume of
manufactured products across multiple
regions leads to greater audit effort, as
inventory is tested at a regional level.

judgement

the extent of
in
determining the recoverable value, particularly
in relation to slow moving or obsolete
inventory.

involved

inherent complexities

the
in applying a
standard cost of manufacturing to inventories
requires additional audit effort in assessing
certain products “at risk”.

To the shareholders of Reliance Worldwide Corporation Limited

Report on the audit of the Financial Report

Opinion

We have audited the Financial Report of

The Financial Report comprises:

Reliance Worldwide Corporation Limited

(the Company).

In our opinion, the accompanying Financial

Report of the Company is in accordance with

the Corporations Act 2001, including:

• Consolidated Statement of financial position as at 30

June 2019;

• Consolidated Statement of profit or loss and other

comprehensive income, Consolidated Statement of

changes in equity, and Consolidated Statement of

giving a true and fair view of the

cash flows for the year then ended;

•

Group’s financial position as at 30 June

2019 and of its financial performance for

the year ended on that date; and

complying with Australian Accounting

Standards

and

the Corporations

Regulations 2001.

• Notes including a summary of significant accounting

policies; and

• Directors’ Declaration.

The Group consists of the Company and the entities it

controlled at the year-end or from time to time during

the financial year.

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 (the Code) that are relevant to our audit of the Financial Report in Australia.

We have fulfilled our other ethical responsibilities in accordance with the Code.

Key Audit Matters

• Valuation of inventory

The Key Audit Matter we identified is:

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.

KPMG, an Australian partnership and a member firm of the

KPMG network of independent member firms affiliated with

KPMG International Cooperative (“KPMG International”), a

Liability limited by a scheme

approved under Professional

Standards Legislation.

Swiss entity.

Our audit procedures included:

•

costing methodology

testing
and
computations, by significant product category,
in key regions. This includes checking inputs
into the costing computation, on a sample
basis, to external documentation such as
supplier invoices.

challenging the Group's approach for allocation
of overheads within the costing computation on
a sample basis by:

 examining the construct of the standard

cost;

 evaluating the underlying documentation
of the Group’s methodology and inquiring
with finance and operational personnel in
the Group
allocation
methodology applied; and

about

the

 comparing the allocation methodology to
our understanding of the business and the
criteria in the accounting standards.

the processes

understanding
the Group
undertakes to assess the slow moving and
obsolete
including the Group’s
consideration of changes in market conditions,
and
the valuation of
its
inventory.

implications

inventory,

the accuracy of

assessing
the Group’s
expected selling prices to inform our evaluation
of
the current expected selling prices
incorporated into the inventory valuation. We
did this by comparing a sample of previously
identified
to
subsequent sales amounts achieved. This was
performed across various products and site
categories.

slow moving

inventories

observing the condition of a sample of
inventory at physical inventory counts. We
traced the identification from the count to the
accounting records as they enter into the
inventory valuation.

challenging the identification of categories of
inventory at risk of net realisable value being
less than cost using:

 our observations of poorer condition
inventory from the inventory counts;

 the implications to saleability of inventory
given our understanding of the changing

INDEPENDENT AUDITOR’S REPORTmarket conditions
experience; and

from our

industry

 comparison against recent sales trends.

testing the Group’s value ascribed to inventory,
across various product and site categories,
where net realisable value is lower than cost.
This was performed on a sample basis by
comparing the cost per unit in the general
ledger with the latest selling price per unit
obtained from the:

 approved pricing list; or

 recent selling prices from transactions

subsequent to year end.

assessing the appropriateness of the Group’s
policies for the valuation of inventory against
the requirements of the accounting standards.

•

Other Information

Other Information is financial and non-financial information in Reliance Worldwide Corporation 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.

The Other Information we obtained prior to the date of this Auditor’s Report was the Directors Report,
Remuneration Report, Operating and Financial Review and Financial Highlights. The Chairman’s Report
and Chief Executive Officer’s Report are expected to be made available to us after the date of the
Auditor’s Report.

Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
and will 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:

•

material misstatement, whether due to fraud or error; and

to issue an Auditor’s Report that includes our opinion.

to obtain reasonable assurance about whether the Financial Report as a whole is free from

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/auditors_responsibilities/ar1.pdf

This description forms part of our Auditor’s Report.

Report on the Remuneration Report

Opinion

Directors’ responsibilities

In our opinion, the Remuneration Report of

The Directors of the Company are responsible for the

Reliance Worldwide Corporation Limited for

preparation and presentation of the Remuneration Report

the year ended 30 June 2019 complies with

in accordance with Section 300A of the Corporations Act

Section 300A of the Corporations Act 2001.

2001.

Our responsibilities

We have audited the Remuneration Report included in

the Directors’ Report exclusively within the section

labelled “Remuneration Report”, for the year ended 30

June 2019.

Our responsibility is to express an opinion on the

Remuneration Report, based on our audit conducted in

accordance with Australian Auditing Standards.

KPMG

Paul McDonald

Partner

Melbourne

27 August 2019

Reliance Worldwide Corporation LimitedAnnual Report 2019Independent Auditor’s ReportINDEPENDENT AUDITOR’S REPORTmarket conditions

from our

industry

experience; and

 comparison against recent sales trends.

•

testing the Group’s value ascribed to inventory,

across various product and site categories,

where net realisable value is lower than cost.

This was performed on a sample basis by

comparing the cost per unit in the general

ledger with the latest selling price per unit

obtained from the:

 approved pricing list; or

 recent selling prices from transactions

subsequent to year end.

•

assessing the appropriateness of the Group’s

policies for the valuation of inventory against

the requirements of the accounting standards.

Other Information

Other Information is financial and non-financial information in Reliance Worldwide Corporation 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.

The Other Information we obtained prior to the date of this Auditor’s Report was the Directors Report,

Remuneration Report, Operating and Financial Review and Financial Highlights. The Chairman’s Report

and Chief Executive Officer’s Report are expected to be made available to us after the date of the

Auditor’s Report.

Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not

and will 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/auditors_responsibilities/ar1.pdf
This description forms part of our Auditor’s Report.

Report on the Remuneration Report

Opinion

Directors’ responsibilities

In our opinion, the Remuneration Report of
Reliance Worldwide Corporation Limited for
the year ended 30 June 2019 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 the Remuneration Report included in
the Directors’ Report exclusively within the section
labelled “Remuneration Report”, for the year ended 30
June 2019.

Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.

KPMG

Paul McDonald

Partner

Melbourne

27 August 2019

INDEPENDENT AUDITOR’S REPORTThe information set out below was applicable at 30 August 2019.

Distribution of Equities – Ordinary Shares

Range

1 – 1,000

1,001 – 5,000

5,001 – 10,000

10,001 – 100,000

100,001 and over

Total

Total holders

Number of
shares

% of issued
shares

4,059

8,640

3,373

2,693

2,189,668

23,404,005

24,581,955

59,226,500

120

680,692,637

0.28

2.96

3.11

7.50

86.15

18,885

790,094,765

100.00

The number of shareholders holding less than a marketable parcel of shares was 274.

Largest Shareholders

The names of the 20 largest registered holders of ordinary shares are listed below:

Number of
shares held

245,098,179

143,331,868

72,722,036

62,518,482

59,246,317

16,901,870

11,167,111

7,389,834

6,466,682

3,561,460

3,207,529

2,772,049

2,600,000

2,558,617

2,501,703

2,000,000

1,930,018

1,879,870

1,750,000

1,671,280

% of Issued
Shares

31.02

18.14

9.20

7.91

7.50

2.14

1.41

0.94

0.82

0.45

0.41

0.35

0.33

0.32

0.25

0.24

0.22

0.21

Name

HSBC Custody Nominees (Australia) Limited

J P Morgan Nominees Australia Pty Limited

BNP Paribas Nominees Pty Ltd

National Nominees Limited

Citicorp Nominees Pty Limited

Australian Foundation Investment Company Limited

BNP Paribas Noms Pty Ltd

Reliance Employee Share Investments Pty Limited

Netwealth Investments Limited

Sandhurst Trustees Ltd

Citicorp Nominees Pty Limited

HSBC Custody Nominees (Australia) Limited

Mirrabooka Investments Limited

BNP Paribas Nominees Pty Ltd

Bond Street Custodians Limited

AMCIL Limited

UBS Nominees Pty Ltd

AMP Life Limited

Djerriwarrh Investments Limited

HSBC Custody Nominees (Australia) Limited

100

Reliance Worldwide Corporation LimitedAnnual Report 2019Shareholder InformationSHAREHOLDER INFORMATIONSubstantial Shareholders

The number of shares held by substantial shareholders at 30 August 2019 was:

Name

Bennelong Australian Equity Partners Ltd

Australian Super

Challenger Limited

Paradice Investment Management Pty Limited

BNP Paribas Nominees Pty Limited (as custodian for UniSuper Limited)

Greencape Capital Pty Ltd

The Vanguard Group, Inc.

Buy-Back

The Company does not have a current on-market buy-back.

Voting rights

Number of
shares held

108,980,639

66,209,343

61,623,171

55,921,081

55,130,743

47,750,182

39,565,578

% of Issued
Shares

13.79

8.38

7.80

7.08

6.98

6.04

5.01

Every shareholder present at a general meeting has one vote on a show of hands and one vote for every fully paid share held if a poll is

conducted. Shareholders entitled to cast two or more votes may appoint up to two proxies. Where more than one proxy is appointed,

each proxy may be appointed to represent a specific number or proportion of the shareholder’s votes. If the appointment does not

specify the proportion or number of votes that each proxy may exercise, each proxy may exercise half of the shareholder’s votes.

Shareholder enquiries

Shareholders with enquiries about their shareholding should contact the Company’s share registry:

Computershare Investor Services Pty Limited

Yarra Falls

452 Johnson Street

Abbotsford Vic 3067

T: 1300 850 505 (within Australia)

T: +61 3 9415 4000 (international)

Please mail all share registry correspondence to:

Computershare Investor Services Pty Ltd

GPO Box 2975 Melbourne VIC 3001

Please include your Shareholder Reference Number (SRN) or Holder Identification Number (HIN) in all correspondence to the share

registry.

Change of address

It is important for shareholders to notify the share registry in writing promptly of any change of address. As an added security measure,

please quote your Shareholder Reference Number and your old address.

Investor information

The Company maintains a website at www.rwc.com where company information is available and a service for any queries is provided.

For further queries, please email the Company at investorrelations@rwc.com or call +61 7 3018 3400.

Stock Exchange listing

Reliance Worldwide Corporation Limited’s ordinary shares are quoted on the Australian Securities Exchange under the code “RWC”.

Annual General Meeting

Details of the Annual General Meeting of Reliance Worldwide Corporation Limited will be advised in the Notice of Meeting which will

be despatched to shareholders.

101

SHAREHOLDER INFORMATIONBoard of Directors

Stuart Crosby (Chairman)

Heath Sharp

Russell Chenu

Ross Dobinson

Sharon McCrohan

Company Secretary

David Neufeld

Registered Office

28 Chapman Place

Eagle Farm, QLD 4009

T: +61 7 3018 3400

F: +61 7 3105 8130

Auditor

KPMG

Tower Two

Collins Square

727 Collins Street

Melbourne Vic 3008

Share Registry

Computershare Investor Services Pty Limited

Yarra Falls

452 Johnson Street

Abbotsford Vic 3067

T: 1300 850 505 (within Australia)

T: +61 3 9415 4000 (international)

Please mail all share registry correspondence to:

Computershare Investor Services Pty Ltd

GPO Box 2975 Melbourne VIC 3001

Stock Exchange Listing

Reliance Worldwide Corporation Limited’s shares are quoted on the Australian Securities Exchange.

Website address

www.rwc.com

102

Reliance Worldwide Corporation LimitedAnnual Report 2019Corporate DirectoryCORPORATE DIRECTORY
Reliance Worldwide
Corporation Limited

28 Chapman Place
Eagle Farm, QLD 4009

ACN 610 855 877