Reliance Worldwide Corporation Limited
Annual
Report
2021
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
2021 has been a record year for RWC.
The strengths of our products, brands,
channel partner relationships and customer
service have been essential factors in
helping us deliver more products to more
users than ever before. Making it happen has
been the incredible team of people at RWC.
Our value proposition
A family of innovative, integrated
products that saves customers’
time and makes their lives easier,
while our unrivalled value creation
delivers stronger returns for our
distribution partners.
Our core purpose
Making our customers’ lives
easier with clever solutions
for the built environment.
Contents
Chairman’s Report
Our 5 year performance
Chief Executive Officer’s Report
2021: A year of challenges and triumphs
Delivering our products
John Guest marks a significant milestone
Making a positive social impact
Strategy overview
Board Members
Senior Leadership Team
Operating and Financial Review
Financial Reports and Statements
Directors’ Report
Shareholder Letter
Remuneration Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss
and 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
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Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Chairman’s
Report
Chairman’s Report
Dear fellow shareholders,
It gives me great pleasure to present
our annual report for 2021.
This has been an extraordinary year for RWC. We
The following report from Heath Sharp, Group Chief
had to manage our way through COVID while at the
Executive Officer, and the accompanying review of
same time meeting much-elevated demand levels.
operations provide more detailed commentary on
These factors placed huge burdens on our people as
performance and financial results.
they worked to manage our supply chains, deal with
the complexities and restrictions made necessary by
the global pandemic and, most importantly, deliver
for our customers. As a result of the extraordinary
efforts of our people, we have delivered powerful
revenue and earnings growth and consequently
achieved a record result for the Company.
Financial Performance
Strong cash performance
has further strengthened
the balance sheet
Our record earnings performance translated into
a very strong cash result, with cash flow from
operations up 20% to $334.3 million. This strong
cash flow performance enabled a further reduction
Reported Net Profit after Tax (“NPAT”) was
of $128.3 million in borrowings and a decrease in the
$188.2 million for the year ended 30 June 2021,
leverage ratio (net debt to EBITDA) from 1.39 times
which was 111% higher than the prior year. NPAT
to 0.51 times. We finished the year in a particularly
after adjustment for one-off restructuring costs
strong financial position including headroom within
and certain tax accounting treatments was $211.9
our borrowing facilities of $583 million.
million, an increase of more than 60% over the
same measure in the prior year.
This exceptionally strong result was driven primarily
by growth in sales in each of our regions, coupled
with tight cost control. Reported sales were 15%
higher than the prior year but when adjusted for
exchange rate movements sales were up 25% on
the prior year in constant dollar terms.
On behalf of the Board, I congratulate the
management team and everyone across the
Company for delivering such an outstanding
result. Meeting the significant increase in
demand for our products while also delivering
operational improvements during a global
pandemic is an extraordinary achievement.
Capital Management
review
During the year, we reviewed the company’s capital
management approach. Following the review,
we believe that RWC’s optimal capital structure
will be achieved by maintaining a leverage ratio in
the range of 1.5 to 2.5 times net debt to EBITDA.
Maintaining a level of debt within this range will
minimise our cost of capital whilst ensuring we are
able to continue to borrow on acceptable terms.
As I have noted above, we are well below this
range at present due to the very strong cash
performance in 2021.
Investing in the business to support growth
opportunities will continue to be a priority.
Cash flows generated beyond this investment will
continue to support distributions to shareholders
through dividends. Our policy of distributing
between 40% and 60% of annual NPAT by way
of dividends each year remains unchanged.
Dividend
With the strong earnings performance recorded
in FY2021 we’ve been able to substantially
increase the dividend paid from last year.
Total dividends declared for the year are 13.0 cents
per share representing an earnings payout ratio
of approximately 55% of Reported NPAT.
This compares favourably with the 7.0 cents per
share declared last year and 9.5 cents per share
declared in respect of the 2019 financial year.
Revised remuneration
structure
A review of RWC’s remuneration framework was
completed during FY2021. The main purpose of the
review was to enable the Company to implement
a remuneration framework programme more
closely aligned with current market practices.
External consultants were engaged to assist with
Beyond paying dividends, we have determined
benchmarking analysis and design of the framework.
that the purchase of RWC shares through
on-market share buybacks would be the most
effective means of distributing excess cash.
A share buyback would be value-enhancing for
shareholders as it would contribute to positive
earnings accretion on an Earnings Per Share (EPS)
basis as well as improve return on equity. We
will consider share buybacks in the future having
regard to our earnings performance, the economic
outlook and other investment opportunities.
We will continue to be very disciplined in our
approach to capital investment. Early in the
pandemic we prudently scaled back capital
expenditure as we sought to preserve cash.
We are now responding to the volume growth
of the past year by investing appropriately
in increased capacity in our manufacturing
The review has been extensive and thorough, and the
revised framework is being implemented across all
those in leadership roles (approximately 215 people)
in FY2022. Its design is largely US-referenced,
reflecting the fact that over half of RWC’s executives
are based in the US, and it is performance-
based, with incentive pay linked to operational
performance and shareholder value creation.
We are confident that the framework will position
us to compete to attract and retain the best
talent for RWC, and that it is aligned with
shareholder expectations, being comparable
with appropriate industry and geographical peers
and ensuring that remuneration is clearly linked to
shareholder returns.
You will find further details of the new framework
operations. Investing in new product development
in Section C of the Remuneration Report.
and their commercial release also continues to
be a priority. Finally, we remain keen to expand
our product offering through acquiring
complementary businesses, and we have an
active programme to identify and assess
opportunities. When assessing these
opportunities, we continue to apply suitable
levels of rigour and financial discipline.
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5
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Chairman’s
Report
Board changes
Outlook
We were pleased to welcome Darlene Knight to the
The outlook for our key markets in FY2022 is positive
Board in April as an independent director. Darlene’s
notwithstanding ongoing COVID restrictions and the
background has been with global manufacturing
emergence of new variants. Economic conditions in
sector organisations where she held strategic
our key markets look to be broadly favourable and
and operations roles, including senior leadership
are likely to be underpinned by ongoing government
roles in the US and China. With her experience in
stimulus measures.
engineering, global manufacturing and quality,
Darlene’s appointment is consistent with the
Board’s aim of strengthening its capacity by adding
members with relevant skills and experience.
In the Americas, home remodelling activity is
expected to remain strong given the positive
fundamentals in core US residential segments,
while weakness in non-residential activity is likely to
Concurrent with Darlene’s appointment, Ross
continue in FY2022. We expect that sales growth in
Dobinson retired from the board after five years as
the Americas will moderate significantly following
a director, and I’d like to formally record here the
the exceptionally strong levels recorded in FY2021.
Board’s thanks to Ross for his contribution to the
Company over that time.
In Australia, increases in residential dwelling
approvals should translate into a continuation
I’d like to thank the chairs of the Nomination and
of construction activity levels, and house price
Remuneration Committee, Christine Bartlett, and
appreciation and low interest rates should remain
the Audit and Risk Committee, Russell Chenu, for
supportive of the home remodelling sector.
their work over the past year. The remuneration
review has been a very significant undertaking
and has been led skilfully and energetically by
Christine. Similarly, the demands on the Audit
and Risk Committee over the past year have been
significantly higher than usual as we have navigated
through COVID, and I thank Russell for his expertise
and leadership.
Social Impact Report
During the year we released our second social
In the UK, short-term housing demand and
economic indicators remain favourable, pointing
to continued strong demand for repair and
remodelling activity. While the recovery in
Continental Europe started later than the UK, it is
anticipated that demand will continue to improve
with increased vaccine availability and economies
opening up further.
I look forward to presenting to shareholders
at the Annual General Meeting to be held on
28 October 2021. National and international
border restrictions will likely dictate that our
impact report which provides an update on our
overseas based directors and management will
progress across a range of environmental,
only be able to join the meeting by video. It is
social and governance practices. Two areas which
unclear at this time whether restrictions in Victoria
we highlight in the report where we made particular
will be eased sufficiently to allow a hybrid virtual
progress were in the development of a Diversity
and physical meeting to be held for shareholders
and Inclusion framework across the Group,
who would like to attend in person. Full details will
and the development of a work plan with short
be outlined in the Notice of Meeting.
and long-term goals to address modern slavery.
This year we will be undertaking a thorough
analysis of our greenhouse gas emissions and
establishing emission reduction targets and an
action plan to achieve them. The Board is actively
engaged with management in working through our
sustainability priorities and we are very appreciative
of the progress that the Company has made over
the past two years in addressing areas of highest
relevance to RWC.
Stuart Crosby
Chairman
The outlook
for our key
markets in
FY2022
is positive
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Roman Vejda
Czech Republic
7
Reliance
Worldwide
Corporation
Limited
Annual Report
Annual Report
2021
2021
Our 5 year
performance
RWC was listed
on the ASX in April
2016 and, at the
end of FY2021,
we had completed
5 full years as a
listed company.
Over that time, we have delivered
strong growth in sales and earnings,
through a combination of organic
growth and acquisitions.
Net Sales A$m
5 Year CAGR: 22%
1341
1162
1104
769
602
1600
1400
1200
1000
800
600
400
200
0
400
350
300
250
200
150
100
50
0
349
212
277
251
158
130
151
121
79
66
250
200
150
100
50
0
Net Sales
Adjusted EBITDA
Adjusted NPAT
FY17
FY18
FY19
FY20
FY21
400
Adjusted EBITDA A$m
5 Year CAGR: 30%
250
Adjusted NPAT A$m
5 Year CAGR: 34%
Our 5 year
performance
Net Sales A$m
5 Year CAGR
+22%
Adjusted EBITDA A$m
5 Year CAGR
1600
+30%
1400
1200
1000
1162
1104
Adjusted NPAT A$m
5 Year CAGR
800
769
602
600
+34%
400
200
0
1341
350
1600
1600
349
300
1400
1400
1341
1341
277
251
1162
1104
1104
1162
1200
1200
1000
1000
800
800
769
769
151
602
602
600
121
600
400
400
200
200
250
200
150
100
50
400
400
200
350
350
300
300
150
250
200
100
250
200
150
150
100
50
100
50
50
0
0
0
212
250
250
349
349
212
212
158
277
277
251
251
130
151
79
151
66
121
121
Adjusted EBITDA
Adjusted NPAT
Adjusted EBITDA
200
200
150
150
100
100
50
50
0
0
158
158
130
130
79
79
66
66
Adjusted NPAT
Adjusted NPAT
Net Sales
0
0
0
Adjusted EBITDA
Net Sales
Net Sales
8
9
FY17
FY18
FY19
FY20
FY21
FY17
FY17
FY18
FY18
FY19
FY19
FY20
FY20
FY21
FY21
CAGR: compound annual growth rate
Chief Executive
Officer’s Report
1
EBITDA, Adjusted
EBITDA, and
Adjusted NPAT are
non-IFRS measures
used by RWC to
assess operating
performance.
These measures
have not been
subject to audit
or review. Refer
to the Operating
and Financial
Review section for
additional detail.
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Chief Executive Officer’s Report
I’m very pleased to report to you on our record
performance for the year ended 30 June 2021.
Trading Performance
of each region
At the start of the year, we faced great uncertainty
across our markets due to the COVID pandemic.
As the year has unfolded, our experience has
been one of incredibly resilient repair and remodel
markets, and of consistently higher demand for
Group Result for FY2021
Americas
EMEA
The 2021 financial year set new records for the
were 27% higher for the year and 31% higher in the
year, with sales on a constant currency basis up
Company for both sales and earnings.
second half. Growth was driven by the strength
25% on the prior year. Sales volumes recovered
Americas’ sales on a constant currency basis
We recorded a strong rebound in EMEA sales this
our products in all of our major markets.
We recorded net sales for the year of $1,340.8
This unprecedented level of demand has at times
tested our capacity and our capability, particularly
during the height of the pandemic in the US and
UK. Our ability to deliver for our channel partners
and end user customers despite the disruption of
COVID and the knock-on impacts to global supply
million which were 15% higher than the prior year.
Foreign currency exchange rates this year had a
particularly marked impact on our reported sales
and mask the true strength of our sales growth.
Looking at net sales performance on a constant
currency basis, the growth rate was 25%.
chains and logistics activities, is testament to the
All regions encountered increased demand
commitment and dedication of everyone at RWC.
throughout the year as a result of strong
residential repair and remodel activity. COVID has
had a major impact on the discretionary spending
priorities of consumers around the world.
With more time being spent at home, consumers
have opted to invest in upgrading their houses and
we saw this flow through to demand in all our key
markets. New residential construction markets
were also buoyant and drove volume growth,
particularly in Australia where a substantial part
of our business is exposed to new home building.
This strong growth in sales translated to higher
earnings. Reported EBITDA1 was $340.7 million,
an increase of 56% on the prior year. During
the year we commenced a rationalisation and
expansion of our warehousing and logistics
activities in the US and UK operations which
incurred one-off costs of $8.5 million. Adjusting
for these costs, and prior year restructuring and
impairment charges, EBITDA was $349.2 million,
39% higher than the prior year.
Reported Net Profit after Tax (“NPAT”) was $188.2
million for the year ended 30 June 2021, which was
111% higher than the prior year. Adjusted NPAT
of $211.9 million reflected one-off restructuring
of the residential repair and remodelling markets
early in the year following the easing of government
in the US and Canada. The trend for increased
COVID restrictions in the UK and Continental Europe.
spending on home improvement was first
Sales growth was initially driven by pent-up demand
evidenced immediately following the outbreak
as channel partners rebuilt inventory levels, and
of COVID and continued throughout FY2021. Our
this was quickly followed by a recovery in activity in
retail and hardware channel partners experienced
repair and remodel markets. Sales in Continental
strong sales growth throughout the year. Wholesale
Europe also improved over the course of the year as
channels saw an improving trend in sales growth,
markets recovered from COVID impacts.
with sales early in the year adversely impacted
by shelter-in-place restrictions in certain parts
of the US and a slower recovery in commercial
construction activity.
Sales in the US were boosted in the second half
by a severe winter freeze impacting Texas and
surrounding US states. This emergency caused
a sudden and significant surge in demand for our
products, and our teams responded magnificently
over the ensuing days and weeks to respond to the
needs of channel partners and their customers.
It was RWC at its very best. We estimate that
approximately US$42 million sales impact can
be attributed to the freeze, which came on top of
already strong demand due to COVID.
APAC
Sales in Asia Pacific were 13% higher for the year.
External sales were up 11% reflecting stronger
Australian new housing construction and remodel
markets. Remodelling activity in Australia was
consistently strong throughout the year, while new
housing commencements in Australia increased by
7% in the year to 31 March 2021. Inter-company sales
were 16% higher as a result of increased exports to
the Americas and the strong demand conditions in
Strong operational
performance
From an operational perspective, the strong
growth in sales had us running hard at all our
facilities. We have been able to keep all our
facilities operational and this was particularly
pleasing in the context of the US and the
UK. We’ve had to do that whilst at the same
time managing the COVID-19 impacts on our
operations. Our people around the world have
worked incredibly hard to keep our operations
going and meet the requirements of our
distributors and our end users, while at the same
time looking after their own health and that of
their colleagues.
A pleasing aspect of this year’s result has been the
way that the top line sales growth has translated
into operational margin expansion and improved
net earnings. Higher volumes have driven factory
efficiencies and improved manufacturing
overhead recoveries. On top of that, our own cost
containment measures have borne fruit. At the
start of the year we announced a cost reduction
programme and a target of $25 million in annual
savings. During the year we realised savings of
$22.3 million and have met our goal of $25 million
in annual savings on a run rate basis by the
end of FY2021.
costs and adjustments for certain tax accounting
the US in particular.
treatments. Adjusted NPAT for the prior
comparable period was $130.3 million.
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11
Investing for the future
Health & Safety
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Cost inflation has been a major challenge this
year, and it has been necessary for us to increase
prices across a range of products in order to
recover input cost increases. The cost of copper,
a key component of manufactured brass
products, rose steeply in the second half of the
year and we also saw increases in plastic resin
and steel costs. Inflation pressures were also
acute in freight and packaging costs.
In the coming year we will be further investing
in manufacturing capacity expansion and to
enable the production of new products. We are
forecasting capital expenditure in the range of
$80 million to $90 million in FY2022, compared
with $48.8 million in FY2021. The increase is partly
due to our tight control of capital expenditure
Looking ahead, we have finalised plans to reshape
during the height of the pandemic, in addition to
our warehouse and logistics activities in the US
the need for more capacity.
and the UK. In the US, we have leased a new
purpose-built distribution centre in Alabama
which will significantly expand our capacity
and allow us to consolidate our warehousing
operations onto one site.
The expansion of manufacturing capacity of
our core products in all three regions, including
SharkBite and SpeedFit fittings, valves and pipe
products, is a direct result of the very strong
growth we experienced in FY2021. We are also
In the UK, we have reached agreement to
investing in production for new products.
outsource our warehousing and logistics
These will allow us to further expand our offering
operations to a third-party logistics provider.
to our core customers which continues to be
This will enable the consolidation of our current
a key component of our growth strategy.
five warehouses into one centrally located
distribution facility with future expansion capacity.
We will also migrate our current truck and trailer
fleet to a more efficient outsourced fleet of
vehicles. These changes will provide a range of
benefits including greater flexibility, efficiency,
scalability, sustainability and enable cost savings.
Importantly it will enable us to enhance the
service we provide to our customers through real
load time visibility and order tracking capability.
In July 2021 we announced the acquisition of the
business assets of LCL Pty Ltd for approximately
A$37 million. LCL is one of Australia’s largest
producers of high-quality copper-based alloys
and produces a range of brass copper alloys
from both new and recycled materials. LCL is the
principal supplier of brass to RWC in Australia
and its primary production facility in Moorabbin
is immediately adjacent to our brass forging
operations. The acquisition means that we
will continue to have access to the supply
of high-quality brass to support our future
operations, and we have also secured a
favourable long-term cost position for our brass
requirements in Australia.
We continue to actively look for business
acquisition opportunities, particularly those that
would allow us to add to our product portfolio
and whose products we could leverage across
our extensive network of channel partners. We
have strong platforms in North America and the
UK which we believe we can leverage further
through selected acquisitions. Demand for quality
businesses is particularly high at present and
we are mindful of the need to remain disciplined
around valuation and growth metrics.
Chief Executive
Officer’s Report
What we do know for sure is that we have finished
FY2021 in a very strong financial position, with
our businesses in each of our regions bigger and
stronger than a year ago. We are well placed to
continue growing in each of our markets through
a combination of new products, marketing
programmes and ongoing plumber conversion to
our range of fitting and pipe systems. Our success
is also built on our customer service and channel
partner relationships and we will continue to
prioritise investment in these areas.
Working with the incredible
team at RWC
Achieving a record year could not have happened
without the commitment and dedication
of everyone at RWC. Despite the enormous
challenges of operating through COVID, RWC
people have worked tirelessly to ensure we were
able to meet the needs of our customers and
channel partners. During the year, we received
The well-being of RWC employees during COVID
remained a priority throughout the year. At each
of our facilities we continued to implement safety
measures in accordance with local regulations
and employed best practices to reduce the
impact to our employees whilst at the facility.
In addition, we have continued to monitor the
impacts of COVID and respond as required when
there are increases in positive case rates in any
regional area in which we operate.
Increasing employee ownership of health and
safety outcomes at RWC has continued to be a
priority. We experienced an increase in employee
health and safety engagement across our
operations, from 24% at the start of FY2021 to
41% at year end. We have achieved this through
encouraging and supporting increased reporting.
During FY2021, nearly 10,000 safety observations,
near-miss events, and hazards were reported
by employees.
Each region has implemented global initiatives
accolades from two of our North American
such as site safety committees and the safety
channel partners naming us a category supplier
observations process. Our regional health and
of the year. The awards, detailed elsewhere in
safety leaders collaborate on a monthly basis
this report, provide third party validation of what
to share general knowledge and identify best
everyone at RWC has achieved over the past year.
practices that we can implement across the
Being part of RWC and working with such
company. This year, we started to implement
a fantastic team has been the highlight of the
additional internal audit processes led by first
year for me, and I thank each and every one of
level leaders in our manufacturing facilities. This
our people for their efforts and contributions over
process is allowing leaders to identify health and
the past year.
Heath Sharp
Group Chief Executive Officer
safety risks, assign corrective actions and track
these tasks to completion. These regular “safety
walks” by site managers will help to minimise
risks in our manufacturing facilities as well as
demonstrate our commitment to the safety
of our people. In FY2022, these safety walks will
expand to include regional and global executives
each time they visit manufacturing
and distribution locations.
The year ahead
After a record year, we are positive about FY2022
while at the same time realistic that the very
high growth rates we achieved in FY2021 will
moderate significantly. One of the factors we
cannot know for certain is the extent to which
potential changes in consumer spending away
from home projects post-COVID will be offset
by a longer-term trend of increased expenditure
on homes.
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13
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Challenges and
Achievements
2021: A year
of challenges
and triumphs
FY2021 was a year dominated by COVID-19, and the effects of
the pandemic were felt in our operations around the world. But
it was only part of the story of RWC in FY2021.
This past year has been the biggest in our history: we’ve sold
more products to more customers than ever before in each
of our key markets. And we’ve done this while managing our
way through lockdowns, workplace restrictions, supply chain
disruptions, border closures, and the personal impacts of
COVID-19 on the lives of our people. Our success in the past
year is testimony to the quality of our people and our products,
the strong relationships we have with our channel partners
and the strength of our brands which ensures customers use
our products again and again.
Detailed on the following pages are just some of the highlights
of the past year - a year of extraordinary challenges but also
great achievements.
Keeping our people safe
The health and safety of RWC employees has
affected employees to self-isolate, conducting
always been our number one priority, even
contact tracing to identify any possible interaction
before the outbreak of COVID-19. Throughout
with other RWC employees or contractors,
the pandemic, RWC has worked to ensure all its
and shutting down and deep cleaning all
facilities adapted and continued to operate safely.
impacted areas.
For employees working at our manufacturing
facilities, we adjusted processes to support social
distancing in production areas and adapted our
material handling processes. For employees working
at our office locations in COVID-19 impacted regions,
we implemented appropriate telecommuting
options and office re-entry protocols.
In cases where employees tested positive,
RWC took appropriate actions, including requiring
Beyond the need to keep employees safe, we
have recognised a need to adapt the way we
operate while preserving our culture and the spirit
of teamwork in a dislocated world. Throughout
COVID-19 we have sought to ensure that our people
remain highly engaged and confident about the
future of RWC.
Lisa Markey & Corey Green
Cullman, Alabama
14
15
Sam Acheampong
Maidenhead, UK
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Challenges and
Achievements
RWC is named a winner at the Atlanta
Top Workplaces 2021 Awards
Meeting the demands of
our customers
Managing through the pandemic and motivating and sustaining
our people through many months of working differently, and
often remotely, has been a challenge. We were especially
pleased when RWC’s Atlanta office was awarded a Top
Workplaces 2021 honour by Atlanta Journal-Constitution.
The list is based solely on employee feedback, gathered
through a third-party survey, which is administered by an
employee engagement technology partner.
Only 175 companies made this year’s list, so RWC was proud
to be included, especially since this was our first time applying
for this award. Our top scores were in three areas: execution,
open-mindedness and innovation.
Our manufacturing, distribution and supply chain
In the US, elevated demand levels were pushed even
teams have worked tirelessly to respond to the
higher during the winter due to a significant freeze
rapid, unforecast changes in demand since the
event in Texas and surrounding US states.
advent of COVID-19, to get as much product as
possible into stores and available for our end-users.
These efforts have required collaboration with each
of our global divisions to meet the elevated demand,
and our operations teams have made an incredible
effort to meet the demands of our customers in a
challenging working environment.
Our ability to respond to changing market conditions
and to meet increased demand was recognised
by two significant awards given to RWC in the
Americas over the past year. Even against the
backdrop of the global pandemic, we proved that
RWC is a manufacturer that cares deeply about
its customers. We distinguished ourselves from
The surge in demand arising from COVID-19 has
household names in the building products category,
been a feature of all our markets in the past year
and that is something we are immensely proud of.
and was driven by increased consumer spending
on home improvements and higher wear and tear
on bathrooms and kitchens.
Texas, US
Atlanta | Top Workplaces 2021 Awards
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Reliance
Worldwide
Corporation
Limited
Annual Report
2021
RWC named one of Lowe’s 2020
Vendor Partners of the Year
In the US, Lowe’s Home Improvement named RWC
Winning this award was a huge testament to
as one of its three distinguished vendor partners of
our strength as an entire organisation to deliver
2020 in the building products category. RWC has
innovation, value and service to our customers.
always maintained a relentless focus on innovation
It reflected the efforts required across the company
and exceeding our customers’ expectations,
to continue to grow the business, forge into new
and our diligence has been recognised once again.
categories and expand our footprint in stores
For the second time in three years, Lowe’s has set
RWC apart as a vendor that:
• Continues to raise the bar in delivering
during an incredibly challenging environment with
increased demand. Accomplishing all of this in
a normal environment is challenging enough,
but to be able to do so during a global pandemic
outstanding quality, innovation, value and service.
and make it seamless for the customer is a
• Goes above and beyond to meet
customers’ needs.
testament to the teamwork, culture and values
within RWC.
This year, Lowe’s also paid special attention to
vendors that acted quickly to meet customers’
needs during the pandemic.
RWC team members hold the Lowe’s 2020
Vendor Partners of the Year Award, US
Challenges and
Achievements
RWC Canada Team
RWC Canada wins 2020 The Home Depot
Plumbing Partner of the Year Award
RWC Canada was awarded the highly coveted The Home Depot Partner of the Year
Award for the plumbing category for 2020, for our exceptional level of service and
product innovation throughout the year.
We’re thankful for our partnerships with all retailers and distributors, and it’s exciting
to be acknowledged for our dedication to our craft.
With the increased demand, new product launches and complexity of our business,
our customer service teams have faced enormous challenges to respond to our
customers. These teams have done an incredible job of responding to our customers
and providing the best experience for our end users.
Delivering for our customers is
a genuine multi-departmental
and multi-country effort
These two awards in the Americas were earnt by all our
US and Canadian teams who worked together to make
this happen. The products on the shelves came from across
our regions, such as SharkBite fittings from Australia and
John Guest FluidTech fittings from the UK. These accolades
are truly global RWC achievements.
18
19
Delivering
our products
Our SharkBite fittings travelled from Melbourne to Texas
With sudden winter storms in Texas — which
On the 2nd of March, RWC sent SharkBite product,
brought about devastating plumbing emergencies
which was produced in our manufacturing facility
like frozen and burst pipes — demand for SharkBite
in Melbourne, from Sydney to San Francisco via
increased dramatically in Texas and surrounding US
a chartered plane. The next day, the shipment flew
states from February onwards. RWC’s team worked
to Chicago before departing by freight to our facility
overtime to make sure plumbers and homeowners
in Cullman, Alabama. Finally, our team distributed
had access to our emergency repair products,
it to Texas. Quite a journey for RWC’s small but
such as brass push fittings and PEX pipe.
mighty fittings!
However, even with increased production, it was
proving difficult to keep products on the shelves in
affected areas. To better serve our customers, we
chartered a plane to transport large quantities of the
most critical repair fittings from Australia to the US.
Plane takes SharkBite products to the US
Melbourne, Australia
Challenges and
Achievements
Continuing product innovation
Despite the impacts of COVID-19 on our operations, we also continued
to innovate and bring new products to market.
In the UK, we brought two of our world-leading brands together to
transform installations. RWC launched a new range of valves that combine
the control and reliability expected from our valves, with the speed and
simplicity of JG Speedfit. Designed for domestic and light commercial
applications, the valves range delivers ultimate control with fast and
simple JG Speedfit push-fit connections.
Our precision engineered valves with push-fit connectors allow both
plastic and copper pipe to be fitted with ease. They’re perfect for tight
spaces as no tools are required.
Another example of product innovation was the launch of
the SharkBite Air and Pneumatics range. Harnessing our
market-leading large diameter 2XL brass push-fit plumbing
technology from SharkBite in the US, we created brass
push-fit fittings that simplify small to large commercial
and industrial compressed air installations. This is a heavy-
duty push-fit air piping system that solves many market
challenges such as lengthy installation times, pipework
corrosion, pressure drops and leaks that lead to higher
energy costs. The new solution complements our existing
John Guest lightweight plastic push-fit fittings and pipe
range that is designed for small to mid-size applications
such as garages and commercial systems.
In the US we continued to bring new product ranges to
market, the most notable being the launch of stop valves
and pipe supports. Our sales teams have worked closely
with our channel partners to increase shelf space for our
core push-to-connect, and PEX pipe and fittings ranges.
These projects have been executed seamlessly, on very
tight timelines, through outstanding collaboration
between our product management, engineering, sales,
marketing and supply chain teams. We have also worked
closely with the merchandising teams of our channel
partners to ensure our products are merchandised
correctly to ensure the best shopping experience
for our customers.
SharkBite stop
valve display
US
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21
Annual Report 2021Reliance Worldwide Corporation Limited Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Challenges and
Achievements
John Guest
marks a significant
milestone
2021 marks a very special year as John Guest celebrates its
60th anniversary - 60 years of trust, innovation and world-class
product design.
Opening his factory doors in 1961, John Guest was determined
to create a brand where quality and excellence of service
underpinned its ethos. One that would change the course of
multiple industries forever and become an iconic plumbing brand.
Inventing the world’s first push-fit technology, designed initially for
compressed air in 1974, John Guest wanted to make installations
faster and easier. That was only the beginning of the 60-year
long journey, one that has been transforming industries such
as plumbing and heating, automotive, drinks, water filtration,
telecoms, air and OEM for decades.
With a passion for simplicity and reliability, John Guest would
go on to invent many more ground-breaking push-fit solutions.
These included the first food grade connector in 1983, the first
fibre optic fitting for BT, the first automotive push-fit for Ford in
1984 and the multi-seal Twist & Lock plumbing and heating range
in 2005. Such innovations, and the pioneering spirit of our people,
are the reasons why John Guest is a world-leading brand.
We are proud of what the John Guest brand has achieved over
the years. From the ingenuity of our engineering teams, through
to the dedication of our shopfloor colleagues, to the passion
of our technical sales and customer care teams. John Guest’s
legacy lives on in RWC’s family of brands and within our teams,
inspiring the next generation of push-fit solutions.
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23
1961
TELECOMSDRINKS DISPENSEOEMCOMPRESSED AIRPLUMBING & HEATINGAUTOMOTIVE Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Social Impact
Making a positive
social impact
Running our business responsibly is vital to our
long-term success, as the decisions we make can
have important consequences for the economy,
society and the environment.
Our approach to corporate social responsibility
helps us to ensure that those consequences are
positive, adding value for our customers,
employees, wider communities and shareholders.
Many of our products have a sustainability
objective at their heart, including thermal mixing
valves, temperature and pressure valves and
push-to-connect technology. As well as designing
products to improve safety, wellbeing and energy
efficiency, we acknowledge the role we play in
shaping a more sustainable, just and equal world.
That includes sustainably sourcing raw materials,
implementing lean manufacturing practices,
ethical management of our supply chain and simply
putting our minds together to help communities
overcome challenges.
We focus our efforts around Environmental, Social
and Governance (ESG) factors through the lens
of product leadership, operational excellence,
supporting our people and robust governance.
You can read more about RWC’s approach in our
latest Social Impact Report on the RWC website:
www.rwc.com/social-impact.
Managing environmental
impacts through the
supply chain
We recognise that environmental issues are increasingly
important to our stakeholders and wider society, and
we work to actively manage and minimise these impacts.
RWC has an ethical code of practice for supply sites,
which provides guidance on the minimum manufacturing
standards acceptable for components and raw
materials supplied to the group’s companies and for
finished products.
This year, we continued to raise our manufacturing
standards by executing projects that will reduce
our carbon footprint. These initiatives include:
• Locating production centres closer to the end market
to reduce transportation miles.
• Sourcing raw materials and components from suppliers
closer to production centres and in the regions that the
finished product will be marketed and sold.
In some cases, these criteria will become mandatory
selection criteria for suppliers.
As RWC remains committed to reducing our supply chain
impacts, we also realise we have much to learn. We are
engaging with experts to accelerate our education process,
help create roadmaps and determine our goals.
Tracy Hill
Cullman, Alabama, US
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Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Social Impact
Fostering Diversity and Inclusion
To continue fostering a diverse and inclusive work environment
across regions, RWC has focused on Diversity and Inclusion (D&I)
education, employee feedback and the evaluation of current policies
to further create a workplace where everyone feels welcome,
supported and valued.
We understand this focus requires ongoing education and
engagement across the company. During the year, the Executive
Leadership Team held workshops with an external firm to
understand the context, requirements and benefits of a diverse
and inclusive workforce. Additionally, education programmes ran
which included training on diversity and inclusion practices.
Another aspect of learning is listening to our people. During the
year we conducted employee engagement surveys in all regions
that included inclusion and diversity questions. Interviews with
employees from all regions and levels of the organisation were
held by an external firm to gather input for consideration in building
RWC’s diversity and inclusion road map.
In addition to listening and learning, we must deliver. At a base level,
RWC maintains workplace policies that comply with local legislative
requirements. The company supports flexible work arrangements
for employees across all regions on a case-by-case basis and
reviews parental leave data annually so that employees with
children feel supported.
We want to make sure various viewpoints are represented in the
organisation. When hiring, we use local equal opportunity practices
and aim for at least one diverse candidate to be included in the final
candidate list.
Guarding against Modern Slavery
At RWC we are proactively seeking to mitigate the
risk of any modern slavery within our operations and
• An assessment of the inherent modern slavery
risks in our supply chains and operations using a
supply chains. We have implemented a broad set of
globally benchmarked tool, and undertaken steps
policies and procedures to identify modern slavery
to understand residual risks for a selection of our
risks which include:
higher risk suppliers.
• Incorporating our modern slavery commitment
into existing policies that cover both operations
and supply chains while committing to remediation.
• Commencing an update of our key internal
policies and extending the scope of these policies
across our regions.
• An analysis of our existing governance structure,
strategy, policies and procedures to understand
the strengths of our current approach and identify
opportunities for improvement.
• Taking steps to address the risks identified
through improvements to our processes and
controls, including updating our standard
purchasing documentation to address modern
slavery requirements.
During the year we published our first Modern
Slavery Statement and a copy can be found
on our website:
www.rwc.com/investors/corporate-governance
‘The programme
offers employees
the chance to
benefit from the
results of RWC’s
success.’
Empowering employees
through the RWC
share plan
We want everyone at RWC to feel invested in the
long-term success of the company. During the year,
we offered employees the opportunity to become
a shareholder by participating in the organisation’s
new Share Match Plan.
The programme offers eligible employees the
chance to benefit from the results of RWC’s success
and is also a way for RWC to reward employees for
the contribution they make to our performance.
Employees can now build their shareholding
gradually through regular post-tax salary
deductions, which will be used to purchase shares
during each plan year. Eligible employees can
acquire up to $5,000 of shares in RWC from post-
tax income. The company will match the shares
acquired on a 1:2 basis up to a cap of $2,500 of
purchased shares, subject to vesting. The 2020
offer was presented to RWC employees in Australia,
Canada, New Zealand, the UK and the US. We
intend to make participation available to employees
in other countries in subsequent offers, subject to
resolving local regulatory matters.
Over 300 employees elected to participate in
the plan in 2020. We hope that by participating,
employees will build an even stronger personal
connection with RWC and its future achievements.
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Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Stategic overview
Strategy
overview
RWC is a global market leader and manufacturer of water delivery,
control and optimisation systems for the modern built environment.
Our unique end-to-end meter to fixture and floor to ceiling plumbing
solutions target the repair and re-model, renovation service and
new construction markets. The core end-user for our product is the
professional plumber.
RWC has three key drivers of growth. The first of these is offering smart
product solutions which make the lives of our end customers easier
and improves their productivity. This is particularly the case for the
pro-plumber who is at the heart of our business, but it’s about enabling
DIY customers too.
Equally important are our channel partner relationships. In each of our
three regions - the Americas, Asia Pacific and EMEA - we have extremely
strong distributor networks. RWC put a lot of effort into ensuring that
we are helping our channel partners grow value. We do this through
expanding the product ranges that are available on their shelves, offering
a high level of service and investing in our brands to ensure that they
retain their strength and continue to attract end-users into their stores.
The third element of our strategy focuses on operational excellence.
This involves delivering the highest quality products via a strong
logistics capability to ensure that our channel partners always have
the right products in stock when they need them. A key aspect of
operational excellence is delivering margin expansion through efficient
and low-cost operations.
Underpinning this is a great culture, sustained by our core values.
We support and develop our people while also supporting and caring
for the broader communities in which we operate. This has been
particularly important over the past year as we have managed the
impact of COVID-19.
Creating Value through Product Leadership
Create and deliver plumbing products that are the first choice for users
Solutions for
the end-user
Distributor
Relationships
Operational
Excellence
Smart product solutions that
improve contractor productivity,
enable the DIYer, and make
lives easier.
Increasing value for the distributor
while providing broadest access
to our products for the end-user.
Premium quality products
and outstanding delivery
performance, yielding margin
expansion.
End user insights
Superior service
Lean manufacturing
New product development
High value product
Strategic sourcing
Acquisitions
Brand management
Logistics capability
Our Team Supporting and developing our people,
supporting and caring for the broader community
Our Values
(our S.P.I.R.I.T.)
Simplicity
Passion
Innovation
Reliability
Integrity
Together
we are one
Team
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Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Board Members
and Senior
Leadership Team
Board Members
Senior Leadership Team
Stuart Crosby
Heath Sharp
Christine Bartlett
Russell Chenu
Independent
Non-executive Chairman
Member of Nomination and
Remuneration Committee
Group CEO
Managing Director
Appointed:
19 February 2016
Appointed:
11 April 2016
Independent
Non-executive Director
Independent
Non-executive Director
Chair of Nomination and
Remuneration Committee
Chair of Audit
and Risk Committee
Appointed:
6 November 2019
Appointed:
11 April 2016
See Directors’ Report
for further details on
the Board Members.
Darlene Knight
Sharon McCrohan
Ian Rowden
Independent
Non-executive Director
Independent
Non-executive Director
Independent
Non-executive Director
Member of Nomination and
Remuneration Committee
Member of Audit
and Risk Committee
Member of Audit
and Risk Committee
Appointed:
14 April 2021
Member of Nomination and
Remuneration Committee
Appointed:
6 July 2020
Appointed:
27 February 2018
Heath Sharp
Group CEO
Andrew Johnson
Group CFO
Sandra Hall-Mulrain
Group SVP and
General Counsel
Edwin de Wolf
CEO
EMEA
Heath joined RWC in 1990
Andrew joined RWC in 2010
Sandra joined RWC in
An experienced General
and has worked in each
as the CFO of the Americas
October 2019. She is
Manager with a proven
international division of the
and has led the division
a seasoned corporate
track record in the plastics,
business, holding senior
through rapid growth and
generalist with 20 years
packaging, security and
management positions
expansion. He has been
of diverse in-house legal
building industries, Edwin
in Engineering, Product
responsible for all aspects
experience in Fortune 100
commenced his RWC
Management, Sales and
of accounting and finance as
corporations and privately
leadership position in 2017.
Operations. Heath was
well as various administrative
held companies. Sandra
With the acquisition of John
General Manager of the Cash
functions. Andrew has
has played a key role as
Guest in 2018, Edwin’s role is
Acme facility in Alabama
over 30 years of finance
a member of the senior
responsible for the successful
after its acquisition in 2002.
and accounting leadership
leadership team helping to
market positioning and
He led the Australian division
and a strong track record
drive strategic initiatives and
sustainable commercial
from late 2004 and returned
in both large and mid-size
provide legal advice and
development of the business
to the US in 2007 to lead the
international manufacturing
guidance to various business
in the UK, Spain, Germany,
RWC business there. Heath
organisations.
activities. Prior to her in-
France, Poland, Czech
held the roles of President of
the US business and global
Chief Operating Officer prior
to his current role.
house counsel career Sandra
Republic and Italy.
was in private practice in
New Jersey.
Simon Woods
Group SVP of
Information Services
Sean McClenaghan
CEO
Americas
Brad Reid
CEO
APAC
Simon has strategically led
With over two decades
Brad has been with RWC for
the IT function of numerous
of executive leadership
nearly three decades. His
banking and medical
experience and strategic
career at RWC commenced
companies in the UK and
involvement in operations,
when he joined the
North America. His leadership
product development and
Brisbane, Australia team as
track record led him to
engineering, Sean currently
a Business Development
become RWC’s Group SVP of
spearheads RWC Americas,
Manager. Currently leading
Information Services in 2016.
having assumed the position
the company’s operation
In his role as RWC’s Group
of a CEO for that region in
in the APAC (Asia-Pacific)
SVP of Information Services,
2014. He is responsible for
region, his role as CEO looks
Simon leads the IT strategy
RWC’s commercial success
after the group’s business
to transform and optimise
and sustainable growth in US,
development and growth
the group’s technology
Canada and Mexico.
in Australia, New Zealand,
architecture, infrastructure
and capabilities.
China, India and South Korea.
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31
Operating and
Financial Review
OPERATING AND FINANCIAL REVIEW
This Operating and Financial Review forms part of, and should be read in conjunction with, the statutory Directors’ Report for the
Constant Currency Revenue, EBITDA and EBIT Performance
year ended 30 June 2021 which commences on page 44.
Defined Terms and non-IFRS measures
EBITDA: Earnings before interest, tax, depreciation and amortisation
EBIT:
Earnings before interest and tax
NPAT:
Net profit after tax
EBITDA, Adjusted EBITDA, Adjusted EBIT, Adjusted net profit after tax and Adjusted earnings per share are non-IFRS measures
used by RWC to assess operating performance. These measures have not been subject to audit or review.
Review of results for the financial period
Year ended
Net sales
Reported EBITDA
Adjusted for one-time items:
– Restructuring and asset impairment charges
Adjusted EBITDA
Reported net profit before tax
Tax Expense
Reported net profit after tax
Adjusted for specific tax items:
– Cash tax benefit of goodwill amortisation for tax purposes
– Prior years tax adjustment
– Restructuring and asset impairment charges
– CARES Act Benefit
Adjusted net profit after tax
Basic earnings per share
Adjusted earnings per share
Declared dividend per share
n/m = not meaningful
30 June 2021
(A$ million)
30 June 2020
(A$ million)
1,340.8
340.7
8.5
349.2
272.3
(84.1)
188.2
15.2
–
8.5
–
211.9
1,162.4
217.9
33.4
251.3
135.9
(46.4)
89.4
16.9
4.9
25.7
(6.6)
130.3
24.0 cents
27.1 cents
13.0 cents
11.4 cents
16.6 cents
7.0 cents
Variance
15%
56%
n/m
39%
100%
81%
111%
n/m
n/m
n/m
n/m
63%
111%
63%
86%
Year ended
Net Sales
Americas
Asia Pacific
EMEA
Eliminations (inter-segment sales)
RWC Group
Adjusted EBITDA
Americas
Asia Pacific
EMEA
Corporate/Eliminations
RWC Group
Adjusted EBIT
Americas
Asia Pacific
EMEA
Corporate/Eliminations
RWC Group
30 June 2021
A$ million
30 June
2020
Constant Currency
A$ million
Variance %
30 June 2021
Constant
Currency
A$ million
Reported
936.1
289.8
404.2
(182.3)
1,447.8
182.2
66.6
136.4
(21.1)
364.1
157.4
53.7
116.0
(22.6)
304.5
739.1
244.8
324.3
(145.8)
1,162.4
118.2
44.3
93.0
(4.2)
251.3
92.0
30.1
72.8
(5.6)
189.3
27%
18%
25%
25%
25%
54%
50%
47%
403%
45%
71%
78%
59%
304%
61%
843.4
277.3
390.8
(170.7)
1,340.8
162.5
66.2
129.1
(8.6)
349.2
140.2
53.3
109.5
(10.1)
292.9
The variation between Reported Sales, EBITDA and EBIT and constant currency figures is explained by movements in foreign
exchange rates for translation purposes. For example, the average Australian Dollar / US Dollar exchange rate for translation of
Americas financial metrics in FY2021 was US$0.7468 compared with US$0.6708 in FY2020.
32
33
OPERATING AND FINANCIAL REVIEWAnnual Report 2021Reliance Worldwide Corporation Limited Operating and
Financial Review
OPERATING AND FINANCIAL REVIEW
Constant Currency Revenue, EBITDA and EBIT Performance
Other major factors which impacted earnings were:
Six months ended:
Constant Currency
A$ million
30 June 2021
A$ million
30 June
2020
Variance %
30 June 2021
Constant
Currency
A$ million
Reported
Net Sales
Americas
Asia Pacific
EMEA
Eliminations (inter-segment sales)
RWC Group
Adjusted EBITDA
Americas
Asia Pacific
EMEA
Corporate/Eliminations
RWC Group
Adjusted EBIT
Americas
Asia Pacific
EMEA
Corporate/Eliminations
RWC Group
513.1
147.1
213.3
(92.6)
780.9
103.5
32.4
72.5
(18.3)
190.1
90.7
26.1
62.5
(19.2)
160.1
392.3
119.4
150.7
(69.3)
593.1
64.6
21.5
40.7
(1.8)
125.0
51.1
14.3
30.1
(2.6)
92.9
31%
23%
42%
34%
32%
60%
51%
78%
917%
52%
78%
82%
108%
639%
72%
442.6
139.1
201.9
(85.2)
698.4
86.7
36.3
66.5
(6.6)
182.9
75.8
30.0
57.1
(7.5)
155.4
Net sales for the year ended 30 June 2021 of $1,340.8 million were 15% higher than the prior year. On a constant currency basis,
sales were up 25%, with strong growth recorded in all three regions. Sales growth was due to heightened levels of repair and
remodel activity in all key markets, driven in part by increased consumer spending on home improvements during the COVID
pandemic, and by increased new residential home building activity. In the Americas, constant currency sales were up 31% in the
second half with significantly increased demand arising as a result of a winter freeze event in Texas and surrounding US states.
Reported EBITDA for the year was $340.7 million, an increase of 56% on the prior year. Included in reported EBITDA are one-time
costs of $8.5 million incurred to enable the expansion and consolidation of RWC’s warehousing and logistics activities in the US
and the UK. Adjusting for these costs, EBITDA was $349.2 million, an increase of 39% on Adjusted EBITDA for the prior year.
The increase in operating earnings was driven by double digit sales growth in each region for the year, with constant currency
sales in the Americas up 27%, Asia Pacific up 18% and EMEA 25% higher.
• Increased overhead recoveries due to higher manufacturing and sales volumes in all regions.
• Carryover procurement and other continuous improvement savings of $7.0 million.
• Adverse foreign exchange impacts of $14.9 million.
• Savings in travel, entertainment, advertising and promotions of $7.0 million as a result of lower activity across these
expenditure categories due to COVID.
Reported net profit after tax (“NPAT”) was $188.2 million, an increase of 111% on the prior year. Adjusting for the restructuring
charges and tax items referenced earlier, net profit after tax was $211.9 million, up 63% on the prior year.
Segment Review
Americas
Year ended:
Net sales
Reported Segment EBITDA
Margin
Adjusted for one-time items:
– Restructuring and asset impairment charges
Adjusted EBITDA
Adjusted Margin
Six months ended:
Net sales
Reported Segment EBITDA
Margin
Adjusted for one-time items:
– Restructuring and asset impairment charges
Adjusted EBITDA
Adjusted Margin
30 June 2021
30 June 2020
(A$ million)
(A$ million)
Variance
843.4
156.2
18.5%
6.3
162.5
19.3%
739.1
96.8
13.1%
21.4
118.2
16.0%
14%
61%
540 bps
n/m
37%
330 bps
30 June 2021
30 June 2020
(A$ million)
(A$ million)
Variance
442.6
80.4
18.2%
6.3
86.7
19.6%
392.3
43.2
11.0%
21.4
64.6
16.5%
13%
86%
720 bps
n/m
34%
310 bps
Americas segment sales were up 14% for the year and 13% for the second half. Reported sales were negatively impacted by
Australian dollar strength during the year. On a constant currency basis, sales were 27% higher for the year and 31% higher in the
Cost savings from restructuring initiatives totalling $22.3 million were delivered in the year, and we achieved our targeted cost
second half.
reduction run rate at the end of the year of $25 million on an annualised basis.
The strong sales growth was driven by the strength of the residential repair and remodelling markets in the US and Canada.
Higher commodity prices for copper, resins and steel resulted in higher manufacturing input costs. The average copper cost in
The trend for increased spending on home improvement was first evidenced following the outbreak of the COVID pandemic in
FY2021 was US$6,600 per tonne compared with US$6,000 per tonne in the previous year, and was US$7,400 per tonne in the
the fourth quarter of FY2020 and was aided by several government stimulus programs as well as a reduction in spending on other
second half. These increased materials costs together with higher packaging and freight costs, negatively impacted earnings by
discretionary activities. This trend continued throughout FY2021. All sales channels recorded strong growth for the year. Retail and
$16.9 million. Price increases were implemented across a number of product categories during the second half in all regions to
hardware channels experienced strong sales growth throughout the year, while wholesale channels saw an improving trend in
mitigate the impact of these higher costs.
sales growth with sales early in the year adversely impacted by shelter in place restrictions in certain parts of the US and a slower
Disruptions arising from the incidence of COVID cases in the UK, Europe and the US put additional pressure on our operations due
recovery in commercial construction activity.
to increased employee sickness and absenteeism as well as supply chain and logistics disruptions. Factory layout and materials
A winter freeze event in February 2021 in Texas and surrounding states in the US boosted sales significantly and partly explains the
flow changes to ensure social distancing requirements were met adversely impacted efficiencies and delivery performance.
very strong constant currency sales growth recorded in the second half of the year. We estimate that approximately 8.5 percentage
It is estimated that $6.2 million in COVID-related costs were incurred during the year. All major RWC manufacturing sites were
points of the constant currency sales growth of 27% in the Americas was due to the impact of the freeze (approximately US$42
operational throughout the year and a focus on execution enabled the Group to meet the heightened demand, particularly in the
million sales impact).
US following the winter freeze event.
34
35
OPERATING AND FINANCIAL REVIEWAnnual Report 2021Reliance Worldwide Corporation Limited Operating and
Financial Review
30 June 2021
30 June 2020
(A$ million)
(A$ million)
Variance
277.3
66.2
23.9%
66.2
23.9%
244.8
44.3
18.1%
44.3
18.1%
13%
50%
580 bps
50%
580 bps
30 June 2021
30 June 2020
(A$ million)
(A$ million)
Variance
139.1
36.3
26.1%
36.3
26.1%
119.4
21.5
18.0%
21.5
18.0%
17%
69%
810 bps
69%
810 bps
OPERATING AND FINANCIAL REVIEW
Constant currency sales growth excluding the freeze is estimated to have been 19% for the year, from a combination of overall
growth in market activity, increased demand due to COVID, new customer and product initiatives, and market share gains.
Reported EBITDA for the Americas segment was $156.2 million, 61% higher than the prior year. Reported EBITDA included
one-off costs relating to the expansion and rationalisation of warehouse and logistics operations in the US of $6.3 million.
The lease of a new purpose-built distribution centre in Alabama will significantly expand our capacity and allow us to consolidate
our warehousing operations in Alabama onto one site. This will align our distribution network with our long-term growth needs,
Segment Review
Asia Pacific
Year ended:
Net sales
improve operational efficiencies and further lower the fixed cost base. Excluding these costs, and $21.4 million of restructuring
Reported Segment EBITDA
costs and impairment charges included in prior year EBITDA, Adjusted EBITDA was 38% higher than the prior year. The principal
drivers of EBITDA performance are summarised in the following table:
Americas
Year Ended:
(A$ million)
Gross Profit
30 June 2021
prior year
Commentary
$ Change over
303.1
43.0
$71.9 million: volume growth impact
($34.4 million): foreign currency translation impact
($10.7 million): higher materials costs
$12.8 million: continuous improvement initiatives
Other impacts: higher freight costs, wage inflation,
depreciation and amortisation charges
Product
development
expenses
9.4
9.7
Savings due to restructuring in FY20 resulting in lower
employee costs, marketing and product development costs
and amortisation
Selling and
100.6
3.1
$15.8 million: foreign currency translation impacts
Other impacts: increased marketing costs associated
with higher volumes
(1.5)
$3.3 million: foreign currency translation impacts
marketing expenses
Administration
expenses
Other expenses
54.0
6.4
Margin
Adjusted EBITDA
Adjusted Margin
Six months ended:
Net sales
Reported Segment EBITDA
Margin
Adjusted EBITDA
Adjusted Margin
Asia Pacific sales were 13% higher for the year and up 18% on a constant currency basis. External sales were up 11% reflecting
stronger Australian new housing construction and remodel markets and inter-company sales were up 29% on a constant currency
basis due to the strength of demand in the Americas.
New housing commencements in Australia increased 7% in the year to 31 March 2021 with new detached commencements up
20%, while multi-family commencements were 11% lower. A significant proportion of RWC’s external net sales in Australia are
made in the more cyclical new residential construction market.
Asia Pacific Reported EBITDA for the year was $66.2 million, an increase of 50% on the prior year. EBITDA was impacted by higher
volumes in the Australian market and higher sales to the Americas segment, with favourable impacts on overhead recoveries.
EBITDA was also positively impacted by $10.9 million from the realisation of profit in stock, of which $1.8 million related to inventory
7.7
Prior year included impairment of intangible assets and costs
associated with Tennessee plant closure
realisation and $9.1 million to foreign exchange translation impacts.
The principal drivers of EBITDA performance are summarised in the following table:
Asia Pacific
Year Ended:
(A$ million)
Gross Profit
Administration
expenses
30 June 2021
prior year
Commentary
$ Change over
92.2
23.8
$14.0 million: volume growth impact
$9.1 million: foreign currency translation impact
$2.8 million: continuous improvement initiatives
$1.8 million: realisation of profit in stock
Other impacts: higher overhead recoveries, higher input costs
14.3
3.8
$2.5 million: lower corporate charges
36
37
OPERATING AND FINANCIAL REVIEWAnnual Report 2021Reliance Worldwide Corporation Limited Operating and
Financial Review
OPERATING AND FINANCIAL REVIEW
Europe, Middle East and Africa (EMEA)
EBITDA performance drivers are summarised below:
Year ended:
Net sales
Reported Segment EBITDA
Margin
Adjusted for one-time items:
– Restructuring and asset impairment charges
Adjusted EBITDA
Adjusted Margin
Six months ended:
Net sales
Reported Segment EBITDA
Margin
Adjusted for one-time items:
– Restructuring and asset impairment charges
Adjusted EBITDA
Adjusted Margin
30 June 2021
30 June 2020
(A$ million)
(A$ million)
Variance
390.8
126.8
32.4%
2.2
129.0
33.0%
324.3
81.1
25.0%
11.9
93.0
28.7%
21%
56%
740 bps
n/m
39%
430 bps
30 June 2021
30 June 2020
(A$ million)
(A$ million)
Variance
201.9
64.3
31.8%
2.2
66.5
32.9%
150.7
28.8
19.1%
11.9
40.7
27.0%
34%
123%
1,270 bps
n/m
63%
590 bps
EMEA
Year Ended:
(A$ million)
Gross Profit
30 June 2021
prior year
Commentary
$ Change over
195.1
46.3
$44.0 million: Impact of higher volumes
($8.0 million): foreign currency translation impact
$7.5 million: continuous improvement initiatives
($1.3 million): higher raw materials
(4.0)
$1.6 million: foreign currency translation impact
2.8
Prior year included $5.9 million for impairment of
Spain plant and equipment
Selling and
marketing expenses
Other expenses
40.8
3.8
Group performance review
Dividend
A partially franked final dividend of 7.0 cents per share has been declared. Total dividends declared for the year ended 30 June
2021 are 13.0 cents per share totalling $102.7 million which represents 55% of Reported NPAT and 48% of Adjusted NPAT.
The company’s intended pay-out range remains between 40% and 60% of annual NPAT.
Both FY21 interim and final dividends are 20% franked. As previously disclosed, future dividends are also likely to be only partially
franked given recent changes in the company’s geographic mix of earnings following acquisitions. It is currently expected that future
Reported net sales in EMEA were up 21% to $390.8 million, while sales in constant currency were up 25%.
dividends will be less than 30% franked.
Sales volumes recovered early in the year following easing of government COVID restrictions in the UK and Continental Europe,
with sales growth initially driven by pent-up demand as channel partners rebuilt inventory levels. In the UK, the recovery in sales
activity was driven in particular by the strength of the repair and remodel market. Sales in Continental Europe also improved
through the course of the year as markets recovered from COVID impacts.
Reported EBITDA was $126.8 million, up 56% on the prior year. EBITDA included $2.2 million of restructuring costs for the
outsourcing of warehousing and logistics operations to a third-party logistics provider. This will enable the consolidation of five
warehouses into one centrally located distribution facility with future expansion capacity. We will also migrate our current truck
and trailer fleet to a more efficient outsourced fleet of vehicles. The prior year included $11.9 million of restructuring costs and asset
impairment charges related to RWC’s Spanish manufacturing operations. Adjusting for these items, EBITDA was 39% higher than
for the prior year.
The record date for entitlement to the final dividend is 10 September 2021. The payment date is 8 October 2021.
Year ended:
Interim
Final
Amount payable or paid
Capital expenditure
30 June 2021
30 June 2020
% Franked
% Franked
30 June 2021
30 June 2020
6.0cps
7.0cps
$102.7m
4.5cps
2.5cps
$55.3m
20%
20%
20%
20%
Capital expenditure payments for property, plant and equipment acquired during the year totalled $48.8 million compared
with $43.4 million in the prior year. Growth capital expenditure was $26.3 million with projects oriented primarily to increase
Adjusted EBITDA margin increased by 430 basis points to 33.0% for the year. The increase was due to higher volumes, better
manufacturing capacity in the Americas and EMEA. $22.5 million was incurred on maintenance capital expenditure.
operational leverage, the positive impact of synergies continuing to be delivered through the integration of the John Guest and RWC
businesses since acquisition, along with the restructure of both manufacturing and administrative and support functions in the UK
Working capital and cash flow
undertaken at the start of the FY21 year.
Reported net cash inflow from operating activities for the year was $334.3 million, an increase of 20% on the prior year as a
result of higher sales and operating earnings. Cash flow conversion1 was 98% of Reported EBITDA, ahead of the 90% target and
reflecting continuing tight working capital management.
38
39
1 FY21: Cash flow from operations to Reported EBITDA of $340.7 million.
OPERATING AND FINANCIAL REVIEWAnnual Report 2021Reliance Worldwide Corporation Limited Operating and
Financial Review
OPERATING AND FINANCIAL REVIEW
Balance sheet
Health and safety
Net cash generation during the year has enabled RWC to maintain a strong balance sheet and conservative financial position.
The well-being of RWC employees continued to be the priority during COVID. Every RWC facility continued to implement safety
Net debt at 30 June 2021 was $173.9 million, a reduction of $128.3 million during the year (30 June 2020 – $302.2 million). Net debt
to Reported EBITDA was 0.51 times2 at 30 June 2021 compared with 1.39 times at the end of the prior year.
RWC continues to have significant funding lines available, with cash on deposit and undrawn committed debt funding of $583
million available as of 30 June 2021. The group’s principal source of funding is a $750 million syndicated facility agreement. During
measures in accordance with local regulatory requirements and employed best practice to reduce the impact on employees whilst
at the facility. Facilities maintained practices established at the onset of the pandemic including telecommuting, on-site social
distancing, distribution of hand sanitisers and personal protective equipment. Each region continues to monitor the impacts of
COVID and respond as required to changes in positive case rates.
the year, the maturity date of a $250 million tranche of this facility was extended by two years. As a result, this facility has one
Health and safety ownership throughout RWC at all levels in the operations functions has increased through leaders and
tranche of $250 million with a maturity date of 30 September 2022 and two tranches totalling $500 million having a maturity
employees reporting of hazardous conditions, near-miss events, and peer to peer safety conversations through the implementation
date of 30 September 2023. Group companies in the US and Australia also have access to committed overdraft facilities of US$15
of behaviour-based safety activities. Facilities have increased employee health and safety engagement from 24% at the start of
million and A$15 million respectively.
RWC expects that it will remain in compliance with all financial covenants in the syndicated facility agreement.
Capital management
FY2021 to 41% at year end. These activities are led by the manufacturing and distribution facilities in all regions. During FY2021
nearly 10,000 safety observations, near-miss events, and hazards were reported by employees directly impacting the incident rate
improvements.
RWC had a reportable incident rate of 1.21 per 100 employees at the end of FY2021 year compared to 1.23 in FY2020. Regions
RWC’s balance sheet has been strengthened considerably over the past two years due to strong operating cash flow generation.
continue to support global initiatives by increasing employee engagement activities such as site safety committees and the safety
The Company has assessed that its optimal capital structure will be achieved by maintaining its net debt levels to achieve a
observations process. Health and safety leaders from each region collaborate monthly to share general knowledge and identify
leverage ratio (net debt to EBITDA) in the range of 1.5 to 2.5 times. Sustaining a level of debt within this range over the long term
best practices to implement.
will ensure the Company minimises its cost of capital whilst at the same time continues to have investment grade equivalent
credit metrics. This will ensure it is continually able to access long term debt markets and have acceptably low refinancing risk of
its debt facilities. RWC’s leverage is currently below this range as a result of very strong cash generation over the past two financial
years. The Company continues to look for future investment opportunities both for organic growth and M&A and is comfortable
maintaining a lower level of debt while these opportunities are being explored.
To the extent that the Company is generating excess cash flows beyond what is required to fund maintenance and growth capital
expenditure and pursue M&A and other inorganic growth opportunities, RWC’s principal means of distributing cash to shareholders
will be through dividends. The Company will continue to pursue its policy of distributing between 40% and 60% of annual NPAT
by way of dividends each year. It is noted that the Company is only able to pay partially franked dividends for Australian taxation
purposes due to the geographic mix of its earnings beyond Australia.
Operations have started to implement additional internal audit processes led by first level leaders in the manufacturing facilities.
This audit process is allowing leaders to identify health and safety risks, assign corrective actions and track these tasks to
completion. These regular “safety walks” by site managers will help to minimise risks in the manufacturing facilities as well as
demonstrate our commitment to the safety of our people. In FY2022, these safety walks will expand to include regional and global
executives each time they visit manufacturing and distribution locations.
Regional and global executives review reportable and lost time injuries monthly, together with details of specific incidents. Findings
of injury inquiries are shared globally to increase learnings and adoption of best practices. Data is regularly reviewed by the Board.
In addition to metrics such as reportable injury rate and lost time injury rate, all regions monitor leading indicator reporting and
employee engagement each month.
Beyond paying dividends to shareholders, the Company has determined that the purchase of RWC shares through an on-market
FY2022 outlook
share buyback has the potential to be the most effective means of distributing excess cash. The Company believes a share
The outlook for RWC’s key markets in FY2022 is positive, with market fundamentals currently signalling steady demand. Economic
buyback would be value enhancing for shareholders as it would contribute to positive earnings accretion on an Earnings Per Share
conditions look to be broadly favourable, underpinned by significant government stimulus measures.
(EPS) basis as well as improve return on equity. The Company will consider share buybacks in the future having regard to its level of
earnings, operating performance, economic outlook, and its capital requirements to support organic growth and other investment
opportunities including M&A.
Taxation
COVID has undoubtedly prompted a step change in remodelling activity in RWC’s major markets, and it is uncertain the extent
to which potential changes in consumer spending away from home projects post-COVID will be offset by a longer-term trend of
increased expenditure on homes. Despite this uncertainty, however, it is expected that a backlog of work with plumbing contractors
is likely to have a smoothing effect on overall activity levels, thereby helping to prolong current demand levels.
The accounting effective tax rate for the period was 30.9%. This rate excludes RWC’s entitlement to claim amortisation of certain
Managing cost inflation, and commodity input costs in particular, will remain a challenge in FY2022 and a dynamic pricing
intangibles for taxation purposes under longstanding tax concessions available in the US. Goodwill is not amortised for accounting
environment is likely to ensure any cost increases can be offset with commensurate price adjustments. As a result of price
purposes under accounting standards. The benefit arising from the amortisation of goodwill for cash tax purposes in the period
increases on a range of products announced in FY2021, average prices in FY2022 are forecast to be 6% higher than FY2021.
was $15.2 million.
Price increases may be margin dilutive by up to 1% where they are applied to offset equivalent cost increases with no net
Adjusting for this item, tax expense for the period was $68.9 million, representing an Adjusted effective tax rate of 25.3%. Adjusted
contribution to gross margins.
effective tax rate best represents the rate of tax paid by the Group. RWC expects that the Adjusted effective rate will be in the
While RWC expects its core end-markets to remain resilient, given that repair and maintenance activities are essential services that
range 24% to 26% in FY2022.
2 Excludes leases
40
are not significantly impacted by economic cycles, the operational and financial performance of the business could be adversely
affected by COVID-related factors. These include potential disruptions to our supply chain, government restrictions on plumbing
and construction works and the economic performance of the key countries in which we operate. The duration of the pandemic and
its impact on the business remains uncertain.
41
OPERATING AND FINANCIAL REVIEWAnnual Report 2021Reliance Worldwide Corporation Limited Operating and
Financial Review
OPERATING AND FINANCIAL REVIEW
Americas
Earnings guidance
The US economy has been relatively healthy with a COVID recovery positively impacting segments and consumer behaviour,
Due to the ongoing uncertainty surrounding market conditions and any potential impacts of further COVID outbreaks, RWC will not
although recent increases in COVID cases represent an ongoing risk to economic performance. Home remodelling activity is
provide earnings guidance for FY2022 at this time. We will update investors each quarter on trading conditions in the three regions,
expected to remain strong given the fundamentals in core US residential segments. The ongoing strength in existing and new
including sales and operating earnings. The next scheduled update on trading conditions will be at the annual general meeting on
home sales, house price appreciation, and new residential construction activity, together with positive consumer sentiment and
28 October 2021. In terms of specific cost items, the following key assumptions are provided for FY2022:
a low-interest rate environment should remain supportive of demand levels in FY2022.
Weakness in non-residential activity is likely to continue in FY2022 with lower investment in retail shopping malls, commercial
office space, hospitality, healthcare, educational facilities and high-rise multi-family developments.
• Capital expenditure is expected to be approximately US$60 million to US$70 million (A$78 million to A$90 million).
• Further cost reduction initiatives are expected to deliver US$12 million (A$16 million) in cost savings.
• Depreciation and amortisation expense is expected to be in the range of US$46 million to US$48 million.
In Canada, the vaccine roll-out has alleviated fear of long-term economic impact of lockdown restrictions experienced in FY2021.
(A$59 million to A$62 million).
Looking forward, the levers of growth for the Americas remain unchanged from those we have presented in recent years. The first
element will be market growth. Sales growth rates are expected to moderate significantly following the exceptionally strong levels
recorded in FY2021. For FY2022, the market growth rate will be determined primarily by the sustainability of the COVID volume
uplift of the last twelve months. We cannot know for certain the extent to which the increase in demand brought about by COVID
will be sustained.
Beyond market growth, we will be aiming to deliver customer and product initiatives in FY2022 to drive sales growth. Sales activity
will also be partly determined by winter weather conditions, as evidenced in FY2021 with the strong demand generated by the US
winter freeze event.
• Net interest expense is expected to be in the range of US$7 million to US$9 million (A$9 million to A$12 million).
• We expect an adjusted effective tax rate in the range of 24% to 26%.
• The average copper price is assumed to be US$10,000 per tonne. RWC estimates that its earnings sensitivity to changes
in the cost of copper is such that a US$100 per tonne movement in the copper price would impact EBITDA by US$1.1 million p.a.
• The average Australian Dollar/ US Dollar exchange rate in FY2021 for earnings translation was US$ 0.7468.
• The average Australian Dollar / Pound Sterling rate in FY21 for earnings translation was GBP 0.5547.
Variations in economic conditions, trading conditions or other circumstances may cause these key assumptions to change.
Key indicators for the year ahead we will be tracking include trends in channel sales volume and inventory levels, and any signs that
Commentary on trading conditions since 30 june 2021
current buoyant conditions are easing, trends in non-residential construction activity, and changes in US consumer sentiment.
Asia Pacific
In Australia, current economic indicators signal a stable demand outlook for FY2022 with increases in residential dwelling approvals
expected to translate into ongoing strong construction activity levels. House price appreciation and low interest rates should
remain supportive of continued momentum in the repair and remodelling sector. Longer term, the removal of specific government
stimulus programmes and lower immigration levels and foreign student enrolments, may adversely impact the demand outlook.
EMEA
In EMEA, economic signals continue to indicate positive demand conditions amid the easing of COVID restrictions. In the UK,
short-term housing demand and economic indicators remain favourable, pointing to continued strong demand. Repair and
remodel activity has been the strongest performing sector within the UK residential construction segment, with the level of activity
higher than pre-pandemic levels. As in other markets, however, there is uncertainty around post-COVID consumer behaviour and
the potential for a shift in spending from home improvement to entertainment and leisure.
While the recovery in Continental Europe started later than the UK, it is anticipated that demand will continue to improve with
increased vaccine availability and economies opening up further.
Change in reporting currency
RWC has changed its reporting currency from Australian dollars to US dollars with effect from 1 July 2021. Consolidated financial
results for the 2022 financial year, including half year earnings, will be reported in US dollars. This change better reflects RWC’s
business revenue, cost base and earnings mix, with the US market the largest in terms of sales revenue and operating earnings.
In July, positive sales growth over the same month in the prior year was experienced in all three regions, with reported net sales up
9% overall and 6% on a constant currency basis. The rate of growth was lower than for FY2021, reflecting the very strong sales
growth in the Americas at the start of FY2021 and the strong recovery in volumes experienced in the UK from July 2021 onwards.
Australian sales maintained their growth momentum supported by growth in residential construction activity. These trends have
continued broadly in August.
Underlying demand remains strong but sales are being constrained by ongoing supply chain disruptions including raw materials
availability, shipping delays and a shortage of labour in plumbing trades.
Trading results can vary month by month and care should be taken not to extrapolate one month’s performance.
42
43
OPERATING AND FINANCIAL REVIEWAnnual Report 2021Reliance Worldwide Corporation Limited Directors' Report
DIRECTORS’ REPORT
For the year ended 30 June 2021
The Directors present their report together with the Financial Report comprising Reliance Worldwide Corporation Limited
Christine Bartlett
(“the Company”) and its controlled entities (together “RWC” or “the Group”) for the financial year ended 30 June 2021
(“reporting period”) and the Auditor’s report thereon.
Independent Non-Executive Director
Chair of Nomination and Remuneration Committee
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 (page 32); and
• Remuneration Report (page 56)
Directors
The Directors of the Company at any time during or since the end of the reporting period were:
Ms. Bartlett is an experienced CEO and senior executive with extensive line management experience gained through roles with
IBM, Jones Lang LaSalle and National Australia Bank Limited. Her executive career has included Australian, regional and global
responsibilities based in Australia, the USA and Japan. She is currently a Non-Executive Director of Mirvac Group, Sigma Healthcare
Limited and TAL; and was previously a director of GBST Holdings Limited, PropertyLook, National Nominees Ltd, the Australian
Custodial Services Association, icare and The Smith Family. She is a member of the UNSW Australian School of Business Advisory
Council, Chief Executive Women and the Australian Institute of Company Directors. Ms. Bartlett holds a Bachelor of Science from
the University of Sydney and has completed senior executive management programs at INSEAD.
Stuart Crosby (Chairman)
Heath Sharp (Group Chief Executive Officer and Managing Director)
Christine Bartlett
Russell Chenu
Darlene Knight
Sharon McCrohan
Ian Rowden
Appointed
11 April 2016
19 February 2016
6 November 2019
11 April 2016
14 April 2021
27 February 2018
6 July 2020
Ross Dobinson was a Director of the Company during the reporting period until 14 April 2021 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
Member 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
Other listed company directorships in the past 3 years:
Mirvac Group (since December 2014)
Sigma Healthcare Limited (since March 2016)
GBST Holdings Limited (July 2015 until November 2019)
Russell Chenu
Independent Non-Executive Director
Chair 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 Non-executive Director of CIMIC Group Limited and Vulcan Steel 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 (August 2014 until November 2020)
Metro Performance Glass Limited (July 2014 until August 2021)
Darlene Knight
Independent Non-Executive Director
Member of Nomination and Remuneration Committee
Ms. Knight’s operational experience was gained with multi-national manufacturing businesses, primarily in the automotive
sector, where she held strategic and operations focused roles. Darlene has held senior leadership roles at both supplier and OEM
organisations, including General Motors Corporation, EDSCHA GmbH, Johnson Controls, Inc. and Adient, Plc. She has experience
in engineering, global manufacturing and quality. Her roles have included P&L responsibility. Ms. Knight holds a Master of Science
in Engineering Science from Rensselaer Polytechnic Institute and a Bachelor of Science in Industrial Administration from
Kettering University. Ms Knight is based in the USA.
management positions in Engineering, Product Management, Sales and Operations. He was appointed General Manager of the
Other listed company directorships in the past 3 years: None
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 Group 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
44
45
DIRECTORS’ REPORTFor the year ended 30 June 2021Annual Report 2021Reliance Worldwide Corporation Limited DIRECTORS’ REPORT
For the year ended 30 June 2021
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, the Ovarian Cancer Research Foundation Board and the Transport Accident Commission
(Victoria). Ms. McCrohan holds a Bachelor of Arts (Journalism) from Royal Melbourne Institute of Technology and is a Graduate
member of The Australian Institute of Company Directors.
Other listed company directorships in the past 3 years: None
Ian Rowden
Independent Non-Executive Director
Member of Audit and Risk Committee
Mr. Rowden’s experience was gained in high profile global roles focused on commercial, marketing and operational activities
with an emphasis on developing and executing strategic plans for business growth. Mr. Rowden worked for over 20 years with
The Coca-Cola Company, including senior leadership roles based in Hong Kong and Atlanta, Georgia. This included roles as
Worldwide Director of Consumer Communication, Region President for the China Division and Director of Marketing for South
East Asia. He has also held roles as chief marketing officer for The Callaway Golf Company and Wendy’s International; and was
a Partner at The Virgin Group. Mr. Rowden was Chairman and CEO, Asia Pacific of Saatchi and Saatchi from 2008 to 2011.
Mr. Rowden is currently a non-executive director of Enero Group Limited (ASX: EGG) and was formerly a director of QMS Media
Limited (ASX listed until February 2020) and Virgin Galactic (NYSE: SPCE). He is a partner and investment advisory board
member of Innovate Partners, a US based venture capital company. He is also non-executive Chairman of Brightguard LLC.,
a director of The Miami Ad School, a non-profit organisation, and a senior advisor to Bowery Capital and DuluxGroup.
Mr. Rowden is based in the USA.
Other listed company directorships in the past 3 years:
Enero Group Limited (since November 2018)
QMS Media Limited (February 2019 to February 2020)
Company Secretary
David Neufeld
Mr. Neufeld has been Company Secretary since April 2016. He has over 35 years’ experience in chartered accounting and corporate
organisations, including over 15 years’ experience as Chief Financial Officer and/or Company Secretary 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 a Graduate member of
The Australian Institute of Company Directors.
Directors' Report
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
Board Meetings
Committee Meetings
Committee Meetings
Held¹
Attended¹
Held¹
Attended¹
Held¹
Attended¹
Audit and Risk
Nomination and
Remuneration
Christine Bartlett
Russell Chenu
Stuart Crosby
Ross Dobinson²
Darlene Knight3
Sharon McCrohan
Ian Rowden4
Heath Sharp
12
12
12
8
4
12
12
12
12
11
12
8
4
12
12
12
–
13
–
12
–
13
12
–
–
12
–
12
–
13
12
–
9
–
9
6
1
9
–
–
9
–
9
6
1
9
–
–
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. 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.
Environmental and social sustainability are core to RWC’s operations and important to its strategy. We understand that running
our business responsibly is vital to our long-term sustainability and the decisions we make have consequences for the economy,
society and the environment. RWC published Social Impact Reports in 2020 and 2021. A copy of each report can be viewed on the
Company’s website at www.rwc.com. The reports provide information on our approach to sustainability, identifies our material
topics and how they are currently managed, our achievements and areas for improvement. Global macro trends related to water
are creating challenges for the built environment that RWC can help to solve. There are opportunities for RWC to make a positive
contribution through the products we design and manufacture. We have existing solutions that we can provide and are also
continually investing in new products and solutions. These may have different applications across the regions in which we operate.
In particular, RWC has a clear role in the provision of clean water and sanitation and also in developing sustainable and resilient
infrastructure, particularly in the context of cities. Since water and energy are closely connected, water efficiency also contributes
to energy efficiency. As a manufacturer and distributor, we also recognise that our operations have an environmental footprint
and that we need to manage the social and environmental impacts of our supply chain. We continue to assess our risks and
opportunities arising from climate impacts.
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.
1 Number of meetings held and attended during the period the Director was a member of the Board or Committee.
2 Retired as a Director on 14 April 2021.
3 Appointed as a Director on 14 April 2021; Appointed to the Nomination and Remuneration Committee on 30 April 2021.
4 Appointed as a Director on 6 July 2020; Appointed to the Audit and Risk Committee on 21 July 2020.
46
47
DIRECTORS’ REPORTFor the year ended 30 June 2021Annual Report 2021Reliance Worldwide Corporation Limited
Directors' Report
Significant changes in the state of affairs
The operations of the Group have been impacted, and continue to be impacted, by the COVID-19 pandemic. The COVID-19
outbreak was declared a pandemic by the 'World Health Organisation' in March 2020. The responses of governments across the
world in dealing with the pandemic have impacted business activity levels in countries and markets where the Group operates.
The Group took actions to minimise negative impacts on its operations and financial position. Despite the challenges presented
by the COVID-19 pandemic, the Group kept all its manufacturing facilities operating and a focus on execution enabled increased
demand to be met. The Operating and Financial Review contains additional information.
In preparing the consolidated financial statements in conformity with Australian Accounting Standards, due consideration has
been given to the judgements, estimates and assumptions that affect the application of accounting 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. The ongoing COVID-19
pandemic continues to impact the estimation uncertainty in the preparation of the consolidated financial statements. At 30
June 2021, the Group has reassessed all significant judgements, assumptions and critical estimates included in the consolidated
financial statements, including but not limited to, provisions against trade debtors and inventory and impairment of non-current
Risk
Loss of customer risk • There can be no guarantee that key customers will
Description
continue to purchase the same or similar quantities of
Management plans
• Maintain connections with, and deliver
ongoing business opportunities, to key
RWC’s products as they have historically. Competition,
customers.
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.
• 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.
• Plans are in place to continue to diversify
the customer base and reduce the
potential impact of this risk.
Materials supply
• Any adverse change in RWC’s ability to procure raw
• RWC aims to have appropriate
assets. Actual results may differ from these estimates. Details of the main judgements, estimates and assumptions applied are set
and price risk
materials, a material increase in the cost of raw materials
agreements in place with major suppliers.
out in the notes to the consolidated financial statements.
There were no significant changes in the affairs of the Group during the reporting period other than as set out above.
Material business risks
RWC continues to evolve its risk management policies and processes. 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 business risk listed.
The information is provided as a guide to RWC’s current risk management focus. The COVID-19 pandemic shifted our risk profile
resulting in some plans to monitor and manage these risks being updated.
The list is provided in no particular order and is not exhaustive.
Risk
RWC is exposed to
changes in general
Description
• RWC’s financial performance is largely dependent on
activity in the residential and commercial repair and
Management plans
• Processes in place to be able to respond
to changes in conditions and adjust
economic conditions,
renovation and new construction end-markets in the
production, delivery and raw materials
legislation and
North American, Asia Pacific and European regions.
purchasing requirements as well as
regulation which may
Activities in these end-markets are impacted by changes
manage operating and overhead costs as
impact activity in
in general economic conditions; and to legislation and
considered necessary and appropriate.
RWC’s end-markets.
regulation (for example, changes to plumbing codes;
RWC’s systems and processes are
tariff rates and import duties; and post Brexit trade
supported by audit protocols and
and regulatory arrangements). Activities in the repair
end-market may also be impacted by the occurrence of
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. The COVID-19 pandemic is
an example of an event which caused and continues to
cause significant impact on general economic conditions.
The impact and uncertainty caused by COVID-19 is
expected to continue for some time into the future.
• Any such downturn may have a material adverse impact
on RWC’s operations and financial results.
monitoring of key performance indicators.
• Key economic indicators are monitored for
data which will assist the business in being
proactive in its decision making.
• The COVID-19 pandemic resulted in a
review of the inputs and methodologies
of our forecasting and financial planning
systems to improve reaction and response
times to abnormal events.
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. For example, a
US$100/tonne change in the cost of copper is estimated
to impact EBITDA by approximately US$1.1 million.
Foreign currency risk
• RWC’s results are impacted by exchange rate
movements. In particular, exposure to USD, AUD, 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.
• Movements in exchange rates can impact profitability
and cash flows.
• Active management of procurement
processes.
• Continuing program to “dual source” key
materials and components to enable price
verification, quality control management
and reduce risk of supplier concentration.
• RWC periodically benchmarks prices for
key material/product supply.
• RWC does not typically hedge its foreign
exchange exposures. RWC currently
benefits from several "natural hedges"
against currency movements. For
example, the impact of foreign currency
denominated purchases against foreign
currency sales. RWC Australia's sales to
RWC 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.
• Foreign currency risk is monitored and
analysed with consideration given to
alternative strategies to manage foreign
exchange risk as the business expands and
exposure to other currencies increases.
• Where appropriate, transaction timings
are optimised to minimise impacts.
• RWC will report its financial results in US
dollars from FY2022. This is expected
to reduce the impact of foreign currency
movements on reported results.
48
49
DIRECTORS’ REPORTFor the year ended 30 June 2021DIRECTORS’ REPORTFor the year ended 30 June 2021Annual Report 2021Reliance Worldwide Corporation Limited Risk
Events affecting
Description
• The equipment and management systems necessary
Management plans
• RWC had 14 manufacturing facilities
Risk
Impact of product
Description
• RWC is exposed to the risk of product recalls and
Management plans
• Continuing investment in production
manufacturing or
for the operation of RWC’s manufacturing facilities may
located in five countries at 30 June 2021.
recalls, product
product liability claims where a defect in a product
technology and quality control processes
Directors' Report
delivery capability
break down, perform poorly, fail or be impacted by a fire
This geographic dispersion reduces the
liability claims or
sold or supplied by RWC or incorrectly installed by a
or major weather event (such as a snow storm, tornado,
impact on total production output if an
claims against RWC
third-party contractor could result in, results in or
cyclone or flood) resulting in manufacturing delays,
adverse event occurs at one or more of
where a product
is alleged to have resulted in, personal injury or
increased manufacturing costs or an inability to meet
the sites.
has not been
property damage.
customer demand.
• Events could also arise which impact upon RWC’s ability
to ship and deliver product from its facilities in a timely
manner. The COVID-19 pandemic resulted in significant
market and supply chain disruption leading to increased
risk around business planning and management.
• Any significant or sustained interruption to RWC’s
manufacturing or delivery processes may adversely
impact RWC’s net sales and profitability.
Climate related risks
and impacts
• As a manufacturer and distributor, we recognise that our
operations have an environmental footprint and that we
• RWC has established long term machine
maintenance support programs with
key suppliers.
• RWC carries stores of key maintenance
spare parts to support timely repairs
to and maintenance of its production
equipment and facilities.
• Investment in high quality machinery
and extensive operator training to enable
machine/operator substitution in the event
of machinery breakdown.
• RWC’s response to the operational
impacts of COVID-19 together with existing
risk management controls minimised the
impact of the pandemic on manufacturing
capacity and output.
• Safety hazard training undertaken and
appropriate onsite procedures in place.
• Business interruption insurance in place.
• Continuing to assess our climate
related business risks and how best
need to manage the social and environmental impacts
to mitigate these.
of our supply chain.
• There may be climate related factors which impact
our operations in both the near and longer term. For
• An ongoing project to identify and capture
emissions information and then set
appropriate, practical targets and plans to
example, these impacts could be in areas such as
achieve these.
availability and cost of materials used in our products or
manufacturing processes, transport and/or occurrence
of extreme weather events. Any significant or sustained
impacts could adversely affect RWC’s financial
performance and/or financial position.
• Material climate related risks identified will
be incorporated into RWC’s enterprise risk
management processes.
• RWC’s published Social Impact Reports
provide information on our approach to
managing and mitigating climate related
risks and impacts.
correctly installed
by a third party.
• RWC may suffer loss as a result of claims for which
it is not insured or if cover is denied or exceeds
available limits.
Key personnel risk
• 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
to minimise the risk of product defects.
• RWC maintains rigorous quality assurance
accreditation in all 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
personnel, its operations and financial results could
retaining key staff.
be adversely affected.
• Succession planning is a focus of the
Board and managed on its behalf by
the Nomination and Remuneration
Committee.
Information
Technology
• Technological advancements and risks of cyber-crime
can impact the integrity of RWC’s IT systems and
• IT security policies and recovery
plans in place.
(including cyber
make them vulnerable to attack if appropriate security
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.
• Fully maintained hardware and software
security measures provide a high watch
status on illegal attempts to penetrate
our systems.
50
51
DIRECTORS’ REPORTFor the year ended 30 June 2021DIRECTORS’ REPORTFor the year ended 30 June 2021Annual Report 2021Reliance Worldwide Corporation Limited Directors' Report
Dividends
Audit and Non-Audit Services
An interim dividend for the financial year ended 30 June 2020 of 4.5 cents per share, franked to 20%, was declared by directors
Fees paid or payable by RWC for services provided by KPMG, the Company’s auditor, during the reporting period were:
on 24 February 2020 with an expected payment date of 9 April 2020. On 25 March 2020, the Company announced that, in view of
the need to prudently manage cash resources during a period of uncertainty caused by the COVID-19 pandemic, payment of this
interim dividend would be deferred. This interim dividend was paid to eligible shareholders on 9 October 2020.
A final dividend for the financial year ended 30 June 2020 of 2.5 cents per share, franked to 20%, was paid to eligible shareholders
on 9 October 2020.
An interim dividend for the financial year ended 30 June 2021 of 6.0 cents per share, franked to 20%, was paid to eligible
shareholders on 9 April 2021.
Since the end of the reporting period, the Directors have resolved to declare a final dividend for the financial year ended 30 June
2021 of 7.0 cents per share. The dividend will be franked to 20%. The record date for entitlement to the dividend is 10 September
2021. The dividend is payable to eligible shareholders on 8 October 2021.
The aggregate dividends paid or declared for the financial year ended 30 June 2021 total $102.7 million (2020 - $55.3 million).
The Company does not have a dividend reinvestment plan.
Events subsequent to reporting date
KPMG Australia
Audit services
Other assurance and non-audit services
• Tax services
Total fees paid or payable to KPMG Australia
Overseas KPMG offices
Audit services
Other assurance and non-audit services
• Tax services
Total fees paid or payable to overseas KPMG offices
On 20 July 2021, the Company announced it had entered into an agreement to acquire the business assets of LCL Pty Ltd (“LCL”).
Total fees paid or payable to KPMG
2021
$
699,500
43,750
743,250
328,119
127,861
455,980
1,199,230
The acquisition completed on 2 August 2021. The final purchase price was $36.7 million. The acquisition was funded through
existing committed borrowing facilities. LCL is one of Australia’s largest producers of high-quality copper-based alloys and
processes both new and recycled non-ferrous materials to produce a range of brass copper alloys. In addition to being the principal
supplier of brass to RWC in Australia, LCL also recycles excess brass (swarf) arising from RWC’s product manufacturing activities.
The Directors are not aware of any other 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
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 2021, 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
Details of options granted under the Company’s Equity Incentive Plan are set out in the Remuneration Report and Note 17 of the
The lead auditor’s independence declaration set out on page 84 forms part of this Directors’ Report.
financial statements. No other share options have been granted by the Company at the date of this report.
Rounding off
Directors’ interests
Details of Directors’ interests in the Company’s issued securities are set out in the Remuneration Report.
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
Corporate Governance Statement
The Company’s Corporate Governance Statement can be viewed at www.rwc.com/investors/corporate-governance.
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.
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
23 August 2021
Heath Sharp
Group Chief Executive Officer
and Managing Director
52
53
DIRECTORS’ REPORTFor the year ended 30 June 2021DIRECTORS’ REPORTFor the year ended 30 June 2021Annual Report 2021Reliance Worldwide Corporation Limited Reliance
Worldwide
Corporation
Limited
Annual Report
2021
SHAREHOLDER LETTER
Dear Shareholders,
Shareholder Letter
On behalf of the Board, I am pleased to present RWC’s Remuneration Report for the year ended 30 June 2021. The report contains
information on remuneration outcomes for FY2021 and a summary of key details of the revised remuneration framework which
applies from 1 July 2021.
Company performance
Outstanding financial results were achieved in FY2021. Net sales for FY2021 were $1,340.8 million, up 15% on the prior year.
On a constant currency basis, net sales were up by 25%, with strong growth recorded in all three regions. Sales growth resulted
from heightened levels of repair and remodel activity in all key markets, driven in part by increased consumer spending on home
improvements during the COVID pandemic, and by increased new residential home building activity. In the Americas, constant
currency sales were up 31% in the second half with significantly increased demand arising during a winter freeze event in Texas
and surrounding US states.
Reported EBITDA for the year was $340.7 million, an increase of 56% on the prior year. Adjusted EBIDTA was $349.2 million,
an increase of 39% over the prior year. Reported net profit after tax was $188.2 million an increase of 111% on the prior year.
Adjusted net profit after tax ($211.9 million) increased by 63% over the prior year.
FY2021 remuneration outcomes
Key considerations in developing and implementing the revised remuneration framework included that it be:
• Capable of being implemented consistently across the Group;
• Market competitive and US-referenced (as greater than 50% of RWC’s executives are based in the USA);
• Performance based with a focus on incentive pay linked to operational performance and shareholder value creation; and
• Aligned with shareholder expectations.
Key outcomes from the review include:
• Alignment of total remuneration for the CEO and some other senior roles will require a downward adjustment of fixed
annual pay. This will be achieved by implementing a downward adjustment of fixed remuneration by approximately
20% over a transition period of 3 years with a corresponding increase in STI and LTI opportunities;
• STI awards will be 100% cash based. This is consistent with USA practice. It also allows an opportunity for impacted
executives to earn back the fixed cash pay being foregone. This represents a change to the current STI Plan for executive
Key Management Personnel where 50% of STI awards were deferred into shares. We believe this change is acceptable in
the overall context of the revised remuneration framework and the required transition;
• LTI awards will contain two performance vesting conditions as well as a service period requirement. The performance
conditions are relative total shareholder return and earnings per share accretion. Both will be assessed over a 3 year
Section B of the Remuneration Report provides details on FY2021 remuneration outcomes for Senior Executives.
performance horizon commencing 1 July each year. It is intended that LTI awards be made annually; and
Two outcomes to highlight are:
• The Board did not approve a Budget for FY2021 for the purpose of assessing and determining STI awards for Senior Executives
owing to the uncertainties created by COVID-19. Rolling forecasts were prepared by management and reviewed by the Board
to assess the financial performance of the business. With no approved Budget, the Board elected to exercise its discretion in
determining STI awards to Senior Executives for FY2021 and considered both the Group’s financial performance and assessment
of non-financial key performance indicators for each executive. The assessment resulted in STI awards to both the Group CEO
and Group CFO equal to 113% and 77% of fixed remuneration respectively; and
• Seventy per cent of the options awarded to our CEO following the IPO in 2016 were subject to a relative Total Shareholder Return
(“TSR”) condition. The performance measurement period ended on 30 June 2021. The number of these options remaining eligible
to vest was determined in July following independent testing of achievement against the hurdle conditions. The Company’s
relative TSR ranking for the performance measurement period was at the 77th percentile. This results in all these options
remaining eligible to vest subject to satisfaction of a service period requirement which ends on 30 June 2022. The Board is
extremely pleased with this outcome as a reward for our CEO.
Revised remuneration structure
As a Board, we have a responsibility to implement and oversee a remuneration framework which is structured to be equitable and
aligned with the long term interests of the Company and shareholders. The remuneration framework should adequately balance
the need to attract and retain the best people to run RWC’s business while ensuring that remuneration is linked clearly
to shareholder returns and remains comparable with appropriate industry and geographical peers.
A review of RWC’s remuneration framework was completed during FY2021. The main purpose of the review was for RWC to
implement a remuneration framework program more closely aligned with current market practices. We engaged with several major
investors and their advisors as part of the process. External consultants were engaged to assist with benchmarking analysis and
design of the framework.
• Alignment with industry practice in the USA which includes a focus on “target” variable remuneration and “maximum”
incentive values at 200% of target for both STI and LTI outcomes.
Please refer to Section C of the Remuneration Report for further details.
I am pleased to advise that both our CEO and CFO have entered into new employment agreements. These agreements
reflect the revised remuneration framework.
The Company has also introduced a minimum shareholding policy which applies to all Key Management Personnel and
certain other senior executives. The policy requires a minimum number of RWC’s ordinary shares to be acquired and held.
Please refer to Section C of the Remuneration Report for further details.
Christine Bartlett
Chair, Nomination and
Remuneration Committee
54
55
Introduction
A. Governance and principles
The Directors present the Remuneration Report for Reliance Worldwide Corporation Limited (“the Company”) and its
The Board believes that the Company’s success depends upon the performance of all employees and that remuneration policies
controlled entities (together “RWC” or “the Group”) for the financial year ended 30 June 2021 (“FY2021” or “the reporting period”).
should be structured to deliver positive benefits for the Company, shareholders and employees.
Remuneration Report
This Remuneration Report forms part of the Directors’ Report and has been audited in accordance with the requirements of the
Corporations Act 2001 (Cth).
This Remuneration Report contains the following sections:
A. Governance and principles
B. FY2021 remuneration arrangements and outcomes
C. Details of the new remuneration framework which applies from 1 July 2021
D. Other required disclosures
The Remuneration Report sets out remuneration arrangements for the Key Management Personnel (“KMP”) of RWC for the
reporting period. KMP for the reporting period are listed below. KMP are determined in accordance with accounting standard
AASB 124: Related Party Disclosures (“AASB 124”). 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 reporting period
Executive Role
unless otherwise stated.
Name
Non-executive Directors
Christine Bartlett
Russell Chenu
Stuart Crosby
Ross Dobinson1
Darlene Knight2
Sharon McCrohan
Ian Rowden3
Senior Executives
Heath Sharp
Andrew Johnson
For the remainder of this Remuneration Report and when appropriate, KMP are referred to as either Non–Executive Directors
or Senior Executives as set out above.
Only the Group Chief Executive Officer (“CEO”) and Group Chief Financial Officer (“CFO”) were considered executive KMP in FY2021
having regard to the Group’s management structure and the criteria in AASB 124. This assessment is consistent with prior years.
There have been no changes to KMP since the end of the reporting period to the date of this report.
1 Until 14 April 2021.
2 From 14 April 2021.
3 From 6 July 2020.
56
The Nomination and Remuneration Committee is responsible for reviewing and recommending to the Board the remuneration
arrangements for the CEO, the Chairman and Non-Executive Directors. The Committee is responsible for reviewing and approving
the remuneration arrangements of the CEO’s direct reports. 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 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 (North America, Asia Pacific and
Europe). Benchmarking is undertaken periodically to confirm that arrangements are market competitive; and
• structure short term and long term incentives that are challenging and linked to the creation of sustainable shareholder returns.
The Committee conducts regular reviews and monitors the implementation of the Company’s remuneration framework to confirm it:
• encourages and sustains a culture aligned with the Company’s values;
• supports the Company’s strategic objectives and long-term financial soundness; and
• is aligned with the Company’s risk management framework and risk appetite.
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 Chair of the Nomination and Remuneration
Committee as the first point of contact.
During FY2021, consultants continued to be engaged to assist with the remuneration framework review project which commenced
during FY2020. Section C sets out the results of this review and provides a summary of the remuneration framework which applies
from 1 July 2021. Disclosures required by the Corporations Act 2001 (Cth) for any remuneration consultants or other advisors who
Principles used to determine the nature and amount of remuneration
Non-Executive Director remuneration
The remuneration of Non-Executive Directors is not linked to Company performance and is comprised solely of cash fees
(including applicable superannuation). This arrangement allows the Board to focus on governance and both short and long-term
strategy free from any potential independence concerns.
The Company’s remuneration policy for Non-Executive Directors aims to attract and retain suitably qualified and experienced
Non-Executive Directors having regard to:
• the level of fees paid to non-executive directors of other ASX listed companies;
• the size and complexity of RWC’s multi-national operations; and
• the responsibilities and work requirements of Board members.
Section B contains further details on fees and arrangements for Non-Executive Directors.
57
Managing Director and Group Chief Executive Officer
provided remuneration recommendations are presented in section D.
Group Chief Financial Officer
REMUNERATION REPORTFor the year ended 30 June 2021 (audited)REMUNERATION REPORTFor the year ended 30 June 2021 (audited)Annual Report 2021Reliance Worldwide Corporation Limited Senior Executive remuneration
B. FY2021 remuneration arrangements and outcomes
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
(a) Company performance
Senior Executives are set to properly reflect a Senior Executive’s duties and responsibilities and to be competitive in attracting,
The following table shows the financial performance of the Group during the last five financial years.
Remuneration Report
Key performance indicators
FY2021
FY2020
FY2019
FY2018
FY2017
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 having 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, applicable contributions to superannuation or pension funds
and other approved benefits;
• eligibility for short term incentive (“STI”) awards subject to approved criteria being met, with the Board retaining
a discretion to adjust the award outcome based on achievements during a reporting period; and
• ‘at risk’ long term incentives (“LTI”).
Section B provides further details on remuneration arrangements for Senior Executives for FY2021. Section C provides
details on remuneration arrangements for Senior Executives for FY2022.
Sales revenue ($m)
Reported EBITDA ($m)1
Adjusted EBITDA ($m)2
Operating profit (“EBIT”) ($m)
Net profit before tax ($m)
Net profit after tax (“NPAT”) ($m)
Adjusted net profit after tax ($m)3
Share price at beginning of year ($)4
Share price at end of year ($)4
The Company has introduced a Minimum Shareholding Policy which applies to Directors and Senior Executives.
Financial year interim and final dividends declared ($m)
A summary of the policy is provided in Section C.
Total dividends declared / NPAT ratio (%)
Basic earnings per share (cents)5
Adjusted earnings per share (cents)5,6
1,340.8
1,162.4
1,104.0
340.7
349.2
284.3
272.3
188.2
211.9
2.94
5.26
102.7
54.6
24.0
27.1
217.9
251.3
155.9
135.9
89.4
130.3
3.52
2.94
55.3
61.9
11.4
16.6
242.5
277.07
199.2
176.7
133.0
158.37
5.36
3.52
71.1
53.5
17.0
20.2
769.4
135.4
150.9
111.1
99.3
66.0
78.6
3.34
5.36
42.1
63.8
12.3
15.8
601.7
120.7
120.7
101.3
96.3
65.6
65.6
3.09
3.34
31.5
48.0
12.5
12.4
Net sales for FY2021 were $1,340.8 million, up 15% on the prior year. On a constant currency basis8, net sales were up 25%,
with strong growth recorded in all three regions (Americas – 27% growth, Asia Pacific – 18% growth and EMEA – 25% growth).
Sales growth resulted from heightened levels of repair and remodel activity in all key markets, driven in part by increased consumer
spending on home improvements during the COVID pandemic, and by increased new residential home building activity. In the
Americas, constant currency sales were up 31% in the second half with significantly increased demand arising during a winter
freeze event in Texas and surrounding US states.
Reported EBITDA for the year was $340.7 million, an increase of 56% on the prior year. Included in Reported EBITDA are one-time
costs of $8.5 million incurred to enable the expansion and consolidation of RWC’s warehousing and logistics activities in the USA
and the UK. Adjusting for these costs, EBITDA was $349.2 million, an increase of 39% on Adjusted EBITDA for the prior year. The
increase in operating earnings was mainly driven by double digit sales growth in each region for the year as described above.
1 EBITDA means earnings before interest, tax, depreciation and amortisation. For FY2021 it reconciles as earnings ($188.2m) before interest ($12.0m), tax ($84.1m) depreciation
and amortisation ($56.4m). EBITDA is a non-IFRS measure used by RWC to assess operating performance and enhance comparability from period to period. EBITDA has not
been subject to audit or review.
2 Adjusted EBITDA for FY2021 is Reported EBITDA ($340.7m) before restructuring and asset impairment charges ($8.5m). Adjusted EBITDA for FY2020 is Reported EBITDA
($217.9m) before restructuring and asset impairment charges ($33.4m). 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 adopting AASB 16: Leases;
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 enhance comparability from period to period. Adjusted EBITDA has not been subject to audit or review.
3 Adjusted Net profit after tax reflects the reconciliation items (tax effected) which determine Adjusted EBITDA for each reporting period as applicable. Adjusted NPAT for FY2021
is NPAT ($188.2m) adjusted for the reconciliation items (tax effected) which determine Adjusted EBITDA ($8.5m) and other specific tax related adjustments ($15.2m). Adjusted
NPAT is a non-IFRS measure used by RWC to assess operating performance and enhance comparability from period to period. Adjusted Net profit after tax has not been subject
to audit or review.
4 790,094,765 issued ordinary shares at the end of each of FY2018, FY2019, FY2020 and FY2021; 525,000,000 issued ordinary shares at the beginning and end of FY2017.
5 Based on weighted average number of shares for the reporting period.
6 Adjusted earnings per share is a non-IFRS measure used by RWC to assess operating performance and enhance comparability from period to period. Adjusted earnings per
share has not been subject to audit or review.
7 Numbers restated for comparative purposes.
8 Constant currency numbers are non-IFRS measures which have not been subject to audit or review.
58
59
REMUNERATION REPORTFor the year ended 30 June 2021 (audited)REMUNERATION REPORTFor the year ended 30 June 2021 (audited)Annual Report 2021Reliance Worldwide Corporation Limited Remuneration Report
Cost savings from restructuring initiatives totalling $22.3 million were delivered in FY2021 and the target of a cost reduction run
(c) Senior Executive remuneration structure for FY2021
rate at the end of FY2021 of $25.0 million on an annualised basis has been achieved1. Price increases were implemented across
a number of product categories during the second half in all regions to mitigate the impact of higher input costs and other
Fixed Remuneration
inflationary pressures.
Disruptions arising from COVID-19 cases in the UK, Europe and the US put additional pressure on our operations due to increased
employee sickness and absenteeism as well as supply chain and logistics disruptions. Factory layout and materials flow changes
to ensure social distancing requirements were met, adversely impacted efficiencies and delivery performance. All major RWC
manufacturing sites were operational throughout the year and a focus on execution enabled the Group to meet the heightened
demand, particularly in the USA following the winter freeze event. The Board considers that these challenges continue to be very
well managed by the leadership team and employees.
Total dividends declared for the year ended 30 June 2021 are 13.0 cents per share ($102.7 million) which represents 55% of Reported
NPAT and 48% of Adjusted NPAT (FY2020 – 7.0 cents per share, $55.3 million). Total dividends declared for FY2021 are 86% higher
than that for FY2020 reflecting the financial performance for the reporting period. The Company’s intended payout range remains
between 40% and 60% of annual NPAT.
Senior Executives received an STI award for FY2021. Refer section (c) below.
(b) Non-Executive Directors’ fees and arrangements
The Board, in accordance with the terms of the Company’s Constitution, determines the remuneration to which each
Non-Executive Director is entitled for services as a Director. The 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 $1,500,000 as approved by shareholders at the 2018
Annual General Meeting.
Non-executive Directors' fees for FY2021 were:
Role
Chair
Non-Executive Directors
(other than Committee Chairs)
Chair of Audit and Risk Committee
Chair of Nomination and Remuneration Committee
All fees include applicable superannuation.
Annual
base fees
$300,000
$130,000
$130,000
$130,000
Additional fees for
Total
Committee Chair
annual fees
-
-
$50,000
$25,000
$300,000
$130,000
$180,000
$155,000
The fees set out above will continue to apply in FY2022, subject to any further review and recommendation by the
Nomination and Remuneration Committee which is accepted by the Board.
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
The terms of employment for Senior Executives contain:
• a fixed remuneration component comprising base salary and applicable superannuation or 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 while maintaining remuneration within comparable
market ranges. The Board considers the USA to be the most comparable market for benchmarking remuneration arrangements for
Senior Executives as the Group’s operational 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 for Senior Executives is designed to be evaluated based on the achievement of agreed key performance measures. The key
performance measures applicable for FY2021 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 Senior Executives.
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 Opportunity1
CEO: 60.0% of fixed remuneration (40.0% measured against RWC financial performance and
20.0% measured against personal Key Performance Indicators (“KPIs”), both as described below).
CFO: 40.0% of fixed remuneration (26.7% measured against RWC financial performance and
13.3% measured against personal KPIs, both as described below).
Maximum Opportunity1
CEO: 120.0% of fixed remuneration (80.0% measured against RWC financial performance and
40.0% measured against personal KPIs, both as described below).
CFO: 80% of fixed remuneration (53.4% measured against RWC financial performance and
16.6% measured against personal KPIs, both as described below).
Scaling criteria apply to move from On Target to Maximum entitlements.
Performance criteria
Budgeted EBITDA
The relevant portion of the STI award subject to financial performance is usually measured by
reference to constant dollar performance against budgeted EBITDA (adjusted to exclude non-
budgeted material changes (for example, acquisitions) (“Budget”). The Board retains a discretion
to adjust the award outcome based on achievements during a reporting period. The Board
exercised discretion for FY2021 for the reasons set out below this table.
or are payable for FY2021. Non-Executive Directors may also be reimbursed for travel and other expenses incurred in attending
The following scale applies for the financial metric:
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.
% of Budget achieved
Payout (% of Target)
0-95% of Budget
Nil
Between 95% and 100% of Budget
Straight line pro-rating from
Nil to On Target Opportunity
100% of Budget
100% of On Target Opportunity
Between 100% and 120% of Budget
Straight line pro-rating from On Target
Opportunity to Maximum Opportunity
120% of Budget
100% of Maximum Opportunity
1 Non-IFRS measures. Not subject to audit or review.
1 On Target and Maximum Entitlements for the CFO reflect new employment agreement entered into during the year and align with the new remuneration framework.
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61
REMUNERATION REPORTFor the year ended 30 June 2021 (audited)REMUNERATION REPORTFor the year ended 30 June 2021 (audited)Annual Report 2021Reliance Worldwide Corporation Limited Remuneration Report
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. Actual EBITDA and Budget are compared on a like for like basis. The Board did
not approve a Budget for FY2021 for the purpose of assessing and determining STI awards for
Senior Executives owing to the uncertainties created by COVID-19. Rolling forecasts were prepared
by management and reviewed by the Board to assess the financial performance of the business.
With no approved Budget, the Board elected to exercise its discretion in determining FY2021 STI
awards for Senior Executives.
Personal KPIs
STI awards to Senior Executives for FY2021
Financial Criteria
Due to the uncertainties created by COVID-19, the Board did not approve a Budgeted EBITDA for FY2021 for the purpose of
assessing and determining STI awards. Rolling forecasts were prepared by management and reviewed by the Board to assess
the financial performance of the business. With no approved Budget, the Board elected to exercise its discretion for FY2021.
The Board took into consideration the following financial performance factors:
• FY2021 financial results compared with the prior year;
• FY2021 financial results measured against rolling forecasts presented to the Board for review and consideration; and
• Comparing FY2021 financial results with consensus forecasts of sell side analysts at various times throughout the financial year.
The Group’s financial results exceeded each comparative measure quite significantly. After due consideration, the Board elected to
The relevant portion of the STI award subject to personal KPIs is measured by scorecard
award Senior Executives their Maximum Opportunity amount for achievement of the financial performance outcome, being:
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.
CEO
CFO
Proportion of fixed
remuneration (%)
80.0
53.4
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
Personal KPIs Criteria
bench strength, ensuring a safe working environment with a diverse workforce, strategic growth
Achievement of Personal KPIs was measured against the following criteria with a score out of 5 for each:
and the expansion of RWC’s business activities and product development.
A combination of financial and non-financial performance criteria were 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.
Following the end of the financial year, performance against Budget is assessed by the
Living RWC’s values and culture
Talent and leadership development
Personal objectives
Average
CEO
4.5
4.5
4.5
4.5
CFO
4.5
5.0
4.5
4.67
Nomination and Remuneration Committee based on the Company’s audited financial results.
Percentage of base achieved
33.33%
23.64%
As noted above and further explained below, the Board elected to exercise its discretion in
determining FY2021 STI awards to Senior Executives.
These scores reflect the Board’s view that the personal performance of both Senior Executives during the year was exceptional.
Assessment of
performance
Performance against personal KPIs is assessed annually as part of the broader performance
Total STI award
review process for Senior Executives. These KPIs are assessed quantitatively against
The total STI award to Senior Executives for FY2021 is:
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.
CEO
CFO
Financial Criteria (%)
Personal KPIs (%)
remuneration (%)
Proportion of fixed
80.00
53.40
33.33
23.64
113.33
77.04
The STI award is 50% payable in cash and 50% deferred into shares and subject to a holding lock for 12 months.
Further details of the STI award amounts are provided in section (h).
Long term incentive
The Company established an 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.
62
63
REMUNERATION REPORTFor the year ended 30 June 2021 (audited)REMUNERATION REPORTFor the year ended 30 June 2021 (audited)Annual Report 2021Reliance Worldwide Corporation Limited A summary of the terms of Options granted to Senior Executives are set out below in (d). Details of Share Rights which have
or had been granted to Senior Executives are summarised below in (e).
(d) LTI Options Grants
The following table summarises details of the options granted to Heath Sharp, Group Chief Executive Officer (“CEO”) in FY2016.
No other options have been granted to the CEO.
Type of award
4,000,000 options (“CEO Options”).
Each of the CEO Options entitles the CEO to acquire an ordinary share in the Company subject to meeting
specific vesting conditions and payment of the exercise price. The CEO Options were granted for nil
consideration as they form part of the CEO’s remuneration.
Vesting Period
From 29 April 2016 (date of listing on the ASX) until 30 June 2022.
Vesting conditions
The CEO Options will vest and become exercisable subject to the satisfaction of a gateway hurdle and two
and assessment
performance conditions. 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 CEO.
1. Gateway hurdle
The Gateway hurdle will be satisfied if the CEO remains employed by the Group at 30 June 2022, subject to
the terms and conditions of the grant. None of the CEO Options will vest if this condition is not met.
2. Performance conditions
The CEO Options were also subject to two performance conditions both of which have now been tested.
All of the CEO Options remain eligible to vest following assessment of the performance conditions.
Details of the performance conditions are:
• 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.
Calculation of NPAT and achievement against the NPAT Hurdle was determined based on the audited
FY2017 financial results. 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; and
• 70% of the CEO Options (“CEO TSR Options”) were 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”).
TSR measures the growth in the Company’s share price together with the value of dividends over the
measurement period (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 Report
The number of CEO TSR Options eligible to vest was determined shortly after the end of the Performance
Period applying the above criteria. The outcome of independent testing of the TSR Hurdle is that the
Company’s Relative TSR Ranking for the Performance Period was at the 77th percentile. This means all
TSR Options remain eligible to vest.
The percentage of CEO TSR Options retained in relation to the TSR Hurdle was determined by reference
to the following schedule:
Relative TSR Ranking
Below 50th percentile
50th percentile
% of CEO TSR Options retained
Nil
50%
Between 50th and 75th percentile
Pro rata straight line vesting between
50th and 75th percentile
75th percentile or above
100%
Exercise of
Options
Voting and
dividend rights
Cessation of
employment
Vesting of the CEO Options remains subject to the Gateway hurdle condition being satisfied.
The CEO Options will vest and become exercisable if the relevant vesting conditions have been met.
The CEO may exercise any vested CEO Options by 30 June 2031. After 30 June 2031, any unexercised CEO
Options will lapse.
Options do not carry any voting or dividend rights prior to vesting and exercise.
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.
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. 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 options and/or vested but unexercised options will lapse;
• shares allocated upon exercise of options will be forfeited; and/or
• require the CEO 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.
Remuneration Committee in their reasonable discretion to take into account corporate actions, including
Exercise Price for Options Granted
but not limited to takeovers, mergers, de-mergers or de-listings.
Relative TSR was 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. For the CEO TSR Options, the starting point for measuring the Company’s TSR
performance was the $2.50 issue price for the shares issued under the Prospectus for the IPO in 2016.
Option holder
Heath Sharp
Original Exercise Price per Option
Adjusted Exercise Price per Option1
$2.50
$2.32
64
65
1 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 REPORTFor the year ended 30 June 2021 (audited)REMUNERATION REPORTFor the year ended 30 June 2021 (audited)Annual Report 2021Reliance Worldwide Corporation Limited
Remuneration Report
Movements in Options held by CEO
The following table sets out the movement during the reporting period of Options held by the CEO (including related parties).
None of the Options granted to the CEO are presently capable of being exercised.
Granted
Granted
during
during
Lapsed
Lapsed
Lapsed
Balance
Balance at
the year
the year
Vested
Vested
Exercised
Exercised
Forfeited
Forfeited
Forfeited
at 30 June
Name
1 July 2020
number
$ value
number
$ value
number
$ value
number
$ value
%
2021
In 2018, 1,810,200 Rights were granted which were also subject to performance conditions to be eligible to vest (“2018 Performance
Rights”). The number of 2018 Performance Rights eligible to vest was determined at the end of a two year performance period
on the Performance Period Measurement Date (30 June 2020) by reference to the applicable performance conditions (refer
2020 Remuneration Report for details). The number of 2018 Performance Rights to be retained by eligible participants following
assessment of the performance conditions at the Performance Period Measurement Date was 1,088,007. The total number of
2018 Performance Rights which lapsed or were forfeited is 722,193 (which also reflects pro rating for eligible departed employees).
Details in respect of Senior Executives are set out below. Any 2018 Performance Rights which do not vest will automatically lapse.
The retained 2018 Performance Rights will vest at the end of the continuous service period subject to the terms of the award.
Heath
4,000,000
–
–
–
–
–
–
–
–
– 4,000,000
During FY2021, 331,263 Rights were granted to Andrew Johnson, Group Chief Financial Officer and a member of KMP. These Rights
Sharp
No options were granted to Senior Executives during FY2021 and none were held by any other Senior Executives during the
reporting period.
(e) Share Rights
contain two vesting conditions, being a continuous service period and a performance condition. Details of these conditions are set
out below in the section on “Rights granted to Senior Executives”.
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
The Board has approved that nominated, eligible executives and employees, including Senior Executives, be invited to participate
following has occurred, then a pro rata portion of the unvested Rights may remain on foot and vest in the ordinary course as though
in the Plan as a means of attracting, retaining and motivating key employees in the Group. Participants are granted rights to be
the participant had not ceased employment:
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 2021 was 6,364,864
(30 June 2020 – 6,394,624). Details of Rights granted to Senior Executives are set out below.
The opening and closing balances of all unvested Rights granted are reconciled for the reporting period as follows:
Granted and unvested at 30 June 2020
Granted during FY2021 with the following vesting dates:
23 December 2022
1 January 2024
6 May 2024
1 July 2025
Total granted during FY2021
Forfeited, Cancelled or Lapsed during FY2021
Unvested at 30 June 2021
Number of Rights
6,394,624
110,620
331,263
12,100
150,000
603,983
(633,743)
6,364,864
No Rights vested during the reporting period or have subsequently vested. A further 196,546 Rights lapsed or have been forfeited
or cancelled subsequent to 30 June 2021 through to the date of this report (none of which were granted to Senior Executives). No
Rights have been granted subsequent to 30 June 2021 to the date of this report.
Vesting conditions for all grants of Rights include a continuous service period ranging between two and five years.
• The participant’s employment is terminated by RWC without cause; or
• The participant terminates employment for a defined good reason.
The remainder of the Rights will lapse.
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 have been granted Rights. These Rights contain a continuous service period vesting condition. Each Right entitles
the participant to one ordinary share in the Company on vesting. 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.
Rights granted to Mr. Sharp
Mr. Sharp received a grant of 987,800 Rights in 2018. The grant was subject to the Performance Conditions attached to the 2018
Performance Rights. The number of Rights retained by Mr. Sharp following assessment of the Performance Conditions was
determined during the reporting period. The overall outcome achieved was 61.875% of Rights (611,201) retained based on the
following assessment:
In relation to the financial conditions:
• FY2019 EBITDA of the John Guest group excluding synergies – below 95% of target – all 12.5% of the opportunity lapsed;
• FY2020 EBITDA of the John Guest group excluding synergies – below 95% of target – all 12.5% of the opportunity lapsed; and
• Run rate synergies achieved by the end of FY2020 – target: $24.3 million; actual run rate achieved $31.3 million – all 25% of the
opportunity remains eligible to vest.
In relation to the non-financial conditions, the Board took the view that the adverse financial impacts of Brexit (materially greater
than anticipated at the time of the acquisition) and COVID-19 were already reflected in the outcome for the financial conditions and
should therefore carry less weight than might otherwise have been the case.
66
67
REMUNERATION REPORTFor the year ended 30 June 2021 (audited)REMUNERATION REPORTFor the year ended 30 June 2021 (audited)Annual Report 2021Reliance Worldwide Corporation Limited Reliance
Worldwide
Corporation
Limited
Annual Report
2021
REMUNERATION REPORT
For the year ended 30 June 2021 (audited)
Remuneration Report
The Board assessed each of the four factors on a scale of 1 to 10 as follows:
The movement in the number of Rights granted to Senior Executives is shown in the following table.
Non-Financial Metric
Rating
Score (1–10)
Cultural integration
Exceptionally strong
European market penetration
Integrated business strength
Cost to achieve synergies,
financial and organisational
An early assessment was made that this should be a
lower priority than originally envisaged – neutral
Strong
Strong
9.0
5.0
7.5
8.0
This assessment produced a total rating of 29.5/40, meaning 36.875% out of the maximum 50% opportunity which related to
non-financial conditions remain eligible to vest.
Rights granted to Mr. Johnson in FY2021
Grant Date
Vesting Date
Heath Sharp
30 October 2018
30 October 2023
Andrew Johnson
1 July 2017
1 July 20224
Andrew Johnson
27 August 2018
27 August 20234
Andrew Johnson
1 January 2021
1 January 2024
Number
of Rights
Granted
987,800
165,000
86,400
331,263
Number
of Rights
Number
Fair value
of Rights
per Right at
Lapsed1
Retained²
Grant Date³
376,599
–
–
–
611,201
165,000
86,400
331,263
$4.29
$3.00
$5.17
$2.99
1,570,463
376,599
1,193,864
No other Rights granted to Senior Executives were forfeited, cancelled or lapsed during FY2020 or subsequently to the date of
this report.
Mr. Johnson received a grant of 331,263 Rights during FY2021 following confirmation of his appointment as Group CFO. The number
Shares purchased to meet vesting obligations
was determined based on an independently assessed fair value of a Right at the start of the Performance Measurement Period.
The Company has established a subsidiary, Reliance Employee Share Investments Pty Ltd (“Trustee”), to act as trustee of the
Each Right entitles Mr. Johnson to one ordinary share in the Company on vesting. Rights are granted at no cost and there will be no
Reliance Employee Share Investments Trust. The Trustee will acquire RWC shares on-market on behalf of the Trust to meet any
amount payable on vesting. There are no voting or dividend rights attaching to Rights prior to vesting. Vesting of these Rights are
obligations to deliver shares to a participant in the Plan where the applicable vesting conditions are met. The Trustee is also entitled
subject to a continuous service period and a performance condition. Details are:
to participate on behalf of the Trust in certain equity raisings undertaken by the Company.
Continuous Service
3 years from 1 January 2021
Period Condition
Performance
1 July 2020 to 30 June 2023
Measurement Period
Performance
conditions
A relative total shareholder return (“TSR”) hurdle, which compares the TSR performance of the
Company with the TSR performance of each of the entities in a comparator group (“TSR Hurdle”)
The movement in the number of shares held during the reporting period is:
Shares held at 30 June 2020
Acquired during FY2021 (at an average cost of $3.88 per share)
Allocated property transferred to participants
over the Performance Measurement Period. TSR measures the growth in the Company’s share price
Shares held at 30 June 2021
together with the value of dividends over the Performance Measurement Period (assuming that all
those dividends are reinvested into new shares) against the Company’s chosen comparator group, being
Vesting obligations will be met in accordance with the terms of the Plan rules.
companies comprising the ASX200 index, excluding mining and energy companies. The comparator
(f) Share Match Plan
Number
6,913,644
71,327
(130,612)
6,854,359
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.
The share prices used to calculate the TSR of a company for the TSR Hurdle will be measured as follows:
• the opening share price will be the volume weighted average price on the ASX of that company for the
5 trading days commencing on 1 July 2020; and
• the closing share price will be the volume weighted average price on the ASX of that company for
the 5 trading days ending on 30 June 2023.
The percentage of Rights subject to the TSR Hurdle that Vest, if any, will be determined by reference to
the percentile ranking achieved by the Company over Performance Measurement Period compared to
the other entities in the comparator group as follows:
Relative TSR Ranking
Below 50th percentile
50th percentile
Between 50th and 75th percentile
% of Rights retained
Nil
50%
Pro rata straight line vesting between
50th and 75th percentile
75th percentile or above
100%
As summarised earlier in this section (e).
Other key terms
and conditions
68
A share match plan was introduced during the reporting period to encourage employees to own shares in the Company.
Eligible employees can acquire up to $5,000 of shares in RWC per plan year from post tax income with contributions made via
a regular salary deduction (“Purchased Shares”). The Company will match the shares acquired on a 1:2 basis up to a cap $2,500
of Purchased Shares subject to the terms of the Share Match Plan (“Matching Rights”). There is a minimum holding period for
Purchased Shares of 2 years and a continuous service obligation for Matching Rights to convert into shares on a 1:1 basis. There are
no performance conditions. Participants receive dividends and have voting rights on their Purchased Shares. Matching Rights have
no voting or dividend entitlements prior to vesting. 307 employees were participating in this plan at 30 June 2021. The total number
of Matching Rights granted at 30 June 2021 was 42,884.
Details of Purchased Shares and Matching Rights held by Senior Executives under the Share Match Plan are shown in following table.
Purchased
Shares
Balance at
1 July 2020
–
–
Matching
Balance at
Rights
Balance at
Fair value
Net
30 June
Balance at
Net
30 June
per Right at
Change
2021
1 July 2020
Change
2021
Grant Date3
–
512
–
512
–
–
–
256
–
256
–
$4.16
Heath Sharp
Andrew Johnson
Mr. Sharp is not a participant in this plan.
1 Lapsed after assessment of applicable performance conditions.
2 These Rights will vest at the end of the continuous service period (being the Vesting Date) subject to the terms of the award
(including achievement of any performance conditions).
3 Based on an independent valuation which used Black Scholes and/or Monte Carlo models and complies with the requirements of AASB2.
4 Only a continuous service period vesting condition applies to these grants which were made prior to Mr. Johnson becoming a Senior Executive.
69
REMUNERATION REPORTFor the year ended 30 June 2021 (audited) (g) Remuneration Mix
The remuneration mix for Senior Executives for FY2021, based on statutory remuneration as set out in section (h), was:
Senior Executive
Fixed remuneration and benefits (%)
STI (%)
LTI (%)
Heath Sharp
Andrew Johnson
39.7
48.5
41.6
32.8
18.7
18.7
Senior Executive
Cash (%)
Non-cash(%)
Heath Sharp
Andrew Johnson
60.5
64.9
39.5
35.1
(h) KMP remuneration
Details of the remuneration of each member of KMP are set out below. The table includes the statutory disclosures required under
the Corporations Act and is in accordance with Australian Accounting Standards. All figures are in Australian dollars and relate to
the period of the year in which the person was a KMP.
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70
71
REMUNERATION REPORTFor the year ended 30 June 2021 (audited)Annual Report 2021Reliance Worldwide Corporation Limited
Remuneration Report
C. Revised remuneration framework applying from 1 July 2021
(i) Review of remuneration framework and strategy
The Nomination and Remuneration Committee and the Board believe that the remuneration framework should adequately
balance the need to attract and retain the best people to run RWC’s business while ensuring that remuneration is linked clearly
to shareholder returns and remains comparable with appropriate industry and geographical peer groups.
During this reporting period, the Nomination and Remuneration Committee completed its review of the overall remuneration
The Nomination and Remuneration Committee’s expects its primary focus in FY2022 will be on monitoring the implementation of
the revised remuneration framework. This will include:
• continuing to review remuneration arrangements of executives, including Senior Executives, to confirm that market competitive
remuneration packages are in place to attract and retain high calibre executives;
• confirming ‘at risk’ variable remuneration arrangements remain appropriately aligned with business strategies and outcomes; and
• overseeing the processes being introduced to manage and administer the revised STI and LTI plans.
framework of the Group. The main purpose of the review was for RWC to implement a remuneration framework more closely
(j) Principles of revised remuneration framework
aligned with current market practices. In reviewing the framework, the Committee considered several factors including:
• The Company listed on the ASX in 2016 with a classic private company remuneration structure which included:
- Relatively high, largely fixed cash remuneration for senior staff;
- Significant discrepancies between people with similar roles;
- No structured STI award program. Awards were mainly discretionary. For Senior Executives, more structured STI criteria
were introduced from FY2019; and
- An Equity Incentive Plan was implemented concurrent with listing. Under the Plan, an Options grant was made to the CEO
at the time of listing. A Share Rights program was introduced in FY2017, mainly with a service vesting condition only although
some grants did have performance conditions related to the John Guest acquisition. The Share Rights program has been
the main LTI award program for eligible employees. Grants have been made to selected executives and employees when
appropriate but without an annual award program in place.
• International expansion has resulted in RWC’s operating activities being less Australian based. The majority of senior executives
are now US based with greater than 50% of executive roles now based in the USA and less than 15% of executive roles based in
Key elements of the revised remuneration framework are summarised below. The framework will initially encompass
approximately 215 current leadership roles across the Group, being less than 10% of the Group’s employees at 30 June 2021.
General principles, considerations and outcomes
Key considerations in developing and implementing the revised remuneration framework included that it be:
• Capable of being implemented consistently across the Group;
• Market competitive and US-referenced (as greater than 50% of RWC’s executives are based in the USA);
• Performance based with a focus on incentive pay linked to operational performance and shareholder value creation; and
• Aligned with shareholder expectations.
Key outcomes from the review include:
• Alignment of total remuneration for the CEO and some other senior executives with market benchmarks will require adjusting
fixed and variable remuneration. This will be achieved by implementing a downward adjustment of fixed remuneration by
approximately 20% over a transition period of 3 years with a corresponding increase in STI and LTI opportunities. This is
Australia. RWC mostly competes for talent in the USA market, where remuneration is quite transparent and competitive in our
discussed further below under “Transition considerations for senior employees”;
sector and has established paradigms for the size, shape and description of remuneration packages that are different from usual
ASX practice.
The Committee focused its review on developing a remuneration framework which is:
• Market competitive and capable of being implemented across the business in a consistent manner;
• Established with a target remuneration mix focused on incentive pay linked to operational performance and shareholder
value creation;
• Referenced primarily against USA peers to recognise that over 50% of senior executives and other leaders are based there;
• Performance based; and
• Aligned with shareholder expectations.
External consultants were engaged to assess the current remuneration framework, including the short term and long term incentive
plans, and to provide insights on potential changes to align the framework with current market practices. The process included
competitive benchmarking, peer group analysis and identifying any gaps with prevalent market practice. Recommendations were
presented to the Committee for consideration.
The recommendations of the Nomination and Remuneration Committee have been approved by the Board. The revised
remuneration framework came into effect on 1 July 2021. The key principles are summarised below in section (j). The Board expects
there will be a transition period of three years before all intended changes are finally completed. This transition period reflects an
appropriate timeframe to phase in changes being made to remuneration arrangements of various senior executives. This includes
annual downward revisions of fixed remuneration and phased increases in STI and LTI opportunities for the CEO and some senior
executives over this period.
• STI awards will be 100% cash based. This is consistent with USA practice. It also allows an opportunity for impacted executives
to earn back the fixed remuneration being foregone. This represents a change to the current STI Plan for Senior Executives
where 50% of STI awards were deferred into shares. The change is justified in the overall context of the revised remuneration
framework and the required transition. Further details are provided below;
• Vesting of LTI awards will be subject to two performance conditions and a service period requirement. The performance
conditions are relative total shareholder return and earnings per share accretion. Both will be assessed over a 3 year performance
horizon commencing 1 July each year. It is intended that LTI awards be made annually. Further details are provided below; and
• Alignment with industry practice in the USA includes a focus on “target” remuneration and plan design maximum incentive
values at 200% of target for both STI and LTI.
Transition considerations for senior executives
Several transition matters arising from the review have been considered and addressed, including:
• Fixed remuneration:
- For those with above market fixed remuneration, annual reductions over 3 years will occur. For the CEO, the aggregate
downward adjustment of fixed remuneration will be approximately 20% over this transition period. This is to bring fixed
remuneration within the benchmarked market range. There is no downward adjustment of fixed remuneration required
for the CFO;
- For other senior executives, any changes to fixed remuneration are in line with the benchmarked market median for the
associated role. Most changes to total remuneration are directed to the variable remuneration structures;
• STI:
- For those with reductions in fixed remuneration, STI target level increases as fixed remuneration reduces to broadly maintain
on-target total cash compensation in relevant cases. As noted above, STI would be all cash (no deferral), consistent with
USA practice and reflecting that some executives are giving up a portion of fixed remuneration.
72
73
REMUNERATION REPORTFor the year ended 30 June 2021 (audited)REMUNERATION REPORTFor the year ended 30 June 2021 (audited)Annual Report 2021Reliance Worldwide Corporation Limited • LTI:
- CEO – target annual grants with “fair value” starting at about 30% of total target remuneration and moving to
greater than 40% over a three year period.
- CFO – target annual grants with “fair value” of about 35% of total target remuneration.
- Other CEO direct reports – target annual grants with “fair value” of between 30% and 35% of total target remuneration.
The target remuneration mix by the end of FY2024 for each of the CEO and CFO is:
Performance Metrics
Financial Metric – Earnings before Interest and Tax (“EBIT”)
The relevant portion of the STI award subject to financial performance is intended to be measured
by reference to budgeted Group or Region EBIT, as applicable (“Budget”). The Board retains
a discretion to adjust the award outcome based on achievements during a reporting period.
For Senior Executives, this is a change from the previous financial metric of EBITDA. The Board
considers EBIT to be a more appropriate measure of operational management of the business.
The EBIT metric may be adjusted at the Board’s discretion to exclude the effects of significant
events deemed not appropriate to assess actual employee performance. These significant events
CEO
CEO
CFO
CFO
may include:
Remuneration Report
28%
28%
43%
43%
35%
35%
45%
45%
29%
29%
25%
25%
Base
LTI
STI
Base
LTI
STI
Base
LTI
STI
Base
LTI
STI
STI Plan
The STI plan is designed to reward eligible participants, including Senior Executives, for achieving fiscal year financial and
strategic goals. The revised STI plan has the following design features:
Objective
Nature
STI awards are determined by the Board following satisfaction of specific performance conditions
100% cash. Payment of 100% cash STI is consistent with USA market practice which for the
Company is the main market in which executives are based. For Senior Executives, this represents
a change from the nature of the STI award applying for FY2021 as explained above.
Target Opportunity
CEO: 80% of fixed remuneration
CFO: 40% of fixed remuneration
Other eligible participants: 10% to 40% of fixed remuneration depending on tier level
Entitlement measured against the Performance Metrics and scaling criteria below.
Maximum Opportunity
CEO: 160% of fixed remuneration
CFO: 80% of fixed remuneration
Other eligible participants: 20% to 80% of fixed remuneration
Entitlement measured against the Performance Metrics and scaling criteria below.
Performance Metrics Mix
The mix of financial and non-financial criteria to be applied is:
Group participants (including CEO and CFO)
Group EBIT – 70%
Region participants
Personal KPI goals – 30%
Group EBIT – 30%
Region EBIT – 40%
Personal KPI goals – 30%
74
• Acquisition related charges and other items;
• Restructuring and other charges;
• Non-cash impairments;
• Impacts resulting from material changes in foreign currency exchange rates; and
• Any other significant items deemed appropriate by the Board.
The following scale applies for the financial metric:
% of Budget achieved
Less than 90% of Budget
Between 90% and less than
100% of Budget
100% of Budget
Payout (% of Target)
Nil
Straight line pro-rating from
Nil to Target Opportunity
100% of Target Opportunity
Above 100% and less than
Straight line pro-rating from
115% of Budget
Target Entitlement to Maximum Opportunity
115% of Budget and greater
100% of Maximum Opportunity
(200% x Target Opportunity)
250
200
150
100
50
g
n
i
t
s
e
V
I
T
S
f
o
%
0
80
250
200
150
100
50
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n
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V
s
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R
R
S
T
f
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%
0
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Vesting Schedule - Budget
Vesting Schedule - Personal KPI Score
115% of Budget:
200% Vesting
Personal KPI Score 5.0
200% Vesting
100% of Budget:
100% Vesting
Personal KPI Score 3.5
100% Vesting
<90% of Budget:
0% Vesting
Personal KPI Score <2.0
0% Vesting
85
90
95
100
105
110
115
120
125
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
% of Budget Achieved
Personal KPI Score
Vesting Schedule - TSR Rights
Vesting Schedule - EPS Rights
80th percentile:
200% Vesting
75
60th percentile:
100% Vesting
40th percentile:
50% Vesting
8% EPS CAGR:
100% Vesting
4% EPS CAGR:
0% Vesting
0
0.0
15% EPS CAGR:
200% Vesting
10
20
30
40
50
60
70
80
90
100
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
Relative TSR Rank (percentile)
% EPS 3 year CAGR
250
200
150
100
50
g
n
i
t
s
e
V
I
T
S
f
o
%
0
0
250
200
150
100
50
g
n
i
t
s
e
V
s
t
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i
R
S
P
E
f
o
%
REMUNERATION REPORTFor the year ended 30 June 2021 (audited)REMUNERATION REPORTFor the year ended 30 June 2021 (audited)Annual Report 2021Reliance Worldwide Corporation Limited
250
g
n
i
t
s
e
V
I
T
S
f
o
%
150
100
g
n
i
t
s
e
V
s
t
h
g
R
R
S
T
f
o
%
i
150
100
The Board considers the disclosure of the Budget set for the STI grant to be commercially sensitive
Vesting Schedule - Budget
information and that disclosure of this Budget would not be in the Company’s and shareholders’
best interests. EBIT 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
200
measurable. Actual EBIT and Budget will be compared on a like for like basis.
The thresholds below which no payout for the financial metric occurs and above which the
maximum payout is triggered have been reduced from prior year levels so as to make the target
level a better reflection of the fair value of the STI opportunity. This was an important element in
100% of Budget:
100% Vesting
the shift from fixed remuneration to variable.
Personal KPI goals
50
115% of Budget:
200% Vesting
The relevant portion of the STI award subject to personal KPIs is intended to be measured by
scorecard performance against role specific objectives to be settled with eligible participants
<90% of Budget:
0% Vesting
annually. Non-financial objectives are set to measure the participant’s performance against
85
90
95
100
105
110
115
120
125
0
80
Criteria
Target %
Examples
RWC values and culture
10%
Living our values, culture, safety,
leadership (SPIRIT)
Business leadership
Personal objectives
10%
10%
diversity and inclusion, ESG
Team management, talent development,
Vesting Schedule - TSR Rights
250
succession planning, training
200
Business development, product development,
cost control, strategic growth, expansion of
RWC’s business activities, ESG goals
80th percentile:
200% Vesting
Assessment of
performance
Non-financial KPIs are chosen to encourage the achievement of personal business goals
consistent with the Group’s overall objectives.
The following scale applies for the personal KPI goals:
60th percentile:
100% Vesting
Average personal KPI score
Less than 2
Payout (% of Target)
40th percentile:
50% Vesting
50
Nil
Clawback
Between 2 and less than 3.5
Straight line pro-rating from Nil to Target
3.5
Above 3.5 and less than 5
0
0
100% of Target
10
Straight line pro-rating from Target
40
30
20
5
100% of Maximum (200% x Target)
to Maximum
Relative TSR Rank (percentile)
Remuneration Report
250
200
150
100
50
g
n
i
t
s
e
V
I
T
S
f
o
%
0
0
Vesting Schedule - Personal KPI Score
Personal KPI Score 5.0
200% Vesting
Personal KPI Score 3.5
100% Vesting
Personal KPI Score <2.0
0% Vesting
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
A combination of financial and non-financial performance criteria were 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.
250
Vesting Schedule - EPS Rights
15% EPS CAGR:
200% Vesting
Following the end of the financial year, performance against Budget will be assessed by the
150
200
Nomination and Remuneration Committee based on the Company’s audited financial results.
g
n
Performance against personal KPIs will be assessed annually as part of the broader performance
i
t
s
e
review process for Senior Executives. These KPIs are assessed quantitatively against
V
s
pre-determined benchmarks, where appropriate.
t
8% EPS CAGR:
h
g
100% Vesting
These methods of assessing performance are chosen as they are, as far as practicable, objective,
R
S
measurable and capable of being independently audited.
P
E
f
Defined criteria are in place to prevent inappropriate benefits being paid. In such circumstances,
o
%
the Board may determine that allocated shares may be forfeited and/or require the Senior
100
50
i
Executive to pay as a debt any part of the net proceeds of a sale of awarded shares, cash payment
4% EPS CAGR:
0% Vesting
RWC’s business strategies and core values. KPIs will be set based on:
% of Budget Achieved
Personal KPI Score
50
60
70
80
90
100
0
or dividends provided in respect of an STI award.
8.0
0.0
6.0
4.0
2.0
10.0
12.0
14.0
16.0
18.0
LTI Plan
% EPS 3 year CAGR
The LTI plan is designed to assist in the motivation, retention and reward of eligible employees and 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 revised LTI plan has the following design features:
Nature
Annual grants of Rights. 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.
Eligible Participants
Senior Executives and other eligible executives and employees subject to Board approval.
Vesting Criteria
Subject to Board approval:
• Continuous service period. For FY2022 grants, the continuous service period will be
3 years from grant date; and
• Performance conditions will apply for all grants, to Senior Executives and Tier 2 and Tier 3
executives. Performance conditions for FY2022 grants are described below.
Any Rights which do not vest will immediately lapse.
76
77
REMUNERATION REPORTFor the year ended 30 June 2021 (audited)REMUNERATION REPORTFor the year ended 30 June 2021 (audited)Annual Report 2021Reliance Worldwide Corporation Limited
Number of Rights
to be granted
The number of Rights to be granted will be calculated using an independently assessed fair value.
The assessment will be made at the commencement of the Performance Period Measurement
date (1 July).
Performance Conditions
Rights granted to Senior Executives and Tier 2 and Tier 3 executives will be subject to performance
and assessment
conditions in addition to a continuous service period. 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. The two performance conditions are:
• 50% of the Rights (“TSR Rights”) will be subject to a relative total shareholder return (“TSR”)
performance condition, which will compare the TSR performance of the Company with the TSR
performance of each of the entities in a comparator group over the Performance Measurement
Period (“TSR Hurdle”).
Vesting Schedule - Budget
TSR measures the growth in the Company’s share price together with the value of dividends
250
over the measurement period (assuming that all those dividends are reinvested into new
shares) against the Company’s chosen comparator group, being companies comprising the
200
ASX200 index, excluding mining and energy companies. The comparator group may be adjusted
115% of Budget:
200% Vesting
by the Board or Nomination and Remuneration Committee in their reasonable discretion to take
250
into account corporate actions, including but not limited to takeovers, mergers, de-mergers
Vesting Schedule - Budget
150
or de-listings.
115% of Budget:
200% Vesting
Relative TSR was chosen because, in the opinion of the Board, it provides the most direct
200
link to shareholder return.
100% of Budget:
100% Vesting
100
I
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i
t
s
e
V
T
S
f
o
%
The number of TSR Rights which will be eligible to vest in relation to the TSR Hurdle will be
150
determined by reference to the following schedule:
100% of Budget:
100% Vesting
<90% of Budget:
0% Vesting
50
g
n
i
t
s
e
V
I
100
T
S
Relative TSR Ranking
f
o
%
Below 40th percentile
40th percentile
50
<90% of Budget:
Above 40th and less than 60th percentile
0% Vesting
0
80
60th percentile
85
90
95
Above 60th and less than 80th percentile
% of Budget Achieved
250
80th percentile or above
200% (Maximum Amount)
0
80
% TSR Rights eligible to vest
90
85
95
100
105
110
115
Nil
50%
% of Budget Achieved
Pro rata straight line vesting between
40th and 60th percentile
100
105
110
115
120
125
100% (Target Amount)
Vesting Schedule - TSR Rights
Pro rata straight line vesting between
60th and 80th percentile
g
n
i
t
s
e
V
I
T
S
f
o
%
250
200
150
100
120
50
0
0
250
200
150
100
50
g
n
i
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V
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g
R
R
S
T
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150
g
n
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s
e
Vesting Schedule - TSR Rights
V
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R
R
S
T
f
o
%
100
50
i
60th percentile:
100% Vesting
80th percentile:
200% Vesting
40th percentile:
50% Vesting
60th percentile:
100% Vesting
0
0
40th percentile:
50% Vesting
10
20
30
40
50
60
70
Relative TSR Rank (percentile)
10
20
30
40
50
60
70
80
90
100
Relative TSR Rank (percentile)
Remuneration Report
50% of the Rights (“EPS Rights”) will be subject to an earnings per share compound average
growth rate performance condition (“EPS Hurdle”). This condition measures earnings per share
growth over the Performance Measurement Period. It was chosen as a performance condition
because, in the opinion of the Board, it is a measure of the success of Senior Executives and other
participants in generating continued business growth.
Earnings per share is determined by dividing net profit after tax (“NPAT”) into the weighted
average number of issued shares. The EPS compound average growth rate will be measured
on a point to point basis over the Performance Measurement Period.
NPAT may be adjusted at the Board’s discretion to exclude the effects of significant events deemed
not appropriate to assess actual employee performance. These significant events may include:
Vesting Schedule - Personal KPI Score
250
200
Vesting Schedule - Personal KPI Score
• Acquisition related charges and other items;
• Restructuring and other charges;
• Non-cash impairments;
• Impacts resulting from material changes in foreign currency exchange rates;
• Impact of statutory tax rate changes enacted during the performance period; and
• Any other significant items deemed appropriate by the Board.
Personal KPI Score 5.0
200% Vesting
Personal KPI Score 3.5
100% Vesting
150
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100
T
The number of EPS Rights which will be eligible to vest in relation to the EPS Hurdle will be
S
f
determined by reference to the following schedule:
o
%
% Growth
50
% EPS Rights eligible to vest
Personal KPI Score 5.0
200% Vesting
4% (Threshold)
Personal KPI Score 3.5
100% Vesting
Personal KPI Score <2.0
0% Vesting
Above 4% and less than 8%
0
125
8% (Target)
0
0.5
1.0
1.5
2.0
Nil
Pro rata straight line vesting from Nil to Target
3.0
2.5
100% (Target Amount)
4.0
4.5
3.5
5.0
Above 8% and less than 15%
Personal KPI Score
Pro rata straight line vesting from
Personal KPI Score <2.0
0% Vesting
15% (Maximum)
Target to Maximum
200%
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
250
Personal KPI Score
Vesting Schedule - EPS Rights
80th percentile:
200% Vesting
g
n
i
t
s
e
V
s
t
h
g
R
S
P
80
E
f
o
%
i
250
200
150
100
90
50
0
0.0
15% EPS CAGR:
200% Vesting
8% EPS CAGR:
100% Vesting
15% EPS CAGR:
200% Vesting
200
i
150
g
n
i
t
s
e
Vesting Schedule - EPS Rights
V
s
t
h
g
R
S
P
E
f
o
%
50
8% EPS CAGR:
100% Vesting
0
4% EPS CAGR:
0% Vesting
100
100
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
4% EPS CAGR:
0% Vesting
2.0
4.0
Assessment of each performance condition will occur after the end of the Performance
Measurement Period.
10.0
8.0
6.0
12.0
14.0
16.0
18.0
These methods of assessing performance are chosen as they are, as far as practicable,
objective, measurable and capable of being independently audited.
% EPS 3 year CAGR
% EPS 3 year CAGR
78
79
REMUNERATION REPORTFor the year ended 30 June 2021 (audited)REMUNERATION REPORTFor the year ended 30 June 2021 (audited)Annual Report 2021Reliance Worldwide Corporation Limited
Performance
Three years commencing 1 July each year. For FY2022, the Performance Measurement
Measurement Period
Period commences on 1 July 2021 and ends on 30 June 2024.
Assessment of
performance
Performance Conditions will be independently assessed following the end of the
Performance Measurement Period.
Voting and dividend rights
Rights do not carry any voting or dividend rights prior to vesting.
Clawback
Defined criteria are in place to prevent inappropriate benefits being paid.
(k) Senior Executive remuneration for FY2022
D. Other disclosures
(m) New Service Agreements with 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. New service agreements have been entered into with each Senior Executive during
2021. The key terms and conditions of the employment contracts for 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 and reflect the revised remuneration
framework effective from 1 July 2021.
The remuneration arrangements for Senior Executives reflect the revised remuneration framework summarised
Heath Sharp, Managing Director and Group Chief Executive Officer
Remuneration Report
Term
Mr. Sharp is employed by Reliance Worldwide Corporation (a company in the Group which carries
above in sections (i) and (j) and include:
Fixed remuneration
CEO: US$ 1,250,000, a decrease of 7% from FY2021 fixed remuneration for the reasons set out previously; and
CFO: US$ 600,000, representing no change from the current amount.
STI Opportunity
The STI opportunity for FY2022 will be cash only for the reasons set out previously. The key criteria are set out in section (j).
Notice
LTI award for FY2022
The Company intends offering:
• 315,990 Rights (target opportunity) to the CEO subject to shareholder approval. The maximum opportunity is 631,980
Rights for which approval is intended to be sought at the 2021 Annual General Meeting; and
• 100,315 Rights (target opportunity) to the CFO. The maximum opportunity is 200,630 Rights.
The Performance Measurement Period will be for the three years commencing on 1 July 2021.
Key conditions are summarised in section (j).
(l) Minimum Shareholding Policy
The Company has approved a Minimum Shareholding Policy which applies to all KMP and certain other senior executives.
The policy came into effect on 1 July 2021. The policy requires KMP and other senior executives to hold and maintain a minimum
number of RWC’s ordinary shares based on:
• Non-executive Directors – 100% of annual base fees (excluding additional Committee fees);
• Group CEO – 100% of Total Fixed Remuneration; and
• Other members of the senior executive team – 50% of Total Fixed Remuneration.
The minimum holding is required to be obtained within 5 years from the later of the date the policy commences or appointment
as either a director or member of the senior executive team.
Termination payments1
Restraint
on operations in the USA) The new agreement has an initial term of five years from 1 July 2021.
Thereafter, automatically extended for one year rolling terms unless and until either party gives
notice of an intention not to renew. The employer shall give any such non-renewal notice at least
90 days prior to the end of the then applicable term. Mr. Sharp shall give any such non-renewal
notice at least 12 months prior to the end of the then applicable term.
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 cure period.
• Where he terminates without good reason, 12 months written notice is required to be provided.
• Where Mr. Sharp’s employment is terminated by the employer without cause or by Mr. Sharp
with good reason, he is entitled to 12 months’ severance pay (in addition to any notice period)
plus accrued entitlements (comprising accrued but unpaid annual base salary, accrued unused
vacation pay and unreimbursed properly incurred business expenses) plus he remains eligible
for a pro rata bonus for the days he was employed during the applicable fiscal year and payment
of certain health insurance premiums.
• Where his employment is terminated due to death or disability, Mr. Sharp is entitled to
accrued entitlements, 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. Sharp
without good reason, then the employer shall have no further payment obligations other
than for accrued entitlements and continuation of applicable welfare and health benefits
entitlements.
• Where Mr. Sharp provides notice of non-renewal, then no severance amount will be payable.
Mr. Sharp’s employment agreement contains a restraint of trade, which operates for a maximum
period of 24 months following cessation of employment.
80
81
1 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.
REMUNERATION REPORTFor the year ended 30 June 2021 (audited)REMUNERATION REPORTFor the year ended 30 June 2021 (audited)Annual Report 2021Reliance Worldwide Corporation Limited Remuneration Report
Andrew Johnson, Group Chief Financial Officer
(n) KMP shareholdings
Andrew Johnson was appointed Interim Group Chief Financial Officer on 11 March 2020 and was confirmed as Group Chief Financial
Movements in the number of shares held by Non-Executive Directors and Senior Executives directly, indirectly (through personally
Officer on 6 July 2020. A revised employment agreement came into effect from 1 January 2021 with the key terms set out below,
related entities) or nominally during FY2021 are set out below.
excluding remuneration arrangements which are presented in other sections of this report. Previously, Mr. Johnson was employed
on a standard RWC employment arrangement which includes no fixed term, appropriate benefits and statutory entitlements
upon termination.
Term
Notice
Termination payments1
Mr. Johnson is employed by Reliance Worldwide Corporation (a company in the Group which
carries on operations in the USA). The employment agreement contains no fixed term.
Termination by the employer
• Mr. Johnson’s employment may be terminated by the employer without cause
(excluding due to death or disability) upon giving 3 months written notice; and
• may be terminated by the employer for cause at any time.
Termination by Andrew Johnson
• Mr. Johnson may terminate his employment with good reason upon giving 3 months
written notice and allowing a cure period.
• Where he terminates without good reason, 3 months written notice is required to be provided.
• Where Mr. Johnson’s employment is terminated by the employer without cause or by
Mr. Johnson with good reason, he is entitled to 9 months’ severance pay (in addition to any
notice period) plus accrued entitlements (comprising accrued but unpaid annual base salary,
accrued unused vacation pay and unreimbursed properly incurred business expenses) plus he
remains eligible for a pro rata bonus for the days he was employed during the applicable fiscal
year and payment of certain health insurance premiums.
• Where his employment is terminated due to death or disability, Mr. Johnson is entitled to
accrued entitlements, 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. Johnson without good reason, then the employer shall have no further payment
Name
Christine Bartlett
Russell Chenu2
Stuart Crosby2
Ross Dobinson
Darlene Knight
Sharon McCrohan
Ian Rowden
Heath Sharp
Andrew Johnson3
Held at 1 July 2020
Net change1
Held at 30 June 2021
20,000
155,217
150,506
32,457
-
-
-
1,204,041
-
-
-
-
(32,457)
-
-
10,000
71,327
512
20,000
155,217
150,506
-
-
-
10,000
1,275,368
512
(o) Remuneration Consultants or other advisors
The Company engaged a consultant, JAL Executive HR Consulting (“Consultant”), to provide a range of services, including assisting
with the design, recommendations, implementation of the revised remuneration framework, talent management and succession
planning and undertaking an assessment of the Group’s human resources structure (“Services”). The Consultant provided a
remuneration recommendation for Senior Executives. Fees paid to the Consultant for Services provided during the reporting period
were approximately US$288,000. The Company estimates that US$259,200 (90%) relates to the remuneration recommendation
services (including review and design of the framework) and US$28,800 (10%) to other services.
The Board is satisfied that appropriate arrangements were implemented to ensure the Consultant would be free to carry out its
work free from undue influence by members of KMP about whom the recommendations may relate. The arrangements included
requiring the Consultant to:
• regularly meet with the Chair of the Nomination and Remuneration Committee (“NRC Chair”) to report on progress
with the Services, including any remuneration recommendations;
• obtain prior approval to interact with executive KMP in relation to the Services and keep the NRC Chair informed of those
obligations other than for accrued entitlements and con-tinuation of applicable welfare
interactions; and
Restraint
Mr. Johnson’s employment agreement contains non-compete and non-solicitation clauses which
operate for a period of 12 months following his ceasing to work for RWC.
and health benefits entitlements.
• present reports and recommendations directly to the Nomination and Remuneration Committee for approval.
The Board is satisfied these arrangements were appropriately followed and that remuneration recommendations made
by the Consultant were free of any undue influence.
(p) Material contracts with Related Parties
New employment agreements have been entered into with Senior Executives. Key terms and conditions are summarised
throughout this report. 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.
(q) 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 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
1 Includes the purchase (sale) of shares during the reporting period and transfers in (out) upon becoming or ceasing to be a member of KMP.
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
2 Includes 20,000 shares received in April 2016 under specific arrangements for Non-Executive Directors in connection with the IPO, as disclosed in the Prospectus.
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.
3 Acquired as a participant in the Company’s Share Match Plan.
82
83
REMUNERATION REPORTFor the year ended 30 June 2021 (audited)REMUNERATION REPORTFor the year ended 30 June 2021 (audited)Annual Report 2021Reliance Worldwide Corporation Limited Financial Statements
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2021
Revenue from sale of goods
Cost of sales
Gross profit
Other income
Product development expenses
Selling, warehousing and marketing expenses
Administration expenses
Other expenses
Operating profit
Finance income
Finance costs
Net finance costs
Profit before tax
Income tax expense
Profit for the period attributable to the Owners of the Company
Other comprehensive profit
Items that may be classified to profit or loss:
Foreign currency translation differences
Total comprehensive profit for the period attributable to the Owners
of the Company
Earnings per share
Basic earnings per share attributable to ordinary equity holders
Diluted earnings per share attributable to ordinary equity holders
Note
3
6
5
5
7
4
4
2021
A$000
1,340,813
(750,449)
590,364
2,266
(16,098)
(161,663)
(116,375)
(14,146)
284,348
180
(12,207)
(12,027)
272,321
(84,072)
2020
A$000
1,162,411
(685,140)
477,271
1,464
(25,916)
(161,285)
(114,313)
(21,324)
155,897
645
(20,675)
(20,030)
135,867
(46,426)
188,249
89,441
43,313
231,562
(7,397)
82,044
Cents
Cents
24.0
23.9
11.4
11.4
84
85
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 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 2021 there have been: i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii. no contraventions of any applicable code of professional conduct in relation to the audit. KPMG Tony Romeo Partner Melbourne 23 August 2021 Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Other current assets
Total Current Assets
Non-current Assets
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Goodwill
Other intangible assets
Other non-current assets
Total Non-current Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Current tax liabilities
Employee benefits
Dividend payable1
Other current liabilities
Total Current Liabilities
Non-current Liabilities
Borrowings
Deferred tax liabilities
Employee benefits
Other non-current liabilities
Total Non-current Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Retained earnings
Total Equity
Note
2021
A$000
2020
A$000
12
8
8
9
10
7
11
11
8
16
24
13
12
7
16
14
15
28,427
293,220
260,395
8,547
15,799
82,166
263,205
215,450
9,671
16,066
606,388
586,558
266,898
91,114
34,335
914,885
320,463
–
1,627,695
2,234,083
239,984
11,924
12,071
–
34,806
298,785
202,333
66,479
6,782
68,425
344,019
642,804
264,965
99,969
36,973
897,350
325,660
2,052
1,626,969
2,213,527
168,426
5,256
16,665
35,554
15,335
241,236
384,377
68,184
6,693
93,546
552,800
794,036
1,591,279
1,419,491
2,330,408
(1,034,327)
295,198
1,591,279
2,330,533
(1,084,228)
173,186
1,419,491
Foreign
Currency
Share-
based
Share
Translation
Merger
Payment
Hedging
Retained
Total
Capital
Reserve
Reserve
Reserve
Reserve
Profits
Equity
Note
A$000
A$000
A$000
A$000
A$000
A$000
A$000
Balance at 30 June 2019
2,329,126
21,726
(1,100,943)
8,923
(10,767)
158,434
1,406,499
Profit for the period
Foreign currency
translation reserve
Total comprehensive
income
Transactions with
owners of the Company
Purchase of treasury shares
Share-based payments
Capital raising costs
Dividends paid
Total transactions with
owners of the Company
15
14
17
–
–
–
–
(7,397)
(7,397)
1,407
–
–
–
1,407
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,230
–
–
–
–
–
–
–
–
–
89,441
89,441
–
(7,397)
133,017
82,044
–
–
–
1,407
4,230
–
(74,689)
(74,689)
4,230
– (74,689)
(69,052)
Balance at 30 June 2020
2,330,533
14,329 (1,100,943)
13,153
(10,767)
173,186
1,419,491
Balance at 30 June 2020
2,330,533
14,329 (1,100,943)
13,153
(10,767)
173,186
1,419,491
Profit for the period
Foreign currency
translation reserve
Total comprehensive
income
Transactions with
owners of the Company
Treasury shares
Share-based payments
Dividends paid or provided
Total transactions with
owners of the Company
15
14
17
–
–
–
–
43,313
43,313
(125)
–
–
(125)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,588
–
–
–
188,249
188,249
–
43,313
–
188,249
231,562
–
–
–
–
–
(125)
6,588
(66,237)
(66,237)
6,588
– (66,237)
(59,774)
Balance at 30 June 2021
2,330,408
57,642 (1,100,943)
19,741
(10,767)
295,198
1,591,279
1 The payment of the interim dividend for the financial year ended 30 June 2020 of 4.5 cents per share ($35.6 million), declared on 24 February 2020, was deferred to 9 October 2020.
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
86
87
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Note
2021
A$000
2020
A$000
1. Basis of preparation
(a) Reporting entity
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees and for customer rebates
Cash generated from operations
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for intellectual property and other intangible assets acquired
Net cash used in investing activities
Cash flows from financing activities
Purchase of treasury shares
Proceeds from borrowings
Repayment of borrowings
Interest received
Interest paid
Dividends paid
Lease payments
1,303,822
(969,564)
334,258
(59,269)
274,989
(47,355)
1,405
(1,215)
1,134,085
(855,747)
278,338
(37,493)
240,845
(28,048)
4,940
(15,384)
(47,165)
(38,492)
(125)
69,000
(223,853)
180
(7,155)
(101,791)
(15,780)
-
59,000
(179,612)
645
(14,705)
(39,135)
(16,390)
9
11
12
12
10
Net cash outflow from financing activities
(279,524)
(190,197)
Net change in cash and cash equivalents
Cash and cash equivalents at 1 July
Effects of movements in exchange rates on cash held
Cash and cash equivalents at 30 June
Represented by:
Cash at bank
Cash and cash equivalents at the end of the year
12
(51,700)
82,166
(2,039)
28,427
28,427
28,427
12,156
69,279
731
82,166
82,166
82,166
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 consolidated financial statements were authorised for issue by the Board of Directors
on 23 August 2021.
(c) Basis of preparation
These consolidated financial statements:
• comprise the Company and its subsidiaries, together referred to as the “Group”, for the reporting period ended 30 June 2021;
• have been prepared on a going concern basis using historical cost conventions;
• are presented in Australian dollars and 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 2020; 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 and Note 25 set out details of
accounting policies which aid the understanding of the financial statements as a whole.
(d) 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.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
88
89
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
1. Basis of preparation (continued)
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 7);
• Recoverability of trade and other receivables (Note 8);
• Estimation of net realisable value and possible obsolescence of inventories (Note 8);
• Recoverability of goodwill and other indefinite life intangible assets (Note 11); and
• Assessment of lease term extension options to be taken into account in the present value of the remaining lease
payments (Note 10).
(e) New accounting standards, interpretations and amendments adopted by the Group
The Group has adopted all amendments to Australian Accounting Standards which became applicable from 1 July 2020.
(f) New accounting standards, interpretations and amendments not yet applicable to the Group
AASB standards not yet applicable are not expected to have a material impact on the RWC Group.
(g) COVID-19 Impacts
The global COVID-19 pandemic and the ongoing restrictions imposed by governments across the world have impacted business
activity levels in countries and markets where the Group operates. The Group has managed, and continues to manage, the risks
arising from COVID-19 to minimise negative impacts on its operations and financial position. During FY2021, the Group has also
taken proactive measures to manage liquidity including:
• Extending the maturity of its syndicated bank Facility A of $250 million from 30 September 2021 to 30 September 2023;
• Prudently managing selling, general and administration costs; and
• Appropriately allocating capital expenditures given continuing uncertainty.
As at 30 June 2021, the Group had cash and cash equivalents of $28 million and committed undrawn borrowing facilities
of $583 million.
The ongoing COVID-19 pandemic has increased the estimation uncertainty in the preparation of these financial statements.
At 30 June 2021, the Group has reassessed all significant judgements, assumptions and critical estimates included in the
consolidated financial statements, including but not limited to, provisions against trade debtors and inventory and impairment
of non-current assets.
These financial statements have been prepared on a going concern basis. In the context of the COVID-19 pandemic, the review
of the current financial forecasts and the consideration of the financial position summarised above support the conclusion on
going concern, including that there are reasonable grounds to believe that the Group will be able to pay its debts as and when
they become due and payable.
2. 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 geographic 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.
90
0
2
0
2
0
0
0
$
1
2
0
2
0
0
0
$
0
2
0
2
0
0
0
$
1
2
0
2
0
0
0
$
0
2
0
2
0
0
0
$
1
2
0
2
0
0
0
$
0
2
0
2
0
0
0
$
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91
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
3. Revenue
Accounting Policy
4. Earnings per share
Accounting Policy
Revenue is recognised when a customer obtains control of the goods or services. Group revenue is derived from the sale of
Earnings Per Share (EPS) is the amount of profit/(loss) attributable to each share. Basic EPS is calculated on the Group’s profit/
products. Under the terms of sale, the Group generally transfers control when the goods leave a distribution centre. In some
(loss) for the reporting period attributable to ordinary shareholders divided by the weighted average number of shares on issue
cases, control does not pass until the goods are received by the customer or delivered to the agreed point of delivery. For sales
during the year. Diluted EPS reflects any commitments the Group has to issue shares in the future.
made with a right of return, the amount of revenue recognised is adjusted for an estimate of the expected returns based on
historical experience.
(a) Basic earnings per share
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.
The major products from which the aforementioned segments derive revenue are:
• Push to Connect Fittings – brass and plastic push-to-connect plumbing fittings (primarily sold under the SharkBite and JG
Speedfit brands) for the installation and repair of water reticulation systems in both domestic and commercial applications;
• Other Fittings – brass and plastic crimp fittings, expansion fittings and accessories;
• Pipe – coiled and straight length tubing manufactured from cross-linked polyethylene and designed for high temperature and
pressure domestic and commercial applications; polybutylene pipe for domestic water and central heating systems; LLDPE
tubing for fluid control applications; rigid nylon and aluminium piping for air and pneumatic systems;
• Valves – temperature and pressure relief valves, pressure regulation valves and thermostatic mixing valves that protect and
safeguard hot water systems;
• Fluid Tech – plastic push-to-connect technologies for drink dispense, pure water, air and pneumatics, blown fibre, automotive,
and OEM solutions;
• Integrated Installation Solutions – engineered plumbing and mechanical solutions that support the delivery of water and
firestop solutions; and
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
(b) Diluted earnings per share
• Other Products – including backflow preventers, expansion vessels, underfloor heating components and kit systems, water
Profit attributable to ordinary shareholders
meters, and water mains connection fittings and repair sleeves.
Revenue by product group for the year ended 30 June 2021 is:
Push to Connect Fittings
Other Fittings
Pipes
Valves
Fluid Tech
Integrated Installation Solutions
Other Products
2021
$000
615,272
131,699
160,084
154,305
137,833
122,087
19,533
2020
$000
517,383
111,803
128,482
137,077
130,449
118,349
18,867
1,340,813
1,162,411
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
The Group had two significant customers each representing greater than 10% of the Group’s revenue in the 2021 financial year.
Both customers are in the Americas segment and contributed a combined $432.9 million of the Group’s revenue in the financial year.
Revenue by geography
Australia
United Kingdom
United Sates of America
Other
92
2021
$000
138,706
251,536
789,765
160,806
1,340,813
2020
$000
127,752
205,807
691,645
137,207
1,162,411
2021
$000
188,249
Number
of shares
2021
2020
$000
89,441
Number
of shares
2020
790,094,765
790,094,765
(6,897,564)
(7,366,351)
783,197,201
782,728,414
Cents
24.0
2021
$000
188,249
Number
of shares
2021
Cents
11.4
2020
$000
89,441
Number
of shares
2020
790,094,765
790,094,765
4,500,000
4,567,320
(6,897,564)
(7,366,351)
787,697,201
787,295,734
Cents
23.9
Cents
11.4
93
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
5. Net finance costs
The Group’s finance income and finance costs include:
• Interest income
• Interest expense
7. Income tax expense
Accounting Policy
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.
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.
(i) Current tax
Interest income from cash and cash equivalents
Interest and borrowing expenses
Interest expense on lease liabilities
Total Finance costs
6. Other expenses
Impairment expenses on specific property, plant, equipment and right-of-use assets
Impairment expenses on specific intangible assets
Other
Total Other Expenses
2021
$000
180
(8,696)
(3,511)
2020
$000
645
(16,360)
(4,315)
(12,207)
(20,675)
2021
$000
(8,617)
-
(5,529)
(14,146)
2020
$000
(6,952)
(11,916)
(2,456)
(21,324)
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 end of 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
Impairment expenses of $7.6 million were recorded during the year as a result of the finalisation of plans to expand and rationalise
amount of its assets and liabilities.
distribution and logistics operations in the US and the UK. These were mainly impairment of right-of-use property assets in the
context of the realignment of warehousing/distribution centre footprints.
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
Net restructuring and severance costs of $0.6 million relating to the UK distribution operations have been reported in in the
current tax assets and tax liabilities on a net basis.
Consolidated Statement of Profit or Loss and Other Comprehensive Income. A further $0.3 million in lease and asset modification
costs also relating to the above consolidation of warehousing and distribution facilities in the US and the UK have been reported in
(iii) Australian tax consolidated group
Other expenses.
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 2021, the Australian tax consolidated group has $11.4 million (2020: $2.6 million) franking credits available for subsequent
reporting periods.
Critical accounting estimates and assumptions
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.
94
95
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
7. Income tax expense (continued)
7. Income tax expense (continued)
(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 consolidated profit or loss statement are as follows:
Profit before income tax
Prima facie income tax expense at 30%
Tax effect of items which (increase)/decrease tax expense:
Effect of tax rates in foreign jurisdictions
Benefits arising from US tax concessions
Non-deductible expenses
Net (under)/over provision from prior years1
Foreign income subject to US tax
Other
2021
$000
272,321
2020
$000
135,867
(81,696)
(40,760)
18,762
-
(3,667)
(346)
(20,326)
3,201
3,777
6,631
(5,139)
(5,892)
(7,482)
2,439
Actual income tax expense reported in the consolidated statement of profit or loss
(84,072)
(46,426)
(b) Components of income tax:
Current tax
Deferred tax
(c) Deferred tax balances
2021
Deferred tax assets
Employee benefits
Other provisions and accruals
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
2021
$000
(80,267)
(3,805)
2020
$000
(24,328)
(22,098)
(84,072)
(46,426)
Opening
Recognised in
Balance
Profit or loss
$000
$000
Foreign
Exchange
$000
4,856
10,270
21,847
36,973
(17,410)
(14,936)
(35,838)
(68,184)
248
2,116
(3,152)
(788)
935
13,588
(17,540)
(3,017)
(78)
(548)
(1,224)
(1,850)
955
1,204
2,563
4,722
Closing
Balance
$000
5,026
11,838
17,471
34,335
(15,520)
(144)
(50,815)
(66,479)
Opening
Recognised in
Balance
Profit or loss
$000
$000
Foreign
Exchange
$000
3,215
5,865
1,208
5,090
15,378
(11,558)
(3,323)
(10,112)
1,690
4,396
(1,208)
16,704
21,582
(6,047)
(11,521)
(26,112)
(24,993)
(43,680)
(49)
9
–
53
13
195
(92)
386
489
Closing
Balance
$000
4,856
10,270
–
21,847
36,973
(17,410)
(14,936)
(35,838)
(68,184)
2020
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
8. Working Capital
(a) Trade and other receivables
Accounting Policy
Trade and other receivables are initially recognised at fair value and subsequently at 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. The Group has adopted the Expected Credit Loss (‘ECL’) model under AASB
9 Financial Instruments to determine its allowance for doubtful debts calculation. This takes into consideration management’s
assessment of the likely level of bad debts (based on historical experience and forward-looking information) as well as any
known ‘at risk’ receivables. The recoverability of debtors at 30 June 2021 has been assessed to consider the impact of the
COVID-19 pandemic and no material recoverability issues have been identified.
Trade debtors
Less: provision for doubtful debts
Other debtors
Tax receivable
2021
$000
265,603
(2,276)
263,327
14,015
15,878
2020
$000
229,927
(2,236)
227,691
18,255
17,259
293,220
263,205
1 FY2020 primarily relates to the derecognition of foreign tax credits partially offset by the recognition of R&D tax credits and US state tax credits.
96
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Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
8. Working Capital (continued)
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 60 days
Over 60 days
Total
(b) Inventories
Accounting Policy
2021
$000
272,069
16,425
3,052
1,674
2020
$000
245,179
14,086
1,483
2,457
9. Property, plant and equipment
Accounting Policy
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 Consolidated Statement of Profit
or Loss and Other Comprehensive Income.
Subsequent expenditure
Subsequent expenditure is only capitalised when it is probable that the future economic benefits associated with the expenditure
293,220
263,205
will flow to the Group.
Depreciation
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. .
At cost
Raw materials and stores
Work in progress
Finished goods
Less: provision for diminution
(c) Trade and other payables
Current:
Trade payables
Other creditors, accruals and provision for employee bonuses
2021
$000
94,866
25,421
161,171
281,458
(21,063)
260,395
2021
$000
112,624
127,360
2020
$000
98,241
21,860
113,110
233,211
(17,761)
215,450
2020
$000
75,711
92,715
239,984
168,426
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:
20-40 years
• Buildings
• Leasehold improvements
• Plant and equipment
Property, plant and equipment are tested for impairment, at least annually. Any impairment losses are recognised in the statement
5-40 years
3-20 years
of profit or loss and other comprehensive income.
Carrying amounts of:
Freehold land1
Buildings
Leasehold improvements
Plant and equipment
2021
$000
36,659
52,823
3,708
173,708
2020
$000
19,128
66,627
8,451
170,759
266,898
264,965
98
99
1 As of July 2020, the land element of several UK freehold properties has been reclassified from ‘Buildings’ to ‘Freehold Land’ for a value of $12.1 million
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
9. Property, plant and equipment (continued)
10. Leases
Freehold
Land
Buildings
Improvements
Leasehold
Plant and
Equipment
Total
2021
$000
2020
$000
2021
$000
2020
$000
2021
$000
2020
$000
2021
$000
2020
$000
2021
$000
2020
$000
Cost
The Group leases various properties, equipment and vehicles. Property leases typically are for a period of 5 to 10 years and often
have extension options. Equipment and vehicle leases are typically for a period of 3 to 5 years. Lease terms are negotiated on an
individual basis and contain a wide range of different terms and conditions.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use
by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the statement
of financial performance over the lease period. The right-of-use asset is depreciated over the shorter of the asset’s useful life and
Opening balance
19,128
215
79,768
108,104
12,471
8,768
329,479
325,404 440,845
442,491
the lease term on a straight-line basis.
(235)
(362)
(625)
(11,445)
(24,995)
(11,851)
(25,854)
less) and leases of low-value assets. Payments relating to these items are recognised on a straight-line basis as an expense in the
Transfers/
reclassification
16,837
19,620
(10,770)
(28,514)
(1,270)
4,031
(4,796)
2,619
-
(2,244)
-
63
257
46,724
27,791
47,355
28,048
Additions
Disposals
Net effect of
change in
-
-
-
-
568
(45)
exchange rates
694
(707)
(1,639)
413
(183)
40
(5,508)
(1,341)
(6,636)
(1,595)
Closing balance
at 30 June
36,659
19,128
67,882
79,768
10,719
12,471
354,454
329,479
469,713
440,845
Accumulated
depreciation and
impairment
Opening balance
Depreciation
Disposals
Impairment
Net effect of
change in
exchange rates
Closing balance
at 30 June
Net carrying
–
–
–
–
–
–
–
–
–
–
–
(13,141)
(10,993)
(4,020)
(3,513)
(158,720)
(138,496) (175,881)
(153,002)
(2,045)
(2,611)
(724)
(1,118)
(31,972)
(34,897)
(34,740)
(38,626)
45
(20)
23
362
621
9,565
21,569
9,971
22,213
-
(2,598)
-
(1,027)
(6,952)
(3,645)
(6,952)
102
440
(31)
(10)
1,408
56
1,479
486
–
(15,059)
(13,141)
(7,011)
(4,020)
(180,746)
(158,720) (202,815)
(175,880)
value at 30 June 36,659
19,128
52,823
66,627
3,708
8,451
173,708
170,759 266,898 264,965
Assets and liabilities arising from a lease are initially measured at present value. The lease payments are discounted using the
interest rate implicit in the lease, if that rate can be determined, or the Group’s incremental borrowing rate. The Group has elected
not to recognise right of use assets or lease liabilities for payments associated with short-term leases (with a term of 12 months or
statement of financial performance.
Critical accounting estimates and assumptions
Extension options are included in most property leases across the Group. These options are included to maximise operational
flexibility in terms of managing lease contracts. Extension options are only included in the assessed lease term if the lease is
reasonably certain to be extended. The assessment is reviewed if a significant event or change in circumstance occurs which
affects this assessment and that is within the control of the lessee.
Right-of-use assets
Balance at 1 July 2020
Depreciation charge for the year
Addition to right-of-use assets
Lease modifications
Foreign exchange impact
Balance at 30 June 2021
Additions at 1 July 2019 on
transition to AASB16
Depreciation charge for the year
Foreign exchange impact
Balance at 30 June 2020
Properties
Equipment
Vehicles
$000
96,117
(12,184)
3,991
3,445
(3,249)
88,120
111,073
(13,029)
(1,927)
96,117
$000
2,854
(1,159)
45
116
(130)
1,726
4,065
(1,137)
(74)
2,854
$000
998
(678)
1,000
–
(52)
1,268
1,676
(639)
(39)
998
Total
$000
99,969
(14,021)
5,036
3,561
(3,431)
91,114
116,814
(14,805)
(2,040)
99,969
100
101
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
10. Leases (continued)
11. Goodwill and other intangible assets (continued)
Amounts recognised in the statement of financial performance
Asia Pacific
Americas
Depreciation charge for right-of-use assets
Properties
Equipment
Vehicles
Total depreciation charge for right-of-use assets
Expense relating to short-term and low value leases
Interest expense on lease liabilities
Finance income on a property sub-lease
2021
$000
12,184
1,159
678
14,021
2,651
3,511
(78)
2020
$000
13,029
1,137
639
14,805
2,739
4,315
(321)
The statement of cash flows for 30 June 2021 includes cash outflows for lease payments of $15.8 million (30 June 2020 –
$16.4 million) within Cash flows from financing activities.
Goodwill
John Guest acquisition (2018)
Holdrite acquisition (2017)
Pre IPO-acquisitions
Total
$000
41,386
–
44,444
85,830
$000
165,542
42,731
–
EMEA
$000
620,782
–
–
Total
$000
827,710
42,731
44,444
208,273
620,782
914,885
Indefinite life intangible assets
–
–
225,337
225,337
Goodwill and other intangible assets in respect of the Asia Pacific, Americas and EMEA CGUs have been tested for impairment
at period end. The recoverable amount of the Group’s CGUs has been assessed utilising value in use methodologies, which is
determined by discounting the future cash flows expected to be generated from the continuing use of the CGUs.
As at 30 June 2020, given the high degree of uncertainty due to the COVID-19 pandemic, the cash flow projections used for the
impairment assessments at the time were formed on the basis of a probability weighted view of a number of potential future
scenarios for each CGU (Base, Upside and Downside case scenarios). Given that the level of certainty on future macroeconomic
outlooks in all three CGUs/regions has improved year on year, with the impacts of COVID-19 now better understood, management
Some property leases contain extension options exercisable by the Group up to the end of the non-cancellable contract period.
has reverted to the use of a single set of cash flow projections in the 30 June 2021 impairment testing rather than considering
The Group has estimated that the potential future lease payments, should it exercise all available extension options, would result in
multiple scenarios as was done at 30 June 2020. The Asia Pacific, Americas and EMEA CGUs all achieved stronger earnings and
an increased lease liability of $41.2 million.
11. Goodwill and other intangible assets
(a) Goodwill
Accounting Policy
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.
cash flow generation than estimated in the impairment testing performed at 30 June 2020, exceeding the most optimistic
‘Quick Recovery’ upside scenario.
The value in use assessment at 30 June 2021 was therefore 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 FY22 budget submissions from each region for the
years 2022, 2023 and 2024, and cash flows beyond the three-year period extrapolated using estimated long-term growth rates
• FY22-FY24 average revenue growth rate of 2.9% in Asia Pacific, 4.9% in Americas and 6.7% for EMEA based on business
assessments
The following nominal discount rates have been used in discounting the projected cash flows:
Opening balance
Foreign currency exchange differences
Carrying value
2021
$000
897,350
17,535
914,885
2020
$000
901,428
(4,078)
897,350
Americas
Asia Pacific
EMEA
Pre-tax
Post-tax
discount rates
discount rates
12.00%
12.75%
10.00%
8.75%
9.50%
8.00%
For the purpose of undertaking impairment testing, the Group has identified its cash generating units (CGUs). These are the
smallest groups 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 was $914.9 million. This was allocated to the Asia Pacific, Americas and
EMEA operating segments based on which CGUs were expected to benefit from the relevant business combinations at the time of
acquisition. The total carrying value of indefinite life intangible assets at balance sheet date was $225.3 million.
The discount rates represent the current market assessment of the risks specific to each CGU and are derived from its weighted
average cost of capital (WACC). The discount rates applied to each impairment model falls within a reasonable range supported by
market observed data. The discount rates at 30 June 2021 were unchanged compared to the prior year as market increases in long
term interest rates (risk-free rates) were offset by the consideration of lower market-specific risks.
102
103
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
11. Goodwill and other intangible assets (continued)
11. Goodwill and other intangible assets (continued)
The terminal value of the CGUs has been forecast using the following nominal long-term growth rates:
(b) Other intangible assets
• Americas: 2.0%
• Asia Pacific: 2.5%
• EMEA: 2.0%
Terminal growth rates are considered by management to be an appropriate estimate of the long-term average growth
rates achievable in the industries and geographies in which the Group participates. Terminal growth rates are consistent
with the prior year.
Americas Cash Generating Unit
The carrying value of the Americas CGU includes goodwill of $208.3 million. Following a detailed impairment review of future cash
flow projections consistent with the Group assumptions detailed above, the recoverable amount of the Americas CGU is estimated
to exceed the carrying amount at 30 June 2021.
There are no reasonably possible changes to key assumptions used in the determination of the CGU recoverable amounts that
would result in a material impairment to the CGU or Group.
Asia Pacific Cash Generating Unit
The carrying value of the Asia Pacific CGU includes goodwill of $85.8 million. Following a detailed impairment review of future cash
flow projections consistent with the Group assumptions detailed above, the recoverable amount of the APAC CGU is estimated to
exceed the carrying amount at 30 June 2021.
There are no reasonably possible changes to key assumptions used in the determination of the CGU recoverable amounts that
would result in a material impairment to the CGU or Group.
EMEA Cash Generating Unit
The carrying value of the EMEA CGU includes goodwill of $620.8 million and other indefinite life intangible assets (brand names)
for an amount of $225.3 million. Following a detailed impairment review of future cash flow projections consistent with the Group
assumptions detailed above, the recoverable amount of the EMEA CGU is estimated to exceed the carrying amount at 30 June 2021.
During the period ended 30 June 2021, the EMEA CGU performed strongly, with revenue growth, earnings and cash flows above
levels estimated in the FY2020 impairment assessment. This was as a result of improved market conditions in the UK, the
finalisation of the basis of trade arrangements between the UK and EU member nations following Brexit and the execution of
revenue and margin improvement initiatives in the business. As a result of this, there are currently no reasonably possible changes
to key assumptions used in the determination of the CGU recoverable amounts that would result in a material impairment to the
CGU or Group.
Critical accounting estimates and assumptions
At the time of acquisition, management determined that some of the intangible assets (Brand names, trade names and
trademarks) recognised as part of business combinations had indefinite useful lives. This means that the value of these assets
does not reduce over time and therefore they are not amortised. These assets have no legal or contractual expiry date and are
integral to future revenue generation. Management intends to continue to promote, maintain and defend the brands, trade
names and trademarks to the extent necessary to maintain their values for the foreseeable future. Management assesses the
useful lives of the Group’s intangible assets at the end of each reporting period. If an intangible asset is no longer considered to
have an indefinite useful life, this change is accounted for prospectively.
Accounting Policy
Other intangible assets are non-physical assets held by the Group in order to generate revenue and profit. These assets include
brand names, trade names, trademarks, intellectual property and licences, software and website development and work in
progress. They are recognised either at the cost the Group has paid for them or at their fair value if they are acquired as part
of a business combination. They are amortised over their expected useful life unless they are considered to have an indefinite
useful life.
Type of intangible asset
Valuation method
Amortisation method
Estimated useful life
Brand names, trade names
Initially at cost, or fair value
Indefinite life brands not
n/a
and trademarks
if acquired as part of a
amortised, reviewed for
business combination
impairment at least annually
Intellectual property,
Initially at cost and
Straight-line
Up to 10 years
software and licence fees
subsequently at cost less
accumulated amortisation
Product technology
Initially at cost and
Straight-line
Up to 20 years
subsequently at cost less
accumulated amortisation
Customer relationship and
Initially at fair value at date
Straight-line
Up to 20 years
distribution agreements
of business combination
(i) 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.
(ii) Intellectual property and licence fees
Intellectual property consists of technical drawings and certifications. Software and licence fees mainly relate to the
accounting and reporting platform being implemented throughout the Group.
(iii) Product technology
Technology based intangible assets relate to innovations or technological advances, such as patented technology.
(iv) Customer relationships and distribution agreements
Customer relationship-based intangibles assets relate to established customer relationships and distribution agreements
for the supply of product.
(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.
104
105
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
11. Goodwill and other intangible assets (continued)
Intellectual
Property, Trade
Names, Brand
Names and
Trademarks
Product
Customer
Licence Fees,
Software and
Technology
Relationships
Other
Total
2021
$000
2020
$000
2021
$000
2020
$000
2021
$000
2020
$000
2021
$000
2020
$000
2021
$000
2020
$000
Cost
Opening balance
257,006
257,560
33,611
30,862
29,526
29,420
40,611
24,408 360,754 342,250
Additions
Disposals
Transfers from
PP&E
Net effect
of change in
–
–
–
–
–
–
–
–
–
–
–
2,244
–
–
–
–
–
–
1,215
15,384
1,215
15,384
–
(8)
–
(8)
(17)
–
(17)
2,244
exchange rates
2,811
(554)
(2,689)
505
(470)
106
(538)
827
(887)
884
Closing balance at
30 June
259,817
257,006
30,922
33,611
29,056
29,526
41,271
40,611
361,065
360,754
Accumulated
Depreciation and
impairment
Opening balance
(8,774)
(1,675)
(8,212)
(3,489)
(3,620)
(2,119)
(14,488)
(7,711)
(35,094)
(14,994)
Amortisation
(34)
(948)
(1,570)
(1,906)
(1,433)
(1,428)
(4,508)
(4,164)
(7,545)
(8,446)
Impairment
Disposals
Net effect
of change in
–
–
(6,321)
–
–
–
(2,886)
–
–
–
–
–
–
–
(2,709)
7
–
–
(11,916)
7
exchange rates
698
170
664
69
358
(73)
317
89
2,037
255
Closing balance at
30 June
(8,110)
(8,774)
(9,118)
(8,212)
(4,695)
(3,620)
(18,679)
(14,488)
(40,602)
(35,094)
Net carrying value
at 30 June
251,707 248,232
21,804
25,399
24,361
25,906
22,592
26,123 320,463 325,660
12. Net debt
Accounting Policy
Borrowings are initially recognised net of transaction costs incurred. Fees paid on the establishment of loan facilities are
recognised as transaction costs where it is probable that some or all of the facility will be drawn down. The fee is deferred until
the drawdown occurs and is amortised on a straight-line basis over the entire life of the facility. Borrowings are classified as
current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the
reporting period. Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, and other
short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.
At 30 June 2021
Syndicated Facility – Tranche A
Syndicated Facility – Tranche B
Syndicated Facility – Tranche C
Cash and cash equivalent
Total RWC Group
At 30 June 2020
Syndicated Facility – Tranche A
Syndicated Facility – Tranche B
Syndicated Facility – Tranche C
Cash and cash equivalent
Total RWC Group
(a) Borrowings
Facility Limit
Borrowings
$000
(250,000)
(250,000)
(250,000)
–
$000
–
(197,333)
(5,000)
–
(750,000)
(202,333)
Facility Limit
Borrowings
$000
(250,000)
(250,000)
(250,000)
–
$000
(207,247)
(177,130)
–
–
(750,000)
(384,377)
Cash
$000
–
–
–
28,427
28,427
Cash
$000
–
–
–
82,166
82,166
Net cash/(debt)
Balance
$000
–
(197,333)
(5,000)
28,427
(173,906)
Net cash/(debt)
Balance
$000
(207,247)
(177,130)
–
82,166
(302,211)
Current
Non-current
Total
2021
$000
2020
$000
2021
$000
2020
$000
2021
$000
2020
$000
Secured:
Borrowings
Total secured borrowings
–
–
–
–
202,333
384,377
202,333
384,377
202,333
384,377
202,333
384,377
The Company and certain of its subsidiaries are parties to a $750 million syndicated facility agreement (30 June 2020 - $750 million)
which is available for drawing by way of cash advances (“Facility”). During October 2020, the Company reached an agreement with its
lending syndicate to extend the maturity date of the $250 million Tranche A Facility from 30 September 2021 to 30 September 2023.
The Facility will mature as follows:
• Tranche A: $250m maturing 30 September 2023
• Tranche B: $250m maturing 30 September 2022
• Tranche C: $250m maturing 30 September 2023
The Facility contains financial covenants which the Company is in compliance with.
106
107
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
12. Net debt (continued)
The security provided to support the Facility is:
12. Net debt (continued)
(c) Cash and cash equivalents
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:
• 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 which are not incorporated in the United Kingdom
(refer Note 18) 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 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.
(b) 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.
Cash on hand and at bank comprises:
AUD
USD
GBP
EUR
NZD
CAD
Australian dollar
United States dollar
Pound sterling
Euro
New Zealand dollar
Canadian dollar
KRW South Korean won
PLN
CZK
CNY
Polish zloty
Czech koruna
Chinese yuan
Current
Non-current
Total
2021
$000
2020
$000
2021
$000
2020
$000
2021
$000
2020
$000
Cash and cash equivalents in the Consolidated Statement of Cash Flows
–
384,377
495,886
384,377
495,886
Opening Balance
Changes from
financing cash flows
Proceeds from
drawdowns on Facility
Repayments of Facility
–
–
–
Interest paid
(7,155)
(14,705)
–
–
(7,155)
–
–
69,000
59,000
69,000
(223,853)
(179,612)
(223,853)
59,000
(179,612)
(14,705)
Total changes from
financing cash flows
Other non-cash changes
Transfers
Interest expense
Other including foreign
exchange movement
Closing balance
(7,155)
(14,705)
(154,853)
(120,612)
(162,008)
(135,317)
–
7,155
–
–
–
14,705
–
–
–
–
–
–
–
7,155
–
14,705
(27,191)
9,103
(27,191)
9,103
202,333
384,377
202,333
384,377
108
109
2021
$000
4,902
9,157
276
4,891
765
3,827
2,150
653
715
1,091
28,427
28,427
2020
$000
12,056
44,247
7,954
11,464
839
2,889
1,280
541
630
266
82,166
82,166
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
12. Net debt (continued)
(d) Reconciliation of cash flow from operations with profit from operations after income tax
13. Financial risk management (continued)
Foreign exchange risk
Profit/(loss) from operations after income tax
Depreciation expense
Amortisation expense
(Profit)/loss on disposal of non-current assets
Impairment expense
Share-based payments
Net interest expense accounted for as financing cash flows
Other finance costs
Changes in operating assets and liabilities:
Trade and other receivables
Inventories
Prepayments
Trade and other payables
Tax balances
Employee entitlements
Other assets and liabilities
2021
$000
188,249
48,760
7,545
(1,405)
8,617
6,588
7,155
4,872
(39,297)
(44,945)
(315)
65,561
24,803
(4,505)
3,306
2020
$000
89,441
53,582
8,446
(1,299)
18,868
4,229
14,060
5,970
(26,847)
13,640
(3,882)
38,023
8,933
10,497
7,184
Net cash from operating activities
274,989
240,845
13. 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, tariff rates and import duties). 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 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.
The Group’s balance sheet exposures of cash, external receivables and payables balances for the major currency exposures
at 30 June 2021 are set out below in Australian dollar equivalents.
Spot exchange rate
Cash
Trade and other receivables
Trade and other payables
Net external exposure
USD
GBP
EUR
2021
$000
0.7500
9,070
3,415
(9,922)
2,563
2020
$000
0.6900
43,989
3,789
(6,424)
41,354
2021
$000
0.5423
275
–
(1,417)
(1,142)
2020
$000
0.5566
7,953
–
(137)
7,816
2021
$000
0.6325
4,891
397
(8,303)
(3,015)
2020
$000
0.6144
11,466
332
(2,790)
9,008
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 2021 rates
If foreign exchange rate +5%
If foreign exchange rate - 5%
Interest rate risk
Increase/(decrease)
Increase/(decrease)
in profit after income tax
in equity
2021
$000
76
(80)
2020
$000
2,770
(3,062)
2021
$000
76
(80)
2020
$000
2,770
(3,062)
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 100 basis points higher the interest expense for the year would have
increased by $3.2 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 12.
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 prices,
working with suppliers to achieve the maximum level of stability in their costs and related pricing and seeking alternative supply
sources when necessary.
110
111
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
13. Financial risk management (continued)
Liquidity risk
13. Financial risk management (continued)
Credit risk
Liquidity risk arises from the ability of the Group to meet its financial liabilities and obligations as and when they fall due.
Credit risk relates to the potential failure of the Group’s counterparties (such as customers or financial institutions) to meet their
The Group monitors future financial commitments and intends to maintain sufficient cash reserves and headroom in its
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:
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.
The Group had cash and cash equivalents of $28.4m at 30 June 2021 (30 June 2020 – $82.2m). In addition to its operating
cash at bank the Group has undrawn borrowing facilities available. Details of the borrowing facilities in place and their terms
are disclosed at Note 12.
Total facilities available
Amount drawn at 30 June
Available at 30 June
2021
$000
750,000
202,333
547,667
2020
$000
750,000
384,377
365,623
Americas
Asia Pacific
EMEA
Total
2021
2020
Carrying amount
Carrying amount
$000
182,487
42,583
68,150
$000
183,177
33,614
46,414
293,220
263,205
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:
2021
Financial liabilities
Trade and other payables
Lease liabilities
Bank borrowings
Total
2020
Financial liabilities
Trade and other payables
Lease liabilities
Bank borrowings
Total
Carrying
amount
$000
239,984
103,230
202,333
Less than
1 year
$000
239,984
34,806
–
1 to 2
years
$000
–
11,291
197,333
545,547
274,790
208,624
Carrying
amount
$000
168,426
108,881
384,377
Less than
1 year
$000
168,426
15,335
–
1 to 2
years
$000
–
14,226
207,247
2 to 5
years
$000
–
32,048
5,000
37,048
2 to 5
years
$000
–
38,169
177,130
More than
5 years
$000
Total
$000
–
239,984
35,268
–
113,413
202,333
35,268
555,730
More than
5 years
$000
–
55,830
–
Total
$000
168,426
123,560
384,377
661,684
183,761
221,473
215,299
55,830
676,363
At 30 June 2021, the Group’s most significant customer accounted for $56.5 million of the trade debtors and receivables amount.
Further details of the Group’s trade receivables are included in Note 8.
14. Share Capital
Share Capital
Ordinary shares
Opening balance
Number of shares
Company
2021
Number
2020
Number
2021
$
2020
$
790,094,765
790,094,765
2,330,533,119
2,329,126,597
Treasury shares (Note 17)
–
–
(124,995)
1,406,522
Total
790,094,765
790,094,765
2,330,408,124
2,330,533,119
The total acquisition cost of treasury shares held at 30 June 2021 was $26,107,978 (30 June 2020 – $25,982,795).
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.
112
113
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
15. 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
2021
$000
2020
$000
16. Employee benefits
Accounting Policy
Retirement benefits costs
14,329
21,726
entitling them to the contributions.
Payments to defined contribution retirement benefit plans are recognised as an expense when employees render the service
43,313
57,642
(7,397)
14,329
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
(1,100,943)
(1,100,943)
(1,100,943)
(1,100,943)
A provision is made for restructuring where the Group has a present legal or constructive obligation as a result of past events,
it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Restructuring provisions
13,153
6,588
19,741
8,923
4,230
13,153
(10,767)
(10,767)
–
–
(10,767)
(10,767)
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.
Short and long-term employee benefits
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:
Total reserves
(1,034,327)
(1,084,228)
Current employee entitlements include benefits for wages, salaries and annual leave that are expected to be settled within
Nature and purpose of reserves
(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.
(c) Share-based payments 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.
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.
114
115
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
16. Employee benefits (continued)
(a) Employee benefits expenses
Employee benefits expenses recognised in the profit or loss account are:
Wages and salaries
Severance and restructuring costs
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
2021
$000
192,421
3,182
5,901
1,037
10,158
15,627
18,326
6,286
339
253,277
(49,607)
203,670
2020
$000
186,459
9,799
5,310
811
9,319
14,959
11,790
5,636
498
244,581
(48,953)
195,628
The Group applied for the UK Government wage subsidy in April 2020 under the Coronavirus Job Retention Scheme where 80%
of wages were subsidised for the Group’s UK furloughed employees. These support payments are presented as offsets of the
related wage expenses in the consolidated profit or loss statement, in line with AASB 120 Accounting for Government Grants and
Disclosure of Government Assistance. A total of $1.0 million (2020: $3.7 million) has been recognised in the consolidated statement
of profit or loss as the amount offsetting wages paid for the period July to October 2020.
(b) Employee benefits provisions
Current
Non-current
Total
Employee entitlements
Opening balance
Charged to profit or loss
2021
$000
16,665
8,131
2020
$000
7,468
14,519
Paid during the period
(12,077)
(4,229)
Foreign currency
exchange differences
Reclassification
Closing balance
(205)
(443)
12,071
(63)
(1,030)
16,665
2021
$000
6,693
62
(107)
35
99
6,782
2020
$000
5,394
590
(648)
327
1,030
6,693
2021
$000
23,358
8,193
(12,184)
(170)
(344)
2020
$000
12,862
15,109
(4,877)
264
–
18,853
23,358
17. Share-based payments
Accounting Policy
The cost of share-based payments is recognised by expensing the fair value of the options or rights granted, over the period
during which the employees become unconditionally entitled to these benefits. Where the plan will be settled by issuing equity,
the corresponding entry is an increase in the share based payments reserve.
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
Balance at 30 June 2020
Exercised during the reporting period
Cancelled, forfeited or lapsed
Balance at 30 June 2021
Vested (#)
Unvested (#)
567,320
(67,320)
–
4,000,000
–
–
Total (#)
4,567,320
(67,320)
–
500,000
4,000,000
4,500,000
Vesting date (subject to vesting conditions)
–
30 June 2022
Expiry date
5 December 2024
30 June 2031
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.
At 30 June 2021, the number of unvested Rights which had been granted by the Company to all participants was 6,364,864
(30 June 2020 – 6,394,624). The opening and closing balances of all unvested Rights granted are reconciled as follows:
Granted and unvested at 30 June 2020
Granted during FY2021 with the following vesting dates:
23 December 2022
1 January 2024
6 May 2024
1 July 2025
Total granted during FY2021
Forfeited, cancelled or lapsed during FY2021
Unvested at 30 June 2021
Number
of Rights
6,394,624
110,620
331,263
12,100
150,000
603,983
(633,743)
6,364,864
No Rights vested during the reporting period or have subsequently vested. A further 196,546 Rights lapsed or have been forfeited or
cancelled subsequent to 30 June 2021 (none of which were granted to Senior Executives). No Rights have been granted subsequent
to 30 June 2021 to the date of this report. Vesting conditions for all grants of Rights include a continuous service period ranging
between two and five years. Details of Rights granted during the reporting period are set out in the Remuneration Report.
116
117
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
17. Share-based payments (continued)
18. Group entities
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. The movement in the number of shares held
during the reporting period is:
Shares held at 30 June 2020
Acquired during FY2021 (at an average cost of $3.88 per share)
Allocated property transferred to participants
Shares held at 30 June 2021
Share Match Plan
Total
6,913,644
71,327
(130,612)
6,854,359
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 and 25.
Country of
Class of
Holding
Holding
Functional
Equity
Equity
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) Limited1
Titon Limited1
Reliance Worldwide Corporation (Canada) Inc
Reliance Worldwide Holdings (USA) Corporation
Reliance Worldwide International Group Holdings Corporation
Reliance Worldwide Corporation
Streamlabs Inc
Incorporation
Shares
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
New Zealand
Ordinary
Canada
America
America
America
America
Spain
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
A share match plan was introduced during the reporting period to encourage employees to own shares in the Company.
Reliance Worldwide Corporation (Europe) S.L.U.
Eligible employees can acquire up to $5,000 of shares in RWC per plan year from post tax income with contributions made via
a regular salary deduction (“Purchased Shares”). The Company will match the shares acquired on a 1:2 basis up to a cap $2,500
of Purchased Shares subject to the terms of the Share Match Plan (“Matching Rights”). There is a minimum holding period for
Purchased Shares of 2 years and a continuous service obligation for Matching Rights to convert into shares on a 1:1 basis. There are
no performance conditions. Participants receive dividends and have voting rights on their Purchased Shares. Matching Rights have
no voting or dividend entitlements prior to vesting. 307 employees were participating in this plan at 30 June 2021. The total number
of Matching Rights granted at 30 June 2021 was 42,884.
Reliance Worldwide Holdings (UK) Limited
United Kingdom Ordinary
Reliance Worldwide Corporation Underfloor Heating 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) Limited
United Kingdom Ordinary
2021
100%
100%
100%
100%
100%
100%
–
–
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2020
Currency
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
AUD
AUD
AUD
AUD
NZD
NZD
NZD
NZD
CAD
USD
USD
USD
USD
Euro
GBP
GBP
ILS
USD
USD
GBP
GBP
GBP
GBP
GBP
Euro
Euro
Euro
Euro
NZD
KRW
CNY
CZK
PLN
John Guest International Ltd
John Guest Speedfit Ltd
John Guest Engineering Ltd
Reliance Worldwide Corporation (UK) Limited
John Guest Automotive GmbH
John Guest GmbH
Reliance Worldwide Corporation France SAS
John Guest SRL
John Guest Pacific Ltd2
John Guest Korea Ltd
John Guest (Shanghai) Trading Co. Ltd
John Guest Czech S.R.O
John Guest Sp zoo
United Kingdom Ordinary
United Kingdom Ordinary
United Kingdom Ordinary
United Kingdom Ordinary
Germany
Germany
France
Italy
Ordinary
Ordinary
Ordinary
Ordinary
New Zealand
Ordinary
–
Korea
China
Ordinary
Ordinary
Czech Republic
Ordinary
Poland
Ordinary
100%
100%
100%
100%
118
119
1 De-registered from the New Zealand Companies register on 15 March 2021
2 John Guest Pacific Limited amalgamated with Reliance Worldwide Corporation (NZ) on 7 December 2020
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
19. Commitments and contingencies
(a) Expenditure commitments
20. Key Management Personnel and related party transactions (continued)
(a) Key Management Personnel compensation
Capital expenditure commitments contracted for at balance date but not provided for in respect of plant and equipment:
Details of the total remuneration of Key Management Personnel of the Group during the reporting period are:
Payable not later than one year
Payable later than one year and not later than five years
Details of the Group’s lease commitments are captured in lease liabilities in Note 10.
(b) Contingencies
Financial guarantees
2021
$000
18,818
–
18,818
2020
$000
3,694
–
3,694
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
Total
2021
$
2020
$
5,073,214
4,794,096
124,169
-
2,593,676
7,791,059
130,964
614,192
1,635,202
7,174,454
(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
The Company has agreed to provide guarantees to third parties for certain commitments made or entered into by
of the Company at 30 June 2021 are:
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 at 30 June 2021 totalling $1,344,884 (2020: $1,233,733).
General contingencies
The Group may be involved in legal claims, administrative actions and proceedings related to the normal conduct of its business
including, among other things, general liability, commercial, employment, intellectual property, and products liability matters such
as the proceeding listed below. Based upon existing information, it is not possible to predict with certainty the outcome or cost
of current legal claims, actions and proceedings. The Directors believe that current matters of which they are aware should not
significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent
financial periods.
The Company is aware of a legal proceeding filed in the United States federal district court in Atlanta, Georgia, against Reliance
Worldwide Corporation, a member of the Group, (“RWC USA”) to a putative class action in connection with alleged product liability
claims. At this stage, it is not possible to provide a reasonable or accurate assessment of RWC USA’s potential exposure, if any.
In any event, RWC USA does not accept any liability and intends to continue vigorously defending this matter.
The Directors are not aware of any other material contingent liabilities at balance date or arising since the end of the financial period.
Shares
Options¹
Rights¹
2021
Number
155,217
150,506
–
–
20,000
10,000
–
2020
Number
155,217
150,506
32,457
–
20,000
–
–
2021
Number
2020
Number
2021
Number
2020
Number
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Russell Chenu
Stuart Crosby
Ross Dobinson2
Sharon McCrohan
Christine Bartlett
Ian Rowden
Darlene Knight
Heath Sharp
Andrew Johnson
512
–
–
–
1,275,368
1,204,041
4,000,000
4,000,000
611,201
582,919
611,2013
251,400
Total
1,611,603
1,562,221
4,000,000
4,000,000
1,194,120
862,201
At 30 June 2021, no Key Management Personnel had been offered or held any rights to be awarded shares other than
20. Key Management Personnel and related party transactions
as disclosed above.
Under Australian Accounting Standards, the term Key Management Personnel refers to directors (both non-executive directors and
Details of movements in holdings during the period are disclosed in the Remuneration Report.
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
(c) Transactions with other related parties
are set out below. All Key Management Personnel held their positions for the entire reporting period unless otherwise noted.
New employment agreements have been entered into with Senior Executives. Key terms and conditions are summarised in the
Stuart Crosby
Independent Non-executive Chairman
Russell Chenu
Independent Non-Executive Director
Ross Dobinson
Independent Non-Executive Director (until 14 April 2021)
Sharon McCrohan
Independent Non-Executive Director
Christine Bartlett
Independent Non-Executive Director
Ian Rowden
Independent Non-Executive Director (appointed 6 July 2020)
Darlene Knight
Independent Non-Executive Director (appointed 14 April 2021)
Heath Sharp
Managing Director and Group Chief Executive Officer
Andrew Johnson
Group Chief Financial Officer
Remuneration Report. 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.
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.
120
121
1 Details of Options and Rights granted to Key Management Personnel are disclosed in the Remuneration Report
2 Ceased to be a member of KMP on 14 April 2021
3 After forfeiture of Rights following assessment of performance conditions subsequent to 30 June 2020
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
21. Auditor’s remuneration
22. Deed of cross guarantee (continued)
KPMG are the auditors of the Company. The total remuneration received, or due and receivable by KPMG from the Group is:
A consolidated statement of comprehensive income, comprising the Company and controlled entities which are party to the
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
2021
$
2020
$
699,500
623,500
43,750
–
743,250
328,119
127,861
455,980
35,000
–
658,500
404,914
249,100
654,014
Total remuneration to KPMG
1,199,230
1,312,514
Total remuneration for audit services
Total remuneration for non-audit services
22. Deed of cross guarantee
1,027,619
171,611
1,028,414
284,100
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.
Deed and after eliminating all transactions between those entities, for the year ended 30 June 2021 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, warehousing 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
Items that may be classified to profit or loss:
Foreign currency translation differences
Total comprehensive profit for the period
attributable to the Owners of the Company
2021
$000
246,509
(181,213)
65,296
179
(3,226)
(18,031)
(19,895)
(3,117)
21,206
1,771
(7,700)
(5,929)
128,929
144,206
(7,116)
137,090
2020
$000
227,788
(162,773)
65,015
249
(3,800)
(18,543)
(19,103)
(1,284)
22,534
44,218
(8,916)
35,302
–
57,874
(17,162)
40,712
–
–
137,090
40,712
122
123
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
22. Deed of cross guarantee (continued)
Statement of financial position at 30 June 2021
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Other current assets
Total Current Assets
Non-current Assets
Property, plant and equipment
Right-of-use assets
Investment in subsidiaries
Deferred tax assets
Goodwill
Other intangible assets
Other non-current assets
Total Non-current assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Current tax liabilities
Employee benefits
Dividend payable
Other current liabilities
Total Current Liabilities
Non-current Liabilities
Borrowings
Deferred tax liabilities
Employee benefits
Other non-current liabilities
Total Non-current Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Retained earnings
Total Equity
124
2021
$000
8,352
67,731
58,096
7,749
7,365
2020
$000
32,652
49,486
59,365
–
8,763
149,293
150,266
33,334
38,598
30,664
43,128
2,139,815
2,098,099
7,088
39,825
8,857
15,256
2,282,773
2,432,066
70,887
–
4,325
–
5,671
80,883
5,000
2,281
5,254
35,292
47,827
128,710
5,989
39,825
10,665
42,945
2,271,315
2,421,581
34,027
2,956
3,131
35,554
5,518
81,186
38,000
2,132
5,120
69,095
114,347
195,533
2,303,356
2,226,048
2,330,408
(141,637)
114,585
2,330,533
(148,224)
43,739
2,303,356
2,226,048
23. Parent entity disclosure
As at, and throughout, the financial year ended 30 June 2021, 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
(c) Parent entity contingent liabilities
2021
$000
154,561
–
154,561
2021
$000
19,623
2,475,105
2020
$000
115,758
–
115,758
2020
$000
156,024
2,318,391
2,494,728
2,474,415
3,676
16,189
19,865
54,287
39,122
93,409
2,474,863
2,381,006
2,318,324
2,318,449
19,741
136,798
13,153
49,404
2,474,863
2,381,006
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 19.
(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 22.
125
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
24. Subsequent events
On 23 August 2021, the Directors resolved to declare a final dividend for the 2021 financial year of 7 cents per share franked to 20%.
The aggregate dividend payment amount is $55.3 million. The dividend will be paid to eligible shareholders on 8 October 2021.
The Company does not have a dividend reinvestment plan.
On 20 July 2021, the Group announced that it had entered into an agreement to acquire the business assets of LCL Pty Ltd (“LCL”);
the transaction completed on 2 August 2021 for a final purchase price of $36.7 million. The acquisition was funded through existing
committed borrowing facilities.
LCL is one of Australia’s largest producers of high-quality copper-based alloys and processes both new and recycled non-ferrous
materials to produce a range of brass copper alloys. In addition to being the principal supplier of brass to RWC in Australia, LCL also
recycles excess brass (swarf) arising from RWC’s product manufacturing activities.
Preliminary net asset value and allocation of the purchase price to acquired assets are as follows:
Final purchase price
Payment – Working Capital Adjustment
Final consideration transferred
Property, plant and equipment
Inventories
Employee leave entitlements
Total identifiable net assets acquired
Preliminary goodwill arising from acquisition
$000
36,712
1,647
38,359
10,961
10,647
(577)
21,031
17,328
The acquisition accounting will be finalised within 12 months of the acquisition date.
The Group intends to change its reporting currency from Australian dollars to US dollars with effect from 1 July 2021. Consolidated
financial results for the half year ending 31 December 2021 and for the year ending 30 June 2022 will be reported in US dollars, with
comparative prior year financial information restated in US dollar.
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.
25. Other accounting policies
(a) Basis of consolidation
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
25. Other accounting policies (continued)
(b) 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 18.
(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.
(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.
(c) Financial instruments
(i) Non-derivative financial instruments: Recognition, Measurement, Classification and Derecognition
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.
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 and;
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial
The Group classifies and measures financial assets it has recognised at amortised cost. These assets are subsequently measured
statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until
at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income,
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.
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.
126
127
Reliance
Worldwide
Corporation
Limited
Annual Report
2021
Directors’ Declaration
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
DIRECTORS’ DECLARATION
For the year ended 30 June 2021
25. Other accounting policies (continued)
In the opinion of the Directors of Reliance Worldwide Corporation Limited (“the Company”):
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as FVTPL if it is
1. the consolidated financial statements and notes set out on pages 85 to 128, are in accordance with the
classified as held for trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are
Corporations Act 2001, including:
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,
(i) giving a true and fair view of the Group’s financial position as at 30 June 2021 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.
discharged, cancelled or they expire. On derecognition of a financial liability, the difference between the carrying amount
2. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
extinguished and the consideration paid is recognised in profit or loss.
become due and payable.
(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,
3. there are reasonable grounds to believe that the Company and the Group entities identified in Note 22 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 22.
derivatives are measured at fair value; any changes therein are generally recognised in profit or loss.
The Directors draw attention to Note 1 to the consolidated financial statements which includes a statement of
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the
compliance with International Financial Reporting Standards.
derivative is recognised in other comprehensive income and accumulated in the hedging reserve. Any ineffective portion of changes
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer as
in the fair value of the derivative is recognised immediately in profit or loss. The amount accumulated in equity is retained in other
required by Section 295A of the Corporations Act 2001.
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.
(d) 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.
Signed in accordance with resolution of the Directors.
Stuart Crosby
Chairman
Melbourne
23 August 2021
Heath Sharp
Group Chief Executive Officer
and Managing Director
128
129
130
131
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s 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 2021 and of its financial performance for the year ended on that date; and • complying with Australian Accounting Standards and the Corporations Regulations 2001. The Financial Report comprises: • Consolidated statement of financial position as at 30 June 2021; • Consolidated statement of profit or loss and other comprehensive income, Consolidated statement of changes in equity, and Consolidated statement of cash flows for the year then ended; • Notes including a summary of significant accounting policies; • Directors' Declaration. The Group consists of Reliance Worldwide Corporation Limited (the Company) and the entities it controlled at the year end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code. Key Audit Matters 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. This matter was 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 this matter. Valuation of goodwill and indefinite life intangible assets ($1,140 million) Refer to Note 11 Goodwill and other intangible assets in the Financial Report The key audit matter How the matter was addressed in our audit A key audit matter for us was the Group’s annual testing of goodwill and indefinite life intangible assets for impairment, given the size of the balance (being 51% of total assets), and the significant estimation uncertainty continuing from the business disruption impact of the COVID-19 global pandemic. We exercised significant judgement in evaluating the evidence available. We focussed on the significant forward-looking assumptions the Group applied in their value in use model, including: • Forecast operating cash flows – there remains a level of future economic uncertainty as a result of COVID-19. These conditions increase the risk of inaccurate forecasts or a significantly wider range of possible outcomes, for us to consider. We focused on what the Group considers as its future business plans when assessing the feasibility of the Group’s forecast cashflows. • Terminal growth rates – in addition to the uncertainties described above, the Group’s models are sensitive to changes in terminal growth rates. This drives additional audit effort specific to their feasibility and consistency of application to the Group’s strategy. • Discount rate - these are complicated in nature and vary according to the conditions and environment the specific Cash Generating Unit (CGU) is subject Our procedures included: • Considering the appropriateness of the value in use method applied by the Group to perform the annual impairment test against the requirements of the accounting standards. • Testing key controls in the Group’s valuation process including Board approval of budgets and review and approval of the impairment assessment, including cash flow forecasts, by examining information reviewed and approved by the Board. • Comparing the forecast cash flows contained in the value in use model to forecasts reflecting the expected ongoing impact for the Group arising from COVID-19 and the future business plans approved by the Board. • Assessing the integrity of the value in use model used, including the accuracy of the underlying calculation formulas. • Assessing the accuracy of previous Group forecasts for each CGU’s cash flows to inform our evaluation of forecasts incorporated in the models. • Considering the sensitivity of the models by varying key assumptions such as forecast operating cash flows in light of the impacts of COVID-19 on the expected rate of recovery for the Group and its future business plans, copper pricing, terminal growth rates and discount rates, within a reasonably possible range, to identify those assumptions at higher risk of bias or inconsistency in application and to focus our further procedures. • We challenged the Group’s significant forecast cash flow and terminal growth rate assumptions in light of the ongoing impacts of COVID-19 on the Group’s ongoing business plans. We used our knowledge of the Group’s operations, their past performance and our 132
133
to from time to time, and the models approach to incorporating risks into the cash flows or discount rates. We involved valuation specialists to supplement our senior audit team members in assessing this key audit matter. industry experience to evaluate the feasibility of these plans. • Working with our valuation specialists, we independently developed a discount rate range for each CGU, using publicly available market data for comparable entities, adjusted for risk factors specific to the Group and the industry it operates in. We compared the discount rates applied by the Group for each CGU to our acceptable range. • Assessing the disclosures in the financial report using our understanding of the matter obtained from our testing and 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. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors are responsible for: • preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001; • implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error; • assessing the Group and Company's ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objective is: • to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and • to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar2_2020.pdf. This description forms part of our Auditor’s Report. Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of Reliance Worldwide Corporation Limited for the year ended 30 June 2021, complies with Section 300A of the Corporations Act 2001. Directors’ responsibilities 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 2021. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG Tony Romeo Partner Melbourne 23 August 2021 Reliance
Worldwide
Corporation
Annual Report
2021
SHAREHOLDER INFORMATION
The information set out below was applicable at 30 July 2021.
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
Shareholder
Information
Total
holders
3,154
5,425
2,054
1,625
93
Number
of shares
1,586,290
14,567,578
15,066,420
35,790,035
723,084,442
% of issued
shares
0.20
1.84
1.91
4.53
91.52
12,351
790,094,765
100.00
SHAREHOLDER INFORMATION
Buy-back
The Company does not have a current on-market buy-back.
Voting rights
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:
The number of shareholders holding less than a marketable parcel of shares was 151.
Largest Shareholders
The names of the 20 largest registered holders of ordinary shares are listed below.
Name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
BNP Paribas Nominees Pty Ltd
National Nominees Limited
BNP Paribas Noms Pty Ltd
Australian Foundation Investment Company Limited
Reliance Employee Share Investments Pty Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Netwealth Investments Limited
BNP Paribas Nominees Pty Ltd Six Sis Ltd
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
AMP Life Limited
BNP Paribas Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
Buttonwood Nominees Pty Ltd
Mr Heath Sharp
Broadgate Investments Pty Ltd
Powerwrap Limited
Substantial Shareholders
The number of shares held by substantial shareholders at 30 July 2021 was:
Name
Australian Super
Bennelong Australian Equity Partners Limited
Challenger Limited
The Vanguard Group, Inc.
134
Number of
shares held
226,370,998
184,588,533
135,985,874
48,949,591
44,863,580
14,966,447
10,963,279
6,854,359
5,725,735
4,319,355
3,285,264
2,232,795
1,963,784
1,690,082
1,394,046
1,342,630
1,321,269
1,275,368
1,247,264
1,206,941
Number of
shares held
86,100,059
69,918,362
48,346,568
39,565,578
% of issued
shares
28.65
23.36
17.21
6.20
5.68
1.89
1.39
0.87
0.72
0.55
0.42
0.28
0.25
0.21
0.18
0.17
0.17
0.16
0.16
0.15
%
10.90
8.85
6.12
5.01
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 3 8352 1400.
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.
135
Reliance
Worldwide
Corporation
Annual Report
2021
Corporate Directory
CORPORATE DIRECTORY
Board of Directors
Stuart Crosby (Chairman)
Heath Sharp
Christine Bartlett
Russell Chenu
Darlene Knight
Sharon McCrohan
Ian Rowden
Company Secretary
David Neufeld
Registered Office
28 Chapman Place
Eagle Farm, QLD 4009
T: +61 7 3018 3400
F: +61 7 3105 8130
Principal Place of Business
Level 26, 140 William Street
Melbourne, VIC 3000
T: +61 3 8352 1400
F: +61 3 8080 9128
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
136
Reliance Worldwide
Corporation Limited
28 Chapman Place
Eagle Farm, QLD 4009
ACN 610 855 877