Annual Report 2014
ANNUAL REPORT 2014 1
This annual report is printed on Maine recycled silk paper which comprises 60%
recycled paper & FSC® certified pulp. This paper meets ISO 14001 Environmental
Accreditation standards. Waterco Limited is pursuing reduction of its carbon footprint
and embraces the new technologies which make recycled paper available.
2 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
4
Company
Profile
14
Board of
Directors
30
Auditor’s
Independence
Declaration
Contents
6
Economic
Entity Financial
Highlights
7
Chief Executive
Officer’s Review
of Operations
16
Statement of
Corporate
Governance
Practices
31
Consolidated
Financial
Report
22
Directors’
Report
80
Shareholder
Information
81
Corporate
Directory
ANNUAL REPORT 2014 3
CANADA
Longueuil
USA
Augusta
UK
Kent
FRANCE
Saint Priest
CHINA
Guangzhou
MALAYSIA
Kuala Lumpur
SINGAPORE
INDONESIA
Jakarta
AUSTRALIA
Sydney, Brisbane,
Melbourne, Adelaide, Perth
NEW ZEALAND
Auckland
Company Profile
Waterco is an Australian publicly listed company involved in the manufacture and distribution of:
• Pool and spa equipment
• Pool and spa chemicals
• Domestic water filters, softeners and purifiers
• Commercial water treatment equipment
Waterco exports its products to over 40 countries via its branches in Australia, New Zealand, China, Malaysia,
Singapore, Indonesia, United Kingdom, France Canada and America.
4 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
4 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Company Profile
Distributor to Manufacturer
Waterco commenced business in 1981 as a distributor of PVC pipes for swimming pools and spas. Since then,
through a series of acquisitions as well as internal growth, the company has expanded into the manufacture and
distribution of a comprehensive range of swimming pool and spa products and water treatment equipment.
Manufacturing Power House
Waterco’s research & development team has created an innovative range of award winning products. Waterco
delivers high quality products at exceptional value with its efficient manufacturing procedures, advanced fibreglass
winding and pioneering plastic moulding.
Swimart is Australia’s premium
pool and spa specialist group.
With over 30 years’ experience
and 71 outlets across Australia
the vast
and New Zealand,
majority
stores
of Swimart
are owned and operated by
independent franchisees. Swimart
also operates a fleet of over 200
reliable mobile service vans, led
by highly-trained and experienced
technicians.
Zane Solar Systems consists
of a 24-strong dealer network
throughout Australia.
Trained
dealers install solar pool heating
systems for both domestic and
commercial applications using
Zane’s
solar
award winning
absorber.
In certain regions of Malaysia,
experience water
residents
discolouration caused by
rust
from unlined galvanised pipes.
To capture this market Waterco
has set up a dealer network of 11
Watershoppes selling Waterco’s
range of water filters and drinking
water purifiers.
ANNUAL REPORT 2014 5
Economic Entity Financial Highlights
Financial Year Ended
2014
$
2013
$
2012
$
2011
$
2010
$
Operating revenue ($ million)
77.97
68.80
66.56
68.20
71.47
Sales revenue ($ million)
77.12
68.21
66.14
67.74
70.88
Earnings Before Interest and
Tax (EBIT) ($ million)
3.43
4.62
4.54
6.07
6.64
EBIT / Sales Revenue
4.4%
6.7%
6.9%
9.0%
9.4%
Profit before income tax
($ million)
1.93
3.19
2.90
4.48
5.33
Net profit attributable to Members of
the Parent Entity ($ million)
0.91
1.67
2.03
3.20
3.70
Total assets ($ million)
92.98
85.75
74.15
72.50
78.78
Equity ($ million)
50.60
46.05
41.82
40.11
46.44
Basic Earnings per share
2.6 cents
4.9 cents
6.1 cents
9.8 cents
12.3 cents
Dividend per share
6.0 cents
7.0 cents
7.0 cents
9.0 cents
8.0 cents
Net Tangible Assets per share
$1.41
$1.33
$1.23
$1.21
$1.43
6 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Chief Executive Officer’s Review Of Operations
SOON SINN GOH
Chairman/CEO
REVENUE AND PROFITABILITY
The Group reported a Net Profit After Tax (NPAT) of $0.97 million, registering a decrease of 43% on
the previous corresponding period (PCP) and coming in below the profit guidance provided at the
last Annual General Meeting but in line with the profit announcement on 13 August 2014. Losses in
North America and Europe entities were not tax-effected, accentuating their impact on the Group’s
profitability. Earnings Before Interest and Tax (EBIT) for the year fell by 25% to $3.43 million from
$4.62 million but Sales Revenue grew by 13% to $77.12 million from $68.21 million.
Activities in the Australian and New Zealand Division account for a
major portion of the Group’s profitability and sales. Though the EBIT of
this Division came in below that of the PCP, we are confident that the
operations of this division are fundamentally sound.
The North America and Europe Division has reduced the level of its
losses by 20%. However, the losses still exceeded expectation, as
a projected marginal profit in Canada turned into a loss of $949,000,
largely as a result of pricing commitments made the previous year to
the Canadian market when the Canadian Dollar was close to parity with
the US Dollar. The subsequent increase in cost to Waterco Canada, as
a result of the weaker Canadian dollar against the US dollar, amounted
to $417,000.
DIVISIONAL EBIT PERFORMANCE
The breakdown of EBIT contributions by division is as follows:
FY14
($000)
FY13
($000)
% Change
Australia and New Zealand
3,231
4,897
– 34%
North America and Europe
(2,007)
(2,520)
+ 20%
Asia
2,209
2,246
Consolidated Reported EBIT
3,433
4,623
– 2%
– 25%
ANNUAL REPORT 2014 7
AUSTRALIA AND NEW ZEALAND (ANZ)
The Australia and New Zealand Division derives its revenue
predominantly from the domestic swimming pool industry. Apart
from selling a wide range of products, including chemicals for
swimming pool water treatment, Waterco is also the franchisor
of the Swimart chain of pool stores. Through more than three
decades of experience, Waterco has acquired an extremely good
understanding of the factors that drive consumer demand in the
after-market. The franchise programme has been developed and
improved on in-house since 1984, with the opening of a company-
owned pool shop in Sydney. This shop was subsequently franchised
and developed into the Swimart Pool and Spa franchising retail
system. This solid foundation has enabled this Division to maintain
an acceptable, albeit lower, level of profitability through the
challenging times in the last few years, during which the industry
underwent consolidation and transformation.
Steady market share in the domestic pool sector has underpinned
the Division’s performance. The Division’s introduction of a range of
energy and water saving swimming pool products generated sales
growth, affirming Waterco’s expectation of the market’s appetite for
environmentally friendly products, such as Waterco’s Hydrostorm
ECO pump and Glass Pearls for improved filtration performance
and reduced water usage from shorter backwash cycle. This was
instrumental in enabling the company to retain market share.
Unfortunately, a weaker Australian Dollar increased costs of
imports, resulting in a lower trading margin. Difficult trading
conditions prevailed. Nevertheless, Waterco forged ahead with the
introduction of a new ERP system and continued with market and
product development of the Hydroxypure chlorine-free sanitizing
system. With this background, the Division recorded a reduced
EBIT of 34%, on increased sales revenue of 3%.
NORTH AMERICA AND EUROPE
Waterco North America and Europe comprises the Group’s operations
in the USA, Canada, UK and France.
Hydrostorm Eco is equipped with a three
speed motor which allows pool owners to
set the pump at a low, energy saving flow
rate for every day filtration. The pump uses
almost 70% less energy than standard
single speed pumps.
Glass Pearls offer much finer filtration than
other filter media on the market and are
therefore capable of providing outstanding
water purity and clarity. They also require
20 per cent less water for backwashing
compared to sand.
8 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Waterco USA (WUSA) The US market is the largest in the world and
Waterco USA had enhanced its presence there through a substantial
investment in its acquisition of Baker Hydro in March 2005. Our
operations in Augusta, Georgia manufacture larger filters and assemble
commercial pumps.
In the United States, sales were up by 6% on PCP. This improved
underlying performance was, however, not reflected in the EBIT, as
the Entity incurred once-off expenses related to the manufacturing of
heat pumps, including inventory write-down of $169,000, production
wastages, air freight expenses and overtime amounting to $298,000
in order to meet delivery schedules needed in the narrow Canadian
The Micron horizontal filter is a space-
its compact
saving high performer;
horizontal design allows installation with
minimal waste of space. Its spherical ends
are designed to give uniform flow from
both inlet and outlet collection assemblies.
Waterco’s largest Micron horizontal filter,
the MD11000, is capable of filtering 6600
litres per minute.
season.
Growth in sales of commercial and industrial filters saw this sector
making up more than 45% of total sales in WUSA during the year. WUSA
continued to deliver more high-pressure seven-bar rated horizontal
filters to the Middle East for installation in a desalination plant.
Waterco Canada (WCI) This Entity was the Group’s original centre
for the manufacture of heat pumps. Its expertise, developed over more
than two decades, with assistance from our Research and Development
division in Sydney, had improved performance of our products in both
quality and cost. This continues to benefit the Group and enables other
manufacturing entities in the Group to produce heat pumps of quality.
WCI is now a trading entity with heat pumps as their key product.
Waterco Europe (WEL), combining an entity set up in 2003 and
the acquisition of Lacron in 2004, enjoys a continuous and successful
history of almost 40 years in the manufacture of fibreglass filters.
The renowned “Lacron” name is synonymous with quality filters and
coupled with progressive manufacturing techniques – which were
introduced after the acquisition – it has enabled WEL to bring to the
market filters of quality at acceptable prices. As a result, both the Lacron
and the Waterco brands are now well-recognised as quality products
in Europe. This recognition continues, even after the manufacturing
operations were transferred to Malaysia and China, because the same
high standards have been maintained.
Waterco expanded its Electroheat heat pump
range with the addition of the Electroheat
MKIV, which combines compactness and
performance to effectively heat both spas
and domestic pools.
The Electroheat MKIV's small footprint
enables greater installation flexibility.
Internationally, Lacron is known for its
commercial fibreglass filters, that are
the preferred choice for more intense
such
installations
commercial
as
heavy-use
and
spas
commercial
commercial pools.
ANNUAL REPORT 2014 9
The economic conditions in the UK have largely remained unchanged
this year. Sales continue to be flat, despite new customers making up
for some of the decline in sales to existing customers. Margins continue
to come under pressure because of the conditions.
Waterco France (WFR) was set up as the thrust into Europe, with UK
as the base. France is one of the largest markets in Europe. However,
with the business environment in Europe remaining unchanged during
the financial year, this Entity continued to consolidate its operations, in
preparation for a higher level of activity, when the business environment
improves.
ASIA
Waterco Far East in Malaysia (WFE) was borne out of Waterco’s
familiarity with the Southeast Asian market. WFE was initially a sales
operation designed to service Waterco Australia’s Southeast Asian
customer base. In 1991 WFE added manufacturing operations to our
undertakings in Kuala Lumpur, Malaysia. As well as bringing the Group
closer to our markets in Southeast Asia, this also gave cost-efficiency
in our manufacturing operations. Since then, WFE has become the
principal manufacturing facility for pumps and filters for the Waterco
Group. WFE continues to deliver new products to give the Group an
edge in our marketing activities.
WFE has achieved ISO9001:2008 certification, the internationally
recognised standard for the quality management of businesses, and
demonstrates the existence of an effective and well-designed quality
management system, which stands up to the rigours of an independent
external audit. A key criterion of this standard is that the management
system can provide confidence in creating products that meet
expectations and requirements.
Local sales in Malaysia improved significantly and were ahead of
expectation. However, this Entity’s performance was below PCP,
mainly as a result of a stronger local currency.
Waterco China This entity commenced operations in 2000, delivering
advantages of low operational costs and a foothold into the huge China
9001:2008
certification
ISO
– With
ISO9001:2008 certification,
international
customers are able to appreciate that
Waterco Far East’s management system is
up to an international standard.
Waterco Far East’s manufacturing plant
spans more than 22,500 square metres and
provides for global manufacturing, design
and product development divisions and
Waterco’s R&D operations all under one
roof.
10 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
market. Today, these operations manufacture filters primarily for the
European and the Australian markets. High manufacturing standards
have been maintained, enabling the acceptance of filters made by
Waterco in China, with the Waterco brand, in these markets.
Waterco China has also achieved an internationally recognised quality
assurance certificate.
This Entity performed well during the year. Turnover was above
expectation. Management changes put in place during the year are
expected to improve performance further in the future.
Waterco International in Singapore (WI) focuses on sales in Asian
countries, other than Malaysia and China, where we have our own
trading entities. WI also provides technical assistance to our Indonesian
entity and has been able to contribute to the growth of the latter. WI
has improved on its performance over PCP.
Waterco’s Hydroxypure chlorine free pool
sanitisation has been launched in China,
with a particular focus on the commercial
pool market.
One of their first customers was the
Agricultural Bank of China, located in Jinan,
Shandong Province.
Its pool has a volume of 300,000 litres.
The pool's water quality has surpassed all
expectations and local laboratory water
tests.
PRODUCT DEVELOPMENT AND WATER TREATMENT
The Group continues to invest in Research and Development in order
to be at the forefront of the industry. The number of patents that the
Group has secured or are in the process of applying for continues to
increase.
During the year, the chlorine-free system, Hydroxypure, was granted a
patent in the United States (USA). Applications in other countries are
pending.
At about the same time, a patent was also granted in the US for a
Biocidal composition for treating water. Primarily an important support
chemical for the Hydroxypure system, this Biocidal composition is also
suitable for ordinary chlorine-treated pools, improving the convenience
of treating all residential pools.
Also linked to the Hydroxypure system is the method of mixing and
measuring ozone dosing. An innovation patent has been granted in
Australia with patents pending in other countries. This method of mixing
and measuring ozone dosing has applications to enhance treatment of
pool water in all residential pools.
Used in conjunction with the Hydroxypure
system, Waterco launched its range of
Perox Perfect and Perox Balance chemicals
to simplify pool maintenance.
The dual action Perox Perfect and Perox
Balance have been specifically designed as
a preventative approach to keep swimming
pools in pristine condition and trouble-free.
Waterco's MultiCyclone technology has
been incorporated into the Hydroxypure
system.
It maximises the strength of
sanitisation by cleverly mixing the ozone
into the pool water as well as providing
adequate contact time for maximising
sanitisation.
ANNUAL REPORT 2014 11
Product innovation and research and development in the water-
treatment subsector are considered to be critical in Waterco staying
at the forefront of the industry. Waterco considers water-treatment
products and systems to be a key revenue driver for the Group. As such,
ensuring that our products and systems are appropriately protected is
of value and importance.
The array of patents will improve Waterco’s position in the servicing of
swimming pools globally and are expected to improve the appeal of the
Swimart franchise, as well as that of other pool shops which market
the products.
Waterco’s key products for the future are the Hydroxypure range of
products that use hydrogen peroxide as a substitute for chlorine as
a sanitising agent. The system uses two disinfectants (ozone and
hydrogen peroxide) that actively work in harmony to increase active
oxygen in the water. The synergy of the two disinfectants ensures the
water environment is safe, without the creation of harmful chemical by-
products. The end result is a swimming pool that is totally chlorine-free
and enriched with oxygen. Hydroxypure is good news for those with
eczema and allergies. It is the only such sanitisation system to receive
a tick of approval from the National Asthma Council Australia.
During the year, a commercial Multicyclone was introduced to the
market. This helped to secure sales of commercial filters which Waterco
might not have otherwise obtained.
DIVIDEND AND OUTLOOK
The results for the year are below expectation and profitability has yet
to return to normal levels, with the North America and Europe Division
again incurring a significant EBIT loss.
has
simplified
Waterco
advanced
drinking water treatment technology and
successfully applied it to treating swimming
pool and spa water.
The end result is a chlorine free, oxygen
enriched swimming pool that’s soft and
gentle on the skin.
recognised
Waterco has been
outstanding
prestigious
Hydroxypure
products.
achievement with
for
four
its
and MultiCyclone XL
industry awards
for
The Swimming Pool & Spa Association of
SA and the Swimming Pool & Spa Alliance
both recognised Waterco’s products at their
recent Awards of Excellence.
The North America and Europe Division showed a reduction of its EBIT
loss to $2.01 million from PCP’s loss of $2.52 million. This year’s loss
in this Division includes significant non-recurrent costs, particularly
with the set-up of a second heat-pump manufacturing division in
WFE, Malaysia. The North America and Europe Division continues to
undergo restructuring, to strengthen its operations, in order to enable
12 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
it to withstand adverse business conditions. Our pursuit of National
Sanitation Foundation (NSF) approval for our commercial filters is
beginning to bring in orders for commercial filters and is expected to
gain momentum. These measures should enable the Division to perform
significantly better during the new financial year. There are signs that
the business environment in this market, in particular in the United
States, is starting to improve. If conditions become favourable, the
Group considers it possible that there could be a break-even situation
in this Division in the next financial year. If achieved, this would mark a
significant turning point in this Division.
The way is now clear for Hydroxypure, the Group’s system of non-
chlorine sanitization, to be sold for domestic installations in almost all
the markets in which Waterco operates; approval is pending in the US.
The group also holds or is pending appropriate patents for this system.
Sales in the Australia and New Zealand market commenced during the
financial year and are expected to contribute significantly to the turnover
in the next financial year. Besides improvement in sales, this system
will reinforce Waterco’s standing as a manufacturer of innovative and
environmentally-friendly products. The patents will help protect our
market share in the foreseeable future. Trials of this system continue
in the commercial sector. These trials have been successful and the
Group is greatly encouraged by their results. The Group is seeking
approvals from the respective authorities to extend this product into
the commercial market.
Accordingly, Waterco declares a final dividend payment of 3 cents per
share, payable to shareholders on 15 December 2014. This brings the
total dividend payout to 6 cents per share for the year, a satisfactory
outcome in an environment of poor global economic conditions.
The Board will provide a profit guidance at a later stage for the financial
year ending 30 June 2015, as more information becomes available
during the year.
Waterco's Micron commercial filters have
received certification to NSF/ANSI Standard
Its certification verifies compliance
50.
with
the American National Standard
for confirming performance, safety, and
material health effects requirements have
been met. Most American commercial pool
codes require compliance with NSF/ANSI
Standard 50.
Turtle Beach Resort on Queensland’s Gold
Coast, is the 1st commercial installation of
the chlorine-free Hydroxypure sanitisation
system.
The Hydroxypure system provided not only
an automated chlorine free environment,
but also the added advantage of complete
water recycling without any additional
treatment.
The resort is now able to reuse all of the
waste water from the filter cleaning cycles
to either irrigate the gardens or fill water
features.
ANNUAL REPORT 2014 13
Board of Directors
SOON SINN GOH - B COM FCPA
Chairman/CEO
Mr. Goh is the founder of Waterco Limited. He has been a member of the Board
since the Company’s incorporation in February 1981. Prior to the inception of
Waterco, he was the Managing Director of a company specialising in the
construction of water and sewage treatment facilities. His extensive experience
in the water treatment industry is instrumental to the success of Waterco.
He held no other listed company directorships during the past three financial
years.
BRYAN GOH - B ECON
Group Marketing Director
Mr. Goh was appointed to the Board on 2 June 2010.
As the Group Marketing Director, Mr. Goh has overall responsibility for business
and product development in Australia and oversees the marketing activities of
Waterco’s overseas subsidiaries.
Mr. Goh was on the board of directors of The Swimming Pool & Spa Association
of New South Wales Ltd (from February 2005 to February 2009), a non-profit
organisation dedicated to maintaining and improving standards within the industry
for the betterment of consumers, pool builders and suppliers.
He held no other listed company directorships during the past three financial
years.
GARRY NORMAN - B COM CA
Non-Executive Director
Mr. Norman was appointed to the Board as a Non-Executive Director in October
1993.
He has been in public practice since 1990, having been previously employed
by Duesburys Chartered Accountants (now Deloitte) for fourteen years before
leaving to establish his own Chartered firm - G R Norman & Co.
He has an extensive background in accounting and taxation matters, having
been involved with a wide range of clients in both city and suburban practices –
previously in his role as a manager of the Business Services Division of Duesburys
and currently in his role as principal of a suburban practice.
Mr. Norman is the Chairman of the Audit Committee and a member of the
Remuneration Committee.
He held no other listed company directorships during the past three financial
years.
14 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
BEN HUNT - PHD (ANU)
Non-Executive Director
Dr. Hunt was appointed to the Board as a Non-Executive Director in June 1998.
His most recent academic appointment was as the Head of the Graduate School
of Business and Associate Dean of the Faculty of Business and an Associate
Professor of Finance at the University of Technology, Sydney (UTS).
He has a doctorate from the Australian National University. Although Dr Hunt has
written extensively on Australian financial markets (he is the co-author of the text
Australian Institutions and Markets, 7th Ed.), his knowledge extends to the South
East Asian region. He is a regular presenter of financial seminars in Hong Kong
and Singapore for the UK publishing and training company Euromoney.
Dr Hunt is the Chairman of the Remuneration Committee and a member of the
Audit Committee.
He held no other listed company directorships during the past three financial
years.
RICHARD CHENG FAH LING - B COM CA
Non-Executive Director
Mr. Ling was appointed to the Board as a Non-Executive Director on 8 May 2009.
He holds a Bachelor of Commerce degree from the University of Newcastle,
Australia. He is a member of the Institute of Chartered Accountants in Australia
and the Malaysia Institute of Accountants. He has worked in companies based
in Australia as Financial Controller, Company Secretary and Senior Manager from
1980 to 1989. In 1992, Mr. Ling was appointed Group General Manager of Tiong
Nam Logistics Holdings Berhad, a public company listed on the Main Board of
Bursa Malaysia (Malaysian Stock Exchange). The company has operations in
Malaysia, Singapore and Thailand. In 2001, Mr. Ling joined the Board of Tiong Nam
Logistics Holdings Berhad as Executive Director. Since 2009 he has been a Non-
Executive Director. Mr. Ling is a member of the Remuneration and Nomination
Committee and the Chairman of the Audit Committee of Tiong Nam Logistics
Holdings Berhad. Mr. Ling has a good understanding of corporate finance, with
experience in raising funds for companies in Australia and Malaysia, via the capital
markets in Asia.
Mr. Ling is a member of the Audit Committee and the Remuneration Committee
of Waterco Limited.
He held no other listed company directorships during the past three financial
years.
ANNUAL REPORT 2014 15
Statement of Corporate Governance Practices
This statement sets out the corporate governance
practices that the Company had in place throughout
the financial year ended 30 June 2014 and current as
at the date of this report.
In compliance with ASX Listing Rule 4.10, this
statement:
• discloses the extent to which the Company
has followed the ASX Corporate Governance
Council’s Corporate Governance Principles and
(ASX Recommendations)
Recommendations
during the financial year; and
• identifies those recommendations that have not
been followed and the reasons for not following
them.
PRINCIPLE 1
LAY SOLID FOUNDATIONS FOR
MANAGEMENT AND OVERSIGHT
Role of the Board
The Board oversees the business and operations of
the Company directly or through its Committees with
particular focus on and responsibility for:
• developing and approving strategies designed to
ensure the controlled growth and success of the
Company;
• the monitoring of Key Management Personnel’s
strategy implementation and performance;
• ensuring that the necessary resources are available
to allow effective strategy implementation by Key
Management Personnel;
• the appointment, evaluation and removal of
the CEO and, where appropriate, ratifying the
appointment and removal of Key Management
Personnel;
• monitoring of
the Company’s control and
accountability systems;
• reviewing and adopting annual budgets
for
the financial performance of the Company and
monitoring the results on a regular basis;
16 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
• monitoring and approving any other necessary
reporting, financial or otherwise;
• reviewing, ratifying and monitoring systems of
internal controls, risk management and legal
compliance; and
• approving and supervising significant capital
expenditure, capital management and acquisitions
and divestments.
Some responsibilities and authorities have been
delegated to Key Management Personnel for the
purposes of operating the Company’s day to day
activities.
In accordance with the ASX Recommendations,
some further responsibilities have been delegated
to the Company’s Committees. Satisfaction of these
responsibilities is monitored by the Board by way
of established lines of communication between the
Board and the Committees.
The Board Charter is published on the Company’s
website www.waterco.com.
Appointment and Re-Election of Directors
The Company has in place a policy for nomination and
appointment of directors. Before appointing a director,
the Company will undertake appropriate checks on a
candidate for directorship and will provide all material
information in its possession to its shareholders to
make a decision on whether or not to elect or re-elect
a director.
Performance of the Board
The Board is committed to an ongoing internal
process of performance evaluation of the Board, its
Committees and individual Directors to ensure the
diligent and effective discharge of responsibilities
and a consistent mindset in improving corporate
governance practices. The Board has undertaken
an evaluation on the performance of the Board, its
Committees and individual Directors for the financial
year ended 30 June 2014.
Performance of Key Management Personnel
The Board is committed to an ongoing internal process
of performance evaluation of Key Management
Personnel to ensure the diligent and effective
discharge of their responsibilities. Key Management
Personnel participated in an annual performance
evaluation for the financial year ended 30 June 2014.
its preferred Board
The Company achieved
Composition of at least five directors during the last
year, with a majority of Non-Executive (and, where
possible, independent) Directors.
Directors
The names of the directors in office during and since
the end of the financial year are:
PRINCIPLE 2
STRUCTURE THE BOARD TO ADD VALUE
The
Nomination Committee
The Company has not established a Nomination
Committee.
Recommendations
ASX
acknowledge that such a committee may not be
required for smaller boards. The Board is of the
opinion that it is appropriate for a company the size
of Waterco for matters that come under the purview
of a Nomination Committee to be undertaken by
the Board through the Remuneration Committee.
Furthermore, the Board has established processes in
place to raise and address issues that would otherwise
be considered by the Nomination Committee.
Board Composition
The Board of Directors comprises an Executive
Chairman who is also the Chief Executive Officer,
an Executive Director and three Non-Executive
Directors. The Board views each of the three Non-
Executive Directors as being independent.
The Board’s membership is reviewed periodically to
ensure that it maintains an appropriate mix of skills,
qualifications and experience. In particular the Board
has identified skills and experience in corporate
finance, international trade and international business
environment, marketing and accounting and technical
and industry knowledge in the water treatment and
pool industries to be important. Although currently
all male, the Board composition represents diversity
in age, ethnicity and background. At each Annual
General Meeting (AGM), one third of the directors
(excluding the Chief Executive Officer) and any
director appointed to fill a casual vacancy since the
previous AGM must retire but may stand for re-
election.
• Soon Sinn Goh
• Bryan Goh
• Garry Norman
• Ben Hunt
• Richard Ling
The details of the Directors’ skills, experience and
expertise, along with the period for which they have
held office are set out in the Board of Directors
section of the Company’s Annual Report.
Independent Directors
A majority of the Board - Garry Norman, Ben Hunt
and Richard Ling - are independent directors, taking
into account the factors relevant to “independence”
under the ASX guidelines.
The Company’s assessment of the materiality of
Directors’ other relationships with the Company is
considered on a case by case basis by the Board.
Where an entity associated with a Director provides
services to the Company, the Board uses a threshold
of $100,000 in fees in a financial year as a guideline.
However the Board does not follow an inflexible set
of criteria but considers whether the relationship in
question is reasonably likely to interfere with that
Director’s independent judgment.
Further details as to how the Board assesses
independence can be found in the Board Charter
published on the Company’s website.
The Company’s Directors have the right to seek
independent legal and other professional advice, at
the Company’s expense, concerning any aspect of
the Company’s operations or undertakings in order
to fulfill their duties and responsibilities as Directors,
subject to prior approval from the Chairman. In light
ANNUAL REPORT 2014 17
of this, the Board is of the opinion that a more formal
procedure for Directors to seek independent advice
need not be established at this time.
Chairperson of the Board
The roles of Chairperson and Chief Executive Officer
are both held by Mr Soon Sinn Goh. The Board
believes that Mr. Goh brings a vital level of industry
experience to the operations of the Company. Also,
as the major shareholder of the Company, Mr. Goh’s
commitment to the success of the Company is
unquestionable. Therefore, it is the Board’s opinion
that it is appropriate in the Company’s circumstances
that the two roles be combined. With the majority
of the Board’s Directors being independent, and
with Independent Directors chairing the Audit and
the Remuneration Committees, the Board is also of
the opinion that it is not necessary that the office of
Chairperson be held by an Independent Director.
Directors Induction Program
All new directors undergo an induction to familiarize
them with the business of the Company, the
Company’s internal control and risk management
practices and policies and procedures. The Company
also provides appropriate professional development
opportunities for directors to develop and maintain
the skills and knowledge needed to perform their role
as directors effectively.
PRINCIPLE 3
PROMOTE ETHICAL AND RESPONSIBLE
DECISION MAKING
A Code of Conduct for Directors, Key Management
Personnel and Employees that addresses the issues
referred to in the ASX guidelines is published on the
Company’s website.
In addition to the Code of Conduct:
• there is a published policy within the organisation
on accepting gifts;
• employees’ letters of appointment emphasise their
obligations to protect the Company’s confidential
information, not to misuse Company property, to
act responsibly in matters of health and safety and
to conduct themselves ethically and lawfully;
• the Company’s Audit Committee has responsibility
for encouraging the reporting by employees of
matters of concern; and
• these matters are reinforced in the Company’s
induction processes for employees.
Diversity Policy
The Board recognises diversity and equity as
strengths and has adopted a Diversity & Equity Policy
for the Company.
The objectives of the Diversity & Equity Policy include:
• Fostering a working culture that values, respects
and responds to the rich diversity of its staff;
• Creating an all inclusive work culture;
• Facilitating equal employment opportunities in all
levels of management based on merit;
• Developing flexible work arrangements
for
staff, including encouraging women to return to
workforce after maternity leave and encouraging a
balanced work and personal life; and
• Developing a harassment-free work environment.
The Diversity & Equity Policy are addressed as part
of the induction processes for new employees.
Recruitment agencies are mandated to provide
a gender balance of suitably qualified shortlisted
candidates for interview. Further, senior executives
are required to address gender balance of women in
succession plans.
18 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
The Board sets the measurable objectives for
achieving gender diversity and assesses annually
both the objectives and the progress of achievement
of the measureable objectives.
With respect to the achievement of these objectives,
the Board notes that as of 30 June 2014:
1) 30% of employees in the Company were women;
and
2) 17% of management and senior executive
positions were held by women.
The Board is satisfied that the Company has met the
measureable objectives for gender diversity based on
the current operational requirement of the Company.
PRINCIPLE 4
SAFEGUARD INTEGRITY IN FINANCIAL
REPORTING
Audit Committee
The Audit Committee operates under the Audit
Committee Charter which
is published on the
Company’s website.
The role of the Audit Committee is to assist the Board
with its oversight of the integrity of the financial
statements, including to oversee the existence
and maintenance of internal controls, accounting
systems, and the financial reporting process. The
Committee also nominates external auditors, reviews
existing audit arrangements and co-ordinates external
and internal auditing functions. In addition, the Audit
Committee examines any other matters referred to it
by the Board.
Throughout the last financial year (and to the date
of this report) the Audit Committee consisted of
3 Independent Non-Executive Directors and was
headed by an Independent Chairperson not holding
the position of Chairperson of the Board.
The members of the Audit Committee during the year
were:
• Garry Norman – Chairman;
• Ben Hunt; and
• Richard Ling.
The number of Audit Committee meetings and details
of Committee members’ attendance are included
in the Directors’ Report section of the Company’s
Annual Report.
PRINCIPLE 5
MAKE TIMELY AND BALANCED DISCLOSURE
The Company’s Continuous Disclosure Policy is
published on its website. This policy sets out the
rules and responsibilities for Waterco’s officers and
employees in promoting factual and timely disclosure
of all material matters concerning the Company.
The Continuous Disclosure Policy further sets out the
following:
• Information to be disclosed, being information
that a reasonable person would expect to have
a material effect on the price or value of the
Company’s securities
• Limited circumstances where disclosure is not
required under Listing Rule 3.1
• Commitment towards preventing a false market
• Policy towards safeguarding of information
• Contact with media
PRINCIPLE 6
RESPECT THE RIGHTS OF SHAREHOLDERS
A communications strategy entitled “Shareholder
Communication Policy” is published on the Company’s
website. This policy details the mechanisms put in
place to ensure that the rights of shareholders are
respected and to facilitate the effective exercise of
those rights.
ANNUAL REPORT 2014 19
The Board considers that the Company is not
materially exposed to economic, environmental and
social sustainability risks.
Declaration under section 295A of Corporations
Act
The Board approves
the Company’s financial
statements for the financial period after receiving a
declaration from its Chief Executive Officer (CEO) and
Chief Financial Officer (CFO) under section 295A of
the Corporations Act.
The CEO and CFO advised the Board in writing that:
• in their opinion the Company’s financial reports
have been properly maintained and have complied
with the appropriate accounting standards and
give a true and fair view of the Company’s financial
position and performance; and
• their opinion were founded on a system of risk
management and internal compliance and control
which implements the policies adopted by the
Board, and that this system is operating efficiently
and effectively in all material respects.
Attendance of Auditors at AGM
The external auditor attends the Annual General
Meeting
(AGM) for the purpose of answering
shareholder questions regarding the conduct of the
audit and the preparation and content of the audit
report.
PRINCIPLE 8
REMUNERATE FAIRLY AND RESPONSIBLY
Remuneration Committee
The Remuneration Committee is responsible for
making recommendations to the Board of Directors on
remuneration packages and policies for the Executive
Directors and the Key Management Personnel. The
Remuneration Committee Charter is published on the
Company’s website.
All disclosures made to the ASX and all information
provided to analysts or the media during briefings
are promptly posted on the Company’s website after
they have been released to the ASX.
The Shareholder Communication Policy contains
information on persons whom shareholders can
contact in relation to procedures at shareholders
meetings, matters being considered at shareholders
meetings and other issues.
Shareholders who are unable to attend any of the
Company’s meetings are encouraged to vote on the
proposed motions by appointing a proxy. Proxy forms
are included with meeting notices that also provides
details on how proxy forms should be completed and
submitted.
PRINCIPLE 7
RECOGNISE AND MANAGE RISK
The Board requires the Company’s management
to design and implement the risk management and
internal control system to manage the Company’s
material business risks. The Audit Committee is
responsible for overseeing the effectiveness of the
Company’s risk management system. The Committee
has appointed the Head of the Group Corporate
Advisory and Assurance as the Risk Manager. A Risk
Register is maintained. Risks identified and actions
taken are reported to the Audit Committee. The
Company’s Risk Management Policy is summarised
and published on the Company’s website as
“Summary of Risk Management Policy.”
The Audit Committee reports to the Board on the
effectiveness of the risk management and internal
control processes of the Company.
The Board reviews the risk management framework
of the Company periodically as and when necessary
to meet the operational requirements of the Company
and changes in the law. The Board has performed the
review for the reporting period.
20 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Remuneration Committee Composition
Throughout the last financial year (and to the date of
this report), the Remuneration Committee consisted
of three Independent Non-Executive Directors and
was headed by an independent Chairperson not
holding the position of Chairperson of the Board.
The members of the Remuneration Committee during
the year were:
• Ben Hunt – Chairman
• Garry Norman
• Richard Ling
The number of Remuneration Committee meetings
and details of Committee members’ attendance are
set out in the Directors’ Report section of the Annual
Report.
The Remuneration Report at the Directors’ Report
section of the Annual Report sets out:
• Information about
the Remuneration Policy
developed by the Remuneration Committee and
adopted by the Board, and
• Details of remuneration of the Directors and Key
Management Personnel (including options issued
to Key Management Personnel).
Remuneration of Directors -v- Non-Executive
Directors
In line with the ASX Recommendations, remuneration
of the Company’s Non-Executive Directors operates
on different principles to the remuneration of
Executive Directors. No equity-based remuneration or
other performance-based remuneration was offered
to Non-Executive Directors in the financial year just
ended, nor is there any proposal to do so this year.
Non-Executive Directors receive fixed fees, and are
not entitled to any retirement benefits other than
statutory superannuation.
ANNUAL REPORT 2014 21
Directors’ Report
Your directors present their report on the Company
and its controlled entities for the financial year ended
30 June 2014.
• Manufacture and sale of solar heating systems
for swimming pools and pre-heat industrial solar
systems;
Directors
The names of directors in office during and since the
end of the financial year are:
• Soon Sinn Goh
• Bryan Goh
• Garry Norman
• Ben Hunt
• Richard Ling
All directors have been in office since the start of the
financial year.
For details of the directors’ qualifications and
experience, refer to the section titled “Board of
Directors” which is to be read as part of this report.
Company Secretaries
The following persons held the position of joint
company secretary throughout the financial year:
Bee Hong Leo
Mrs Leo was appointed Company Secretary on 3
March 1983. She has been employed by Waterco
since March 1981 performing management roles in
the administration and legal divisions.
Gerard Doumit FCPA
Mr Doumit was appointed Joint Company Secretary
on 22 July 1991. He has been employed by Waterco
since January 1987 as an Accountant and is currently
Chief Accountant and Joint Company Secretary.
Principal Activities
The principal activities of the consolidated Group
during the financial year were:
• Wholesale, export and manufacture of equipment
and accessories
in the swimming pool, spa
pool, spa bath, rural pump and water treatment
industries;
22 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
• Franchise of retail outlets for swimming pool
equipment and accessories; and
• Formulating, packing and distribution of swimming
pool chemicals to independent pool stores and
stores in its Swimart franchise network.
There were no significant changes in the nature of
the consolidated Group’s principal activities during the
financial year.
Consolidated Results
The consolidated profit of the Group after providing for
income tax and eliminating non controlling interests
amounted to $906,662.00.
Dividends
Dividends paid or declared for payment are as follows:
• Final ordinary dividend of 4 cents per share paid on
16 December 2013 as recommended in last year’s
report - $1,389,275
• Interim ordinary dividend of 3 cents per share paid
on 16 June 2014 - $1,052,079.
• Final ordinary dividend of 3 cents per share declared
by the directors to be paid on 15 December 2014
- $1,068,933. All dividends paid or declared since
the end of the previous financial year were fully
franked.
Review of Operations
A review of operations of the consolidated Group
during the financial year and of the results of those
operations together with likely developments in
the operations of the consolidated Group and the
expected results of those operations are set out in
the Chief Executive Officer’s Review of Operations.
Financial Position
The net assets of the consolidated Group have
increased by $4.6 million from $46.0 million in June
2013 to $50.6 million in June 2014.
The change has largely resulted from:
• Increase in the share capital from the Waterco
Dividend Reinvestment Plan $1.1 million;
affected or may significantly affect the operations
of the consolidated Group, the results of those
operations, or the state of affairs of the consolidated
Group in future financial years.
• Downward movement
translation of $0.3 million;
in
foreign currency
• Downward movement in profits less dividends of
$1.5 million; and
• Net increase in the asset revaluation reserve of
group companies (due to revaluations and changes
in foreign exchange rates) $5.3 million.
The Group’s working capital being current assets less
current liabilities increased from $29.8 million in 2013
to $30.6 million in 2014.
The directors believe that the Group is in a strong and
stable financial position.
Significant Changes in State of Affairs
The directors are not aware of any significant changes
in the state of affairs of the consolidated Group that
occurred during the financial year which have not
been covered elsewhere in this report.
After Balance Date Events
Since the end of the reporting period, the Board
resolved to pay a final dividend of 3 cents per share
fully franked.
No other matters or circumstances have arisen
since the end of the financial year which significantly
Future Developments, Prospects and Business
Strategies
Information as to future developments, prospects
and business strategies in the operations of the
consolidated Group are included in the Chief Executive
Officer’s Review of Operations. Other possible
developments have not been included in this report as
such inclusions would, in the opinion of the directors,
prejudice the interests of the consolidated Group.
Environmental Issues
The consolidated Group’s operations are subject
to some environmental
regulations, particularly
with regard to the storage of chemicals and
waste management. The consolidated Group has
adequate systems in place for the management of
its environmental requirements. The directors are
not aware of any breaches of the environmental
regulations during the financial year.
Directors’ Shareholdings
Details of the directors’ shareholdings are contained
in Note 7 to the Financial Statements.
Meetings of Directors
During the financial year, 13 meetings of directors
(including Audit and Remuneration Committees)
were held. Attendances are set out below:
Director
Directors’ Meeting
Audit Committee Meeting
Remuneration
Committee Meeting
Number
Eligible
To Attend
Number
Attended
Number
Eligible
To Attend
Number
Attended
Number
Eligible
To Attend
Number
Attended
Soon Sinn Goh
Bryan Goh
Garry Norman
Ben Hunt
Richard Ling
5
5
5
5
5
5
5
5
5
5
-
-
6
6
6
-
-
6
6
6
-
-
2
2
2
-
-
2
2
2
ANNUAL REPORT 2014 23
Indemnifying Officers or Auditor
During and since the financial year, the Company has
paid premiums to insure all directors and officers
against liabilities for costs and expenses incurred by
them in defending any legal proceedings arising out of
their conduct while acting in the capacity as director or
officer of the Company, other than conduct involving
a wilful breach of duty in relation to the Company. In
accordance with common commercial practice, the
insurance policy prohibits disclosure of the nature
of the liability insured against and the amount of the
premium.
The Company has not otherwise, during or since the
financial year, indemnified or agreed to indemnify an
officer or auditor of the Company or any related body
corporate against a liability incurred by such an officer
or auditor.
Directors’ Benefits
No director has received or become entitled to receive,
during or since the financial year, a benefit arising from
a contract made by the parent entity, or a related body
corporate with a director, a firm of which a director is
a member or a director or an entity in which a director
has a substantial financial interest other than:
i. Sales made by a controlled entity to Asiapools (M)
Sdn Bhd of which Mr Soon Sinn Goh is a director
and shareholder.
ii. Payments made for rental of warehouses and
offices to Mint Holdings Pty Ltd of which Mr Soon
Sinn Goh is a director and shareholder.
This statement excludes a benefit included in the
aggregate amount of emoluments received or due and
receivable by directors and shown in the Company’s
accounts or the fixed salary of a full time employee
of the parent entity, controlled entity or related body
corporate.
Proceedings on Behalf of Company
No person has applied for leave of Court to bring
proceedings on behalf of the Company or intervene
in any proceedings to which the Company is a party
24 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
for the purpose of taking responsibility on behalf of
the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings
during the year.
Non-Audit Services
The Board of Directors, in accordance with advice from
the Audit Committee, is satisfied that the provision of
non-audit services during the year is compatible with
the general standard of independence for auditors
imposed by the Corporations Act 2001. The directors
are satisfied that the services disclosed below did not
compromise the external auditor’s independence for
the following reasons:
• all non-audit services are reviewed and approved
by the Audit Committee prior to commencement
to ensure they do not adversely affect the integrity
and objectivity of the auditor; and
• the nature of the services provided do not
compromise the general principles relating to
auditor independence in accordance with APES
110: Code of Ethics for Professional Accountants
set by the Accounting Professional and Ethical
Standards Board.
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the
year ended 30 June 2014 has been received and is
included in the directors’ report.
ASIC Class Order 98/100 Rounding of Amounts
The Company is an entity to which ASIC Class Order
98/100 applies and, accordingly, amounts in the
financial statement and directors’ report have been
rounded to the nearest thousand dollars.
Remuneration Report
Introduction
This report provides remuneration policy and payment
details applying in the financial year for persons who
were members of Key Management Personnel of the
consolidated Group.
2014 Remuneration Policy
The Remuneration Committee governs the Company’s
Remuneration Policy. The Committee comprises of
Independent Non-Executive Directors.
responsibility, performance, qualifications, experience
and potential. Adjustments are made only if there
is the prospect of fixed remuneration levels falling
behind market levels.
It has the following objectives:
• attract, retain and motivate management of the
appropriate calibre to further the success of the
business;
• align management reward with shareholder value;
• ensure that total remuneration is reasonable and
comparable with market standards;
• ensure that remuneration should realistically reflect
the responsibilities of the executives;
• ensure that incentive schemes reward superior
company performance and be clearly linked to
appropriate performance benchmarks based on
improved company performance; and
• ensure that the remuneration costs are disclosed
in accordance with the requirements of law and
relevant accounting standards.
The remuneration structure for Key Management
Personnel of the Waterco Group comprises:
• Fixed remuneration. This consists of base salary
and the full costs of other benefits; and
• Incentives. The level varies with performance. It
consists of an annual incentive plan.
The Remuneration Committee reviews market data
and the performance of the CEO. The Committee
then recommends the fixed remuneration and annual
incentive payment of the CEO for approval by the
Board.
The CEO recommends the fixed remuneration of
Key Management Personnel to the Remuneration
Committee. Fixed remuneration for Key Management
Personnel is reviewed annually and determined by
reference to appropriate benchmark information of
comparable companies, taking into account their
The remuneration of Non-Executive Directors is fixed
and does not change according to the performance of
the company. They do not participate in any incentive
plans available to managers. Non-Executive Directors
are paid fees based on the nature of their work
and their responsibilities. The Company also pays
superannuation guarantee (SG), in addition to those
fees. The level and structure of fees is based upon the
need for the Company to be able to attract and retain
Non-Executive Directors of an appropriate calibre, the
demands of the role and prevailing market conditions.
The maximum aggregate amount of fees that can be
paid to Non-Executive Directors is subject to approval
by shareholders at the Annual General Meeting.
There has been an increase of 3% in the Non-Executive
Director fees for the 2014/2015 financial year. The
total fees are now at an aggregate of $159,551 plus
superannuation guarantee (SG).
The Remuneration Committee seeks independent
external advice when required.
Performance–based Remuneration policy, and its
relationship with Company performance
There is an annual incentive plan in place for all Key
Management Personnel. This is a payment that varies
with performance measured over a twelve-month
period.
There have been no changes in performance based
remuneration policy compared with the prior reporting
period.
Maximum payments are capped.
In the case of the CEO, the Remuneration Committee
sets the performance requirements; in the case of other
Key Management Personnel, the CEO recommends
performance requirements for consideration by the
Remuneration Committee.
ANNUAL REPORT 2014 25
The annual incentive performance criteria relate to the employee’s responsibilities. If requirements are achieved,
there will be an improvement in shareholder value.
The key performance requirements for an incentive payment are Net Profit After Tax (NPAT).
This provides a clear alignment between the interests of shareholders and the level of reward for eligible
employees.
Performance criteria are tabulated below:
Key Management Personnel
with annual incentives
Summary of Performance
Condition FY 14
Why Chosen
Soon Sinn Goh
– CEO
Budgeted NPAT for the
Waterco Group.
Key Management Personnel
Budgeted NPAT for the
Waterco Group.
Encourage CEO to improve the
performance levels of the Group
as a whole and thereby increase
shareholder wealth.
The performance of other key
management personnel can have a
Group impact, so targets are based
on Group performance.
The satisfaction of the performance conditions of the annual incentive is based on a review of the audited
financial statements of the Group.
If the Group’s performance, as a whole does not reach the relevant target levels, then no annual incentive
payments are made.
None of the Company’s Key Management Personnel achieved their performance targets in FY 2014. Therefore
they will not receive an annual incentive payment for the financial year just ended.
The following table shows the Sales Revenue, Net Profit Before Tax (NPBT), Net Profit After Tax (NPAT), Earnings
Per Share (EPS), dividends and year-end share price in the financial year just ended and the previous four financial
years for the consolidated Group.
Year ended
June 14
June 13
June 12
June 11
June 10
Sales Revenue ($million)
NPBT ($million)
EPS (cents)
Dividends per share (cents)
Year end share price ($)
NPAT ($million)
77.12
1.93
2.6
6.0
1.15
0.97
68.21
3.19
4.9
7.0
1.00
1.72
66.14
2.9
6.1
7.0
0.88
2.09
67.74
4.48
9.8
9.0
1.06
3.18
70.88
5.33
12.3
8.0
1.02
3.71
26 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Employment Details of Key Management Personnel
The following table provides employment details for the financial year for Key Management Personnel. The
table also illustrates the proportion of remuneration that was performance and non-performance based and the
proportion of remuneration received in the form of options.
Proportions of elements of
remuneration related to
performance
Proportions of
elements of
remuneration not
related to
performance
Position held as at
30 June 2014 and
any change during
the year
Contract details
(duration & termination)
Non-
salary
cash-based
incentives
%
Shares/
Units
%
Options/
Rights
%
Fixed
Salary/
Fees
%
Total
%
Key
Management
Personnel
Soon Sinn Goh Chairman & CEO
No fixed term; may be
terminated on 6 months’
notice by either party
Bryan Goh
Group Marketing
Director -
Executive
No fixed term; may be
terminated on 1 month’s
notice by either party
Garry Norman
Director -
Non-Executive
Ben Hunt
Director -
Non-Executive
Richard Ling
Director -
Non-Executive
Sze Tin Lim
Chief Financial
Officer
Bee Hong Leo
Joint Company
Secretary
No formal contract,
but subject to member
confirmation every
3 years after AGM when
first appointed
No formal contract,
but subject to member
confirmation every 3
years after AGM when
first appointed
No fixed term, but
subject to member
confirmation every
3 years after AGM when
first appointed
No fixed term, may be
terminated on 1 months’
notice by either party
No fixed term, may be
terminated on 1 months’
notice by either party
Gerard Doumit
Chief Accountant/
Joint Company
Secretary
No written contract
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Changes in Directors and Key Management Personnel Subsequent to Year-end
There have been no changes in Directors and Key Management Personnel subsequent to year-end.
ANNUAL REPORT 2014 27
Remuneration Details for the Year Ended 30 June 2014
The following table provides remuneration details for the 2014 and 2013 financial years for Key Management
Personnel.
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Equity-settled
share-based
payments
Salary,
fees
and
leave
$
Profit
share
and
bonus
$
Non-
monetary
(3)
$
Pension
and super-
annuation
$
Incentive
plans (2)
$
LSL
$
Share/
Units
$
Option/
Rights
$
Total
$
Key
Management Personnel
Soon Sinn Goh(1)
Bryan Goh
Garry Norman
Ben Hunt
Richard Ling
Sze Tin Lim
Ben Hong Leo
Gerard Doumit
2014 359,465
2013 346,722
2014 186,800
2013 181,485
2014
51,635
2013
49,768
2014
51,635
2013
49,768
2014
51,635
2013
49,768
2014 192,260
2013 195,349
2014 163,963
2013 154,810
2014 153,583
2013 148,033
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,440
9,813
18,470
15,775
4,776
4,479
4,776
4,479
4,776
4,479
-
-
-
-
-
-
-
-
-
-
-
-
13,557
11,630
-
-
-
-
-
-
18,470
1,649
16,022
15,775
1,822
5,405
16,095
1,413
10,038
15,094
1,562
12,901
20,578
14,206
1,413
15,022
13,323
1,562
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
369,905
356,535
218,827
208,890
56,411
54,247
56,411
54,247
56,411
54,247
228,401
4,036 222,387
-
-
-
-
191,509
184,367
189,780
177,940
(1) Soon Sinn Goh’s Base Salary of $359,465 is made up of $112,862 paid by Waterco Ltd, $84,364 paid
by Waterco (Far East) Sdn Bhd (a subsidiary) and $162,239 paid by Waterco International Pte Ltd
(a subsidiary).
(2) These represent the benefits from the Legacy Non-recourse Loan Employee Share Plan.
(3) Non monetary benefits are made up of Company vehicle benefits.
28 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Securities Received that are not Performance Related
No Key Management Personnel are entitled to receive securities which are not performance based as part of
their remuneration package.
Cash incentives, Performance-related Bonus and Share-based Payments
No options or other share based payments were granted in the 2014 financial year.
Maximum cash incentives expressed as a percentage of fixed remuneration and the maximum value that could
have been earned in 2013/2014 if stretch performance targets were achieved are tabulated below:
Position
Maximum possible incentive
as a percentage of fixed pay
Maximum possible
incentive $
Key Management Personnel
CEO, Waterco Limited
Group Marketing Director, Waterco Limited
CFO, Waterco Limited
Joint Company Secretary, Waterco Limited
Chief Accountant/Joint Company Secretary,
Waterco Limited
27%
18%
18%
13%
13%
$100,000
$40,000
$40,000
$25,000
$25,000
The percentage of cash incentives paid and forfeited during the year to key management personnel.
Key Management Personnel
Short term incentive in respect of 2014 financial year
Paid %
Forfeited %
Soon Sinn Goh
Bryan Goh
Sze Tin Lim
Bee Hong Leo
Gerard Doumit
0
0
0
0
0
100
100
100
100
100
This Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution
of the Board of Directors:
Soon Sinn Goh
Chairman
3rd September 2014
ANNUAL REPORT 2014 29
Auditor’s Independence Declaration
30 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Consolidated Financial Report
For the year ended 30 June 2014
32
Consolidated
Statement of
Profit or Loss
and Other
Comprehensive
Income
35
Statement of
Cash Flows
78
Independent
Auditor’s
Report
33
Consolidated
Statement
of Financial
Position
36
Notes to the
Financial
Statements
80
Shareholder
Information
34
Statement of
Changes in
Equity
77
Directors’
Declaration
81
Corporate
Directory
ANNUAL REPORT 2014 31
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For The Year Ended 30 June 2014
Consolidated Group
Revenues
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Employee benefits expense
Depreciation, impairment and amortisation expense
Finance costs
Advertising expense
Discounts allowed
Outward freight expense
Rent expense
Contracted staff expense
Warranty expense
Commission expense
Other expenses
Profit before income tax expense
Income tax expense
Profit for the year
Other comprehensive income
Items that will not be classified subsequently to profit
or loss
Property revaluation increment (net of tax)
Items that maybe reclassified to profit or loss
Share option reserve increment
Exchange translation differences
Other comprehensive income for the year
Total comprehensive income for the year
Profit attributable to :
Members of the parent entity
Non-controlling interest
Total comprehensive income for the year
attributable to:
Members of the parent entity
Non-controlling interest
Total comprehensive income for the year
Earnings per share
From continuing and discontinued operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
From continuing operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Dividends per share (cents per share)
Note
No.
3
4
4
4
4
6
29
29
29
29
28
The accompanying notes form part of these financial statements.
32 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
2014
$000
77,971
(1,309)
(40,771)
(15,153)
(1,310)
(1,529)
(1,797)
(9)
(1,801)
(2,480)
(375)
(457)
(416)
(8,636)
1,928
(954)
974
5,251
-
(283)
4,968
5,942
907
67
974
5,875
67
5,942
2.6
2.6
2.6
2.6
6.0
2013
$000
68,802
(5,685)
(28,660)
(13,994)
(1,263)
(1,437)
(1,506)
(287)
(1,604)
(2,233)
(289)
(546)
(447)
(7,665)
3,186
(1,467)
1,719
750
4
3,242
3,996
5,715
1,673
46
1,719
5,669
46
5,715
4.9
4.9
4.9
4.9
7.0
Consolidated Statement Of Financial Position
As At 30 June 2014
Consolidated Group
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 & equipment
Intangible assets
Deferred tax assets
Total Non-Current Assets
Total Assets
LIABILITIES
Current Liabilities
Trade and other payables
Borrowings
Current tax liabilities
Short term provisions
Total Current Liabilities
Non-Current Liabilities
Borrowings
Deferred tax liabilities
Long-term provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
EQUITY
Issued capital
Reserves
Retained earnings
Parent interest
Non-controlling interest
Total Equity
Note
No.
8
9
10
17
11
13
14
17
15
16
17
18
19
17
20
21
22
23
2014
$000
1,588
11,816
33,827
65
724
48,020
43,987
355
614
44,956
92,976
11,512
4,380
-
1,492
17,384
23,280
1,524
189
24,993
42,377
50,599
37,430
3,246
9,533
50,209
390
50,599
2013
$000
2,456
9,850
31,370
-
859
44,535
40,115
422
676
41,213
85,748
9,675
3,227
363
1,510
14,775
23,723
1,037
165
24,925
39,700
46,048
36,380
(1,722)
11,067
45,725
323
46,048
The accompanying notes form part of these financial statements.
ANNUAL REPORT 2014 33
Statement Of Changes In Equity
For Year Ended 30 June 2014
Ordinary
Shares
Retained
Earnings
Capital
Profits
Reserve
Asset
Revalua-
tion
Reserve
Foreign
Currency
Translation
Reserve
Share
Options
Reserve
Non-
Controlling
Interests
Consolidated Group
Note
No.
$000
$000
$000
$000
$000
$000
$000
Total
$000
Balance at 30/6/2012
Comprehensive income
Profit for the year
Other comprehensive income
for the year
Total comprehensive income
for the year
Transactions with owners, in
their capacity as owners
and other transfers
Issue of shares under
Waterco DRP
Issue of shares for
Poppits Acquisition
Employee share loans
Dividends paid
Total transactions with
owners and other transfers
Balance at 30/6/2013
Comprehensive income
Profit for the year
Other comprehensive income
for the year
Total comprehensive income
for the year
Transactions with owners, in
their capacity as owners
and other transfers
Issue of shares under
Waterco DRP
Employee share loans
Dividends paid
Total transactions with
owners and other transfers
28
28
35,477
11,784
211
6,084
(12,029)
16
277
41,820
-
-
-
667
212
24
-
903
1,673
-
1,673
-
-
-
(2,390)
(2,390)
-
-
-
-
-
-
-
-
-
750
750
-
3,242
3,242
-
-
-
-
-
-
-
-
-
-
-
4
4
-
-
-
-
-
46
-
46
-
-
-
-
-
1,719
3,996
5,715
667
212
24
(2,390)
(1,487)
36,380
11,067
211
6,834
(8,787)
20
323
46,048
-
-
-
907
-
907
1,042
8
-
-
-
(2,441)
1,050
(2,441)
-
-
-
-
-
-
-
-
5,251
5,251
-
(283)
(283)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
67
-
67
-
-
-
-
974
4,968
5,942
1,042
8
(2,441)
(1,391)
Balance at 30/6/2014
37,430
9,533
211
12,085
(9,070)
20
390
50,599
The accompanying notes form part of these financial statements.
34 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Statement Of Cash Flows
For The Year Ended 30 June 2014
Consolidated Group
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers and employees
Interest received
Other Income
Finance costs
Income tax paid
Net cash provided by operating activities (note 33a)
Cash Flows from Investing Activities
Payment for property, plant & equipment
Proceeds from sale of property, plant & equipment
Net cash used in investing activities
Cash Flows from Financing Activities
Proceeds from borrowings
Proceeds from issue of shares
Payment of hire purchase creditors
Payment of lease liabilities
Dividends paid
Employee share plan repayments
Net cash (used in) / provided by financing activities
Net decrease in cash held
Cash at beginning of the year
Effects of exchange rate changes on balance of cash
held in foreign currencies
Cash and cash equivalents at the end of the year (Note 8)
2014
$000
81,845
(79,204)
24
828
(1,529)
(1,238)
726
(1,603)
155
(1,448)
(382)
1,042
-
(238)
(2,441)
8
(2,011)
(2,733)
1,939
726
(68)
2013
$000
71,589
(69,939)
64
531
(1,437)
(431)
377
(3,473)
77
(3,396)
2,330
879
(68)
(126)
(2,390)
24
649
(2,370)
1,832
2,477
1,939
The accompanying notes form part of these financial statements.
ANNUAL REPORT 2014 35
Notes To The Financial Statements
For the year ended 30 June 2014
Note 1: Statement of Significant Accounting
Policies
Indonesia all of which have a December financial
year end.
These consolidated financial statements and notes
represent those of Waterco Limited and controlled
entities, (“Group”).
Waterco Limited
incorporated and domiciled in Australia.
is a
listed public company,
The separate financial statements of the parent entity,
Waterco Limited have not been presented within this
financial report as permitted by the Corporations Act
2001.
The financial statements were authorised for issue on
3 September 2014.
Basis of Preparation
The financial statements are general purpose financial
statements that have been prepared in accordance
with Australian Accounting Standards, Australian
Interpretations, other authoritative
Accounting
pronouncements of
the Australian Accounting
Standards Board (AASB) and the Corporations Act
2001.
Australian Accounting Standards set out accounting
policies that the AASB has concluded would result in
financial statements containing relevant and reliable
information about transactions, events and conditions.
Compliance with Australian Accounting Standards
ensures that the financial statements and notes
also comply with International Financial Reporting
Standards as issued by the IASB. Material accounting
policies adopted in the preparation of these financial
statements are presented below and have been
consistently applied unless otherwise stated.
Except for cash flow information, the financial
statements have been prepared on an accruals
basis and are based on historical costs, modified,
where applicable, by the measurement at fair value
of selected non-current assets, financial assets and
financial liabilities.
a. Principles of Consolidation
The consolidated financial statements incorporate
all of the assets, liabilities and results of the parent
(Waterco Limited) and all of the subsidiaries
(including any structured entities). Subsidiaries are
entities the parent controls. The parent controls
an entity when it is exposed to, or has rights to,
variable returns from its involvement with the
entity and has the ability to affect those returns
through its power over the entity. A list of the
subsidiaries is provided in Note 12. All subsidiaries
have a June financial year end except for Waterco
Guangzhou Ltd, Waterco (C) Ltd, and PT Waterco
36 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
The assets, liabilities and results of all subsidiaries
are fully consolidated into the financial statements
of the Group from the date on which control is
obtained by the Group. The consolidation of a
subsidiary is discontinued from the date that control
ceases.
transactions, balances
and unrealised gains or losses on transactions
between group entities are fully eliminated on
consolidation. Accounting policies of subsidiaries
have been changed and adjustments made where
necessary to ensure uniformity of the accounting
policies adopted by the Group.
Intercompany
interests
Equity interests in a subsidiary not attributable,
directly or indirectly, to the Group are presented
as “non-controlling interests”. The Group initially
recognises non-controlling
that are
present ownership interests in subsidiaries and are
entitled to a proportionate share of the subsidiary’s
net assets on liquidation at either fair value or at
the non-controlling interests’ proportionate share
of the subsidiary’s net assets. Subsequent to initial
recognition, non-controlling interests are attributed
their share of profit or loss and each component
of other comprehensive income. Non-controlling
interests are shown separately within the equity
section of the statement of financial position and
statement of comprehensive income.
Business combinations
Business combinations occur where an acquirer
obtains control over one or more businesses.
A business combination is accounted for by
applying the acquisition method, unless it is a
combination
involving entities or businesses
under common control. The business combination
will be accounted for from the date that control is
attained, whereby the fair value of the identifiable
assets acquired and liabilities (including contingent
liabilities) assumed is recognised (subject to
certain limited exemptions).
When measuring the consideration transferred
in the business combination, any asset or
liability resulting from a contingent consideration
arrangement is also included. Subsequent to initial
recognition, contingent consideration classified
as equity is not remeasured and its subsequent
settlement
for within equity.
Contingent consideration classified as an asset
or liability is remeasured each reporting period to
fair value, recognising any change to fair value in
profit or loss, unless the change in value can be
identified as existing at acquisition date.
is accounted
Notes To The Financial Statements
For the year ended 30 June 2014
Note 1: Statement of Significant Accounting
Policies (continued)
a. Principles of Consolidation (continued)
Business combinations (continued)
All transaction costs incurred in relation to the
the
business combination are expensed
statement of comprehensive income.
to
The acquisition of a business may result in the
recognition of goodwill or a gain from a bargain
purchase.
b. Goodwill
Goodwill is carried at cost less accumulated
impairment losses. Goodwill is calculated as the
excess of the sum of:
(i)
the consideration transferred;
(ii) any non-controlling interest; and
(iii) the acquisition date fair value of any
previously held equity interest;
over the acquisition date fair value of net identifiable
assets acquired.
The acquisition date fair value of the consideration
transferred for a business combination plus
the acquisition date fair value of any previously
held equity interest shall form the cost of the
investment in the separate financial statements.
Fair value uplifts in the value of pre-existing
equity holdings are taken to the statement of
comprehensive income. Where changes in the
value of such equity holdings had previously been
recognised in other comprehensive income, such
amounts are recycled to profit or loss.
The amount of goodwill recognised on acquisition
of each subsidiary in which the Group holds less
than a 100% interest will depend on the method
adopted in measuring the non-controlling interest.
The Group can elect in most circumstances
to measure the non-controlling interest in the
acquiree either at fair value (full goodwill method)
or at the non-controlling interest’s proportionate
share of the subsidiary’s identifiable net assets
(proportionate
such
circumstances, the Group determines which
method to adopt for each acquisition and this is
stated in the respective notes to these financial
statements disclosing the business combination.
interest method).
In
Under the full goodwill method, the fair value of
the non-controlling interest is determined using
valuation techniques which make the maximum
use of market
information where available.
Under this method, goodwill attributable to the
non-controlling interests is recognised in the
consolidated financial statements.
Refer to Note 14 for information on the goodwill
policy adopted by the Group for acquisitions.
Goodwill on acquisitions of subsidiaries is included
in intangible assets. Goodwill on acquisition of
associates is included in investments in associates.
Goodwill is tested for impairment annually and
is allocated to the Group’s cash-generating units
or groups of cash-generating units, representing
the lowest level at which goodwill is monitored
not larger than an operating segment. Gains and
losses on the disposal of an entity include the
carrying amount of goodwill related to the entity
disposed of.
Changes in the ownership interests in a subsidiary
are accounted for as equity transactions and do
not affect the carrying values of goodwill.
c. Fair Value of Assets and Liabilities
The Group measures some of its assets and
liabilities at fair value on either a recurring or non-
recurring basis, depending on the requirements of
the applicable Accounting Standard.
Fair value is the price the Group would receive
to sell an asset or would have to pay to transfer
a liability in an orderly (ie unforced) transaction
between independent, knowledgeable and willing
market participants at the measurement date.
As fair value is a market-based measure, the closest
equivalent observable market pricing information
is used to determine fair value. Adjustments to
market values may be made having regard to the
characteristics of the specific asset or liability.
The fair values of assets and liabilities that are not
traded in an active market are determined using
one or more valuation techniques. These valuation
techniques maximise, to the extent possible, the
use of observable market data.
To the extent possible, market information is
extracted from either the principal market for the
asset or liability (ie the market with the greatest
volume and level of activity for the asset or liability)
or, in the absence of such a market, the most
advantageous market available to the entity at
the end of the reporting period (ie the market that
maximises the receipts from the sale of the asset
or minimises the payments made to transfer the
liability, after taking into account transaction costs
and transport costs).
For non-financial assets, the fair value measurement
also takes into account a market participant’s ability
to use the asset in its highest and best use or to sell
it to another market participant that would use the
asset in its highest and best use.
The fair value of liabilities and the entity’s own
equity instruments (excluding those related to
share-based payment arrangements) may be
valued, where there is no observable market price in
relation to the transfer of such financial instrument,
by reference to observable market information
where such instruments are held as assets. Where
this information is not available, other valuation
techniques are adopted and, where significant,
are detailed in the respective note to the financial
statements.
ANNUAL REPORT 2014 37
Notes To The Financial Statements
For the year ended 30 June 2014
Note 1: Statement of Significant Accounting
Policies (continued)
d. Leases
Leases of fixed assets where substantially all the
risks and benefits incidental to the ownership
of the asset, but not the legal ownership that is
transferred to entities in the consolidated group,
are classified as finance leases.
Finance leases are capitalised by recognising an
asset and a liability at the lower of the amounts
equal to the fair value of the leased property or the
present value of the minimum lease payments,
including any guaranteed residual values. Lease
payments are allocated between the reduction of
the lease liability and the lease interest expense
for the period.
Leased assets are depreciated on a straight-line
basis over the shorter of their estimated useful
lives or the lease term.
Lease payments for operating leases, where
substantially all the risks and benefits remain with
the lessor, are recognised as expenses in the
periods in which they are incurred.
Lease incentives under operating leases are
recognised as a liability and amortised on a straight-
line basis over the lease term.
e. Inventories
Inventories are measured at the lower of cost
and net realisable value. Cost is determined on
a standard cost basis. The cost of manufactured
products includes direct materials, direct labour
and an appropriate portion of variable and fixed
overheads. Overheads are applied on the basis
of normal operating capacity. Net realisable value
is determined as the estimated selling price less
costs to sell.
f. Income Tax
The income tax expense (revenue) for the year
comprises current income tax expense (income)
and deferred tax expense (income).
Current income tax expense charged to profit or
loss is the tax payable on taxable income. Current
tax liabilities (assets) are measured at the amounts
expected to be paid to (recovered from) the
relevant taxation authority.
Deferred income tax expense reflects movements
in deferred tax asset and deferred tax liability
balances during the year as well as unused tax
losses.
Current and deferred income tax expense (income)
is charged or credited outside profit or loss when
the tax relates to items that are recognised outside
profit or loss.
38 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Except for business combinations, no deferred
income tax is recognised from the initial recognition
of an asset or liability, where there is no effect on
accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated
at the tax rates that are expected to apply to the
period when the asset is realised or the liability is
settled and their measurement also reflects the
manner in which management expects to recover
or settle the carrying amount of the related asset
or liability.
Deferred
relating
tax assets
temporary
differences and unused tax losses are recognised
only to the extent that it is probable that future
taxable profit will be available against which the
benefits of the deferred tax asset can be utilised.
to
Where temporary differences exist in relation to
investments in subsidiaries, branches, associates,
and joint ventures, deferred tax assets and
liabilities are not recognised where the timing of
the reversal of the temporary difference can be
controlled and it is not probable that the reversal
will occur in the foreseeable future.
Current tax assets and liabilities are offset where
a legally enforceable right of set-off exists and it
is intended that net settlement or simultaneous
realisation and settlement of the respective asset
and liability will occur. Deferred tax assets and
liabilities are offset where: (a) a legally enforceable
right of set-off exists; and (b) the deferred tax
assets and liabilities relate to income taxes levied
by the same taxation authority on either the same
taxable entity or different taxable entities where
it is intended that net settlement or simultaneous
realisation and settlement of the respective asset
and liability will occur in future periods in which
significant amounts of deferred tax assets or
liabilities are expected to be recovered or settled.
Waterco Limited and its wholly-owned Australian
Subsidiaries have formed a consolidated group for
the purposes of the tax consolidation provisions
of the Income Tax Assessment Act 1997. Each
entity in the group recognises its own current
and deferred tax assets and liabilities. Such taxes
are measured using the “stand-alone taxpayer”
approach to allocation. All of the deferred tax
assets and liabilities of the subsidiary members
have become part of the deferred assets and
liabilities of Waterco Ltd. Each company in the
group contributes to the income tax payable in
proportion to their contribution to the net profit
before tax of the consolidated group. The group
notified the ATO on 20 January 2005 that it had
formed an income tax consolidated group to apply
from 1 July 2003.
Notes To The Financial Statements
For the year ended 30 June 2014
Note 1: Statement of Significant Accounting
Policies (continued)
g. Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the group’s
entities is measured using the currency of the
primary economic environment in which that entity
operates. The consolidated financial statements
are presented in Australian dollars which is
the parent entity’s functional and presentation
currency.
Transaction and balances
Foreign currency transactions are translated into
functional currency using the exchange rates
prevailing at the date of the transaction. Foreign
currency monetary items are translated at the
year-end exchange rate. Non-monetary items
measured at historical cost continue to be carried
at the exchange rate at the date of the transaction.
Non-monetary items measured at fair value are
reported at the exchange rate at the date when
fair values were determined.
Exchange differences arising on the translation of
monetary items are recognised in the statement of
comprehensive income, except where deferred in
equity as a qualifying cash flow or net investment
hedge.
Exchange differences arising on the translation
of non-monetary items are recognised directly in
equity to the extent that the gain or loss is directly
recognised in equity, otherwise the exchange
difference is recognised in the statement of
comprehensive income.
Group companies
The financial results and position of foreign
operations whose functional currency is different
from the group’s presentation currency are
translated as follows:
• assets and liabilities are translated at year-end
exchange rates prevailing at that reporting date;
•
income and expenses are translated at average
exchange rates for the period; and
• retained earnings are translated at the exchange
rates prevailing at the date of the transaction.
Exchange differences arising on translation of
foreign operations are transferred directly to the
Group’s foreign currency translation reserve in
the statement of comprehensive income. These
differences are recognised in the statement of
comprehensive income in the period in which the
operation is disposed.
h. Employee Benefits
Provision for employee benefits, which include
long service leave, and annual leave are computed
to cover expected benefits at balance date.
Employee benefits expected to be settled within
one year together with benefits arising from wages
and salaries, annual leave and sick leave which will
be settled after one year, have been measured at
the amounts expected to be paid when the liability
is settled plus related on-costs. (See note 18)
Employee benefits (long service leave) payable
later than one year have been measured at the
present value of the estimated future cash outflows
to be made for those benefits. In determining the
liability , consideration is given to employee wage
increases and the probability that the employee
may satisfy any vesting requirements. Those
cash flows are discounted using market yields on
national government bonds with terms to maturity
that match the expected timing of cash flows
attributable to employee benefits.
Contributions are made by the consolidated
group to an employee superannuation fund and
are charged as expenses when incurred. The
consolidated group has no legal obligation to cover
any shortfall in the funds obligations to provide
benefits to employees on retirement.
Equity-settled compensation
The group operates equity-settled share-based
payment employee share and option schemes.
The fair value of the equity to which employees
become entitled is measured at grant date and
recognised as an expense over the vesting
period, with a corresponding increase to an equity
account. The fair value of shares is ascertained as
the market bid price. The fair value of options is
ascertained using a Black–Scholes pricing model
which incorporates all market vesting conditions.
The number of shares and options expected to
vest is reviewed and adjusted at each reporting
date such that the amount recognised for
services received as consideration for the equity
instruments granted shall be based on the number
of equity instruments that eventually vest.
ANNUAL REPORT 2014 39
Notes To The Financial Statements
For the year ended 30 June 2014
Note 1: Statement of Significant Accounting
Policies (continued)
i. Deferred Expenditure
Expenditure during the research phase of a project
is recognised as an expense when incurred.
Development costs are capitalised only when
technical feasibility studies identify that the project
will deliver future economic benefits and these
benefits can be measured reliably.
Development costs have a finite life and are
amortised on a systematic basis matched to the
future economic benefits over the useful life of the
project.
j. Acquisition of Assets
The cost method of accounting has been used for
acquisition of all assets (including shares). Cost
is defined as the fair value of the assets given up
at the date of acquisition plus costs incidental to
acquisition. Where goodwill arises it is brought to
account on the basis described in note 1 (b) to the
accounts.
k. Property, Plant and Equipment
Each class of property, plant and equipment is
carried at cost or fair value less, where applicable,
any accumulated depreciation.
Property
Land and buildings are measured on a fair value
basis being the amount for which an asset could
be exchanged between knowledgeable willing
parties in an arms length transaction. It is the policy
of the consolidated group to have an independent
valuation every three years.
The value of the land and building owned by the
consolidated group is based on the following
independent valuations:
Land &
Buildings
Date of
Valuation
Amount
Rydalmere,
NSW
15 June 2012
AUD 9,750,000
Malaysia
30 April 2014
MYR 55,000,000
China
USA
18 June 2012
CNY 42,170,000
17 June 2013
USD 1,995,000
40 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Valuations were made on the basis of open value.
The revaluation surplus net of applicable deferred
capital gains taxes was credited to an asset
revaluation reserve in shareholders’ equity.
Increases in the carrying amount arising on
revaluation of land and buildings are credited to
a revaluation surplus in equity. Decreases that
offset previous increases of the same asset are
charged against fair value reserves directly in
equity; all other decreases are charged to the
statement of comprehensive income. Each year
the difference between depreciation based on the
revalued carrying amount of the asset charged
to the statement of comprehensive income and
depreciation based on the asset’s original cost is
transferred from the revaluation surplus to retained
earnings.
Any accumulated depreciation at the date of
revaluation is eliminated against the gross carrying
amount of the asset and the net amount is restated
to the revalued amount of the asset.
Plant and equipment
Plant and equipment are measured on the
cost basis and therefore carried at cost less
accumulated depreciation and any accumulated
impairment. In the event the carrying amount of
plant and equipment is greater than the estimated
recoverable amount, the carrying amount is written
down immediately to the estimated recoverable
amount and impairment losses are recognised
either in profit or loss or as a revaluation decrease
if the impairment losses relate to a revalued asset.
A formal assessment of recoverable amount is
made when impairment indicators are present
(refer to Note 1(n) for details of impairment).
The carrying amount of plant and equipment is
reviewed annually by directors to ensure it is not
in excess of the recoverable amount from these
assets. The recoverable amount is assessed on
the basis of the expected net cash flows that will
be received from the asset’s employment and
subsequent disposal. The expected net cash flows
have been discounted to their present values in
determining recoverable amounts.
The cost of fixed assets constructed within the
consolidated group includes the cost of materials,
direct labour, borrowing costs and an appropriate
proportion of fixed and variable overheads.
Notes To The Financial Statements
For the year ended 30 June 2014
Note 1: Statement of Significant Accounting
Policies (continued)
k. Property, Plant and Equipment (continued)
Plant and equipment (continued)
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with the
item will flow to the Group and the cost of the
item can be measured reliably. All other repairs
and maintenance are charged to the statement of
comprehensive income during the financial period
in which they are incurred.
Depreciation
The depreciable amount of all fixed assets
including building and capitalised leased assets,
but excluding freehold land, is depreciated over
their useful lives commencing from the time the
asset is ready for use. Leasehold improvements
are depreciated over the shorter of either the
unexpired period of the lease or the estimated
useful lives of the improvements.
The gain or loss on disposal of all fixed assets is
determined as the difference between the carrying
amount of the asset at the time of disposal and the
proceeds of disposal, and is included in operating
profit before income tax of the consolidated group
in the year of disposal.
Depreciation where applicable has been charged in
the accounts so as to write off each asset over the
estimated useful life of the asset concerned. Either
the diminishing value or straight line method, as
considered appropriate, is used. The depreciation
rates used for each class of depreciable assets
are:
Class of Fixed Assets
Depreciation Rate
Buildings
1.50%
-
2.50%
Plant and equipment
6.00%
- 33.33%
Leased plant and
equipment
13.00%
- 20.00%
The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at each
balance date.
An asset’s carrying amount is written down
immediately to its recoverable amount if the
asset’s carrying amount
its
estimated recoverable amount.
is greater than
Gains and losses on disposals are determined
by comparing the proceeds with the carrying
amount. These gains and losses are included in
the statement of comprehensive income. When
revalued assets are sold, amounts included in
the revaluation reserve relating to that asset are
transferred to retained earnings.
l. Revenue and Other Income
Revenue is measured at the fair value of the
consideration received or receivable after taking
into account any trade discounts and volume
rebates allowed. When the inflow of consideration
is deferred, it is treated as the provision of
financing and is discounted at a rate of interest
that is generally accepted in the market for
similar arrangements. The difference between
the amount initially recognised and the amount
ultimately received is interest revenue.
Revenue from the sale of goods is recognised
at the point of delivery as this corresponds to
the transfer of significant risks and rewards of
ownership of the goods and the cessation of all
involvement in those goods.
Interest revenue is recognised using the effective
interest rate method.
Dividend revenue is recognised when the right to
receive a dividend has been established.
Franchise fee income is invoiced and recognised
as revenue on a monthly basis.
All revenue is stated net of the amount of goods
and services tax (GST).
incurred
m. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised
net of the amount of GST, except where the
is not recoverable
amount of GST
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 an item
of the expense. Receivables and payables in the
statement of financial position are shown inclusive
of GST.
Cashflows are presented
in the cash flow
statement on a gross basis, except for the GST
component of investing and financing activities,
which are disclosed as operating cash flows.
ANNUAL REPORT 2014 41
q. Provisions
Provisions are recognised when the group has a
legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of
economic benefits will result and that outflow can
be reliably measured.
r. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand,
deposits held at call with banks, other short-term
highly liquid investments with original maturities
of three months or less, and bank overdrafts.
Bank overdrafts are shown within short-term
borrowings in current liabilities in the statement of
financial position.
s. Borrowing Costs
Borrowing costs directly attributable to the
acquisition, construction or production of assets
that necessarily take a substantial period of time
to prepare for their intended use or sale, are added
to the cost of those assets, until such time as the
assets are substantially ready for their intended
use or sale.
All other borrowing costs are recognised in income
or loss in the period in which they are incurred.
t. Financial Instruments
Recognition and Initial Measurement
instruments,
Financial
incorporating financial
assets and financial liabilities, are recognised
when
the
the entity becomes a party
contractual provisions of the instrument. Trade
date accounting is adopted for financial assets that
are delivered within timeframes established by
marketplace convention.
to
Financial instruments are initially measured at fair
value plus transactions costs where the instrument
is not classified as at fair value through profit or
loss. Transaction costs related to instruments
classified as at fair value through profit or loss are
expensed to profit or loss immediately. Financial
instruments are classified and measured as set
out below.
Notes To The Financial Statements
For the year ended 30 June 2014
Note 1: Statement of Significant Accounting
Policies (continued)
n. Impairment of Assets
At the end of each reporting period, the Group
assesses whether there is any indication that
an asset may be impaired. The assessment will
include the consideration of external and internal
sources of information including dividends received
from subsidiaries, associates or jointly controlled
entities deemed to be out of pre-acquisition
profits. If such an indication exists, an impairment
test is carried out on the asset by comparing the
recoverable amount of the asset, being the higher
of the asset’s fair value less costs to sell and value
in use, to the asset’s carrying amount. Any excess
of the asset’s carrying amount over its recoverable
amount is recognised immediately in profit or
loss, unless the asset is carried at a revalued
amount in accordance with another Standard (eg
in accordance with the revaluation model in AASB
116). Any impairment loss of a revalued asset is
treated as a revaluation decrease in accordance
with that other Standard.
Where it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates
the recoverable amount of the cash-generating
unit to which the asset belongs.
Impairment testing is performed annually for
goodwill and intangible assets with indefinite lives.
o. Trade and Other Receivables
Trade and other receivables include amounts
due from customers for goods sold and services
performed in the ordinary course of business.
Receivables expected to be collected within twelve
months at the end of the reporting period are
classified as current assets. All other receivables
are classified as non-current assets. Trade and
other receivables are initially recognised at fair
value and subsequently measured at amortised
cost using the effective interest method less any
provision for impairment (see 1 n.)
p. Trade and Other Payables
Trade and other payables represent the liability
outstanding at the end of the reporting period for
goods and services received by the Group during
the reporting period which remains unpaid. The
balance is recognised as a current liability with
the amount being normally paid within 30 days of
recognition of the liability.
42 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Notes To The Financial Statements
For the year ended 30 June 2014
Note 1: Statement of Significant Accounting
Policies (continued)
t. Financial Instruments (continued)
Derecognition
Financial assets are derecognised where the
contractual rights to receipt of cash flows expires
or the asset is transferred to another party
whereby the entity no longer has any significant
continuing involvement in the risks and benefits
associated with the asset. Financial liabilities
are derecognised where the related obligations
are either discharged, cancelled or expire. The
difference between the carrying value of the
financial liability extinguished or transferred to
another party and the fair value of consideration
paid, including the transfer of non-cash assets or
liabilities assumed, is recognised in profit or loss.
Classification and Subsequent Measurement
Finance instruments are subsequently measured
at fair value, amortised cost using the effective
interest rate method, or cost.
Amortised cost is the amount at which the
financial asset or financial liability is measured at
initial recognition less principal repayments and
any reduction for impairment, and adjusted for any
cumulative amortisation of the difference between
that initial amount and the maturity amount
calculated using the effective interest method.
Fair value is determined based on current bid prices
for all quoted investments. Valuation techniques
are applied to determine the fair value for all
unlisted securities, including recent arm’s length
transactions, reference to similar instruments and
option pricing models.
The effective interest method is used to allocate
interest income or interest expense over the
relevant period and is equivalent to the rate that
discounts estimated future cash payments or
receipts (including fees, transaction costs and other
premiums or discounts) through the expected life
(or when this cannot be reliably predicted, the
contractual term) of the financial instrument to
the net carrying amount of the financial asset or
financial liability. Revisions to expected future net
cash flows will necessitate an adjustment to the
carrying value with a consequential recognition of
an income or expense item in profit or loss.
The Group does not designate any interests in
subsidiaries, associates or joint venture entities as
being subject to the requirements of Accounting
Standards specifically applicable
to financial
instruments.
(i) Financial assets at fair value through profit
or loss
Financial assets are classified at “fair value
through profit or loss” when they are held
for trading for the purpose of short-term
profit taking, derivatives not held for hedging
purposes, or when they are designated as
such to avoid an accounting mismatch or
to enable performance evaluation where
a Group of financial assets is managed by
key management personnel on a fair value
basis in accordance with a documented risk
management or investment strategy. Such
assets are subsequently measured at fair
value with changes in carrying value being
included in profit or loss.
(ii) Loans and receivables
Loans and receivables are non-derivative
financial assets with fixed or determinable
payments that are not quoted in an active
market and are subsequently measured at
amortised cost.
Loans and receivables are included in current
assets, where they are expected to mature
within 12 months after the end of the reporting
period.
(iii) Financial liabilities
Non-derivative financial liabilities (excluding
financial
subsequently
measured at amortised cost.
guarantees)
are
Impairment
At the end of each reporting period, the Group
assesses whether there is objective evidence that
a financial instrument has been impaired. In the
case of available-for-sale financial instruments, a
prolonged decline in the value of the instrument is
considered to determine whether an impairment
has arisen. Impairment losses are recognised
in profit or loss. Also, any cumulative decline
in fair value previously recognised
in other
comprehensive income is reclassified to profit or
loss at this point.
u. Rounding of Amounts
The parent entity has applied the relief available
to it under ASIC Class Order 98/100. Accordingly,
amounts in the financial statements and directors’
report have been rounded off to the nearest
$1,000, unless specified otherwise.
ANNUAL REPORT 2014 43
Notes To The Financial Statements
For the year ended 30 June 2014
Note 1: Statement of Significant Accounting
Policies (continued)
v. Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgements
incorporated into the financial report based on
historical knowledge and best available current
information. Estimates assume a reasonable
expectation of future events and are based on
current trends and economic data, obtained both
externally and within the group.
Key Estimates
(i)
value-in-use
Investments in / loans to Controlled Entities
The Group assesses impairment at each
reporting date by evaluating conditions and
events specific to the Group that may be
indicative of impairment triggers. Recoverable
amounts of relevant assets are reassessed
using
calculations which
incorporate various key assumptions. The
parent entity holds significant investments in,
and loans to controlled entities. Discounted
cash flow projections for the impairment
assessment of these loans and investments
include average growth rates of 10.6-12.3%
for the next five years on the basis of
management’s expectations and strategic
plans. Growth rates of 2.5% subsequent to
this period have been used. The rates used
incorporate allowance for inflation. Pre-tax
discount rates of 7.09% have been used in
all models. Such impairment models are to
assess the carrying value of investments in
subsidiaries and loans owing by subsidiaries at
the parent company level, and any impairment
losses do not impact on the consolidated
balances or results as these eliminate in full
on consolidation.
(ii) Inventory Classification
Included in inventory are certain inventory
items held to service existing products and
various components used in the manufacturing
process. The nature of these items may require
them to be included in inventory for more
than one year. Management have evaluated
these inventory items and do not consider the
carrying value of these items as material. All
inventory items have therefore been classified
as current.
(iii) Inventory Obsolescence
Management review inventory reports on a
regular basis to determine slow-moving or
obsolescence.
items are disposed of as and when identified.
(v) Impairment - General
The Group assesses
impairment at the
end of each reporting period by evaluating
conditions and events specific to the Group
that may be indicative of impairment triggers.
Recoverable amounts of relevant assets are
reassessed using value-in-use calculations
which incorporate various key assumptions.
(vi) Impairment - Carbon Price
In November 2011, the Federal Parliament
passed the Clean Energy Act 2011, which
implements a carbon pricing mechanism from
1 July 2012. Under the mechanism, entities
that produce over the threshold level of carbon
emissions will be required to purchase permits
to offset their carbon emissions.
The Group is not directly impacted by the
carbon pricing mechanism because it does
not control facilities that produce emissions
greater than the threshold level. However,
the Group will be indirectly impacted by the
mechanism through increases in the prices it
pays for energy and materials purchased from
suppliers that are impacted by the introduction
of the mechanism. The Group also anticipates
in
that
expenditures related to waste disposal under
the carbon pricing mechanism, although any
future increases in such costs are likely to be
less significant than the anticipated increases
in energy and material costs.
it will experience an
increase
Management of the Group has considered
whether the introduction of the carbon pricing
mechanism is an impairment indicator and
has determined that it is not expected to
have a significant impact on the estimated
net cash flows of the Group’s operations or
the recoverability of its assets, principally
because the Group has the capacity to pass
on any increases in production costs through
its contracts with customers.
At the time of writing, management is aware
that the Clean Energy Act may be repealed.
w. Comparative Figures
Where
required by Accounting Standards
to
comparative figures have been adjusted
conform with changes in presentation for the
current financial year.
Appropriate provisions
for
impairment of slow-moving items. Obsolete
carried
are
44 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Notes To The Financial Statements
For the year ended 30 June 2014
Note 1: Statement of Significant Accounting Policies (continued)
x. New and Amended Accounting Policies Adopted by the Group
The below table shows the new and revised accounting standards (including amending standards) and
interpretations that are mandatory for the year ended 30 June 2014.
Standard
Effective Date
Requirements or amendments
Impact
AASB 10
Consolidated
Financial
Statements
1 January 2013
AASB 11 Joint
Arrangements
1 January 2013
Replaces the requirements of AASB 127 and
Interpretation 112 pertaining to the principles to
be applied in the preparation and presentation of
consolidated financial statements.
Replaces the requirements of AASB 131 pertaining to
the principles to be applied for financial reporting by
entities that have in interest in arrangements that are
jointly controlled.
AASB 12
Disclosure of
Interests in Other
Entities
AASB 127
Separate Financial
Statements
1 January 2013
Replaces the disclosure requirements of AASB 127
and AASB 131 pertaining to interests in other entities.
1 January 2013
Prescribes the accounting and disclosure requirements
for investments in subsidiaries, joint ventures and
associates when an entity prepares separate financial
statements.
None
None
None
None
AASB 13 Fair Value
Measurement
1 January 2013
Provides a clear definition of fair value, a framework
for measuring fair value and requires enhanced
disclosures about fair value measurement.
Disclosure only
2011-8
Amendments
to Australian
Accounting
Standards arising
from AASB 13
1 January 2013
Amends AASB 1, 2, 3, 4, 5, 7, 9, 101, 102, 108, 110,
116, 117, 118, 119, 120, 121, 132, 133, 134, 136, 138,
139, 140, 141, 1004, 1023 & 1038 and Interpretations
2, 4, 12, 13, 14, 17, 19, 131 & 132 as a result of
issuance of AASB 13 Fair Value Measurement.
Disclosure only
AASB 119
Employee Benefits
1 January 2013
The amendments to this Standard eliminates the
option for defined benefit plans to use the corridor
approach to defer the recognition of actuarial gains
and losses and introduce enhanced disclosures about
defined benefit plans.
The amendments also incorporate changes to the
accounting for termination benefits.
2011-10
Amendments
to Australian
Accounting
Standards arising
from AASB 119
1 January 2013
Amends AASB 1, 8, 101, 124, 134, 1049, 2011-8 &
Interpretation 14 as a result of the issuance of AASB
119 Employee Benefits.
None
None
ANNUAL REPORT 2014 45
Notes To The Financial Statements
For the year ended 30 June 2014
Note 1: Statement of Significant Accounting Policies (continued)
y. New Accounting Standards for Application in Future Periods
Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the
Group, together with an assessment of the potential impact of such pronouncements on the Group when
adopted in future periods, are discussed below:
Reference
Title
Summary
AASB 9
Financial
Instruments
Replaces the requirements of AASB 139 for the
classification and measurement of financial assets.
This is the result of the first part of Phase 1 of the
IASB’s project to replace IAS 39.
Application date
(financial years
beginning)
Expected
Impact
1 January 2017
Unlikely to be
significant
2012-3
Amendments
to Australian
Accounting
Standards –
Offsetting Financial
Assets and
Financial Liabilities
Interpretation 21
Levies
AASB 2013–3
Amendments to
AASB 136 –
Recoverable
Amount
Disclosures for
Non-Financial
Assets
This Standard adds application guidance to AASB
132 to address inconsistencies identified in
applying some of the offsetting criteria of AASB
132.
1 January 2014
Unlikely to be
significant
Interpretation 21 clarifies
the circumstances
under which a liability to pay a levy imposed by a
government should be recognised, and whether
that liability should be recognised in full at a specific
date or progressively over a period of time. This
Interpretation is not expected to significantly impact
the Group’s financial statements
1 January 2014
Unlikely to be
significant
This Standard amends the disclosure requirements
in AASB 136: Impairment of Assets pertaining to
the use of fair value in impairment assessment and
is not expected to significantly impact the Group’s
financial statements
1 January 2014
Unlikely to be
significant
46 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Notes To The Financial Statements
For the year ended 30 June 2014
Note 2: Parent Information
The following information has been extracted from the books and records of the parent and has been prepared
in accordance with accounting standards.
STATEMENT OF FINANCIAL POSITION
ASSETS
Current Assets
TOTAL ASSETS (i)
LIABILITIES
Current Liabilities
TOTAL LIABILITIES
EQUITY
Issued capital
Capital profits reserve
Asset revaluation reserve
Share options reserve
Retained earnings
TOTAL EQUITY
(i) refer accounting policy Note1 (v) (i) key estimates and judgements
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Total profit after tax
Total comprehensive income
2014
$000
18,969
67,482
5,347
25,288
37,430
180
2,229
20
2,336
42,195
2014
$000
1,243
1,243
2013
$000
18,485
75,526
16,756
33,183
36,380
180
2,229
20
3,534
42,343
2013
$000
3,759
3,763
Guarantees
At 30th June 2014, Waterco Ltd has provided a guarantees of RM11,150,000 and $US1,000,000 (A$4,752,164)
(2013: RM6,150,000 (A$2,093,047)) to AM Bank for loans provided to a subsidiary, Waterco (Far East) Sdn Bhd.
Contingent Liabilities
At 30th June 2014, Waterco Ltd has provided guarantees of $5,428,897 (2013: $5,864,772) to landlords for leases
of premises subleased to its Swimart franchisees.
Contractual Commitments
At 30th June 2014, Waterco Ltd has not entered any contractual commitments for the acquisition of any property,
plant and equipment. (2013: nil).
ANNUAL REPORT 2014 47
Notes To The Financial Statements
For the year ended 30 June 2014
Note 3: Revenue and Other Income
Revenue from Continuing Operations
Sales revenue
• Sale of goods
Other revenue
• Interest received 3(a)
• Rent
• Other
Total Revenue
(a) Interest received or receivable from
• Other persons
Total interest revenue
Consolidated Group
2014
$000
2013
$000
77,118
68,206
24
210
619
64
180
352
77,971
68,802
24
24
64
64
48 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Notes To The Financial Statements
For the year ended 30 June 2014
Note 4: Profit for the Year
Profit for the year has been determined after:
(a) Expenses:
Cost of Sales
Finance costs:
• Borrowings
• Hire purchase expense
• Finance charges on finance leases
Depreciation of non-current assets :
• Buildings
• Plant & equipment
• Capitalised leased assets
Amortisation of non-current assets:
• Land use rights
• Leasehold land
• Goodwill on acquisition
• Expenditure carried forward
Consolidated Group
2014
$000
2013
$000
42,249
34,231
1,503
-
26
1,529
222
868
179
1,269
15
13
6
7
41
1,410
1
26
1,437
377
653
86
1,116
-
54
5
88
147
Total depreciation, amortisation and impairment
1,310
1,263
Bad and doubtful debts
• Trade debtors
Rental expense on Operating leases
• Minimum lease payments
Research & development
Net loss on disposal of non-current assets
• Property, plant and equipment
Note 5: Auditors’ Remuneration
Remuneration of the auditor of the parent entity for:
• Audit or reviewing the financial report
• Non audit fees for agreed upon procedures
Remuneration of other auditors of subsidiaries for:
• Auditing or reviewing the financial report of subsidiaries
4
60
2,480
1,063
85
169
-
107
2,233
1,027
34
144
3
110
ANNUAL REPORT 2014 49
Notes To The Financial Statements
For the year ended 30 June 2014
Note 6: Income Tax Expense
(a) The components of tax expense comprise:
• Current tax
• Deferred tax
• Recoupment of prior year tax losses
(b) The prima facie tax on profit before income tax is reconciled to the
income tax as follows:
Profit before income tax
Prima facie tax payable on profit before income tax at 30% (2013 30%)
Add
Tax effect of:
• Depreciation of buildings
• Entertainment
• Amortisation – Goodwill
• Amortisation – Leasehold Land
• Foreign controlled entities not tax effected
• Expenses not allowable
• Unrealised foreign exchange losses (gains)
• Other
Less
Tax effect of:
• Research and development
• Special building write off
• Effects of lower rates in overseas countries
• Overprovision / (underprovision) for tax in prior years
• Other
Income tax expense attributable to entity
Consolidated Group
2014
$000
800
54
100
954
1,928
578
12
2
2
4
565
-
57
-
67
6
127
57
9
954
2013
$000
1,166
360
(59)
1,467
3,186
956
12
3
2
16
785
2
(214)
17
79
25
109
(101)
-
1,467
46%
The applicable weighted average effective tax rates are as follows:
49%
50 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Notes To The Financial Statements
For the year ended 30 June 2014
Note 7: Key Management Personnel Compensation
Consolidated Group
(a) Key Management Personnel (“KMP”) Compensation
The totals of remuneration paid to KMP of the company and the Group during the year are as follows:
2014
$000
Short-term employee benefits
Post-employment benefits
Other long term benefits
Share-based payments
1,232
92
40
4
1,368
2013
$000
1,191
83
30
9
1,313
Refer to the remuneration report contained in the directors’ report for remuneration paid or payable to each mem-
ber of the Group’s KMP for the year ended 30 June 2014.
(b) Shareholdings
Number of Shares held by key Management Personnel
2014
Key Management Personnel
Balance
1.7.2013
Received as
Remuneration
Net Change
Other
Mr S S Goh
Mr B Goh
Mr G Norman
Mr B Hunt
Mr R Ling
Mr S T Lim
Mrs B H Leo
Mr G Doumit
2013
18,716,514
539,703
146,287
311,191
-
120,317
81,361
86,300
-
-
-
-
-
-
-
-
590,689
134
2,997
18,926
-
-
-
-
Key Management Personnel
Balance
1.7.12
Received as
Remuneration
Net Change
Other
Mr S S Goh
Mr B Goh
Mr G Norman
Mr B Hunt
Mr R Ling
Mr S T Lim
Mrs B H Leo
Mr G Doumit
(c) Options
2014
Key Management Personnel
Mr S T Lim
2013
Key Management Personnel
Mr S T Lim
18,388,422
524,265
143,005
291,741
-
120,317
81,361
86,300
Balance
1.7.13
90,000
Balance
1.7.12
90,000
-
-
-
-
-
-
-
-
328,092
15,438
3,282
19,450
-
-
-
-
Received as
Remuneration
Net Change
Other
-
(90,000)
Received as
Remuneration
Net Change
Other
-
-
Balance
30.6.2014
19,307,203
539,837
149,284
330,117
-
120,317
81,361
86,300
Balance
30.6.13
18,716,514
539,703
146,287
311,191
-
120,317
81,361
86,300
Balance
30.6.14
-
Balance
30.6.13
90,000
ANNUAL REPORT 2014 51
Notes To The Financial Statements
For the year ended 30 June 2014
Note 7: Key Management Personnel Compensation (continued)
(d) Compensation Practices
In constructing, reviewing and determining the remuneration policy for Executive Directors and the senior
executive team, the Board and Remuneration Committee have considered a number of factors including
the importance of attracting, retaining and motivating management of the appropriate calibre to further the
success of the business;
•
linking pay to performance by rewarding effective individual achievement as well as business
performance; and
• the mix within the package which is designed to align personal reward with enhanced shareholder value
over both the short and long-term.
The Executive Directors’ and the senior executive team’s package consists of two general components:
• fixed remuneration component consisting of base salary which executives may “salary sacrifice” and other
benefits; and
• variable or “at risk” component consisting of an annual short term incentive plan for executives and a long
term incentive plan for the CEO.
Remuneration of the company’s Non-Executive Directors is determined by the Board, based on the nature of
their work, responsibilities and market comparisons. The maximum aggregate amount of fees that can be paid
to Non-Executive Directors is subject to approval by shareholders.
CURRENT ASSETS
Note 8: Cash and cash equivalents
Consolidated Group
Cash at bank and in hand
Reconciliation of cash
Cash at the end of the year as shown in the statement of cash flows
is reconciled to the related items in the balance sheet as follows:
Cash and cash equivalents
Bank overdraft (note 16)
Note 9: Trade and other receivables
Trade receivables
Less: provision for impairment of receivables
Other receivables
2014
$000
1,588
1,588
(1,656)
(68)
10,603
(186)
10,417
1,399
11,816
2013
$000
2,456
2,456
(517)
1,939
9,277
(242)
9,035
815
9,850
Provision For Impairment of Receivables
Current trade and term receivables are non-interest bearing loans and generally on 30-day terms. Non-current
trade and term receivables are assessed for recoverability based on the underlying terms of the contract. A
provision for impairment is recognised when there is objective evidence that an individual trade or term receivable
is impaired. These amounts have been included in the other expenses item.
52 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Notes To The Financial Statements
For the year ended 30 June 2014
Note 9: Trade and other receivables (continued)
Movement in the provision for impairment of receivables is as follows:
Consolidated Group
Current trade receivables
Opening
Balance
1.7.2012
$000
339
Opening
Balance
1.7.2013
$000
Charge for
the Year
Amounts
Written Off
$000
(37)
$000
(60)
Charge for
the Year
Amounts
Written Off
$000
$000
Closing
Balance
30.6.2013
$000
242
Closing
Balance
30.6.2014
$000
Consolidated Group
Current trade receivables
242
(52)
(4)
186
There are $2,712,348 (2013: $2,102,399) within trade and other receivables that are not impaired and are past
due. It is expected these balances will be received in full. Impaired assets are provided for in full.
The following table details the Group’s trade and other receivables exposed to credit risk (prior to collateral and
other credit enhancements) with ageing analysis and impairment provided for thereon. Amounts are considered
as ‘past due’ when the debt has not been settled, with the terms and conditions agreed between the Group and
the customer or counter party to the transaction. Receivables that are past due are assessed for impairment by
ascertaining solvency of the debtors and are provided for where there are specific circumstances indicating that
the debt may not be fully repaid to the Group.
The balances of receivables that remain within initial trade terms (as detailed in the table) are considered to be
of high credit quality.
Gross
amount
Past
due and
impaired
Past due but not impaired (days overdue)
< 30
31–60
61–90
> 90
Within initial
trade terms
Consolidated Group
2014
Trade and term receivables
Other receivables
Total
2013
Trade and term receivables
Other receivables
Total
$000
$000
$000
$000
$000
$000
$000
10,603
1,399
12,002
9,277
815
10,092
186
-
186
242
-
242
1,425
-
1,425
1,364
-
1,364
455
-
455
295
-
295
833
-
833
443
-
443
-
-
-
-
-
-
7,704
1,399
9,103
6,933
815
7,748
The Group does not hold any financial assets with terms that have been renegotiated, but which would
otherwise be past due or impaired.
ANNUAL REPORT 2014 53
Notes To The Financial Statements
For the year ended 30 June 2014
Note 10 : Inventories
Raw materials and stores at cost
Work in progress at cost
Finished goods at cost
Goods in transit at cost
Provision for inventory write-down
Note 11: Other current assets
Prepayments
NON CURRENT ASSETS
Note 12: Interests in Subsidiaries
Consolidated Group
2014
$000
10,572
1,144
20,910
2,230
(1,029)
33,827
724
724
2013
$000
9,725
1,038
20,402
1,172
(967)
31,370
859
859
Parent Entity
Waterco Limited
Controlled Entities of Waterco Limited:
Swimart Pty Ltd
Zane Solar Systems Australia Pty Ltd
Swimart Network Pty Ltd*
Waterco USA Inc
Waterco Engineering Sdn Bhd
Waterco (Far East) Sdn Bhd
Watershoppe (M) Sdn Bhd
Baker Hydro (Far East) Sdn Bhd**
Waterco Engineering Services Sdn Bhd
Waterco (NZ) Ltd
Swimart (NZ) Ltd
Waterco (Guangzhou) Ltd
Waterco (C) Ltd
Waterco (Europe) Ltd
Waterco Canada Inc
PT Waterco Indonesia
Waterco International Pte Ltd
Waterco France
Country of
incorporation
Carries on
business in
% owned
2014
2013
Australia
Australia
-
-
Australia
Australia
Australia
USA
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
New Zealand
New Zealand
China
China
United Kingdom
Canada
Indonesia
Singapore
France
Australia
Australia
Australia
USA
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
New Zealand
New Zealand
China
China
United Kingdom
Canada
Indonesia
Singapore
France
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
100
100
* On 15 October 2013, Aquaswim Australia Pty Ltd changed its name to Swimart Network Pty Ltd
** On 15 August 2013, Lacron Filters (Far East) Sdn Bhd changes its name to Baker Hydro (Far East) Sdn Bhd
54 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Notes To The Financial Statements
For the year ended 30 June 2014
Consolidated Group
Note 13: Property, plant & equipment
Freehold land at independent valuation
Land use rights
Less: accumulated amortisation
Freehold buildings at independent valuation
Less: accumulated depreciation
Leasehold land at cost
Less: accumulated amortisation
Plant & equipment at cost
Less: accumulated depreciation
Leased plant & equipment at cost
Less: accumulated depreciation
2014
$000
13,327
3,246
(15)
3,231
21,015
(976)
20,039
268
(268)
-
26,076
(19,189)
6,887
668
(165)
503
2013
$000
8,278
3,330
-
3,330
22,815
(2,354)
20,461
268
(255)
13
25,770
(18,299)
7,471
721
(159)
562
Total written down value
43,987
40,115
Movements in Carrying Amounts
2014
Consolidated Group:
Balance at the
beginning of year
Foreign exchange
translation
Additions
Revaluation
Disposals
Depreciation expense*
Carrying amount at the
end of year
Freehold
Land
Buildings
$000
$000
Land use
rights
$000
Leasehold
Land
Plant &
Equipment
Leased Plant
& Equipment
$000
$000
$000
Total
$000
8,278
20,461
3,330
(5)
-
5,054
-
-
(257)
-
367
-
(532)
(84)
-
-
-
(15)
13
-
-
-
-
(13)
7,471
562
40,115
-
1,413
-
(308)
(1,689)
-
190
-
(100)
(149)
(346)
1,603
5,421
(408)
(2,398)
13,327
20,039
3,231
-
6,887
503
43,987
*
Included in the depreciation expense above is $1,131,000 (2013:$938,150) that has been capitalised into
the cost of inventory and is reflected in raw materials cost.
ANNUAL REPORT 2014 55
Notes To The Financial Statements
For the year ended 30 June 2014
Note 13: Property, plant & equipment (continued)
Movements in Carrying Amounts
2013
Freehold
Land
Buildings
Land use
rights
Leasehold
Land
Plant &
Equipment
Leased
Plant &
Equipment
Hire
Purchase
Plant &
Equipment
$000
$000
$000
$000
$000
$000
$000
Total
$000
Consolidated Group:
Balance at the
beginning of year
Additions
Revaluation
Disposals
Depreciation expense*
Carrying amount at the
end of year
7,747
19,255
2,930
491
40
-
-
1,332
291
-
(417)
71
329
-
-
67
-
-
-
(54)
6,413
2,745
-
(145)
(1,542)
225
423
-
-
(86)
209
-
-
(200)
(9)
36,846
5,062
660
(345)
(2,108)
8,278
20,461
3,330
13
7,471
562
-
40,115
*
Included in the depreciation expense above is $938,150 (2012: $1,109,683) that has been capitalised into the
cost of inventory and is reflected in raw materials cost
If Land & Buildings were stated at historic cost,
amounts would be as follows:
Cost
Less: Accumulated depreciation
Net book value
Consolidated Group
2014
$000
28,106
(4,077)
24,029
2013
$000
27,927
(3,560)
24,367
The Group’s land and buildings were revalued as per the disclosures in note 1(k)). The directors consider the carrying value of
the land and buildings to be a fair reflection of the market value.
56 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Notes To The Financial Statements
For the year ended 30 June 2014
Note 14: Intangible assets
Goodwill (note 1b)
Less: accumulated amortisation
Preliminary expenses
Deferred expenditure carried forward at cost
less: accumulated amortisation
Consolidated Group
2014
$000
280
(268)
12
1
414
72
342
355
Movements in Carrying Amounts
Consolidated Group:
Balance at the beginning of year
Additions
Disposals
Amortisation expense
Carrying amount at the end of year
Preliminary
Expense
$000
Goodwill
$000
Deferred
expenditure
$000
1
-
-
-
1
18
-
-
6
12
403
-
54
7
342
2013
$000
280
(262)
18
1
798
395
403
422
Total
$000
422
-
54
13
355
ANNUAL REPORT 2014 57
Notes To The Financial Statements
For the year ended 30 June 2014
CURRENT LIABILITIES
Note 15: Trade and other payables - unsecured
Trade creditors
Sundry creditors and accrued expenses
Note 16: Borrowings
Bank loans
Bank overdraft
Lease liability
Consolidated Group
2014
$000
2013
$000
8,219
3,293
11,512
2,556
1,656
168
4,380
6,855
2,820
9,675
2,510
517
200
3,227
Bank facilities of the group are secured by a first ranking and registered fixed and floating debenture charge over
the assets of the parent entity, and registered mortgages over freehold land and buildings and guarantees and
indemnities from subsidiaries. That part of the facilities that fluctuate on an annual basis are classified as current.
Note 17: Taxes
a) Liabilities
Current
Income Tax
Non Current Deferred tax liability comprises:
Tax allowances relating to property, plant & equipment
Revaluation adjustments taken direct to equity
Other
Parent entity DTA netted off against DTL
Consolidated DTL
b) Assets
Current
Income Tax
Deferred tax assets comprises:
Provisions
Attributable to tax losses
Tax allowances relating to property, plant & equipment
Other
Parent entity DTA netted off against DTL
Consolidated DTA
Net Deferred Tax Asset
58 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
-
1,466
674
2
2,142
(618)
1,524
65
632
418
(19)
201
1,232
(618)
614
363
1,071
578
2
1,651
(614)
1,037
-
633
473
13
171
1,290
(614)
676
Notes To The Financial Statements
For the year ended 30 June 2014
Note 17: Taxes (continued)
c) Reconciliations
i. Gross Movements
The overall movement in the deferred tax account is as follows:
Opening balance
Credit to statement of comprehensive income
Credit / (Charge) to equity
Closing Balance
ii. Deferred Tax Liability
The movement in deferred tax liability for each
temporary difference during the year is as follows:
Tax allowances relating to property, plant & equipment
Opening balance
Charge to statement of comprehensive income
Closing balance
Property revaluation adjustments taken direct to equity
Opening balance
Net revaluations during current period taken direct equity
Net revaluation during current period charged to
statement of comprehensive income
Closing balance
Other
Opening balance
Credit / (charge) to statement of comprehensive income
Closing balance
iii. Deferred Tax Assets
The movement in deferred tax liability for each
temporary difference during the year is as follows:
Provisions
Opening balance
(Charge) / credit to statement of comprehensive income
Closing balance
Income tax losses
Opening balance
(Charge) to statement of comprehensive income
(Charge) / credit to equity
Closing balance
Capital tax losses
Opening balance
Credit / (charge) to statement of comprehensive income
Closing balance
Tax allowances relating to
Property plant & equipment
Opening balance
(Charge) to statement of comprehensive income
Closing balance
Other
Opening balance
Credit / (charge) to statement of comprehensive income
Closing balance
Consolidated Group
2014
$000
2013
$000
(361)
(443)
(106)
(910)
1,071
395
1,466
578
96
-
674
2
-
2
723
(1)
722
454
(43)
(11)
400
18
-
18
13
(5)
8
81
3
84
54
(446)
31
(361)
559
512
1,071
578
-
-
578
2
-
2
590
133
723
478
(54)
30
454
18
-
18
13
-
13
94
(13)
81
ANNUAL REPORT 2014 59
Notes To The Financial Statements
For the year ended 30 June 2014
Note 17: Taxes (continued)
d) Deferred tax assets not brought to account the benefits
of
which can only be realised if the conditions for
deductibility set out in note 1(f) occur - tax losses
- Operating losses
Note 18: Short-term provisions
Employee Benefits (see note 1h)
Opening Balance
Additional provisions
Amounts used
Closing Balance
NON-CURRENT LIABILITIES
Note 19: Borrowings
Bank loans
Lease liability
Consolidated Group
2014
$000
2013
$000
5,930
5,930
1,510
778
(796)
1,492
5,286
5,286
1,333
866
(689)
1,510
23,008
272
23,280
23,436
287
23,723
Bank loans of the group are secured by a first ranking and registered fixed and floating debenture charge over
the assets of the parent entity, and registered mortgages over freehold land and buildings and guarantees and
indemnities from subsidiaries. Bank loan of $16,888,000, maturity date for the parent entity is 31 July 2015 and
bears variable interest at 5.12% payable monthly. Management expects an agreement will be reached with
the bank for the loan facility to be extended prior to maturity. The remaining bank loan amount of $11,788,000
relates to a subsidiary and bears interest at 4.80%-5.10% repayable by monthly instalments with maturity dates
of December 2021 and June 2031.
Note 20: Long-term provisions
Employee Benefits (see note 1h)
Opening balance
Additional provisions
Amounts used
Closing balance
a) Aggregate employee entitlement liability
b) Number of employees at year end
60 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
165
24
-
189
1,681
532
171
17
(23)
165
1,674
478
Notes To The Financial Statements
For the year ended 30 June 2014
Note 21: Issued capital
34,731,886 ordinary shares fully paid at beginning of the year (2013:
33,895,279)
On 16 December 2013, 337,412 shares were issued at $1.19 each
under the Waterco Ltd DRP
On 16 June 2014, 561,815 shares were issued at $1.14 each under
the Waterco Ltd DRP
On 4 December 2012, 212,000 shares were
Issued at $1.00 to fund the Poppits Business
On 14 December 2012, 357,702 shares were issued at $1.05 each
under the Waterco Ltd DRP
On 14 June 2013,266,905 shares were issued at $1.09 each under
the Waterco Ltd DRP
Employee Share Plans loan repayments [see note 32(1)]
35,631,113 ordinary shares fully paid at the end of the year (2013:
34,731,886)
Consolidated Group
2014
$000
2013
$000
36,380
35,477
402
640
-
-
-
8
-
-
212
376
291
24
37,430
36,380
The company has authorised share capital amounting to 200,000,000 ordinary shares of 50 cents each. Ordinary
shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number
of shares held. At the shareholders meetings, each ordinary share is entitled to one vote when a poll is called,
otherwise each shareholder has one vote on a show of hands.
Capital Management
Management controls the capital of the group in order to maintain a good debt to equity ratio, provide the shareholders
with adequate returns and ensure that the group can fund its operations and continue as a going concern.
The group’s debt and capital includes ordinary share capital and financial liabilities supported by financial assets.
There are no externally imposed capital requirements.
Management effectively manages the group’s capital by assessing the group’s financial risks and adjusting its capital
structure in response to changes in these risks and in the market. These responses include the management of
debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the group since the
prior year. This strategy is to ensure that the group’s gearing ratio remains between 30% and 70%. The gearing
ratios for the year ended 30 June 2014 and 30 June 2013 are as follows:
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
Consolidated Group
2014
$000
27,660
(1,588)
26,072
50,599
76,671
52%
2013
$000
26,950
(2,456)
24,494
46,048
70,542
53%
ANNUAL REPORT 2014 61
Notes To The Financial Statements
For the year ended 30 June 2014
Note 22: Reserves
a) Capital profits
The capital profits reserve relates to non taxable
profits on sale of property.
b) Foreign currency translation
The foreign currency translation reserve records
exchange differences on translation of foreign
controlled subsidiaries
c) Asset revaluation reserve
Balance at the beginning of the year
Net revaluation increment/(decrement) on revaluation
of land and buildings
Balance at the end of the year
The asset revaluation reserve records the revaluation
of non-current assets
d) Share options reserve
Balance at the beginning of the year
Share option increment
Balance at the end of the year
The share options reserve records the
cost of the share option plan
Note 23 : Retained earnings
Opening retained earnings
Net profit attributable to the members of the parent entity
Dividends paid
Closing retained earnings
Note 24: Lease commitments
Finance leases
Lease expenditure contracted and provided for:
not later than one year
later than one year but not later than five years
Total minimum lease commitments
Less: future finance charges
Lease liability
Current portion
Non-current portion
Note
No
28
16
19
Consolidated Group
2014
$000
211
2013
$000
211
(9,070)
(8,787)
6,834
5,251
12,085
20
-
20
6,084
750
6,834
16
4
20
3,246
(1,722)
11,067
907
(2,441)
9,533
11,784
1,673
(2,390)
11,067
182
281
463
23
440
168
272
440
224
306
530
43
487
200
287
487
Finance leases of 3 or 4 years are taken out on motor vehicles, forklifts and IT equipment with an option to
purchase the asset at the end of the lease term at a residual of 30% to 45% depending on the asset.
62 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Notes To The Financial Statements
For the year ended 30 June 2014
Note 24: Lease commitments (continued)
Operating lease payable:
Non-cancellable operating leases contracted but not
capitalised in the financial statements
not later than one year
later than one year but not later than five years
Note 25: Contingent Liabilities
Estimate of the maximum amount of contingent
liabilities that may become payable
Guarantee provided to a bank on behalf of a subsidiary
Guarantees of leases of premises subleased to
franchisees
Note 26: Related Parties
(A) Transactions with director related parties
Consolidated Group
2014
$000
2,052
3,103
5,155
3,195
5,514
8,709
2013
$000
1,722
3,540
5,262
2,093
8,996
11,089
(i) Sales made to Asiapools (M) Sdn Bhd.
174
160
Mr S S Goh, a shareholder has significant influence over
Asiapools (M) Sdn Bhd.
(ii) Payments made to Mint Holdings Pty Ltd
for rental of warehouses and offices.
Mr S S Goh is a director and shareholder of
Mint Holdings Pty Ltd.
688
662
ANNUAL REPORT 2014 63
Segment assets
Where an asset is used across multiple segments,
the asset is allocated to the segment that receives
the majority of the economic value from the asset. In
the majority of instances, segment assets are clearly
identifiable on the basis of their nature and physical
location.
Segment liabilities
Liabilities are allocated to segments where is a direct
nexus between the incurrence of the liability and the
operations of the segment.
Unallocated items
The following items of revenue, expenses, assets
and liabilities are not allocated to operating segments
as they are not considered part of the core operations
of any segment:
– other revenues
Notes To The Financial Statements
For the year ended 30 June 2014
Note 27: Operating Segments
Segment Information
Identification of reportable segments
The group has identified its operating segments based
on the internal reports that are reviewed and used
by the board of directors (chief operating decision
makers) in assessing performance and determining
the allocation of resources.
The group is managed primarily on the basis of location
since the group’s operations have similar risk profiles
and performance criteria. Operating segments are
therefore determined on the same basis.
The group operates predominantly in one industry
being the manufacture and wholesale of swimming
pool chemicals, accessories and equipment,
manufacture and sale of solar pool heating systems
and as a franchisor of swimming pool outlets retailing
swimming pool accessories and equipment.
Basis of accounting for the purposes of reporting
by operating segments
Accounting Policies Adopted
Unless stated otherwise, all amounts reported to
the Board of Directors as the chief decision maker
with respect to operating segments are determined
in accordance with accounting policies that are
consistent to those adopted in the annual financial
statements of the Group.
Inter-segment transactions
An internally determined transfer price is set for all
inter-entity sales. The price is reviewed annually
(unless special circumstances arise) and is based
on what would be realised in the event the sale was
made to an external party at arm’s length under the
same terms and conditions. All such transactions are
eliminated on consolidation for the Group’s financial
statements.
Corporate charges are allocated
reporting
segments based on the services provided to those
reporting segments.
to
Inter-segment loans payable and receivable are
initially recognised at the consideration received net
of transaction costs. If inter-segment loans receivable
and payable are not on commercial terms, these are
not adjusted to fair valued based on market interest
rates.
64 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Notes To The Financial Statements
For the year ended 30 June 2014
Note 27: Operating Segments (continued)
Geographical Segments
AUSTRALIA &
NEW ZEALAND
$000
REVENUE
Sales to customers outside the
consolidated group
Intersegment sales
Total segment revenue
51,528
1,229
52,757
Reconciliation of segment
revenue to group revenue
Other revenue
Intersegment elimination
Total group revenue
Segment net profit / (loss)
from continuing operations
before tax
Reconciliation of segment result
to group net profit/loss
before tax
Unallocated items
- other
Net profit before tax
from continuing operations
Segment assets
Segment asset increases for the
period
Reconciliation of segment assets
to group assets
Intersegment eliminations
Total group assets
2014
ASIA
$000
9,708
21,954
31,662
NORTH
AMERICA &
EUROPE
CONSOLIDATED
GROUP
$000
$000
15,882
8,049
23,931
77,118
31,232
108,350
853
(31,232)
77,971
2,942
1,747
(1,908)
2,781
72,106
43,491
(11,314)
104,283
(853)
1,928
Capital expenditure
441
662
Segment liabilities
Reconciliation of segment
liabilities to group liabilities
Intersegment eliminations
Total group liabilities
27,645
22,305
155
2,035
(11,307)
92,976
1,258
51,985
(9,608)
42,377
ANNUAL REPORT 2014 65
Notes To The Financial Statements
For the year ended 30 June 2014
Note 27: Operating Segments (continued)
Geographical Segments
AUSTRALIA &
NEW ZEALAND
$000
50,496
910
51,406
2013
ASIA
$000
6,915
20,215
27,130
NORTH
AMERICA &
EUROPE
CONSOLIDATED
GROUP
$000
$000
10,795
1,714
12,509
68,206
22,839
91,045
595
(22,838)
68,802
4,381
1,914
(2,514)
3,781
79,900
49,438
(5,254)
124,084
(595)
3,186
REVENUE
Sales to customers outside the
consolidated group
Intersegment sales
Total segment revenue
Reconciliation of segment
revenue to group revenue
Other revenue
Intersegment elimination
Total group revenue
Segment net profit / (loss)
from continuing operations
before tax
Reconciliation of segment result
to group net profit/(loss)
before tax
Unallocated items
- other
Net profit / (loss) before tax
from continuing operations
Segment assets
Segment asset increases for the
period
Reconciliation of segment assets
to group assets
Intersegment eliminations
Total group assets
516
6,272
(38,336)
85,748
5,059
75,541
(35,841)
39,700
Capital expenditure
1,215
3,328
Segment liabilities
Reconciliation of segment
liabilities to group liabilities
Intersegment eliminations
Total group liabilities
35,697
33,572
66 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Notes To The Financial Statements
For the year ended 30 June 2014
Note 28: Dividends Paid or Proposed
Final fully franked ordinary dividend of 4c per share (2013: 4c)
franked at the tax rate of 30% paid
Interim fully franked ordinary dividend of 3c per share (2013:3c)
franked at the tax rate of 30% paid
Proposed final fully franked ordinary dividend of 3c per share (2013
4c) franked at the tax rate of 30%
Balance of franking account at year end adjusted for franking credits
arising from payment of income tax payable, payment of proposed
dividends and franking credits not available for distribution.
Note 29: Earnings Per Share
Reconciliation of Earnings to Net Profit
Net Profit
Net profit attributable to outside equity interest
Earnings used in the calculation of basic EPS
Earnings used in the calculation of diluted EPS
a) Weighted average number of ordinary shares outstanding during
the year used in calculation of basic EPS
b) Weighted average number of ordinary shares outstanding during
the year used in calculation of diluted EPS
Note 30: Events Subsequent to Reporting Date
There were no reportable events subsequent to balance date.
Consolidated Group
2014
$000
1,389
1,052
2,441
1,069
2013
$000
1,356
1,034
2,390
1,389
1,878
2,939
974
67
907
907
34,937
34,937
1,719
47
1,673
1,673
34,224
34,224
ANNUAL REPORT 2014 67
Notes To The Financial Statements
For the year ended 30 June 2014
Note 31: Financial Risk Management
The Audit Committee (AC) has been delegated
responsibility by the Board of Directors for, amongst
other issues, monitoring and managing financial risk
exposures of the Group. The AC monitors the Group’s
financial risk management policies and exposures and
approves financial transactions within the scope of its
authority. It also reviews the effectiveness of internal
controls relating to commodity price risk, counter
party credit risk, currency risk, financing risk and
interest rate risk. The AC meets on a bi-monthly basis
and minutes of the AC are reviewed by the Board.
The AC’s overall risk management strategy seeks to
assist the consolidated group in meeting its financial
targets, while minimising potential adverse effects
on financial performance. Its functions include the
review of the use of hedging derivative instruments,
credit risk policies and future cash flow requirements.
The main risks the group is exposed to through its
financial instruments are interest rate risk, credit risk,
foreign currency risk, liquidity risk and price risk.
(a) Interest Rate Risk
The consolidated group’s exposure to interest rate
risk, which is the risk that a financial instrument’s
value will fluctuate as a result of changes in market
interest rates and the effective weighted average
interest rates on classes of financial assets and
liabilities.
(b) Credit Risk
The maximum exposure to credit risk, excluding
the value of any collateral or other security, at
balance date to recognised financial assets is the
carrying amount, net of any provisions for doubtful
debts, as disclosed in the statement of financial
position and notes to the financial statements.
Credit risk is managed through maintenance of
procedures in relation to approval, granting and
renewal of credit limits, regular monitoring of
exposures against such limits and the monitoring
of the financial stability of significant customers.
Such monitoring is used in assessing receivables
for impairment. Depending on the subsidiary,
credit terms are generally 30 days from invoice
month.
Credit risk for derivative financial instruments
arises from the potential failure by counter parties
to the contract to meet their obligations. The credit
risk exposure to forward exchange contracts and
interest rate swaps is the net fair value of these
contracts as disclosed in (c).
The Group has no single concentration of credit
risk with any single debtor or group of debtors.
However, on a geographical basis, the group
has significant credit exposure to Australia/
New Zealand and Canada given the substantial
operations in those regions.
Trade and other receivables that are neither past
due or impaired are considered to be of high
credit quality. Aggregates of such amounts are as
detailed in Note 9.
(c) Foreign Currency Risk
The parent entity is exposed to fluctuations
in foreign currencies arising from the sale and
purchase of goods in currencies other than the
group’s measurement currency.
The parent entity has forward contracts in place
at balance date relating to highly probable forecast
transactions. There are no forward contracts
taken out by any other member in the group
These contracts commit the group to buy and sell
specified amounts of foreign currencies in the
future at specified exchange rates.
Contracts are taken out with terms that reflect the
underlying settlement terms of the commitment
to the maximum extent possible so that hedge
ineffectiveness is minimised.
The following table summarises the notional
amounts of
(and parent entity)
commitments in relation to forward exchange
contracts.
the Group
Notional Amounts
2014
$000
2013
$000
Average Exchange Rate
2013
2014
$000
$000
Consolidated Group (and Parent Entity)
Buy USD/Sell AUD
- Less than 6 months
1,000
3,000
0.92215
1.0392
68 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Notes To The Financial Statements
For the year ended 30 June 2014
Note 31: Financial Risk Management (continued)
d) Liquidity Risk
The group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised
borrowing facilities are maintained.
Financial liability and financial asset maturity analysis
Consolidated Group
Within 1 Year
1 to 5 Years
Over 5 years
Total
2014
$000
2013
$000
2014
$000
2013
$000
2014
$000
Financial Assets
Cash
Receivables
Total anticipated
inflows
Financial Liabilities
Bank overdraft
Bank loans
Trade and other
payable
Lease Liabilities
Total contractual
outflows
Less bank overdrafts
Total expected
outflows
Net inflow/(outflow)
on financial
instruments
2014
$000
1,588
11,816
2013
$000
2,456
9,850
13,404
12,306
-
-
-
-
-
-
-
2,556
11,512
168
-
2,510
9,675
200
1,656
23,008
517
23,436
-
272
-
287
14,236
12,385
24,936
24,240
-
-
(1,656)
(517)
14,236
12,385
23,280
23,723
(832)
(79)
(23,280)
(23,723)
2013
$000
2,456
9,850
1,588
11,816
13,404
12,306
1,656
25,564
11,512
440
517
25,946
9,675
487
39,172
(1,656)
36,625
(517)
37,516
36,108
(24,112)
(23,802)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
ANNUAL REPORT 2014 69
Notes To The Financial Statements
For the year ended 30 June 2014
Note 31: Financial Risk Management (continued)
e) Price Risk
Price risk relates to the risk that the fair value or future cashflows of a financial instrument will fluctuate
because of changes in market prices largely due to demand and supply factors for commodities.
Net Fair Values
The net fair value of bank overdrafts, bank loans and lease liabilities is determined by discounting the cash flows,
at market interest rates of similar borrowings, to their present value. Their net fair value is adjusted for any costs
involved in settling the instrument.
Financial Liabilities
Bank Overdraft
Bank Loans
Lease Liabilities
2014
2013
Carrying
Amount
$000
Net Fair
Value
$000
Carrying
Amount
$000
Net Fair
Value
$000
1,656
25,564
440
27,660
1,672
25,820
463
27,955
517
25,946
487
26,950
522
26,206
512
27,240
For financial assets and other liabilities, the net fair value approximates their carrying value. Financial assets
where the carrying amount exceeds the net fair values have not been written down as the consolidated group
intends to hold these assets to maturity.
Sensitivity Analysis
The following table illustrates sensitivities to the Group’s exposures to changes in interest rates and exchange
rates. The table indicates the impact on how profit and equity values reported at balance date would have been
affected by changes in the relevant risk variable that management considers to be reasonably possible. The
sensitivity assumes the movement in a particular variable is independent to other variables.
Consolidated Group
Equity
$000
+/-520
+/-751
+/-510
+/-823
Profit
$000
+/-520
+/-751
+/-510
+/-823
Year ended 30 June 2014
+/- 2% in interest rates
+/- 5% in $A/$US
Year ended 30 June 2013
+/- 2% in interest rates
+/- 5% in $A/$US
70 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
2) Waterco Limited Directors and Senior
Executives Option Plan
This plan was approved by an Extraordinary
General Meeting held on 18 December 1998 and
amended by the Board on 7 May 2008.
Its objective is to encourage Directors and Senior
Executives of the Waterco Group to acquire
ordinary shares in the company in order to promote
the long term success of the company.
During a previous period, 90,000 options were
granted at no cost to Mr Sze Tin Lim (Chief Financial
Officer). These options are split into three equal
tranches of 30,000 each and may be exercised at
a price of $1.35 each over the following periods:
Tranche
Exercise Period
Tranche 1
the period beginning on 1 July
2010 and ending on 1 July 2013.
Tranche 2
the period beginning on 1 July
2011 and ending on 1 July 2013.
Tranche 3
the period beginning on 1 July
2012 and ending on 1 July 2013.
During the exercise period some or all of the
options can be exercised but only in multiples of
100.
Nil options have been exercised during the period.
All options have expired on 1 July 2013.
Notes To The Financial Statements
For the year ended 30 June 2014
Note 32: Employee Benefits
Employee Share Plans
The following is a summary of the existing employee
share plans.
1) Waterco Employee Share Plan
The plan was approved by shareholders at the
1996 Annual General Meeting.
Its objective is to encourage full-time and part-
time employees of the Waterco Group to acquire
ordinary shares in the company in order to promote
the long term success of the company as a goal
shared by the employees.
All full-time and part-time employees are invited
by the Board to subscribe for ordinary shares in
the company at the market price at the time of
invitation (being the weighted average price over
the 3 preceding trading days on ASX subject to
adjustment by the board if it believes the price
is distorted) but not less than twenty cents The
company may extend an interest free loan to
acquire the shares which is repayable within ten
years or immediately if the employee leaves the
company. The security given for the loan is the
pledge of the shares and a charge over any benefits
generated by those shares including dividends and
bonus shares etc. The proceeds of these benefits
are used to reduce the borrower’s indebtedness to
the company.
The loans are limited recourse loans meaning that
if the shares are sold and the proceeds are not
sufficient to meet the loan balance outstanding,
the company cannot recover the difference from
the borrower. During the year, $nil (2013: $nil) in
loan balances were written off.
Any ordinary shares issued during the year under
this plan are shown in the statement of financial
position as issued capital. Any residual loan
amounts written off are expensed during the year.
During the year no shares were issued under this
plan while debts of $7,848 (2013: $24,387) were
repaid. At reporting date, the balance of the debt
receivable is $52,685 (2013:$60,533).
The closing share market price of an ordinary
share of Waterco Limited on the Australian Stock
Exchange at 30 June 2014 was $1.15 (28 June
2013 $1.00).
ANNUAL REPORT 2014 71
Notes To The Financial Statements
For the year ended 30 June 2014
Note 33: Cash Flow Information
a) Reconciliation of cash flows from operations with profit
after income tax.
Profit after income tax
Non-cash flows in profit
Depreciation
Impairment / Amortisation
(Profit) / Loss on sale of non current assets
Changes in Assets and Liabilities:-
Trade debtors
Provision for doubtful debts
Other debtors
Inventories
Prepayments
Deferred tax assets
Expenditure carried forward
Trade creditors
Other creditors
Provision for employee benefits
Provision for tax
Provision for deferred tax
Share options reserve
Cashflow – Non Operating Activities :
Cash Flows provided by operations
b) Non Cash Financial and investment activities
1) Property, Plant and Equipment
Consolidated Group
2014
$000
2013
$000
974
2,399
19
2
(1,326)
(56)
(584)
(2,456)
135
58
61
1,363
472
6
(427)
86
-
726
1,719
2,035
59
(27)
(1,502)
(97)
201
(6,078)
(277)
(97)
(25)
2,786
372
171
621
512
4
377
During the year, the consolidated group acquired plant and equipment with an aggregate fair value of $190,752
(2013:$418,686) by means of finance leases. These acquisitions are not reflected in the statement of cash flows.
c) Financing Facilities
The following lines of credit were available at balance date:
Fully Drawn Advance Facilities
Master lease facilities
Amount utilised
Amount unutilised
32,863
826
33,689
(27,665)
6,024
33,488
865
34,353
(28,964)
5,389
The Fully Drawn Advance Facilities of the parent entity are due to expire on 31 July 2015. The parent entity expects
to renew these facilities on expiry date.
The Fully Drawn Advance Facilities of a subsidiary is due to expire on 31 December 2021 and 30 June 2031.
The subsidiary expects to renew these facilities on expiry date.
72 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Notes To The Financial Statements
For the year ended 30 June 2014
Note 34: Fair Value Measurements
The Group measures and recognises the following
assets and liabilities at fair value on a recurring
basis after initial recognition:
– derivative financial instruments;
– freehold land and buildings;
The Group subsequently measures some items of
freehold land and buildings at fair value on a non
recurring basis.
The Group does not subsequently measure any
liabilities at fair value on a non-recurring basis.
a) Fair Value Hierarchy
AASB 13: Fair Value Measurement requires the
disclosure of fair value information by level of the
fair value hierarchy, which categorises fair value
measurements into one of three possible levels
based on the lowest level that an input that is
significant to the measurement can be categorised
into as follows:
Level 1
Measurements
based
prices
(unadjusted) in active markets for identical assets
or liabilities that the entity can access at the
measurement date.
quoted
on
Level 2
Measurements based on inputs other than quoted
prices included in Level 1 that are observable for
the asset or liability, either directly or indirectly.
Level 3
Measurements based on unobservable inputs for
the asset or liability.
The fair values of assets and liabilities that are
not traded in an active market are determined
using one or more valuation techniques. These
valuation techniques maximise, to the extent
possible, the use of observable market data. If all
significant inputs required to measure fair value
are observable, the asset or liability is included in
Level 2. If one or more significant inputs are not
based on observable market data, the asset or
liability is included in Level 3.
Valuation techniques
The Group selects a valuation technique that is
appropriate in the circumstances and for which
sufficient data is available to measure fair value.
The availability of sufficient and relevant data
primarily depends on the specific characteristics
of the asset or liability being measured. The
evaluation techniques selected by the Group
are consistent with one or more of the following
valuation approaches:
– Market approach: valuation techniques that use
prices and other relevant information generated
by market transactions for identical or similar
assets or liabilities.
–
Income approach: valuation techniques that
convert estimated future cash flows or income
and expenses into a single discounted present
value.
– Cost approach: valuation techniques that reflect
the current replacement cost of an asset at its
current service capacity.
Each valuation technique requires inputs that
reflect the assumptions that buyers and sellers
would use when pricing the asset or liability,
including assumptions about
risks. When
selecting a valuation technique, the Group gives
priority to those techniques that maximise the
use of observable inputs and minimise the use of
unobservable inputs. Inputs that are developed
using market data (such as publicly available
information on actual transactions) and reflect
the assumptions that buyers and sellers would
generally use when pricing the asset or liability
are considered observable, whereas inputs for
which market data is not available and therefore
are developed using
information
available about such assumptions are considered
unobservable.
the best
ANNUAL REPORT 2014 73
Notes To The Financial Statements
For the year ended 30 June 2014
Note 34: Fair Value Measurements (continued)
The following tables provide the values of the Group’s assets and liabilities measured and recognised on a recurring
basis after initial recognition and their categorisation withing the fair value hierarchy.
Note
Level 1
$000
30 June 2014
Level 2
$000
Level 3
$000
Total
$000
Recurring fair value measurements
Financial assets
Derivatives held for hedging
forward exchange contracts
Total Financial assets recognised at
fair value on a recurring basis
Non-financial assets
Freehold land
Freehold buildings
Total non-financial assets recognised
at fair value on a recurring basis
Total non-financial assets recognised
at fair value
31
13
13
-
-
-
-
--
--
1,000
1,000
13,327
20,039
33,366
33,366
-
-
-
-
-
-
1,000
1,000
13,327
20,039
33,366
33,366
Note
Level 1
$000
30 June 2013
Level 2
$000
Level 3
$000
Total
$000
Recurring fair value measurements
Financial assets
Derivatives held for hedging
forward exchange contracts
Financial assets at fair value
through profit or loss
Total Financial assets recognised at
fair value
Non-financial assets
Freehold land
Freehold buildings
Total non-financial assets recognised
at fair value
31
13
13
-
-
-
-
--
3,000
3,000
8,278
20,461
28,739
-
-
-
-
-
3,000
3,000
8,278
20,461
28,739
74 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Notes To The Financial Statements
For the year ended 30 June 2014
Note 34: Fair Value Measurements (continued)
b) Valuation Techniques and Inputs Used to Measure Level 2 Fair Values
Description
Fair Value at 30 June
2014
Valuation Technique(s)
Inputs Used
Financial assets
Forward exchange contracts
Non-financial assets
Freehold land(i)
$000
1,000
1,000
13,327
Freehold buildings(i)
20,039
33,366
Income approach using
discounted cash flow
methodology
Current forward exchange
rates applicable to
remaining life of contract
Price per hectare; market
borrowing rate
Price per square metre;
market borrowing rate
Market approach using
recent observable market
data for similar properties;
income approach using
discounted cash flow
methodology
Market approach using
recent observable market
data for similar properties;
income approach using
discounted cash flow
methodology
(i) The fair value of freehold land and buildings is determined at least every three years based on valuations by an
independent valuer. At the end of each intervening period, the directors review the independent valuation and,
when appropriate, update the fair value measurement to reflect current market conditions using a range of valuation
techniques, including recent observable market data and discounted cash flow methodologies
There were no changes during the period in the valuation techniques used by the Group to determine Level 2 fair
values.
c) Disclosed Fair Value Measurements
The following assets and liabilities are not measured at fair value in the statement of financial position, but their fair
values are disclosed in the notes:
- lease liability
- bank debt
ANNUAL REPORT 2014 75
Notes To The Financial Statements
For the year ended 30 June 2014
Note 34: Fair Value Measurements (continued)
The following table provides the level of the fair value hierarchy within which the disclosed fair value measurements are
categorised in their entirety and a description of the valuation technique(s) and inputs used:
Description
Assets
Liabilities
Lease liability
Bank debt
Note
Fair Value
Hierarchy Level
Valuation Technique(s)
Inputs Used
31
31
2
2
Income approach using
discounted cash flow
methodology
Current commercial
borrowing rates for similar
instruments
Income approach using
discounted cash flow
methodology
Current commercial
borrowing rates for similar
instruments
There has been no change in the valuation technique(s) used to calculate the fair values disclosed in the notes to the financial
statements.
Note 35: Company Details
The registered office of the company is:
Waterco Limited
36 South Street
Rydalmere NSW 2116
76 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Directors’ Declaration
In accordance with a resolution of the directors
of Waterco Limited, the directors of the company
declare that:
1. the financial statements and notes, as set out
on pages 32 to 76 are in accordance with the
Corporations Act 2001 and:
a. comply with Australian Accounting Standards,
which, as stated in accounting policy Note
1 to the financial statements, constitutes
compliance with
Financial
Reporting Standards (IFRS); and
International
b. give a true and fair view of the financial position
as at 30 June 2014 and of the performance for
the year ended on that date of the consolidated
group;
2 in the directors’ opinion there are reasonable
grounds to believe that the company will be able
to pay its debts as and when they become due and
payable; and
3. the directors have been given the declarations
required by s 295A of the Corporations Act
2001 from the Chief Executive Officer and Chief
Financial Officer.
Soon Sinn Goh
Chief Executive Officer
Dated at Sydney this 3 September 2014
ANNUAL REPORT 2014 77
Independent Auditor’s Report
To the members of Waterco Ltd
78 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Independent Auditor’s Report
To the members of Waterco Ltd
ANNUAL REPORT 2014 79
Shareholder Information
As at 21 August 2014
(a) Distribution of Shareholders
1
1,001
5,001
10,001
100,001
Range
-
-
-
-
-
1,000
5,000
10,000
100,000
and over
Total Holders
277
287
94
126
32
816
Options
-
-
-
-
-
(b) Marketable Parcel
49 shareholders hold less than a marketable parcel.
(c) Substantial Shareholders
The following information is extracted from the company’s register as at 21 August 2014:
Name
S S Goh Group
Redbrook Nominees Pty Ltd
Acres Holdings Pty Ltd
(d) Voting Rights
Number of shares
19,307,203
2,375,930
2,114,136
For all shares, voting rights are one vote per member on a show of hands and one vote
per share on a poll.
(e) Twenty Largest Shareholders
The twenty largest shareholders hold 83.11% of the total shares issued.
Name
Leitch Pty Ltd (Leitch Super Fund A/C)
Redbrook Nominees Pty Ltd
Goh Lai Huat & Sons Sdn Bhd
Acres Holdings Pty Ltd
1 Mr Soon Sinn Goh
2
3
4
5 Mr Soon Leong Goh
6 Mr Swee Kheong Goon
7 Mrs Christine Goh
8
9 Mrs Janet Swee Nyet Goh
10 Mr Chu Shien Chang
11
12 Mr Benjamin Francis Hunt (B F Hunt Super Fund A/C)
Deuteronomy Pty Ltd (Dennis Hambleton SF A/C)
13
GSS Holdings Sdn Bhd
14
Brazil Enterprises Pty Ltd
15
16
S G Corporation Pty Limited
17 Mr Tiow Lip Lee
18 Ms May-Yin Goh
19 Mr Bryan Weng Keong Goh
20 Mr Shane Goh
TOTAL
GWK Corporation Pty Ltd
Number of shares
16,507,203
2,568,772
2,500,000
2,422,760
577,022
562,717
500,000
483,001
447,112
340,281
334,103
330,117
301,456
300,000
295,173
281,739
245,386
225,267
200,734
188,607
29,611,450
%
46.33
7.21
7.02
6.80
1.62
1.58
1.40
1.36
1.25
0.96
0.94
0.93
0.85
0.84
0.83
0.79
0.69
0.63
0.56
0.53
83.11
(f) Stock Exchange Listing
The shares of Waterco Limited are listed on the Australian Stock Exchange under the trade symbol WAT.
80 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities
Corporate Directory
Directors
Soon Sinn Goh
Bryan Goh
Garry Norman
Ben Hunt
Richard Ling
Secretaries
Bee Hong Leo
Gerard Doumit
Registered office
36 South Street, Rydalmere NSW 2116
Tel: + 61 2 9898 8600
Fax: + 61 2 9898 1877
Website: www.waterco.com
E-mail: administration@waterco.com
Share Registry
Computershare Investor Services Pty Ltd
GPO Box 2975, Melbourne VIC 3001
Tel: 1300 850 505
Offices – Australia
NSW (Head Office)
36 South Street, Rydalmere NSW 2116
Tel: + 61 2 9898 8600
QLD
77 Nealdon Drive, Meadowbrook QLD 4131
Postal Address: PO Box 606
Springwood QLD 4127
Tel: + 61 7 3299 9999
VIC
Unit 1, 6 Samantha Court, Knoxfield Vic 3180
Tel: + 61 3 9764 1211
WA
2 Stretton Place, Balcatta WA 6021
Tel: + 61 8 9273 1900
SA
580 Torrens Road, Woodville North SA 5012
Tel: + 61 8 8244 6000
Auditors
RSM Bird Cameron Partners Level 12,
60 Castlereagh St Sydney, NSW 2000
Banker
HSBC Bank Australia Limited
HSBC Centre
580 George St
Sydney, NSW 2000
Offices – International
Canada
2645 East, Jacques-Cartier Blvd., Longueuil,
Qc, Canada, J4N 1L7
Tel: +1 450 748 1421
China
No.132 Buling Road, Yonghe District, GETDD
Guangzhou 511356, PR China
Tel: + 86 20 3222 2180
France
Parc d’Activite Entrimmo
3 Rue Paul Rieupeyroux
69800 Saint Priest, France
Tel: + 33 4 72 79 33 31
Indonesia
Inkopal Plaza Kelapa Gading
Blok B No. 31-32
Jl. Raya Boulevard Barat
Jakarta 14240, Indonesia
Tel: + 62 21 45851481
Malaysia
Lot 832, Jalan Kusta
Kawasan Perindustrian SB Jaya
47000 Sungai Buloh, Selangor Darul Ehsan
Tel: + 60 3 6145 6000
New Zealand
7 Industry Road, Penrose, 1061
Auckland, New Zealand
Tel: + 64 9 525 7570
Singapore
24 Peck Seah Street
#05-02/04 Nehsons Building
Singapore 079314
Tel: + 65 6344 2378
United Kingdom
Radfield, London Road, Teynham Sittingbourne,
Kent, ME9 9PS, UK
Tel: + 44 1795 521733
United States Of America
1864 Tobacco Rd Augusta, GA 30906, USA
Tel: + 1 706 793 7291
ANNUAL REPORT 2014 81
ANNUAL REPORT 2014 83
WATERCO LIMITED
ABN 62 002 070 733
Registered Office:
36 South Street,
Rydalmere NSW 2116.
Tel: +61 2 9898 8600
Fax: +61 2 9898 1877
Website: www.waterco.com
Email: administration@waterco.com
84 WATERCO LIMITED ABN 62 002 070 733 And Controlled Entities