ANNUAL
REPORT
2021
Waterco pioneers
reliable solutions for
healthy, safe water
environments.
This annual report is printed on Ecostar Offset 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.
CONTENTS | 2021
Company Profile
Group Consolidated Financial Highlights
Chief Executive Officer’s Review of Operations
Board of Directors
Statement of Corporate Governance Practices
Directors’ Report
Auditor’ Independence Declaration
Consolidated Financial Report
Shareholder Information
Corporate Directory
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6
7
12
14
22
34
35
82
83
1
WATERCO LIMITED | ANNUAL REPORT 2021 Company Profile
CANADA
Boucherville
USA
Augusta
UK
Kent
CHINA
Guangzhou
MALAYSIA
Kuala Lumpur
SINGAPORE
INDONESIA
Jakarta
AUSTRALIA
Sydney, Brisbane,
Melbourne, Adelaide, Perth
NEW ZEALAND
Auckland
Waterco pioneers reliable solutions for healthy, safe water environments, which are used in residential,
commercial and industrial applications in over 40 countries.
Established in 1981, it has since become a global brand recognised for designing and manufacturing
filtration and sanitisation innovations for the swimming pool, spa, aquaculture, and water purification
sectors.
4
4
Manufacturing Power House
Waterco’s research and 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 a market leading brand in the pool care industry across
Australia and New Zealand with over 38 years experience.
Swimart is focussed on making pool care easy, with 72 retail stores
and 5 mobile franchises across Australia and New Zealand. Swimart
provides its customers a great range, service and advice through its
highly trained and experienced technicians focussed on their pool
care needs through its fleet of over 250 Swimart service vans.
Zane Solar Systems consists of a 36-strong dealer network throughout
Australia. These highly skilled and trained professionals install solar,
heat pump and gas pool heating systems for both domestic and
commercial applications using Zane’s Gulfstream and Gulfpanel
solar absorber, Electroheat pool heat pumps and Turbotemp gas
pool heaters.
regions of Malaysia,
residents experience water
In certain
discolouration caused by rust from unlined galvanised pipes. To
service this market Waterco has set up a dealer network of 10
Watershoppes selling Waterco’s range of water filters and drinking
water purifiers.
5
WATERCO LIMITED | ANNUAL REPORT 2021 Group Consolidated Financial Highlights
Financial Year Ended
Operating revenue ($ million)
Sales revenue ($ million)
Earnings Before Interest and
Tax (EBIT) ($ million) from
continuing operations
Earnings Before Interest and
Tax (EBIT) ($ million) from
discontinued operations
EBIT (continuing operations)
/ Sales Revenue
Profit before income tax from
continuing operations ($ million)
Profit/(loss) before income tax from
discontinued operations ($ million)
Net profit after tax ($ million)
Total assets ($ million)
Equity ($ million)
Basic Earnings per share from
continuing and discontinued
operations
Basic Earnings per share from
continuing operations
Basic Earnings per share from
discontinued operations
2021
118.38
113.35
2020
98.47
93.58
2019
88.24
89.62
2018
87.83
86.26
2017
85.21
82.51
9.40
4.83
5.13
6.73
6.21
-
17.92
(0.71)
-
-
8.3%
5.2%
6.0%
7.8%
7.5%
9.06
3.90
4.17
5.72
5.33
-
17.92
(0.86)
-
-
12.70
135.40
100.45
17.56
146.21
87.26
2.28
116.83
75.83
3.95
116.59
74.17
3.71
100.78
64.38
35.6 cents
48.8 cents
6.1 cents
10.3 cents
9.7 cents
35.6 cents
8.6 cents
8.4 cents
10.3 cents
9.7 cents
-
40.2 cents
(2.3 cents)
-
-
Dividends per share (Interim and Final) 7.0 cents
5.0 cents
5.0 cents
5.0 cents
5.0 cents
Net Tangible Assets per share
Year-end share price
$2.78
$2.90
$2.43
$2.55
$2.06
$1.61
$1.99
$2.05
$1.71
$1.70
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6
Chief Executive Officer’s Review Of Operations
SOON SINN GOH
Chairman/Group CEO
REVENUE AND PROFITABILITY
The Group reports an increase in Net Profit After Tax (NPAT) and Earnings Before Interest and Tax (EBIT)
from continuing operations. NPAT from continuing operations increased by 321% to $12.7 million, while
EBIT from continuing operations increased by 95% to $9.40 million.
The major reasons for the improvement in sales were the contribution of the new Autopool Division (from
July 2020), industry consolidation and retail consumers using the funds set aside for travel (restricted
because of Covid-19) to make home improvements including renovating their existing pools or using
the money to build a new pool instead. The Australian and New Zealand Division, which accounts for a
major portion of the Group’s profitability and sales, registered an increase in EBIT of 58%.
Swimart Division met expectations after the franchising of several company operated stores in the first
quarter resulting in lower operating expenses (which adversely impacted its contributions in the previous
year) together with stronger retail sales flowing from the increased home improvement expenditure.
The North America and Europe
Division recorded large increases
in EBIT and sales resulting from
restructuring of the last few years
and greater demand for product due
to the boom in home improvement
expenditure. The division (excluding
discontinued operations) achieved
an increase of $2.876million from
EBIT of $0.959million to an EBIT of
$3.855million. The large increases in
EBIT and sales occurred in both USA
and UK.
DIVISIONAL EBIT PERFORMANCE
The breakdown of EBIT contribution by division is as follows:
Continuing Operations
Australia and New Zealand
North America and Europe
Asia
Consolidated Reported
EBIT From Continuing
Operations
Consolidated Reported
EBIT From Discontinued
Operations
FY21
($000)
FY20
($000) % Change
3,987
3,855
1,558
2,517
959
1,356
+58%
+302%
+15%
9,400
4,832
+95%
-
17,915
-
Consolidated Reported EBIT
9,400 22,747
(59%)
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WATERCO LIMITED | ANNUAL REPORT 2021 Swimart continues
its brand refresh and
update of all its stores and mobile assets
across Australia and New Zealand.
To date, Swimart has completed 24 store
exterior brand refresh projects and 125
vehicles rebrands completed across AU & NZ.
In addition, we have now transformed 10 store
interiors.
MultiCyclone success in USA
North American swimming pool market has
experienced increased demand for swimming
pools from consumers cocooning at home.
Waterco USA has benefited with significant
sales of Waterco’s patented
increased
MultiCyclone centrifugal filtration system.
MultiCyclone’s ability to dramatically reduce
filter maintenance and save water has
captured the interest of the US market.
AUSTRALIA AND NEW ZEALAND (ANZ)
The Australia and New Zealand Division derives its revenue
predominantly from the domestic swimming pool industry. In
this market, Waterco offers a wide range of products, including
chemicals for swimming pool water treatment. Waterco also
owns the Swimart franchise, which features 72 pool stores
and 5 mobiles in Australia and New Zealand. The success of
these stores is built on more than three decades of experience,
during which Waterco has developed an extremely good
understanding of the factors that drive consumer demand in
the after-market. Franchise partners benefit from a programme
that has been developed and improved on in-house since
1983, when the first company-owned pool shop was opened
in Sydney. This has since grown into a successful Swimart
franchising retail system.
Steady market share
underpinned the Division’s performance.
in the domestic pool sector has
Despite a challenging year in the ANZ Market, Waterco was
able to achieve a 19% increase in sales on the previous year.
NORTH AMERICA AND EUROPE
Waterco North America and Europe comprises the Group’s
operations in the USA, Canada and UK.
This division recorded an increase in sales of 33.45% on the
same period last year.
Waterco USA (WUSA): The US market is the largest in the
world. Waterco has invested significantly in this market,
through start-up operations, as well as a substantial acquisition
of Baker Hydro in March 2005. Our operations in Augusta,
Georgia, now distribute a wide range of filters and assemble
commercial pumps.
In June 2020, Waterco USA opened a small branch in Canada
(Distribution Waterco Canada or DWC) to service its local
customer base. Its numbers for FY21 are not material to
Waterco USA.
This entity has experienced another double-digit sales growth
during the year under review and is expecting a further
improvement in revenue in the year ahead.
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Waterco Europe (WEL): Waterco started operations in the
UK in 1999 and subsequently acquired the business of Lacron
Ltd in 2003. The renowned “Lacron” name is synonymous
with quality filters and, coupled with Waterco’s established
progressive manufacturing techniques, this has enabled WEL
to bring to the market filters of quality at acceptable prices.
Today, both the Lacron and the Waterco brands are well-
recognised as quality products in Europe. This recognition
continues, even after the manufacturing operations had been
transferred to Malaysia and China, because the same high
standards have been maintained.
Waterco Europe achieved a double-digit increase in sales
during the year despite the challenges in the European Market
(including Brexit and Covid-19 pandemic). The business
experienced a huge turnaround from the corresponding drop
in the previous year with filter sales responsible for most of
the growth. This Entity continues to reinforce its interest in
commercial filters of high pressure ratings developed for
water treatment, in particular, as pre-filtration for seawater
desalination. The Group’s ability to manufacture filters of such
pressure ratings from composites provides an opportunity to
enhance our presence in a market that has traditionally used
steel to cope with such pressures.
Prestigious UK water fountain
specialist specifies Waterco
With rooftop views of London and Wembley
Stadium, Canada Gardens is set to become
one of the city’s most coveted residential
precincts.
Fountains Direct managing director Nick
Roberts, who has specified Waterco
for
more than two decades, proposed five
separate water features to complement the
development’s architectural character.
Multiple Micron SMD Commercial Filters,
Multicyclone centrifugal filters and Hydrostar
commercial pumps ensures the highest level
of water quality for the various water features
throughout the residential precint.
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WATERCO LIMITED | ANNUAL REPORT 2021 ASIA
Waterco Far East in Malaysia (WFE): This Entity was born
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 its undertakings in
Kuala Lumpur, Malaysia. As well as bringing the Group closer
to Southeast Asia markets, this also gave cost-efficiency in our
manufacturing operations. Since then, WFE has become the
principal manufacturing facility for the Waterco Group. WFE
continues to deliver robust new products to give the Group a
strong reputation and competitive edge.
Waterco’s Malaysian manufacturing
facility in Kuala Lumpur
facility takes up 6.3
Waterco’s high-tech
hectares and has a total work force of 450 staff.
achieved
recognised
certification,
for
ISO9001:2008
standard
WFE has
the
the quality
internationally
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 recorded double-digit growth making
up part of the decline in the previous year. The Covid-19
pandemic lockdown and continuing political uncertainty
are still significant challenges faced by the business and are
also expected to carry through to the new financial year.
Increased volume, particularly
large
commercial filters, has resulted in an increase in wages, with
more overtime worked on top of the extra wages incurred to
catch up with manufacturing after several periods of lockdown
during the year. The introduction of robots (on a small scale)
to the manufacturing process has kept these wage increases
to a moderate level. The Entity’s capacity has been increased
during the year and this has led to greater efficiencies in the
business and an improvement in financial performance.
labour-intensive
in
Waterco Guangzhou (WGZ): Commenced operations in
2000, delivering advantages of low operational costs and a
foothold into the huge China market. The manufacturing of
filters primarily for the European and the Australian markets
has been relocated to Malaysia, leaving this entity to focus on
the development of commercial heat pumps and to improve
marketing of pool equipment to the commercial pool market in
China. External sales fell by a small percentage during the year
(compared to the large decline in the previous year) due to the
impact of the ongoing pandemic and construction industry
slowdown in addition to the continued trade issues and softer
economic conditions that existed prior to the pandemic.
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The Malaysian
facility manufactures an
extensive range of fibreglass filters, from
400mm to 3000mm diameter vertical filters
and 860mm diameter to 2200mm diameter
horizontal filters.
Waterco’s Micron commercial fibreglass filters
are made from continuous strands of high-
quality fiberglass filament wound under
controlled tension to create a seamless,
impervious vessel.
Waterco’s quality control procedures ensure
that the structural requisites of the product
are achieved at every stage of production.
This results in 100% compliance of the end
product with the specifications.
New inverter swimming pool heat pumps
Unable to travel, pool owners are maximising
the use of their swimming pools by investing
in a pool heater.
Electroheat swimming pool heat pumps have
experienced the fastest growth within the
pool heating category.
Waterco has recently released a new range of
Electroheat inverter heat pumps which feature
an energy efficient variable speed compressor.
The new inverter heat pumps allow the pool
owner to heat their pool in cooler climates
even when the ambient air temperature is
close to 0 °C.
Waterco International in Singapore (WI): This Entity 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. Performance during
the year was steady with a small increase in external sales.
PRODUCT DEVELOPMENT AND WATER TREATMENT
The Group continues to invest in Research and Development
to ensure it is an industry pioneer.
Product innovation and research and development in the
water- treatment subsector are critical to 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 our intellectual property is
protected is of immense value and importance.
The array of technology advances and patents will improve
Waterco’s position in the servicing of swimming pool markets
globally and are expected to improve the appeal of the Swimart
franchise network.
DIVIDEND AND OUTLOOK
improvement
The results (Net Profit After Tax of $12.7million from continuing
operations) is 321% above last year. While all sectors reported
in EBIT (from continuing operations),
an
there was a substantial improvement in North America and
Europe. This is especially pleasing, as losses in the US (in the
North America and Europe Division) are not tax-effected,
accentuating their impact.
The Board will provide a profit guidance at a later stage for
the financial year ending 30 June 2022, as more information
becomes available (especially around the uncertainty caused
by the global Covid-19 pandemic).
Waterco declares a final dividend payment of 4 cents per
share, payable to shareholders on 15 December 2021. With
an interim dividend of 3 cents per share, declared after the
announcement of the Half-Year results, this brings the total
dividend for the year at 7 cents per share compared to the 5
cents in the previous financial year.
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WATERCO LIMITED | ANNUAL REPORT 2021 Board of Directors
SOON SINN GOH - B COM FCPA
Chairman/Group 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
Executive Director/Chief Operating Officer
Mr. Goh was appointed to the Board in June 2010.
As the Chief Operating Officer, Mr. Goh has overall responsibility for the business
operations in Australia and New Zealand.
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.
BEN HUNT - PHD (ANU)
Non-Executive Director
Dr. Hunt was appointed to the Board as a Non-Executive Director in June 1998. He has
held academic appointments as the Head of the Graduate School of Business, Associate
Dean of the Faculty of Business and 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 has been 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.
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(RICHARD) CHENG FAH LING - B COM CA
Non-Executive Director
Mr. Ling was appointed to the Board as a Non-Executive Director in May 2009. He
holds a Bachelor of Commerce degree from the University of Newcastle, Australia. He
is a member of Chartered Accountants Australia and New Zealand and the Malaysian
Institute of Accountants. He has experience in total logistics and corporate finance in
capital markets. Mr. Ling is currently a Non-Executive Director of Tiong Nam Logistics
Holdings Berhad, a public company listed on Bursa Malaysia (Malaysian Stock Exchange).
He is a member of the Remuneration and Nomination Committee and Chairman of the
Audit Committee of Tiong Nam Logistics Holdings Berhad.
Mr. Ling is Chairman of the Audit Committee and a member of the Remuneration
Committee of Waterco Limited.
He held no other listed company directorships during the past three financial years.
JUDY RAPER AM, BE (Hons), PHD, FATSE, FAICD, FIE(Aust), MIET.
Non-Executive Director
Professor Raper holds a Bachelor of Engineering (Hons) and has a doctorate from The
University of New South Wales. She has held several academic and non-academic
appointments in Australia, the United States and the UK as the Dean of Engineering
at the University of Sydney, Head of Chemical & Biological Engineering at University of
Missouri in United States, Division Director of Chemical, Bioengineering, Environmental
Engineering and Transport Systems at the National Science Foundation in United States
and Deputy Vice-Chancellor (Research & Innovation) at the University of Wollongong.
She is currently the Dean and Chief Executive Officer of TEDI-London responsible for the
development of a new start-up Engineering Institution.
Professor Raper is a Fellow of the Australian Academy of Technology, a fellow of the
Australian Institute of Company Directors and an Honorary Fellow of Engineers Australia.
Professor Raper is a member of the Remuneration Committee and the Audit Committee
of Waterco Limited.
She held no other listed company directorships during the past three financial years.
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WATERCO LIMITED | ANNUAL REPORT 2021 Statement of Corporate Governance Practices
This statement explains how Waterco Limited ACN 002 070 733 (Waterco or Company) has complied with the ASX
Corporate Governance Council’s Corporate Governance Principles and Recommendations – 4th Edition, published
February 2019 (ASX Recommendations), during the financial year ended 30 June 2021 (Reporting Period).
All Waterco charter, codes and policy documents referred to in this statement are available in the Corporate
Governance section of the Company’s website, www.waterco.com.au
This statement has been adopted by the Board as current as of 26 August 2021.
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
RECOMMENDATION
WATERCO’S COMPLIANCE WITH ASX RECOMMENDATIONS
1.1
Role of Board and
management
The Board Charter sets out the roles and responsibilities of the Board. The Board
is ultimately responsible for the growth, strategic direction and success of the
Company and has set out specific matters reserved for its decision and matters
delegated to the management.
The Board has disclosed a copy of the Board Charter available in the Corporate
Governance section of the Company’s website, www.waterco.com.au
1.2
Information
regarding election
and re-election of
director candidates
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.
When considering the re-election of an incumbent director or election of a new
director, the Board takes into account the following:
(a) business experience, particularly in respect of the industries in which the
company operates;
(b) standing in the community;
(c) educational qualifications;
(d) checks against the person’s character, criminal record and bankruptcy
history;
(e) availability and other directorships;
(f) the possession of particular skills such as finance, marketing or risk
management;
(g) whether the appointment or re-appointment will contribute positively to
the skill set and diversity of the Board as a whole; and
(h) gender diversity policy of the Company.
14
1.3 Written
appointment
1.4
Company Secretary
1.5 Diversity
In addition to being set out in the Board Charter, the letters of appointment
executed with all directors describe the key duties and responsibilities of
each member of the Board, and further include the terms of appointment,
remuneration, time commitment envisaged, expectations regarding committee
work, the requirement to disclose directors’ interests and confidentiality
obligations.
Mr Soon Sinn Goh has an employment agreement with the Company as
the Group Chief Executive Officer. As Mr Goh spends a majority of his time
developing and enhancing manufacturing capabilities in Malaysia and sales in
various entities other than Australia and New Zealand, he also has a letter of
employment with Waterco (Far East) Sdn Bhd setting out his role in Malaysia
and a letter of employment with Waterco International Pte Ltd for his role in
Singapore.
Key Management Personnel have written employment agreements setting out
a description of key duties and responsibilities, reporting lines, remuneration
and termination rights.
The Company Secretary is appointed by and accountable to the Board and has
particular responsibility for:
(a) advising the board and its committees on governance matters;
(b) monitoring whether board and committee policy and procedure are being
followed;
(c) coordinating timely completion of board and committee papers;
(d) ensuring that business conducted at board and committee meetings are
accurately recorded in the minutes; and
(e) helping to organise the induction and professional development of directors.
The Board Charter explicitly reflects this delegation by the Board to the Company
Secretary.
The Board recognises diversity and equity as strengths and adopted a Diversity
& Equity Policy for the Company which includes an express requirement for the
Board to set measurable objectives for achieving gender diversity.
The Diversity & Equity Policy is available in the Corporate Governance section of
the Company’s website, www.waterco.com. In accordance with the Diversity &
Equity Policy, the Board set objectives for achieving gender diversity across its
organisation. The objectives for the Reporting Period were:
Women on the Board
Women in senior executive positions
(excluding Board Members)
Women employees in the company
Measurable objective for the Reporting Period
20%
0%
25%
The Board assessed the progress towards these objectives during the Reporting
Period by reviewing the relative proportion of women and men in the Company’s
workforce at all levels. As at 30 June 2021, women represented 34.21% of the
overall workforce. There were no women in senior executive positions (defined
by the company as the Key Management Personnel). At the Board level, there is
1 female director.
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WATERCO LIMITED | ANNUAL REPORT 2021 1.6
Board reviews
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 undertakes the
performance evaluations by way of evaluation forms.
The Board has undertaken an evaluation on the performance of the Board, its
committees and individual directors for the Reporting Period.
1.7 Management
reviews
The Company is committed to an ongoing internal process of performance
evaluation of Key Management Personnel to ensure the diligent and effective
discharge of their responsibilities The CEO has undertaken a performance
evaluation review of Key Management Personnel for the Reporting Period.
PRINCIPLE 2: STRUCTURE THE BOARD TO BE EFFECTIVE AND ADD VALUE
RECOMMENDATION
WATERCO’S COMPLIANCE WITH ASX RECOMMENDATIONS
The Company has not established a nomination committee. The ASX
Recommendations acknowledge that such committees 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 a nomination
committee.
The Board comprises an Executive Chairman who is also the Group Chief
Executive Officer (CEO), 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. The Board composition represents diversity in gender, age, ethnicity
and background.
At each Annual General Meeting (AGM), one third of the directors (excluding the
CEO) and any director appointed to fill a casual vacancy since the previous AGM
must retire but may stand for re-election.
The Company achieved its preferred Board composition of at least five directors
during the Reporting Period, with a majority of Non-Executive (and, where
possible, independent) Directors.
2.1
Nominations
committee
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2.2
Board skills matrix
Below is the matrix of skills and attributes that Waterco is aiming to achieve
across its Board membership. This matrix was adopted by the Board on 1 July
2020. The Board aims to improve in some areas, such as legal and engineering
experience and female representation.
General
Governance
Executive and Non-Executive experience Governance committee experience
Leadership
Strategic thinking
Risk management experience
Knowledge of ethical and fiduciary duties
Industry experience (local & global)
Commitment to environmental protection
and sustainability
Corporate responsibility, health and safety
Stakeholder engagement
Technical
Legal
Financial
Engineering
Human resources
Regulatory and compliance experience
Diversity
Female
Male
Different ethnicities and cultures
Languages other than English
2.3 Disclose
independence and
length of service
The names of the independent directors in office during the Reporting Period are:
(a) Ben Hunt;
(b) (Richard) Cheng Fah Ling; and
(c) Judy Raper.
The Company’s assessment of the materiality of a director’s interest 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 judgement. Further details of
the directors’ skills, experience, expertise and lengths of service are set out in the
Board of Directors' section of the Company’s Annual Report.
2.4 Majority of directors
independent
A majority of the Board are independent directors, taking into account the
factors relevant to "independence" under the ASX guidelines.
2.5
Independent Chair
2.6
Induction and
professional
development
The roles of Chairperson and Group CEO 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 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.
All new directors undergo an induction to familiarise them with the business of
the Company, the Company’s internal control and risk management practices
and policies and procedures. The Company also seeks to provide appropriate
professional development opportunities for directors to develop and maintain
the skills and knowledge needed to perform their role as directors effectively.
17
WATERCO LIMITED | ANNUAL REPORT 2021 PRINCIPLE 3: INSTIL A CULTURE OF ACTING LAWFULLY, ETHICALLY AND RESPONSIBLY
RECOMMENDATION
WATERCO’S COMPLIANCE WITH ASX RECOMMENDATIONS
3.1
Statement of Values
The Board’s statement of values can be found on the Company’s website: www.
waterco.com.au
3.2
Code of conduct
The Board has established a Code of Conduct for directors, key management
personnel and employees.
3.3 Whistleblower policy
The Company encourages employees to speak up about unlawful, unethical
or irresponsible behavior within the organisation through the Company’s
whistleblower policy which is available in the Corporate Governance section of
the Company’s website, www.waterco.com.au
3.4
Antibribery and
corruption policy
The Company is committed to conducting all dealings lawfully, ethically and in
line with the Company’s Statement of Values. The Company’s antibribery and
corruption framework enables it to prevent, detect and response to bribery and
corruption risks. The policy is available in the Corporate Governance section of
the Company’s website, www.waterco.com.au
PRINCIPLE 4: SAFEGUARD THE INTEGRITY OF CORPORATE REPORTS
RECOMMENDATION
WATERCO’S COMPLIANCE WITH ASX RECOMMENDATIONS
4.1
Audit committee
The Audit Committee operates under the Audit Committee Charter.
The role of the Audit Committee is to assist the Board with its oversight of
the integrity of the financial statements, including overseeing 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 Reporting Period, 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 Reporting Period were:
(a) (Richard) Cheng Fah Ling – Chairman;
(b) Ben Hunt; and
(c) Judy Raper.
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.
18
4.2
CEO and CFO
certification of
financial statements
The Board has received a written statement from its Group CEO and Chief
Financial Officer (CFO) which includes a declaration under section 295A of the
Corporations Act 2001 (Cth) advising that:
(a) 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
(b) the opinion has been formed on the basis of a system of risk management
and internal control adopted by the Board, and that this system is operating
efficiently.
4.3
External auditor at
AGM
The external auditor attends the AGM for the purpose of answering shareholder
questions regarding the conduct of the audit and the preparation and content
of the audit report.
PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE
RECOMMENDATION
WATERCO’S COMPLIANCE WITH ASX RECOMMENDATIONS
5.1 Disclosure and
Communications
Policy
The Company’s Continuous Disclosure Policy sets out the rules and
responsibilities for Waterco’s officers and employees to ensure compliance
with ASX Listing Rules and promote factual and timely disclosure of all material
matters concerning the Company.
5.2
Board to receive
information on
announcements
To ensure that the Board has timely visibility of the nature and quality of the
information being disclosed to the market and the frequency of such disclosures,
the Board receives copies of all material market announcements promptly after
they have been made.
5.3
Investor
presentations
Should the Company give a new and substantive
investor or analyst
presentation, it will release a copy of the presentation materials on the ASX
Market Announcements Platform ahead of the presentation.
19
WATERCO LIMITED | ANNUAL REPORT 2021 PRINCIPLE 6: RESPECT THE RIGHTS OF SECURITY HOLDERS
RECOMMENDATION
WATERCO’S COMPLIANCE WITH ASX RECOMMENDATIONS
6.1
Information on
website
Waterco keeps investors informed by publishing information 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.
6.2
Investor relations
programs
The Company’s Shareholder Communication 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.
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. It also
indicates the predominant sources for investors to engage with the Company
at general meetings of the Company.
6.3
6.4
6.5
Facilitate
participation at
meetings of security
holders
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 which also provides details on how
proxy forms should be completed and submitted.
Substantive
resolutions
The Company ensures that all substantive resolutions at the shareholders’
meeting are decided on a poll rather than by a show of hands.
Facilitate electronic
communications
The Company recognises the benefits of the use of electronic communications.
Shareholders have the option of selecting to receive the following information
electronically from the share registry: dividend statements; annual reports;
notices of meetings and proxy forms and the ability to vote online; and other
general company communications.
With this in place, shareholders can log into their account to make changes to
their communication preferences. The share registry can also be contacted via
email or telephone. Contact details can be found on the Company’s website.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
RECOMMENDATION
WATERCO’S COMPLIANCE WITH ASX RECOMMENDATIONS
7.1
Risk committee
The Company has not established a Risk Committee.
The functions of the Risk Committee are performed by the Audit Committee
who reports to the Board on the effectiveness of the risk management and
internal control processes of the Company regularly by circulation of Minutes
of Meetings to the directors and through other means of formal and informal
reporting.
Further details regarding the Audit Committee, its membership and the
number of meetings held during the Reporting Period are set out in response to
Recommendation 4.1.
20
7.2
Annual risk review
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 through the Audit Committee. The Board has performed
the review for the Reporting Period.
7.3
Internal audit
The Company reviews and continually improves the effectiveness of its risk
management and internal control processes.
Further details regarding audit functions are set out
Recommendation 4.1.
in response to
7.4
Sustainability risks
The Board considers that the Company is not materially exposed to economic,
environmental and social sustainability risks.
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
RECOMMENDATION
WATERCO’S COMPLIANCE WITH ASX RECOMMENDATIONS
8.1
Remuneration
committee
8.2 Disclosure of
Executive and
Non-Executive
Director
remuneration
policy
The Remuneration Committee is responsible for making recommendations to
the Board 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.
During the Reporting Period, 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:
(a) Ben Hunt - Chairman;
(b) (Richard) Cheng Fah Ling; and
(c) Judy Raper.
The number of Remuneration Committee meetings and details of Committee
members’ attendance during the Reporting Period are set out in the Directors’
Report section of the Company's Annual Report.
Remuneration of the Company’s Non-Executive Directors operates on different
principles to the remuneration of Executive Directors. Non-Executive Directors
receive fixed fees, and are not entitled to any retirement benefits other than
statutory superannuation.
The Remuneration Report at the Directors’ Report section of the Annual Report
sets out:
(a) information about the Remuneration Policy developed by the
Remuneration Committee and adopted by the Board; and
(b) details of remuneration of the directors (executive and non-executive) and
Key Management Personnel.
8.3
Policy on hedging
equity incentive
schemes
The Company did not offer an equity-based remuneration scheme during the
Reporting Period.
21
WATERCO LIMITED | ANNUAL REPORT 2021 Directors' Report
Your directors present their report on the Company and its controlled entities for the financial year ended 30 June
2021.
Directors
The names of directors in office during and since the end of the financial year are:
• Soon Sinn Goh
• Bryan Goh
• Ben Hunt
• (Richard) Cheng Fah Ling
• Judy Raper
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. Mrs Leo retired on 30 October
2020.
• Gerard Doumit FCPA JP
Mr Doumit was appointed Company Secretary on 22 July 1991. He has been employed by Waterco since January
1987 as an Accountant and is currently Chief Financial Officer (CFO) and Company Secretary.
He holds a Bachelor of Economics (Accounting ) from Macquarie University.
• Sin Wei Yong
Mr Yong was appointed Company Secretary on 1 July 2020.
He is an admitted solicitor and holds a Bachelor of Laws (Hons) from Northumbria University, United Kingdom.
He joined the Company in 2014 as a Legal Officer. He has extensive experience in corporate governance and has
more than 15 years’ experience in legal and regulatory compliance in a financial services group prior to joining
the Company.
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;
• manufacture and sale of solar heating systems for swimming pools and pre-heat industrial solar systems;
• 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.
22
Consolidated Results
The consolidated profit of the group after providing for income tax and eliminating non-controlling interests
amounted to $12.755 million.
Dividends
Dividends paid or declared for payment are as follows:
• Final ordinary dividend of 3 cents per share paid on 16 December 2020 as recommended in last year’s report -
$1.074 million
• Interim dividend of 3 cents per share paid on 15 June 2021 as declared in the half yearly report - $1.073million
• Final ordinary dividend of 4 cents per share declared by the directors to be paid on 15 December 2021 - $1.429
million.
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 $13.19 million from $87.26 million in June 2020 to
$100.45 million in June 2021.
The change has largely resulted from:
• Upward movement in profits (less dividends paid) of $10.61 million;
• Net increase in the asset revaluation reserve of group companies of $5.62 million;
• Net decrease in non-controlling Interests of $0.06 million;
• Foreign currency translation loss of $2.59 million;
• Net decrease in share capital of $0.39 million from the Waterco Share Buy-Back.
The Group’s working capital being current assets less current liabilities decreased from $46.81 million in 2020 to
$39.76 million in 2021.
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.
23
WATERCO LIMITED | ANNUAL REPORT 2021 After Balance Date Events
The impact of the Coronavirus (COVID 19) pandemic is ongoing and it is not practicable to estimate the potential
impact, positive or negative, after the reporting date. The situation is frequently changing and is dependent on
measures imposed by the Australian Government and other countries, such as local and state lockdowns restricting
businesses to open, maintaining social distancing requirements, quarantine, travel restrictions and any economic
stimulus that may be provided.
Final dividend
Since the end of the reporting period, the Board resolved to pay a final dividend of 4 cents per share fully franked.
Share Option Plan
On 24 June 2021, the Board approved the Waterco Limited Group Employee Share Plan.
Under this plan, three senior managers were invited on 13 July 2021 to take up 350,000 options (in 3 Tranches).
All 3 senior managers took up the invitation and 350,000 options were issued to them on 23 August 2021.
Details of the Issue are as follows
Tranche No
1
2
3
No of
Options
116,000
116,000
118,000
Vesting Date
Vesting Condition –
Group EBIT
Exercise Price
Expiry Date
23 August 2022
23 August 2023
23 August 2024
$10,338,853
$11,278,748
$12,218,644
$3.15
$3.15
$3.15
23 August 2031
23 August 2031
23 August 2031
The exercise price is based on the weighted average share price (VWAP) over the 5 days immediately prior to issue
date.
This was calculated to be $3.15.
The vesting condition is based on achieving the Base EBIT of FY21 plus an additional cumulative 10% improvement
in each of the subsequent 3 years
The base EBIT for FY21 was calculated to be $9,398,957
For the Options to Vest, the Group must achieve an EBIT for:
i) Tranche 1 $10,338,853 ($9,398,957 +10%)
ii) Tranche 2 $11,278,748 ($9,398,957 +20%)
iii) Tranche 3 $12,218,644 ($9,398,957 +30%)
Each of the tranches can only be exercised if Vesting Condition associated with that tranche has been met.
The option term is 10 years and expires on 23 August 2031.
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.
24
Directors’ Shareholdings
Details of the Directors’ shareholdings are contained in the Key Management Personnel Shareholding table on
page 31.
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
Ben Hunt
(Richard) Ling
Judy Raper
5
5
5
5
5
5
5
5
5
4
-
-
5
5
5
-
-
5
5
4
-
-
3
3
3
-
-
3
3
3
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, offices and a pool shop to Mint Holdings Pty Ltd of which Mr Soon
Sinn Goh is a director and shareholder.
iii. Rent charged to Mint Holdings Pty Ltd for office space in Rydalmere, NSW.
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.
25
WATERCO LIMITED | ANNUAL REPORT 2021 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 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 2021 has been received and is included
in the directors’ report.
ASIC Corporations (rounding in Financial/Directors Reports) Instruments 2016/191
The amounts in the financial reports and directors’ report have been rounded to the nearest thousand dollars in
accordance with ASIC Corporations Instruments 2016/191.
26
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 Company.
2021 Remuneration Policy
The Remuneration Committee governs the Company’s Remuneration Policy. The Committee comprises
Independent Non-Executive Directors.
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 Group CEO. The Committee then
recommends the fixed remuneration and annual incentive payment of the Group CEO for approval by the Board.
The Group CEO recommends Key Management Personnel’s fixed remuneration and annual incentive payments
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 responsibility, performance, qualifications, experience and potential. Adjustments are made only if there is
the prospect of fixed remuneration levels falling behind market levels.
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 makes superannuation guarantee
(SG) payments, 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 $300,000. This was
approved by shareholders at the Annual General Meeting held on 26 October 2018.
There has been an increase of 3% in the Non-Executive Director fees for the 2021/2022 financial year. The total fees
are now at an aggregate of $194,323 plus Superannuation Guarantee Charge.
The Remuneration Committee seeks independent external advice when required.
27
WATERCO LIMITED | ANNUAL REPORT 2021 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 Group CEO, the Remuneration Committee sets the performance requirements; in the case of
other Key Management Personnel, the Group CEO recommends performance requirements for consideration by
the Remuneration Committee.
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 requirement for an incentive payment is Earnings Before Interest and Tax (EBIT).
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 21
Why Chosen
Soon Sinn Goh
– Group CEO
Key Management Personnel
Earnings Before Interest
and Tax (EBIT) for the
Waterco Group.
Earnings Before Interest
and Tax (EBIT) for the
Waterco Group.
Encourage Group 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.
Although none of the Company’s Key Management Personnel achieved their performance targets based on normal
operations (Net Profit after tax from Continuing Operations) in the year-ended 30 June 2020, the Remuneration
Committee recommended to the Board that the lowest incentive (threshold level) be paid to the Company’s Key
Management Personnel given the highest incentive level (stretch level) had been met if both the Net Profit after
tax from both continuing and discontinued operations were taken into account. The Board approved this special
incentive (threshold level) for all Key Management Personnel and it was paid to the Key Management Personnel
(Except the Group CEO) in Mid December 2020.
In the year ending 30 June 2021, the Key Management Personnel have achieved their performance targets based
on normal operations. This incentive is subject to Board Approval, and if approved, will be paid in December 2021.
28
The following table shows the Sales Revenue, Earnings Before Interest and Tax (EBIT), 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 21
June 20
June 19
June 18
June 17
Sales revenue ($million) from continuing and
discontinued operations
Earnings Before Interest and Tax (EBIT) ($million)
from continuing and discontinued operations
NPBT ($million) from continuing and
discontinued operations
EPS (cents) from continuing and discontinued
operations
Dividends per share paid (cents)
Year end share price ($)
NPAT ($million) continuing operations
NPAT ($million) discontinued operations
113.35
93.58
89.62
86.26
82.51
9.40
22.75
4.42
6.73
6.21
9.06
21.83
3.31
5.72
5.33
35.6
6.0
2.90
12.70
-
48.8
5.0
2.55
3.01
6.1
5.0
1.61
3.14
14.54
(0.86)
10.3
5.0
2.05
3.95
-
9.7
5.0
1.70
3.71
-
Please see commentary on performance on page 23.
29
WATERCO LIMITED | ANNUAL REPORT 2021 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.
Proportions of elements of
remuneration related to
performance
Position held as at
30 June 2021 and any
change during the year
Contract details
(duration & termination)
Non-salary
cash-based
incentives
%
Shares/
Units
%
Options/
Rights
%
Key
Management
Personnel
S S Goh
Chairman &
Group CEO
No fixed term; may be
terminated on 6 months’
notice by either party
B Goh
Group Marketing
Director -
Executive
No fixed term; may be
terminated on 2 months'
notice by either party
B Hunt
Director -
Non-Executive
R Ling
Director -
Non-Executive
J Raper
Director -
Non-Executive
No fixed term, 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, but
subject to member
confirmation every 3
years after AGM when
first appointed.
G Doumit
Chief Financial
Officer / Company
Secretary
No fixed term, may be
terminated on 2 months’
notice by either party
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Proportions of
elements of
remuneration
not related to
performance
Fixed
Salary/
Fees
%
Total
%
100
100
100
100
100
100
100
100
100
100
100
100
Changes in Directors and Key Management Personnel during the Year
On 30 October 2020, Mrs Bee Hong Leo retired as a Company Secretary of Waterco Ltd.
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.
30
Key Management Personnel Shareholding
Number of Shares held by Key Management Personnel
2021
Key Management Personnel
Mr S S Goh
Mr B Goh
Mr B Hunt
Mr R Ling
Ms J Raper
Mr G Doumit
2020
Balance
1.7.2020
Received as
Remuneration
Net Change
Other
Balance
30.6.2021
21,721,853
540,121
170,223
-
-
71,300
-
-
-
-
-
-
-
-
-
-
-
-
21,721,853
540,121
170,223
-
-
71,300
Key Management Personnel
Balance
1.7.2019
Received as
Remuneration
Net Change
Other
Balance
30.6.2020
Mr S S Goh
Mr B Goh
Mr G Norman 2)
Mr B Hunt
Mr R Ling
Ms J Raper 3)
Mr S T Lim 4)
Mrs B H Leo 1)
Mr G Doumit
21,721,853
540,121
155,114
170,223
-
-
-
102,817
71,300
-
-
-
-
-
-
-
-
-
-
-
(155,114)
-
-
-
-
(102,817)
-
21,721,853
540,121
-
170,223
-
-
-
-
71,300
1) On 30 October 2020, Mrs Bee Hong Leo retired as a Company Secretary of Waterco Ltd.
2) On 25 October 2019, Mr Garry Norman retired as a Director of Waterco Ltd.
3) On 1 April 2020, Ms Judy Raper was appointed as a Non-Executive Director of Waterco Ltd.
4) On 23 July 2019, Mr Sze Tin Lim retired as Chief Financial Officer of Waterco Ltd.
31
WATERCO LIMITED | ANNUAL REPORT 2021 Remuneration Details
The following table provides remuneration details for the 2021 and 2020 financial years for Key Management
Personnel.
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Renumeration
incl Salary,
fees and leave
(6)
$
Profit
share and
bonus
$
Non-
monetary
(7)
$
Pension and
super-
annuation
$
LSL
$
Total
$
Key Management
Personnel
Soon Sinn Goh 1)
Bryan Goh
Garry Norman 2)
Ben Hunt
(Richard) Ling
Judy Raper 3)
Sze Tin Lim 4)
Bee Hong Leo 5)
Gerard Doumit
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
437,488
428,914
283,497
248,527
-
21,342
62,887
61,655
62,887
61,655
62,887
14,228
-
146,803
-
207,766
228,846
204,752
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,424
24,576
13,028
12,773
21,694
21,003
-
2,028
5,974
5,857
5,974
5,857
5,974
1,352
-
1,676
-
19,675
20,685
19,451
3,282
3,002
24,160
9,205
-
-
-
-
-
-
-
-
-
254
-
3,742
7,653
6,158
453,798
444,689
329,351
278,735
-
23,370
68,861
67,512
68,861
67,512
68,861
15,580
-
148,733
-
231,183
277,608
254,937
(1) S S Goh’s Remuneration of $453,798 is made up of $153,454 paid/payable by Waterco Ltd, $150,172 paid by Waterco
(Far East) Sdn Bhd (a subsidiary) and $150,172 paid by Waterco International Pte Ltd (a subsidiary).
(2) Garry Norman’s Remuneration has been calculated up to the date of his retirement 25 October 2019
(3) Judy Raper’s Remuneration has been calculated from the date of her appointment 1 April 2020
(4) Sze Tin Lim’s Remuneration has been calculated up to the date of his retirement 23 July 2019
(5) The Board has decided in their meeting held on 24 June 2020, the definition of Key Management Personnel no longer
includes company secretary. Bee Hong Leo’s Remuneration has been shown for the FY20 year only.
(6) Included in the "Remuneration incl Salary, fees and leave" column are special incentive payments made to the following KMP
Bryan Goh
Gerard Doumit
30,000
20,000
Although the above KMP did not achieve a performance target level (based on Group Profit after tax from Continuing
Operations alone), the Remuneration Committee recommended to the Board a special payment be made to the above
KMP based on the lowest performance target level ("threshold level"). The Board accepted the recommendation of the
Remuneration Committee and the special payment was made in December 2020.
(7) Non-monetary benefits are made up of Company vehicle benefits.
32
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.
Waterco Limited Group Employee Share Option Plan
This plan was approved by the Board on 24 June 2021
On 23 August 2021, the CFO was issued 100,000 options at an exercise price of $3.15 per share (being the Volume
Weighted Average Price (VWAP) of Waterco Shares for the 5 days preceding date of issue) under this plan.
The Options will vest in 3 tranches in accordance with the Exercise Periods set out below provided the Vesting
Condition for each year has been met and the CFO remains employed by the company at the beginning of the
Exercise Period.
Tranche 1: 33,000 shares - the period beginning on 23 August 2022 and ending on 23 August 2031
Tranche 2: 33,000 shares - the period beginning on 23 August 2023 and ending on 23 August 2031
Tranche 2: 34,000 shares - the period beginning on 23 August 2024 and ending on 23 August 2031
Cash incentives, Performance-related Bonus and Share-based Payments
No options or other share-based payments were granted in the 2021 financial year.
Maximum cash incentives expressed as a percentage of fixed remuneration and the maximum value that could
have been earned in 2020/2021 if stretch performance targets were achieved are tabulated below:
Position
Key Management Personnel
Group CEO, Waterco Limited
Executive Director / Chief Operating Officer ,
Waterco Limited
Chief Financial Officer / Company Secretary,
Waterco Limited
Maximum possible
incentive
Maximum possible
incentive $
33%
30%
27%
$150,000
$100,000
$75,000
The percentage of cash incentives payable (subject to Board Approval) and forfeited for the year to key management
personnel.
Key Management Personnel
S S Goh
B Goh
G Doumit
Short term incentive in respect of 2021 financial year
Payable %
70%
66.50%
66.67%
Forfeited %
30%
33.50%
33.33%
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
Dated at Sydney this 10 September 2021
33
WATERCO LIMITED | ANNUAL REPORT 2021 Auditor’s Independence Declaration
34
CONSOLIDATED FINANCIAL REPORT
for the year ended 30 June 2021
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor's Report
36
37
38
39
40
78
79
35
WATERCO LIMITED | ANNUAL REPORT 2021 Consolidated Statement of Profit or Loss and other Comprehensive Income
For The Year Ended 30 June 2021
Consolidated Group
Continuing Operations
Revenues
Changes in inventories of finished goods and
work in progress
Raw materials and consumables used
Employee benefits expense
Depreciation and amortisation expense
Finance costs
Advertising expense
Discounts allowed
Outward freight expense
Rent expense
Research and development
Insurance – general
Contracted staff expense
Warranty expense
Commission expense
Other expenses
Profit before income tax expense
Income tax benefit/(expense)
Profit for the year from Continuing operations
Discontinued Operations
Profit from Discontinued Operations after tax
Net Profit for the year
Other comprehensive income
Note
No.
3
4
4
4
6
7
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
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
Members of the parent entity
Non-controlling interest
Total comprehensive income for the year
Earnings per share
Basic earnings per share from continuing and discontinued
operations (cents per share)
Basic earnings per share from continuing operations
(cents per share)
Basic earnings per share from discontinued operations
(cents per share)
Diluted earnings per share from continuing and discontinued
operations (cents per share)
31
31
31
31
The accompanying notes form part of these financial statements.
36
2021
$000
118,382
(2,226)
(55,494)
(24,263)
(6,623)
(367)
(1,745)
(514)
(2,256)
(1,156)
(1,719)
(1,225)
(257)
(683)
(450)
(10,343)
9,061
3,635
12,696
-
12,696
5,615
(2,585)
3,030
15,726
12,755
(59)
12,696
15,785
(59)
15,726
35.6
35.6
-
35.6
2020
$000
98,466
6,327
(54,663)
(22,043)
(6,566)
(959)
(2,043)
(306)
(2,010)
(1,324)
(1,366)
(1,051)
(269)
(281)
(409)
(7,599)
3,904
(890)
3,014
14,542
17,556
433
(2,730)
(2,297)
15,259
17,662
(106)
17,556
15,365
(106)
15,259
48.8
8.6
40.2
48.8
Consolidated Statement of Financial Position
As At 30 June 2021
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total Current Assets
Non-Current Assets
Property, plant & equipment
Right of use assets
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.
9
10
11
12
14
15
16
19
17
18
19
20
21
19
22
23
24
25
The accompanying notes form part of these financial statements.
2021
$000
11,694
13,719
34,716
1,022
61,151
58,822
12,883
1,200
1,364
74,269
Consolidated Group
2020
$000
9,697
36,848
33,060
792
80,397
51,606
13,350
292
560
65,808
135,420
146,205
11,487
5,054
982
3,868
21,391
9,022
4,347
212
13,581
34,972
100,448
35,590
18,442
45,842
99,874
574
100,448
14,056
16,761
810
1,956
33,583
19,177
5,974
210
25,361
58,944
87,261
35,982
15,413
35,233
86,628
633
87,261
37
WATERCO LIMITED | ANNUAL REPORT 2021 Consolidated Statement of Changes in Equity
For The Year Ended 30 June 2021
Consolidated Group
Note
No.
Balance at 30/6/19
Adjustment for change in
accounting policy (note 1)
Restated Balance at 30/6/19
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
Cancellation of shares under
Waterco Share Buyback
Disposal of controlled
entities
Dividends paid
Total transactions with
owners and other transfers
Ordinary
Shares
Retained
Earnings
Capital
Profits
Reserve
Asset
Revaluation
Reserve
Foreign
Currency
Translation
Reserve
Non-
Controlling
Interests
$000
$000
$000
$000
$000
$000
Total
$000
37,676
14,191
-
37,676
(36)
14,155
211
-
211
25,234
(2,221)
739
75,830
-
25,234
-
(2,221)
-
739
(36)
75,794
-
-
-
17,662
-
17,662
(1,694)
-
30
-
-
5,227
(1,811)
(1,694)
3,416
-
-
-
-
-
-
-
-
433
433
-
(106) 17,556
(2,730)
-
(2,297)
(2,730)
(106) 15,259
-
(5,514)
-
-
-
-
-
-
-
-
-
-
(1,694)
(287)
(1,811)
1,722
Balance at 30/6/20
35,982
35,233
211
20,153
(4,951)
633
87,261
Comprehensive income
Profit/(loss) for the year
Other comprehensive
Income/(loss) for the year
Total comprehensive
income for the year
Transactions with
owners, in their
capacity as owners
and other transfers
Cancellation of shares under
Waterco Share Buyback
Dividends paid
Total transactions with
-
-
-
12,755
-
12,755
(392)
-
-
(2,146)
30
owners and other transfers
(392)
(2,146)
-
-
-
-
-
-
-
-
(59) 12,696
5,615
(2,585)
-
3,030
5,615
(2,585)
(59) 15,726
-
-
-
-
-
-
-
-
-
(392)
(2,146)
(2,538)
Balance at 30/6/21
35,590
45,842
211
25,768
(7,536)
574 100,448
The accompanying notes form part of these financial statements.
38
Consolidated Statement of Cash Flows
For The Year Ended 30 June 2021
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 34)
Cash Flows from Investing Activities
Dividend received
Payment for property, plant & equipment
Payment for business
Proceeds from sale of business
Proceeds from sale of property, plant & equipment
Net cash (used in) investing activities
Cash Flows from Financing Activities
Proceeds from bank borrowings
Repayment of bank borrowings
Share buyback
Payment of right of use liabilities
Payment of lease liabilities
Dividends paid
Dividends paid-outside interests
Net cash (used in) 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 the end of the year (Note 9)
2021
$000
116,754
(111,516)
29
1,644
(367)
(1,311)
5,233
1
(2,795)
(1,426)
27,402
105
23,287
-
(19,560)
(391)
(1,737)
(236)
(2,146)
-
(24,070)
4,450
8,312
(1,068)
11,694
The accompanying notes form part of these financial statements.
2020
$000
102,176
(87,193)
39
945
(959)
(3,022)
11,986
1
(1,919)
-
-
-
(1,918)
1,016
(1,257)
(1,695)
-
(309)
(1,811)
-
(4,056)
6,012
4,166
(1,866)
8,312
39
WATERCO LIMITED | ANNUAL REPORT 2021 Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 1: Statement of Significant Accounting Policies
These consolidated financial statements and notes
represent those of Waterco Limited and controlled
entities, (“Group”).
Waterco Limited (a for-profit entity) is a listed public
company, incorporated and domiciled in Australia.
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 10
September 2021.
Basis of Preparation
The financial statements are general purpose financial
statements that have been prepared in accordance with
Australian Accounting Standards, Australian Accounting
Interpretations, other authoritative 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.
New or amended Accounting Standards and
Interpretations adopted
The consolidated entity has adopted all of the new or
amended Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board
('AASB') that are mandatory for the current reporting
period.
Any new or amended Accounting Standards or
Interpretations that are not yet mandatory have not been
early adopted.
The following Accounting Standards and Interpretations
are most relevant to the consolidated entity:
Conceptual
(Conceptual Framework)
Framework
for
Financial Reporting
40
The consolidated entity has adopted the revised
Conceptual Framework from 1 July 2020. The Conceptual
Framework contains new definition and recognition
criteria as well as new guidance on measurement that
affects several Accounting Standards, but it has not had
a material impact on the consolidated entity's financial
statements.
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 13. All
subsidiaries have a 30 June financial year end except
for Waterco Guangzhou Ltd, PT Waterco Indonesia
and Waterco Vietnam Company Ltd which have a 31
December financial year end. The reason for this is
local company regulation.
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.
Intercompany 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.
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 interests 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
shown
income. Non-controlling
separately within the equity section of the statement
of financial position and statement of comprehensive
income.
interests are
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 1: Statement of Significant Accounting Policies
(continued)
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 is accounted 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.
All transaction costs incurred in relation to the business
combination are expensed
the 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. 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.
c. Lease liabilities
A lease liability is recognised at the commencement
date of a lease. The lease liability is initially recognised
at the present value of the lease payments to be
made over the term of the lease, discounted using
the interest rate implicit in the lease or, if that rate
cannot be readily determined, the consolidated
entity's incremental borrowing rate. Lease payments
comprise of fixed payments less any lease incentives
receivable, variable lease payments that depend on
an index or a rate, amounts expected to be paid under
residual value guarantees, exercise price of a purchase
option when the exercise of the option is reasonably
certain to occur, and any anticipated termination
penalties. The variable lease payments that do not
depend on an index or a rate are expensed in the
period in which they are incurred.
Lease liabilities are measured at amortised cost using
the effective interest method. The carrying amounts
are remeasured if there is a change in the following:
future lease payments arising from a change in an
index or a rate used; residual guarantee; lease term;
certainty of a purchase option and termination
penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of-use
asset, or to profit or loss if the carrying amount of the
right-of-use asset is fully written down.
41
WATERCO LIMITED | ANNUAL REPORT 2021
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 1: Statement of Significant Accounting Policies
(continued)
d. 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.
e. Income Tax
income tax expense/(income) for the year
The
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 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.
for business combinations, no deferred
Except
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 tax assets relating to 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.
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.
42
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.
the “stand-alone
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
to
using
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.
taxpayer” approach
f. Discontinued operations
A discontinued operation is a component of the
consolidated entity that has been disposed of or
is classified as held for sale and that represents a
separate major line of business or geographical area
of operations, is part of a single co-ordinated plan to
dispose of such a line of business or area of operations,
or is a subsidiary acquired exclusively with a view
to resale. The results of discontinued operations are
presented separately on the face of the statement of
profit or loss and other comprehensive income.
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.
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 1: Statement of Significant Accounting Policies
(continued)
g. Foreign Currency Transactions and Balances
(continued)
the exchange
Transaction and balances
Foreign currency transactions are translated into
functional currency using
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
in the statement of comprehensive
recognised
income.
Group companies
The financial
foreign
operations whose functional currency is different
from the group’s presentation currency are translated
as follows:
results and position of
• 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 20)
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.
i. Deferred Expenditure
recognised as an expense when
Expenditure during the research phase of a project
incurred.
is
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.
43
WATERCO LIMITED | ANNUAL REPORT 2021
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 1: Statement of Significant Accounting Policies
(continued)
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 arm's length transaction.
The value of the land and buildings owned by the
consolidated group are based on the following
independent valuations:
Land &
Buildings
Rydalmere
NSW
Date of
Valuation
Amount
30 June 2021
AUD 29,500,000
Malaysia
15 May 2020
USA
7 March 2019
AUD 20,426,227
(MYR 60,000,000)
AUD 2,426,979
(USD 1,720,000)
Increases (net of deferred taxes) 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. 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.
On 30 June 2021, Waterco Limited revalued its
Rydalmere Property resulting in an increase of $A7.8m
from the last valuation of the property done on 27
April 2018. The value of the Rydalmere Property went
up from $21.7m to $29.5m.
The above valuation was performed by an
independent valuer.
Plant and equipment
Plant and equipment are measured on the cost
basis and therefore carried at cost less accumulated
44
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(o) 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.
included
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.
Subsequent costs are
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.
in
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.
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 1: Statement of Significant Accounting Policies
(continued)
k. Property, Plant and Equipment (continued)
Depreciation (continued)
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:
estimated useful life of the asset, whichever is the
shorter. Where the consolidated entity expects to
obtain ownership of the leased asset at the end of the
lease term, the depreciation is over its estimated useful
life. Right-of use assets are subject to impairment or
adjusted for any remeasurement of lease liabilities.
The consolidated entity has elected not to recognise a
right-of-use asset and corresponding lease liability for
short-term leases with terms of 12 months or less and
leases of low-value assets. Lease payments on these
assets are expensed to profit or loss as incurred.
Class of Fixed Assets
Depreciation Rate
m. Revenue recognition
Buildings
1.50% - 2.50%
The consolidated entity recognises revenue as follows:
Plant and equipment
6.00% -
33.33%
Revenue from contracts with customers
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 recognised in the profit and
loss in the period in which they arise.
l. Right-of-use assets
A
right-of-use
at
asset
recognised
the
is
commencement date of a lease. The right-of-use
asset is measured at cost, which comprises the
initial amount of the lease liability, adjusted for, as
applicable, any lease payments made at or before
the commencement date net of any lease incentives
received, any initial direct costs incurred, and, except
where included in the cost of inventories, an estimate
of costs expected to be incurred for dismantling and
removing the underlying asset, and restoring the site
or asset.
Right-of-use assets are depreciated on a straight-line
basis over the unexpired period of the lease or the
Revenue is recognised at an amount that reflects
the consideration to which the consolidated entity is
expected to be entitled in exchange for transferring
goods or services to a customer. For each contract
with a customer, the consolidated entity: identifies the
contract with a customer; identifies the performance
obligations in the contract; determines the transaction
price which takes into account estimates of variable
consideration and the time value of money; allocates
the transaction price to the separate performance
obligations on the basis of the relative stand-alone
selling price of each distinct good or service to be
delivered; and recognises revenue when or as each
performance obligation is satisfied in a manner that
depicts the transfer to the customer of the goods or
services promised.
Variable consideration within the transaction price,
if any, reflects concessions provided to the customer
such as discounts, rebates and refunds, any potential
bonuses receivable from the customer and any other
contingent events. Such estimates are determined
using either the 'expected value' or 'most likely
amount' method. The measurement of variable
consideration is subject to a constraining principle
whereby revenue will only be recognised to the extent
that it is highly probable that a significant reversal in
the amount of cumulative revenue recognised will
not occur. The measurement constraint continues
until the uncertainty associated with the variable
consideration is subsequently resolved. Amounts
received that are subject to the constraining principle
are recognised as a refund liability.
45
WATERCO LIMITED | ANNUAL REPORT 2021
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 1: Statement of Significant Accounting Policies
(continued)
m. Revenue recognition (continued)
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).
n. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net
of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian
Taxation Office. In these circumstances, the GST is
recognised as part of the cost of acquisition of the
asset or as part of 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.
o. 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).
46
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.
p. Trade and Other Receivables
Trade receivables are initially recognised at fair value
and subsequently measured at amortised cost using
the effective interest method, less any allowance for
expected credit losses. Trade receivables are generally
due for settlement within 30 days.
The consolidated entity has applied the simplified
approach to measuring expected credit losses, which
uses a lifetime expected loss allowance. To measure
the expected credit losses, trade receivables have
been grouped based on days overdue.
Other receivables are recognised at amortised cost,
less any allowance for expected credit losses.
q. Trade and Other Payables
These amounts represent liabilities for goods and
services provided to the consolidated entity prior to
the end of the financial year and which are unpaid.
Due to their short-term nature, they are measured at
amortised cost and are not discounted. The amounts
are unsecured and are usually paid within 30 days of
recognition.
r. 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.
s. 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.
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 1: Statement of Significant Accounting Policies
(continued)
t. Borrowings and Borrowing Costs
Loans and borrowings are initially recognised at
the fair value of the consideration received, net of
transaction costs. They are subsequently measured at
amortised cost using the effective interest method.
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 in
the period in which they are incurred.
u. Investments and Other Financial Assets
Investments and other financial assets are initially
measured at fair value. Transaction costs are included
as part of the initial measurement, except for financial
assets at fair value through profit or loss. Such assets are
subsequently measured at either impaired cost or fair
value depending on their classification. Classification
is determined based on both the business model
within which such assets are held and the contractual
cash flow characteristics of the financial asset, unless
an accounting mismatch is being avoided.
Financial assets are derecognised when
the
rights to receive cash flows have expired or have
been transferred and the consolidated entity has
transferred substantially all the risks and rewards of
ownership. When there is no reasonable expectation
of recovering part or all of a financial asset, its carrying
value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at
fair value through other comprehensive income are
classified as financial assets at fair value through profit
or loss. Typically, such financial assets will be either:
(i) held for trading, where they are acquired for
the purpose of selling in the short-term with an
intention of making a profit, or a derivative; or
(ii) designated as such upon initial recognition where
permitted. Fair value movements are recognised
in profit or loss.
Financial assets at fair value through other
comprehensive income
Financial assets at
through other
comprehensive income include equity investments
which the consolidated entity intends to hold for
the foreseeable future and has irrevocably elected to
classify them as such upon initial recognition.
fair value
Impairment of financial assets
The consolidated entity recognises a loss allowance
for expected credit losses on financial assets which
are either measured at amortised cost or fair
value through other comprehensive income. The
measurement of the loss allowance depends upon
the consolidated entity's assessment at the end of
each reporting period as to whether the financial
instrument's credit risk has increased significantly
since initial recognition, based on reasonable and
supportable information that is available, without
undue cost or effort to obtain.
loss allowance
Where there has not been a significant increase
in exposure to credit risk since initial recognition,
is
a 12-month expected credit
estimated. This represents a portion of the asset's
lifetime expected credit losses that is attributable
to a default event that is possible within the next 12
months. Where a financial asset has become credit
impaired or where it is determined that credit risk
has increased significantly, the loss allowance is
based on the asset's lifetime expected credit losses.
The amount of expected credit loss recognised is
measured on the basis of the probability weighted
present value of anticipated cash shortfalls over
the life of the instrument discounted at the original
effective interest rate.
For financial assets measured at fair value through
other comprehensive income, the loss allowance is
recognised within other comprehensive income. In all
other cases, the loss allowance is recognised in profit
or loss.
47
WATERCO LIMITED | ANNUAL REPORT 2021
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 1: Statement of Significant Accounting Policies
(continued)
v. Current and Non-Current Classifications
Assets and liabilities are presented in the statement of
financial position based on current and non-current
classification.
An asset is classified as current when:
i.
it is either expected to be realised or intended to
be sold or consumed in the consolidated entity's
normal operating cycle;
ii.
it is held primarily for the purpose of trading;
iii. it is expected to be realised within 12 months
after the end of the reporting period; or
iv. the asset is cash or cash equivalent unless
restricted from being exchanged or used to settle
a liability for at least 12 months after the reporting
period.
All other assets are classified as non-current.
A liability is classified as current when:
i.
it
is either expected to be settled
consolidated entity's normal operating cycle;
in the
ii. it is held primarily for the purpose of trading;
iii. it is due to be settled within 12 months after the
end of the reporting period; or
iv. there is no unconditional right to defer the
settlement of the liability for at least 12 months
after the reporting period.
All other liabilities are classified as non-current.
w. Rounding of Amounts
The amounts in the financial statements and directors’
report have been rounded off to the nearest $1,000
in accordance with ASIC Corporations (Rounding in
Financial/Directors Reports) Instrument 2016/191.
x. 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.
reasonable
expectation of future events and are based on current
trends and economic data, obtained both externally
and within the group.
Estimates
assume
a
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the
impacts that the Coronavirus (COVID-19) pandemic
has had, or may have, on the consolidated entity
based on known information. This consideration
48
extends to the nature of the products and services
offered, customers, supply chain, staffing and
geographic regions in which the consolidated entity
operates. Other than as addressed in specific notes,
there does not currently appear to be either any
significant impact upon the financial statements or
any significant uncertainties with respect to events or
conditions which may impact the consolidated entity
unfavourably as at the reporting date or subsequently
as a result of the Coronavirus (COVID-19) pandemic.
Key Estimates
(i)
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.
inventory
Management has evaluated these
items and do not consider the carrying value of
these items as material. All inventory items have
therefore been classified as current.
(ii) Inventory Obsolescence
Management review
inventory reports on a
regular basis to determine slow-moving or
obsolescence.
Appropriate provisions are carried for impairment
of slow-moving
items are
disposed of as and when identified.
items. Obsolete
(iii) 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.
y. New Accounting Standards and Interpretations
not yet mandatory or early adopted
Australian Accounting Standards and Interpretations
that have recently been issued or amended but are
not yet mandatory, have not been early adopted
by the consolidated entity for the annual reporting
period ended 30 June 2021.
The consolidated entity has not yet assessed the
impact of these new or amended Accounting
Standards and Interpretations.
z. Comparative Figures
Where required by Accounting Standards comparative
figures have been adjusted to conform with changes
in presentation for the current financial year.
Notes To The Financial Statements
For The Year Ended 30 June 2021
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
LIABILITIES
Current Liabilities
TOTAL LIABILITIES
EQUITY
Issued capital
Capital profits reserve
Asset revaluation reserve
Retained earnings
TOTAL EQUITY
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Total profit after tax
Total comprehensive income
2021
$000
27,056
102,290
15,825
27,367
35,590
180
17,400
21,752
74,922
2021
$000
4,626
4,626
2020
$000
50,274
116,246
29,500
49,679
35,982
180
11,132
19,273
66,567
2020
$000
17,906
17,906
Guarantees
At 30th June 2021, Waterco Ltd has provided guarantees up to RM11,150,000 and USD1,000,000 (AUD4,901,798) (2020:
RM11,150,000 and USD1,000,000 (AUD5,157,622) to two Malaysian Banks for loans provided to a subsidiary, Waterco (Far
East) Sdn Bhd.
Contractual Commitments
At 30th June 2021, Waterco Ltd has not entered into any contractual commitments for the acquisition of any property,
plant and equipment. (2020: $3,085,000).
49
WATERCO LIMITED | ANNUAL REPORT 2021 Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 3: Revenue and Other Income
Revenue from Continuing Operations
Sales revenue
• Sale of goods
Other revenue
• Interest received 3(a)
• Dividends received
• Rental income
• Rent-Other
• Other
Total Revenue
Timing of revenue recognition
- Goods transferred at a point in time
- Services transferred over time
(a) Interest received or receivable from
• Other persons
Total interest revenue
Other Income
Net gain on disposal of non-current assets
• Property, plant and equipment
• Goodwill
Consolidated Group
2021
$000
2020
$000
113,345
29
1
3,434
265
1,308
118,382
113,416
4,966
118,382
29
29
3
-
93,583
39
1
3,291
155
1,397
98,466
93,788
4,688
98,466
39
39
49
206
50
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 4: Profit for the Year
Profit for the year has been determined after:
(a) Expenses:
Cost of Sales
Finance costs:
• Borrowings
• Lease liabilities
• Finance charges on finance leases
Depreciation of non-current assets :
• Buildings
• Plant & equipment
• Capitalised leased assets
• Right of use assets
Impairment of non-current assets:
• Land use rights
• Goodwill on acquisition
• Goodwill on consolidation
Total depreciation and amortisation
Bad and doubtful debts
• Trade debtors
Rental expense on Operating leases
• Minimum lease payments
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
Remuneration of other auditors of subsidiaries for:
• Auditing or reviewing the financial report of subsidiaries
Consolidated Group
2021
$000
2020
$000
58,087
48,218
162
191
14
367
683
824
195
4,846
6,548
-
50
25
75
6,623
-
1,156
76
152
150
912
24
23
959
487
1,144
205
4,798
6,634
(97)
4
25
(68)
6,566
300
1,324
-
210
186
51
WATERCO LIMITED | ANNUAL REPORT 2021 Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 6: Income Tax Expense
(a) The components of tax expense comprise:
• Current tax
• Deferred tax
• Recoupment of prior year tax losses
Income tax attributable to:
- Profit from continuing operations
- Profit from discontinued operations
(b) The prima facie tax on profit before income tax is
to the income tax as follows:
Profit before income tax
Prima facie tax payable on profit before income tax at 30%
(2020: 30%)
Add
Tax effect of:
• Depreciation of buildings
• Foreign controlled entities tax losses not tax effected
• Unrealised foreign exchange losses
• Transfer of revaluation gain on sale of controlled entity
to retained profits
• Right of use assets
• Non deductible expenses
• Other
Less
Tax effect of:
• Research and development
• Effects of lower rates in overseas countries
• Unrealised foreign exchange gains
• Exempt income
• Adjustment recognised for prior period
• Right of use assets
• Reinvestment allowance
• Foreign controlled entities tax losses not tax effected
• Other
Income tax expense attributable to entity
The applicable weighted average effective tax rates are as follows:
52
2021
$000
1,380
(5,015)
-
(3,635)
(3,635)
-
(3,635)
9,061
2,718
235
-
200
-
-
38
37
129
651
-
20
5,158
183
357
349
16
(3,635)
(40.1)%
Consolidated Group
2020
$000
4,325
(73)
19
4,271
890
3,381
4,271
21,828
6,548
105
-
-
1,655
77
9
10
114
133
115
-
66
-
-
3,638
67
4,271
20%
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 7: Discontinued Operations
On 31 May 2020, Waterco Ltd closed Waterco Canada Inc
and deregistered the company.
On 3 June 2020, Waterco Ltd sold its shares in Waterco (C) Ltd
Financial information relating to the discontinued operations
to the date of closure/sale is set out below
The financial performance of the discontinued operations to
the date of closure/sale, which is included in the profit/(loss)
from discontinued operations per the statement of
comprehensive income, is as follows:
Revenue
Expenses
Profit before income tax
Income tax expense
(Loss) attributable to the members of the parent entity
Profit on sale before income tax
Income tax expense
Profit on sale after income tax
Total profit/(loss) after tax attributable to discontinued
operations
The net cash flows for the discontinued divisions, which
have been incorporated into the statement of cash flows
are as follows:
Net cash inflow/(outflow) from operating activities
Net cash inflow/(outflow) from investing activities
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash generated by the
discontinued division
Net gain/(loss) on disposal of divisions included in gain from
discontinued operations per the statement of comprehensive
income.
Consolidated Group
2021
$000
2020
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,991
(3,084)
(1,093)
-
(1,093)
19,016
3,381
15,635
14,542
4,416
-
-
4,416
14,542
53
WATERCO LIMITED | ANNUAL REPORT 2021 Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 8: Key Management Personnel Compensation
(a) Key Management Personnel (KMP) Compensation
The total remuneration paid to KMP of the company and the Group during the year are as follows:
Short-term employee benefits
Post-employment benefits
Other long term benefits
Consolidated Group
2020
$000
1,420
90
22
1,532
2021
$000
1,159
73
35
1,267
Refer to the remuneration report contained in the directors’ report for remuneration paid or payable to each KMP
(b) 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
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.
54
Notes To The Financial Statements
For The Year Ended 30 June 2021
CURRENT ASSETS
Note 9: Cash and cash equivalents
Cash at bank and in hand (1)
Reconciliation of cash
Cash at the end of the year as shown in the statement of cash
Cash and cash equivalents
Bank overdraft (note 18)
(1) Includes $437,452 (2020:$491,539) in advertising levies held by
Waterco Ltd in its capacity as the franchisor of the Swimart
network and included in other creditors (see note 17).
Amounts are held in a separate bank account at year end and
are subject to in accordance with the franchise agreement and are
available for general use by Waterco Ltd.
Note 10: Trade and other receivables
Trade receivables
Less: allowance for expected credit loss
impairment of receivables)
Other receivables
2021
$000
11,694
11,694
-
11,694
13,082
(403)
12,679
1,040
13,719
Consolidated Group
2020
$000
9,697
9,697
(1,385)
8,312
9,063
(455)
8,608
28,240
36,848
55
WATERCO LIMITED | ANNUAL REPORT 2021 Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 10: Trade and other receivables (continued)
Movements in the allowance of expected credit loss of receivables are as follows:
Consolidated Group
Current trade receivables
Opening
Balance
1.7.2019
$000
Charge for
the Year
$000
Amounts
Written Off
$000
524
231
(300)
Opening
Balance
1.7.2020
$000
Charge for
the Year
$000
Amounts
Written Off
$000
Closing
Balance
30.6.2020
$000
455
Closing
Balance
30.6.2021
$000
Consolidated Group
Current trade receivables
455
88
(140)
403
There are $3,009,000 (2020: $868,000) within trade and other receivables that are not impaired and are past due. It is
expected these balances will be received in full. Impaired receivables 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
counterparty 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
$000
$000
Past due but not impaired (days overdue)
< 30
$000
31–60
$000
61–90
$000
Consolidated Group
2021
Trade and term receivables
Other receivables
Total
2020
Trade and term receivables
Other receivables
Total
13,082
1,040
14,122
9,063
28,240
37,303
403
403
455
455
1,715
1,715
648
648
482
482
128
128
271
271
92
92
Within initial
trade terms
$000
9,670
1,040
10,710
7,740
28,240
35,980
> 90
$000
541
541
-
-
The Group does not hold any financial assets with terms that have been renegotiated, but which would otherwise be
past due or impaired.
The consolidated entity has increased its monitoring of debt recovery as there is an increased probability of customers
delaying payment or being unable to pay, due to the Coronavirus (COVID-19) pandemic. As a result, the calculation of
expected credit losses has been revised as at 30 June 2021 and rates have increased in each category up to 6 months
overdue.
56
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 11: 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 12: Other current assets
Prepayments
NON CURRENT ASSETS
Note 13: Interests in Subsidiaries
Parent Entity
Waterco Limited
Controlled Entities of Waterco Limited:
Swimart Pty Ltd
Zane Solar Systems Australia Pty Ltd
Swimart Network Pty Ltd
Ezera Systems Pty Ltd
Waterco USA Inc
Waterco Engineering Sdn Bhd
Waterco (Far East) Sdn Bhd
Watershoppe (M) Sdn Bhd
Baker Hydro (Far East) Sdn Bhd
Solar-Mate Sdn Bhd
Waterco (NZ) Ltd
Swimart (NZ) Ltd
Waterco (Guangzhou) Ltd
Waterco (Europe) Ltd
PT Waterco Indonesia
Waterco International Pte Ltd
Medipool Pte Ltd
Waterco France
Beijing Waterco Trading Co Ltd**
Guangzhou Waterco Environmental Technology Co Ltd
Shanghai Waterco Trading Co Ltd
Waterco Vietnam Company Limited*
2021
$000
9,928
3,236
23,915
3,205
(5,568)
34,716
1,022
1,022
Consolidated Group
2020
$000
10,499
2,255
21,340
2,169
(3,203)
33,060
792
792
Country of
incorporation
Carries on
business in
% owned
2021
2020
Australia
Australia
-
-
Australia
Australia
Australia
Australia
USA
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
New Zealand
New Zealand
China
Australia
Australia
Australia
Australia
USA
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
New Zealand
New Zealand
China
United Kingdom United Kingdom
Indonesia
Singapore
Singapore
France
China
China
China
Vietnam
Indonesia
Singapore
Singapore
France
China
China
China
Vietnam
100
100
100
60
100
100
100
100
100
100
100
100
100
100
51
100
60
100
-
100
100
100
100
100
100
60
100
100
100
100
100
100
100
100
100
100
51
100
60
100
100
100
100
-
* On 24 December 2020, Waterco Vietnam Company Limited was incorporated (as a fully owned subsidiary of Waterco
Far East Sdn Bhd) with a paid-up capital of VND2.325 billion ($A126,729)
** On 8 January 2021, Beijing Waterco Trading Co Ltd was deregistered.
57
WATERCO LIMITED | ANNUAL REPORT 2021 Consolidated Group
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 14: Property, plant & equipment
Freehold land at independent valuation
Freehold buildings at independent valuation
Less: accumulated depreciation
Plant & equipment at cost
Less: accumulated depreciation
Leased plant & equipment at cost
Less: accumulated depreciation
Total written down value
2021
$000
19,138
32,155
(440)
31,715
33,285
(25,656)
7,629
496
(156)
340
58,822
Movements in Carrying Amounts
2021
Consolidated Group:
Balance at the beginning of year
Effects of exchange rate changes
Additions
Revaluation
Disposals
Depreciation expense*
Carrying amount at the end of year
Freehold
Land
$000
Buildings
$000
Land
use
$000
Plant &
Equipment
$000
Leased
Plant
$000
17,850
(682)
-
1,970
-
-
19,138
26,118
(744)
52
6,984
-
(695)
31,715
-
-
-
-
-
-
-
7,064
(240)
2,744
-
(178)
(1,761)
7,629
574
-
64
-
(103)
(195)
340
*Depreciation expense that is absorbed into the cost of manufactured inventory is $883,722
2020
Consolidated Group:
Balance at the beginning of year
Effects of exchange rate changes
Additions
Revaluation
Disposals
Depreciation expense*
Carrying amount at the end of year
Freehold
Land
$000
Buildings
$000
Land
use
$000
Plant &
Equipment
$000
Leased
Plant
$000
17,763
(117)
-
204
-
-
17,850
30,761
(71)
17
393
(4,308)
(674)
26,118
4,980
(4,980)
-
-
7,311
(14)
2,176
-
(543)
(1,866)
7,064
644
(1)
234
-
(98)
(205)
574
*Depreciation expense that is absorbed into the cost of manufactured inventory is $889,805
58
2020
$000
17,850
27,091
(973)
26,118
32,352
(25,288)
7,064
781
(207)
574
51,606
Total
$000
51,606
(1,666)
2,860
8,954
(281)
(2,651)
58,822
Total
$000
61,459
(203)
2,427
597
(9,929)
(2,745)
51,606
Notes To The Financial Statements
For the year ended 30 June 2021
Note 14: Property, Plant & Equipment (continued)
If Land & Buildings were stated at historic cost,
amounts would be as follows:
Cost
Less: Accumulated depreciation
Net book value
Consolidated Group
2021
$000
2020
$000
24,939
(5,160)
19,779
25,254
(4,916)
20,338
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 their market value.
Note 15: Right of use Assets
Leased building
Accumulated depreciation
28,077
(15,194)
12,883
30,116
(16,766)
13,350
The consolidated entity leases land and buildings for its offices, warehouses and retail outlets under agreements of
between five to fifteen years with, in some cases, options to extend. The leases have various escalation clauses. On
renewal, the terms of the leases are renegotiated. The consolidated entity also leases plant and equipment under
agreements of between three to seven years.
Note 16: Intangible assets
Goodwill
Less: impairment
Goodwill on consolidation
Less: impairment
Product development costs
less: amortisation
Movements in Carrying Amounts
Consolidated Group:
Balance at the beginning of year
Additions
Disposals
Effects of exchange rate changes
Impairment/amortisation expense
Carrying amount at the end of year
1,072
(62)
1,010
249
(62)
187
3
-
3
1,200
Goodwill on
consolidation
$000
Goodwill
$000
Deferred
expenditure
$000
212
-
-
(25)
187
67
993
(50)
1,010
13
-
-
(10)
-
3
79
(12)
67
249
(37)
212
13
-
13
292
Total
$000
292
993
-
(10)
(75)
1,200
59
WATERCO LIMITED | ANNUAL REPORT 2021 Notes To The Financial Statements
For the year ended 30 June 2021
CURRENT LIABILITIES
Note 17: Trade and other payables - unsecured
Trade creditors
Sundry creditors and accrued expenses (1)
(1) Included in sundry creditors are advertising levies collected of
$437,452 (2020:$491,539) and held by Waterco Ltd in its
capacity as the franchisor of the Swimart network. These amounts
are held in a separate bank account at year end (see Note 9).
Note 18: Borrowings
Bank loans - secured (refer Note 21)
Bank trade bills
Bank overdraft
Right of use lease liability
Lease liability
Note 19: 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
60
Consolidated Group
2021
$000
2020
$000
5,833
5,654
11,487
9,701
4,355
14,056
104
-
-
4,797
153
5,054
982
2,081
7,457
(418)
9,120
(4,773)
4,347
-
2,134
3,895
(248)
356
6,137
(4,773)
1,364
8,328
2,532
1,385
4,291
225
16,761
810
1,428
4,771
295
6,494
(520)
5,974
-
981
-
(239)
338
1,080
(520)
560
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 19: Taxes (continued)
c) Reconciliations
i. Gross Movements
The overall movement in the deferred tax account is
as follows:
Opening balance
Credit/(Charge) 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
Transfer to deferred tax asset
Credit/(Charge) to statement of comprehensive income
Closing balance
Property revaluation adjustments taken direct to equity
Opening balance
Net revaluations during current period taken direct to 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 asset for each
temporary difference during the year is as follows:
Provisions
Opening balance
Credit/(Charge) to statement of comprehensive income
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
Transfer from deferred tax liability
Credit/(Charge) to statement of comprehensive income
Closing balance
Other
Opening balance
Credit/(charge) to statement of comprehensive income
Closing balance
Consolidated Group
2021
$000
2020
$000
(5,415)
(255)
2,686
(2,984)
1,406
-
(105)
1,301
7,176
1,061
-
8,237
(2,090)
1,672
(418)
981
1,153
2,134
-
3,895
3,895
(239)
(9)
(248)
338
18
356
(5,382)
(33)
-
(5,415)
1,428
-
(22)
1,406
5,706
1,470
-
7,176
(745)
(1,345)
(2,090)
899
82
981
-
-
-
(232)
-
(7)
(239)
340
(2)
338
61
WATERCO LIMITED | ANNUAL REPORT 2021 Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 19: Taxes (continued)
d) Deferred tax assets not brought to account the benefits
of which can only be realised in if the conditions for
deductibility set out in note 1e) occur - tax losses
- Operating losses
Note 20: Short-term provisions
Employee Benefits (see note 1h)
Opening Balance
Additional provisions
Amounts used
Closing Balance
Consolidated Group
2021
$000
2020
$000
2,544
2,544
1,956
2,847
(935)
3,868
2,866
2,866
1,811
977
(832)
1,956
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes all unconditional entitlements (including bonuses 1,783,335 FY20
nil) where employees have completed the required period of service and also those where employees are entitled to pro-
rata payments in certain circumstances. The entire amount is presented as current, since the consolidated entity does
not have an unconditional right to defer settlement.
NON-CURRENT LIABILITIES
Note 21: Borrowings
Bank loans - secured (1)
Right of use lease liability
Lease liability
782
8,108
132
9,022
9,584
9,361
232
19,177
(1) Bank facilities of the group are secured by a first ranking general security interest over all the assets and undertakings
of the parent entity (including a first registered mortgage over the Rydalmere Property), and corporate guarantees
from the parent entity to the banks of an overseas subsidiary. That part of the facilities which are payable or subject
to an annual review within 12 months, are classified as current.
Bank loan amount of AUD nil relates to the parent entity and bears interest at 1.99%- 2.25% repayable by quarterly
instalments with a maturity date of 27 November 2021. Bank loan amount of AUD774,000 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 22: 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
62
210
2
-
212
4,080
723
202
8
-
210
2,166
660
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 23: Issued capital
Ordinary shares are classified as equity.
35,855,221 ordinary shares fully paid at beginning of the year
(2020: 36,632,651)
On 31 July 2020, 19,702 shares were purchased at $2.57 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 August 2020, 724 shares were purchased at $2.60 and
cancelled under Waterco Ltd Share-buyback Scheme
On 30 September 2020, 38,197 shares were purchased at $2.75 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 December 2020, 923 shares were purchased at $2.80 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 January 2021, 3,541 shares were purchased at $2.80 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 March 2021, 39,271 shares were purchased at $2.86 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 May 2021, 37,615 shares were purchased at $2.90 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 July 2019, 12,469 shares were purchased at $1.62 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 August 2019, 680 shares were purchased at $1.75 and
cancelled under Waterco Ltd Share-buyback Scheme
On 30 September 2019, 26,028 shares were purchased at $1.94 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 October 2019, 22,145 shares were purchased at $2.03 and
cancelled under Waterco Ltd Share-buyback Scheme
On 30 November 2019, 150,587 shares were purchased at $2.12 and
cancelled under aterco Ltd Share-buyback Scheme
On 31 December 2019, 45,108 shares were purchased at $2.15 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 January 2020, 13,232 shares were purchased at $2.12 and
cancelled under Waterco Ltd Share-buyback Scheme
On 29 February 2020, 388,779 shares were purchased at $2.27 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 March 2020, 50,731 shares were purchased at $2.10 and
cancelled under Waterco Ltd Share-buyback Scheme
On 30 April 2020, 39,926 shares were purchased at $2.02 and
cancelled under Waterco Ltd Share-buyback Scheme
On 30 June 2020, 27,745 shares were purchased at $2.33 and
cancelled under Waterco Ltd Share-buyback Scheme
35,715,248 ordinary shares fully paid at the end of
the year (2020: 35,855,221)
Consolidated Group
2021
$000
2020
$000
35,982
37,676
(51)
(2)
(105)
(3)
(10)
(112)
(109)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(20)
(1)
(50)
(45)
(319)
(97)
(28)
(881)
(107)
(81)
(65)
35,590
35,982
63
WATERCO LIMITED | ANNUAL REPORT 2021 Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 23: Issued Capital (continued)
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and
the company does not have a limited amount of authorised capital.
On a show of hands, every member present at a meeting in person or by proxy shall have one vote and, upon a poll, each
share shall have one vote.
Share buy-back
On 10 May 2019, the company announced a fourth share buyback of $2,500,000 worth of shares (approximately 1,666,666
shares) commencing on 13 May 2019 and ending on 12 May 2020 (or earlier if the $2,500,000 is purchased before then).
During the current year, the company purchased and cancelled 749,685 (2019: 4,611) shares costing $1,630,060 (2019:
$7,324).
This Share buyback expired on 12 May 2020.
On 28 May 2020, the company announced a fifth share buyback of $3,000,000 worth of shares (approximately 1,363,636
shares) commencing on 1 June 2020 and ending on 31 May 2021 (or earlier if the $3,000,000 is purchased before then).
During the current year, the company purchased and cancelled 139,973 (2020: 27,745) shares costing $391,272 (2020:
$64,742).
This Share buyback expired on 31 May 2021.
On 1 June 2021, the company announced a sixth share buyback of $3,000,000 worth of shares (approximately 1,034,483
shares) commencing on 16 June 2021 and ending on 15 June 2022 (or earlier if the $3,000,000 is purchased before then).
During the current year, the company purchased and cancelled nil shares.
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 2021 and 30 June 2020 are as follows:
2021
$000
14,076
(11,694)
2,382
100,448
102,830
2%
Consolidated Group
2020
$000
35,938
(9,697)
26,241
87,261
113,502
30%
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
64
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note
No.
Note 24: 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
Sale of controlled entity
Property revaluation increment (net of tax and
reinstatement)
Effect of foreign exchange changes on translation
Balance at the end of the year
The asset revaluation reserve records the revaluation
of non-current assets
Note 25: Retained earnings
Opening retained earnings
Transfer from asset revaluation reserve on disposal
of controlled entities
Net profit attributable to the members of the parent
entity
Dividends paid
Closing retained earnings
30
Consolidated Group
2020
$000
211
2021
$000
211
(7,538)
(4,951)
20,153
-
6,268
(653)
25,768
25,234
(5,514)
485
(52)
20,153
18,441
15,413
35,233
-
12,755
(2,146)
45,842
14,191
5,227
17,662
(1,811)
35,233
65
WATERCO LIMITED | ANNUAL REPORT 2021 Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 26: 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.
18
21
Consolidated Group
2020
$000
236
242
478
(21)
457
225
232
457
2021
$000
161
134
295
(10)
285
153
132
285
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.
Note 27: Contingent Liabilities
Estimate of the maximum amount of contingent
liabilities that may become payable
Guarantees provided to banks on behalf of a subsidiary
Note 28: Related Parties
Transactions with director related parties
i) Sales made to Asiapools (M) Sdn Bhd.
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, offices and a retail shop
Mr S S Goh is a director and shareholder of Mint Holdings
Pty Ltd
(iii) Payments received from Mint Holdings Pty Ltd for
rental of office space
(iv) Management fee charged to Mint Holdings Pty Ltd for
administration and secretarial services.
4,902
4,902
5,372
5,372
227
680
22
-
162
660
-
30
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
66
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 29: 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 to reporting segments
based on the services provided to those reporting
segments. 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 value based on market interest rates.
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
67
WATERCO LIMITED | ANNUAL REPORT 2021 Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 29: Operating Segments (continued)
Geographical Segments
AUSTRALIA &
NEW ZEALAND
$000
76,081
1,009
77,090
2021
ASIA
$000
11,870
33,398
45,268
NORTH
AMERICA &
EUROPE
$000
CONSOLIDATED
GROUP
$000
25,394
589
25,983
113,345
34,996
148,341
5,037
(34,996)
118,382
7,998
1,810
4,290
14,098
-
14,098
(5,037)
9,061
9,061
-
9,061
107,812
52,169
18,112
178,093
1,106
30,101
1,630
24,040
122
24,249
(42,673)
135,420
2,858
78,390
(43,418)
34,972
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 FROM
CONTINUING OPERATIONS
BEFORE TAX
DISCONTINUED
OPERATIONS BEFORE TAX
Reconciliation of segment result to
group net profit before tax
Unallocated items
- other
Net profit before tax
from continuing operations
from discontinued operations
SEGMENT ASSETS
Segment asset increases for
the period
Reconciliation of segment
assets to group assets
Intersegment eliminations
Total group assets
CAPITAL EXPENDITURE
SEGMENT LIABILITIES
Reconciliation of segment
liabilities to group liabilities
Intersegment eliminations
Total group liabilities
68
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 29: Operating Segments (continued)
Geographical Segments
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 FROM
CONTINUING OPERATIONS
BEFORE TAX
DISCONTINUED
OPERATIONS BEFORE TAX
Reconciliation of segment result to
group net profit before tax
Unallocated items
- other
Net profit before tax
from continuing operations
from discontinued operations
SEGMENT ASSETS
Segment asset increases for
the period
Reconciliation of segment
assets to group assets
Intersegment eliminations
Total group assets
CAPITAL EXPENDITURE
SEGMENT LIABILITIES
Reconciliation of segment
liabilities to group liabilities
Intersegment eliminations
Total group liabilities
AUSTRALIA &
NEW ZEALAND
$000
63,874
934
64,808
2020
ASIA
$000
11,189
27,993
39,182
18,520
951
19,471
NORTH
AMERICA &
EUROPE
$000
CONSOLIDATED
GROUP
$000
6,318
5,757
1,352
100
1,125
12,059
93,583
29,878
123,461
4,883
(29,878)
98,466
8,795
17,916
26,711
(4,883)
21,828
3,904
17,924
21,828
122,015
59,374
16,892
198,281
789
53,047
1,428
32,907
210
27,720
(52,076)
146,205
2,427
113,674
(54,730)
58,944
69
WATERCO LIMITED | ANNUAL REPORT 2021 Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 30: Dividends Paid or Proposed
Dividends are recognised when declared during the financial year
and no longer at the discretion of the company.
Final fully franked ordinary dividend of 3c per share (2020:3c)
franked at the tax rate of 30% paid
Interim fully franked ordinary dividend of 3c per share (2020:2c)
franked at the tax rate of 30% paid
Proposed final fully franked ordinary dividend of 4c per share
(2020: 3c) 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 31: Earnings Per Share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit (after
tax) attributable to members of Waterco Ltd by the weighted
average number of ordinary shares outstanding during the financial
year adjusted for any share issues and share buybacks that have
taken place during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
calculation of the basic earnings per share after income tax effect
of interest and other financing costs associated with the dilutive
potential ordinary shares and the weighted average number of
shares assumed to have been issued for no consideration in
relation to dilutive potential ordinary shares.
Reconciliation of Earnings to Net Profit
Net Profit – continuing operations
Net Profit – discontinued operations
Net Profit
Net Profit/(loss) 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
70
Consolidated Group
2021
$000
2020
$000
1,074
1,072
2,146
1,429
1,093
718
1,811
1,076
5,653
6,432
12,696
-
12,696
(59)
12,755
12,755
35,822
35,822
3,014
14,542
17,556
(106)
17,662
17,662
35,855
35,855
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 32: Events Subsequent to Reporting Date
Share Option Plan
On 24 June 2021, the Board approved the Waterco
Limited Group Employee Share Plan. Under this plan, 3
senior managers were invited on 13 July 2021 to take up
350,000 options (in 3 Tranches).
All three senior managers took up the invitation and
350,000 options were issued to them on 23 August 2021.
There were no other reportable events subsequent to
balance date.
Note 33: 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, counterparty
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 counterparties 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 USA
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 10.
loss allowance
lifetime
The consolidated entity has adopted a
expected
in estimating expected
credit losses to trade receivables through the use
of a provisions matrix using fixed rates of credit
loss provisioning. These provisions are considered
representative across all customers of the consolidated
entity based on recent sales experience, historical
information
collection rates and forward-looking
that is available. As disclosed in note 10, due to the
Coronavirus (COVID-19) pandemic, the calculation of
expected credit losses has been revised as at 30 June
2020 and rates have increased in each category up
to 6 months overdue. Management closely monitors
receivable balances on a monthly basis and is in
regular contact with its customers to mitigate risk.
71
WATERCO LIMITED | ANNUAL REPORT 2021
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 33: Financial Risk Management (continued)
(c) Foreign Currency Risk (continued)
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.
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 the Group (and parent entity) commitments in relation to
forward exchange contracts.
Consolidated Group (and Parent Entity)
Buy USD/Sell AUD
- Less than 6 months
d) Liquidity Risk
Notional Amounts
2021
$000
2020
$000
Average Exchange Rate
2020
2021
$000
$000
2,501
4,307
0.7996
0.6965
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
2021
$000
2020
$000
2021
$000
2020
$000
2021
$000
2020
$000
2021
$000
2020
$000
Financial Assets
Cash
Receivables
Total anticipated
inflows
Financial Liabilities
Bank overdraft
Bank loans
Trade and other
payable
Right of use lease liability
Lease liability
Total contractual
outflows
Less bank overdrafts
Total expected
outflows
Net (outflow)/ inflow on
financial instruments
11,694
13,719
9,697
36,848
25,413
46,545
-
104
11,487
4,797
153
16,541
-
1,385
10,860
14,056
4,291
225
30,817
1,385
-
-
-
-
782
-
8,108
132
9,022
-
-
-
-
-
9,584
-
9,361
232
19,177
-
16,541
29,432
9,022
19,177
8,872
17,113
(9,022)
(19,177)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,694
13,719
9,697
36,848
25,413
46,545
-
886
11,487
12,905
285
25,563
-
1,385
20,444
14,056
13,652
457
49,994
1,385
25,563
48,609
(150)
(2,064)
72
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 33: 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 Assets
Cash at bank and in hand
Receivables
Financial Liabilities
Bank overdraft
Bank loans
Lease liabilities
Right of use lease liability
2021
2020
Carrying
Amount
$000
Net Fair
Value
$000
Carrying
Amount
$000
11,694
13,719
25,413
-
886
285
12,905
14,076
11,694
13,719
25,413
-
895
299
12,905
14,099
9,697
36,848
46,545
1,385
20,444
457
13,652
35,938
Net Fair
Value
$000
9,697
36,848
46,545
1,399
20,648
480
13,652
36,179
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.
Year ended 30 June 2021
+/- 2% in interest rates
+/- 5% in $A/$US
Year ended 30 June 2020
+/- 2% in interest rates
+/- 5% in $A/$US
Consolidated Group
Profit
$000
Equity
$000
+/-92
+/-1,179
+/-92
+/-1,179
+/-489
+/-936
+/-489
+/-936
73
WATERCO LIMITED | ANNUAL REPORT 2021
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 34: 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
Rental income
Impairment and 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
Cashflow – Non Operating Activities:
Dividends Received
Cash Flows (used in) /provided by operations
b) Non Cash Financial and investment activities
Consolidated Group
2021
$000
2020
$000
12,696
17,556
7,432
(3,434)
75
73
(4,020)
(52)
(202)
(427)
(202)
(5,057)
10
(3,868)
259
1,839
173
(61)
(1)
5,233
6,634
(3,281)
(68)
(19,102)
2,326
(70)
417
3,129
37
(72)
110
3,132
(235)
153
1,216
105
(1)
11,986
1) Property, Plant and Equipment
During the year, the consolidated group acquired plant and equipment with an aggregate fair value of
$64,351 (2020:$233,615) 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
23,647
1,750
25,397
(10,459)
35,856
30,415
1,761
32,176
12,502
19,674
The Fully Drawn Advance Facilities of the parent entity are due to expire on 27 November 2021 (refer to note 21). The
parent entity expects to renew these facilities on expiry date.
The Fully Drawn Advance Facilities of the controlled entity are due to expire on 31 December 2021 and 30 June 2031.
The controlled entity expects to renew these facilities on expiry date.
74
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 35: 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. They can be categorised as follows:
Level 1
Level 2
Level 3
Measurements
based on
unobservable
inputs for
the asset or
liability.
Measurements
based on
quoted prices
(unadjusted) in
active markets for
identical assets
or liabilities that
the entity can
access at the
measurement
date
Measurements
based on inputs
other than
quoted prices
included in
Level 1 that
are observable
for the asset or
liability, either
directly or
indirectly
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
is
The Group selects a valuation technique that
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. A change in those inputs might result in a
significantly higher or lower fair value measurement.
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
the best information available about such assumptions
are considered unobservable.
75
WATERCO LIMITED | ANNUAL REPORT 2021
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 35: Fair Value Measurements (continued)
The following tables provide the fair values of the Group’s assets and liabilities measured and recognised on a recurring
basis after initial recognition and their categorisation within the fair value hierarchy:
Note
No
14
14
Note
No
14
14
Recurring fair value measurements
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
Recurring fair value measurements
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
Level 1
$000
30 June 2021
Level 2
$000
-
-
-
-
-
-
-
-
Level 1
$000
30 June 2020
Level 2
$000
-
-
-
-
-
-
-
-
Level 3
$000
19,138
31,715
50,853
50,853
Level 3
$000
17,850
26,118
43,968
43,968
Total
$000
19,138
31,715
50,853
50,853
Total
$000
17,850
26,118
43,968
43,968
b. Valuation Techniques and Inputs Used to Measure Level 3 Fair Values
Description
Fair Value at
30 June 2021
$000
Non-financial assets
Freehold land(i)
19,138
Freehold buildings(i)
31,715
50,853
Valuation Technique(s)
Inputs Used
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
Price per hectare; market
borrowing rate
Price per square metre;
market borrowing rate
(i) The fair value of freehold land and buildings is determined at least every three years based on valuations from
independent valuers. 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/or discounted cash flow methodologies.
(ii) There were no changes during the period in the valuation techniques used by the Group to determine Level 3 fair
values.
76
Notes To The Financial Statements
For The Year Ended 30 June 2021
Note 35: Fair Value Measurements (continued)
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;
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
Note
Fair Value
Hierarchy Level
Valuation Technique(s)
Inputs Used
Liabilities
Lease liability
Bank debt
33
33
2
2
Income approach using
discounted cash flow
methodology
Income approach using
discounted cash flow
methodology
Current commercial
borrowing rates for similar
instruments
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 36: Business Combinations
On 17 July 2020, Waterco Ltd completed the purchase of the business of Autopool from Automated Pool Products Pty
Ltd. Autopool is a leading distributor of hardware in the pool market. It provides a range of high quality products and has
a very strong presence throughout Australia (especially in WA and Qld). The acquired business contributed (from 17th
July 2020 till the end of the financial year) revenue of $6.295m and profit after tax of $136,000.
The values identified in relation to the acquisition of Autopool as at 30 June 2021.
Details of the Acquisition are as follows:
Plant and Equipment
Inventory
Prepayments
Employee benefits
Net Assets Acquired
Intangibles
Acquisition date fair value
Representing:
Cash paid/payable to vendor
Cash used to acquire business
(net of cash acquired)
Less: Payments to be made
in future periods
Net cash used
Note 37: Company Details
The registered office of the company is:
Waterco Limited
36 South Street
Rydalmere NSW 2116
Fair Value
$000
338
1,229
27
(75)
1,519
947
2,466
2,466
2,466
(1,040)
1,426
77
WATERCO LIMITED | ANNUAL REPORT 2021
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 36 to 77 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 International Financial Reporting Standards (IFRS);
b. give a true and fair view of the financial position as at 30 June 2021 and of the performance for the year ended on
that date of the consolidated group; and
c. that the opinion has been formed on the basis of a sound system of risk management and internal control adopted
by the Board, and that this system is operating efficiently;
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 s295A of the Corporations Act 2001 from the Chief
Executive Officer and Chief Financial Officer.
Soon Sinn Goh
Chief Executive Officer
Dated at Sydney this 10 September 2021
78
Independent Auditor's Report
to the members of Waterco Ltd
79
WATERCO LIMITED | ANNUAL REPORT 2021 Independent Auditor's Report
to the members of Waterco Ltd
80
Independent Auditor's Report
to the members of Waterco Ltd
81
WATERCO LIMITED | ANNUAL REPORT 2021 Shareholder Information
For The Year Ended 30 June 2021
(a) Distribution of Shareholders as at 6 September 2021
1
1,001
5,001
10,001
100,001
Range
-
-
-
-
-
1,000
5,000
10,000
100,000
and over
Total Holders
246
159
59
67
26
557
Options
-
-
-
-
-
(b) Marketable Parcel
29 shareholders hold less than a marketable parcel.
(c) Substantial Shareholders
The following information is extracted from the company’s register as at 6 September 2021
Name
S S Goh Group
Redbrook Nominees Pty Ltd
Acres Holdings Pty Ltd
(d) Voting Rights
Number of shares
21,721,853
3,114,529
2,964,883
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 91.96% of the total shares issued.
Name
Number of shares
Mr Soon Sinn Goh
Redbrook Nominees Pty Ltd
Acres Holdings Pty Ltd
Goh Lai Huat & Sons Sdn Bhd
Mr Soon Leong Goh
Mr Swee Kheong Goon
Mrs Christine Goh
Mr Shane Goh
Mrs Janet Swee Nyet Goh
1
2
3
4
5
6
7
8
9
10 Mr Chu Shien Chang
11
12
13
14
15 Mr Tiow Lip Lee
16 Ms May-Yin Goh
17 Mr Bryan Weng Keong Goh
18 Mr Khoon Ping Kuok
19
20
Protango Pty Ltd (BFHunt SF A/C)
Jok Pty Limited (Hempton Super Fund A/C)
TOTAL
Leitch Pty Ltd (Leitch Super Fund A/C)
GWK Corporation Pty Ltd
Deuteronomy Pty Ltd (Dennis Hambleton SF A/C)
Brazil Enterprises Pty Ltd
19,221,853
3,112,943
2,578,322
2,500,000
681,384
562,717
500,000
470,346
447,112
340,281
337,834
334,387
315,000
295,173
245,386
225,267
205,734
173,000
170,223
102,405
32,819,367
(f) Stock Exchange Listing
The shares of Waterco Limited are listed on the Australian Stock Exchange under the trade symbol WAT.
82
%
53.86
8.72
7.22
7.01
1.91
1.58
1.40
1.32
1.25
0.95
0.95
0.94
0.88
0.83
0.69
0.63
0.58
0.48
0.48
0.29
91.96
Corporate Directory
Directors
Soon Sinn Goh
Bryan Goh
Ben Hunt
(Richard) Cheng Fah Ling
Judy Raper
Secretaries
Gerard Doumit
Sin Wei Yong
Registered office
36 South Street, Rydalmere NSW 2116
Tel: + 61 2 9898 8600
Fax: + 61 2 9898 1877
Website: www.waterco.com.au
E-mail: administration@waterco.com.au
Share Registry
Computershare Investor Services Pty Limited
GPO Box 2975, Melbourne VIC 3001
Tel: 1300 850 505
Offices – Australia
NSW
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
Autopool Division
QLD
Unit 2, 5 Stockwell Place, Archerfield Qld 4108
Tel: 1300 656 956
Auditors
RSM Australia Partners
Level 13,
60 Castlereagh St Sydney, NSW 2000
Banker
Commonwealth Bank of Australia
Level 9, Darling Park Tower 1
201 Sussex Street, Sydney NSW 2000
Offices – International
China
No.132 Buling Road, Yonghe District, GETDD
Guangzhou 511356, PR China
Tel: + 86 20 3222 2180
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 and France
Radfield, London Road, Teynham Sittingbourne
Kent, ME9 9PS, UK
Tel: + 44 1795 521733
United States Of America (and Canada Office)
1812 Tobacco Rd Augusta, GA 30906, USA
Tel: + 1 706 793 7291
6185-118 boul. Taschereau, suite 389
Brossard, QC J4Z 0E4 CANADA
Tel: + 1 450 748-1421
WA
Unit 4, 115 Belmont Ave, Belmont WA 6104
Tel: 1300 656 956
Vietnam
207A Nguyen Van Thu Street, Da Kao Ward, District 1
Ho Chi Minh City, Vietnam
83
WATERCO LIMITED | ANNUAL REPORT 2021 WATERCO LIMITED ABN 62 002 070 733
Registered Office
36 South Street, Rydalmere NSW 2116
T: +61 2 9898 8600
W: www.waterco.com.au E: administration@waterco.com
F: +61 2 9898 1877