ANNUAL REPORT 2022
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 | 2022
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
4
6
7
14
16
24
35
37
85
86
1
WATERCO LIMITED | ANNUAL REPORT 2022 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 39 years experience.
Swimart is focussed on making pool care easy, with 68 retail
stores and 6 mobile franchises across Australia and New
its customers a great range,
Zealand. Swimart provides
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 38-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.
In certain regions of Malaysia, residents experience water
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 2022 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)
2022
128.14
123.28
2021
118.38
113.35
2020
98.47
93.58
2019
88.24
89.62
2018
87.83
86.26
15.17
9.40
4.83
5.13
6.73
-
-
17.92
(0.71)
-
12.3%
8.3%
5.2%
6.0%
7.8%
14.87
9.06
3.90
4.17
5.72
-
-
17.92
(0.86)
-
Net profit after tax ($ million)
11.57
12.70
17.56
2.28
3.95
Total assets ($ million)
157.65
135.40
146.21
116.83
116.59
Equity ($ million)
111.01
100.45
87.26
75.83
74.17
Basic Earnings per share from
continuing and discontinued
operations
Basic Earnings per share from
continuing operations
Basic Earnings per share from
discontinued operations
32.7 cents 35.6 cents 48.8 cents
6.1 cents 10.3 cents
32.7 cents 35.6 cents
8.6 cents
8.4 cents 10.3 cents
-
- 40.2 cents (2.3 cents)
-
Dividends per share (Interim and Final)
8.0 cents
7.0 cents
5.0 cents
5.0 cents
5.0 cents
Net Tangible Assets per share
Year-end share price
$3.10
$3.60
$2.78
$2.90
$2.43
$2.55
$2.06
$1.99
$1.61
$2.05
6
6
Chief Executive Officer’s Review Of Operations
SOON SINN GOH
Chairman/Group CEO
REVENUE AND PROFITABILITY
The Group reports an increase in Sales, Net Profit Before Tax (NPBT) and Earnings Before Interest
and Tax (EBIT) . Sales increased by 9% from $113.35m to $123.28m while NPBT increased by 64% to
$14.87m and EBIT increased by 61% to $15.17m.
The major reasons for the improvement in sales were forward stock planning resulting in a higher
inventory level to cater for expected increase in demand due to continuing industry consolidation and
retail consumers using the funds set aside for travel (restricted for a good part of the year because
of Covid-19) to make home improvements, upgrades including renovating their existing pools and
adding pool heating or installing a new pool. 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 93%.
Swimart Division met expectations after the franchising of several company operated stores in
the previous year resulted in lower operating expenses (in the current year) together with stronger
retail sales across the Swimart Franchise Network flowing from the increased home improvement
expenditure.
DIVISIONAL EBIT PERFORMANCE
The breakdown of EBIT contribution by division is as follows:
FY22
FY21
DIVISIONAL EBIT
($000)
($000)
% Change
Australia and New Zealand
North America and Europe
Asia
7,704
2,559
4,911
3,987
3,855
1,558
Consolidated Reported EBIT
15,174
9,400
+93%
-34%
+215%
+61%
7
WATERCO LIMITED | ANNUAL REPORT 2022 AUSTRALIA AND NEW ZEALAND (ANZ)
The Australia and New Zealand (ANZ) 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 68 pool stores and 6 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
The investment in the heat pump division over the last
few years has paid off well - The ANZ Division achieved a
substantial increase in heat pump sales during the year.
This year was a specially challenging year for the ANZ Market
with the sourcing of stock and booking shipping lines more
problematic than in any previous year due to unprecedented
demand and Covid-19 factors. However, some forward
planning resulted in both entities having extra stock supplies
on hand to meet the expected demand in the current year
and for the start of the next season . While Group Stock
levels (especially ANZ) went up by 40% or $14m, the resulting
double digit sales growth in the current year and expected
continuing growth in the new year justify the approach taken.
Despite a challenging year in the ANZ Market, Waterco was
able to achieve a 15% 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 a decline in sales of 4.1% on the same
period last year.
The North America and Europe Division recorded a decrease
in EBIT and sales resulting from an inability to supply products
on time due to lack of shipping capacity from Waterco Far
East (WFE) in Malaysia to the markets in USA and Europe. There
were delays in production schedules arising from shortage of
raw materials as well as sudden influx of orders that resulted
8
Swimart continues its brand refresh
and update of all its stores and mobile
assets across Australia and New
Zealand.
To date, Swimart has completed 32
store exterior brand refresh projects
and 150 vehicles rebrands completed
across AU & NZ. In addition, we have
now transformed 10 store interiors.
Electroheat ECO-V inverter
swimming pool heat pumps
Electroheat ECO-V heat pumps
only require energy to operate a
compressor and a fan motor, using low
amperage in the process.
Compared to gas and electric heaters,
Electroheat ECO-V inverter pool heat
pumps use a fraction of the energy to
generate the same amount of heat.
For every 1kW of electricity consumed,
Electroheat ECO-V can produce up to
8kW of heat.
MultiCyclone success in USA
Waterco USA has continued to benefit
from significant increase in sales of
Waterco’s patented MultiCyclone
filters.
unique
centrifugal
MultiCyclone’s
filtration
dramatically
reduces filter maintenance and saves
water.
technology
Waterco’s MPD10000 Fibreglass
Nozzle Plate Filter
Waterco manufactures
horizontal
nozzle plate filters with up to 10m2
filter area and 1,200mm filter media
bed depth – the largest to receive AS/
NZS 4020:2005 Certification from the
Australian Water Quality Centre.
in delayed delivery ex-factory. Combined with shipping
delays, there were significant losses from cancellation of
orders in addition to increased landed costs of products that
could not be passed on, thus resulted in lower margins.
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. While Waterco USA Augusta Division
recorded a decline in sales of 8%, DWC recorded an increase
in sales (from a small base) of 42%.
Overall, this entity recorded a decline in sales of just 1%
during the year under review despite the number of new pool
constructions falling during the year.
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 recorded a decline in sales of 7% during
the year despite the additional challenges in the European
Market (including political uncertainty, Covid-19 pandemic
and regional conflict). This was further complicated by the
lockdown in Malaysia in the middle of 2021 coupled with the
spike in demand for shipping in the region meaning delays
in the supply of product to Europe. The business recorded
good growth in the second half of the year but is cautious
about the outlook for the new financial year as the growth in
the number of new pool constructions is expected to fall. 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.
9
WATERCO LIMITED | ANNUAL REPORT 2022 Waterco’s Malaysian manufacturing
facility in Kuala Lumpur
Waterco’s high-tech facility takes up
6.3 hectares and has a total work force
of 504 staff.
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.
ASIA
Waterco Far East in Malaysia (WFE): This Entity was born out
of Waterco’s familiarity with the South East Asia market. WFE
was initially a sales operation designed to service Waterco
Australia’s South East Asia customer base. In 1991 WFE
added manufacturing operations to its undertakings in Kuala
Lumpur, Malaysia. As well as bringing the Group closer to the
South East 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.
for
recognised standard
ISO9001:2008 certification,
the
WFE has achieved
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 an increase in the current
year despite the lockdown experienced in the middle of 2021.
The sourcing of raw materials and components together with
the continuing political uncertainty are significant challenges
faced by the business and are also expected to carry through
to the new financial year. Increased volume, particularly in
labour-intensive 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
schedules due to the shortage of foreign labour (that has
not returned to normal after the Pandemic restrictions were
lifted). The growth in the use of robots (still at a relatively small
scale) in 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.
Local sales were higher than expected despite the effect
of Covid-19 on the market. Builders in South East Asia cut
back on imports from this region due to uncertainties in
shipping and the ability to supply product (especially out of
China). Combined with improved efficiencies and reduced
wastages in WFE, profits were better than expected.
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
the automation of
Waterco Far East
in Malaysia has
its
increased
production process over the past two
years. With the onset of Covid-19, it has
become difficult for the company to
secure workers.
10
Commercial swimming pool heat
pumps
The new generation Electroheat PRO
heat pumps are the latest advancement
in commercial pool heating.
The Electroheat PRO range have been
designed to deliver efficient cost
effective heating for commercial pools
of up to 250,000 litres in size.
Oxiswim Dual Sanitisation System
OxiSwim Dual sanitisation system
combines all of the most practical
ways to sanitise pool and spa water and
puts them at the fingertips of the pool
owner.
Oxiswim allows the pool owner to
operate their pool either as a:
• Freshwater pool: a silky-smooth
the
bathing experience, minus
chlorine irritants
• Winter or chlorine pool: operate
the pool with no extra sanitisers,
reducing off-season costs
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 for the current year were flat despite
the impact of the ongoing pandemic issues, continuing
construction industry problems, ongoing trade issues and a
general slow-down in growth across the country.
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 13% 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.
During the year the Group invested a lot of time and energy
into OxiSwim and are now just starting to reap its rewards
in terms of securing pool builders for the system and also
rolling out its chemistry to the pool industry.
Oxiswim, a revolutionary breakthrough in water treatment
technology, was recently awarded Master Pool Builders
Association (MPBAA) 2022 Australian Product of the Year.
The Oxiswim sanitisation system revolutionises and simplifies
how a swimming pool or spa is managed and maintained. It
is the result of many years of research looking for healthier
alternative pool sanitisation to pool chlorination.
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.
11
WATERCO LIMITED | ANNUAL REPORT 2022 DIVIDEND AND OUTLOOK
The results (Net Profit After Tax of $11.574m) was 8.8% below
last year – Last year’s number of $12.696m included a one off
prior period tax credit of $5.031m
If we take out the one off prior period tax credit of $5.031m
from the FY21 NPAT, the FY21 NPAT would be reduced from
$12.696m to $7.665m and the increase for the current year
would amount to 51% as shown in the table below:
RESTATED NET PROFIT FOR
THE YEAR (AFTER TAX)
($000)
($000)
FY22
FY21 % change
Profit before income tax
expense
14,866
9,061
+64%
Income tax expense/(benefit) 3,292
(3,635)
Net Profit for the year
11,574 12,696
-9%
Income Tax Expense/
(Benefit)
3,292
(3,635)
Add back:prior period tax
credit (one off)
-
5,031
Adjusted Income Tax
Expense (before tax credit)
3,292
1,396
Restated Profit after tax
Profit before income tax
expense
14,866
9,061
Adjusted Income Tax
Expense (before tax credit)
3,292
1,396
Restated Net Profit for the
year (after adjusted income
tax expense)
11,574
7,665
+51%
12
The Board will provide a profit guidance at a later stage for
the financial year ending 30 June 2023, as more information
becomes available
(especially around the uncertainty
caused by the global Covid-19 pandemic).
Waterco declares a final dividend payment of 5 cents per
share, payable to shareholders on 15 December 2022. 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 8 cents per share compared to the 7
cents in the previous financial year.
13
WATERCO LIMITED | ANNUAL REPORT 2022 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 accounting and financial management academic training combined
with understanding of the technical aspects of the water treatment industry
is an important contributing factor 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.
14
(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.
15
WATERCO LIMITED | ANNUAL REPORT 2022 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 2022 (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 2022.
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.
16
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 CEO. 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.au. 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:
Measurable objective for the Reporting Period
Women on the Board
Women in senior executive
positions (excluding Board
Members)
Women employees in the
company
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 2022, women
represented 32.1% 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.
17
WATERCO LIMITED | ANNUAL REPORT 2022 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
improving corporate governance practices. The Board
mindset
undertakes the performance evaluations by way of evaluation forms.
in
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
is committed to an ongoing
The Company
internal process of
performance evaluation of Key Management Personnel to ensure the
diligent and effective discharge of their responsibilities. The Group 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
2.1
Nominations
committee
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 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.
18
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
Leadership
Strategic thinking
Industry experience (local & global)
Governance committee experience
Risk management experience
Knowledge of ethical and fiduciary
duties
Commitment to environmental
protection and sustainability
Corporate responsibility, health and
safety
Stakeholder engagement
Technical
Diversity
Legal
Financial
Engineering
Human resources
Regulatory and compliance experience
Female
Male
Different ethnicities and cultures
Languages other than English
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.
A majority of the Board are independent directors, taking into account
the factors relevant to "independence" under the ASX guidelines.
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.
19
2.3 Disclose
independence
and length of
service
2.4 Majority of
directors
independent
2.5
Independent
Chair
WATERCO LIMITED | ANNUAL REPORT 2022 2.6
Induction and
professional
development
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.
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
The Audit Committee operates under the Audit Committee Charter.
committee
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.
20
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.
21
WATERCO LIMITED | ANNUAL REPORT 2022 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 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.
6.4 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.
6.5
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.
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.
22
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 in response to
Recommendation 4.1.
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 packages for Executive Directors are set so as to include
an appropriate balance of fixed remuneration and performance-based
remuneration.
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 do not participate in schemes
designed for the remuneration of Executive Directors. Non-Executive
Directors do not receive options or bonus payments or 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
During the Reporting Period, the Company issued 350,000 performance
options (Options) to three executives (holders) under the Company’s long
term incentive plan. The Options will vest in 3 tranches over three years,
subject to satisfaction of certain vesting conditions. Once vested, each
Option entitles the holder to receive one fully paid ordinary share in Waterco.
The Options are not transferable (except with the approval of the Board)
or sold, assigned or otherwise disposed of or encumbered by the holders.
The holders are not permitted to enter into transactions which limit the
economic risk of participating in long term incentive plan.
23
WATERCO LIMITED | ANNUAL REPORT 2022 Directors' Report
Your directors present their report on the Company and its controlled entities for the financial year
ended 30 June 2022.
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:
• 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.
24
Consolidated Results
The consolidated profit of the group after providing for income tax and eliminating non-controlling
interests amounted to $11.641 million.
Dividends
Dividends paid or declared for payment are as follows:
• Final ordinary dividend of 4 cents per share paid on 15 December 2021 as recommended in last
year’s report - $1.426 million
• Interim dividend of 3 cents per share paid on 15 June 2022 as declared in the half yearly report -
$1.065million
• Final ordinary dividend of 5 cents per share declared by the directors to be paid on 15 December
2022 - $1.775 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 $10.56 million from $100.45 million
in June 2021 to $111.01 million in June 2022.
The change has largely resulted from:
• Upward movement in profits (less dividends paid) of $9.16 million;
• Net increase in the asset revaluation reserve of group companies of $0.68 million;
• Net decrease in non-controlling Interests of $0.07 million;
• Foreign currency translation gain of $1.53 million;
• Net decrease in share capital of $0.74 million from the Waterco Share Buy-Back.
The Group’s working capital being current assets less current liabilities increased from $39.76 million
in 2021 to $49.92 million in 2022.
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.
25
WATERCO LIMITED | ANNUAL REPORT 2022 After Balance Date Events
COVID-19
The consequences of the Coronavirus (COVID-19) pandemic are continuing to be felt around the world,
and its impact on the Group, if any, has been reflected in the results to date. Whilst control measures
and related government policies, including the roll out of the vaccine and boosters, have started to
mitigate the risks caused by COVID-19, it is not possible at this time to state that the pandemic will
not subsequently impact the Group's operations going forward. The Group now has experience in
the swift implementation of business continuation processes should future lockdowns of the
population occur, and these processes continue to evolve to minimise any operational disruption.
Management continues to monitor the situation both locally and internationally.
Final Dividend
Since the end of the reporting period, the Board resolved to pay a final dividend of 5 cents per share
fully franked.
Future Developments, Prospects and Business Strategies
Information as to future developments, prospects and business strategies in the operations of
the Consolidated Group are included in the Chief Executive Officer’s Review of Operations. Other
possible developments have not been included in this report as such inclusions would, in the opinion
of the Directors, prejudice the interests of the Consolidated Group.
Environmental Issues
The Consolidated Group’s operations are subject to some environmental regulations, particularly
with regard to the storage of chemicals and waste management. The Consolidated Group has
adequate systems in place for the management of its environmental requirements. The Directors are
not aware of any breaches of the environmental regulations during the financial year.
Directors’ Shareholdings
Details of the Directors’ shareholdings are contained in the Key Management Personnel Shareholding
table on page 32.
Meetings of Directors
During the financial year, 12 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
5
-
-
5
5
5
-
-
5
5
5
-
-
2
2
2
-
-
2
2
2
Shares under option
Unissued ordinary shares in Waterco Limited under option at the date of this report are as follows:
Grant date
Expiry date
Exercise price
Number under option
23 August 2021
23 August 2031
$3.15
350,000
There have been no shares issued on exercise of options during the year ended 30 June 2022.
26
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.
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.
Officers of the company who are former partners of RSM Australia
There are no officers of the company who are former partners of RSM Australia.
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the year ended 30 June 2022 has been received
and is included in the directors’ report.
Auditor
RSM Australia continues in office in accordance with section 327 of the Corporations Act 2001.
27
WATERCO LIMITED | ANNUAL REPORT 2022 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.
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.
2022 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 5% in the Non-Executive Director fees for the 2022/2023 financial year.
The total fees are now at an aggregate of $204,039 plus Superannuation Guarantee Charge.
The Remuneration Committee seeks independent external advice when required.
28
Performance–based Remuneration Policy, and its Relationship with Company Performance
Incentive Plan
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 22
Why Chosen
Soon Sinn Goh
– Group CEO
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.
Key Management
Personnel
Earnings Before Interest
and Tax (EBIT) for the
Waterco Group.
The performance of 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.
In the year ending 30 June 2022, the Key Management Personnel have achieved their performance
targets (Target Level) based on normal operations. The payment of this incentive is subject to Board
Approval, and if approved, will be paid in December 2022.
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.
29
WATERCO LIMITED | ANNUAL REPORT 2022 Details of the Issue are as follows
Tranche No
No of
Options
Vesting Date
Vesting Condition –
Group EBIT
Exercise
Price
Expiry Date
1
2
3
33,000
23 August 2022
$10,338,853
33,000
23 August 2023
$11,278,748
34,000
23 August 2024
$12,218,644
$3.15
$3.15
$3.15
23 August 2031
23 August 2031
23 August 2031
The CFO has met the Vesting Condition for Tranche 1 as the EBIT for the financial year ending 30
June 2022 has exceed $10,338,853.The CFO may exercise the options for Tranche 1 in whole or in
part anytime, from now until 23 August 2031. The value of all three tranches over the 10 year period
amount to $38,230 ($3,823 per year) .
No other options or share-based payments were granted in the 2022 financial year.
The following table shows the Sales Revenue, Earnings Before Interest and Tax (EBIT), Net Profit Before
Tax (NPBT), Net Profit After Tax (NPAT), Earnings Per Share (EPS), dividends and year-end share price
in the financial year just ended and the previous four financial years for the consolidated Group.
Year ended
June 22
June 21
June 20
June 19
June 18
Sales revenue ($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
123.29
113.35
93.58
89.62
86.26
15.17
9.40
22.75
4.42
6.73
14.87
9.06
21.83
3.31
5.72
32.7
35.6
48.8
6.1
10.3
7.0
3.60
11.57
-
6.0
2.90
12.70
5.0
2.55
3.01
5.0
1.61
3.14
5.0
2.05
3.95
-
14.54
(0.86)
-
Please see commentary on performance on page 25.
30
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.
Position held as at
30 June 2022 and any
change during the
year
Contract details
(duration & termination)
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 related to
performance
Non-
salary
cash-
based
incentives
%
Shares/
Units
%
Options/
Rights
%
Proportions of
elements of
remuneration
not related to
performance
Fixed
Salary/
Fees
%
Total
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
100
100
100
100
100
100
100
100
100
100
99
100
31
WATERCO LIMITED | ANNUAL REPORT 2022 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.
Key Management Personnel Shareholding
Number of Shares held by Key Management Personnel
2022
Key Management Personnel
Balance
1.7.2021
Received as
Remuneration
Net Change
Other
Balance
30.6.2022
Mr S S Goh
Mr B Goh
Mr B Hunt
Mr R Ling
Ms J Raper
Mr G Doumit
2021
21,721,853
540,121
170,223
-
-
71,300
-
-
-
-
-
-
-
-
-
-
-
-
21,721,853
540,121
170,223
-
-
71,300
Key Management Personnel
Balance
1.7.2020
Received as
Remuneration
Net Change
Other
Balance
30.6.2021
Mr S S Goh
Mr B Goh
Mr B Hunt
Mr R Ling
Ms J Raper
Mr G Doumit
21,721,853
540,121
170,223
-
-
71,300
-
-
-
-
-
-
-
-
-
-
-
-
21,721,853
540,121
170,223
-
-
71,300
32
Remuneration Details
The following table provides remuneration details for the 2022 and 2021 financial years for Key
Management Personnel.
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Long-term
benefits
Renumeration
incl Salary,
fees and leave
$
Profit
share and
bonus
$
Non-
monetary
(2)
$
Pension and
super-
annuation
$
Key Management
Personnel
2022
2021
449,973
35,000
437,488
-
2022
300,000
66,500
283,497
64,774
62,887
64,774
62,887
64,774
62,887
-
-
-
-
-
-
-
Soon Sinn Goh 1)
Bryan Goh
Ben Hunt
(Richard) Ling
Judy Raper
Gerard Doumit
2021
2022
2021
2022
2021
2022
2021
2022
2021
-
-
-
-
-
-
-
-
-
-
16,709
13,028
23,568
21,694
6,477
5,974
6,477
5,974
6,477
5,974
LSL
$
3,959
3,282
13,310
24,160
-
-
-
-
-
-
Share
options
Total
$
-
-
-
-
-
-
-
-
-
-
505,641
453,798
403,378
329,351
71,251
68,861
71,251
68,861
71,251
68,861
215,113
50,000
19,676
27,099
10,748
3,823
326,459
228,846
-
20,424
20,685
7,653
-
277,608
(1) S S Goh’s Remuneration of $505,641 is made up of $196,285 paid/payable by Waterco Ltd, $154,678 paid by
Waterco (Far East) Sdn Bhd (a subsidiary) and $154,678 paid by Waterco International Pte Ltd (a subsidiary).
(2) Non-monetary benefits are made up of Company vehicle benefits
33
WATERCO LIMITED | ANNUAL REPORT 2022
Securities Received that are not Performance Related
No Key Management Personnel are entitled to receive securities which are not performance-based
as part of their remuneration package.
Cash incentives, Performance-related Bonus and Share-based Payment
Maximum cash incentives expressed as a percentage of fixed remuneration and the maximum
value that could have been earned in 2021/2022 if stretch performance targets were achieved are
tabulated below:
Position
Maximum possible
incentive
Maximum possible
incentive $
Key Management Personnel
Group CEO, Waterco Limited
Executive Director / Chief Operating
Officer , Waterco Limited
Chief Financial Officer / Company
Secretary, Waterco Limited
29%
25%
23%
$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
Group CEO, Waterco Limited
Executive Director / Chief Operating
Officer , Waterco Limited
Chief Financial Officer / Company
Secretary, Waterco Limited
Short term incentive in respect of 2022 financial year
Payable %
Forfeited %
70%
70%
30%
30%
66.67%
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 9 September 2022
34
Auditor’s Independence Declaration
35
WATERCO LIMITED | ANNUAL REPORT 2022 36
Consolidated Financial Report
for the year ended 30 June 2022
38
39
40
41
42
81
82
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
37
WATERCO LIMITED | ANNUAL REPORT 2022 Consolidated Statement of Profit or Loss and other
Comprehensive Income
For The Year Ended 30 June 2022
Note
No.
2022
$000
2021
$000
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
Impairment 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
Other comprehensive income
3
4
4
4
4
4
4
6
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 (cents per share)
Diluted earnings per share (cents per share)
31
31
The accompanying notes form part of these financial statements.
38
128,141
118,382
(13,056)
(49,597)
(24,485)
(6,314)
(79)
(328)
(1,952)
(473)
(2,425)
(959)
(1,564)
(1,348)
(430)
(487)
(391)
(9,387)
14,866
(3,292)
11,574
676
1,533
2,209
13,783
11,641
(67)
11,574
13,850
(67)
13,783
32.7
32.7
(2,226)
(55,494)
(24,263)
(6,548)
(75)
(367)
(1,745)
(514)
(2,256)
(1,156)
(1,719)
(1,225)
(257)
(683)
(450)
(10,343)
9,061
3,635
12,696
5,615
(2,585)
3,030
15,726
12,755
(59)
12,696
15,785
(59)
15,726
35.6
35.6
Consolidated Statement of Financial Position
As At 30 June 2022
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.
8
9
10
11
13
14
15
18
16
17
18
19
20
18
21
22
23
24
25
The accompanying notes form part of these financial statements.
Consolidated Group
2021
$000
11,694
13,719
34,716
1,022
61,151
58,822
12,883
1,200
1,364
74,269
2022
$000
11,946
17,201
48,688
1,077
78,912
59,986
15,794
1,119
1,842
78,741
157,653
135,420
14,211
8,271
2,547
3,964
28,993
12,614
4,823
213
17,650
46,643
111,010
34,847
20,664
54,992
110,503
507
111,010
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
39
WATERCO LIMITED | ANNUAL REPORT 2022 Consolidated Statement of Changes in Equity
For The Year Ended 30 June 2022
Ordinary
Shares
Retained
Earnings
Capital
Profits
Reserve
Asset
Revaluation
Reserve
Foreign
Currency
Translation
Reserve
Share
Options
Reserve
Non-
Controlling
Interests
Total
Consolidated Group
Note
No.
$000
$000
$000
$000
$000
$000
$000
$000
Balance at 30/6/20
35,982
35,233
211
20,153
(4,951)
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
-
-
-
12,755
-
12,755
and other transfers
Cancellation of shares under
Waterco Share Buyback
Dividends paid
30
(392)
-
-
(2,146)
Total transactions with
owners and other transfers
(392)
(2,146)
-
-
-
-
-
-
-
-
5,615
(2,585)
5,615
(2,585)
-
-
-
-
-
-
Balance at 30/6/21
35,590 45,842
211
25,768
(7,536)
-
-
-
-
-
-
-
-
633
87,261
(59)
12,696
-
3,030
(59)
15,726
-
-
-
(392)
(2,146)
(2,538)
574 100,449
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
-
-
-
11,641
-
11,641
Cancellation of shares under
Waterco Share Buyback
Disposal of controlled
entities
Dividends paid
30
Total transactions with
owners and other transfers
(743)
-
-
-
(2,491)
(743)
(2,491)
-
-
-
-
-
-
-
-
(67)
11,574
676
1,532
676
1,532
13
13
-
2,221
(67)
13,795
-
-
-
-
-
-
-
-
-
(743)
(2,491)
(3,234)
Balance at 30/6/22
34,847
54,992
211
26,444
(6,004)
13
507
111,010
The accompanying notes form part of these financial statements.
40
Consolidated Statement of Cash Flows
For The Year Ended 30 June 2022
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 35)
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)/provided by 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)/increase 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 8)
The accompanying notes form part of these financial statements.
2022
$000
128,196
(124,663)
20
1,829
(328)
(1,730)
3,324
1
(3,501)
(520)
-
97
(3,923)
4,124
(139)
(744)
(1,820)
(161)
(2,491)
-
(1,231)
(1,830)
11,694
2,082
11,946
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
41
WATERCO LIMITED | ANNUAL REPORT 2022 Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 1: Statement of Significant Accounting
Policies
New or amended Accounting Standards and
Interpretations adopted
These consolidated financial statements and notes
represent those of Waterco Limited and controlled
entities, (“Group”).
The financial statements are presented in Australian
dollars, which is Waterco Limited's functional and
presentation currency.
The directors have the power to amend and reissue
the financial statements.
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. Supplementary information about the parent
entity is disclosed in note 2.
The financial statements were authorised for issue on
9 September 2022.
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
the Australian Accounting
pronouncements of
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.
The financial statements have been prepared under
the historical cost convention, except for, where
applicable, the revaluation of financial assets and
liabilities at fair value through profit or loss, financial
assets at fair value through other comprehensive
income,
investment properties, certain classes
of property, plant and equipment and derivative
financial instruments.
The preparation of the financial statements requires
the use of certain critical accounting estimates. It
also requires management to exercise its judgement
in the process of applying the consolidated entity's
accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where
assumptions and estimates are significant to the
financial statements, are disclosed in note 1.
42
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.
a. Principles of Consolidation
The consolidated financial statements incorporate
all of the assets, liabilities and results of the parent
(Waterco Limited) and all of the subsidiaries
(including any structured entities). Subsidiaries are
entities the parent controls. The parent controls
an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity
and has the ability to affect those returns through
its power over the entity. A list of the subsidiaries
is provided in Note 12. All subsidiaries have a
30 June financial year end except for Waterco
Indonesia and
Guangzhou Ltd, PT Waterco
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
transactions,
control ceases.
balances and unrealised gains or
losses on
transactions between group entities are fully
eliminated
Accounting
policies of subsidiaries have been changed and
adjustments made where necessary to ensure
uniformity of the accounting policies adopted by
the Group.
consolidation.
Intercompany
on
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
income. Non-controlling
interests are shown
separately within the equity section of the
statement of financial position and statement of
comprehensive income.
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 1: Statement of Significant Accounting
Policies (continued)
techniques maximise, to the extent possible, the
use of observable market data.
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).
included. Subsequent to
When measuring the consideration transferred in the
business combination, any asset or liability resulting
from a contingent consideration arrangement
is
initial recognition,
also
contingent consideration classified as equity
is
its subsequent settlement
not remeasured and
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
in relation to the
business combination are expensed to the statement
of comprehensive income.
incurred
The acquisition of a business may result
in the
recognition of goodwill or a gain from a bargain
purchase.
Operating segments
Operating segments are presented using the
'management approach', where the
information
presented is on the same basis as the internal reports
provided to the Chief Operating Decision Makers
('CODM'). The CODM is responsible for the allocation
of resources to operating segments and assessing
their performance.
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
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).
the
non-financial
For
value
assets,
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.
fair
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 commence-
ment 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
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
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.
43
WATERCO LIMITED | ANNUAL REPORT 2022
Notes To The Financial Statements
For The Year Ended 30 June 2022
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
The income tax expense/(income) for the year
comprises current income tax expense/(income)
and deferred tax expense/(income).
Current income tax expense charged to profit
or loss is the tax payable on taxable income.
Current tax liabilities/(assets) are measured at the
amounts expected to be paid to/(recovered from)
the relevant taxation authority.
Deferred income tax expense reflects movements
in deferred tax asset and deferred tax liability
balances during the year as well 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.
Except for business combinations, no deferred
initial
recognised
income
recognition of an asset or liability, where there is
no effect on accounting or taxable profit or loss.
from
the
tax
is
Deferred tax assets and liabilities are calculated
at the tax rates that are expected to apply to the
period when the asset is realised or the liability is
settled and their measurement also reflects the
manner in which management expects to recover
or settle the carrying amount of the related asset
or liability.
Deferred
relating
tax assets
temporary
differences and unused tax losses are recognised
only to the extent that it is probable that future
taxable profit will be available against which the
benefits of the deferred tax asset can be utilised.
to
Where temporary differences exist in relation to
investments in subsidiaries, branches, associates,
joint ventures, deferred tax assets and
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.
44
Current tax assets and liabilities are offset where
a legally enforceable right of set-off exists and it
is intended that net settlement or simultaneous
realisation and settlement of the respective asset
and liability will occur. Deferred tax assets and
liabilities are offset where: (a) a legally enforceable
right of set-off exists; and (b) the deferred tax
assets and liabilities relate to income taxes levied
by the same taxation authority on either the same
taxable entity or different taxable entities where
it is intended that net settlement or simultaneous
realisation and settlement of the respective asset
and liability will occur in future periods in which
significant amounts of deferred tax assets or
liabilities are expected to be recovered or settled.
Waterco Limited and its wholly-owned Australian
Subsidiaries have
formed a consolidated
group for the purposes of the tax consolidation
provisions of the Income Tax Assessment Act 1997.
Each entity in the group recognises its own current
and deferred tax assets and liabilities. Such taxes
are measured using the “stand-alone taxpayer”
approach to allocation. All of the deferred tax
assets and liabilities of the subsidiary members
have become part of the deferred assets and
liabilities of Waterco Ltd. Each company in the
group contributes to the income tax payable in
proportion to their contribution to the net profit
before tax of the consolidated group. The group
notified the ATO on 20 January 2005 that it had
formed an income tax consolidated group to
apply from 1 July 2003.
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 2022
Note 1: Statement of Significant Accounting
Policies (continued)
g. Foreign Currency Transactions and Balances
Functional and presentation currency
Transaction and balances
Foreign currency transactions are translated into
functional currency using the exchange rates
prevailing at the date of the transaction. Foreign
currency monetary items are translated at the
year-end exchange rate. Non-monetary items
measured at historical cost continue to be carried
at the exchange rate at the date of the transaction.
Non-monetary items measured at fair value are
reported at the exchange rate at the date when
fair values were determined.
Exchange differences arising on the translation of
monetary items are recognised in the statement of
comprehensive income, except where deferred in
equity as a qualifying cash flow or net investment
hedge.
Exchange differences arising on the translation
of non-monetary items are recognised directly in
equity to the extent that the gain or loss is directly
recognised in equity, otherwise the exchange
difference
in the statement of
comprehensive income
is recognised
Group companies
The financial results and position of foreign
operations whose functional currency is different
from the group’s presentation currency are
translated as follows:
• assets and liabilities are translated at year-end
exchange rates prevailing at that reporting
date;
•
•
income and expenses are translated at average
exchange rates for the period; and
retained earnings are translated at the exchange
rates prevailing at the date of the transaction
Exchange differences arising on translation
of foreign operations are transferred directly
to the Group’s foreign currency translation
reserve in the statement of comprehensive
income. These differences are recognised in
the statement of comprehensive income in the
period in which the operation is disposed.
h. Employee Benefits
Provision for employee benefits, which include
long service leave, and annual leave are computed
to cover expected benefits at balance date.
Employee benefits expected to be settled within
one year together with benefits arising from wages
and salaries, annual leave and sick leave which will
be settled after one year, have been measured at
the amounts expected to be paid when the liability
is settled plus related on-costs. (see notes 19 and
21)
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
Expenditure during the research phase of a
project
is recognised as an expense when
incurred. Development costs are capitalised only
when technical feasibility studies identify that the
project will deliver future economic benefits and
these benefits can be measured reliably.
Development costs have a finite life and are
amortised on a systematic basis matched to the
future economic benefits over the useful life of the
project.
j. Acquisition of Assets
The cost method of accounting has been used for
acquisition of all assets (including shares). Cost
is defined as the fair value of the assets given up
at the date of acquisition plus costs incidental to
acquisition. Where goodwill arises, it is brought to
account.
Goodwill arises on the acquisition of a business.
Goodwill is not amortised. Instead, goodwill is
tested annually for impairment, or more frequently
if events or changes in circumstances indicate
that it might be impaired and is carried at cost
less accumulated impairment losses. Impairment
losses on goodwill are taken to profit or loss and
are not subsequently reversed.
45
WATERCO LIMITED | ANNUAL REPORT 2022
Notes To The Financial Statements
For The Year Ended 30 June 2022
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
Date of
Valuation
Amount
Rydalmere
NSW
30 June 2021
AUD 29,500,000
Malaysia
15 May 2020
USA
4 May 2022
AUD 20,426,227
(MYR 60,000,000)
AUD 2,594,937
(USD 1,845,000)
revaluation of
Increases (net of deferred taxes) in the carrying
amount arising on
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 4 May 2022, Waterco USA Inc revalued its
increase of
Augusta Property resulting
$US125,000
of the
property done on 7 March 2019. The value of the
Augusta Property went up from $US1.72m to
$US1.845m.
in an
last valuation
from the
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 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.
46
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.
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 included in the asset’s
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with
the item will flow to the Group and the cost of the
item can be measured reliably. All other repairs
and maintenance are charged to the statement of
comprehensive income during the financial period
in which they are incurred.
Depreciation
The depreciable amount of all fixed assets
including building and capitalised leased assets,
but excluding freehold land, is depreciated over
their useful lives commencing from the time the
asset is ready for use. Leasehold improvements
are depreciated over the shorter of either the
unexpired period of the lease or the estimated
useful lives of the improvements.
The gain or loss on disposal of all fixed assets
is determined as the difference between the
carrying amount of the asset at the time of
disposal and the proceeds of disposal, and is
included in operating profit before income tax of
the consolidated group in the year of disposal.
Depreciation where applicable has been charged
in the accounts so as to write off each asset over
the estimated useful life of the asset concerned.
Either the diminishing value or straight
line
is used.
method, as considered appropriate,
The depreciation rates used for each class of
depreciable assets are:
Class of Fixed Assets
Depreciation Rate
Buildings
1.50% - 2.50%
Plant and equipment
6.00% - 33.33%
Leased plant and
equipment
13.00% - 20.00%
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 1: Statement of Significant Accounting
Policies (continued)
k. Property, Plant and Equipment (continued)
Depreciation (continued)
The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at each
balance date.
An asset’s carrying amount
immediately to
asset’s carrying amount
estimated recoverable amount.
its recoverable amount
is written down
if the
its
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
is
right-of-use asset
recognised at the
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 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 re-
measurement 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.
m. Revenue recognition
The consolidated entity recognises revenue as
follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects
the consideration to which the consolidated
entity is expected to be entitled in exchange for
the
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
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.
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.
Rent revenue from
investment properties
is
recognised on a straight-line basis over the lease
term. Lease incentives granted are recognised as
part of the rental revenue. Contingent rentals are
recognised as income in the period when earned.
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.
Other revenue is recognised when it is received or
when the right to receive payment is established.
All revenue is stated net of the amount of goods
and services tax (GST).
47
WATERCO LIMITED | ANNUAL REPORT 2022
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 1: Statement of Significant Accounting
Policies (continued)
incurred
n. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised
net of the amount of GST, except where the
is not recoverable
amount of GST
from the Australian Taxation Office.
In these
circumstances, the GST is recognised as part of
the cost of acquisition of the asset or as part of an
item of the expense. Receivables and payables
in the statement of financial position are shown
inclusive of GST.
Cashflows are presented
in the cash flow
statement on a gross basis, except for the GST
component of investing and financing activities,
which are disclosed as operating cash flows.
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). 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.
48
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
less any allowance for expected credit
cost,
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.
t. Borrowings and Borrowing Costs
initially recognised
Loans and borrowings are
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 profit
or loss in the period in which they are incurred.
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 1: Statement of Significant Accounting
Policies (continued)
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
is no reasonable
of ownership. When there
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 fair value through other
comprehensive
equity
include
investments which
the consolidated entity
intends to hold for the foreseeable future and has
irrevocably elected to classify them as such upon
initial recognition.
income
recognises a
Impairment of financial assets
loss
The consolidated entity
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
the consolidated entity's
depends
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.
upon
Where there has not been a significant increase
in exposure to credit risk since initial recognition,
a 12-month expected credit loss allowance is
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
loss
losses. The amount of expected credit
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.
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 in the
consolidated entity's normal operating cycle;
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.
49
WATERCO LIMITED | ANNUAL REPORT 2022
(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
Standards
Accounting
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 2022.
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 2022
Note 1: Statement of Significant Accounting
Policies (continued)
w. Rounding of Amounts
The amounts
in the financial statements and
directors’ report have been rounded off to
in accordance with ASIC
the nearest $1,000
Corporations
in Financial/Directors
Reports) Instrument 2016/191.
(Rounding
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. Estimates assume a reasonable
expectation of future events and are based on
current trends and economic data, obtained both
externally and within the group.
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
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. Management has evaluated
these inventory items and do not consider the
carrying value of these items as material. All
inventory items have therefore been classified
as current.
(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. Obsolete
items are disposed of as and when identified.
50
Notes To The Financial Statements
For The Year Ended 30 June 2022
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
Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Non-Current Liabilities
TOTAL LIABILITIES
EQUITY
Issued capital
Capital profits reserve
Asset revaluation reserve
Share options reserve
Retained earnings
TOTAL EQUITY
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Total profit after tax
Total comprehensive income
2022
$000
36,575
78,271
114,846
26,325
10,027
36,352
34,847
180
17,400
13
26,054
78,494
2022
$000
6,793
6,793
2021
$000
27,056
75,234
102,290
15,826
11,542
27,368
35,590
180
17,400
-
21,752
74,922
2021
$000
4,626
4,626
Guarantees
At 30 June 2022, Waterco Ltd has provided guarantees up to RM11,150,000 and USD1,000,000 (AUD5,125,032)
(2021: RM11,150,000 and USD1,000,000 (AUD4,901,798) to two Malaysian Banks for loans provided to a
subsidiary, Waterco (Far East) Sdn Bhd.
Contractual Commitments
At 30 June 2022, Waterco Ltd has not entered into any contractual commitments for the acquisition of any
property, plant and equipment. (2021: $nil).
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in
note 1, except for the following:
• Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
• Dividends received from subsidiaries are recognized as other income by the parent entity and its receipt may
be an indicator of an impairment of the investment.
51
WATERCO LIMITED | ANNUAL REPORT 2022 Notes To The Financial Statements
For The Year Ended 30 June 2022
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
2022
$000
2021
$000
123,285
113,345
20
1
3,006
296
1,533
128,141
123,285
4,856
128,141
20
20
69
-
29
1
3,434
265
1,308
118,382
113,416
4,966
118,382
29
29
3
-
52
Notes To The Financial Statements
For The Year Ended 30 June 2022
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:
• Goodwill on acquisition
• Goodwill on consolidation
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
2022
$000
2021
$000
62,974
58,087
50
270
8
328
843
784
103
4,584
6,314
54
25
79
103
959
-
225
136
162
191
14
367
683
824
195
4,846
6,548
50
25
75
-
1,156
76
152
150
53
WATERCO LIMITED | ANNUAL REPORT 2022 Notes To The Financial Statements
For The Year Ended 30 June 2022
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
(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%
(2021: 30%)
Add
Tax effect of:
• Depreciation of buildings
• Foreign controlled entities tax losses not tax effected
• Unrealised foreign exchange losses
• Right of use assets
• Non deductible expenses
• Under provision for tax in prior period
• 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/(benefit) attributable to entity
Consolidated Group
2022
$000
3,451
(159)
-
3,292
2021
$000
1,380
(5,015)
-
(3,635)
3,292
(3,635)
14,866
4,460
185
-
49
4
10
46
41
148
592
-
-
-
-
482
281
-
3,292
9,061
2,718
235
-
200
38
37
-
-
129
651
-
20
5,158
183
357
349
16
(3,635)
The applicable weighted average effective tax rates are as
follows:
22.1%
(40.1)%
54
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note7: 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
2022
$000
1,319
98
32
1,449
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.
55
WATERCO LIMITED | ANNUAL REPORT 2022
Notes To The Financial Statements
For The Year Ended 30 June 2022
CURRENT ASSETS
Note 8: 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
(1) Includes $867,262 (2021:$437,452) in advertising levies held
by Waterco Ltd in its capacity as the franchisor of the Swimart
network and included in other creditors (see note 16).
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 9: Trade and other receivables
Trade receivables
Less: allowance for expected credit loss
impairment of receivables
Other receivables
Consolidated Group
2022
$000
11,946
11,946
11,946
16,571
(519)
16,052
1,149
17,201
2021
$000
11,694
11,694
11,694
13,082
(403)
12,679
1,040
13,719
Movements in the allowance of expected credit loss of receivables are as follows:
Opening
Balance
1.7.2020
$000
Charge for
the Year
$000
Amounts
Written Off
$000
Closing
Balance
30.6.2021
$000
Consolidated Group
Current trade receivables
455
88
(140)
403
Opening
Balance
1.7.2021
$000
Charge for
the Year
$000
Amounts
Written Off
$000
Closing
Balance
30.6.2022
$000
Consolidated Group
Current trade receivables
403
219
(103)
519
56
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 9: Trade and other receivables (continued)
There are $4,221,000 (2021: $3,009,000) 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
> 90
$000
Within initial
trade terms
$000
Consolidated Group
2021
Trade and term receivables
Other receivables
Total
2022
Trade and term receivables
Other receivables
Total
13,082
1,040
14,122
16,571
1,149
17,720
403
1,715
403
1,715
482
482
519
519
1,829
1,317
1,829
1,317
271
271
827
827
541
541
248
248
9,670
1,040
10,710
11,831
1,149
12,980
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 2022 and rates have increased in each
category up to 6 months overdue.
57
WATERCO LIMITED | ANNUAL REPORT 2022 Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 10: Inventories
Raw materials and stores at cost
Work in progress at cost
Finished goods at cost
Goods in transit at cost
Provision for inventory write-down
Note 11: Other current assets
Prepayments
NON CURRENT ASSETS
Note 12: Interests in Subsidiaries
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*
Guangzhou Waterco Environmental Technology Co Ltd
Shanghai Waterco Trading Co Ltd**
Waterco Vietnam Company Limited
Shanghai Waterco Trading Co Ltd
Waterco Vietnam Company Limited
Consolidated Group
2022
$000
10,844
3,741
34,759
5,608
(6,264)
48,688
1,077
1,077
2021
$000
9,928
3,236
23,915
3,205
(5,568)
34,716
1,022
1,022
Country of
incorporation
Carries on
business in
% owned
2022
2021
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
100
100
100
60
100
100
100
100
100
100
100
100
100
United Kingdom United Kingdom 100
51
100
60
-
100
-
Vietnam 100
100
Vietnam 100
Indonesia
Singapore
Singapore
France
China
China
Vietnam
China
Vietnam
Indonesia
Singapore
Singapore
France
China
China
China
100
100
100
100
60
100
100
100
100
100
100
100
100
100
100
51
100
60
100
100
100
100
100
* On 30 June 2022, Waterco France operations were closed and the company was deregistered.
** On 1 September 2021, Shanghai Waterco Trading Co Ltd was deregistered.
58
Notes To The Financial Statements
For The Year Ended 30 June 2022
Consolidated Group
Note 13: 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
Movements in Carrying Amounts
2022
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
2022
$000
19,486
32,864
(1,125)
31,739
36,205
(27,614)
8,591
272
(102)
170
59,986
Freehold
Land
$000
Buildings
$000
Plant &
Equipment
$000
Leased
Plant
$000
19,138
326
-
22
-
-
19,486
31,715
433
110
360
-
(879)
31,739
7,629
153
2,749
-
(28)
(1,912)
8,591
340
-
-
-
(68)
(102)
170
*Depreciation expense that is absorbed into the cost of manufactured inventory is $1,025,152
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
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
2021
$000
19,138
32,155
(440)
31,715
33,285
(25,656)
7,629
496
(156)
340
58,822
Total
$000
58,822
912
2,859
382
(96)
(2,893)
59,986
Total
$000
51,606
(1,666)
2,860
8,954
(281)
(2,651)
58,822
59
WATERCO LIMITED | ANNUAL REPORT 2022 Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 13: 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
2022
$000
2021
$000
25,586
(5,447)
20,139
24,939
(5,160)
19,779
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 14: Right of use Assets
Leased buildings
Accumulated depreciation
Movement in carrying amount
Leased buildings
Opening net carrying amount
Addition to Right of use Asset
Depreciation expense
Closing net carrying amount
29,446
(13,652)
15,794
12,883
7,495
(4,584)
15,794
28,077
(15,194)
12,883
13,350
4,379
(4,846)
12,883
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 15: Intangible assets
Goodwill
Less: impairment
Goodwill on consolidation
Less: impairment
Product development costs
less: amortisation
60
1,069
(114)
955
249
(87)
162
2
-
2
1,119
1,072
(62)
1,010
249
(62)
187
3
-
3
1,200
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 15: Intangible assets (continued)
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
Goodwill on
consolidation
$000
Goodwill
$000
Deferred
expenditure
$000
187
-
-
-
(25)
162
1,010
-
-
(1)
(54)
955
3
-
-
(1)
-
2
Total
$000
1,200
(2)
(79)
1,119
Consolidated Group
CURRENT LIABILITIES
Note 16: Trade and other payables - unsecured
Trade creditors
Sundry creditors and accrued expenses (1)
(1) Included in sundry creditors are advertising levies collected
of $867,262 (2021:$437,452) 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 8).
Note 17: Borrowings
Bank loans - secured (refer Note 20)
Bank trade bills (refer Note 20)
Right of use lease liability
Lease liability
2022
$000
8,469
5,742
14,211
2,111
2,117
3,942
102
8,272
2021
$000
5,833
5,654
11,487
104
-
4,797
153
5,054
61
WATERCO LIMITED | ANNUAL REPORT 2022 Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 18: 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
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
62
Consolidated Group
2022
$000
2021
$000
2,547
1,677
7,457
462
9,596
(4,773)
4,823
982
2,081
7,457
(418)
9,120
(4,773)
4,347
-
-
2,396
4,086
(226)
359
6,615
(4,773)
1,842
(2,984)
4
-
(2,980)
1,301
-
376
1,677
2,134
3,895
(248)
356
6,137
(4,773)
1,364
(5,415)
(255)
2,686
(2,984)
1,406
-
(105)
1,301
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 18: Taxes (continued)
c) Reconciliations (continued)
ii. Deferred Tax Liability (continued)
Property revaluation adjustments taken direct to equity
Opening balance
Net revaluations during current period taken direct to
equity
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
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
Consolidated Group
2022
$000
2021
$000
8,237
-
8,237
(418)
100
(318)
2,134
262
2,396
3,895
191
4,086
(248)
22
(226)
356
3
359
2,220
2,220
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
2,544
2,544
63
WATERCO LIMITED | ANNUAL REPORT 2022
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 19: Short-term provisions
Employee Benefits (see note 1h)
Opening Balance
Additional provisions
Amounts used
Closing Balance
Consolidated Group
2022
$000
3,868
2,440
(2,344)
3,964
2021
$000
1,956
2,847
(935)
3,868
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes all unconditional entitlements (including bonuses 1,619,519
FY21 1,783,335) 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 20: Borrowings
Bank loans - secured (1)
Right of use lease liability
Lease liability
642
11,949
23
12,614
782
8,108
132
9,022
(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 Facilities of $8.9m relating to the parent entity mature on 30 November 2024. As at 30 June 2022,
the parent entity has drawn a 90 day trade advance of $2m (part of bank loans-secured shown as current
borrowings in note 17) with an interest rate payable of 2.9%. Bank Facilities of RM51.5m ($A16.967m) relate to
a subsidiary and are due to mature between May 2024 and January 2029. As at 30 June 2022 an amount of
AUD2.793m has been drawn and shown in Note 17 Current Borrowings :Bank loans secured $A.074m and Bank
trade bills $A2.117m and in Note 20 as Non Current borrowings Bank loans secured $0.602m. These loans bear
an interest of 3.29%-6.27% and are repayable by monthly instalments.
Note 21: 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
64
212
1
-
213
4,177
735
210
2
-
212
4,080
723
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 22: Issued capital
Ordinary shares are classified as equity.
35,715,248 ordinary shares fully paid at beginning of the year
(2021: 35,855,221)
On 31 July 2021, 27,363 shares were purchased at $2.90 and
cancelled under Waterco Ltd Share-buyback Scheme
On 30 September 2021, 9,052 shares were purchased at $3.14 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 October 2021, 26,596 shares were purchased at $3.15 and
cancelled under Waterco Ltd Share-buyback Scheme
On 30 November 2021, 19,905 shares were purchased at $3.28 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 December 2021, 10,310 shares were purchased at $3.30 and
cancelled under Waterco Ltd Share-buyback Scheme
On 28 February 2022, 4,862 shares were purchased at $3.30 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 March 2022, 21,328 shares were purchased at $3.31 and
cancelled under Waterco Ltd Share-buyback Scheme
On 30April 2022, 91,022 shares were purchased at $3.56 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 May 2022, 4,460 shares were purchased at $3.60 and
cancelled under Waterco Ltd Share-buyback Scheme
On 30 June 2022, 7,204 shares were purchased at $3.60 and
cancelled under Waterco Ltd Share-buyback Scheme
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
35,493,146 ordinary shares fully paid at the end of
the year (2021: 35,715,248)
Consolidated Group
2022
$000
2021
$000
35,590
35,982
(79)
(28)
(84)
(65)
(34)
(16)
(71)
(324)
(16)
(26)
-
-
-
-
-
-
-
-
-
-
-
-
-
(51)
(2)
(105)
(3)
(10)
(112)
(109)
34,847
35,590
65
WATERCO LIMITED | ANNUAL REPORT 2022 Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 22: Issued capital (continued)
Ordinary shares
Ordinary shares are classified as equity
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
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 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 previous 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 222,102 shares.(2021:
nil) shares costing $ 743,559 (2021: nil)
This Share buyback expired on 15 June 2022.
On 30 June 2022, the company announced a seventh share buyback of $3,000,000 worth of shares
(approximately 833,333 shares) commencing on 1 July 2022 and ending on 30 June 2023 (or earlier if the
$3,000,000 is purchased before then). During the current year, the company purchased and cancelled nil
shares. (2021: nil) shares costing $nil (2021: nil)
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 2022 and 30 June 2021 are as follows:
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
66
Consolidated Group
2022
$000
20,886
(11,946)
8,940
111,010
119,950
7%
2021
$000
14,076
(11,694)
2,382
100,448
102,830
2%
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 23: Reserves
a) Capital profits
The capital profits reserve relates to non taxable
profits on sale of property.
Note
No.
2022
$000
2021
$000
Consolidated Group
211
211
b) Foreign currency translation
(6,004)
(7,537)
The foreign currency translation reserve records
exchange differences on translation of foreign
controlled subsidiaries and the exchange gains and
losses on hedges of the net investment in foreign
operations.
c) Asset revaluation reserve
Balance at the beginning of the year
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 land and buildings to fair value
d) Share Options Reserve
Balance at the beginning of the year
Share option increment
Balance at the end of the year
The share options reserve records the cost of the
share option plan
Note 24: Retained earnings
Opening retained earnings
Net profit attributable to the members of the parent
entity
Dividends paid
Closing retained earnings
30
25,768
20,153
402
274
26,444
6,268
(653)
25,768
-
13
13
-
-
-
20,664
18,442
45,842
11,641
(2,491)
54,992
35,233
12,755
(2,146)
45,842
67
WATERCO LIMITED | ANNUAL REPORT 2022 Notes To The Financial Statements
For The Year Ended 30 June 2022
Note
No.
Note 25: Non-controlling interest
Issued capital
Retained profits
Non-controlling interest equity holding in subsidiaries:
Ezera Systems Pty Ltd
PT Waterco Indonesia
Medipool Pte Ltd
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
17
20
Consolidated Group
2022
$000
176
331
507
40%
49%
40%
39
89
128
(3)
125
102
23
125
2021
$000
176
398
574
40%
49%
40%
161
134
295
(10)
285
153
132
457
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
Corporate guarantees provided by the parent company to
overseas banks to secure loans for 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
5,125
5,125
4,902
4,902
360
227
685
680
23
22
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
68
Segment assets
Where an asset is used across multiple segments,
the asset is allocated to the segment that receives
the majority of the economic value from the asset. In
the majority of instances, segment assets are clearly
identifiable on the basis of their nature and physical
location.
Segment liabilities
Liabilities are allocated to segments where is a direct
nexus between the incurrence of the liability and the
operations of the segment.
Unallocated items
The following items of revenue, expenses, assets and
liabilities are not allocated to operating segments as
they are not considered part of the core operations
of any segment:
– other revenues
Notes To The Financial Statements
For The Year Ended 30 June 2022
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.
receivable are
reporting
Corporate charges are allocated to
segments based on the services provided to those
reporting segments. Inter-segment loans payable
and
recognised at the
initially
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.
69
WATERCO LIMITED | ANNUAL REPORT 2022 Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 29: Operating Segments (continued)
Geographical Segments
AUSTRALIA &
NEW ZEALAND
$000
86,542
1,320
87,862
ASIA
$000
12,397
41,318
53,715
2022
NORTH
AMERICA &
EUROPE
$000
CONSOLIDATED
GROUP
$000
24,346
870
25,216
123,285
43,508
166,793
4,856
(43,508)
128,141
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 Before Tax
10,993
5,110
3,619
19,722
19,722
(4,856)
14,866
126,427
64,420
5,798
196,645
882
44,896
1,887
31,645
89
9,936
(38,992)
157,653
2,858
86,477
(39,834)
46,643
Reconciliation of segment
result to group net profit
before tax
Unallocated items
- other
Net profit before tax
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
70
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 29: Operating Segments (continued)
Geographical Segments
AUSTRALIA &
NEW ZEALAND
$000
76,081
1,009
77,090
ASIA
$000
11,870
33,398
45,268
2021
NORTH
AMERICA &
EUROPE
$000
CONSOLIDATED
GROUP
$000
25,394
589
25,983
113,345
34,996
148,341
5,037
(34,996)
118,382
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 Before Tax
7,998
1,810
4,290
14,098
Reconciliation of segment
result to group net profit
before tax
Unallocated items
- other
Net profit before tax
SEGMENT ASSETS
Segment asset increases for
the period
Reconciliation of segment
assets to group assets
Intersegment eliminations
Total group assets
14,098
(5,037)
9,061
107,812
52,169
18,112
178,093
(42,673)
135,420
CAPITAL EXPENDITURE
1,106
1,630
122
2,858
SEGMENT LIABILITIES
Reconciliation of segment
liabilities to group liabilities
Intersegment eliminations
Total group liabilities
30,101
24,040
24,249
78,390
(43,418)
34,972
71
WATERCO LIMITED | ANNUAL REPORT 2022 Notes To The Financial Statements
For The Year Ended 30 June 2022
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 4c per share (2021:3c)
franked at the tax rate of 30% paid
Interim fully franked ordinary dividend of 3c per share (2021:3c)
franked at the tax rate of 30% paid
Proposed final fully franked ordinary dividend of 5c per share
(2021: 4c) franked at the tax rate of 30%
Balance of franking account at year end adjusted for franking
credits arising from payment of income tax payable, payment of
proposed dividends and franking credits not available
for distribution
Note 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.
Net Profit
Net Profit/(loss) attributable to outside equity interest
Earnings used in the calculation of basic EPS
Consolidated Group
2022
$000
2021
$000
1,426
1,065
2,491
1,775
1,074
1,072
2,146
1,429
6,820
5,653
11,574
(67)
11,641
12,696
(59)
12,755
a) Weighted average number of ordinary shares outstanding
during the year used in calculation of basic EPS
35,627
35,822
b) Weighted average number of ordinary shares outstanding
during the year used in calculation of diluted EPS
35,627
35,822
72
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 32: Employee Benefits
Share Option Plan
This plan was approved by the Board on 24 June 2021
Its objective is to encourage employees to acquire ordinary shares in the company in order to promote the long
term success of the company.
On 23 August 2021, the company issued the following options to three senior executives 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.
Senior Executive
Mr Gerard Doumit
Mr Marchal De Pasuale CEO Waterco USA
Mr Tony Fisher
Position
CFO
CEO Waterco Nth America and
Waterco Europe
No of Options
100,000
100,000
150,000
Tranche 1
33,000
33,000
50,000
Tranche 2
33,000
33,000
50,000
Tranche 3
34,000
34,000
50,000
The Options will vest in 3 tranches in accordance with the Exercise Periods set out below provided the Vesting
Condition (EBIT) for each year has been met and the executives remain employed by the Waterco Group at the
beginning of the Exercise Period.
Tranche
1
2
3
Exercise Period
23/8/22-23/8/31
23/8/23-23/8//31
23/8/24-23/8/31
Vesting Condition
30 June 2022
30 June 2023
30 June 2024
EBIT
$10,338,853
$11,278,748
$12,218,644
All 3 executives have met the Vesting Condition for Tranche 1 as the EBIT for the financial year ending 30 June
2022 has exceed $10,338,853. Each executive may now exercise the options for Tranche 1 anytime from now until
23 August 2031.
Nil options were exercised during the period.
Note 33: Events Subsequent to Reporting Date
COVID-19
The consequences of the Coronavirus (COVID-19)
pandemic are continuing to be felt around the world,
and its impact on the Group, if any, has been reflected
in the results to date. Whilst control measures and
related government policies, including the roll out of
the vaccine and boosters, have started to mitigate
the risks caused by COVID-19, it is not possible
at this time to state that the pandemic will not
subsequently impact the Group's operations going
forward. The Group now has experience in the swift
implementation of business continuation processes
should future lockdowns of the population occur, and
these processes continue to evolve to minimise any
operational disruption. Management continues to
monitor the situation both locally and internationally.
There were no other reportable events subsequent to
balance date.
Note 34: 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.
73
WATERCO LIMITED | ANNUAL REPORT 2022
information that
forward-looking
is available.
As disclosed in note 9, due to the Coronavirus
(COVID-19) pandemic,
the calculation of
expected credit losses has been revised as at
30 June 2022 and rates have increased in each
category up to 6 months overdue. Management
receivable balances on a
closely monitors
monthly basis and is in regular contact with its
customers to mitigate risk.
The parent entity
is exposed to fluctuations
in foreign currencies arising from the sale and
purchase of goods in currencies other than the
group’s measurement currency.
The parent entity has forward contracts in place at
balance date relating to highly probable forecast
transactions. 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.
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 34: Financial Risk Management (continued)
(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
to forward exchange
contracts and interest rate swaps is the net fair
value of these contracts as disclosed in (c).
risk exposure
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 9.
The consolidated entity has adopted a lifetime
expected loss allowance 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 collection rates and
74
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 34: Financial Risk Management (continued)
(c) Foreign Currency Risk (continued)
The following table summarises the notional amounts of the Group (and parent entity) commitments in
relation to forward exchange contracts.
Notional Amounts
2022
$000
2021
$000
Average Exchange Rate
2021
2022
$000
$000
Consolidated Group (and Parent Entity)
Buy USD/Sell AUD
- Less than 6 months
3,000
2,501
0.7544
0.7996
d) Liquidity Risk
The group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised
borrowing facilities are maintained.
Financial liability and financial asset maturity analysis
Consolidated Group
Within 1 Year
1 to 5 Years
2022
$000
2021
$000
2022
$000
2021
$000
Over 5 years
2022
$000
2021
$000
Total
2022
$000
2021
$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
11,946
17,201
11,694
13,719
29,147
25,413
-
4,228
14,211
3,942
102
22,483
-
-
104
11,487
4,797
153
16,541
-
-
-
-
-
642
-
11,949
23
12,614
-
-
-
-
-
782
-
8,108
132
9,022
-
outflows
22,483
16,541
12,614
9,022
Net (outflow)/ inflow on
financial instruments
6,664
8,872
(12,614)
(9,022)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,946
17,201
11,694
13,719
29,147
25,413
-
4,870
14,211
15,891
125
-
886
11,487
12,905
285
35,097
-
25,563
-
35,097
25,563
(5,950)
(150)
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;
75
WATERCO LIMITED | ANNUAL REPORT 2022
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 34: Financial Risk Management (continued)
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
2022
2021
Carrying
Amount
$000
Net Fair
Value
$000
Carrying
Amount
$000
Net Fair
Value
$000
11,946
17,201
29,147
-
4,870
125
15,891
20,886
11,946
17,201
29,147
-
4,919
131
15,891
20,941
11,694
13,719
25,413
-
886
285
12,905
14,076
11,694
13,719
25,413
-
895
299
12,905
14,099
For financial assets and other liabilities, the net fair value approximates their carrying value. Financial assets where
the carrying amount exceeds the net fair values have not been written down as the consolidated group intends to
hold these assets to maturity.
Sensitivity Analysis
The following table illustrates sensitivities to the Group’s exposures to changes in interest rates and exchange
rates. The table indicates the impact on how profit and equity values reported at balance date would have been
affected by changes in the relevant risk variable that management considers to be reasonably possible. The
sensitivity assumes the movement in a particular variable is independent to other variables.
Consolidated Group
Profit
$000
Equity
$000
+/-60
+/-1,569
+/-60
+/-1,569
+/-92
+/-1,179
+/-92
+/-1,179
Year ended 30 June 2022
+/- 2% in interest rates
+/- 5% in $A/$US
Year ended 30 June 2021
+/- 2% in interest rates
+/- 5% in $A/$US
76
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 35: Cash Flow Information
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
Share options reserve
Cashflow – Non Operating Activities:
Dividends Received
Cash Flows provided by operations
Consolidated Group
2022
$000
2021
$000
11,574
12,696
7,340
(3,006)
79
(69)
(3,489)
116
(109)
(13,972)
(55)
(479)
-
2,635
609
97
1,565
476
13
(1)
3,324
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
b) Non Cash Financial and investment activities
1) Property, Plant and Equipment
During the year, the consolidated group acquired plant and equipment with an aggregate fair value of
$nil (2021:$64,351) 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
24,117
1,750
25,867
(6,883)
32,750
23,647
1,750
25,397
(10,459)
35,856
The Fully Drawn Advance Facilities of the parent entity are due to expire on 30 November 2024). The parent
entity expects to renew these facilities on expiry date. (refer to note 20)
The Fully Drawn Advance Facilities of the controlled entity are due to expire on 31 May 2024 and 30 June 2031.
The controlled entity expects to renew these facilities on expiry date. (refer to note 20)
77
WATERCO LIMITED | ANNUAL REPORT 2022
Valuation Techniques
The Group selects a valuation technique that is
appropriate
in the circumstances and for which
sufficient data is available to measure fair value. The
availability of sufficient and relevant data primarily
depends on the specific characteristics of the asset
or liability being measured. The evaluation techniques
selected by the Group are consistent with one or
more of the following valuation approaches:
– Market approach: valuation techniques that use
prices and other relevant information generated by
market transactions for identical or similar assets or
liabilities.
– Income approach: valuation
that
convert estimated future cash flows or income and
expenses into a single discounted present value.
techniques
– 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.
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 36: 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.
78
Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 36: 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
13
13
Note
No
13
13
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 2022
Level 2
$000
Level 3
$000
Total
$000
-
-
-
-
-
-
-
-
19,486
31,739
19,486
31,739
51,225
51,225
51,225
51,225
Level 1
$000
30 June 2021
Level 2
$000
Level 3
$000
Total
$000
-
-
-
-
-
-
-
-
19,138
31,715
19,138
31,715
50,853
50,853
50,853
50,853
b. Valuation Techniques and Inputs Used to Measure Level 3 Fair Values
Description
Fair Value at
30 June 2022
$000
Non-financial assets
Freehold land(i)
19,486
Freehold buildings(i)
31,739
51,225
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.
79
WATERCO LIMITED | ANNUAL REPORT 2022 Notes To The Financial Statements
For The Year Ended 30 June 2022
Note 36: 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
34
34
2
2
Income approach using
discounted cash flow
methodology
Current commercial
borrowing rates for
similar instruments
Income approach using
discounted cash flow
methodology
Current commercial
borrowing rates for
similar instruments
There has been no change in the valuation technique(s) used to calculate the fair values disclosed in the notes
to the financial statements.
Note 37: Company Details
The registered office and principal place of business of the company is:
Waterco Limited
36 South Street
Rydalmere NSW 2116
80
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 38 to 80 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 2022 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 9 September 2022
81
WATERCO LIMITED | ANNUAL REPORT 2022
Independent Auditor's Report
to the members of Waterco Ltd
82
Independent Auditor's Report
to the members of Waterco Ltd
83
WATERCO LIMITED | ANNUAL REPORT 2022 Independent Auditor's Report
to the members of Waterco Ltd
84
Shareholder Information
For The Year Ended 30 June 2022
(a) Distribution of Shareholders as at 6 September 2022
1
1,001
5,001
10,001
100,001
Range
-
-
-
-
-
1,000
5,000
10,000
100,000
and over
Total Holders
256
161
55
65
25
562
Options
-
-
-
-
-
(b) Marketable Parcel
28 shareholders hold less than a marketable parcel..
(c) Substantial Shareholders
The following information is extracted from the company’s register as at 6 September 2022
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 92.55% of the total shares issued.
Name
Number of shares
Mr Soon Sinn Goh
1
Redbrook Nominees Pty Ltd
2
Acres Holdings Pty Ltd
3
4 Goh Lai Huat & Sons Sdn Bhd
5 Mr Soon Leong Goh
6 Mr Swee Kheong Goon
7
Mrs Christine Goh
8 Mr Shane Goh
9 Mrs Janet Swee Nyet Goh
10 Mr Chu Shien Chang
11 GWK Corporation Pty Ltd
12 Deuteronomy Pty Ltd (Dennis Hambleton SF A/C)
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 DWS Nominees Pty Ltd
Brazil Enterprises Pty Ltd
Leitch Pty Ltd (Leitch Super Fund A/C)
Protango Pty Ltd (BFHunt SF A/C)
TOTAL
(f) Stock Exchange Listing
19,221,853
3,112,943
2,578,322
2,500,000
681,384
562,717
500,000
470,346
447,112
340,281
334,387
300,000
295,173
290,000
245,386
225,267
205,734
173,000
170,223
95,130
32,749,258
%
54.32
8.80
7.29
7.06
1.93
1.59
1.41
1.33
1.26
0.96
0.94
0.85
0.83
0.82
0.69
0.64
0.58
0.49
0.48
0.27
92.55
The shares of Waterco Limited are listed on the Australian Stock Exchange under the trade symbol
WAT.
85
WATERCO LIMITED | ANNUAL REPORT 2022 Corporate Directory
Directors
Soon Sinn Goh
Bryan Goh
Ben Hunt
(Richard) Cheng Fah Ling
Judy Raper
Secretaries
Gerard Doumit
Sin Wei Yong
Registered office and principal place of
business
36 South Street, Rydalmere NSW 2116
Tel: + 61 2 9898 8600
Fax: + 61 2 9898 1877
Website: www.waterco.com.au
E-mail: companysecretary@waterco.com
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
77 Nealdon Drive, Meadowbrook QLD 4131
Tel: +617 3277 4958
WA
Unit 4, 115 Belmont Ave, Belmont WA 6104
Tel: +618 9362 4022
86
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
Solicitors
Marque Lawyers Pty Ltd
Level 4, 343 George St, 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
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
Vietnam
207A Nguyen Van Thu Street, Da Kao Ward,
District 1
Ho Chi Minh City, Vietnam
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: companysecretary@waterco.com
F: +61 2 9898 1877