ANNUAL
REPORT
2023
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 | 2023
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6
7
14
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35
37
85
86
Company Profile
Group Consolidated Financial Highlights
Chief Executive Officer’s Review of Operations
Board of Directors
Statement of Corporate Governance Practices
Directors’ Report
Auditor's Independence Declaration
Consolidated Financial Report
Shareholder Information
Corporate Directory
1
WATERCO LIMITED | ANNUAL REPORT 2023 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.
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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 molding.
Swimart is a market leading brand in the pool care industry across
Australia and New Zealand with over 40 years experience. Swimart is
focused on making pool care easy, with 68 retail stores and 6 mobile
franchises across Australia and New Zealand. Swimart provides its
customers a great range, service and advice through its highly trained
and experienced technicians focused on their pool care needs
through its fleet of over 250 Swimart service vans.
Zane Solar Systems consists of a 36-strong dealer network throughout
Australia. These highly skilled and trained professionals install solar,
heat pump and gas pool heating systems for both domestic and
commercial applications using Zane’s Gulfstream and Gulfpanel solar
absorber, Electroheat pool heat pumps and Turbotemp gas pool
heaters.
regions of Malaysia,
In certain
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 2023 Group Consolidated Financial Highlights
Financial Year Ended
2023
2022
2021
Operating revenue ($ million)
134.00
128.14
118.38
Sales revenue ($ million)
129.05
123.28
113.35
2020
98.47
93.58
2019
88.24
89.62
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
14.5
15.17
9.4
4.83
5.13
-
-
-
17.92
-0.71
11.20%
12.30%
8.30%
5.20%
6.00%
Profit before income tax from continuing
operations ($ million)
Profit/(loss) before income tax from
discontinued operations ($ million)
13.85
14.87
9.06
3.9
4.17
-
-
-
17.92
-0.86
Net profit after tax ($ million)
10.8
11.57
12.7
17.56
2.28
Total assets ($ million)
167.95
157.65
135.4
146.21
116.83
Equity ($ million)
121.23
111.01
100.45
87.26
75.83
Basic Earnings per share from continuing
and discontinued operations
30.7 cents
32.7 cents
35.6 cents
48.8 cents
6.1 cents
Basic Earnings per share from continuing
operations
Basic Earnings per share from
discontinued operations
30.7 cents
32.7 cents
35.6 cents
8.6 cents
8.4 cents
-
-
-
40.2 cents
(2.3 cents)
Dividends per share (Interim and Final)
10.0 cents
8.0 cents
7.0 cents
5.0 cents
5.0 cents
Net Tangible Assets per share
Year-end share price
$3.41
$4.00
$3.10
$3.60
$2.78
$2.90
$2.43
$2.55
$2.06
$1.61
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Chief Executive Officer’s Review Of Operations
SOON SINN GOH
Chairman/Group CEO
REVENUE AND PROFITABILITY
The Group reports an increase in Sales for the year of 5% from $123.28m to $129.05m.
Net Profit Before Tax (NPBT) fell 7% from 14.87m to 13.85m while Earnings Before Interest and Tax (EBIT)
recorded a small reduction of 4% from $15.17m to $14.50m
The major reasons for the improvement in sales were the result of the ongoing effects of Covid-19 which
resulted in a lot of our major pool builders order books filled till the end of June 2023. However,a weakness in
the Australian Dollar over the year and increase in input costs (mainly wages, freight and energy costs) resulted
in lower margins and higher overheads for the year. As a result, the Australian and New Zealand Division,
which accounts for a major portion of the Group’s profitability and sales, registered a decrease in EBIT of 34%.
Swimart Division met expectations despite an increase in operating expenses in the current year. Retail sales
across the Swimart Franchise Network continued to grow as home improvement expenditure started to slow
down with normal travel returning and interest rates rising by 3.25% since the start of the financial year.
DIVISIONAL EBIT PERFORMANCE
The breakdown of EBIT contribution by division is as follows:
FY23
FY22
DIVISIONAL EBIT
($000)
($000)
% Change
Australia and New Zealand
North America and Europe
Asia
5,090
2,950
6,458
7,704
2,559
4,911
Consolidated Reported EBIT
14,498
15,174
-34%
+15%
+32%
-4%
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WATERCO LIMITED | ANNUAL REPORT 2023 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 pool stores and 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 in the domestic pool sector has underpinned
the Division’s performance.
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 another challenging year for the ANZ Market with the
operating costs continuing to rise (wage, local freight and energy
costs and a weaker Australian Dollar putting pressure on margins.
However, unlike the previous year, there were few problems
sourcing of stock and booking shipping lines. Unlike the previous
year where Group Stock Levels went up by 40% or $14m, Group
Stock Levels only went up 3% or $1.5m as supplies and shipping
returned to normal.
Despite a challenging year in the ANZ Market, Waterco was able
to achieve a 0.5% increase in external 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 increase in external sales of 7.5% on the
same period last year.
The North America and Europe Division recorded a healthy 15%
increase in EBIT as supplies returned to normal and management
made excellent progress in winning market share.
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.
Swimart continues its brand refresh and
update of all its stores and mobile assets
across Australia and New Zealand.
Waterco engineers a large output
single-phase inverter pool heat pump
Waterco engineers a high-output single-
phase inverter pool heat pump. The
31kW Electroheat ECO-V Inverter Top
Vent Single Phase Pool Heat Pump
delivers a massive 39kW of heat at 27°C
air and 32kW at 15°C air, thanks to its
oversized evaporator area and twin
fans. This makes it ideal for swimming
pool owners who don't have or can't get
three-phase power.
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Overall, this entity recorded an outstanding increase in sales of
23% during the year under review despite the number of new pool
constructions continuing to fall during the year.
Lacron Filters
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 10% during the
year due to the expected fall in the number new pools being built.
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. However,
its mix of sales resulted in a vast improvement in its Gross Margin
leading to an overall net profit for the year less than 1% below the
PCP.
ASIA
Waterco Far East in Malaysia (WFE): This Entity was born out
of Waterco’s familiarity with the Southeast Asian market. WFE was
initially a sales operation designed to service Waterco Australia’s
Southeast Asian customer base. In 1991 WFE added manufacturing
operations to its undertakings in Kuala Lumpur, Malaysia. As well
as bringing the Group closer to Southeast Asia markets, this also
gave cost-efficiency in our manufacturing operations. Since then,
WFE has become the principal manufacturing facility for the
Waterco Group. WFE continues to deliver robust new products to
give the Group a strong reputation and competitive edge.
WFE has achieved ISO9001:2008 certification, the internationally
recognised standard for the quality management of businesses,
and demonstrates the existence of an effective and well-designed
quality management system, which stands up to the rigours of
an independent external audit. A key criterion of this standard is
that the management system can provide confidence in creating
products that meet expectations and requirements.
Local sales in Malaysia recorded a greater than 30% increase in
the current year despite continuing political uncertainty and cost
pressures faced by the business especially with the availability of
foreign labour that which has not returned to Pre-Covid 19 Levels.
The sourcing of raw materials and components has improved
during the year and the restrictions imposed by the Pandemic
no longer having an effect on the business The growth in the
use of robots (still at a relatively small scale) in the manufacturing
Established in 1971, Lacron Ltd. is known
for its superior quality and durability.
Lacron commercial fiberglass filters are
the preferred choice for more intense
commercial installations, such as large-
scale spas and heavily used pools.
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.
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WATERCO LIMITED | ANNUAL REPORT 2023 Electrochlor Plus Mineral Chlorinator:
Smart pool care, all in one
This advanced device automatically
sanitises, manages pH, filters, and
controls auxiliary equipment, so you
can relax and enjoy your pool. With the
Electrochlor Plus mobile app, you can
monitor and control all of your pool's
function.
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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.
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 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 slightly up on last year despite the
economic challenges facing the Country with a further decline in
the Construction Industry , general slow-down in consumption
and growth across the Country and unemployment (especially
among the youth ) continuing to rise. Floods in January and June
2023 also caused havoc while a severe drought during the year
has reduced Hydro – Electric Power Generation and irrigation
right 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. WI achieved a record 39% increase in external
sales during the year.
PRODUCT DEVELOPMENT AND MARKET EXPANSION
Waterco Continues to Invest in Product Innovation and R&D
Waterco, a leading provider of water treatment products and
systems, is committed to staying at the forefront of the industry
through continuous investment in product innovation and research
and development (R&D).
In recent years, Waterco has made significant progress in
developing new technologies for swimming pools. The company's
latest innovation is an IoT platform that enables homeowners and
pool service technicians to obtain essential data about swimming
pools remotely.
The IoT platform was developed by a team of specialized software
engineers and cloud architects over the past four years. It includes
a WiFi board that can be customized and adapted to different
equipment, new production tools, a robust device registry, and
digital tools that simulate production and real-world use.
Waterco expects the IoT platform to improve pool management,
reduce operating costs, and enhance the customer experience.
The platform is expected to be available in early 2024.
MARKET EXPANSION
Waterco Vietnam
In addition to its investment in R&D, Waterco is also expanding
its global footprint. In 2023, the company opened a branch in
Vietnam to tap into the growing demand for its products in the
country.
Vietnam has seen a rapid growth in its middle class in recent years,
and this has led to an increased demand for luxury goods and
services, including swimming pools. The country is also a popular
tourist destination, and many hotels and resorts are investing in
swimming pools to attract visitors.
Waterco believes that there is a significant opportunity for growth
in the Vietnamese market. The company's decision to open a
branch in Vietnam is a strategic move that will help Waterco to
better serve its customers in the region.
The company's continued investment in product innovation and
R&D, as well as its expansion into new markets, is a testament to
Waterco's commitment to providing its customers with the best
possible water treatment solutions.
DIVIDEND AND OUTLOOK
The results (Net Profit After Tax of $10.805m was 7% below last
year
NET PROFIT FOR THE YEAR
(AFTER TAX)
($000)
($000)
FY23
FY22 % change
Profit before income tax
expense
13,853 14,866
-7%
Income tax expense/(benefit)
3,048
3,292
Net Profit for the year
10,805 11,574
-7%
Waterco aims to improve market share by
increasing awareness of its innovations in
the region. With the population becoming
progressively wealthier, research is showing
that swimming pools and access to
clean water are considered an important
investment in improving quality of life.
11
WATERCO LIMITED | ANNUAL REPORT 2023 The Board will provide a profit guidance at a later stage for the financial year ending 30 June 2024, as more
information becomes available.
Waterco declares a final dividend payment of 5 cents per share, payable to shareholders on 15 December
2023. With an interim dividend of 5 cents per share, declared after the announcement of the Half-Year results,
this brings the total dividend for the year at 10 cents per share compared to the 8 cents in the previous
financial year.
EVENTS AFTER BALANCE DATE
Purchase of Davey
On 5 August 2023, Waterco Ltd signed an agreement with GUD Holdings Ltd to purchase the worldwide
business of Davey Water Products for a consideration of approximately $65m. The purchase is being fully
funded by Bank Facilities provided by Westpac Banking Corporation. The Davey Business provides Waterco
with not only a much larger presence in the pool industry but a significant entry point in the water treatment
business especially in regional areas. The settlement of this business took place on 1st September 2023.
Davey, an iconic Australian brand since
1934, manufactures and distributes a
wide range of water-related products,
from water transfer and conservation
to water treatment and filtration. With
branches in Australia, New Zealand,
and France, Davey is a global leader in
the water industry.
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WATERCO LIMITED | ANNUAL REPORT 2023 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, 8th Ed.), his knowledge extends to the South
East Asian region. He has been a regular presenter of financial seminars in Hong
Kong and Singapore for the UK publishing and training company Euromoney.
Dr. Hunt is the Chairman of the Remuneration Committee and a member of the
Audit Committee.
He held no other listed company directorships during the past three financial
years.
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(RICHARD) CHENG FAH LING - B COM CA
Non-Executive Director
Mr. Ling was appointed to the Board as a Non-Executive Director in May 2009.
He holds a Bachelor of Commerce degree from the University of Newcastle,
Australia. He is a member of Chartered Accountants Australia and New Zealand
and the Malaysian Institute of Accountants. He has experience in total logistics
and corporate finance in capital markets. Mr. Ling was formerly a Non-Executive
Director, the Chairman of the Audit Committee and a member of the Remuneration
Committee of Tiong Nam Logistics Holdings Berhad, a public company listed on
Bursa Malaysia (Malaysian Stock Exchange).
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 was appointed to the Board as a Non-Executive Director in April 2020.
She 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.
WAYNE BEAUMAN BE, CA, GAICD
Non-Executive Director
Mr Beauman was appointed to the Board as a Non-Executive Director on 21July
2023.He has a Bachelor of Economics from Macquarie University. He is an
Associate of Chartered Accountants Australia and New Zealand and a graduate of
the Australian Institute of Company Directors.
Mr Beauman is an experienced finance professional with more than 25 years as
a Partner in Chartered Accounting firms. He has provided assurance and related
services to clients with national and international operations across a broad range of
industries including manufacturing, real estate and property development, mining,
retail, financial services and local government. He is highly skilled in financial data
analysis and reporting as well as providing advice to Executive Management and
Corporate Boards on governance and regulatory reporting requirements.
Mr Beauman is a member of the Remuneration Committee and the Audit
Committee of Waterco Limited since his appointment to the Board.
He held no other listed company directorships during the past three years.
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WATERCO LIMITED | ANNUAL REPORT 2023 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 2023
(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 25 August 2023.
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
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.
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.
1.2
Information
regarding
election and
re-election
of director
candidates
1.3 Written
appointment
16
1.4
Company
Secretary
1.5 Diversity
1.6
Board reviews
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%
20%
35%
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. During the Reporting Period, the Company has met the
measurable objectives for women on the Board with 1 female Director out of 5
Directors on the Board; and 1 female senior executive out of 2 senior executives of
the Company (defined by the Company as Key Management Personnel). However,
the Company did not meet the measurable objective for total women employed.
As at 30 June 2023, women represented 34.44% of the overall workforce. The
Company will continue to work towards achieving the target measurable objective.
The Board is committed to an ongoing internal process of performance evaluation
of the Board, its committees and individual directors to ensure the diligent and
effective discharge of responsibilities and a consistent mindset in improving
corporate governance practices. The Board undertakes the performance
evaluations by way of evaluation forms.
The Board has undertaken an evaluation on the performance of the Board, its
committees and individual directors for the Reporting Period.
1.7 Management
reviews
The Company is committed to an ongoing internal process of performance
evaluation of Key Management Personnel to ensure the diligent and effective
discharge of their responsibilities. The Group CEO has undertaken a performance
evaluation review of Key Management Personnel for the Reporting Period.
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WATERCO LIMITED | ANNUAL REPORT 2023 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.
During the Reporting Period, the Board comprised 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.
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
Legal
Financial
Engineering
Human resources
Regulatory and compliance experience
Diversity
Female
Male
Different ethnicities and cultures
Languages other than English
18
2.3 Disclose
independence
and length of
service
The names of the independent directors in office during the Reporting Period are:
(a) Ben Hunt;
(b) (Richard) Cheng Fah Ling; and
(c) Judy Raper.
The Company’s assessment of the materiality of a director’s interest is considered
on a case by case basis by the Board. Where an entity associated with a Director
provides services to the Company, the Board uses a threshold of $100,000 in fees
in a financial year as a guideline. However, the Board does not follow an inflexible
set of criteria but considers whether the relationship in question is reasonably
likely to interfere with that Director’s independent judgement. Further details of
the directors’ skills, experience, expertise and lengths of service are set out in the
Board of Directors' section of the Company’s Annual Report.
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.
2.4 Majority of
directors
independent
2.5
Independent
Chair
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.
19
WATERCO LIMITED | ANNUAL REPORT 2023 PRINCIPLE 3: INSTIL A CULTURE OF ACTING LAWFULLY, ETHICALLY AND RESPONSIBLY
RECOMMENDATION
WATERCO’S COMPLIANCE WITH ASX RECOMMENDATIONS
3.1
Statement of
Values
The Board’s statement of values can be found on the Company’s website, www.
waterco.com.au
3.2
Code of conduct
The Board has established a Code of Conduct for directors, key management
personnel and employees.
3.3 Whistleblower
policy
The Company encourages employees to speak up about unlawful, unethical
or irresponsible behavior within the organisation through the Company’s
whistleblower policy which is available in the Corporate Governance section of
the Company’s website, www.waterco.com.au
3.4 Antibribery and
corruption policy
The Company is committed to conducting all dealings lawfully, ethically and in
line with the Company’s Statement of Values. The Company’s antibribery and
corruption framework enables it to prevent, detect and response to bribery and
corruption risks. The policy is available in the Corporate Governance section of
the Company’s website, www.waterco.com.au
PRINCIPLE 4: SAFEGUARD THE INTEGRITY OF CORPORATE REPORTS
RECOMMENDATION WATERCO’S COMPLIANCE WITH ASX RECOMMENDATIONS
4.1 Audit committee The Audit Committee operates under the Audit Committee Charter.
The role of the Audit Committee is to assist the Board with its oversight of the
integrity of the financial statements, including overseeing the existence and
maintenance of internal controls, accounting systems, and the financial reporting
process. The Committee also nominates external auditors, reviews existing
audit arrangements and co-ordinates external and internal auditing functions. In
addition, the Audit Committee examines any other matters referred to it by the
Board.
During 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 2023 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
6.5
Substantive
resolutions
The Company ensures that all substantive resolutions at the shareholders’
meeting are decided on a poll rather than by a show of hands.
Facilitate
electronic
communications
The Company recognises the benefits of the use of electronic communications.
Shareholders have the option of selecting to receive the following information
electronically from the share registry: dividend statements; annual reports;
notices of meetings and proxy forms and the ability to vote online; and other
general company communications.
With this in place, shareholders can log into their account to make changes to
their communication preferences. The share registry can also be contacted via
email or telephone. Contact details can be found on the Company’s website.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
RECOMMENDATION WATERCO’S COMPLIANCE WITH ASX RECOMMENDATIONS
7.1
Risk committee
The Company has not established a Risk Committee.
The functions of the Risk Committee are performed by the Audit Committee who
reports to the Board on the effectiveness of the risk management and internal
control processes of the Company regularly by circulation of Minutes of Meetings
to the directors and through other means of formal and informal reporting.
Further details regarding the Audit Committee, its membership and the number
of meetings held during the Reporting Period are set out in response to
Recommendation 4.1.
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
Recommendation 4.1.
functions are set out
in response to
7.4
Sustainability
risks
The Board considers that the Company is not materially exposed to economic,
environmental and social sustainability risks.
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
RECOMMENDATION
WATERCO’S COMPLIANCE WITH ASX RECOMMENDATIONS
8.1
Remuneration
committee
8.2 Disclosure of
Executive and
Non-Executive
Director
remuneration
policy
8.3
Policy on
hedging equity
incentive
schemes
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 Reporting Period 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.
The Company did not offer any equity-based remuneration scheme during the
Reporting Period. In the previous 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 2023 Directors' Report
Your directors present their report on the Company and its controlled entities for the financial year ended 30
June 2023.
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.
On 21 July 2023, Mr Wayne Beauman was appointed a director.
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.
Consolidated Results
The consolidated profit of the group after providing for income tax and eliminating non-controlling interests
amounted to $10.846 million.
24
Dividends
Dividends paid or declared for payment are as follows:
• Final ordinary dividend of 5 cents per share paid on 15 December 2022 as recommended in last year’s
report - $1.763 million
• Interim dividend of 5 cents per share paid on 15 June 2023 as declared in the half yearly report -
$1.761 million
• Final ordinary dividend of 5 cents per share declared by the directors to be paid on 15 December 2023 -
$1.760 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 $10.22 million from $111.01 million in June 2022
to $121.23 million in June 2023.
The change has largely resulted from:
• Upward movement in profits (less dividends paid) of 7.32 million;
• Net increase in the asset revaluation reserve of group companies of $4.25 million;
• Net decrease in non-controlling Interests of $0.14 million;
• Foreign currency translation loss of $0.01 million;
• Net decrease in share capital of $1.20 million from the Waterco Share Buy-Back.
The Group’s working capital being current assets less current liabilities increased from $49.92 million in 2022
to $56.57 million in 2023.
The Directors believe that the Group is in a strong and stable financial position.
Significant Changes in State of Affairs
The Directors are not aware of any significant changes in the state of affairs of the Consolidated Group that
occurred during the financial year which have not been covered elsewhere in this report.
After Balance Date Events
On 17 July 2023, the company announced its eighth on market share buyback of $1,000,000 worth of shares
(approximately 226,244 shares) commencing on 18 July 2023 and ending on 2 July 2024 (or earlier if the
$1,000,000 is purchased before then).
On 5 August 2022, Waterco Ltd signed an agreement with GUD Holdings Ltd to purchase the worldwide
business of Davey Water Products for a consideration of approximately $65m. The purchase is being fully
funded by Bank Facilities provided by Westpac Banking Corporation. The completion of the purchase took
place on 1 September 2023.
The Davey Business provides Waterco with not only a much larger presence in the pool industry but a significant
entry point in the water treatment business especially in regional areas.
Final Dividend
Since the end of the reporting period, the Board resolved to pay a final dividend of 5 cents per share fully
franked.
25
WATERCO LIMITED | ANNUAL REPORT 2023 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
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. For the financial year ended 30 June 2023 and as at
the date of this report, the Directors are not aware of any breaches of the environmental regulations.
Data, privacy and cyber security
The Consolidated Group’s strategy is built around detecting, protecting and responding to cyber threats. The use
of up-to-date technology to protect against cyber incidents supplemented by strong internal control processes
help ensure the privacy, integrity and security of both customer and staff data.
Climate change
Over the last few years, there has been a move towards a low carbon economy with both investors and regulators
now expecting companies to embrace cleaner/renewable energy solutions. The Group continues to invest in
technologies which replace traditional sources of energy (electricity from coal) with renewable alternatives
like solar. An example of this was the installation of solar panels at Rydalmere property a few years ago which
cut traditional electricity consumption by above 75%. In addition, the group has undertaken continuous
research into and production of energy efficient products, and product lines which are only powered by solar.
This process started in the mid 1980s (well before the world started talking about renewable clean energy)
with the acquisition of Zane Solar Systems. The solar business started off distributing rubber absorber for
solar pool heating to be replaced over time by the more durable and energy efficient solar roof panels. The
Group keeps abreast of market norms on sustainability and continues to monitor investor expectations and
changing customer preferences while at the same time making any necessary changes to comply with evolving
regulatory and legislative requirements.
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
Wayne Beauman
N/A
N/A
N/A
N/A
N/A
N/A
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 or options exercised during the year ended 30 June 2023.
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
The following persons were officers of the Company during the financial year and were previously partners of
the current audit firm, RSM, at a time when RSM undertook an audit of the Group:
Wayne Beauman who retired from RSM on 31/12/2018
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the year ended 30 June 2023 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 2023 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.
2023 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 2023/2024 financial year. The total
fees are now at an aggregate of $237,807 including the 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 23
Why Chosen
Soon Sinn Goh
– Group CEO
Key Management Personnel
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.
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 2023, the Key Management Personnel have achieved their performance (Threshold
Level) based on normal operations. The payment of this incentive is subject to Board Approval, and if approved,
will be paid in December 2023.
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 2023 Details of the Issue are as follows
Tranche
No
No of
Options
Vesting Date
Vesting Condition
–Group EBIT
Exercise
Price
Expiry Date
Vested
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
33,000
23 August 2031
33,000
23 August 2031
The CFO has met the Vesting Condition for Tranche 2 as the EBIT for the financial year ending 30 June 2023
has exceed $11,278,748. The CFO may now exercise the options for both Tranches 1 and 2 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 ($3,823 per year).
No other options or share-based payments were granted in the 2023 financial year.
No options have been exercised during the 2023 financial year.
The following table shows the Sales Revenue, Earnings Before Interest and Tax (EBIT), Net Profit Before Tax
(NPBT), Net Profit After Tax (NPAT), Earnings Per Share (EPS), dividends and year-end share price in the
financial year just ended and the previous four financial years for the consolidated Group.
Year ended
June 23
June 22
June 21
June 20
June 19
Sales revenue ($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
129.05
123.29
113.35
93.58
89.62
14.50
15.17
9.40
22.75
4.42
13.85
14.87
9.06
21.83
3.31
EPS (cents) from continuing and discontinued
operations
30.7
32.7
35.6
48.8
6.1
Dividends per share paid (cents)
Year end share price ($)
10.0
4.00
7.0
3.60
6.0
2.90
NPAT ($million) continuing operations
10.80
11.57
12.70
5.0
2.55
3.01
5.0
1.61
3.14
NPAT ($million) discontinued operations
-
-
-
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 2023 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
W Beauman
Director -
Non-Executive
(appointed
21 July 2023)
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.
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
J Ainsworth
Chief
Commercial
Officer
Three year fixed term,
(subject to renewal),
may be terminated on 2
months’ notice by either
party
Proportions of elements
of remuneration related to
performance
Proportions of
elements of
remuneration
not related to
performance
Non-
salary
cash-
based
incentives
%
Shares/
Units
%
Options/
Rights
%
Fixed
Salary/
Fees
%
Total
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
100
100
100
100
100
100
100
100
100
100
100
100
99
100
100
100
31
WATERCO LIMITED | ANNUAL REPORT 2023 Changes in Directors and Key Management Personnel During the Year
On 23 June 2023, the Board designated Ms Jo Ainsworth, the Chief Commercial Officer as a Key Management
Personnel.
Changes in Directors and Key Management Personnel Subsequent to Year-end
On 21 July 2023, Mr Wayne Beauman was appointed as a non-executive director.
Key Management Personnel Shareholding
Number of Shares held by Key Management Personnel
2023
Key Management Personnel
Balance
1.7.2022
Received as
Remuneration
Net Change
Other
Balance
30.6.2023
Mr S S Goh
Mr B Goh
Mr B Hunt
Mr R Ling
Ms J Raper
Mr W Beauman 1)
Mr G Doumit
Ms J Ainsworth 2)
21,721,853
540,121
170,223
-
-
-
71,300
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,721,853
540,121
170,223
-
-
-
71,300
-
1) Mr Wayne Beauman was appointed a Non-Executive Director on 21st July 2023
2) Ms Joanne Ainsworth was appointed Chief Commercial Officer on 1 October 2022
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 W Beauman 1)
Mr G Doumit
Ms J Ainsworth 2)
21,721,853
540,121
170,223
-
-
-
71,300
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,721,853
540,121
170,223
-
-
-
71,300
-
Number of Options held by Key Management Personnel
2023
Key Management
Personnel
Balance
30.6.2023
Exercisable
No
Vested
Unexercisable
No
Total at
30.6.2023
Unvested
Total at
30.6.2023
Mr G Doumit
100,000
66,000
-
66,000
34,000
32
Remuneration Details
The following table provides remuneration details for the 2023 and 2022 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
(3)
$
Pension and
super-
annuation
$
Key Management
Personnel
Soon Sinn Goh 1)
Bryan Goh
Ben Hunt
(Richard) Ling
Judy Raper
Wayne
Beauman 2)
Gerard Doumit
Joanne
Ainsworth 3)
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
469,558
449,973
318,000
300,000
68,013
64,774
68,013
64,774
68,013
64,774
-
-
35,000
35,000
70,000
66,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
225,868
50,000
18,460
215,113
50,000
19,676
178,229
-
-
-
-
-
27,499
16,709
25,292
23,568
7,141
6,477
7,141
6,477
7,141
6,477
-
-
27,500
27,099
16,718
-
LSL
$
4,620
3,959
15,180
13,310
-
-
-
-
-
-
-
-
Share
options
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
536,677
505,641
428,472
403,378
75,154
71,251
75,154
71,251
75,154
71,251
-
-
12,975
10,748
3,823
338,626
3,823
326,459
-
-
-
-
194,947
-
(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) Mr Wayne Beauman was appointed a Non-Executive Director on 21st July 2023
(3) Ms Joanne Ainsworth was appointed Chief Commercial Officer on 1 October 2022. Joanne’s remuneration has
been calculated from 1 October 2022 (date of appointment) until 30 June 2023
(4) Non-monetary benefits are made up of Company vehicle benefits
33
WATERCO LIMITED | ANNUAL REPORT 2023
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 2022/2023 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
Chief Commercial Officer,
Waterco Limited
28%
23%
22%
26%
$150,000
$100,000
$75,000
$50,000
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
Chief Commerical Officer ,
Waterco Limited
Short term incentive in respect of 2023 financial year
Payable %
Forfeited %
42%
40%
40%
20%
58%
60%
60%
80%
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 8 September 2023
34
Auditor’s Independence Declaration
RSM Australia Partners
Level 13, 60 Castlereagh Street Sydney NSW 2000
GPO Box 5138 Sydney NSW 2001
T +61 (0) 2 8226 4500
F +61 (0) 2 8226 4501
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Waterco Limited for the year ended 30 June 2023, I declare
that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Cameron Hume
Partner
Sydney, NSW
Dated: 13 September 2023
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
35
WATERCO LIMITED | ANNUAL REPORT 2023
36
Consolidated Financial Report
for the year ended 30 June 2023
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 2023 Consolidated Statement of Profit or Loss and other Comprehensive
Income
For The Year Ended 30 June 2023
Note
No.
2023
$000
2022
$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
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
Share options expense
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)
The accompanying notes form part of these financial statements.
38
3
4
4
4
4
4
4
6
31
31
133,999
128,141
1,244
(65,761)
(26,438)
(7,066)
(79)
(707)
(2,421)
(953)
(2,312)
(1,138)
(2,005)
(1,366)
(243)
(536)
(469)
(9,896)
13,853
(3,048)
10,805
4,245
(12)
13
4,246
15,051
10,846
(41)
10,805
15,092
(41)
15,051
30.7
30.7
(13,056)
(49,597)
(24,485)
(6,314)
(79)
(328)
(2,421)
(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
Consolidated Statement of Financial Position
As At 30 June 2023
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
Contract liabilities
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
Note
No.
8
9
10
11
13
14
15
18
16
17
18
19
20
18
21
22
23
24
25
2023
$000
12,337
17,106
50,145
2,643
82,231
65,874
17,001
1,170
1,675
85,720
Consolidated Group
2022
$000
11,946
17,201
48,688
1,077
78,912
59,986
15,794
1,119
1,842
78,741
167,951
157,653
12,353
2,552
6,765
595
3,394
25,659
14,566
6,254
238
21,058
46,717
14,211
-
8,271
2,547
3,964
28,993
12,614
4,823
213
17,650
46,643
121,234
111,010
33,643
24,909
62,314
120,866
368
34,847
20,664
54,992
110,503
507
Total Equity
121,234
111,010
The accompanying notes form part of these financial statements.
39
WATERCO LIMITED | ANNUAL REPORT 2023 Consolidated Statement of Changes in Equity
For The Year Ended 30 June 2023
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 30/6/21
35,590
45,842
211
25,768
(7,536)
Comprehensive income
Profit for the year
Other comprehensive
income for the year
Total comprehensive
income for the year
Transactions with
owners, in their
capacity as owners
and other transfers
Cancellation of shares under
Waterco Share Buyback
Dividends paid
Total transactions with
-
-
-
11,641
-
11,641
(743)
-
-
(2,491)
30
owners and other transfers
(743)
(2,491)
-
-
-
-
-
-
-
-
676
1,532
676
1,532
-
-
-
-
-
-
-
-
13
13
-
-
-
574 100,449
(67) 11,574
-
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
Comprehensive income
Profit/(loss) for the year
Other comprehensive
Income/(loss) for the year
Total comprehensive
income for the year
Transactions with
owners, in their
capacity as owners
and other transfers
Cancellation of shares under
Waterco Share Buyback
Dividends paid
Total transactions with
owners and other transfers
-
-
-
10,846
-
10,846
(1,204)
-
-
(3,524)
30
(1,204)
(3,524)
-
-
-
-
-
-
-
4,245
4,245
-
-
-
-
(13)
(13)
-
-
-
(41) 10,805
-
4,245
(41) 15,050
13
13
-
(98)
(1,204)
(3,622)
(98)
(4,826)
Balance at 30/6/23
33,643
62,314
211
30,689
(6,017)
26
368 121,234
The accompanying notes form part of these financial statements.
40
Consolidated Statement of Cash Flows
For The Year Ended 30 June 2023
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
2023
$000
140,445
(124,712)
60
924
(707)
(4,823)
11,187
1
(2,915)
(520)
-
46
(3,388)
1,102
(1,706)
(1,204)
(1,591)
(101)
(3,524)
(99)
(7,123)
676
11,946
(285)
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
Cash and cash equivalents the end of the year (Note 8)
12,337
11,946
The accompanying notes form part of these financial statements.
41
WATERCO LIMITED | ANNUAL REPORT 2023 Notes To The Financial Statements
For The Year Ended 30 June 2023
Note 1: Statement of Significant Accounting
Policies
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 8
September 2023.
Basis of Preparation
The financial statements are general purpose
financial statements that have been prepared
in
accordance with Australian Accounting Standards,
Australian Accounting
authoritative pronouncements of
Accounting Standards Board
Corporations Act 2001.
the Australian
the
Interpretations, o t h e r
(AASB) and
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
investment
properties, certain classes of property, plant and
equipment and derivative financial instruments.
income,
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
New or amended Accounting Standards and
Interpretations adopted
The consolidated entity has adopted all of the new or
amended Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board
('AASB') that are mandatory for the current reporting
period.
Any new or amended Accounting Standards or
Interpretations that are not yet mandatory have not
been early adopted.
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 Guangzhou Ltd, PT
Waterco Indonesia and Waterco Vietnam Company
Ltd which have a 31 December financial year end.
The reason for this is local company regulation.
The assets, liabilities and results of all subsidiaries
are fully consolidated into the financial statements
of the Group from the date on which control is
obtained by the Group. The consolidation of a
subsidiary is discontinued from the date that control
ceases. Intercompany transactions, balances and
unrealised gains or losses on transactions between
group entities are fully eliminated on consolidation.
Accounting policies of subsidiaries have been
changed and adjustments made where necessary
to ensure uniformity of the accounting policies
adopted by the Group.
interests
Equity interests in a subsidiary not attributable,
directly or indirectly, to the Group are presented
as “non-controlling interests”. The Group initially
recognises non-controlling
that are
present ownership interests in subsidiaries and are
entitled to a proportionate share of the subsidiary’s
net assets on liquidation at either fair value or at
the non-controlling interests’ proportionate share
of the subsidiary’s net assets. Subsequent to initial
recognition, non-controlling interests are attributed
their share of profit or loss and each component
of other comprehensive income. Non-controlling
interests are shown separately within the equity
section of the statement of financial position and
statement of comprehensive income.
Notes To The Financial Statements
For The Year Ended 30 June 2023
Note 1: Statement of Significant Accounting
Policies (continued)
Business combinations
Business combinations occur where an acquirer obtains
control over one or more businesses.
A business combination is accounted for by applying
the acquisition method, unless it is a combination
involving entities or businesses under common control.
The business combination will be accounted for from
the date that control is attained, whereby the fair
value of the identifiable assets acquired and liabilities
(including contingent liabilities) assumed is recognised
(subject to certain limited exemptions).
When measuring the consideration transferred in the
business combination, any asset or liability resulting
from a contingent consideration arrangement is also
included. Subsequent to initial recognition, contingent
consideration classified as equity is not remeasured
and its subsequent settlement is accounted for within
equity. Contingent consideration classified as an asset
or liability is remeasured each reporting period to fair
value, recognising any change to fair value in profit or
loss, unless the change in value can be identified as
existing at acquisition date.
All transaction costs incurred in relation to the business
combination are expensed
the statement of
comprehensive income.
to
The acquisition of a business may result
in the
recognition of goodwill or a gain from a bargain
purchase.
Operating segments
the
Operating segments are presented using
'management approach', where
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.
the
b. Fair Value of Assets and Liabilities
The Group measures some of
its assets and
liabilities at fair value on either a recurring or non-
recurring basis, depending on the requirements of
the applicable Accounting Standard.
Fair value is the price the Group would receive to sell
an asset or would have to pay to transfer a liability
in an orderly (ie unforced) transaction between
independent, knowledgeable and willing market
participants at the measurement date.
As fair value is a market-based measure, the closest
equivalent observable market pricing information
is used to determine fair value. Adjustments to
market values may be made having regard to the
characteristics of the specific asset or liability.
The fair values of assets and liabilities that are not
traded in an active market are determined using
one or more valuation techniques. These valuation
techniques maximise, to the extent possible, the use
of observable market data.
information
To the extent possible, market
is
extracted from either the principal market for the
asset or liability (ie the market with the greatest
volume and level of activity for the asset or liability)
or, in the absence of such a market, the most
advantageous market available to the entity at the
end of the reporting period (ie the market that
maximises the receipts from the sale of the asset
or minimises the payments made to transfer the
liability, after taking into account transaction costs
and transport costs).
For non-financial assets, the fair value measurement
also takes into account a market participant’s ability
to use the asset in its highest and best use or to sell
it to another market participant that would use the
asset in its highest and best use.
The fair value of liabilities and the entity’s own
equity
instruments (excluding those related to
share-based payment arrangements) may be
valued, where there is no observable market price in
relation to the transfer of such financial instrument,
by reference to observable market information
where such instruments are held as assets. Where
this information is not available, other valuation
techniques are adopted and, where significant,
are detailed in the respective note to the financial
statements.
is
lease
liability
lease. The
c. Lease liabilities
A lease liability is recognised at the commence-A
lease liability is recognised at the commencement
initially
date of a
recognised at the present value of the
lease
payments to be made over the term of the lease,
discounted using the interest rate implicit in the
lease or, if that rate cannot be readily determined,
the consolidated entity's incremental borrowing
rate. Lease payments comprise of fixed payments
less any lease incentives receivable, variable lease
payments that depend on an index or a rate,
amounts expected to be paid under residual value
guarantees, exercise price of a purchase option
when the exercise of the option is reasonably certain
to occur, and any anticipated termination penalties.
The variable lease payments that do not depend
on an index or a rate are expensed in the period in
which they are incurred.
Lease liabilities are measured at amortised cost using
the effective interest method. The carrying amounts
are remeasured if there is a change in the following:
future lease payments arising from a change in
an index or a rate used; residual guarantee; lease
term; certainty of a purchase option and termination
penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of-
use asset, or to profit or loss if the carrying amount
of the right-of-use asset is fully written down.
43
WATERCO LIMITED | ANNUAL REPORT 2023
Notes To The Financial Statements
For The Year Ended 30 June 2023
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
income tax is recognised from the initial recognition
of an asset or liability, where there is no effect on
accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at
the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled
and their measurement also reflects the manner in
which management expects to recover or settle the
carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences
and unused tax losses are recognised only to the
extent that it is probable that future taxable profit
will be available against which the benefits of the
deferred tax asset can be utilised.
Where temporary differences exist in relation to
investments in subsidiaries, branches, associates,
and joint ventures, deferred tax assets and liabilities
are not recognised where the timing of the reversal
of the temporary difference can be controlled and
it is not probable that the reversal will occur in the
foreseeable future.
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
the
operations are presented separately on
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.
44
Notes To The Financial Statements
For The Year Ended 30 June 2023
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
in equity, otherwise the exchange
recognised
difference
in the statement of
is recognised
comprehensive income
Group companies
The financial results and position of
foreign
operations whose functional currency is different
the group’s presentation currency are
from
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
incurred.
is recognised as an expense when
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 2023
Notes To The Financial Statements
For The Year Ended 30 June 2023
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
25 May 2023
AUD 33,100,000
Malaysia
14 June 2023
USA
4 May 2022
AUD 19,985,817
(MYR 62,000,000)
AUD 2,594,937
(USD 1,845,000)
Increases (net of deferred taxes) in the carrying
amount arising on revaluation of land and buildings
are credited to a revaluation surplus in equity.
Decreases that offset previous increases of the
same asset are charged against fair value reserves
directly in equity; all other decreases are charged
to the statement of comprehensive income. Any
accumulated depreciation at the date of revaluation
is eliminated against the gross carrying amount
of the asset and the net amount is restated to the
revalued amount of the asset.
On 25 May 2023, Waterco Ltd revalued its Rydalmere
Property resulting in an increase of $A3,600,000
from the last valuation of the property done on 30
June 2021. The value of the Rydalmere Property
went up from $A29.5m to $A33.1m.
On 14 June 2023, Waterco (Far East) Sdn revalued
its SG Buloh Property resulting in an increase of
RM2,000,000 from the last valuation of the property
done on 15 May 2020. The value of the property
went up from RM60,000,000 ($A20,426,227) to
RM62,000,000 ($A19,985,817).
The above valuations were performed by
independent valuers.
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
46
the estimated recoverable amount and impairment
losses are recognised either in profit or loss or as a
revaluation decrease if the impairment losses relate
to a revalued asset.
A formal assessment of recoverable amount is made
when impairment indicators are present (refer to
Note 1(o) for details of impairment).
The carrying amount of plant and equipment is
reviewed annually by directors to ensure it is not in
excess of the recoverable amount from these assets.
The recoverable amount is assessed on the basis of
the expected net cash flows that will be received
from the asset’s employment and subsequent
disposal. The expected net cash flows have been
discounted to their present values in determining
recoverable amounts.
included
The cost of fixed assets constructed within the
consolidated group includes the cost of materials,
direct labour, borrowing costs and an appropriate
proportion of fixed and variable overheads.
Subsequent costs are
in the asset’s
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with the
item will flow to the Group and the cost of the
item can be measured reliably. All other repairs
and maintenance are charged to the statement of
comprehensive income during the financial period
in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including
building and capitalised leased assets, but excluding
freehold land, is depreciated over their useful lives
commencing from the time the asset is ready for use.
Leasehold improvements are depreciated over the
shorter of either the unexpired period of the lease
or the estimated useful lives of the improvements.
The gain or loss on disposal of all fixed assets is
determined as the difference between the carrying
amount of the asset at the time of disposal and the
proceeds of disposal, and is included in operating
profit before income tax of the consolidated group
in the year of disposal.
Depreciation where applicable has been charged in
the accounts so as to write off each asset over the
estimated useful life of the asset concerned. Either
the diminishing value or straight line method, as
considered appropriate, is used. The depreciation
rates used for each class of depreciable assets are:
Class of Fixed Assets
Depreciation Rate
Buildings
1.50% - 2.50%
Plant and equipment
6.00% -
33.33%
Leased plant and
equipment
13.00% -
20.00%
Notes To The Financial Statements
For The Year Ended 30 June 2023
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
is written down
immediately to its recoverable amount if the asset’s
its estimated
carrying amount
recoverable amount.
is greater than
Gains and losses on disposals are determined by
comparing the proceeds with the carrying amount.
These gains and losses are included in the statement
of comprehensive income. When revalued assets
are sold, amounts included in the revaluation
reserve relating to that asset are recognised in the
profit and loss in the period in which they arise.
l. Right-of-use assets
A
recognised at
right-of-use asset
the
is
commencement date of a lease. The right-of- use
asset is measured at cost, which comprises the
initial amount of the lease liability, adjusted for, as
applicable, any lease payments made at or before
the commencement date net of any lease incentives
received, any initial direct costs incurred, and,
except where included in the cost of inventories,
an estimate of costs expected to be incurred for
dismantling and removing the underlying asset, and
restoring the site or asset.
Right-of-use assets are depreciated on a straight-
line basis over the unexpired period of the lease or
the 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
in
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
the contract;
determines the transaction price which takes into
account estimates of variable consideration and
the time value of money; allocates the transaction
price to the separate performance obligations on
the basis of the relative stand-alone selling price of
each distinct good or service to be delivered; and
recognises revenue when or as each performance
obligation is satisfied in a manner that depicts the
transfer to the customer of the goods or services
promised.
Variable consideration within
the
transaction
price, if any, reflects concessions provided to the
customer such as discounts, rebates and refunds,
any potential bonuses receivable from the customer
and any other contingent events. Such estimates
are determined using either the 'expected value' or
'most likely amount' method. The measurement of
variable consideration is subject to a constraining
principle whereby revenue will only be recognised to
the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue
recognised will not occur. The measurement
constraint continues until the uncertainty associated
with the variable consideration is subsequently
resolved. Amounts received that are subject to the
constraining principle are recognised as a refund
liability.
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
from
revenue
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 2023
Notes To The Financial Statements
For The Year Ended 30 June 2023
Note 1: Statement of Significant Accounting
Policies (continued)
Other receivables are recognised at amortised cost,
less any allowance for expected credit losses.
q. Trade and Other Payables
These amounts represent liabilities for goods and
services provided to the consolidated entity prior to
the end of the financial year and which are unpaid.
Due to their short-term nature, they are measured
at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within
30 days of recognition.
Contract Liabilities
Contract
liabilities represent
the consolidated
entity's obligation to transfer goods or services to
a customer and are recognised when a customer
pays consideration, or when the consolidated entity
recognises a receivable to reflect its unconditional
right to consideration (whichever is earlier) before
the consolidated entity has transferred the goods or
services to the customer.
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
Loans and borrowings are initially recognised at
the fair value of the consideration received, net of
transaction costs. They are subsequently measured
at amortised cost using the effective
interest
method.
Borrowing costs directly attributable
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.
to
All other borrowing costs are recognised in profit or
loss in the period in which they are incurred.
n. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net
of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian
Taxation Office. In these circumstances, the GST
is recognised as part of the cost of acquisition
of the asset or as part of an item of the expense.
Receivables and payables in the statement of
financial position are shown inclusive of GST.
Cashflows are presented in the cash flow statement
on a gross basis, except for the GST component
of investing and financing activities, which are
disclosed as operating cash flows.
o. Impairment of Assets
At the end of each reporting period, the Group
assesses whether there is any indication that an
asset may be impaired. The assessment will include
the consideration of external and internal sources
of information including dividends received from
subsidiaries, associates or jointly controlled entities
deemed to be out of pre-acquisition profits. If such
an indication exists, an impairment test is carried
out on the asset by comparing the recoverable
amount of the asset, being the higher of the asset’s
fair value less costs to sell and value in use, to the
asset’s carrying amount. Any excess of the asset’s
carrying amount over its recoverable amount is
recognised immediately in profit or loss, unless the
asset is carried at a revalued amount in accordance
with another Standard (eg in accordance with the
revaluation model in AASB116). 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
goodwill and intangible assets with indefinite lives.
is performed annually
for
p. Trade and Other Receivables
Trade receivables are initially recognised at fair value
and subsequently measured at amortised cost using
the effective interest method, less any allowance
for expected credit losses. Trade receivables are
generally due for settlement within 30 days.
The consolidated entity has applied the simplified
approach to measuring expected credit losses,
which uses a lifetime expected loss allowance.
To measure the expected credit losses, trade
receivables have been grouped based on days
overdue.
48
Notes To The Financial Statements
For The Year Ended 30 June 2023
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.
the
Financial assets are derecognised when
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
expectation of recovering part or all of a financial
asset, its carrying value is written off.
there
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 income include equity investments
which the consolidated entity intends to hold for the
foreseeable future and has irrevocably elected to
classify them as such upon initial recognition.
Impairment of financial assets
The consolidated entity recognises a loss allowance
for expected credit losses on financial assets which
are either measured at amortised cost or fair
value through other comprehensive income. The
measurement of the loss allowance depends upon
the consolidated entity's assessment at the end of
each reporting period as to whether the financial
instrument's credit risk has increased significantly
since initial recognition, based on reasonable and
supportable information that is available, without
undue cost or effort to obtain.
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 losses.
The amount of expected credit loss recognised is
measured on the basis of the probability weighted
present value of anticipated cash shortfalls over
the life of the instrument discounted at the original
effective interest rate.
For financial assets measured at fair value through
other comprehensive income, the loss allowance is
recognised within other comprehensive income. In
all other cases, the loss allowance is recognised in
profit or loss.
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 2023
y. New Accounting Standards and Interpretations
not yet mandatory or early adopted
Australian
Accounting
S t a n d a r d s
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 2023.
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 2023
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 the nearest $1,000
in accordance with ASIC Corporations (Rounding in
Financial/Directors Reports) Instrument 2016/191.
x. Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgements
incorporated into the financial report based on
historical knowledge and best available current
information. Estimates assume a
reasonable
expectation of future events and are based on
current trends and economic data, obtained both
externally and within the group.
Key Estimates
(i) 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
for
impairment of slow-moving items. Obsolete
items are disposed of as and when identified.
carried
are
(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.
50
Notes To The Financial Statements
For The Year Ended 30 June 2023
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
2023
$000
36,058
85,588
121,646
26,124
14,549
40,673
33,643
180
20,615
27
26,508
80,973
2023
$000
3,979
7,194
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
Guarantees
At 30 June 2023, Waterco Ltd has provided guarantees up to RM11,150,000 and USD1,000,000 (AUD5,102,519)
(2022: RM11,150,000 and USD1,000,000 (AUD5,125,032) to two Malaysian Banks for loans provided to a subsidiary,
Waterco (Far East) Sdn Bhd.
Contractual Commitments
At 30 June 2023, Waterco Ltd has not entered into any contractual commitments for the acquisition of any property,
plant and equipment. (2022: $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 2023 Notes To The Financial Statements
For The Year Ended 30 June 2023
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
Consolidated Group
2023
$000
2022
$000
129,050
123,285
60
1
3,712
252
924
20
1
3,006
296
1,533
133,999
128,141
129,050
4,949
133,999
123,285
4,856
128,141
60
60
15
20
20
69
52
Notes To The Financial Statements
For The Year Ended 30 June 2023
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
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
2023
$000
2022
$000
63,921
62,974
296
408
3
707
614
1,127
78
5,247
7,066
54
25
79
-
1,138
130
189
50
270
8
328
843
784
103
4,584
6,314
54
25
79
103
959
225
136
53
WATERCO LIMITED | ANNUAL REPORT 2023 Notes To The Financial Statements
For The Year Ended 30 June 2023
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:
Consolidated Group
2023
$000
2,820
57
171
3,048
3,048
2022
$000
3,451
(159)
-
3,292
3,292
Profit before income tax
13,853
14,866
Prima facie tax payable on profit before income tax at 30%
(2022: 30%)
4,156
4,460
Add
Tax effect of:
• Depreciation of buildings
• Impairment of goodwill
• Entertainment
• 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
• Adjustment recognised for prior period
• Reinvestment allowance
• Foreign controlled entities tax losses not tax effected
• Other
Income tax expense/(benefit) attributable to entity
The applicable weighted average effective tax rates are as
follows:
194
23
10
-
-
33
-
-
-
539
120
239
147
150
173
3,048
22%
185
23
6
49
4
10
46
12
148
592
-
-
482
281
-
3,292
22%
54
Notes To The Financial Statements
For The Year Ended 30 June 2023
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
2023
$000
1,569
118
37
1,724
2022
$000
1,319
98
32
1,449
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 2023
Notes To The Financial Statements
For The Year Ended 30 June 2023
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 $489,524 (2022:$867,262) 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
in accordance with the franchise agreement and
are not 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
2023
$000
12,337
12,337
12,337
16,166
(425)
15,741
1,365
17,106
2022
$000
11,946
11,946
11,946
16,571
(519)
16,052
1,149
17,201
Closing
Balance
30.6.2022
$000
Movements in the allowance of expected credit loss of receivables are as follows:
Opening Bal-
ance 1.7.2022
Charge for
the Year
$000
$000
Amounts
Written Off
$000
Consolidated Group
Current trade receivables
403
219
(103)
519
Opening
Balance
1.7.2022
$000
Charge for
the Year
$000
Amounts
Written Off
$000
Closing
Balance
30.6.2023
$000
Consolidated Group
Current trade receivables
519
-
(94)
425
56
Notes To The Financial Statements
For The Year Ended 30 June 2023
Note 9: Trade and other receivables (continued)
There are $1,004,000 (2022: $4,221,000) within trade and other receivables that are not impaired and are past due
date. 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
61–90
$000
31–60
$000
> 90
$000
Within initial
trade terms
$000
Consolidated Group
2022
Trade and term receivables
Other receivables
Total
16,571
1,149
17,720
519
1,829
1,317
519
1,829
1,317
827
827
248
248
11,831
1,149
12,980
2023
Trade and term receivables
Other receivables
Total
16,166
1,365
17,531
425
425
829
829
742
(160)
(407)
742
(160)
(407)
14,737
1,365
16,102
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 2023 and rates have increased in each category
up to 6 months overdue.
57
WATERCO LIMITED | ANNUAL REPORT 2023 Notes To The Financial Statements
For The Year Ended 30 June 2023
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
Guangzhou Waterco Environmental Technology Co Ltd
Waterco Vietnam Company Limited
58
Consolidated Group
2023
$000
13,546
3,552
37,052
2,538
(6,543)
50,145
2,643
2,643
2022
$000
10,844
3,741
34,759
5,608
(6,264)
48,688
1,077
1,077
Country of
incorporation
Carries on
business in
% owned
2023
2022
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
Indonesia
Singapore
Singapore
China
Vietnam
Indonesia
Singapore
Singapore
China
100
100
100
60
100
100
100
100
100
100
100
100
100
100
51
100
60
100
100
Notes To The Financial Statements
For The Year Ended 30 June 2023
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
2023
Consolidated Group:
Balance at the beginning of year
Effects of exchange rate changes
Additions
Revaluation
Reclassification
Disposals
Depreciation expense*
Carrying amount at the end of year
2023
$000
23,671
32,406
(258)
32,148
37,006
(26,985)
10,021
64
(31)
33
65,873
Freehold
Land
$000
Buildings
$000
Plant &
Equipment
$000
Leased
Plant
$000
19,486
(250)
-
4,435
-
-
-
23,671
31,739
(93)
8
1,479
(371)
-
(614)
32,148
8,591
(103)
3,619
-
-
(45)
(2,041)
10,021
170
-
-
-
-
(59)
(78)
33
*Depreciation expense that is absorbed into the cost of manufactured inventory is $1,161,230
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
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
2022
$000
19,486
32,864
(1,125)
31,739
36,205
(27,614)
8,591
272
(102)
170
59,986
Total
$000
59,986
(446)
3,627
5,914
(371)
(104)
(2,733)
65,873
Total
$000
58,822
912
2,859
382
(96)
(2,893)
59,986
59
WATERCO LIMITED | ANNUAL REPORT 2023 Notes To The Financial Statements
For The Year Ended 30 June 2023
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
2023
$000
2022
$000
25,323
(5,449)
19,874
25,586
(5,447)
20,139
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
33,559
(16,558)
17,001
15,794
6,454
(5,247)
17,001
29,446
(13,652)
15,794
12,883
7,495
(4,584)
15,794
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
1,071
(169)
902
249
(112)
137
131
-
131
1,170
1,069
(114)
955
249
(87)
162
2
-
2
1,119
Notes To The Financial Statements
For The Year Ended 30 June 2023
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
162
-
-
-
(25)
137
955
-
-
1
(54)
902
2
129
-
-
-
131
Total
$000
1,119
129
-
1
(79)
1,170
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 $489,524 (2022: $867,262) 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
Unexpired interest
Lease liability
Consolidated Group
2023
$000
2022
$000
7,807
4,546
12,353
8,469
5,742
14,211
404
2,568
4,165
(395)
23
6,765
2,111
2,117
4,355
(413)
102
8,272
61
WATERCO LIMITED | ANNUAL REPORT 2023 Notes To The Financial Statements
For The Year Ended 30 June 2023
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
2023
$000
2022
$000
595
2,525
8,835
(333)
11,027
(4,773)
6,254
2,547
1,677
7,457
462
9,596
(4,773)
4,823
-
-
2,231
4,086
(240)
371
6,448
(4,773)
1,675
(2,980)
(269)
(1,331)
(4,580)
1,677
-
46
1,723
2,396
4,086
(226)
359
6,615
(4,773)
1,842
(2,984)
4
-
(2,980)
1,301
-
376
1,677
Notes To The Financial Statements
For The Year Ended 30 June 2023
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
2023
$000
2022
$000
8,237
1,400
9,637
(318)
(15)
(333)
2,396
(164)
2,232
4,086
-
4,086
(226)
(14)
(240)
359
10
369
2,100
2,100
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
63
WATERCO LIMITED | ANNUAL REPORT 2023
Notes To The Financial Statements
For The Year Ended 30 June 2023
Note 19: Short-term provisions
Employee Benefits (see note 1h)
Opening Balance
Additional provisions
Amounts used
Closing Balance
Consolidated Group
2023
$000
2022
$000
3,964
1,684
(2,254)
3,394
3,868
2,440
(2,344)
3,964
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes all unconditional entitlements (including bonuses 801,348)
(FY22 1,619,519) 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
1,294
13,272
-
14,566
642
11,949
23
12,614
(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 $8.15m relating to the parent entity mature on 30 November 2024. As at 30 June 2023, the
parent entity has drawn nil trade advances (2022: 90 day trade advance of $2m with an interest rate payable of
2.9%shown as part of bank loans-secured shown in current borrowings in note 17). Bank Facilities of RM51.5m
($A16.601m) relate to a subsidiary and are due to mature between May 2024 and January 2029. As at 30 June
2023 an amount of AUD4.225m has been drawn and shown in Note 17 Current Borrowings: Bank loans secured
$A0.366m and Bank trade bills $A2.568m and in Note 20 as Non Current borrowings Bank loans secured
$1.291m. These loans bear an interest of 4.01%-7.06% 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
213
25
-
238
3,632
742
212
1
-
213
4,177
735
Notes To The Financial Statements
For The Year Ended 30 June 2023
Note 22: Issued capital
Ordinary shares are classified as equity.
35,493,146 ordinary shares fully paid at beginning of the year
(2022: 35,715,248)
On 31 July 2022, 100,885 shares were purchased at $3.74 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 August 2022, 14,424 shares were purchased at $3.74 and
cancelled under Waterco Ltd Share-buyback Scheme
On 30 September 2022, 67,485 shares were purchased at $4.00 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 October 2022, 47,002 shares were purchased at $4.00 and
cancelled under Waterco Ltd Share-buyback Scheme
On 30 November 2022, 8,104 shares were purchased at $4.00 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 December 2022, 4,517 shares were purchased at $4.00 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 January 2023, 18,513 shares were purchased at $4.00 and
cancelled under Waterco Ltd Share-buyback Scheme
On 28 February 2023, 2,969 shares were purchased at $3.95 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 March 2023, 248 shares were purchased at $4.00 and
cancelled under Waterco Ltd Share-buyback Scheme
On 30 April 2023, 3,721 shares were purchased at $4.00 and
cancelled under Waterco Ltd Share-buyback Scheme
On 31 May 2023, 4,722 shares were purchased at $4.00 and
cancelled under Waterco Ltd Share-buyback Scheme
On 30 June 2023, 35,789 shares were purchased at $3.60 and
cancelled under Waterco Ltd Share-buyback Scheme
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
35,184,767 ordinary shares fully paid at the end of
the year (2022: 35,493,146)
Consolidated Group
2023
$000
2022
$000
34,847
35,590
(377)
(55)
(270)
(188)
(32)
(18)
(74)
(12)
(1)
(15)
(19)
(143)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(79)
(28)
(84)
(65)
(34)
(16)
(71)
(324)
(16)
(26)
33,643
34,847
65
WATERCO LIMITED | ANNUAL REPORT 2023 Notes To The Financial Statements
For The Year Ended 30 June 2023
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 1 June 2021, the company announced a sixth share buyback of $3,000,000 worth of shares (approximately
1,034,483 shares) commencing on 16 June 2021 and ending on 15 June 2022 (or earlier if the $3,000,000 is
purchased before then). During the current year, the company purchased and cancelled nil shares (2022:222,102)
shares costing $nil (2022:$ 743,559)
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 308,379 shares. (2022: nil) shares
costing $1,204,011 (2022: nil).
This Share buyback expired on 30 June 2023.
After balance date, on 17 July 2023, the company announced its eighth on market share buyback of $1,000,000
worth of shares (approximately 226,244 shares) commencing on 18 July 2023 and ending on 2 July 2024 (or earlier
if the $1,000,000 is purchased before then)
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 2023 and 30 June 2022 are as follows:
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total capital
Consolidated Group
2023
$000
21,331
(12,337)
8,994
121,234
130,228
2022
$000
20,886
(11,946)
8,940
111,010
119,950
Gearing ratio
7%
7%
66
Notes To The Financial Statements
For The Year Ended 30 June 2023
Note 23: Reserves
a) Capital profits
The capital profits reserve relates to non taxable
profits on sale of property.
Note
No.
2023
$000
2022
$000
Consolidated Group
211
211
b) Foreign currency translation
(6,017)
(6,004)
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
26,444
25,768
382
3,863
30,689
402
274
26,444
13
13
26
-
13
13
24,909
20,664
54,992
10,846
(3,524)
62,314
45,842
11,641
(2,491)
54,992
67
WATERCO LIMITED | ANNUAL REPORT 2023 Notes To The Financial Statements
For The Year Ended 30 June 2023
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
2023
$000
176
192
368
40%
49%
40%
23
-
23
-
23
23
-
23
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
4,225
4,225
5,125
5,125
361
721
9
360
685
23
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
68
Notes To The Financial Statements
For The Year Ended 30 June 2023
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.
chemicals,
The group operates predominantly in one industry
being the manufacture and wholesale of swimming
pool
equipment,
accessories
manufacture and sale of solar pool heating systems
and as a franchisor of swimming pool outlets retailing
swimming pool accessories and equipment.
and
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.
to
Corporate charges are allocated
reporting
segments based on the services provided to those
reporting segments. Inter-segment loans payable and
receivable are initially recognised at the consideration
received net of transaction costs. If inter-segment loans
receivable and payable are not on commercial terms,
these are not adjusted to fair value based on market
interest rates.
Segment assets
Where an asset is used across multiple segments,
the asset is allocated to the segment that receives
the majority of the economic value from the asset. In
the majority of instances, segment assets are clearly
identifiable on the basis of their nature and physical
location.
Segment liabilities
Liabilities are allocated to segments where is a direct
nexus between the incurrence of the liability and the
operations of the segment.
Unallocated items
The following items of revenue, expenses, assets and
liabilities are not allocated to operating segments as
they are not considered part of the core operations of
any segment:
– other revenues
69
WATERCO LIMITED | ANNUAL REPORT 2023 Notes To The Financial Statements
For The Year Ended 30 June 2023
Note 29: Operating Segments (continued)
Geographical Segments
AUSTRALIA &
NEW ZEALAND
$000
87,033
929
87,962
ASIA
$000
15,834
38,532
54,366
2023
NORTH
AMERICA &
EUROPE
$000
CONSOLIDATED
GROUP
$000
26,183
577
26,760
129,050
40,038
169,088
4,949
(40,038)
133,999
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
9,465
6,345
2,992
18,802
18,802
(4,949)
13,853
133,459
73,739
9,746
216,944
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
(48,993)
167,951
3,627
96,527
(49,810)
46,717
CAPITAL EXPENDITURE
1,566
1,934
127
SEGMENT LIABILITIES
Reconciliation of segment
liabilities to group liabilities
Intersegment eliminations
Total group liabilities
49,078
36,223
11,226
70
Notes To The Financial Statements
For The Year Ended 30 June 2023
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
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
882
1,887
SEGMENT LIABILITIES
Reconciliation of segment
liabilities to group liabilities
Intersegment eliminations
Total group liabilities
44,896
31,645
89
9,936
(38,992)
157,653
2,858
86,477
(39,834)
46,643
71
WATERCO LIMITED | ANNUAL REPORT 2023 Notes To The Financial Statements
For The Year Ended 30 June 2023
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 5c per share (2022:5c)
franked at the tax rate of 30% paid
Interim fully franked ordinary dividend of 5c per share (2022:3c)
franked at the tax rate of 30% paid
Proposed final fully franked ordinary dividend of 5c per share
(2022:5c) 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
1,763
1,761
3,524
1,759
1,426
1,065
2,491
1,775
6,450
6,820
10,805
(41)
10,846
11,574
(67)
11,641
a) Weighted average number of ordinary shares outstanding
during the year used in calculation of basic EPS
35,291
35,627
b) Weighted average number of ordinary shares outstanding
during the year used in calculation of diluted EPS
35,291
35,627
72
Notes To The Financial Statements
For The Year Ended 30 June 2023
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 exceeded $10,338,853. Each executive may now exercise the options for Tranche 1 anytime from now until 23
August 2031.
All 3 executives have met the Vesting Condition for Tranche 2 as the EBIT for the financial year ending 30 June 2023
has exceeded $11,278,748. Each executive may now exercise the options for Tranche 2 anytime from now until 23
August 2031
Nil options were exercised during the period.
Note 33: Events Subsequent to Reporting Date
Purchase of Davey
On 4 August 2023, Waterco Ltd signed an agreement with GUD Holdings Ltd to purchase the worldwide business
of Davey Water Products for a consideration of approximately $65m. The purchase is being fully funded by Bank
Facilities provided by Westpac Banking Corporation. The Davey Business provides Waterco with not only a much
larger presence in the pool industry but a significant entry point in the water treatment business especially in regional
areas. The settlement of this business took place on 1st September 2023.
There were no other reportable events subsequent to balance date.
73
WATERCO LIMITED | ANNUAL REPORT 2023 Notes To The Financial Statements
For The Year Ended 30 June 2023
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.
(a) Interest Rate Risk
The consolidated group’s exposure to interest rate
risk, which is the risk that a financial instrument’s
value will fluctuate as a result of changes in market
interest rates and the effective weighted average
interest rates on classes of financial assets and
liabilities.
(b) Credit Risk
The maximum exposure to credit risk, excluding the
value of any collateral or other security, at balance
date to recognised financial assets is the carrying
amount, net of any provisions for doubtful debts, as
disclosed in the statement of financial position and
notes to the financial statements.
Credit risk is managed through maintenance of
procedures in relation to approval, granting and
renewal of credit limits, regular monitoring of
exposures against such limits and the monitoring of
the financial stability of significant customers. Such
monitoring is used in assessing receivables for
impairment. Depending on the subsidiary, credit
terms are generally 30 days from invoice month.
Credit risk for derivative financial
instruments
arises from the potential failure by counterparties
to the contract to meet their obligations. The credit
risk exposure to forward exchange contracts and
interest rate swaps is the net fair value of these
contracts as disclosed in (c).
The Group has no single concentration of credit
risk with any single debtor or group of debtors.
However, on a geographical basis, the group
has significant credit exposure to Australia, New
Zealand and USA given the substantial operations
in those regions.
Trade and other receivables that are neither past
due or impaired are considered to be of high
credit quality. Aggregates of such amounts are as
detailed in Note 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 forward-
looking information that 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 2023 and rates have
increased in each category up to 6 months overdue.
Management closely monitors receivable balances
on a monthly basis and is in regular contact with its
customers to mitigate risk.
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.
74
Notes To The Financial Statements
For The Year Ended 30 June 2023
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
2023
$000
2022
$000
Average Exchange Rate
2022
2023
$000
$000
Consolidated Group (and Parent Entity)
Buy USD/Sell AUD
- Less than 6 months
-
3,000
-
0.7544
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
2023
$000
2022
$000
2023
$000
2022
$000
Over 5 years
2023
$000
2022
$000
Total
2023
$000
2022
$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
12,337
17,105
11,946
17,201
29,442
29,147
-
-
-
-
-
-
-
2,972
14,905
3,770
23
-
4,228
14,211
3,942
102
-
1,294
-
13,272
-
-
642
-
11,949
23
21,670
-
22,483
-
14,566
-
12,614
-
outflows
21,670
22,483
14,566
12,614
Net (outflow)/ inflow on
financial instruments
7,772
6,664
(14,566)
(12,614)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,337
17,105
11,946
17,201
29,442
29,147
-
4,266
14,905
17,042
23
-
4,870
14,211
15,891
125
36,236
-
35,097
-
36,236
35,097
(6,794)
(5,950)
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 2023
Notes To The Financial Statements
For The Year Ended 30 June 2023
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
2023
2022
Carrying
Amount
$000
Net Fair
Value
$000
Carrying
Amount
$000
Net Fair
Value
$000
12,337
17,105
29,442
-
4,266
23
17,042
21,331
12,337
17,105
29,442
-
4,309
24
17,042
21,375
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
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
+/-150
+/-1,471
+/-150
+/-1,471
+/-60
+/-1,569
+/-60
+/-1,569
Year ended 30 June 2023
+/- 2% in interest rates
+/- 5% in $A/$US
Year ended 30 June 2022
+/- 2% in interest rates
+/- 5% in $A/$US
76
Notes To The Financial Statements
For The Year Ended 30 June 2023
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
Contract liabilities
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
2023
$000
2022
$000
10,805
11,574
8,227
(3,712)
78
(15)
406
(95)
(215)
(1,458)
(1,566)
168
(129)
(661)
2,551
(722)
(544)
(1,952)
9
13
(1)
11,187
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
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
$nil (2022:$nil) by means of finance leases. These acquisitions are not reflected in the statement of cash
flows.
c) Financing Facilities
The following lines of credit were available at balance date:
Fully Drawn Advance Facilities
Master lease facilities
Amount utilised
Amount unutilised
23,751
1,750
25,501
(7,961)
33,462
24,117
1,750
25,867
(6,883)
32,750
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 2023
Valuation Techniques
is
The Group selects a valuation technique that
appropriate
in the circumstances and for which
sufficient data is available to measure fair value. The
availability of sufficient and relevant data primarily
depends on the specific characteristics of the asset or
liability being measured. The evaluation techniques
selected by the Group are consistent with one or more
of the following valuation approaches:
– Market approach: valuation techniques that use
prices and other relevant information generated by
market transactions for identical or similar assets or
liabilities.
– Income approach: valuation techniques that convert
estimated future cash flows or income and expenses
into a single discounted present value.
– Cost approach: valuation techniques that reflect the
current replacement cost of an asset at its current
service capacity.
Each valuation technique requires inputs that reflect the
assumptions that buyers and sellers would use when
pricing the asset or liability, including assumptions
about risks. A change in those inputs might result in a
significantly higher or lower fair value measurement.
When selecting a valuation technique, the Group gives
priority to those techniques that maximise the use of
observable inputs and minimise the use of unobservable
inputs. Inputs that are developed using market data
(such as publicly available
information on actual
transactions) and reflect the assumptions that buyers
and sellers would generally use when pricing the asset
or liability are considered observable, whereas inputs
for which market data is not available and therefore are
developed using the best information available about
such assumptions are considered unobservable.
Notes To The Financial Statements
For The Year Ended 30 June 2023
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.
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.
If all significant
78
Notes To The Financial Statements
For The Year Ended 30 June 2023
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 2023
Level 2
$000
Level 3
$000
Total
$000
-
-
-
-
-
-
-
-
23,671
32,148
23,671
32,148
55,819
55,819
55,819
55,819
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
b. Valuation Techniques and Inputs Used to Measure Level 3 Fair Values
Description
Fair Value at
30 June 2023
$000
Non-financial assets
Freehold land(i)
23,671
Freehold buildings(i)
32,148
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 2023 Notes To The Financial Statements
For The Year Ended 30 June 2023
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 2023 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 8 September 2023
81
WATERCO LIMITED | ANNUAL REPORT 2023
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 2023 Independent Auditor's Report
to the members of Waterco Ltd
84
Shareholder Information
For The Year Ended 30 June 2023
(a) Distribution of Shareholders as at 6 September 2023
1
1,001
5,001
10,001
100,001
Range
-
-
-
-
-
1,000
5,000
10,000
100,000
and over
Total Holders
281
164
55
61
25
586
Options
-
-
-
-
-
(b) Marketable Parcel
35 shareholders hold less than a marketable parcel..
(c) Substantial Shareholders
The following information is extracted from the company’s register as at 6 September 2023
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 93.02% of the total shares issued.
Name
Number of shares
Redbrook Nominees Pty Ltd
Acres Holdings Pty Ltd
Goh Lai Huat & Sons Sdn Bhd
1 Mr Soon Sinn Goh
2
3
4
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)
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
269,000
245,386
225,267
205,734
173,000
170,223
95,130
%
54.63
8.85
7.33
7.11
1.94
1.60
1.42
1.34
1.27
0.97
0.95
0.85
0.84
0.76
0.70
0.64
0.58
0.49
0.48
0.27
TOTAL
(f) Stock Exchange Listing
32,728,258
93.02
The shares of Waterco Limited are listed on the Australian Stock Exchange under the trade symbol
WAT.
85
WATERCO LIMITED | ANNUAL REPORT 2023 Corporate Directory
Directors
Soon Sinn Goh
Bryan Goh
Ben Hunt
(Richard) Cheng Fah Ling
Judy Raper
Wayne Beauman
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
2 Stretton Place, Balcatta WA 6021
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 MAPEX 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
Apartment No. 00.20, Ground Fl, Thu Thiem
Lake View 1 Condominium – No. 19 To Huu
Street, Thu Thiem Ward, Thu Duc City, 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