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REECE LIMITED Annual Report 2012
65683_rns_2012-08-29_061d436b-dd81-4269-b43c-7eb9ff11a165.pdf
Annual Report
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REECE AUSTRALIA LIMITED
A.B.N. 49 004 313 133
| Controlled Entities | Reece Pty Ltd A.B.N. 84 004 097 090 |
|---|---|
| Plumbing World Pty Ltd A.B.N. 99 004 910 829 |
|
| Reece Project Supply Pty Ltd A.B.N. 54 100 065 307 |
|
| Reece International Pty Ltd A.B.N. 11 100 278 171 |
|
| Reece New Zealand Limited Company No. 1530569 |
|
| Directors | L.A. Wilson (Executive Chairman) |
| P.J. Wilson (Chief Executive Officer) | |
| B.W.C. Wilson | |
| J.G. Wilson | |
| R.G. Pitcher, AM | |
| A.T. Gorecki | |
| Company Secretary | G.W. Street |
| Bankers | National Australia Bank Limited |
| Commonwealth Bank of Australia Limited | |
| Bank of New Zealand Limited | |
| Solicitors | Russell Kennedy |
| Lander & Rogers | |
| Auditors | Pitcher Partners |
| Registered Office | 118 Burwood Highway Burwood, Victoria, 3125 Telephone (03) 9274 0000 Facsimile (03) 9274 0197 |
| Share Registry | Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Abbotsford, Victoria, 3067 Telephone (03) 9415 5000 Facsimile (03) 9473 2500 |
| Stock Exchange Listing | Reece Australia Limited shares are listed on the Australian Stock Exchange ASX Code: REH |
NOTICE OF MEETING
Notice is hereby given that the Annual General Meeting of Reece Australia Limited will be held at 3 pm on Thursday, 25 October, 2012 at 452 Johnston Street, Abbotsford, Victoria
CONTENTS
Reece Australia Limited and its controlled entities Annual Report for the financial year ended 30 June 2012
| Corporate Governance Statement | 4 |
|---|---|
| Directors' Report | 7 |
| Auditor's Independence Declaration | 13 |
| Consolidated Statement of Comprehensive Income | 14 |
| Consolidated Statement of Financial Position | 15 |
| Consolidated Statement of Changes in Equity | 16 |
| Consolidated Statement of Cash Flows | 17 |
| Notes to the Financial Statements | 20 |
| Directors' Declaration | 34 |
| Independent Auditors' Report | 35 |
| ASX Shareholders Information | 36 |
2012 Highlights
Reece has continued to invest in the business through the refurbishment of our outlets, opening new locations and increasing our range of products and services.
Corporate Governance Statement
The Board of Directors of Reece Australia Limited is responsible for the corporate governance of the Company.
This statement outlines the corporate governance policies and practices formally adopted by the Company. These policies and practices are in accordance with the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations with 2010 Amendments (2nd Edition) unless otherwise stated.
Principle 1
Lay solid foundations for management and oversight
The role of the Board is to provide strategic guidance and effective oversight of management. The Board operates in accordance with the principles outlined in the Board Charter. The Charter describes the Board's composition, functions and responsibilities and designates authority reserved to the Board and that delegated to senior executives, and is available from the Company upon request.
The Board is generally responsible for the business strategies of the Company, overseeing the management of the Company, setting the values and standards of the Company to uphold in dealings with all stakeholders and acting as custodian of the Company's shareholders' interests.
More particularly, the Board's responsibilities encompass:
- Setting and monitoring the strategic plans and corporate objectives for the Company
- Monitoring the operational and financial aspects of the Company's activities
- Overview of the Company's risk management strategy, internal controls and accounting and reporting systems
- Approving and monitoring capital expenditure, capital management and acquisitions
- Monitoring compliance with regulatory requirements
- Monitoring the performance of senior executives
- Appointing or removing the Chief Executive Officer, the Chief Financial Officer and the Company Secretary
- Monitoring compliance with the Company's own ethical and business standards
An internal process of evaluation was undertaken during the year of the performance of senior executives, including executive directors, having regard to the overall performance of the Company and of the individual Directors against the Board Charter.
Principle 2
Structure the Board to add value
The growth of the Company, strong results and returns to shareholders, reflects the Board's wide management and professional experience and its commitment to growing returns for shareholders and protecting shareholders' investment.
The experience and expertise relevant to the position of director held by each director in office at the date of the annual report is included in the Directors' Report.
The term in office held by each director in office at the date of this report is as follows:
| Name | Term in office |
|---|---|
| Mr L.A. Wilson | 43 years |
| Mr B.W.C. Wilson | 42 years |
| Mr J.G. Wilson | 28 years |
| Mr P.J. Wilson | 15 years |
| Mr R.G. Pitcher, AM | 9 years |
| Mr A.T. Gorecki | 4 years |
The ASX Corporate Governance Principles and Recommendations recommend that the Board comprise a majority of directors who are independent, and an independent Chairperson.
The Board, as currently composed, does not comply with these recommendations.
Mr L.A. Wilson is a substantial shareholder of the Company. He has been Executive Chairman since 1 January 2008 having previously held the position of Chairman and Chief Executive Officer.
Mr B.W.C. Wilson and Mr J.G. Wilson are substantial shareholders of the Company. They, along with Mr R.G. Pitcher and Mr A.T. Gorecki, represent a majority of non-executive directors in the current Board structure and bring objective judgement to bear on Board decisions commensurate with their commercial knowledge, experience and expertise.
Mr P.J. Wilson is a senior executive of the Company and has been Chief Executive Officer since 1 January 2008.
The Company does not have a nomination committee with the role being carried out by the full Board.
An internal process of evaluation was undertaken during the year of the performance of the Board and its committees. This review provided satisfaction to the Board that it is effective and appropriate to the Company's circumstances.
To enable performance of their duties, all directors:
- are provided with appropriate information in a timely manner and can request additional information at any time
- have access to the Company Secretary
- are able to seek independent professional advice at the Company's expense.
Principle 3
Promote ethical and responsible decision making
The Board places great emphasis on honesty and integrity in all its business dealings, recognising that the interests of all stakeholders will be best served when directors, senior executives and employees adhere to high standards of business ethics and comply with the law.
In order to clarify the standards of ethical behaviour required of its directors, senior executives and employees the Board has established Codes of Conduct to ensure the Company's ethical reputation is maintained. The Company's Code of Conduct for Directors and Senior Executives and Code of Business Ethics and Conduct are published on the Company's website at www.reece.com.au.
The Company has in place a policy concerning trading in Company securities. The Company's Policy on Share Trading by Directors and Employees is published on the Company's website at www.reece.com.au.
The Company has in place an Equal Opportunity and Diversity Policy which is published on the Company's website at www.reece.com.au.
The Company has adopted a Whistleblower policy designed to provide all employees the opportunity to raise concerns regarding improper conduct without fear of any adverse ramifications. The Board encourages and supports the Company's commitment to providing a work environment that provides an equal opportunity to all employees.
The Company has implemented the following initiatives during the year:
- the policy made available to all employees and included in new staff training programs
- management training programs highlighting the importance and benefits of diversity in the work force
- continually re-enforcing its policy to recruit for the best available talent regardless of gender, age, ethnicity, disability or cultural background
- annual review by the Risk and Compliance Committee and the Board of the Company's gender profile
17% of the corporate group employees are women and 18% of senior management roles are filled by women. There are currently no female directors on the Board.
The Board confirms it has undertaken an annual review of the Equal Opportunity and Diversity Policy and the measurable objectives for the Financial Year 2013. The Board has determined it will maintain the existing measurable objectives.
Principle 4
Safeguard integrity in financial reporting
The Company has an audit committee comprised of a majority of independent directors. The audit committee presently comprises Mr R.G. Pitcher (Chairman), Mr A.T. Gorecki and Mr B.W.C. Wilson. All members of the committee are non-executive directors of the Company and have extensive experience in, and knowledge of, the industry in which the Company operates. Mr R.G. Pitcher and Mr B.W.C. Wilson have accounting qualifications.
The details of the number of audit committee meetings held and attended are included in the Directors' Report.
The Audit Committee operates under its own charter which is available from the Company upon request.
The Audit Committee ensures the rotation of the external audit engagement partners in accordance with regulatory requirements.
Principle 7
Recognise and manage risk
The Board recognises that the effective management of risk is an integral part of good management and vital to the continued growth and success of the Company. The Board has decided against the establishment of a separate Board risk committee at this time, and risk oversite remains a direct responsibility of the full Board. As a part of the risk management process a Risk and Compliance Committee made up of senior management meet quarterly and report to the Board.
The Company's risk management policy aims not to eliminate risk but to identify, monitor and manage material risks inherent in the activities of the Company.
In managing risk, the Board has charged the Risk and Compliance Committee with the responsibility of determining and implementing risk management controls in the conduct of the business in at least the following areas:
- strategic risks
- operations including business continuity
- product and service quality
- reputation
- ethical conduct in business dealings
- maintenance of a safe work environment
- management of technology resources
- the integrity and reliability of financial reporting
- compliance with internal policies and procedures
- compliance with regulatory requirements
- compliance with environmental obligations
The Company has effective risk management controls implemented by Reece management incorporating:
- a clearly defined organisational structure with defined management responsibilities
- segregation of duties
- delegated limits of authority
- reliable and stable management reporting systems and accounting controls
- internal audit function to review the quality and effectiveness of internal processes, procedures and controls
- procedures for managing financial risk and the treasury function
- a comprehensive insurance programme which is reviewed annually
- utilisation of an independent, confidential and impartial whistleblowing management service
- a clearly defined set of standards and behaviours expected from those working within the Company
The board has received written assurances from management as to the effectiveness of the company's management of its material business risks.
The Board retains oversight responsibility for assessing the effectiveness of the Company's systems for the management of material business risks.
The Chief Executive Officer and Chief Financial Officer have provided written assurance that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.
Principle 8
Remunerate fairly and responsibly
The ASX Corporate Governance Principles and Recommendations recommend that a listed company should have a Remuneration Committee comprising at least three members with the majority being independent directors.
The Remuneration Committee currently consists of three non-executive directors with the majority being independent.
The Committee is chaired by an independent director, Mr R.G. Pitcher and comprises of Mr B.W.C. Wilson and Mr. A.T. Gorecki. Mr. B.W.C. Wilson is a non-executive director and a substantial shareholder of the Company.
The Remuneration Committee operates under its own charter available from the company upon request.
Remuneration of the directors and senior executives is the responsibility of the Remuneration Committee. The Committee obtains advice where necessary to ensure the Company attracts and retains talented and motivated directors and employees who can enhance Company performance through their contributions and leadership. The Board has been able to retain a high calibre management team through a policy of fair and appropriate remuneration which takes into consideration prevailing employment market conditions and which is linked to the Company's financial and operational performance.
The components of remuneration for each executive director and senior executive are largely cash based. There are no share based payments and non-cash benefits are modest. Performance based cash payments are largely related to Company trading and operating performance. Currently there is no scheme to provide any director or member of management with retirement benefits other than accrued long service leave, accrued annual leave and superannuation benefits.
Non-executive directors are remunerated by way of cash fees plus statutory superannuation and do not participate in the Company's incentive scheme. There is no scheme to provide non-executive directors with retirement benefits other than statutory superannuation.
Director and executive disclosure requirements are dealt with in the Directors' Report.
The Directors present their report together with the financial report of the consolidated entity consisting of Reece Australia Limited and the entities it controlled ("Reece"), for the financial year ended 30 June 2012 and auditor's report thereon. This financial report has been prepared in accordance with Australian Accounting Standards .
Principal Activities
Reece is a leading supplier of plumbing and bathroom products with operations in Australia and New Zealand. Its activities include importing, wholesaling, distribution, marketing and retailing. Reece supplies customers in the trade, retail, professional and commercial markets.
There has been no significant change in the nature of these activities during the financial year.
Results
The consolidated profit for the year attributable to the members of Reece Australia Limited was:
| 2012 (\$000's) |
2011 (\$000's) |
|
|---|---|---|
| Profit before income tax | 163,007 | 171,040 |
| Income tax expense | 49,727 | 52,429 |
| Operating profit after income tax attributable to the members of Reece Australia Limited |
113,280 | 118,611 |
Review of Operations
Reece earned a net profit after tax of \$113.3m for the year ended 30 June 2012, down 4.5% on the prior year (2011 \$118.6m). Sales revenue was down 2.9% to \$1,519m (2011 \$1,564m), with profit before income tax down 4.7% to \$163.0m (2011 \$171.0m). The profit after tax result was impacted by lower revenue due to the reduction in building activity and the challenging economic conditions in both Australia and New Zealand. The Company has maintained investment in key areas of the business whilst continuing to deliver process improvements to ensure costs are tightly managed. The Directors wish to record their appreciation of the work and commitment of the company's employees in delivering a commendable result in these difficult times.
Reece has maintained a very strong cash position with cash and cash equivalents of \$166.8m at 30 June 2012. Net assets increased by 8.1% to \$707m (2011 \$654m) with growth funded through internally generated profit.
Investment in the branch network continued with the refurbishment of trade and showroom outlets during the year. In addition, the company has completed the roll out of the new corporate identity as well as opening 13 new outlets in Australia and 1 new outlet in New Zealand. One outlet was closed in Australia. At the end of the year 453 outlets were trading in Australia and New Zealand. The Company will continue to invest in the development of key sites in both Australia and New Zealand and intends to open more sites over the next twelve months.
Customer service continues to be the number one business priority. Customer feedback is used by management to identify opportunities and develop plans to further improve the in-store service and on-line experience. Reece has introduced a range of new products during the year, sourced both locally and overseas, to further increase the product offering. The Company has a comprehensive development and testing program to ensure the high level of quality is maintained.
Inventory levels are in line with prior year despite an increase in the number of outlets. The stock management system and stock ordering process allowed the Company to more effectively manage inventory and improve customer service. This was further enhanced with the opening of the new regional distribution centre in Queensland. The new distribution centre incorporates the latest warehouse management technology and allows the Company, in conjunction with the national distribution centre in Victoria, to provide a more effective and efficient service to the branch network.
The IT transformation program is well underway with the Company enhancing the online offering to both trade and retail customers with new functionality launched during the year. The development of the new point of sale system continued with new functionality implemented during the year. Reece will continue to invest in the development of new technology to further improve business processes and customer service.
Trading conditions continued to be challenging for the building and construction industry. Reece has worked closely with customers to manage customer relationships and receivables during the year. Bad debts were contained within acceptable levels.
The Board is pleased to advise it has declared a final dividend of 40 cents per share fully franked. The final dividend will be paid on 25 October 2012 with the record date for entitlement being 8 October 2012. Total dividends paid and to be paid relating to the year ended 30 June 2012 will be 61 cents per share, the same as the prior year.
The Board expects the challenging economic environment to continue into 2013 and is reluctant to provide a forecast. Guidance will be provided to the market at the appropriate time.
Significant Changes in the State of Affairs
There have been no significant changes in the consolidated entity's state of affairs during the financial year.
After Balance Date Events
No matters or circumstances have arisen since the end of the financial year that have significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.
Likely Developments
The consolidated entity will continue to pursue its operating strategy to create shareholder value.
Environmental Regulations
The consolidated entity's operations are subject to certain environmental regulation under a law of the Commonwealth or of a State. The consolidated entity is not aware of any significant breaches of environmental regulations during the year.
Dividends
Dividends paid or declared by Reece Australia Limited since the end of the previous financial year were:
| In respect of the previous financial year: | (\$000's) |
|---|---|
| A final fully franked ordinary dividend of 40 cents per share in respect of the year ended 30 June 2011 was paid on 27 October 2011. |
39,840 |
| In respect of the current financial year: | |
| An interim ordinary dividend of 21 cents per share was paid on 21 March 2012. The final dividend declared to be paid on 25 |
20,916 |
| October 2012 is an ordinary fully franked dividend of 40 cents per share. |
39,840 |
| 60,756 |
Share Options
No options over unissued shares or interests in the consolidated entity were granted during or since the end of the financial year and there were no options outstanding at the end of the financial year.
Indemnification and Insurance of Directors, Officers and Auditors
A deed of indemnity, insurance and access has been entered into with each director, and with the Company Secretary, of the consolidated entity.
The Company has not, during or since the financial year, indemnified or agreed to indemnify the auditor of the Company against a liability incurred as auditor.
During the financial year the consolidated entity paid a premium for Directors' and Officers' Liability insurance. Further disclosure is prohibited under the terms of the contract.
Proceedings on Behalf of the Consolidated Entity
No person has applied for leave of Court to bring proceedings on behalf of the consolidated entity.
Philanthropic Initiatives
During the financial year, the Board approved payments totalling \$490,000 (2011 - \$645,000) to various charitable organisations. This is a continuing initiative and recipients may vary from year to year at the discretion of the Board. The recipients this year were:
| MS Society of Victoria Ltd | 20,000 |
|---|---|
| Salvation Army | 20,000 |
| The Smith Family | 20,000 |
| Royal Flying Doctor Service | 25,000 |
| Doctors Without Borders | 50,000 |
| Barnados | 25,000 |
| Peter MacCallum Cancer Centre | 25,000 |
| Prostate Cancer Foundation of Australia | 25,000 |
| Centre for Eye Research Australia | 35,000 |
| Alzheimers Australia | 20,000 |
| Sane Australia | 20,000 |
| Mental Health Research Institute | 30,000 |
| Motor Neurone Disease Association of Victoria | 20,000 |
| St Vincent De Paul Society | 20,000 |
| Baker Heart Research Institution | 30,000 |
| Legacy | 20,000 |
| St. Vincent's Institute | 20,000 |
| Trust of Nature | 10,000 |
| Typo Station | 15,000 |
| Murdochs Children's Medical Research Institute | 20,000 |
| Scope | 20,000 |
Information on Directors and Company Secretary
| Name: | Mr L. Alan Wilson |
|---|---|
| Age: | 71 |
| Position: | Executive Chairman |
| Experience: | Appointed to the Board 1969. General Manager 1970 - 1974. Deputy Chairman 1973 - 2001. Managing Director 1974 - 2008. Appointed Chairman 2001. |
No other directorships of listed companies were held at any time during the three years prior to 30 June 2012.
| Name: | Mr Peter J. Wilson |
|---|---|
| Age: | 44 |
| Position: | Chief Executive Officer |
| Experience: | B.Comm (Melb), FAIM Appointed to the Board 1997 General Manager Operations 2002 - 2004 Chief Operating Officer 2005 - 2007 Appointed Chief Executive Officer 2008. |
No other directorships of listed companies were held at any time during the three years prior to 30 June 2012
| Name: | Mr Bruce W.C. Wilson |
|---|---|
| Age: | 66 |
| Position: | Non-Executive Director |
| Experience: | B.Comm (Melb). Appointed to the Board 1970. Secretary 1974 - 1999. |
| Committee Membership: Member of Audit Committee Member of Remuneration Committee |
|
| the three years prior to 30 June 2012. | No other directorships of listed companies were held at any time during |
| Name: | Mr John G. Wilson |
| Age: | 74 |
| Position: | Non-Executive Director |
|---|---|
| Experience: | Appointed to the Board 1984. |
No other directorships of listed companies were held at any time during the three years prior to 30 June 2012
| Name: | Mr Ronald G. Pitcher, AM |
|---|---|
| Age: | 73 |
| Position: | Non-Executive Director |
| Experience: | FCA, FCPA, ACAA. |
A chartered accountant and business consultant with over 45 years experience in the accounting profession and in the provision of business advisory services. Appointed to the Board 2003.
Mr Pitcher was a previous partner of the Company's audit firm until his retirement from the audit firm in 1999.
| Committee Membership: Chairman of Audit Committee Chairman of Remuneration Committee |
|
|---|---|
| Directorships of other Listed Companies: |
McMillan Shakespeare Limited 8 years |
| Name: | Mr Andrzej (Andrew) T. Gorecki |
| Age: | 57 |
| Position: | Non-Executive Director |
| Experience: | Master of Science (Engineering), Warsaw Technical University |
| Appointed to the Board March 2008. Managing Director of I.T. company Retail Directions. |
|
| Committee Membership: Member of Audit Committee Member of Remuneration Committee (appointed November 2010) |
|
| No other directorships of listed companies were held at any time during the three years prior to 30 June 2012. |
| Name: | Mr Gavin W. Street |
|---|---|
| Age: | 43 |
| Position: | Company Secretary & Chief Financial Officer |
| Experience: | B.Bus, B.Comp (Monash), CPA Joined consolidated entity 2008 Appointed Company Secretary & Chief Financial Officer 2008 |
Directors' Meetings
The number of meetings of the board of directors and of each board committee held during the financial year and the number of meetings attended by each director were:
| Director | Number of Directors | Number of Directors |
|---|---|---|
| Meetings Attended | Meetings Held Whilst in Office | |
| L.A. Wilson | 11 | 11 |
| P.J. Wilson | 11 | 11 |
| B.W.C. Wilson | 11 | 11 |
| J.G. Wilson | 10 | 11 |
| R.G. Pitcher, AM | 10 | 11 |
| A.T. Gorecki | 11 | 11 |
| Director | Number of Audit Committee Meetings Attended |
Number of Audit Committee Meetings Held Whilst In Office |
|---|---|---|
| R.G. Pitcher, AM | 3 | 3 |
| B.W.C. Wilson | 3 | 3 |
| A.T. Gorecki | 3 | 3 |
| Director | Number of Remuneration Committee Meetings Attended |
Number of Remuneration Committee Meetings Held Whilst In Office |
|---|---|---|
| R.G. Pitcher, AM | 3 | 3 |
| B.W.C. Wilson | 3 | 3 |
| A.T. Gorecki | 3 | 3 |
Directors' Interests in Shares
Directors' relevant interests in shares of Reece Australia Limited are detailed below.
| Director | Ordinary Shares of |
|---|---|
| Reece Australia Limited | |
| J.G. Wilson | 67,438,320 |
| L.A. Wilson | 66,625,820 |
| B.W.C. Wilson | 66,508,320 |
| P.J. Wilson | 106,500 |
| R.G. Pitcher, AM | 30,000 |
| A.T. Gorecki | 10,000 |
Directors' Interests in Contracts
Directors' interests in contracts are disclosed in note 24 to the financial statements.
Auditor's Independence Declaration
A copy of the auditor's independence declaration in relation to the audit for the financial year is provided with this report.
Non-Audit Services
Non-audit services are approved by resolution of the Audit Committee and approval is provided in writing to the board of directors. Non-audit services provided by the auditors of the consolidated entity during the year, Pitcher Partners, are detailed below. The directors are satisfied that the provision of the non-audit services during the year by the auditor is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
Amounts paid or payable to an auditor for non-audit services provided during the year by the auditor to any entity that is part of the consolidated entity are detailed below.
| 2012 \$ |
2011 \$ |
|
|---|---|---|
| Audit/Review fees | 462,140 | 435,465 |
| Amounts paid and payable to Pitcher Partners for Non-audit services: | ||
| Taxation services | 7,775 | 28,500 |
| Other assurance services | 22,935 | 82,685 |
| 30,710 | 111,185 | |
| Amounts paid and payable to network firms of Pitcher Partners: | ||
| Audit/Review fees | 1,299 | 982 |
| Other assurance services 14,578 |
16,939 | |
| 15,877 | 17,921 |
Rounding of Amounts
The amounts contained in the report and in the financial report, other than remuneration, have been rounded to the nearest \$1,000 (where rounding is applicable) under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the Class Order applies.
Remuneration Report
Remuneration Policies
Remuneration of the directors and senior managers is the responsibility of the Remuneration Committee. The broad remuneration policy is to ensure remuneration packages properly reflect the person's duties and responsibilities and that remuneration is competitive in attracting and retaining talented and motivated executives who can enhance Company performance through their contributions and leadership. The Committee did not seek external advice in relation to these matters.
The components of remuneration for each executive director and senior manager are largely cash based and comprise fixed remuneration (including superannuation and benefits) and performance based short-term incentives. There is no share-based remuneration. The executive director and senior management have employment contracts with notice periods executable by either party. Apart from termination benefits which accrue under statute including accrued leave entitlements and superannuation benefits, there are no arrangements in place to provide any executive director or senior manager with retirement benefits. The Company pays superannuation contributions at the required superannuation guarantee rate or greater into an accumulation type fund and therefore there are no future liabilities in respect of these payments.
Performance based cash payments are largely related to Company trading and operating performance. The CEO's performance based incentive scheme is largely structured around the achievement of targets within a range of financial performance criteria. This criteria encompasses return on equity, EBIT to sales and the rate of profit before tax growth. The CEO's performance based cash payment is calculated on 75% of base salary with a ceiling of 112.5% for exceptional performance. The scheme provides for no payment in the event of unacceptable Company performance.
The Company Secretary / Chief Financial Officers' performance based incentive is structured around the same company performance criteria as the CEO but with a ceiling of 40% of base salary. The Executive Chairman declined to participate in the company's performance based incentive scheme in the current year.
Non-executive directors receive fees and do not receive performance based payments. Their fees reflect the additional committees that they may serve on from time to time. The aggregate remuneration paid to non-executive directors is capped at the level approved by shareholders for this purpose. There are no termination benefits for non-executive directors.
| 2012 \$(000's) |
2011 \$(000's) |
2010 \$(000's) |
2009 \$(000's) |
|
|---|---|---|---|---|
| Dividends Declared | 60,756 | 60,756 | 57,768 | 50,796 |
| Performance Based Incentives to KMP | 947 | 1,674 | 1,332 | 604 |
Key Management Personnel
| Short Term | Other | Post Employment | ||||
|---|---|---|---|---|---|---|
| Salary & Fees \$ |
Performance Based Payment \$ |
Non-cash benefits \$ |
Super Contributions \$ |
Total | Total Performance Related % |
|
| Directors | ||||||
| L.A. Wilson (Executive Chairman) | ||||||
| 2012 | 1,385,000 | - | 66,587 | 50,000 | 1,501,587 | 0% |
| 2011 | 1,383,886 | 476,754 | 67,398 | 50,000 | 1,978,038 | 24% |
| P.J. Wilson (Chief Executive Officer) |
||||||
| 2012 | 1,630,000 | 794,925 | 80,988 | 25,000 | 2,530,913 | 31% |
| 2011 | 1,525,000 | 1,012,409 | 77,564 | 25,000 | 2,639,973 | 38% |
| B.W.C. Wilson (Non-Executive) | ||||||
| 2012 | 75,000 | - | - | 6,750 | 81,750 | 0% |
| 2011 | 75,000 | - | - | 6,750 | 81,750 | 0% |
| J.G. Wilson (Non-Executive) | ||||||
| 2012 | 75,000 | - | - | 6,750 | 81,750 | 0% |
| 2011 | 75,000 | - | - | 6,750 | 81,750 | 0% |
| R.G. Pitcher, AM (Non-Executive) | ||||||
| 2012 | 130,000 | - | - | 11,700 | 141,700 | 0% |
| 2011 | 130,000 | - | - | 11,700 | 141,700 | 0% |
| A.T. Gorecki (Non-Executive) | ||||||
| 2012 | 95,000 | - | - | 8,550 | 103,550 | 0% |
| 2011 | 95,000 | - | - | 8,550 | 103,550 | 0% |
| Total Remuneration: Directors | ||||||
| 2012 | 3,390,000 | 794,925 | 147,575 | 108,750 | 4,441,250 | 18% |
| 2011 | 3,283,886 | 1,489,163 | 144,962 | 108,750 | 5,026,761 | 30% |
| Executives | ||||||
| G.W. Street (Company Secretary, Chief Financial Officer) |
||||||
| 2012 | 585,000 | 152,157 | - | 25,000 | 762,157 | 20% |
| 2011 | 551,666 | 184,374 | - | 25,000 | 761,040 | 24% |
| Total Remuneration: Executives | ||||||
| 2012 | 585,000 | 152,157 | - | 25,000 | 762,157 | 20% |
| 2011 | 551,666 | 184,374 | - | 25,000 | 761,040 | 24% |
"Executives" are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. Being a working Board, decisions and direction are exercised through the Board and accordingly, there is only one employee in addition to the directors who is in this category.
At the Company's most recent Annual General Meeting, resolution to adopt the prior year remuneration was put to the vote and at least 75% of "yes" votes were cast for adoption of the report. No comments were made on the remuneration report that were considered at the Annual General Meeting.
Dated at Melbourne on 30 August 2012.
Signed in accordance with a resolution of Directors.
L. A. WILSON P.J. WILSON
Executive Chairman Chief Executive Officer
Auditors' Independence Declaration
| An independent Victorian Partnership ABN 27 975 255 196 |
|
|---|---|
| To the Directors of Reece Australia Limited belief there have been: (i) No contraventions of the auditor independence requirements of the Corporations Act 2001. (ii) No contraventions of any applicable code of professional conduct. |
In relation to the independent audit for the year ended 30 June 2012, to the best of my knowledge and |
| D. A. KNOWLES Partner 30 August 2012 |
PITCHER PARTNERS Melbourne |
| Liability limited by a scheme approved under Professional Standards Legislation | Pitcher Partners, including Johnston Rorke, is an association of independent firms Melbourne Sydney Perth Adelaide Brisbane An independent member of Baker Tilly International |
Consolidated Statement of Comprehensive Income for the year ended 30 June 2012
| Consolidated Entity | ||||
|---|---|---|---|---|
| Notes | 2012 (\$000's) |
2011 (\$000's) |
||
| Revenue | ||||
| Sales revenue | 4 | 1,518,507 | 1,563,634 | |
| Other income | 7,295 | 6,634 | ||
| 1,525,802 | 1,570,268 | |||
| Less: Expenses | ||||
| Cost of goods sold | 1,035,818 | 1,073,993 | ||
| Employee benefits expense | 167,247 | 161,857 | ||
| Depreciation | 32,998 | 29,619 | ||
| Finance costs | 445 | 2,520 | ||
| Other expenses | 126,287 | 131,239 | ||
| Profit before income tax | 163,007 | 171,040 | ||
| Income tax expense | 6 | 49,727 | 52,429 | |
| Net Profit for the year from continuing operations | 5 | 113,280 | 118,611 | |
| Other Comprehensive Income | ||||
| Exchange differences on translation of foreign operations, net of tax | 106 | (401) | ||
| Total comprehensive income | 113,386 | 118,210 | ||
| Basic earnings per share | 22 | 114 cents | 119 cents | |
| Diluted earnings per share | 22 | 114 cents | 119 cents |
The Consolidated Statement of Comprehensive Income is to be read in conjunction with the notes to the financial statements set out on pages 20 to 33.
Consolidated Statement of Financial Position as at 30 June 2012
| Consolidated Entity | ||||
|---|---|---|---|---|
| Notes | 2012 (\$000's) |
2011 (\$000's) |
||
| Current Assets | ||||
| Cash and cash equivalents | 8 | 166,758 | 134,186 | |
| Receivables | 9 | 230,248 | 246,257 | |
| Inventories | 10 | 212,624 | 212,481 | |
| Total Current Assets | 609,630 | 592,924 | ||
| Non-Current Assets | ||||
| Property, plant and equipment | 11, 12 | 374,198 | 341,012 | |
| Deferred tax assets | 6 | 25,038 | 24,081 | |
| Total Non-Current Assets | 399,236 | 365,093 | ||
| Total Assets | 1,008,866 | 958,017 | ||
| Current Liabilities | ||||
| Payables | 13 | 229,898 | 229,251 | |
| Short-term borrowings | 14 | 9,018 | 8,302 | |
| Current tax payable | 6 | 12,234 | 18,263 | |
| Provisions | 15 | 33,072 | 30,951 | |
| Other | 16 | 10,694 | 10,069 | |
| Total Current Liabilities | 294,916 | 296,836 | ||
| Non-Current Liabilities | ||||
| Long-term payable | 13 | 4,762 | 5,122 | |
| Provisions | 15 | 2,241 | 1,742 | |
| Total Non-Current Liabilities | 7,003 | 6,864 | ||
| Total Liabilities | 301,919 | 303,700 | ||
| Net Assets | 706,947 | 654,317 | ||
| Equity | ||||
| Contributed equity | 17 | 9,960 | 9,960 | |
| Reserves | 18 | 2,567 | 2,461 | |
| Retained earnings | 19 | 694,420 | 641,896 | |
| Total Equity | 706,947 | 654,317 |
The Consolidated Statement of Financial Position is to be read in conjunction with the notes to the financial statements set out on pages 20 to 33.
Consolidated Statement of Changes In Equity for the year ended 30 June 2012
| Contributed Equity |
Reserves | Retained Earnings |
Total Equity | |
|---|---|---|---|---|
| Consolidated Entity | \$A'000 | \$A'000 | \$A'000 | \$A'000 |
| Balance as at 1 July 2010 | 9,960 | 2,862 | 582,049 | 594,871 |
| Profit for the year | - | - | 118,611 | 118,611 |
| Exchange differences on translation of foreign operations, net of tax | - | (401) | - | (401) |
| Total comprehensive income for the year | - | (401) | 118,611 | 118,210 |
| Transactions with owners in their capacity as owners: | ||||
| Dividends paid | - | - | (58,764) | (58,764) |
| Total transactions with owners in their capacity as owners: | - | - | (58,764) | (58,764) |
| Balance as at 30 June 2011 | 9,960 | 2,461 | 641,896 | 654,317 |
| Balance as at 1 July 2011 | 9,960 | 2,461 | 641,896 | 654,317 |
| Profit for the year | - | - | 113,280 | 113,280 |
| Exchange differences on translation of foreign operations, net of tax | - | 106 | - | 106 |
| Total comprehensive income for the year | - | 106 | 113,280 | 113,386 |
| Transactions with owners in their capacity as owners: | ||||
| Dividends paid | - | - | (60,756) | (60,756) |
| Total transactions with owners in their capacity as owners | - | - | (60,756) | (60,756) |
| Balance as at 30 June 2012 | 9,960 | 2,567 | 694,420 | 706,947 |
The Consolidated Statement of Changes in Equity is to be read in conjunction with the notes to the financial statements set out on pages 20 to 33.
Consolidated Statement of Cash Flows for the year ended 30 June 2012
| Consolidated Entity | |||
|---|---|---|---|
| Notes | 2012 (\$000's) |
2011 (\$000's) |
|
| Cash flow from operating activities | |||
| Receipts from customers | 1,687,397 | 1,705,056 | |
| Payments to suppliers and employees | (1,479,430) | (1,522,412) | |
| Interest received | 5,756 | 6,072 | |
| Borrowing costs | (457) | (2,506) | |
| Income tax paid | (56,713) | (50,378) | |
| Net cash provided by operating activities | 20(a) | 156,553 | 135,832 |
| Cash flow from investing activities | |||
| Payment for property, plant and equipment | (67,749) | (67,334) | |
| Proceeds from sale of property, plant and equipment | 3,809 | 2,479 | |
| Net cash used in investing activities | (63,940) | (64,855) | |
| Cash flow from financing activities | |||
| Dividends paid | (60,756) | (58,764) | |
| Repayments of borrowings | (41,307) | (38,815) | |
| Proceeds from borrowings | 42,022 | 38,157 | |
| Net cash used in financing activities | (60,041) | (59,422) | |
| Net increase in cash and cash equivalents | 32,572 | 11,555 | |
| Cash and cash equivalents at the beginning of the year | 134,186 | 122,631 | |
| Cash and cash equivalents at the end of the year | 8 | 166,758 | 134,186 |
The Consolidated Statement of Cash Flows is to be read in conjunction with the notes to the financial statements set out on pages 20 to 33.
A continued customer focus
In a tougher market, we aim to reinforce our competitive advantage by continuing to focus on our customers and providing them with the best service possible.
We continue to listen and respond
Now more than ever, it is important to strengthen relationships with our customers. To understand their needs and respond with tailored solutions. We will continue to listen to our customers feedback and identify opportunities to further improve our in-store service and on-line offering to provide a more effective and personalised service.
We continue to set the standards
Over the past 12 months we have continued to refurbish our trade and showroom outlets and completed the roll out of our new corporate identity. We also introduced a number of new products from here and overseas, increasing the range of brands for our customers. We will continue to differentiate Reece from our competitors by offering our customers the best products and store environments.
We continue to make it easy to do business
During the year we introduced and developed a number of initiatives to enhance the customer experience. Our new regional distribution centre in Queensland has improved our stock ordering and management process ensuring customers get the products they need quickly and efficiently. Our IT transformation program is well underway and we are continually improving our online offering to both trade and retail customers with new functionality.
We continue to provide peace of mind
Reece has always stood behind the quality of our products. In today's environment this commitment is even more important. We have a comprehensive development and testing program to ensure product quality. And our extensive warranty program, which was launched last year, continues to offer both our trade and retail customers some of the industry's best warranties. This is supported by our ongoing "Don't risk it, use a licensed plumber" campaign.
1. Basis of Preparation
The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
The financial report covers Reece Australia Limited and controlled entities as a consolidated entity. Reece Australia Limited is a company limited by shares, incorporated and domiciled in Australia. Reece Australia Limited is a for-profit entity for the purpose of preparing the financial statements.
The following is a summary of material accounting policies adopted by the consolidated entity in the preparation and presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.
The financial report has been prepared on a going concern basis.
(a) Basis of Preparation of the Financial Report
Compliance with IFRS
Australian Accounting Standards ensure compliance with International Financial Reporting Standards.
Historical Cost Convention
The financial report has been prepared under the historical cost convention, as modified by revaluations to fair value for certain classes of assets as described in the accounting policies.
(b) Principles of Consolidation
The consolidated financial statements are those of the consolidated entity, comprising the financial statements of the parent entity and of all entities which Reece Australia Limited controlled from time to time during the year and at balance date. Details of the controlled entities are contained in Note 26.
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies which may exist.
All inter-company balances and transactions, including any unrealised profits or losses have been eliminated on consolidation.
(c) Revenue Recognition
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to the customer.
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.
All revenue is stated net of the amounts of goods and services tax (GST).
Rent revenue from operating leases is recognised on a straight-line basis over the term of the lease.
(d) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and at banks, shortterm deposits with an original maturity of three months or less held at call with financial institutions and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position.
(e) Inventories
Inventories are measured at the lower of cost and net realisable value. Cost is based on the first-in first-out principle.
(f) Property, Plant and Equipment
All classes of property, plant and equipment are stated at cost less depreciation and any accumulated impairment losses.
Depreciation
Land is not depreciated. The depreciable amounts of all other fixed assets are depreciated on a straight-line basis over their estimated useful lives commencing from the time the asset is held ready for use. Fixtures, fittings and equipment are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.
The useful lives for each class of assets are:
| 2012 | 2011 | |
|---|---|---|
| Buildings | 25 years | 25 years |
| Fixtures, fittings and equipment | 2.5 to 20 years | 2.5 to 20 years |
| Motor vehicles | 5 to 8 years | 5 to 8 years |
(g) Leases
Leases of buildings, plant and equipment under which the parent entity or its controlled entities do not assume substantially all the risks and benefits of ownership are classified as operating leases.
Lease payments for operating leases, where substantially all of the risks and benefits remain with the lessor, are charged as expenses in the period in which they are incurred.
Lease incentives received under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.
(h) Intangibles
Goodwill
Goodwill is not amortised but is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired. Goodwill is carried at cost less accumulated impairment losses, if any.
(i) Impairment of Assets
Assets with an indefinite useful life are not amortised but are tested annually for impairment in accordance with AASB 136. Assets subject to annual depreciation or amortisation are reviewed for impairment whenever events or circumstances arise that indicate that the carrying amount of the asset may be impaired.
An impairment loss is recognised where the carrying amount of the asset exceeds its recoverable amount. The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and value in use.
(j) Taxes
Current income tax expense is the tax payable on the current period's taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities.
Deferred tax assets and liabilities are recognised for temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred tax asset or liability is recognised in relation to temporary differences arising from the initial recognition of an asset or a liability if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for temporary differences and unused tax losses only when it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
Tax Consolidation
The parent entity and its Australian controlled entities have formed an income tax consolidated group under the tax consolidation legislation. The parent entity is responsible for recognising the current tax liabilities and deferred tax assets arising in respect of tax losses for the tax consolidated group. The tax consolidated group has also entered into a tax funding agreement whereby each company in the group contributes to the income tax payable in proportion to their contribution to the net profit before tax of the tax consolidated group.
(k) Employee Benefits
Liabilities arising in respect of wages and salaries, annual leave, and any other employee benefits expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled.
All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date.
Contributions are made by the economic entity to employee superannuation funds and are charged as expenses when incurred.
(l) Financial Instruments
Financial Assets
Trade receivables are carried at full amounts due less impairments. Amounts receivable from other debtors are carried at full amounts due.
Financial Liabilities
Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the economic entity.
Hedge Accounting
Certain derivatives are designated as hedging instruments and are further classified as fair value hedges.
At the inception of each hedging transaction the group documents the relationship between the hedging instruments and hedged items, its risk management objective and its strategy for undertaking the hedge transaction. The group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items.
Fair Value Hedge
Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recorded in the statement of financial position, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
Other Derivatives
Where a derivative financial instrument is not designated in a qualifying hedge relationship, it is measured at fair value and changes in fair value are recognised immediately in the profit and loss.
(m) Foreign Currencies
Functional and presentation currency
The financial statements of each group entity are measured using its functional currency, which is the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars, as this is the parent entity's functional and presentation currency.
Transactions and Balances
Transactions in foreign currencies of entities within the consolidated entity are translated into functional currency at the rate of exchange ruling at the date of the transaction.
Foreign currency monetary items that are outstanding at the reporting date (other than monetary items arising under foreign currency contracts where the exchange rate for that monetary item is fixed in the contract) are translated using the spot rate at the end of the financial year.
Resulting exchange differences arising on settlement or re-statement are recognised as revenues and expenses for the financial year.
Group Companies
The financial statements of foreign operations whose functional currency is different from the group's presentation currency are translated as follows:
- Assets and liabilities are translated at year-end exchange rates prevailing at the reporting date;
- Income and expenses are translated at average exchange rates for the period; and
- All resulting exchange differences are recognised as a separate component of equity.
Exchange differences arising on translation of foreign operations are transferred directly to the group's foreign currency translation reserve as a separate component of equity in the statement of financial position
(n) Comparatives
Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures.
(o) Rounding Amounts
The Company is of a kind referred to in ASIC Class Order 98/100, and in accordance with that Class Order, amounts in the financial statements have been rounded off to the nearest thousand dollars, or in certain cases, to the nearest dollar.
(p) New Accounting Standards and Interpretations
A number of accounting standards and interpretations have been issued at the reporting date but are not yet effective. While the consolidated entity does not expect AASB10 and AASB 11 to have a significant impact on its composition, it has yet to perform a detailed analysis of the new guidance in the context of its various investees that may or may not be controlled under the new rules.
(q) 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 Tax 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.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.
2. Critical Accounting Estimates and Judgements
The group makes certain estimates and assumptions concerning the future, which, by definition, will seldom represent actual results. The estimates and assumptions that have a significant inherent risk in respect of estimates based on future events, which could have a material impact on the assets and liabilities in the next financial year, are discussed below:
Income taxes
Income tax benefits are based on the assumption that no adverse change will occur in the income tax legislation and the anticipation that the company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
3. Financial Risk Management
The consolidated entity is exposed to a variety of financial risks comprising: a) Currency risk
- b) Interest rate risk c) Credit risk
- d) Liquidity risk
- e) Fair values
The board of directors has overall responsibility for identifying and managing operational and financial risks.
(a) Currency Risk – Forward exchange contracts
Forward exchange contracts are entered into in order to buy and sell specified amounts of foreign currency in the future at stipulated exchange rates. The objective in entering the forward exchange contracts is to protect the consolidated entity against unfavourable exchange rate movements for both the contracted and anticipated future purchases undertaken in foreign currencies. The consolidated entity reviews its currency risk on a regular basis, taking into account refinancing, renewal of existing positions and alternative financing. Budgeted foreign currency requirements are determined over a rolling 12 month period and forward exchange positions are taken in consideration of those requirements in accordance with the consolidated entity's Foreign Exchange Management Policy.
The full amount of the foreign currency the consolidated entity will be required to pay or purchase when settling the brought forward exchange contracts should the counterparty not pay the currency it is committed to deliver at balance date was \$101,950,198 (2011: \$0).
The consolidated entity utilised a mixture of forward exchange contracts and direct purchase of foreign currency to manage its foreign currency exposure.
The accounting policy in regards to forward exchange contracts is detailed in Note 1(l).
At balance date, the details of outstanding forward exchange contracts are:
| Buy United State Dollars |
Sell Australian Average Dollars Exchange Rate |
|||
|---|---|---|---|---|
| Settlement | 2012 | 2011 | 2012 | 2011 |
| \$'000 | \$'000 | \$ | \$ | |
| Less than 6 months | 21,054 | - | 1.02 | - |
| 6 months to 1 year | 43,214 | - | 1.01 | - |
| Buy Euros | Sell Australian Dollars |
Average Exchange Rate |
||
|---|---|---|---|---|
| Settlement | 2012 | 2011 | 2012 | 2011 |
| \$'000 | \$'000 | \$ | \$ | |
| Less than 6 months | 11,513 | - | 0.78 | - |
| 6 months to 1 year | 26,169 | - | 0.78 | - |
If the exchange rate was to increase by 10% from the rates used to determine the fair values as at the reporting date, then the impact for the year would be an additional loss of \$10.2M. If the exchange rate was to decrease by 10% from the rates used to determine the fair values as at the reporting date, then the impact for the year would be an addition profit of \$7.0M.
(b) Interest Rate Risk
The consolidated entity's main interest rate risk arises from short-term cash deposits. During 2012 and 2011, the consolidated entity's held both fixed and variable rate deposits.
The consolidated entity reviews its interest rate exposure on a monthly basis, taking into account both short-term and long-term deposit rates. A t 30 June 2012, if interest rates had changed -/+1% from the year-end rates, with all other variables held constant, the effect on post-tax profit for the year would have been immaterial.
The consolidated entity's exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised at the balance date, are as follows:
| Financial Instruments | Fixed interest rate maturing in: | ||||||
|---|---|---|---|---|---|---|---|
| Floating interest rate |
1 year or less |
Over 1 to 5 years |
More than 5 years |
Non-interest bearing |
Total carrying amount as per Statement of financial position |
Weighted average effective interest rate |
|
| 2012 | 2012 | 2012 | 2012 | 2012 | 2012 | 2012 | |
| 2011 | 2011 | 2011 | 2011 | 2011 | 2011 | 2011 | |
| \$'000 \$'000 |
\$'000 \$'000 |
\$'000 \$'000 |
\$'000 \$'000 |
\$'000 \$'000 |
\$'000 \$'000 |
% % |
|
| (i) Financial assets | |||||||
| Cash | 19,758 | 147,000 | - | - | - | 166,758 | 4.94 |
| 69,186 | 65,000 | - | - | - | 134,186 | 5.30 | |
| * Trade and other | - | - | - | - | 230,248 | 230,248 | |
| receivables | - | - | - | - | 246,257 | 246,257 | |
| Total financial assets | 19,758 69,186 |
147,000 65,000 |
- - |
- - |
230,248 246,257 |
397,006 380,443 |
|
| (ii) Financial liabilities | |||||||
| Short-term borrowings | 600 | 8,418 | - | - | - | 9,018 | 3.70 |
| 582 | 7,720 | - | - | - | 8,302 | 4.33 | |
| Trade payables | - | - | - | - | 229,898 | 229,898 | |
| - | - | - | - | 229,251 | 229,251 | ||
| Amounts owing under | - | - | - | - | 10,694 | 10,694 | |
| contract | - | - | - | - | 10,069 | 10,069 | |
| Long-term payables | - | - | - | - | 4,762 | 4,762 | |
| - | - | - | - | 5,122 | 5,122 | ||
| Total financial liabilities | 600 | 8,418 | - | - | 245,354 | 254,372 | |
| 582 | 7,720 | - | - | 244,442 | 252,744 |
(c) Credit risk exposures
At balance date, the maximum exposure to credit risk, excluding the value of any collateral or other security, to recognised financial assets is the carrying amount of those assets, net of any impairment as disclosed in the Statement of Financial Position and Notes to the financial statements.
Credit risk for cash deposits is managed by holding all cash deposits with a selection of major Australia banks.
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 is the net fair value of these contracts.
With the exception of its bankers, the consolidated entity does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the consolidated entity.
The consolidated entity minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with a large number of customers.
95.8% of trade receivables are within approved credit terms (2011: 94.8%)
(d) Liquidity Risk
The consolidated entity's risk management includes maintaining sufficient cash and the availability of funding via an adequate amount of credit facilities as disclosed in note 20(b). All borrowings are less than 6 months.
(e) Fair values
The fair value of financial assets and financial liabilities approximates their carrying amounts as disclosed in the Statement of financial position and Notes to the financial statements. Other derivative instruments in relation to forward exchange contracts have been recognised at fair value through the profit and loss.
| Consolidated Entity | ||
|---|---|---|
| 2012 (\$000's) |
2011 (\$000's) |
|
| 4. Revenue | ||
| Revenues from continuing operations: | ||
| Revenue from sale of goods | 1,518,507 | 1,563,634 |
| Other Income | ||
| Interest received or due and receivable from other persons | 6,522 | 6,083 |
| Bad debts recovered | 773 | 551 |
| 7,295 | 6,634 | |
| Total revenues from continuing operations | 1,525,802 | 1,570,268 |
| 5. Profit from Continuing Operations | ||
| Profit from continuing operations before income tax has been determined after the following specific expenses: |
||
| Cost of goods sold | 1,034,264 | 1,071,144 |
| Foreign currency loss | 1,554 | 2,849 |
| 1,035,818 | 1,073,993 | |
| Bad debts written off: | ||
| Trade Debtors | 2,778 | 2,356 |
| Depreciation: | ||
| Buildings | 4,193 | 4,098 |
| Motor vehicles | 7,251 | 6,524 |
| Fixtures, fittings and equipment | 21,554 | 18,997 |
| Employee benefits expense: | ||
| Wages and salaries | 155,206 | 149,572 |
| Superannuation costs | 12,041 | 12,285 |
| Other expense items: | ||
| Operating lease rentals | 24,888 | 23,408 |
| Consolidated Entity | ||
|---|---|---|
| 2012 (\$000's) |
2011 (\$000's) |
|
| 6. Income Tax | ||
| (a) The components of tax expense: | ||
| Current tax | 50,618 | 54,031 |
| Deferred tax | (957) | (1,650) |
| Under(over) provision in prior years | 66 | 48 |
| Income tax expense | 49,727 | 52,429 |
| (b) The prima facie tax payable on profit before income tax is reconciled to the income tax expense as follows: |
||
| At the statutory income tax rate of 30% (2011: 30%) | 48,902 | 51,312 |
| Tax effect of amounts which are not deductible in calculating taxable income: | ||
| Non-deductible expenditure | 759 | 1,069 |
| Underprovision in prior year | 66 | 48 |
| Income tax expense | 49,727 | 52,429 |
| (c) Deferred tax asset relates to the following: | ||
| Employee benefits | 9,705 | 8,997 |
| Other provisions | 6,029 | 5,895 |
| Depreciation of buildings & rental incentives | 9,304 | 9,189 |
| 25,038 | 24,081 | |
| Movement in deferred tax asset: | ||
| Balance at beginning of year | 24,081 | 22,431 |
| Movement to the statement of financial position | 957 | 1,650 |
| Balance at the end of the year | 25,038 | 24,081 |
| Current tax liability | ||
| Balance at beginning of the year | 18,263 | 14,562 |
| Current tax | 50,618 | 54,031 |
| Tax instalments paid | (56,713) | (50,378) |
| (Over)/under provision | 66 | 48 |
| Balance at the end of the year | 12,234 | 18,263 |
| Deferred tax asset not brought to account | ||
| Deferred tax asset relating to tax losses at 30% (2011: 30%) | 2,266 | 1,955 |
The deferred tax asset not brought to account relates to a foreign subsidiary and will only be obtained if:
(i) the subsidiary derives future assessable income of a nature and an amount sufficient to enable the benefit to be realised; and
(ii) the subsidiary continues to comply with the conditions for deductibility imposed by the law; and
(iii) no changes in tax legislation adversely affect the subsidiary in realising the benefit.
| Consolidated Entity | ||
|---|---|---|
| 2012 (\$000's) |
2011 (\$000's) |
|
| 7. Dividends on Ordinary Shares | ||
| The following are the dividends paid and/or proposed for the financial year: | ||
| In respect of the previous financial year: | ||
| Final dividend of 40 cents per share paid 27 October 2011 (fully franked to 30%) | 39,840 | 37,848 |
| In respect of the current financial year: | ||
| Interim dividend of 21 cents per share paid 21 March 2012 (fully franked to 30%) | 20,916 | 20,916 |
| Dividend declared to be paid 25 October 2012 (40 cents per share fully franked) | 39,840 | 39,840 |
| 60,756 | 60,756 | |
| Dividend franking account | ||
| Balance of franking account at year end adjusted for franking credits arising from payment of income tax and franking debits arising from dividends paid. |
338,692 | 314,107 |
| Impact on the franking account of dividends recommended by the directors since the year end but not recognised as a liability at year end. |
(17,074) | (17,074) |
| 321,618 | 297,033 | |
| 8. Cash and Cash Equivalents | ||
| Cash on hand | 171 | 166 |
| Cash on deposit | 166,587 | 134,020 |
| 166,758 | 134,186 | |
| 9. Receivables | ||
| Current | ||
| Trade receivables | 218,827 | 234,959 |
| Less: Provision for doubtful debts | (4,979) | (4,979) |
| 213,848 | 229,980 | |
| Other debtors and prepayments | 16,400 | 16,277 |
| 230,248 | 246,257 | |
| 10. Inventories | ||
| Finished goods, at lower of costs or net realisable value | 212,624 | 212,481 |
| Consolidated Entity | ||
|---|---|---|
| 2012 (\$000's) |
2011 (\$000's) |
|
| 11. Property, Plant and Equipment | ||
| Freehold land at cost | 111,493 | 102,209 |
| Freehold buildings at cost | 112,331 | 108,400 |
| Less: Accumulated depreciation | (45,090) | (41,208) |
| 67,241 | 67,192 | |
| Fixtures, fittings and equipment at cost | 265,086 | 224,393 |
| Less: Accumulated depreciation | (107,665) | (86,097) |
| 157,421 | 138,296 | |
| Motor vehicles at cost | 66,131 | 60,904 |
| Less: Accumulated depreciation | (28,088) | (27,589) |
| 38,043 | 33,315 | |
| Total property, plant and equipment | 374,198 | 341,012 |
Reconciliations of the carrying amounts of property, plant and equipment at the beginning and end of the current financial year.
| Freehold land | ||
|---|---|---|
| Carrying amount at beginning of year | 102,209 | 86,936 |
| Additions | 9,474 | 15,290 |
| Disposals | (190) | (17) |
| Carrying amount at end of year | 111,493 | 102,209 |
| Buildings | ||
| Carrying amount at beginning of year | 67,192 | 61,575 |
| Additions | 4,424 | 9,715 |
| Disposals | (182) | - |
| Depreciation | (4,193) | (4,098) |
| Carrying amount at end of year | 67,241 | 67,192 |
| Fixtures, fittings & equipment | ||
| Carrying amount at beginning of year | 138,296 | 128,146 |
| Additions | 40,696 | 29,147 |
| Disposals | (17) | - |
| Depreciation | (21,554) | (18,997) |
| Carrying amount at end of year | 157,421 | 138,296 |
| Motor vehicles | ||
| Carrying amount at beginning of year | 33,315 | 31,389 |
| Additions | 15,672 | 11,666 |
| Disposals | (3,693) | (3,216) |
| Depreciation | (7,251) | (6,524) |
| Carrying amount at end of year | 38,043 | 33,315 |
12. Current Value of Land and Buildings
A Directors' valuation of land and buildings was undertaken on 30 June 2012. In their valuation, the directors took account of independent valuations previously completed over the last 3 years. As at 30 June 2012, the directors' assessment of the current market value of land and buildings based on continuing use is \$278,879,044. The Company has not provided any land or buildings as security.
| Consolidated Entity | ||
|---|---|---|
| 2012 (\$000's) |
2011 (\$000's) |
|
| 13. Payables | ||
| Current | ||
| Trade payables | 229,898 | 229,251 |
| Non Current | ||
| Other | 4,762 | 5,122 |
| 14. Short Term Borrowings Current |
||
| Bank overdraft secured by guarantee from Reece Australia Limited | 600 | 582 |
| Multi-Currency Cash Advance | 8,418 | 7,720 |
| 9,018 | 8,302 | |
| 15. Provisions | ||
| Current | ||
| Employee benefits | 30,122 | 28,251 |
| Warranty | 2,200 | 2,200 |
| Other | 750 | 500 |
| 33,072 | 30,951 | |
| Non-current | ||
| Employee benefits | 2,241 | 1,742 |
| Aggregate employee benefits liability | 32,363 | 29,993 |
| Number of employees at year end | 3,025 | 3,074 |
| 16. Other Current Liabilities | ||
| Amounts owing under contract | 10,694 | 10,069 |
| 17. Contributed Equity | ||
| Issued and paid up capital | ||
| Ordinary shares fully paid (99,600,000 ordinary shares) | 9,960 | 9,960 |
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held.
At shareholder's meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.
When managing capital, management's objective is to ensure the consolidated entity continues as a going concern as well as to maintain returns to shareholders and benefits for other stakeholders. This is achieved through the monitoring of historical and forecast performance and cash flows.
During 2012, management paid /declared dividends of \$60.8m (2011: \$60.8m).
Management manages capital through the gearing ratio (net debt / total capital). The policy for the consolidated entity's gearing ratio is less than 40%.
| Consolidated Entity | |
|---|---|
| 2012 | 2011 (\$000's) |
| 461 | 461 |
| 51 | 51 |
| 2,491 | 2,491 |
| (436) | (542) |
| 2,567 | 2,461 |
| 641,896 | 582,049 |
| 113,280 | 118,611 |
| (60,756) | (58,764) |
| 694,420 | 641,896 |
| 113,280 | 118,611 |
| 273 | 754 |
| 32,998 | 29,619 |
| (75) | 287 |
| 2,621 | 1,945 |
| 149,097 | 151,216 |
| 16,132 | (12,138) |
| (123) | (2,286) |
| (143) | (10,320) |
| (1,424) | 7,309 |
| (6,029) | 3,701 |
| (957) | (1,650) |
| 156,553 | 135,832 |
| (\$000's) |
| Consolidated Entity | |||
|---|---|---|---|
| 2012 (\$000's) |
2011 (\$000's) |
||
| 20. Cash Flow Information (cont'd) | |||
| (b) Financing facilities | |||
| Bank Loans and Overdraft | |||
| Bank facilities are secured by Deed of Negative Pledge which includes the following financial covenants; shareholder equity, interest cover ratio and gearing ratio |
|||
| The consolidated entity has access to the following lines of credit: | |||
| Total facilities available and unused at 30 June 2012 | |||
| Bank Overdraft | - facility | 783 | 772 |
| - unused | 174 | 190 | |
| Uncommitted Placement Line | - facility | 25,000 | 25,000 |
| - unused | 25,000 | 25,000 | |
| Multi-Currency Multi-Jurisdictional | - facility | 15,000 | 50,000 |
| - unused | 6,582 | 42,509 | |
| Bank Guarantees | - facility | 5,000 | 5,000 |
| - unused | 755 | 802 | |
| Trade Refinance & documentary letters of credit/surrenders | - facility | 7,000 | 7,000 |
| - unused | 3,982 | 3,747 | |
| Credit cards | - facility | 3,396 | 3,393 |
| - unused | 2,821 | 2,777 | |
| Total | - facility | 56,179 | 91,165 |
| - unused | 39,314 | 75,025 |
21. Commitments
Future operating lease rentals not provided for and payable in respect of:
| Buildings | 165,037 | 140,928 |
|---|---|---|
| Equipment | 385 | 1,067 |
| 165,422 | 141,995 | |
| Due not later than one year | 28,280 | 26,143 |
| Due later than one year but not later than five years | 82,418 | 76,705 |
| Due later than five years | 54,724 | 39,147 |
| 165,422 | 141,995 |
Commitment for future purchases and development of property is stated in Note 16
22. Earnings per Share
| Earnings used in calculating basic and diluted earnings per share. |
113,280,228 | 118,610,998 |
|---|---|---|
| Weighted average number of ordinary shares outstanding during the year used in the calculation of basic and diluted earnings per share. |
99,600,000 | 99,600,000 |
| The earnings per share has been calculated on the weighted average of share capital during the year. |
114 cents | 119 cents |
| Consolidated Entity | ||
|---|---|---|
| 2012 (\$000's) |
2011 (\$000's) |
|
| 23. Auditors' Remuneration | ||
| Amounts received or due and receivable by Pitcher Partners for: | ||
| An audit or review of the financial report of the entity and any other entity in the consolidated entity | 462 | 436 |
| Taxation services | 8 | 29 |
| Other assurance services | 23 | 82 |
| 493 | 547 |
24. Related Party Disclosures
(a) Directors
The names of each person holding the position of Director of Reece Australia Limited during the financial year were
L.A. Wilson, B.W.C. Wilson, J.G. Wilson, P.J. Wilson,
R.G. Pitcher and A.T. Gorecki. Senior management was G.W. Street.
Short-term employee benefits of \$5,069,657 (2011: \$5,654,051) and post-employment benefits of \$133,750 (2011: \$133,750) were made to the directors and senior manager.
Apart from the details disclosed in this note, no director or senior manager has entered into a material contract with the Company or the consolidated entity since the end of the previous financial year and there were no material contracts involving directors' or senior manager interests existing at year end.
Directors of the Company, Messrs L.A. Wilson, B.W.C. Wilson and J. G. Wilson have a beneficial interest in an entity that sold plumbing and building supplies to the consolidated entity. All dealings are in the ordinary course of business and on normal terms and conditions no more favourable than those which it is reasonable to expect would have been accepted if dealing at arms length in the same circumstances. Goods purchased from this entity during the year total \$4,487,631 (2011 \$5,100,328) of which \$338,151 (2011 \$452,936) was owing at year end.
Directors of the Company Messrs L.A. Wilson, B.W.C. Wilson and J.G. Wilson have a beneficial interest in entities that lease premises to the consolidated entity. All dealings with these entities are in the ordinary course of business and on normal terms and conditions no more favourable than those which would have been expected if dealing at arms length in the same circumstances. Lease rentals paid to these entities during the year were \$1,078,089 (2011 \$1,056,868).
From time to time, directors and senior manager of the Company or its controlled entities, may purchase goods from the consolidated entity. These transactions are on the same terms and conditions as those entered into by other consolidated entity employees.
(b) Ownership Interests in Related Parties
Details of interests in controlled entities are set out in Note 26.
25. Segment Information
The sole activity of the consolidated entity is the supply of plumbing and bathroom products in Australia and New Zealand. The revenue for the New Zealand operations are not material.
26. Particulars in Relation to Corporations in the Group
| Ownership Percentage 2012 |
Ownership Percentage 2011 |
|
|---|---|---|
| Name of entity | % | % |
| Parent entity Reece Australia Limited | ||
| Controlled entities of Reece Australia Limited | ||
| 1. Reece Pty Ltd | 100% | 100% |
| 2. Plumbing World Pty Ltd | 100% | 100% |
| 3. Reece Project Supply Pty Ltd | 100% | 100% |
| 4. Reece International Pty Ltd | 100% | 100% |
| 5. Reece New Zealand Limited | 100% | 100% |
| Notes (i) Controlled entities 1 to 4 are incorporated in Australia |
(ii) Controlled entity 5 is incorporated in New Zealand
(iii) All shareholdings are of ordinary shares
(iv) Controlled entities 1 to 4 carry on business in Australia only
- (v) Controlled entity 5 carries on business in New Zealand only
- (vi) All corporations financial years end on 30 June
27. Subsequent Events
There has been no matter or circumstance, which has arisen since 30 June 2012, that has significantly affected or may significantly affect:
- (a) the operations, in financial years subsequent to 30 June 2012, of the consolidated entity, or
- (b) the results of those operations, or
- (c) the state of affairs, in financial years subsequent to 30 June 2012, of the consolidated entity.
28. Parent Entity Details
| Consolidated Entity | ||
|---|---|---|
| 2012 (\$000's) |
2011 (\$000's) |
|
| (a) Summarised statement of financial position | ||
| Assets | ||
| Current Assets | - | - |
| Non-current Assets | 25,354 | 25,354 |
| Total Assets | 25,354 | 25,354 |
| Liabilities | ||
| Current Liabilities | 13,831 | 13,831 |
| Non-current Liabilities | - | - |
| Total Liabilities | 13,831 | 13,831 |
| Net Assets | 11,523 | 11,523 |
| Equity | ||
| Contributed equity | 9,960 | 9,960 |
| Retained earnings | 1,526 | 1,526 |
| Reserves | 37 | 37 |
| Total Equity | 11,523 | 11,523 |
| (b) Summarised statement of comprehensive income | ||
| Profit for the year | 60,756 | 58,764 |
| Other comprehensive income for the year payable | - | - |
| Total comprehensive income for the year | 60,756 | 58,764 |
| (c) Parent entity guarantees | ||
| Bank Overdraft | 600 | 582 |
(d) The final dividend declared to be paid on 25 October 2012 as per note 7 shall be funded by way of a fully owned subsidiary.
Directors' Declaration
The directors declare that the financial statements and notes set out on pages 14 to 33 in accordance with the Corporations Act 2001:
- (a) Comply with Accounting Standards and the Corporations Regulations 2001, and other mandatory professional reporting requirements;
- (b) As stated in Note 1(a) the consolidated financial statements also comply with International Financial Reporting Standards; and
- (c) Give a true and fair view of the financial position of the consolidated entity as at 30 June 2012 and of its performance for the year ended on that date.
In the directors' opinion there are reasonable grounds to believe that Reece Australia Limited will be able to pay its debts as and when they become due and payable.
This declaration has been made after receiving the declarations required to be made by the chief executive officer and chief financial officer to the directors in accordance with sections 295A of the Corporations Act 2001 for the financial year ending 30 June 2012.
This declaration is made in accordance with a resolution of the directors.
Dated at Melbourne on 30 August 2012.
L. A. Wilson P.J. Wilson
Executive Chairman Chief Executive Officer
Independent Auditors' Report
An independent Victorian Partnership ABN 27 975 255 196
We have audited the accompanying financial report of Reece Australia Limited and controlled entities, which comprises the consolidated statement of financial position as at 30 June 2012, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during the financial year.
Directors' Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.
Auditors' Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditors' Opinion
In our opinion:
- (a) the financial report of Reece Australia Limited is in accordance with the Corporations Act 2001, including:
- (i) giving a true and fair view of the consolidated entity's financial position as at 30 June 2012 and of its performance for the year ended on that date; and
- (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
- (b) the consolidated financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages pages 11 to 12 of the directors' report for the year ended 30 June 2012. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditors' Opinion
IIn our opinion, the Remuneration Report of Reece Australia Limited and controlled entities for the year ended 30 June 2012 complies with section 300A of the Corporations Act 2001.
Partner Melbourne 30 August 2012
D. A. KNOWLES PITCHER PARTNERS
Liability limited by a scheme approved under Professional Standards Legislation Pitcher Partners, including Johnston Rorke, is an association of independent firms Melbourne | Sydney | Perth | Adelaide | Brisbane An independent member of Baker Tilly International In accordance with Section 4.10 of the Australian Stock Exchange Limited Listing Rules, the directors provide the following information.
Shareholding Analysis
(a) Distribution of shareholders
At 13 August 2012, the distribution of shareholdings was as follows:
| Size of Shareholding | Number of Shareholders |
|---|---|
| 1 – 1,000 | 691 |
| 1,001 – 5,000 | 352 |
| 5,001 – 10,000 | 70 |
| 10,001 – 100,000 | 119 |
| Over 100,000 | 37 |
| Holdings of less than a marketable parcel |
0 |
(b) Substantial shareholdings
The number of shares held by the substantial shareholders listed in the Company's register of substantial shareholders as at 13 August 2012 were:
| Shareholder | Number of Shares |
|---|---|
| Waln Pty Ltd | 42,465,320 |
| W.A.L. Investments Pty Ltd | 41,931,320 |
| Leslie Alan Wilson | 66,625,820 |
| Wilgay Pty Ltd | 42,465,320 |
| J.G.W. Investments Pty Ltd | 42,465,320 |
| John Gay Wilson | 67,438,320 |
| Lezirol Pty Ltd | 42,465,320 |
| Florizel Investments Pty Ltd | 41,931,320 |
| Bruce Walter Campbell Wilson | 66,508,320 |
| Adawarra Nominees Pty Ltd | 55,479,000 |
| Warramunda Investments Pty Ltd | 55,479,000 |
| L.T.W. Holdings Pty Ltd | 53,169,000 |
| L.T. Wilson Pty Ltd | 38,571,000 |
| Wilaust Holdings Pty Ltd | 38,571,000 |
| Austral Hardware Pty Ltd | 38,571,000 |
| Austral Hardware (Healesville) Pty Ltd | 38,571,000 |
| Tyara Pty Ltd | 42,465,320 |
| Wal Assets Pty Ltd | 42,465,320 |
| Abtourk Vic No. 11 Pty Ltd | 42,465,320 |
| Perpetual Trustees Australia Limited | 13,817,545 |
(c) Class of shares and voting rights
At 13 August 2012, there were 1,269 holders of ordinary shares of the Company. All of the issued shares in the capital of the parent entity are ordinary shares and each shareholder is entitled to one vote per share.
(d) Twenty largest shareholders, as at 13 August 2012:
| Shareholder | Number of Shares |
% Held |
|---|---|---|
| L.T. Wilson Pty Ltd | 31,440,000 | 31.6% |
| L.T.W. Holdings Pty Ltd | 12,000,000 | 12.1% |
| Warramunda Investments Pty Ltd | 9,729,000 | 9.8% |
| RBC Investor Services Australia Nominees Pty Ltd (PI Pooled A/C) |
8,896,793 | 8.9% |
| Florizel Investments Pty Ltd | 3,360,320 | 3.4% |
| W.A.L. Investments Pty Ltd | 3,360,320 | 3.4% |
| J.G.W. Investments Pty Ltd | 3,360,320 | 3.4% |
| Austral Hardware Pty Ltd | 2,985,000 | 3.0% |
| Austral Hardware (Healesville) Pty Ltd | 2,400,000 | 2.4% |
| Adawarra Nominees Pty Ltd | 2,310,000 | 2.3% |
| Wilaust Holdings Pty Ltd | 1,746,000 | 1.8% |
| Citicorp Nominees Pty Ltd (Colonial First State Inv A/C) |
1,441,732 | 1.5% |
| UBS Nominees Pty Ltd | 1,288,805 | 1.3% |
| RBC Investor Services Australia Nominees Pty Ltd (PIIC A/C) |
1,212,312 | 1.2% |
| J P Morgan Nominees Australia Limited | 953,457 | 1.0% |
| John G. Wilson | 934,000 | 0.9% |
| BNP Paribas Noms Pty Ltd |
911,592 | 0.9% |
| National Nominees Limited | 776,346 | 0.8% |
| Citicorp Nominees Pty Limited | 621,529 | 0.6% |
| Argo Investments Limited | 583,006 | 0.6% |
The twenty members holding the largest number of shares together held a total of 90.7% of the issued capital.
Note: Many of these substantial shareholdings relate to the same shares.
