Annual Report 2017 - Amazon Web Services

2017

ANNUAL REPORT

FY17 PERFORMANCE HIGHLIGHTS

REVENUE

$446.3 million

Revenue 2% to $446.3 million ahead of market growth with margin expansion delivering solid net profit and earnings growth Bathrooms & Kitchens revenue 3% Door & Access Systems revenue 2%

EARNINGS Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)

2% to $86.2 million

NET PROFIT

$53.7 million

Net Profit After Tax (NPAT) 3% to $53.7 million

FINANCIAL POSITION Strong financial position with net debt 10% and credit metrics continue to improve supporting growth plans

RETURN Return on Funds Employed (ROFE) 0.9pp to 20.2%

Earnings Before Interest and Tax (EBIT)

3% to $80.6 million

Bathrooms & Kitchens EBIT 4% Door & Access Systems EBIT 14%

STRATEGY

Continued progress on strategy to deliver stronger platform to manage through the market cycle

Earnings per share 7% to 20.3 cents per share

Note: All references are to continuing operations which excludes Gliderol which was sold on 31 July 2015. All comparisons are to the year ended 30 June 2016 (FY16) unless otherwise stated.

FINAL DIVIDEND

Fully-franked final dividend of 9 cents per share, bringing the FY17 full year dividend to 16.5 cents per share fully-franked 10%

CONTENTS

Five Year Financial Summary

1

GWA Door & Access Systems

12

Company Profile

2

Board of Directors

13

Strategic Summary

3

Directors' Report

15

Chairman's Review

4

Financial Report

32

Managing Director's Review of Operations

7

Other Statutory Information

77

Health and Safety

10

Shareholder Information

78

GWA Bathrooms & Kitchens

11

4 | GWA GROUP LIMITED | 2017 ANNUAL REPORT

FIVE YEAR FINANCIAL SUMMARY

Continuing operations Revenue from continuing operations Earnings before interest, tax, depreciation, amortisation (EBITDA) and significant items(3) EBITDA margin (%) Depreciation and amortisation Earnings before interest, tax (EBIT) and significant items(3) EBIT margin (%) Interest (net) Normalised profit before tax(3) (%) Tax expense Effective tax rate (%) Normalised profit after tax(3) Significant items after tax Net profit after tax from continuing operations Profit / (loss) from discontinued operations (net of income tax) Net profit / (loss) after tax for the period

Net cash from operating activities Capital expenditure Net debt(4) Shareholders' equity

2012/13(1) $'000

565,365

2013/14(1) $'000

399,394

2014/15(1) $'000

426,218

2015/16(1) $'000

439,666

2016/17 $'000

446,332

87,168 15.4

(20,398) 66,770

11.8 (13,324) 53,446

9.5 (14,115)

26.4 39,331 (6,941) 32,390

? 32,390

76,819 19.2

(12,328) 64,491

16.1 (11,201) 53,290

13.3 (15,452)

29.0 37,838 (6,664) 31,174 (12,578) 18,596

81,734 19.2

(8,970) 72,764

17.1 (7,329) 65,435

15.4 (20,278)

31.0 45,157 (34,796) 10,361 (26,544) (16,183)

84,250 19.2

(5,985) 78,265

17.8 (6,508) 71,757

16.3 (19,837)

27.6 51,920

? 51,920

1,761 53,681

86,156 19.3

(5,562) 80,594

18.1 (5,338) 75,256

16.9 (21,585)

28.7 53,671

? 53,671

? 53,671

63,349 14,703 162,243 426,742

33,898 5,570

149,385 425,989

43,505 5,062

94,763 305,894

54,924 3,628

88,420 307,698

57,171 5,281

79,756 320,603

Other Ratios and Statistics Interest cover (times)(7) Gearing: net debt / (net debt + equity) (%)(4) Return on shareholders' equity (%) Dividend payout ratio (%)(6) Dividend per share (cents)(8) Franking (%) Capital return (cents)(5) Share price (30 June) ($) Dividend yield at 30 June share price (%) Number of employees

6.5

8.5

12.8

14.3

17.1

27.5

26.1

23.7

22.3

19.9

7.6

4.4

(5.3)

17.4

16.7

113.2

90.3

?

81.4

81.1

12.0

5.5

6.0

16.0

16.5

100

100

76.7

100

100

?

?

22.8

?

-

2.40

2.63

2.28

2.09

3.15

5.0

2.1

2.6

7.7

5.2

1,680

1,681

1,183

876

760

Basic earnings per share (cents) ? Group Basic earnings per share (cents) ? Continuing Normalised earnings per share (cents) ? Continuing(2)

10.6

6.1

(5.3)

19.7

20.3

10.6

10.2

3.4

19.0

20.3

12.9

12.4

14.8

19.0

20.3

(1) During the year ended 30 June 2016, the Gliderol business was sold with an effective date of 31 July 2015. During the year ended 30 June 2015, the Dux Hot Water Business was sold with an effective date of 19 December 2014 and the Brivis heating & Cooling business was sold with an effective date of 2 February 2015. Accordingly, the operating activities of Gliderol, Dux and Brivis were classified as discontinued operations in FY16 and FY15 and presented separately from the results of continuing operations. The FY14 results have been re-presented to be comparable with FY16 and FY15. FY13 has not been re-presented and includes the operating activities of Gliderol, Dux and Brivis as part of continuing operations.

(2) Excludes significant items. (3) Normalised profit before significant items is a non-IFRS financial measure reported to provide a greater understanding of the underlying business performance of the Group. The

disclosures are extracted or derived from the FY13-FY15 financial reports and have not been subject to review or audit. The non-IFRS financial measures included in this table exclude significant items that are detailed in the FY13-FY15 financial reports. (4) Net debt reflects the Group's borrowings and bank guarantees less cash (including cash classified within assets held for sale at 30 June 15). (5)A capital return of 22.8 cents per share and a special dividend of 6.0 cents per share from the Brivis and Dux net sale proceeds were paid to shareholders on 15 June 2015. (6) Dividend payout ratio is calculated as the Dividend per share (cents) divided by the Basic EPS for the Group (cents). Basic EPS is calculated using the weighted average number of ordinary shares at 30 June. (7) Interest cover (times) is calculated using EBITDA excluding non-recurring other significant items divided by net interest expense. (8) Dividend per share includes ordinary and special dividends.

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COMPANY PROFILE

GWA Group Limited (GWA) listed on the Australian Securities Exchange in May 1993 and is a leading Australian supplier of building fixtures and fittings to households and commercial premises. The Group has sales and distribution facilities located across Australia and a branch office in New Zealand. GWA is a member of the ASX 200 index of listed Australian companies.

GWA operates a central-led business with corporate functions supporting two business divisions focused on customers in their target market segments. GWA's business divisions currently comprise:

GWA Bathrooms & Kitchens is Australia's foremost designer, importer and distributor of iconic brands and products, servicing and enhancing residential and commercial bathrooms and kitchens across Australia and New Zealand. The product range is distributed under Australian brands including Caroma, Clark, Dorf, Fowler, Stylus and international brands including Schell, EMCO, Virtu and Sanitron.

GWA Door & Access Systems is a leading Australian designer, manufacturer, importer and distributor of a comprehensive range of access and security systems and door hardware for use in residential and commercial premises. The product range is distributed under Australian brands including Gainsborough, Trilock, TradePro, Austral Lock and international brands including Salto, Lorient and Eco Schulte.

GWA Door & Access Systems was expanded in 2012 to include API Locksmiths which is an Australian supplier of security and access control systems and locksmithing services to major commercial enterprises.

GWA has grown since listing as a result of the strong performance of the core building fixtures and fittings businesses and through successful acquisitions. The Group remains committed to growing shareholder wealth through organic growth initiatives in target market segments and acquisitions that add value to its core businesses by supporting expansion into new markets or providing access to new products and solutions.

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STRATEGIC SUMMARY

OUR MISSION

To build GWA as the most trusted and respected company in the building sector

OUR PURPOSE

Making life better

with simple, superior water solutions

Bathrooms & Kitchens

with a superior range of access and security systems

Door & Access Systems

GWA OPERATIONAL MEASURES

Market share, NSV, EBIT, ROFE, DIFOT, NPS, Safety, Engagement

CORPORATE PRIORITIES

Leverage and build on core assets & brands to drive revenue and market share growth

Add value to customers through improved insights, analytics and processes

Build "fit for future" culture, engagement and capability

Build an advantaged Supply Chain to deliver superior NPD, Quality and Service at best cost

Drive cost out in SG&A and Supply Chain to improve profitability and allow selective reinvestment

MAXIMISE SHAREHOLDER VALUE CREATION

Key Financial Measures ? NPAT Growth, TSR, ROFE

We are empowered to make a difference

OUR CULTURAL PILLARS

We strive to be the best

We collaborate to achieve goals

We are customer focused and consumer driven

We care for each other

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