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GWA INTERNATIONAL LIMITED 2003/04 ANNUAL REPORT

COMPANY PROFILE

GWA International Limited listed on the Australian Stock Exchange in May 1993,and is one of Australia’s largest designers, manufacturers, importers and distributorsof household consumer products. The company has more than 2,500 employeeswith manufacturing facilities throughout Australia and overseas.

GWA International Limited currently comprises six business divisions, Caroma, DorfClark, Dux, Gainsborough, Rover and Sebel, all of which are well-establishedbusinesses with strong brand names and market positions.

Caroma is Australia’s foremost designer, manufacturer, importer and distributorof domestic and commercial sanitaryware and bathroom products. Caroma is atthe forefront of product innovation and is the market leader in reduced flush waterefficient sanitaryware.

Dorf Clark is Australia’s principal designer, manufacturer, importer and distributorof tapware and associated accessories, stainless steel sinks and laundry tubs forboth domestic and commercial applications.

Dux is a major Australian designer, manufacturer and distributor of a range of gasand electric mains pressure hot water storage units for domestic applications. Duxalso imports and distributes domestic and commercial instantaneous hot watersystems and solar heating products.

Gainsborough is a leading Australian designer, manufacturer, importer anddistributor of a comprehensive range of domestic and commercial door hardwareand fittings, including security products.

Rover is one of Australia’s leading designers, manufacturers and distributors ofdomestic and commercial lawn and garden care equipment.

Sebel is at the forefront of Australian design, manufacture and distribution ofquality commercial furniture and seating.

GWA International Limited has grown significantly sincelisting as a result of the strong operating performance ofthe businesses and successful acquisitions. The companyremains committed to growth through maximising businessperformance and the pursuit of further appropriatedomestic acquisition opportunities.

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CONTENTS

Performance 1Highlights

Strategic Direction 2and BusinessDivisions

Chairman’s Review 4

Managing 6Director’s Reviewof Operations

Board of Directors 12

Corporate 13Governance

Directors’ Report 20

Financial 25Statements

Other Statutory 63Information

Shareholder 64Information

Corporate Directory insideback cover

Head Office insideLocations back cover

ABN 15 055 964 380

GWA INTERNATIONAL LIMITED 2003/04 ANNUAL REPORT

page #

P E R F O R M A N C E H I G H L I G H T S 1

Performance HighlightsPerformance Highlights

Earnings per share increased by 12.6% to 22.3 centsFully franked dividend of 20.5 cents (including 2.5 cents special)Net operating profit after tax increased by 12.8% to $62.05 millionOperating revenue increased by 1.6% to $677.3 million

1999/00 2000/01 2001/02 2002/03 2003/04$’000 $’000 $’000 $’000 $’000

Operating revenue 607,897 570,072 615,843 666,525 677,393

Earnings before depreciation, interest and tax 109,448 103,137 108,527 118,978 130,025(%) 18.0 18.1 17.6 17.9 19.2

Depreciation and amortisation 26,450 26,924 28,812 28,034 30,549Earnings before interest and tax 82,998 76,213 79,715 90,944 99,476(%) 13.7 13.4 12.9 13.6 14.7Interest 12,042 13,305 13,070 12,368 11,075

Operating profit before tax 70,956 62,908 66,645 78,576 88,401(%) 11.7 11.0 10.8 11.8 13.1

Tax expense 29,555 21,457 19,995 23,569 26,348(%) 41.7 34.1 30.0 30.0 29.8

Operating profit after tax 41,401 41,451 46,650 55,007 62,053

Net cash flow provided from operating activitiesbefore debt cost and tax 98,569 78,719 116,807 128,200 162,104

Capital expenditure 30,144 24,550 32,976 24,392 20,579Research and development 5,558 5,228 5,064 5,770 5,485Net debt 201,571 237,759 229,435 207,678 159,451

Shareholders’ equity 387,473 386,058 387,849 413,787 428,178

Other Ratios and Statistics

Return on shareholders’ equity % 10.7 10.7 12.0 13.3 14.5Interest cover times 6.9 5.7 6.1 7.4 9.0Net debt/equity % 52.0 61.6 59.2 50.2 37.2Earnings per share cents 15.1 15.0 16.8 19.8 22.3Ordinary dividend per share cents 13.0 13.5 14.5 15.5 18.0Special dividend per share cents 5.0 2.5 2.5 2.5 2.5Total dividend per share cents 18.0 16.0 17.0 18.0 20.5Franking % 100 100 100 100 100Ordinary dividend payout ratio % 86.1 90.0 86.3 78.3 80.7Share price (30 June) $ 2.20 2.35 2.35 2.70 2.95Dividend yield % 8.2 6.8 7.2 6.7 6.9

FIVE YEAR FINANCIAL SUMMARY

Vitreous china suites, urinals, bidets and basins. Plastic cisterns,

basins, bathroom accessories and fittings. Acrylic and pressed

steel spas, baths and shower trays

Tapware, stainless steel sinks and laundry tubs

Dux is an Australian designer, manufacturer and distributor of

a range of gas and electric mains pressure hot water storage

units ranging in size from 25 litres to 400 litres. The range also

includes temperature controlled gas instantaneous hot water

systems and solar heating products

A comprehensive range of door hardware comprising door

handles (knobs and levers), door locks, door closers, hinges and

other metal door accessories

Sebel produces a broad range of commercial furniture suited

to its target markets. The range includes dining seating and

tables, outdoor furniture, mass seating for stadia and public

areas, casual corporate markets, and tables, desks and chairs

for the education market

Range of walk-behind and ride-on mower equipment, grass

trimmers, garden chip and shred products and spare parts

GWA International Limited is committed to growing shareholder value over time. Thisobjective will be achieved by continuing to invest in our people, products and technologyto maximise the company’s performance and to create value building opportunities forour businesses.

G W A I N T E R N A T I O N A L L I M I T E D A N N U A L R E P O R T 2 0 0 3 / 0 42

Strategic Direction andBusiness DivisionsStrategic Direction andBusiness Divisions

BrandNames

OperatingLocations

Main Productsand Services

Caroma, Fowler,

Stylus, Wisa,

Starion

Clark, Myttons,

Radiant, Dorf,

Irwell, Epure,

Caroma Taps

Dux

Gainsborough,

Trilock,

Homecraft,

In-Style

Sebel

Rover

Australia, New

Zealand, North

America, Europe

Australia, overseas

distributors

Australia, overseas

distributors

Australia, New

Zealand, export

markets

Australia, New

Zealand,

Singapore, Hong

Kong, United

Kingdom

Australia, New

Zealand, overseas

distributors

BusinessDivisions


S T R A T E G I C D I R E C T I O N & B U S I N E S S D I V I S I O N S 3

MajorMarkets

StrategicDirection

New dwellings, renovation and commercial markets in Australia

and selected markets internationally

Domestic commercial and renovation construction markets, and

export markets primarily in New Zealand and the United States

Dux’s primary market is the replacement of domestic hot water

heaters, while its secondary market is new home construction.

Domestic home builders, DIY and building projects, commercial

buildings and multi-dwelling developments

Entertainment, hospitality, healthcare, public seating, sports

stadia, corporate and educational markets. Sells direct to builders,

developers, clubs and hotels

Domestic, commercial, lawn care and garden products and

equipment, marketed in five continents

Maintain leadership in the domestic market through design,

service and innovation, and develop an international business

through brand development

Dorf Clark’s primary focus is to expand its product range and

improve operational effectiveness and productivity

Dux will continue to focus on improving business performance

by strengthening key customer relationships and improving

plant performance through investment in manufacturing

technologies to reduce costs

Gainsborough’s strategic direction encompasses the development

of additional door hardware products to suit domestic buildings,

continued development of commercial markets and development

of export growth

As well as its strong emphasis on new product development,

Sebel will continue to pursue traditional markets using its strong

brand name and good customer service to drive sales through

increased market share. Current export markets will also be

expanded, with the division pursuing opportunities in education

and stadia markets overseas

Targeting market growth segments in Australia and overseas

The company’s priority is to acquire another major domesticbusiness division, and to also pursue bolt-on acquisitionopportunities that add value to our existing businesses andsupport our expansion into new markets.

2003/04 Year Result

I am pleased to report that the2003/04 year net profit after tax forGWA International Limited was anotherrecord for the company, following onfrom the previous year’s recordperformance. In favourable domesticmarket conditions for most of thecompany’s businesses, sales revenuerose 1.3% to $667.9 million, and thecompany achieved net profit after tax of$62.05 million, a 12.8% increase fromthe previous year.

I congratulate the company’smanagement team and staff on thisoutstanding financial performance. Theresult inspires confidence in the underlyingstrength of the company’s businesses andlays a solid platform for further growthin shareholder value.

The 2003/04 year was the first fullfinancial year under the stewardship ofthe new Managing Director, Mr PeterCrowley, who succeeded the formerManaging Director, Mr Geoff McGrathon 6 May 2003. As demonstrated by therecord result, Mr Crowley has continuedto grow the profitability of the company’sbusinesses through improved businessperformance.

In July 2004, the Board appointed thevery experienced Mr Geoff McGrath as adirector. In the Board’s view, the decisionto appoint Mr McGrath as a director is inthe best interests of the company’sshareholders. Mr McGrath brings to theBoard an outstanding knowledge of thecompany’s businesses and will immediatelyadd value to the company. I welcome MrMcGrath to the Board.

Dividends

Last year, I flagged to shareholders thatthe 2.5 cents special dividend would be

“I am pleased to report that the 2003/04 year net profit aftertax was another record for the company – sales revenuerose 1.3% to $667.9 million, and the company achieved netprofit after tax of $62.05 million, a 12.8% increase fromthe previous year.”


Chairman’sReviewChairman’sReview

incorporated into the ordinary dividendin the coming year. This year, an interimfully franked dividend of 10.0 cents pershare was paid on 1 April 2004 to putthis into effect. Our excellent tradingresults and cash flow have increased bothour cash assets and franking credits atyear end. As the amount of cash andthe balance of franking credits are inexcess of the company’s requirements,the directors have decided to pay a furtherspecial dividend of 2.5 cents per sharefully franked, with the final ordinarydividend of 8.0 cents per share payableon 1 October 2004. This brings the totaldividend per share for the 2003/04 yearto 20.5 cents per share fully franked,representing a 13.9% increase on theprevious year’s total dividend paid(including the special dividend).

Directors will give consideration to afurther special dividend of 2.5 centsper share fully franked, to be paid withthe next interim dividend payable inApril 2005.

The Board’s aim is to continue to growtotal dividends in line with companyprofits, and to distribute to shareholderscash and franking credits excess to thecompany’s needs. We recognise thatdividends are very important to ourshareholders. We are cognisant however,that our shareholders expect the companyto maintain a strong financial position,and to that end we are delighted thatour track record of paying increaseddividends has been achieved against abackground of growing financial strength.

We expect that the company’s level ofdomestic tax payments and franking creditbalance will ensure that future dividendswill continue to be fully franked.

The Dividend Reinvestment Plan andShare Purchase Plan remain suspended.However, the Board will consider there-opening of these Plans when a majoracquisition is undertaken.

Corporate Governance

Since listing in May 1993, the companyhas been successful in growingshareholder value through improvedbusiness performance and acquisitions.Another critical factor in the success ofthe company has been the soundcorporate governance practices whichhave been in place since listing. This hasensured that the company conducts itsbusiness with the utmost integrity in everyaspect of its operations.

The corporate governance practices wereimplemented by the Board, who are longserving members (excluding Mr Crowley,who was appointed on 6 May 2003) withcomplementary skills and experience, andhave an in-depth knowledge of thecompany’s businesses. The Board hasdeveloped succession plans for the futureretirement of individual directors, whilstrecognising the importance of maintainingan efficient and effective Board with theappropriate balance of skills andexperience.

The Board supports the Principles of GoodCorporate Governance and Best Practice

Barry ThorntonChairman


Consistent with the company’s missionstatement, the company continues toinvest in its people, products andtechnology to improve businessperformance and create value buildingopportunities for its businesses. Duringthe year, the company has continued thesearch for appropriate domesticacquisition opportunities, but none todate have met the company’s acquisitioncriteria, and we make no apologies foradhering to the strict financial disciplinewhich has delivered so handsomely forshareholders. The Board re-affirms itscommitment of acquiring another majordomestic business division and to alsopursue bolt-on acquisition opportunitiesto add value to existing businesses andto pursue growth in new markets.

The company has substantial cash flowsfrom its businesses, growing cash assetsand access to significant additionalborrowings to fund new acquisitionopportunities as they arise.

Future

Your Board is committed to growingshareholder value over time. The companywill continue to focus on generatinggrowth through maximising theperformance and profitability of ourcurrent businesses, and through thepursuit of appropriate domestic acquisitionopportunities that fit within the company’sstrategic plans.

B ThorntonChairman

C H A I R M A N ’ S R E V I E W 5

Recommendations of the ASX CorporateGovernance Council. I confirm toshareholders that the corporategovernance practices of the company arein accordance with the best practicerecommendations, and that there are nodepartures to be disclosed to shareholders.The Board is committed to the continualreview and updating of the company’scorporate governance practices to ensurebest practice is maintained. For moredetailed information on the company’scorporate governance practices, I referyou to our Corporate GovernanceStatement.

Directors’Remuneration

At last year’s Annual General Meeting,shareholders approved the terminationof the Directors’ Retirement Scheme forthe non-executive directors, which is inaccordance with the best practicerecommendations of the ASX CorporateGovernance Council. As the Scheme hasbeen terminated, the Board will put toshareholders at the next Annual GeneralMeeting that the accrued benefits underthe former Scheme of in total $1,214,700be paid out to the directors on theirrequest.

The Board will also put to shareholdersat the next Annual General Meetingthat the upper limit of directors’ fees beincreased by $250,000 to $1 million(excluding statutory superannuation).This is necessary for possible new directorappointments in future years in

accordance with the succession plans ofthe Board, including the appointmentof Mr Geoff McGrath to the Board.

For further information on these proposedresolutions, I refer you to the Notice ofAnnual General Meeting which you willhave received with the Annual Report.

Audit Tender

Following on from my announcementat last year’s Annual General Meeting,the Board conducted an audit tenderduring the year. After a comprehensiveaudit tender process, the Board selectedKPMG as the new external auditor,commencing for the financial yearbeginning 1 July 2004, subject toshareholder approval at the nextAnnual General Meeting.

I would like to thank the company’scurrent long serving external auditor,Ernst & Young, for their services andsupport over the last 10 years.

Strategic Direction

The outstanding financial performanceof the company’s businesses, asdemonstrated by the 2003/04 year recordresult, has ensured that a solid platformhas been laid for further growth inshareholder value. Growth will continueto be achieved through improved businessperformance and through appropriatedomestic acquisitions.

PROFIT AFTER TAX

70

60

50

0

$ million

1999/00 2000/01 2001/02 2002/03 2003/04

10

30

2003/04 CASH PAYMENTS (EXCLUDING GST)

61% Payments tosuppliers

1% Interestpayments

Employment 23% costs

Capital 3%expenditure

Dividends 7%

Income tax 5%

The primary objective of GWAInternational Limited is to create andsustain shareholder wealth in the longterm through continuing our investmentin, and sound management of theGroup’s business units. Each of thesebusinesses play significant roles in theirrespective markets and supply productsand services which meet clearly definedcustomer needs.

The Group makes a significantcontribution to the Australian communitythrough the supply of high quality,innovative products with many ofthese products offering water saving,energy conservation and other tangiblebenefits. The Group currently employsapproximately 2,600 staff, in Australiaand overseas, and remitted Australiancompany tax payments of $34.6 millionin the 2003/04 year.

GWA International Limited, since floatingin 1993, has built a diversified portfolioof strong business units, which operateprincipally in Australia. The major businesssegment is Building Fixtures and Fittingswhere Caroma, Dorf Clark, Gainsboroughand Dux have long established and strongmarket positions. This segmentcontributed a further profit increase inthe 2003/04 year benefiting from thehigh level of domestic construction andrenovations and the growing generaleconomy. We believe that demand fromdomestic construction reached the peakof the current cycle in the 2003/04 year.

The Building Fixtures and Fittings segmentcontributed 82.7% of the Group’s totalsales revenue in the 2003/04 year. TheGroup’s other business segments,Commercial Furniture and Domestic andRide-on mowers, contributed 10.2% and7.1% of the Group sales revenue.

“GWA International Limited makes a significant contributionto the Australian community through the supply of highquality, innovative products with many of these productsoffering water saving, energy conservation and othertangible benefits.”


Managing Director’sReview of OperationsManaging Director’sReview of Operations

Record Profit in 2003/04

For the 2003/04 year, the companyachieved a Profit after Tax of$62.05 million, an increase of 12.8%over the prior year. This excellent resultis the third consecutive record profit forGWA International Limited.

Operating Cash Flow

Cash flow management is a key driver ofshareholder wealth and is a major areaof the Group’s focus.

The 2003/04 profit result, together withimproved working capital managementacross the Group’s business units,


Peter CrowleyManaging Director

20

40

M A N A G I N G D I R E C T O R ’ S R E V I E W O F O P E R A T I O N S 7

produced an Operating Cash Flow of$114.7 million a 25.4% increase on theprevious year. Largely as a result of thisfocus on cash flow management ourcash assets increased to $138.4 millionat year end.

The Operating Cash Flow is after thepayment of $37.5 million in income taxes.Of this amount $34.6 million wasAustralian income tax and, consequently,the balance of franking credits hasincreased during the 2003/04 year to$33.2 million ensuring that the companycan maintain its strong track record ofpaying fully franked dividends. Includedin these Australian tax payments were$21 million of company PAYG instalmentsfor the 2003/04 year.

Earnings Per Share

Earnings per share for the 2003/04 yearwas 22.3 cents per share, an increase of12.6% over the prior year’s 19.8 centsper share. Ordinary dividends paid andpayable to shareholders from theseearnings will be 18 cents per share fullyfranked. This compares with the previousyear’s ordinary dividend of 15.5 cents pershare. During the previous year thecompany also paid a 2.5 cent per sharespecial dividend and a further specialdividend of 2.5 cents per share will bepaid with the October 2004 final dividendbringing the total dividend paid out of2003/04 year profits to 20.5 cents pershare fully franked.

Insert Graph 3 Operating Cash Flow and Cash Assets

Insert Graph 4 - EPS

Insert Graph 5 – Dividends

DIVIDENDS

25

15

5

0

Cents per share

2001/02 2002/03 2003/04

Ordinary dividend Special dividend

EARNINGS PER SHARE

25

20

5

0

Cents per share

2001/02 2002/03 2003/04

OPERATING CASH FLOW AND CASH ASSETS

150

100

50

0

$ million

1999/00 2000/01 2001/02 2002/03 2003/04

Operating cash flow Cash assets

15

10

10

125

75

25

20

Operating Performance

The Group’s largest activity segment,Building Fixtures and Fittings, realised theopportunities of peak demand from thedomestic construction market to achievea further increase in segment profit to$102.2 million an increase of 6.7% overthe prior year.

The segment sales revenue and profit foreach of the Group’s business segmentsare set out in the table right:

The Group’s Building Fixtures and Fittingssegment is comprised of Caromasanitaryware, Dorf Clark taps and sinks,Gainsborough door furniture and Duxwater heaters. Each business has a strongmarket position with Caroma and DorfClark being market leaders. Each division’sprincipal markets are Australia and NewZealand. The businesses have anexpanding group of overseas distributorsin Asia, North America and Europe.

In the 2003/04 year, the Australianconstruction market reached the peak ofthe current domestic construction cyclewith the Group’s businesses experiencingstrong domestic demand from thedwelling, non-dwelling, renovation andreplacement sectors. The continuinggrowth in the general economyunderpinned this high level of constructionactivity during the year and in particularthe ongoing growth in renovation andreplacement spending.

Caroma was the major contributor ofprofit growth in the Building Fixtures andFittings segment on sales revenue abovethe prior year. The excellent profit resultwas generated from improvedperformance across the operations of thisbusiness coupled with the sustained highdomestic demand. Caroma’s export salesto Asia and North America were adverselyimpacted by the exchange rate whichwas volatile during the year. Caromagenerated an excellent operating cashflow boosted by a reduction in stocks.

“The Group’s largest activity segment, Building Fixturesand Fittings, increased their segment profit to$102.2 million an increase of 6.7% over the prior year.”


Caroma’s European business, Wisa,contributed an improved profit also on amarginal increase in sales revenue.

Dorf Clark performed below expectations,particularly in the first half, with bothsales and profit below the level of theprior year. Business performance, undernew management, has progressivelyimproved in the second half resulting ina higher operating cash flow assisted bya reduction in stock.

The Gainsborough door furniture businessrecorded an increase in sales andcontributed a sound profit result in linewith the prior year. Additional stockprovisioning during the year reduced theprofit result. The USA export marketcontribution was reduced by the higheraverage exchange rate.

The Dux water heaters business produceda good underlying sales and profitperformance, however, the final profit

result was reduced by the $2.3 millionwritedown of plant.

Overall in the 2003/04 year the BuildingFixtures and Fittings segment contributedgrowth in profitability through soundoperating performance, an excellentoperating cash flow and an improvedreturn on segment net assets.

The Commercial Furniture business, Sebel,is the Group’s largest exporter, and thehigher Australian dollar exchange ratewith the US dollar adversely impactedsales and margins in its North Americanand Asian markets. The domestic businesscontinues to improve performance andsales of the Postura seat have grownfurther in the United Kingdom and otherEuropean markets. Overall Sebelcontributed an increased profit on sales3% below the prior year, a pleasing resultin a difficult year for the business.

Business Segment Segment Results Segment Sales

2002/03 2003/04 2002/03 2003/04$’000 $’000 $’000 $’000

Building fixtures and fittings 95,801 102,176 546,614 552,504

Commercial furniture 6,246 6,832 70,146 68,148

Other (23,471) (20,607) 42,829 47,274

Total business segments 78,576 88,401 659,589 667,926

Income tax expense (23,569) (26,348)

Profit after tax 55,007 62,053

SEGMENT SALES REVENUE AND PROFIT


Managing Director’sReview of Operations CONTINUED


2001/02 2002/03 2003/04$’000 $’000 $’000

Payments for property, plant and equipment 32,976 24,392 20,579

PROPERTY, PLANT AND EQUIPMENT EXPENDITURE

In 2003/04, Dux released the awardwinning SunPro solar gas continuoussystem heater. The SunPro product is ahighly efficient water heater combiningstate of the art solar panel technologyboosted by a continuous flow natural gasheater. This product has won theBPN/Environ Design Build environmentallysustainable design award for 2004.

Caroma’s Smartflush® range of 4A ratedtoilet suites will be released in the newyear. These new toilet suites utilise thetechnology and precision of matchedperformance which allows CaromaSmartflush® to dramatically reduce in-house water consumption. The new 4Arated toilets will save 38,000 litres ofwater per annum in a normal household.

Dorf Clark have developed a new rangeof water efficient tapware (WET) thatstudies show can save up to 25% onhousehold water consumption. Thesetaps also introduce new styling includingthe Motif range which provides flexibleand versatile options to complement themodern bathroom. The launch of theseproducts coincides with water efficiencyregulations governing taps introduced bythe Victorian Government with effectfrom 1 July 2004.

The Group’s businesses have incurredsignificant research, development anddesign costs with respect to these newproducts. The tooling and other plantrelated costs have been capitalised andthe research and development costs havebeen expensed as incurred.

The Group will commence a replacementprogram for its range of operatingbusiness systems in the 2004/05 year.


Rover Mowers enjoyed strong mid to lateseason demand from its domestic marketwith export sales below the high level ofthe prior year. Profit increased significantlyon a 10% increase in overall sales. Thehigher exchange rate to the US dollarcontributed a net benefit to Rover forthe year.

The trading performance of the Group’sbusinesses in the 2003/04 year is verypleasing and our continuing focus onnew products and operating performancecan yield further improvement.Stock provisioning during the year of$6.5 million, whilst less than the prioryear as expected, reflects supply controlissues in addition to the increasingbusiness risks of shorter product lifecycles and broader product ranges.Improved stocking and supplyoutcomes are a continuing priority foroperating management.

The Group’s businesses continue to pursuenew and improved products whichconserve water and energy, two criticalresources for Australia and with increasingimportance in the Group’s internationalmarkets. New legislation and regulationwith respect to energy and water usage

and pricing can rapidly impact the typeand mix of product sold in a market,creating both risk and opportunity.

Caroma and Dorf Clark are well placedto realise market opportunities with therelease of new water efficient productsin the 2004/05 year.

In summary, the 2003/04 year has beenexcellent for the Group with strongoperating performance realising theopportunities of the buoyant domesticmarket. A third successive record profitand outstanding operating cash flow givesus confidence going forward.

Investments in FuturePerformance

The Group’s businesses are continuing toinvest in new products and technologies,our brands, markets, business systems,our people and plant and equipment.Expenditures on new property, plantand equipment are shown in thetable below.

The Caroma, Dorf and Dux businessesare continuing to develop new water andenergy efficient technologies with a rangeof new products released in 2003/04and scheduled for release in 2004/05.

“Caroma and Dorf Clark arewell placed to realisemarket opportunities withthe release of new waterefficient products in the2004/05 year.”

This diverse range of systems is theoutcome of the Group’s businessacquisitions over time and a number ofthese systems are not sustainable and areincreasingly expensive to maintain in theshort term. The Group has negotiated anagreement with Intentia for theprogressive replacement of currentsystems with the Movex EnterpriseResource Planning system across theGroup, commencing with the Duxbusiness. This move will providesustainable business systems and establisha framework for systems developmentinto the future. We expect that allbusinesses will be converted to Movexwithin five years. This stepped roll out ofthe Movex system will mitigate anysignificant systems risk for the company.

Outlook for 2004/05 Year

The general industry view is thatconstruction of new dwellings is likely todecline in the 2004/05 year reducingdemand for the Group’s products withpotentially the greater impact in thesecond half of the year. This fall in activityin the new dwelling sector is expectedto be partially offset by ongoing growthin renovations which is a key source ofdemand for the company’s products.Against this background domesticdemand for the products of the Group’sBuilding Fixtures and Fittings segment,may decline by 4% to 5% in the2004/05 year.

Further volatility in exchange rateswould add risk to the trading resultsfrom the Group’s overseas and exportoperations, including Sebel, and it shouldbe noted that seasonal conditions are theprincipal factor in Rover’s year to yearprofit contribution.

Whilst domestic demand will decline inthe 2004/05 year, this year’s performancedemonstrates that the Group’s businesseshave opportunities to improveperformance and reduce the impact of


the lower demand on results. Subject todomestic demand declining as forecast,and assuming a continuing stronggeneral economy, we expect that profitafter tax for the 2004/05 year will benear the 2003/04 performance on lowersales revenue.

Longer Term Outlook

GWA International’s portfolio of strongbusinesses provide a diversified earningsbase from well established marketpositions. Caroma and Dorf Clark aredomestic market leaders and operateacross all product sectors. Gainsboroughand Dux have significant marketshares and are number two in size intheir industries.

The longer term outlook for these fourbusinesses, which constitute the Group’sBuilding Fixtures and Fittings segment,remains strong within the Australianmarket. Population growth coupled withcontinuing trends to lower family sizesand larger houses are expected to furtherdrive the construction of new dwellingsover time.

Housing renovations are also expected tocontinue to grow at a rate above thegrowth of the general economy. In lastyear’s report, I addressed the principalfactors in renovations growth and thesefactors are expected to continue to driveactivity in this sector.

Our businesses are also well placed tobuild on their overseas and export salessubject to cost competitive sourcing.Sustained movements in Australiandollar exchange rates impact on thecost competitiveness of domesticmanufactured goods both in overseasmarkets and in the domestic marketwhich is open to imports and ishighly competitive.

The Group’s businesses are significantdomestic manufacturers and are alsomajor importers of components and

finished goods and will continue todevelop strategic sourcing options toensure product cost competitivenessover time.

Over the longer term GWA Internationalwill continue to focus on innovative newproducts, market leading brands and lowcost supply. This, in conjunction withunderlying growth in domesticconstruction and overseas sales, isexpected to provide ongoing opportunitiesfor growth in our shareholders’ wealth.

Financial Condition

The company’s shares on issue increasedto 278.3 million with the allotment of500,000 employee shares during the yearand Shareholder Funds increased overthe year to $428.2 million, inclusive ofthis employee share issue. The companyhas not issued share options and theDividend Reinvestment and SharePurchase Plans were suspended inFebruary 2000.

The Operating Cash flow of the Group’sbusinesses is expected to continue tocomfortably exceed the operationalfunding requirements of the company.Debt funding and other facilities areprovided to the company by major banksunder a Master Financing Agreement.

At balance date, bank loans were madeup of:

• Australian Currency $285.0 million

• Euro 7.3 million

The loans and other facilities are extendedannually under 2 year and 3 yearevergreen arrangements.

The Euro loan is a currency hedge withrespect to the Group’s investment in theWisa business.

The company has entered into interestrate swaps to manage the interest raterisk on Australian currency borrowings as




domestic manufacturing operations.Export earnings from the Group’s marketsin Asia and North America were reduced,while our competitiveness in the domesticmarket in the face of US$ denominatedimports was also affected. Costcompetitiveness relative to manufacturedproducts subject to the Euro improvedmarginally during the 2003/04 year.

Summary

GWA International Limited performedstrongly during the 2003/04 financial year.This year’s result of $62.05 million is thethird consecutive record profit and hasunderpinned the increase in ordinarydividend to 18 cents per share fullyfranked.

Our focus on improving businessperformance and working capitalmanagement will ensure the companyremains well positioned to pursue growthopportunities as and when they occurwhile maintaining a strong dividend yieldfor our shareholders.

Whilst we expect a slowing in domesticdemand in 2004/05, we are confident inthe underlying strength of our domesticbusinesses and our longer terminternational opportunities. The companyis in sound financial shape and we areconfident that further profit growth isachievable over time.

In closing, I recommit management toour primary objective of creatingsustainable shareholder wealth whileensuring our various businesses continueto add value to our customers and thebroader community through high qualityinnovative products and a talented andcommitted workforce.

P C CrowleyManaging Director


detailed in Note 33(a) (iv) as set out inthe table below.

The future commitments for leasepayments are set out in Note 24. TheGroup’s businesses lease factory premises,distribution warehouses and sales offices.

GWA International and specific controlledentities, incorporating the Group’sAustralian operating businesses, areparties to a Deed of Cross Guaranteeunder which the parties to the Deedguarantee the debts of each other. Thecompany has not given any securities overits assets.

The Group’s businesses undertake hedgeswith respect to material foreign currencytransactions and the position at balancedate is set out in Note 33 (a) (iv). Thehedges are with respect to importedcomponents and products for resale.

The company’s cash flow from operatingactivities for the 2003/04 year of$114.7 million has funded the Group’scapital expenditures and dividends for theyear, and cash at the end of the year hasincreased by $49.4 million. The Group’scash is held predominantly in Australiandollars and is liquid with funds placed ondeposit for periods up to 90 days.

GWA International is well placed toincrease its borrowings to fund newacquisition opportunities as they arise,

with net debt to equity ratio of 37% andinterest cover, as defined in the MasterFinancing Agreement of 10 times. Anindicative debt rating is near BBB, howeverthe company has not undertaken a formaldebt rating process.

All of the Group’s debt funding andfacilities are negotiated and reportedcentrally. Individual businesses operatetheir currency hedging and otherrequirements, including bank guaranteesunder these central facilities.

Sources of further equity include futureretained earnings and includereinstatement of the DividendReinvestment and Share Purchase Plans.These Plans have been well supported byshareholders in the past and the Groupexpects a similar level of support shouldthe Plans be reinstated.

With respect to the Employee Share Plan,at balance date, there were 2.785 millionshares on issue under this Plan, with theloan of $3.852 million. Dividends andrepayments for the year have been$1.8 million.

Exchange rates with the US dollar andEuro have fluctuated during the year asset out in the table below.

The rapid appreciation of A$ to US$exchange rates in 2003/04 reduced thecost competitiveness of the Group’s

Jun 03 Sep 03 Dec 03 Mar 04 Jun 04

USA 0.6680 0.6798 0.7375 0.7556 0.6889

Euro 0.5902 0.5985 0.5851 0.6270 0.5702

EXCHANGE RATES

Amount Period Rate

$200 million To October 2004 4.98%

$100 million October 2004 to March 2005 4.84%

$50 million March 2005 to May 2006 4.63%

AUSTRALIAN CURRENCY BORROWINGS

B Thornton KSJ FCA FAICD FAIM FCIS

Chairman– Elected to the Board 1992

Expertise: Chartered accountant,corporate and financial management

Special Responsibilities:Chairman of the Board, Chairman ofNomination Committee and member ofAudit Committee

Mr Thornton joined GWA Limited in1974 as Finance Director and wasappointed Chief Executive in 1981. In1986, he was appointed ExecutiveChairman and, following theprivatisation of GWA Limited in 1989and the public float of theManufacturing Division as GWAInternational Limited in 1993, he becameNon-Executive Chairman. He is alsoChairman of the Brisbane AirportCorporation Limited, a director ofStockland Trust Group and a memberof the Brisbane Advisory Board of theSalvation Army.

Previous appointments include:Director – Suncorp Metway Limited,Queensland Cement & Lime Limited,Power Brewing Limited, and PortsCorporation of Queensland

Commissioner – QueenslandCommission of Audit

J J Kennedy AO CBE DUniv (QUT) FCA FCPA

Deputy Chairman– Elected to the Board 1992

Expertise: Chairman and director ofa number of public and statutorycorporations

Special Responsibilities:Deputy Chairman of the Board,Chairman of Audit Committee andmember of Nomination Committee

Mr Kennedy is a director of QantasAirways Limited, Suncorp MetwayLimited and Australian StockExchange Limited.


Board of DirectorsBoard of Directors

P C Crowley BA BEcon FAICD

Managing Director– Elected to the Board 2003

Expertise: Broad manufacturingexperience in Australia and overseas

2001: Managing Director and ChiefExecutive, Austrim Nylex Limited, adiversified industrial company;1999: Executive Director, Cement andLime, The Rugby Group PLC, a UK PublicCompany with extensive internationalcement operations. During this period,also served as a director of AdelaideBrighton Limited; 1997: Chief Executive,Cockburn Cement Limited (a subsidiaryof The Rugby Group PLC), WesternAustralia’s largest cement producer andAustralia’s largest lime producer;1982: Various roles with QueenslandCement Limited and its parent companyHolderbank culminating in GeneralManagement responsibilities withinAustralia and South-East Asia.

D R Barry FAIM

Non-Executive Director– Elected to the Board 1992

Expertise: Importation, distributionand retailing

Special Responsibilities: Member of theRemuneration Committee

Mr Barry joined GWA Limited as directorin 1979 and for much of his 33 yearinvolvement with the Group wasresponsible for importation, wholesalingand retailing.

In 1992, Mr Barry was appointed aNon-Executive Director ofGWA International Limited.

R M AndersonNon-Executive Director– Elected to the Board 1992

Expertise: Property investment andtransport logistics

Mr Anderson has more than 49 years’experience with the Group, havingjoined the organisation in 1955. Hisexpertise covers management, transportlogistics, investment and propertymatters.

Mr Anderson was appointed a directorof GWA Limited in 1979, and joined theBoard of GWA International Limited asNon-Executive Director in 1992.

M D E Kriewaldt BA LLB FAICD

Non-Executive Director– Elected to the Board 1992

Expertise: Lawyer and director of anumber of public and other corporations

Special Responsibilities: Chairman ofRemuneration Committee, member ofAudit Committee and member ofNomination Committee

Mr Kriewaldt provides advice to the lawfirm Allens Arthur Robinson and to Aon,insurance brokers. He formerly practisedin a wide range of areas includingbanking and finance, insurance,insolvency and receivership andintellectual property.

Mr Kriewaldt is Chairman of OperaQueensland Limited and a director ofCampbell Brothers Limited, Oil SearchLimited, Suncorp Metway Limited andPeptech Limited.

G J McGrath MIIE

Non-Executive Director– Appointed to the Board 6 July 2004

Expertise: Manufacturing and generalmanagement

Special Responsibilities: Appointedmember of the RemunerationCommittee on 3 August 2004

2003: Mr McGrath retired as ManagingDirector of GWA International Limitedon 6 May 2003, and continued hisinvolvement with the Group as anadviser to the Board; 1992: Mr McGrathwas appointed Managing Director ofGWA International Limited; 1982: Afterthe takeover of UPL Group by GWALimited, Mr McGrath was appointedManaging Director of the GWAManufacturing Group companiescomprising Caroma, Sebel and RoverMowers; 1980: General Manager,Caroma Industries; 1978: Group ManagerFibreboard Division; 1960: Joined UnitedPackages Limited.

Mr McGrath is also Chairman ofCampbell Brothers Limited and a directorof Fletcher Building Limited.


The Board operates under a charter thatdetails the functions and responsibilitiesof the Board. The charter is regularlyreviewed to ensure it remains consistentwith the Board’s objectives andresponsibilities and is in accordance withthe best practice recommendations ofthe ASX Corporate Governance Council.The Board charter has been posted onthe company’s website in the CorporateGovernance section.

2. Board Meetings

The Board meets at least 10 times eachyear for scheduled meetings and may, onother occasions, meet to deal with specificmatters that require attention betweenscheduled meetings. Together with theBoard Committees, the directors use theBoard meetings to challenge and fullyunderstand the business and operationalissues. The General Managers of thebusiness divisions are required to regularlyattend and present at the Board meetingson corporate strategies and performance.

The Board regularly visits the company’sbusiness operations to enhance theirunderstanding of operations andstrategies. During the current year, thedirectors held Board Meetings at theWetherill Park and Norwood factoriesof the Caroma Division, followed bymanagement presentations andfactory tours.

C O R P O R A T E G O V E R N A N C E S T A T E M E N T 13

The corporate governance practices ofthe company have been in place sincelisting and are constantly reassessed inthe light of experience (within thecompany and in other organisations),contemporary views and best practiceguidelines on good corporate governancepractices. The Board adopts practices itconsiders to be superior and which willlead to better outcomes for the company’sshareholders, whilst endeavouring toavoid those which are based on unsoundprinciples or represent temporary fads.

The Board supports the Principles ofGood Corporate Governance andBest Practice Recommendations(“the Recommendations”) released bythe ASX Corporate Governance Councilon 31 March 2003. The Board confirmsthat the current corporate governancepractices of the company are inaccordance with the Recommendations,and that there are no departures fromthe Recommendations to be disclosedto shareholders. In addition, as part of itson-going review and monitoring role,the Board has implemented a numberof enhancements to the corporategovernance practices of the company,particularly in the area of RiskManagement and Internal Controls.These are outlined in more detailbelow – refer Risk Management andInternal Controls.

For further information on the corporategovernance practices of the company,please refer to our corporate website atwww.gwail.com.au in the CorporateGovernance section.

1. Role of the Board

The Board is responsible for thelong-term growth and profitability ofthe company. The Board charts thestrategic direction of the company andmonitors Executive and SeniorManagement performance on behalf ofshareholders. To achieve this, the Boardis engaged in the following activities:

• Final approval of corporate strategiesand performance objectives developedby Senior Management, with Boardinput

• Approval and monitoring of financialand other reporting

• Monitoring of Executive and SeniorManagement performance, includingthe implementation of corporatestrategies, and ensuring appropriateresources are available

• Appointment and monitoring of theperformance of the Managing Director

• Liaison with the company auditorthrough the Audit Committee

• Ensuring that the company hasappropriate systems of riskmanagement and internal control,reporting mechanisms and delegationauthority limits in place

• Approval and monitoring of theprogress of major capital expenditure,capital management, and acquisitionsand divestments

• Any other matters required to be dealtwith by the Board from time to timedepending upon circumstances of thecompany

• Other matters referred to in the BoardCommittee charters

The Board of Directors is responsible for the corporate governance of GWA InternationalLimited which is an essential part of the role of the Board. Corporate governance is aboutthe Board undertaking an active monitoring of the company’s activities and ensuring thatintegrity prevails within the company. The governance principles adopted by the Boardare designed to achieve this outcome.

Corporate GovernanceStatement FOR THE YEAR ENDED 30 JUNE 2004

Corporate GovernanceStatement FOR THE YEAR ENDED 30 JUNE 2004

3. Composition of theBoard

The Board presently comprises7 directors, 6 of whom, includingthe Chairman and Deputy Chairman,are non-executive directors and 1,the Managing Director, is anexecutive director.

Profiles of the directors are set out onpage 12 of the Annual Report. Theprofiles outline the skills, experience andexpertise of each Board member.

The composition of the Board isdetermined by the NominationCommittee and, where appropriate,external advice is sought. The followingprinciples and guidelines are adhered to:

• The Board should maintain a majorityof non-executive directors

• The Board should maintain a majorityof independent directors

• The Chairperson should be anindependent non-executive director

• The role of Chairperson and ManagingDirector should not be exercised by thesame individual

• Non-executive directors should not beinvolved in management of the day today operations of the company

• All Board members should havefinancial expertise and relevantexperience in the industries in whichthe company operates

The Board has developed a comprehensiveinduction program for new directors andkey executives. The Board views theinduction program as critical in introducingnew directors and key executives to thecompany and the markets in which itoperates. The induction program isregularly reviewed to ensure itseffectiveness.


4. Independence of theBoard

The Board considers that directors mustbe independent from management andfree of any business or other relationshipthat could interfere, or reasonably beperceived to interfere, with the exerciseof their unfettered and independentjudgment. In applying the definitionof independence as outlined in thebest practice recommendations of theASX Corporate Governance Council, ithas been determined that the majorityof the Board members of GWAInternational Limited are independent.This is in accordance withRecommendation 2.1 of the bestpractice recommendations of theASX Corporate Governance Council.

The Board is responsible for ensuringthat the actions of individual directors inthe Boardroom is that of independentpersons. The Board distinguishesbetween the concept of independenceand issues of conflict of interest or materialpersonal interest which may arise fromtime to time – refer Conflicts of Intereston page 15.

In recognising the importance of theindependence of directors and theimmediate disclosure of conflicts ofinterest, the Board has included bothmatters as permanent items on theagenda at each Board meeting. Anyindependence or conflict of interest issuesarising during the relevant period mustbe disclosed to the Chairman prior toeach Board meeting. The disclosure isrecorded in the register of directors’interests and in the Board minutes.

(i) New Director Appointment

On 6 July 2004, Mr Geoff McGrathwas appointed a non-executivedirector of GWA International Limited.Mr McGrath was the formerManaging Director of the companyand retired on 6 May 2003 after

43 years’ service in various capacitieswith the company’s businesses, thelast 10 as Managing Director. Inappointing Mr McGrath as a director,the Board acknowledges thatMr McGrath does not meet thedefinition of an independent directoras outlined in the best practicerecommendations of the ASXCorporate Governance Council, dueto his executive position with thecompany within the last three years.In the Board’s view, this will in noway impact on Mr McGrath’seffectiveness and performance as adirector, nor affect Mr McGrath’sability to exercise independentjudgment in carrying out his dutiesas a director.

Mr McGrath is well-known toshareholders of GWA InternationalLimited, and the company prosperedunder Mr McGrath’s stewardship. Inappointing Mr McGrath as a director,the Board is of the view that theappointment is in the best interest ofthe company’s shareholders.Mr McGrath brings extensive skillsand experience to the Board, and hisdetailed knowledge of the company’sbusinesses will ensure that thecompany’s shareholders will be wellserved by Mr McGrath’s appointment.Mr McGrath will hold office until thenext Annual General Meeting on28 October 2004, where he will beeligible for re-election.

(ii) Director Tenure

The current Board members havebeen in office for many years, asdisclosed on page 12 of the AnnualReport (excluding Mr Crowley whowas appointed in the 2002/03 year).The Board does not consider that theindependence of a director can beassessed by reference to an arbitraryand set period of time. The Board hasoverseen the growth anddevelopment of the company since


Corporate GovernanceStatement CONTINUED


The Audit Committee meets as requiredand on several occasions throughout theyear. For attendance details of the AuditCommittee, refer to page 24 of theAnnual Report.

The composition of the Audit Committeeis based on the following principles:

• The Audit Committee should consistof non-executive directors only

• The Audit Committee should maintaina majority of independent directors

• The Chairperson must be independent,and not Chairperson of the Board

• The Audit Committee should consistof at least three members

• The Audit Committee should includemembers who are financially literatewith at least one member who hasfinancial expertise

The Audit Committee was establishedin 1993 and is governed by a charterwhich outlines the Committee’s roleand responsibilities, composition,structure and membership requirements.The charter is regularly reviewed toensure it remains consistent with theBoard’s objectives and responsibilitiesand is in accordance with the best practicerecommendations of the ASX CorporateGovernance Council. The AuditCommittee charter has been postedon the company’s website in theCorporate Governance section.

The external auditors, Managing Director,Chief Financial Officer, CompanySecretary, Risk Management and InternalAudit Manager and other companyExecutives (as required) attend AuditCommittee meetings, by invitation, topresent the relevant statutory information,financial statements, reports, and toanswer the questions of the AuditCommittee members. The externalauditors meet with the Audit Committeemembers without management present.

15

listing and in the Board’s view thecompany derives benefits from havinglong serving directors with detailedknowledge of the company’soperations. The Board considersthis a significant factor in theireffectiveness and performance in theirroles as directors of the company.

The Board is developing successionplans for the future retirement ofindividual directors. In formulatingthe succession plans, the Boardrecognises the importance ofmaintaining corporate memory andensuring the appropriate balance ofskills required to maintain an efficientand effective Board.

5. Conflicts of Interest

The directors are required to disclose tothe Board any relationships from whicha conflict of interest might arise. A directorwho has an actual or potential conflictof interest or a material personal interestin a matter is required to absent himselffrom any meeting of the Board or BoardCommittee, whenever the matter isconsidered. In addition, the director doesnot receive any Board papers or otherdocuments in which there is a referenceto the matter.

This process is applied to business andtrading relationships, dealings with thedirectors, dealings with companies withcommon directors and dealings with anysignificant shareholders of the company.

The materiality thresholds used for thedetermination of independence and issuesof conflict of interest have beenconsidered from the point of view of thecompany and directors. For the company,a relationship which accounts for 5% ormore of its revenue is considered material.For a director, a relationship whichaccounts for 5% or more of the totalincome of a director is consideredmaterial. Directors’ fees are not subjectto this test.

During the current year, Mr McGrathadvised the Chairman prior to hisappointment as a director that a potentialconflict of interest exists with respect toMr McGrath’s position as a director ofFletcher Building Limited, which owns theOliveri business. The Chairman agreedstrict procedures to deal with this potentialconflict of interest.

During the year, there were no otherconflict of interest issues or independenceissues advised to the Chairman.

6. Access to IndependentAdvice

Directors and the Board Committeeshave the right in connection with theirduties and responsibilities to seekindependent advice at the company’sexpense. Prior written approval of theChairman is required, but this will not beunreasonably withheld. Whereappropriate, directors share such advicewith the other directors.

7. Board Committees

The Board has a number of standingBoard Committees to assist in carryingout its duties and responsibilities.All members of Board Committeesare non-executive directors.

The standing Board Committees are:

Audit Committee

The Audit Committee consists of thefollowing non-executive directors:

J J Kennedy (Chairman)AO CBE DUniv (QUT) FCA FCPA

M D E KriewaldtBA LLB FAICD

B ThorntonKSJ FCA FAICD FAIM FCIS

C O R P O R A T E G O V E R N A N C E S T A T E M E N T

The main responsibilities of the AuditCommittee include:

• Review of financial statements andexternal financial reporting

• Assess the management processessupporting external reporting

• Assess whether the external reportingis adequate to meet the informationneeds for shareholders

• Recommendations on the appointmentand removal of the external auditor

• Review and monitor the performanceand independence of the external audit

• Review of tax planning and taxcompliance systems and processes

• Review and monitor risk managementand internal compliance and controlsystems

• Assess the performance and objectivityof the internal audit function

• Reporting to the Board on theCommittee’s role and responsibilitiescovering all the functions in its charter

During the year, the Audit Committeeconducted an evaluation of theperformance of Audit Committeemembers to determine whether it isfunctioning effectively by reference tobest practice. Each member was requiredto complete a detailed performancequestionnaire, the results of which werecollated and analysed by the Chairmanof the Committee. There were no issuesto report to the Board from the exercise.

Certification ofFinancial Reports

The Managing Director and Chief FinancialOfficer state in writing to the Board eachreporting period that the company’sfinancial reports present a true and fairview, in all material respects, of thecompany’s financial position andperformance, and are in accordance withrelevant accounting standards. Thestatements from the Managing Directorand Chief Financial Officer are based ona formal sign-off framework established


throughout the company and reviewedby the Audit Committee as part of thefinancial reporting process.

Nomination Committee

The Nomination Committee consists ofthe following non-executive directors:

B Thornton (Chairman)KSJ FCA FAICD FAIM FCIS

J J KennedyAO CBE DUniv (QUT) FCA FCPA

M D E KriewaldtBA LLB FAICD

The Nomination Committee meets asrequired and on several occasionsthroughout the year. For attendancedetails of the Nomination Committee,refer to page 24 of the Annual Report.

The composition of the NominationCommittee is based on the followingprinciples:

• The Nomination Committee shouldconsist of non-executive directors only

• The Nomination Committee shouldmaintain a majority of independentdirectors

• The Nomination Committee shouldconsist of a minimum of three members

• The Chairperson should be theChairperson of the Board or anotherindependent director

The Nomination Committee operatesunder a charter that details theCommittee’s role and responsibilities,composition, structure and membershiprequirements. The charter is regularlyreviewed to ensure it remains consistentwith the Board’s objectives andresponsibilities and is in accordance withthe best practice recommendations ofthe ASX Corporate Governance Council.The Nomination Committee charter hasbeen posted on the company’s websitein the Corporate Governance section.

The main responsibilities of the Committeeinclude:

• Assessment of the necessary anddesirable competencies of Boardmembers

• Review of the Board succession plans

• Evaluation of the performance andcontributions of Board members

• Recommendations for the appointmentand removal of directors

• Review of the remuneration frameworkfor directors


In performing its responsibilities, theNomination Committee receivesappropriate advice from externalconsultants and other advisers as required.

During the year, the NominationCommittee conducted an evaluation ofthe performance of Board members todetermine whether it is functioningeffectively by reference to best practice.Each Board member was required tocomplete a detailed performancequestionnaire, the results of which werecollated and analysed by the Chairmanof the Committee. There were no issuesto report to the Board from the exercise.

Remuneration Committee

The Remuneration Committee consistsof the following non-executive directors:

M D E Kriewaldt (Chairman)BA LLB FAICD

G J McGrathMIIE

D R BarryFAIM

Mr G J McGrath was appointed a memberof the Remuneration Committee on3 August 2004, on the retirement ofMr B Thornton as a member of theCommittee.




confirm to the Chairman that they donot possess unpublished insiderinformation.

The Board is currently reviewing its policiesand practices in this area, as it doesregularly, and will publish the revisedpolicy on the company’s website whenthis review is concluded.

10. Risk Managementand Internal Control

The Board is responsible for ensuring thatadequate policies and procedures are inplace on risk oversight and management.The Board recognises that effectivecorporate governance is critical to soundrisk management practices. In carryingout its risk oversight and managementduties, the Board is assisted by the AuditCommittee which reports regularly to theBoard on all risk management and internalcontrol matters.

The company has a comprehensive,company-wide risk management systemincorporating processes which have beenin place for many years. The riskmanagement model adopted for thecompany is based on the Australian NZStandard AS/NZS 4360:1999 – RiskManagement, which specifies the keyelements of the risk management process.Each of the key elements identified in theStandard are reflected in the currentbusiness risk management practices andprocedures of the company.

The Risk Management and Internal AuditManager reports directly to the Boardon all risk management and internalcontrol matters. All internal audit activitiesare planned and coordinated by the RiskManagement and Internal Audit Manager,with actual internal audit activities eitherperformed internally or through qualifiedexternal consultants.

The Board has approved an annual riskmanagement and internal audit program

17

The Remuneration Committee meets asrequired and on several occasionsthroughout the year. For attendancedetails of the Remuneration Committee,refer to page 24 of the Annual Report.

The composition of the RemunerationCommittee is based on the followingprinciples:

• The Remuneration Committee shouldconsist of non-executive directors only

• The Remuneration Committee shouldmaintain a majority of independentdirectors

• The Remuneration Committee shouldconsist of a minimum of three members

• The Chairperson of the RemunerationCommittee should be an independentnon-executive director

The Remuneration Committee operatesunder a charter that details theCommittee’s role and responsibilities,composition, structure and membershiprequirements. The charter is regularlyreviewed to ensure it remains consistentwith the Board’s objectives andresponsibilities and is in accordance withthe best practice recommendations of theASX Corporate Governance Council. TheRemuneration Committee charter hasbeen posted on the company’s websitein the Corporate Governance section.

The main responsibilities of the Committeeinclude:

• Review of the company’s remunerationand incentive policies

• Review of Executive and SeniorManagement remuneration packages

• Review of the company’s recruitment,retention and termination policies andprocedures for Senior Management

• Review of the company’ssuperannuation arrangements


In performing its responsibilities, theRemuneration Committee receives

appropriate advice from externalconsultants and other advisers as required.

8. Code of Conduct

The company conducts its businesswith the highest standards of personaland corporate integrity. To assist ouremployees in achieving this objective, thecompany has developed a comprehensivecode of conduct which directors, officersand employees of the company arerequired to strictly adhere to. The codeof conduct is incorporated as part of allnew employees’ induction training andan acceptance form is signed by all newemployees acknowledging theirunderstanding and on-going compliance.

The code of conduct states the valuesand policies of the company andcomplements the company’s riskmanagement practices. The code ofconduct is regularly reviewed to ensureit is in accordance with the bestpractice recommendations of theASX Corporate Governance Counciland to promote the ethical behaviourof all employees. The code of conducthas been posted on the company’swebsite in the About GWA section.

9. Share Trading

The company has developed a sharetrading policy which prohibits directors,officers and other “potential insiders”from trading in GWA International Limitedshares during designated periods. Outsideof the designated periods, there are notrading restrictions where the directors,officers and other “potential insiders”are not in the possession of unpublishedinsider information. At all times, if anindividual possesses unpublished insiderinformation about the company, thatperson is prohibited from trading.

As an additional restriction, the directorsmust advise the Chairman prior to tradingoutside the designated periods and

C O R P O R A T E G O V E R N A N C E S T A T E M E N T

for the company, and together with thefollowing activities have achieved thestrengthening of the control environmentat the company:

• Preparation of a comprehensive riskmanagement policy for the company

• Formal education program on riskmanagement for Executive and SeniorManagement

• Formalisation and enhancement ofreporting to the Board on business risks

• Formalisation of the risk managementand accountability framework

• Expansion of monthly corporatemonitoring of financial andnon-financial performance indicators

• Review and updating of the Code ofConduct and Employment Policies andProcedures to ensure they reflect bestpractice and comply with statutoryrequirements

Risk management is embedded in thecompany’s people, processes, cultureand technology, and this ensures that asound system of risk oversight andmanagement exists within the company.During the year, the Board reviewed therisk management practices of thecompany in light of the best practicerecommendations of the ASX CorporateGovernance Council. The Board aimsto continually evaluate and re-assess therisk management and internal controlpractices of the company to ensurethat best practice is maintained, andto preserve and create value withinthe organisation.

Certification of RiskManagement Controls

In conjunction with the certification offinancial reports (refer page 16), theManaging Director and Chief Financial


Officer state in writing to the Board eachreporting period that:

• the statement is founded on a soundsystem of risk management and internalcompliance and control whichimplements the policies adopted by theBoard

• the company’s risk management andinternal compliance and control systemis operating efficiently and effectivelyin all material respects

The statements from the ManagingDirector and Chief Financial Officer arebased on a formal sign-off frameworkestablished throughout the company andreviewed by the Audit Committee as partof the financial reporting process.

11. RemunerationPolicies

The Nomination Committee isresponsible for determining theremuneration for the non-executivedirectors, with the maximum aggregateamount approved by shareholders. Thedirectors receive their remuneration byway of directors’ fees only (includingsuperannuation), and are not able toparticipate in the Executive incentivearrangements.

The Remuneration Committee isresponsible for reviewing and determiningthe remuneration and incentivearrangements of Executives and SeniorManagement of the company. Theremuneration and incentive arrangementshave been structured to ensure thatperformance is fairly rewarded and toretain a high quality Executive and SeniorManagement team.

For details of the company’s remunerationpolicies and disclosures, refer to page 22of the Annual Report.

At the Annual General Meeting on23 October 1998, shareholders approved

total aggregate maximum directors’ feesof $750,000 per annum (excludingstatutory superannuation). As the Boardhas not sought an increase in directors’fees since 1998, and to allow for possiblenew director appointments in future years,including the appointment of Mr GeoffMcGrath as a director, the Board proposesto put to shareholders at the next AnnualGeneral Meeting on 28 October 2004that the upper limit of directors’ fees beincreased by $250,000 to $1 million(excluding statutory superannuation).

At the Annual General Meeting on30 October 2003, shareholders approvedthe termination of the Directors’Retirement Scheme for non-executivedirectors. This means that retirementbenefits will not be available for any newnon-executive directors of the company,other than statutory superannuation.This is in accordance with the guidelinesfor non-executive director remuneration,as outlined in the best practicerecommendations of the ASX CorporateGovernance Council.

As the Directors’ Retirement Scheme hasbeen terminated, the Board will put toshareholders at the next Annual GeneralMeeting on 28 October 2004 that theaccrued benefits under the former Schemebe paid out to the directors, when eachdirector requests the payment to be made.At 30 June 2004, the total accruedbenefits to the non-executive directors ofthe company were $1,214,700.

12. Employee SharePlan

The company has not issued share optionsat any time.

The company has operated an EmployeeShare Plan since listing as part of theremuneration and incentive arrangementsfor Executives and Senior Management.

Full details of the operation of theEmployee Share Plan are described inNote 19 of the Financial Statements.




C O R P O R A T E G O V E R N A N C E S T A T E M E N T 19

13. Audit and AuditorIndependence

The Board recognises the importanceof a truly independent audit firm toensure that the audit function delivers,for the benefit of the Board and all otherstakeholders, an unbiased confirmationof both the financial statements and thestate of affairs of the company. Consistentwith the Board’s commitment to anindependent audit firm, a policy hasbeen prepared and approved by theBoard on the Role of the External Auditor,which is designed to ensure theindependence of the external auditfunction. The Board is currently reviewingits policies and practices in this area, asit does regularly, and will publish therevised policy on the company’s websitewhen this review is concluded.

During each year, the Audit Committeeexamines the non-audit roles performedby the audit firm and other potential auditservice providers to satisfy itself that theauditor’s independence will not becompromised and that alternate providersare available if considered desirable. Whilstthe value of the non-audit services could,in extreme cases, compromise auditindependence, more important is toensure that the auditor is not passing anaudit opinion on the non-audit work ofits own firm.

Both the Audit Committee and the auditorconfirm to the Board the continuingindependence of the audit function.

The company’s current external auditor,Ernst & Young, were appointed as a resultof a comprehensive tender conducted forthe year ended 30 June 1995 for auditand other services. As announced by theChairman at the Annual General Meetingon 30 October 2003, a comprehensivetender for the external audit services wasconducted during the year, whichincluded tenders from KPMG, Deloitteand Ernst & Young. After a competitive

tender process, KPMG was selected asthe external auditor for the financial yearcommencing 1 July 2004, subject toshareholder approval of the appointmentat the next Annual General Meeting on28 October 2004.

14. Communication withShareholders

The company is committed to ensuringshareholders and the financial marketsare provided with full, open and timelyinformation about its activities. This isachieved by the following:

• Complying with continuous disclosureobligations contained in the ASX ListingRules and the Corporations Act 2001.The company has for many yearsincluded continuous disclosure as apermanent item on the agenda forBoard meetings. The Board hasapproved a continuous disclosure policyto ensure that the company iscomplying with the ASX Listing Ruledisclosure requirements and to ensureaccountability at the Executive andSenior Management level for thatcompliance.

• Ensuring that all shareholdercommunications (including annualreports, half-year reports and noticesof Annual General Meetings) satisfyrelevant statutory requirements andthe best practice guidelines of the ASXCorporate Governance Council andother professional bodies. The companyis committed to producing shareholdercommunications in plain English withfull and open disclosure about thecompany’s policies and procedures,operations and performance.

• Ensuring that all shareholders have theopportunity to receive externallyavailable information issued by thecompany. The company has a corporatewebsite (www.gwail.com.au) for thepurpose of enhancing communication

with shareholders and other parties.All company announcements andinformation released to the market arelocated on the website and may beaccessed by shareholders. There is alsoa Corporate Governance section onthe website which outlines the practicesof the company and other companyinformation.

• The Board is committed to thecontinued development andenhancement of electroniccommunications to shareholders. Thisis a developing area for all publiclylisted companies and the Board willcontinue to monitor what is happeningin the market place, particularlyregarding cost savings, take-up ratesand service features. The Board willthen decide on an appropriateelectronic communication service tooffer to shareholders.

• The attendance at the Annual GeneralMeeting by the external auditor toanswer questions from shareholdersabout the conduct of the audit and thepreparation and content of theIndependent Audit Report.

Directors

The following persons were directors ofthe company during the whole of thefinancial year and up to the date of thisreport:

• B Thornton, Chairman andIndependent Non-Executive Director

• J J Kennedy, Deputy Chairman andIndependent Non-Executive Director

• D R Barry, Independent Non-ExecutiveDirector

• R M Anderson, Independent Non-Executive Director

• M D E Kriewaldt, Independent Non-Executive Director

• P C Crowley, Managing Director

Mr Geoff J McGrath was appointed anon-executive director of GWAInternational Limited on 6 July 2004.

Details of the directors’ qualifications,experience and responsibilities are locatedon page 12 of the Annual Report.

Corporate Structure

GWA International Limited is a companylimited by shares that is incorporated anddomiciled in Australia. GWA InternationalLimited has prepared a consolidatedfinancial report incorporating the entitiesthat it controlled during the financial year,which are outlined in Note 27 of theFinancial Statements.


Directors’ Report AS AT 30 JUNE 2004Directors’ Report AS AT 30 JUNE 2004

Principal Activities

The principal activities during the yearwithin the consolidated entity were theresearch, design, manufacturing,importing, and marketing of householdconsumer products as well as thedistribution of these various productsthrough a range of distribution channelsin Australia and overseas.

There have been no significant changesin the nature of these activities duringthe year.

Employees

The consolidated entity employed 2,565employees as at 30 June 2004 (last year2,646 employees).

The company recognises the productivitybenefits to be gained from investing inits employees to improve motivation andindividual skills. The company remainscommitted to ensuring that staff areprovided access to appropriate trainingand development programs.

All companies in the consolidated entityare active equal opportunity employers.

Your directors present their report on the consolidated entity of GWA International Limitedand the entities it controlled during the year ended 30 June 2004.

Directors’ Interests

At the date of this report, the relevant interest (as defined in the Corporations Act 2001)of the directors in shares of the company were:

Director Ordinary Shares Interest (see notes below)

B Thornton Nil Note 4

J J Kennedy 50,000 Notes 1 and 4

D R Barry 3,126,061 Notes 2 and 4

R M Anderson Nil Note 4

M D E Kriewaldt 100,000 Notes 2 and 4

P C Crowley 500,000 Notes 3 and 4

G J McGrath 754,276 Notes 1 and 4

Note 1: Beneficially and legally owned.Note 2: The relevant interest is the power to exercise control over the disposal of the sharesand the power to control the right to vote.Note 3: In accordance with a resolution of shareholders at the Annual General Meeting on30 October 2003, Mr Crowley was issued 500,000 shares on 14 November 2003 under theterms and conditions of the GWA International Employee Share Plan.Note 4: Note 21 to the Financial Statements sets out the number of shares held directly,indirectly or beneficially by directors or their related entities at balance date as prescribedin Accounting Standard AASB 1046, this being 47,235,883 shares (last year 46,705,306 shares).


Review of Operationsand State of Affairs

A review of the consolidated entities’operations and the results of thoseoperations for the financial year isprovided in the Managing Director’sReview of Operations which is located onpages 6-11 of the Annual Report.

In the opinion of the directors, there wereno significant changes in the state ofaffairs of the consolidated entity duringthe financial year, other than that referredto in the financial statements or notesthereto.

Dividends

In respect of the financial year ended30 June 2003, as detailed in the Directors’Report for that financial year, a finaldividend of 8.0 cents per share franked

D I R E C T O R S ’ R E P O R T 21

Consolidated Results

Consolidated results of the economic entity for the financial year were as follows:

to 100% at 30% corporate income taxrate was paid to the holders of fully paidordinary shares on 1 October 2003.

In respect of the financial year ended30 June 2004, an interim dividend of10.0 cents per share franked to 100%at 30% corporate income tax rate waspaid to the holders of fully paid ordinaryshares on 1 April 2004.

In respect of the financial year ended30 June 2004, the directors recommendthe payment to the holders of fully paidordinary shares on 1 October 2004 of afinal ordinary dividend of 8.0 cents pershare, and a special dividend of 2.5 centsper share franked to 100% at 30%corporate income tax rate.

Significant Events afterBalance Date

On 31 August 2004, the directors ofGWA International Limited declared a

final ordinary dividend and a specialdividend on ordinary shares inrespect of the financial year ended30 June 2004. The total amount of thedividend is $29.222 million (last year$22.224 million), which represents a fullyfranked ordinary dividend of 8.0 centsper share and a fully franked specialdividend of 2.5 cents per share. Thedividends have not been provided for inthe 30 June 2004 financial statements.

There has not been any other matter orcircumstance, other than that referred toin the financial statements or notesthereto, that has arisen since the end ofthe financial year, that has significantlyaffected, or may significantly affect, theoperations of the consolidated entity, theresults of those operations, or the stateof affairs of the consolidated entity infuture financial years.

Likely Developments andExpected Results

Likely developments and expectedresults of the operations of theconsolidated entity is provided in theManaging Director’s Review of Operationswhich is located on pages 6-11 of theAnnual Report.

In the next financial year, the consolidatedentity will continue to pursue its policiesof increasing profitability and marketshare of all its businesses. Strategies havebeen formulated which focus onmaintaining growth and ensuring thatthe consolidated entity generates the bestpossible returns from its businesses.

Further information on likelydevelopments and expected results ofthe operations of the consolidated entityhave not been included in this Reportbecause the directors believe it would belikely to result in unreasonable prejudiceto the company.

Business Segment Segment Revenues Segment Results

2002/03 2003/04 2002/03 2003/04$’000 $’000 $’000 $’000

Buildings, fixtures and fittings 549,716 556,331 95,801 102,176

Commercial furniture 73,427 71,509 6,246 6,832

Unallocated 45,637 51,649 (23,471) (20,607)

Eliminations (2,255) (2,096) - -

Total 666,525 677,393 78,576 88,401

Consolidated results after tax 55,007 62,053

2002/03 2003/04cents cents

Basic earnings per share 19.8 22.3

Earnings Per Share


Directors’ Report CONTINUEDDirectors’ Report CONTINUED

EnvironmentalRegulation andPerformance

The consolidated entity holds licencesissued by Environmental ProtectionAuthorities which specify limits fordischarges to the environment whicharise from the operations of entities whichit controls.

These licences regulate the managementof discharge to air, storm water run-off,transport of waste and removalassociated with the manufacturingoperations in factories throughoutAustralia and the Netherlands. Whereappropriate, an independent review ofcompliance with licence conditions ismade by external advisors.

Storage and treatment of hazardousmaterials within particular operations aremonitored by the company in conjunctionwith external advisors. Prior to anydischarge to sewers, effluent is treatedand monitored to ensure strict observancewith licence conditions.

The directors are not aware of anybreaches of the consolidated entity’slicence conditions during thefinancial year.

Indemnification andInsurance of Directorsand Officers

Indemnification

The company’s Constitution provides that,to the extent permitted by the law, everycurrent (and former) director or secretaryof the company shall be indemnified outof the assets of the company against allcosts, expenses and liabilities which resultsdirectly or indirectly from facts orcircumstances relating to the personserving (or having served) in their capacityas director or secretary of the company,but excluding any liability arising out ofconduct involving a lack of good faith or

conduct known to the person to bewrongful or any liability to the companyor related body corporate.

Insurance Premiums

The company has paid premiums inrespect of insurance contracts whichprovide cover against certain liabilities ofevery current (and former) director andofficer of the company and its controlledentities. The contracts of insuranceprohibit disclosure of the total amountof the premiums paid, or the nature ofthe liabilities covered under the policies.

Premiums were paid in respect of everycurrent (and former) director andofficer of the company and controlledentities, including the directors namedon page 12 of this Report, the ChiefFinancial Officer, the Company Secretaryand all persons concerned or taking partin the management of the company andits controlled entities.

Directors’ and OtherOfficers’ Emoluments

Directors’ Remuneration Policy

The Nomination Committee is responsiblefor determining the remuneration for thenon-executive directors, with themaximum aggregate amount approvedby shareholders.

The non-executive directors areremunerated by way of directors’ feesonly (including statutory superannuation)and are not able to participate in theExecutive Performance Plan or GWAInternational Employee Share Plan (referbelow). In setting directors’ fees, theNomination Committee receives advicefrom external consultants to determinemarket remuneration levels.

As a result of the termination of theDirectors’ Retirement Scheme fornon-executive directors at the AnnualGeneral Meeting on 30 October 2003,retirement benefits are not available forany new non-executive directors of the

company, other than statutorysuperannuation.

Executives’ RemunerationPolicy

The Remuneration Committee isresponsible for determining and reviewingthe remuneration arrangements for theManaging Director and the executiveteam. The Remuneration Committeeassesses the appropriateness of the natureand amount of emoluments of suchofficers on a periodic basis by referenceto the relevant employment conditions,with the overall objective of ensuringmaximum stakeholder benefits from theretention of the high quality executiveteam.

Such officers receive their emolumentsin a variety of forms including cash andfringe benefits including motor vehicles.

To assist in achieving these objectives,the Remuneration Committee links thenature and amount of the ManagingDirector and officers emoluments to thecompany’s financial and operatingperformance. Executives have theopportunity to qualify for participation inthe Executive Performance Plan whichspecifies criteria to be met relating toprofitability, return on assets and earningsper share. Under the Plan there are twoincentives, one based on yearlyperformance and one based on discretethree year periods. All performance planpayments are subject to maximumamounts.

As a further incentive measure, employeesof the company may be invited toparticipate in the GWA InternationalEmployee Share Plan (“Share Plan”).Under the Share Plan, employees areprovided with a non-interest bearing loanfrom the company to acquire shares inthe company at market value. The loanis repaid through dividends, or in fullupon an employee ceasing employmentwith the company. Further detailsregarding the Share Plan are provided inNote 19 to the Financial Statements.


Details of the nature and amount of the emoluments of each director of the companyand each of the five executive officers of the company and the consolidated entityreceiving the highest emoluments for the financial year are as follows:

D I R E C T O R S ’ R E P O R T 23

Notes:Bonuses: The bonuses for the Executives are based on their entitlements under the yearly and three yearly Executive Performance Plan. Thebonus for the Executive Director, Mr Peter Crowley, is based on earning targets as outlined in his letter of appointment. Effective from1 July 2004, Mr Crowley will be included in the yearly and three yearly Executive Performance Plan.Other Benefits: Other benefits for the Executive Director and Executives include the provision of fringe benefits including motor vehicles, loansunder the Share Plan, insurances and applicable fringe benefits tax.

Salaryand Leave 1 Year 3 Year Other Super Termination

Entitlements Plan Plan Benefits annuation Payments Total$ $ $ $ $ $ $

S Wright 369,534 88,200 58,800 66,435 29,512 - 612,481Group Operations Manager

E Harrison 390,300 90,000 60,000 63,407 - - 603,707Chief Financial Officer

J Pearce 126,493 - - 40,831 12,849 300,000 480,173General Manager,Dorf Clark

R Watkins 276,309 75,600 35,280 57,299 25,040 - 469,528General Manager,Rover

J Measroch 246,530 69,600 46,400 65,778 23,200 - 451,508General Manager,Sebel

Bonuses-

EMOLUMENTS OF THE FIVE MOST HIGHLY PAID EXECUTIVES OF THE COMPANY AND THE CONTROLLED ENTITIES

Directors Other Super TerminationNon-Executive Fees Bonuses Benefits annuation Payments TotalDirectors $ $ $ $ $ $

B Thornton 214,500 - 250 19,305 - 234,055

J J Kennedy 108,810 - 250 9,793 - 118,853

D R Barry 75,790 - 250 6,821 - 82,861

R M Anderson 71,500 - 250 6,435 - 78,185

M D E Kriewaldt 85,800 - 250 7,722 - 93,772

Salary and Leave Other Super TerminationExecutive Entitlements Bonuses Benefits annuation Payments TotalDirector $ $ $ $ $ $

P C Crowley 815,079 412,500 68,807 36,000 - 1,332,386

-

EMOLUMENTS OF THE DIRECTORS OF GWA INTERNATIONAL LIMTED

Directors’ Meetings

The number of meetings of directors (including meetings of committees of directors)held during the year and the number of meetings attended by each director were asfollows:


Rounding

The company is of a kind referred to inClass Order 98/0100 issued by theAustralian Securities InvestmentCommission relating to the rounding ofamounts in the Directors’ Report.

Amounts in the Directors’ Report havebeen rounded off in accordance with thatClass Order to the nearest thousanddollars, or in certain cases, to the nearestdollar.

Corporate Governance

In recognising the need for the higheststandards of corporate behaviour andaccountability, the directors confirm thatthe current corporate governancepractices of the company are inaccordance with the Principles of GoodCorporate Governance and Best PracticeRecommendations released by the ASXCorporate Governance Council on31 March 2003. The company’s CorporateGovernance Statement is located onpages 13-19 of the Annual Report.

Auditor Independence

Ernst & Young have confirmed to thedirectors that their independence asauditor of the consolidated entity for theyear ended 30 June 2004 has not beencompromised.

Signed in accordance with a resolutionof the directors.

B ThorntonChairman

P C CrowleyManaging Director

Brisbane 31 August 2004

Note:Mr B Thornton retired as a member of the Remuneration Committee on 3 August 2004.The Board appointed Mr G J McGrath as the replacement member on the Committee.As at the date of this Report, the company had an Audit Committee, a RemunerationCommittee and Nomination Committee of the board of directors.The members of the Audit Committee are Mr J J Kennedy (Chairman), Mr B Thornton andMr M D E Kriewaldt.The members of the Remuneration Committee are Mr M D E Kriewaldt (Chairman),Mr G J McGrath and Mr D R Barry.The members of the Nomination Committee are Mr B Thornton (Chairman), Mr J J Kennedyand Mr M D E Kriewaldt.

Directors’ Meetings Audit Remuneration Nomination

Number of Meetingsheld: 11 3 3 1

Number of Meetingsattended:

B Thornton 11 3 3 1

J J Kennedy 11 3 - 1

P C Crowley 11 - - -

D R Barry 10 - 3 -

R M Anderson 11 - - -

M D E Kriewaldt 10 3 3 1

Meetings of Committes


Directors’ Report CONTINUEDDirectors’ Report CONTINUED

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