Globe International Annual Report 2004

Transcription

ITED
M
I
L
L
A
ATION EPORT 2004
N
R
E
T
N
I
AL R
GLOBE
ANNU
066
5 007
ABN 6
033
FRONT COVER: GLOBE SURF TEAM RIDER CJ HOBGOOD
BACK COVER: GLOBE SKATE AND LEGACY TEAM RIDER MATT MUMFORD
. These
s
d
n
a
r
.
b
twear
rldwide
e
o
e
w
r
t
s
s
t
d
e
an
rk
rdsports ccessories ma
a
o
b
g
in
a
manag
or
oods and
g
ing and
d
d
r
il
unities f
a
t
u
r
h
b
o
,
r
in
p
a
p
is
e
o
tw
ure
ificant
and fut
arel, foo
e
p
ing sign
g
p
id
a
t
a
v
i
o
r
e
r
h
e
p
t
h
s
y,
Globe's represented acros
categor
i
t
l
u
m
d
an
are
brands
ti region
l
u
m
,
d
de
ulti bran
m
is
s
s
e.
ine
Our bus he years to com
in t
growth
ITED
M
I
L
L
A
ATION EPORT 2004
N
R
E
T
N
I
AL R
GLOBE
ANNU
066
5 007
ABN 6
033
GLOBE SKATE AND DARKSTAR TEAM RIDER PAUL MACHNAU
CONTENTS
GLOBE INTERNATIONAL LIMITED
ANNUAL REPORT 2004
CHAIRMAN’S REPORT
5
CHIEF EXECUTIVE OFFICER’S REPORT
7
MULTI BRANDS
10
MULTI CATEGORY
12
MULTI REGION
14
HIGHLIGHTS
16
CORPORATE GOVERNANCE
19
DIRECTORS’ REPORT
25
FINANCIAL STATEMENTS
30
INDEPENDENT AUDIT REPORT TO THE MEMBERS
73
OF GLOBE INTERNATIONAL LIMITED
STOCK EXCHANGE AND INVESTOR INFORMATION
77
COMPANY PARTICULARS
80
GALLAZ
CHAIRMAN’S REPORT
“ …to continue to provide products that lead the way in our
I would also like to welcome Matt Hill to his new role as our Chief
core market and to provide sound returns to shareholders is
Executive Officer. I have no doubt that Matt’s international marketing
a challenge that inspires and drives all involved in
and brand management experience will bring a new dimension to
the business.”
growth at Globe. I would also like to express my personal thanks and
the thanks of my fellow directors to Matt’s predecessor, Mike
At this time last year I advised shareholders that the challenge
Sonand, for the manner in which he has overseen the restructuring
facing directors and management was quite clear - deliver
of the company in recent months. I know that Mike in his new role
sustainable growth and value to Globe’s shareholders.
as Chief Operating Officer will continue to be a major contributor to
Globe’s future.
It therefore now gives me pleasure to be able to report that the
process of restoring shareholder value is well underway. The profit
Globe is a company with an outstanding culture and history – to
turnaround that the company has recently reported this year, whilst
build on this legacy, to continue to provide products that lead the
still not satisfactory at this stage, is a reflection of the considerable
way in our core market and to provide sound returns to shareholders
gains that have been made as a result of the efforts of the
is a challenge that inspires and drives all involved in the business.
Globe team.
Over the last twelve months, much work has been undertaken to
reduce the company’s cost base and pursue efficiency gains whilst
at all times ensuring that product design and development,
marketing initiatives and an adherence to the company’s culture and
values is continued. In a highly creative and innovative business such
as Globe, it is essential to ensure that there are professional
business controls and systems in place. It is also vital that the
creativity and energy needed to be a leader in the youth market is
Paul Isherwood
Chairman
not in any way compromised. I believe that we have been successful
in achieving this balance.
Whilst in many ways the last twelve months has been a period of
consolidation for the company, directors remain steadfast in their
desire for sustainable growth. Our exciting new product offerings,
innovative and aggressive marketing initiatives, all on the back of a
sound internal structure, promise to deliver sound outcomes in the
year ahead.
I would like to express my thanks and appreciation to my fellow
directors, management and employees for all the work that has been
undertaken over the last twelve months to create such a sound base
for future growth.
CHAIRMAN’S REPORT
5
GLOBE SURF TEAM RIDER DAMIEN HOBGOOD
“Globe’s heritage and future is as a builder of authentic
boardsports and streetwear brands and we will always
remain true to our roots.”
The last twelve months has been a period of stabilisation for the
company as we have set about establishing the foundations for our
future successes. In doing so, we have refocused on the core values
that have both built this business and will be our strength into
the future.
Globe’s heritage and future is as a builder of authentic boardsports
and streetwear brands and we will always remain true to our roots.
Our forward looking strategies maintain this priority, ensuring we are
chasing growth while never sacrificing our brands’ longevity
and credibility.
In the forthcoming year, we will continue to focus strongly on
opportunities for long term growth, these will include:
* Significant investment in brands
* Innovative marketing
* Leading the industry in product development
* Continually seeking out new markets
* Optimising brand and category growth
Going forward, we will aggressively chase opportunities without
compromising our brands, and will continue to solidify Globe as a
true leader in the international boardsports and streetwear market.
2004
Over the last year, we have completed a major review of all our
operations, significantly cut our cost base, continued investing in
product development and marketing, and developed new brands that
will help drive growth into the future.
The Group result before interest, tax and depreciation and
amortization (EBITDA) was $19.8 million, a significant improvement
on the previous year’s loss of $3.0 million. Net profit after tax was
$7.1 million, an excellent recovery from last year’s loss of
$59.7 million.
Sales revenues grew strongly in the Australasian market, with solid
improvement in Europe and North America, particularly in the last six
months of 2003/04. As well, the recently established European Head
office in France is already demonstrating increased penetration in
this growing and important market.
7
OUTLOOK
CEO’S FOCUS
There is every reason to approach the next year with a positive
We are well set for growth in the year ahead and we have
outlook. A good base has been established and it is expected that
commenced many progressive new initiatives. I know that Globe has
we will continue to see growth across all markets. Specifically, in
the ability to generate superior returns by managing multiple brands
North America, the Globe brand of footwear and apparel will perform
in multiple categories and multiple markets whilst remaining
at a high level and the Gallaz brand will continue its growing
authentic in our market. The challenge for me will be to ensure that
momentum in the female boardsport market. Dwindle will continue
we continue to invest in our brands to maximise value in the long
as a powerful force in the skate market. Category expansion into
term, whilst at the same time generating good returns to
apparel with brands such as Darkstar and Blind is providing a
shareholders in the short term.
springboard for stable sales growth. New brands, in particular
Almost, are showing positive signs of acceptance in the market.
I will be ensuring that there is a specific emphasis on building our
presence in the northern hemisphere in the year ahead and it is
In Europe, the benefits of our new headquarters in France are
anticipated that the gains that we have seen, particularly in the last
evident. We are building our sales, marketing and distribution
six months, will be built upon.
infrastructure and will continue to increase our presence in this
important and growing market.
We have returned to the core values that this business was built on
and I hope that the year ahead is rewarding for both employees and
In Australasian markets, the continual growth of the Globe and Gallaz
shareholders of Globe alike. There is no doubt that the next year will
footwear and apparel ranges is encouraging. This trend is set to
hold many challenges, however, with a sound financial base, focused
continue as a result of the renewed focus on product and marketing
marketing, innovative products and with the support of the entire
initiatives for these brands. The company’s streetwear brands,
Globe crew, we will emerge as a stronger and even more
including Mooks and M-ONE-11, continue to be developed, with
successful company.
innovative, leading edge products being introduced and well
promoted into the market.
Increased sales momentum in the second half of the last financial
year, and the level of activity in the new financial year, gives us every
confidence to believe sales in 2004/05 will exceed our previous
record year of $217 million achieved in 2001/02.
Matt Hill
Chief Executive Officer
8
BLIND TEAM RIDER KRIS MARKOVICH
MULTI BRANDS
10
MULTI BRANDS
MULTI BRANDS
11
MULTI CATEGORY
12
MULTI CATEGORY
MULTI REGION
LONDON, UK
HOSSEGOR, FRANCE
LOS ANGELES, USA
14
MULTI REGION
HONG KONG
GOLD COAST, AUSTRALIA
MELBOURNE, AUSTRALIA
TORQUAY, AUSTRALIA
AUCKLAND, NEW ZEALAND
MULTI REGION
15
HIGHLIGHTS
SOMEWHERE ANYWHERE EVERYWHERE
GLOBE WORLD CUP SKATEBOARDING
Globe’s much anticipated surf movie, Somewhere Anywhere
In front of a sell-out crowd of 14,000 screaming fans, Blind team
Everywhere, had its international release in March to great acclaim.
skater Ronnie Creager stormed to a memorable victory in the Globe
Featuring Globe team surfers CJ Hobgood, Taj Burrow, Mark
World Cup Skateboarding final at Rod Laver Arena in Melbourne on
Occhilupo, Damien Hobgood, Luke Hitchings, Nathan Webster and
February 14th. In an event that brought together the best
Pancho Sullivan, and filmed at some of the greatest locations around
skateboarders in the world, fans were treated to a level of
the world, the result is a surf movie that has helped redefine the art.
competition not seen before. With international media coverage, a
global television program seen by millions and a top selling DVD of
the event now released, the 2004 Globe World Cup will long
be remembered.
TAJ BURROW
GLOBE WORLD CUP SKATEBOARDING 2004
CJ HOBGOOD RULES AT TEAHUPOO
With one of the highest scoring quarter finals in history when he
defeated six times world champion, Kelly Slater, there was no way
CJ was going to be stopped in his pursuit of victory at the Billabong
MARK OCCHILUPO
Pro at Teahupoo, Tahiti in May. Riding perfect waves breaking over a
shallow coral reef clearly brought out the best in CJ, in what was a
memorable final and an awesome event.
DAMIEN HOBGOOD - PERFECTION IN FIJI
In a great event for Globe surf team riders, Damien Hobgood scored
a memorable championship tour victory at the Quiksilver Pro at
Tavarua, Fiji in June. With a record score of 19.93 for two waves in
the final, nobody was going to catch Damien, but with fellow Globe
team riders, brother CJ and Occy coming in third and fifth
respectively, it was a dream result for the Globe team.
CJ HOBGOOD
16
HIGHLIGHTS
RYAN SHECKLER WINS WORLD CUP
With a series of wins throughout North America including Slam City
and the X-Games, there was no stopping Almost and Tensor team
rider Ryan Sheckler in his quest for World Cup glory in 2003. In a
continual display of awesome riding, Ryan tore up street courses
wherever he competed throughout the world and made it quite clear
that he is going to be at the leading edge of competition
skateboarding for many years to come.
GREG LUTZKA
VANESSA TORRES
LAYNE BEACHLEY WINS SIXTH CONSECUTIVE WORLD TITLE
AND MAJOR INTERNATIONAL AWARD
In December, Gallaz team surfer Layne Beachley re-wrote the history
books in winning her sixth consecutive ASP World Surfing
Championship. Layne also went on to win the coveted Laureus
World Alternative Sportsperson of the Year, honouring her
outstanding achievement. Layne is now acknowledged as one of
Australia’s greatest athletes.
RYAN SHECKLER
DOUBLE VICTORY AT SLAM CITY FOR GLOBE RIDERS
Globe riders, Greg Lutzka and Vanessa Torres scored a great team
double when they scored first place honours at the Van’s Slam City
Jam men’s and women’s street event in Vancouver, Canada in
early May.
LAYNE BEACHLEY
HIGHLIGHTS
17
M-ONE-11
The Company and the board are committed to achieving and
demonstrating the highest standards of corporate governance. In
light of the best practice recommendations released by the
Australian Stock Exchange (ASX) Corporate Governance Council in
March 2003 a review of the Company’s corporate governance
framework was completed during the 2004 financial year and
formally adopted by the board in June 2004. As a result of this
review and other recent governance developments the Company
made some changes to its corporate governance framework.
A description of the Company’s main corporate governance policies
is set out below.
THE BOARD OF DIRECTORS
The board operates in accordance with the principles set out in its
charter. The board charter is published on the Globe corporate
website www.globecorporate.com. The charter details the board’s
composition and responsibilities.
Board composition
The composition of the board is determined in accordance with
the constitution.
Responsibilities
The roles and responsibilities of the board of directors are set out in
the board charter. A summary of the responsibilities includes:
• Providing oversight and strategic direction for the Company.
• Reviewing and approving business plans, the annual budget and
financial plans including available resources and major capital
expenditure initiatives.
• Monitoring financial performance including approval of the annual
and half-year financial reports and liaison with the Company’s
auditors.
• Appointing and assessing the performance of the board.
• Selecting, appointing and reviewing the performance of the Chief
Executive Officer (CEO), Chief Financial Officer (CFO) and senior
management.
• Overseeing the operation of the board audit and risk management
committee.
• Considering approving and monitoring risk management strategies
and policies.
• Ensuring the Company meets its social and ethical responsibilities.
19
DIRECTORS
Non-executive directors
Details of the directors, their experience, expertise, qualifications and
The three non-executive directors met during the year without the
independent status are set out in the document below. There are
presence of management, to discuss the operation of the board and
three non-executive directors, all of whom are deemed independent
a range of other matters.
under the principles set out below and two executive directors at
the date of signing the directors’ report.
Term of office
Directors’ independence
The Company’s Constitution specifies that all non-executive directors
must retire from office no later than the third annual general meeting
The board has adopted specific principles in relation to directors’
(AGM) following their last election. Where eligible, a director may
independence. These state that to be deemed independent, a
stand for re-election.
director must be a non-executive and:
• not be a substantial shareholder of the Company or an officer of,
The chairman and the CEO
or otherwise associated directly with, a substantial shareholder of
the Company;
• within the last three years, not have been employed in an
executive capacity by the Company or any other group member, or
The chairman is responsible for leading the board, ensuring directors
are properly briefed in all matters relevant to their roles and
responsibilities and facilitating board discussions.
been a director after ceasing to hold any such employment;
• within the last three years not have been a principal of a material
professional adviser or a material consultant to the Company or
The CEO is responsible for managing the group, including
implementing group strategies and policies.
any other group member, or been an employee materially
associated with the service provided;
• not be a material supplier or customer of the Company or any
Commitment
other group member, or an officer of or otherwise associated
directly or indirectly with a material supplier or customer;
• have no material contractual relationship with the Company or a
controlled entity other than as a director of the group;
• not have been on the board for a period which could, or could
During the 2004 financial year there were nine board meetings and
five meetings of the audit and risk management committee. All
meetings were attended by all directors and appointed committee
members.
reasonably be perceived to, materially interfere with the director’s
ability to act in the best interests of the Company; and
• be free from any interest and any business or other relationship
Independent professional advice
which could, or could reasonably be perceived to, materially
interfere with the director’s ability to act in the best interests of
Directors and board committees have the right, in connection with
the Company.
their duties and responsibilities, to seek independent professional
advice at the Company’s expense.
Materiality for these purposes is determined on both qualitative and
quantitative bases. An amount of over 5% of annual turnover of the
Company or 5% of the individual director’s net worth is considered
Performance assessment
material for these purposes. In addition, a transaction of any amount
or a relationship is deemed material if knowledge of it may affect the
The board undertakes an annual assessment of its collective
shareholders’ understanding of the director’s performance.
performance and the performance of the chairman. The results and
any action plans are documented together with specific performance
goals which are agreed for the coming year. The last board self
assessment was conducted during June and July 2004.
20
CORPORATE REPORTING
A summary of the charter is set out below.
Consistent with ASX Principle 4, the Company’s financial report
Composition
preparation and approval process for the financial year ended 30
June 2004, involved both the CEO and CFO giving sign offs. They
The board audit and risk management committee comprises two or
have certified to the board that in their opinions:
more independent directors as determined by the board.
• That the Company’s financial reports are complete and present a
All members of the committee shall have a working familiarity with
true and fair view, in all material respects, of the financial
finance and accounting principles and practices, and at least one
condition and operational results of the Company and Group and
member of the committee shall be an audit committee
are in accordance with relevant accounting standards.
financial expert.
• That the above statement is founded on a system of risk
management and internal compliance and control which
Committee members will be appointed for an initial term of three
implements the policies adopted by the board.
years and can be appointed for a subsequent three year term.
BOARD AUDIT AND RISK MANAGEMENT COMMITTEE
Responsibilities
The board has established a board audit and risk management
committee to assist in the execution of its duties and to allow
The main responsibilities of the committee are to review the:
detailed consideration of risk management and audit issues faced by
the board.
• integrity of the Group financial statements;
• external auditors’ qualifications, performance and independence;
Minutes of committee meetings are tabled at the next
• performance of the Group’s risk management functions;
committee meeting.
• management of the Group’s operational risks; and
• compliance with legal and regulatory requirements.
The board audit and risk management committee consists of the
following non-executive directors:
NOMINATION AND REMUNERATION COMMITTEE
Norman O’Bryan (Chairman)
Paul Isherwood
The Company does not have separate nomination or remuneration
Philip Brass
committees. The board considers that these matters are best
addressed by the board as a whole.
Details of these directors’ qualifications and attendance at board
audit and risk management committee meetings are set out in the
directors’ report.
EXTERNAL AUDITORS
The committee has its own written charter setting out its role and
The Company and board audit and risk management committee
responsibilities, composition, structure, membership requirements
policy is to appoint external auditors who clearly demonstrate quality
and the manner in which the committee is to operate. The charter is
and independence. PricewaterhouseCoopers were appointed as the
reviewed on an annual basis and a copy of the committee charter is
external auditors in 2003.
published on the Globe corporate website www.globecorporate.com.
An analysis of fees paid to the external auditors, including a
breakdown of fees for non audit services, is provided in note 3 to the
financial statements. It is the policy of the external auditors to
provide an annual declaration of their independence to the
audit committee.
21
The external auditor attends the annual general meeting and is
CONTINUOUS DISCLOSURE
available to answer shareholder questions about the conduct of the
audit and the preparation and content of the audit report.
The Company has adopted a comprehensive policy covering
continuous disclosure that prescribes practices to ensure continuous
disclosure, prevention of selective disclosure and the conduct of
RISK ASSESSMENT AND MANAGEMENT
external briefings. The policy is reviewed annually and updated as
required. A copy of the continuous disclosure policies and
Consistent with ASX Principle 7, the Company is committed to the
procedures is on the Globe corporate website
identification, monitoring and management of risks associated with
www.globecorporate.com.
its business activities and has embedded in its management and
reporting systems a number of risk management controls. These
The CEO, CFO and company secretary are responsible for
include:
communications with the ASX. They must ensure compliance with
• guidelines and limits for approval of capital expenditure and
the continuous disclosure requirements in the ASX listing rules. They
investments;
• a comprehensive annual insurance programme;
must also coordinate information disclosures to analysts,
shareholders, the media and the public.
• policies and procedures for the management of financial risk and
treasury operations, including exposures to foreign currency
movements;
COMMUNICATIONS WITH SHAREHOLDERS
• annual budgeting and monthly and daily reporting systems which
enable the monitoring of progress against performance targets and
The Company places considerable importance on effective
the evaluation of trends; and
communications with its shareholders.
• directors’ financial due diligence questionnaires to management.
Management is ultimately responsible to the board for the group’s
The Company’s communications strategy promotes the
system of internal control and risk management. The board audit
communication of information to shareholders through the
and risk management committee assists the board in monitoring
distribution of the annual and half yearly reports, announcements
this role.
through the ASX and the media regarding changes in its businesses
and the chairman’s address at the annual general meeting.
CODE OF CONDUCT
The Company has adopted a set of corporate conduct principles that
reinforce to everyone who works for, and acts on its behalf, to
observe the highest standards of conduct and ethical behaviour. A
copy of the corporate code of conduct is on the Globe corporate
website www.globecorporate.com.
PURCHASE AND SALE OF COMPANY SECURITIES
The Company has in place a formal policy that reinforces to all
directors, officers and senior executives of Globe the operation of the
prohibition against insider trading and imposes limitations upon
dealings in Globe securities. A copy of the policy is on the Globe
corporate website www.globecorporate.com.
22
Globe posts all reports, ASX and media releases and copies of
significant business presentations and speeches on the Globe
corporate website www.globecorporate.com.
MOOKS
GLOBE SKATE AND ALMOST TEAM RIDER GREG LUTZKA
GLOBE INTERNATIONAL LIMITED AND ITS CONTROLLED ENTITIES
DIRECTORS’ REPORT
Your directors present their report on Globe International
Paul Isherwood (65)
Limited (“the Company”) and its controlled entities
Non-Executive Chairman
(collectively “Globe”) for the year ended 30 June 2004.
1,200,000 (Directors’ interests in Ordinary Shares of GLB)
DIRECTORS
Paul Isherwood was appointed to the Board of Directors in March
2001 and elected chairman in March 2003. He is a former Partner
and National Executive Chairman of Partners of Coopers & Lybrand,
Chartered Accountants. Paul is also chairman of Stadium Australia
Management Limited, Munich Reinsurance Company of Australasia
Limited and NM Rothschild Australia Holdings Pty Limited and is a
director of St George Bank Limited. Paul is a member of the audit
and risk management committee.
Norman O’Bryan SC (46)
Non-Executive Director
Stephen Hill (42)
Executive Director
Norman O’Bryan was appointed to the Board of Directors in July
2002. He is a Senior Counsel at the Victorian Bar, President of the
Stephen Hill co-founded Globe in 1984, remains a major shareholder
Baker Heart Research Institute and a Rhodes Scholar. Norman has
in the business, and has extensive expertise in the development of
written extensively on securities legislation in Australia and between
growth initiatives and market positioning strategies for the Company.
2001 and 2003, was Senior Counsel Assisting the HIH Royal
Stephen is a former champion skateboarder and remains an
Commission. Norman is Chairman of the Company’s audit and risk
active participant.
management committee.
Philip Brass (56)
Philip Brass was appointed to the Board of Directors in May 2003.
He is the former Chairman of NM Rothschild Australia Holdings Pty
Limited and various Rothschild group companies. He is Chairman of
UCMS Pty Ltd. Mr Brass was the Managing Director of Pacific
Dunlop Limited (88-96) and has extensive experience and expertise
in the Australian retail consumer goods industry. He is an active
member of a number of Australian and international industry and
Peter Hill (40)
professional associations and has represented Australia at APEC
Executive Director
Business Forums. He is also a past Chairman of the International
Business Leaders’ Advisory Council for the Mayor of Shanghai and,
from 1998, returns annually to Shanghai as an honorary council
Peter Hill co-founded Globe in 1984 and maintains a significant
member. Philip is a member of the Company’s audit and risk
shareholding in the business. He is a major contributor to the
management committee.
strategic market direction and brand development of the business.
Peter is a former skateboarding champion and maintains an
extensive interest in extreme action sports.
DIRECTORS’ REPORT
25
DIRECTORS’ REPORT
PRINCIPAL ACTIVITIES
The principal activities of the consolidated entity during the financial year were the design, development and distribution of youth fashion apparel,
footwear and skate equipment for the “Action Sports” market under both proprietary brands and other licensed and distributed brands.
No significant change in the nature of those activities has occurred during the period, other than by the acquisition of complementary entities and
businesses referred to herein.
CHANGES IN STATE OF AFFAIRS
No changes in the state of affairs of Globe have occurred, other than those referred to under post balance date events below.
POST BALANCE DATE EVENTS
There are no post balance date events.
DIVIDENDS
A final dividend of $4,146,378 was declared on 25 August 2004 and is payable on 27 September 2004, to those shareholders who are registered
on 15 September 2004.
SUMMARY OF OPERATIONS
Globe returned to full year profitability with a pre-amortisation, pre tax profit for the year of $16.6 million, a $25.4 million turnaround from the
prior year.
The Company’s cash position, net of debt, at 30 June 2004 was $17.2 million, an improvement of $12.5 million over the previous year,
underpinning the strength of the group’s financial position.
AUSTRALASIA
Australasian sales were $102.6 million, an improvement of 12.0% over the previous year’s result of $91.6 million. The Australasian EBITDA margin
at 12.4% is a 72% improvement on last year.
NORTH AMERICA
Globe North American sales in local currency terms were up 29% on last year. Importantly, Globe North America experienced a strong recovery in
the second half of the year with an improvement of over 60%, half on half.
The performance of Dwindle brands, formerly Kubic, has now stabilised after an unacceptable first half decline in sales.
26
DIRECTORS’ REPORT
DIRECTORS’ REPORT
Improvements in brand positioning and category development will see FY05 sales performance of both Globe and Dwindle improving by at least
20% in each division.
The Company’s multi branding strategy has extended with the establishment of a licensor division in North America. Licensing opens growth
opportunities by expanding our brands into new channels and categories not accessible within our traditional markets.
GLOBE EUROPE
European sales were US$14.2 million (compared to US$12.8 million last year) up 10.9% from the previous year’s result but are slightly down in
Australian currency. The recently opened office in Europe has already made a significant contribution to our business in this market. Moving to a
more direct relationship with customers, as well as the consumer, will see improved responsiveness and margins, better pricing and greater control
over distribution, all combining to ensure positive outcomes in future years.
OUTLOOK
Globe second half sales and net margins improved significantly over the first half. This momentum is expected to continue throughout the 2005
financial year and we anticipate sales will exceed our previous record of $217 million achieved in the 2001/02 year.
FUTURE DEVELOPMENTS
No further commentary on future developments is included in this report as the directors are of the opinion that such commentary would likely
result in unreasonable prejudice to the consolidated entity.
MEETINGS OF DIRECTORS
Details of attendances by directors at board meetings and committees of the board during the financial year were as follows:
BOARD MEETINGS
AUDIT AND RISK COMMITTEE MEETINGS
NUMBER ELIGIBLE TO
ATTEND
NUMBER
ATTENDED
NUMBER ELIGIBLE
TO ATTEND
NUMBER
ATTENDED
Paul Isherwood
9
9
5
5
Peter Hill
9
9
*
*
Stephen Hill
9
9
*
*
Norman O’Bryan
9
9
5
5
Philip Brass
9
9
5
5
* Not a member of relevant committee.
DIRECTORS’ REPORT
27
DIRECTORS’ REPORT
REMUNERATION REPORT
Please refer to Note 26 on page 56 of the accompanying Financial Statements for further information.
Details of the nature and amount of each element of remuneration for each director of the Company and each of the 5 officers of the Company and
of the consolidated entity receiving the highest emoluments for the year ended 30 June 2004 are set out in the following tables.
DIRECTORS OF GLOBE INTERNATIONAL LIMITED
PRIMARY
POST-EMPLOYMENT
CASH
SALARY & FEES
$
SUPERANNUATION
$
Paul Isherwood
120,000
12,800
132,800
Norman O’Bryan
34,400
36,450
70,850
Philip Brass
60,000
-
60,000
-
-
-
NAME
Peter Hill
Stephen Hill
Total
TOTAL
$
-
-
-
214,400
49,250
263,650
TOP 5 REMUNERATED EXECUTIVES OF GLOBE INTERNATIONAL LIMITED (PARENT ENTITY)
PRIMARY
NAME
Michael Sonand
378,811
Stephen Kelly
Harry Truscott
Matthew Wong
Noel Forsyth
Total
28
CASH
SALARY & FEES
$
DIRECTORS’ REPORT
CASH
BONUS
$
POST-EMPLOYMENT
EQUITY
SUPERANNUATION
$
PERFORMANCE
RIGHTS
$
TOTAL
$
-
43,707
66,667
489,185
233,974
-
21,058
33,333
288,365
150,030
50,000
12,202
26,667
238,899
200,000
-
11,002
26,667
237,669
144,240
22,500
16,762
-
187,252
1,107,055
72,500
104,731
153,334
1,437,620
DIRECTORS’ REPORT
TOP 5 REMUNERATED EXECUTIVES OF THE CONSOLIDATED ENTITY
PRIMARY
NAME
CASH
SALARY & FEES
$
CASH
BONUS
$
POST-EMPLOYMENT
EQUITY
SUPERANNUATION
$
PERFORMANCE
RIGHTS
$
TOTAL
$
Rodney Mullen (1)
399,576
133,641
-
-
533,217
Michael Sonand
378,811
-
43,707
66,667
489,185
Gary Valentine (1)
390,636
7,021
-
26,667
424,324
Marc McKee (1)
279,775
116,020
-
-
395,795
John Sherwood (1)
Total
369,330
-
-
-
369,330
1,818,128
256,682
43,707
93,334
2,211,851
(1) US based executives
ENVIRONMENTAL REGULATIONS
The consolidated entity is not subject to particular or significant environmental regulation in respect of its activities.
INSURANCE OF OFFICERS
During the financial year, Globe paid a premium of $52,723 to insure the directors, secretary and senior management of the Company.
The liabilities insured include legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in
their capacity as officers of the Company and its controlled entities, but not in respect of obligations owed to the Company, or if they are found
liable in such proceedings.
Signed in accordance with a resolution of the board of directors.
Melbourne
Dated this 25th August 2004
Paul Isherwood
Norman O’Bryan
Chairman
Director
DIRECTORS’ REPORT
29
STATEMENTS OF FINANCIAL PERFORMANCE for the year ended 30 June 2004
NOTES
PARENT ENTITY
CONSOLIDATED
2004
2003
2004
2003
$’000
$’000
$’000
$’000
187,593
207,083
88,098
84,262
1,736
(13,967)
715
(3,941)
Materials and consumables used
(93,351)
(100,801)
(44,054)
(35,860)
Employee benefits expense
(22,605)
(31,150)
(11,764)
(10,938)
(7,166)
(60,009)
(1,051)
(1,098)
Revenue from ordinary activities
2
Changes in inventories of finished goods and work in progress
Depreciation and amortisation expense
3
Borrowing costs expense
3
(1,185)
(2,357)
(1)
(30)
(52,991)
(63,616)
(22,180)
(33,240)
12,031
(64,817)
9,762
(845)
(4,754)
5,118
(2,806)
392
tax expense
7,277
(59,699)
6,956
(453)
Net profit attributable to outside equity interests
(167)
-
-
-
5
7,110
(59,699)
6,956
(453)
6
38
(5,130)
9,022
(8,938)
38
(5,130)
9,022
(8,938)
Selling, general and administrative expenses
Profit/(loss) from ordinary activities before income tax
expense
Income tax (expense) / benefit relating to ordinary activities
4
Profit/(loss) from ordinary activities after related income
Net profit/(loss) attributable to members of Globe
International Limited
Net exchange difference on translation of financial report of
self-sustaining foreign operations
Total revenues, expenses and valuation adjustments
attributable to members of Globe International Limited
recognised directly in equity
Total changes in equity attributable to members of Globe
International Limited other than those resulting from
transactions with owners as owners
7
7,148
(64,829)
15,978
(9,391)
Basic Earnings Per Share (cents per share)
8
1.7
(14.4)
-
-
Diluted Earnings Per Share (cents per share)
8
1.7
(14.4)
-
-
The above statements of financial performance should be read in conjunction with the accompanying notes.
30
STATEMENTS OF FINANCIAL POSITION as at 30 June 2004
NOTES
PARENT ENTITY
CONSOLIDATED
2004
2003
2004
2003
$’000
$’000
$’000
$’000
9
31,404
26,422
15,370
12,680
Receivables
10
34,008
27,640
18,423
15,703
Inventories
11
22,469
20,733
9,919
9,204
Other
17
6,129
6,225
2,473
4,185
94,010
81,020
46,185
41,772
Current assets
Cash
Total current assets
Non current assets
Receivables
10
-
-
64,573
53,084
Property, plant and equipment
12
7,453
7,775
3,839
3,707
Investments
13
954
502
80,238
80,300
Intangible assets
15
69,403
71,799
3,523
658
Deferred tax assets
16
7,137
8,652
885
1,326
Other
17
Total non current assets
Total assets
6
519
-
-
84,953
89,247
153,058
139,075
178,963
170,267
199,243
180,847
Current liabilities
Accounts payable
18
17,581
10,587
6,236
4,385
Interest bearing liabilities
19
6,544
8,851
-
-
Current tax liabilities
20
1,661
3
-
-
Provisions
27
1,104
974
1,038
914
26,890
20,415
7,274
5,299
Total current liabilities
Non current liabilities
19
7,617
12,840
-
-
Deferred tax liabilities
20
507
528
429
136
Provisions
27
384
334
384
334
8,508
13,702
813
470
35,398
34,117
8,087
5,769
143,565
136,150
191,156
175,078
184,167
184,067
184,167
184,067
Total non current liabilities
Total liabilities
Net assets
Equity
Contributed equity
21
Reserves
6
(5,867)
(5,905)
-
(9,022)
Retained profits/(losses)
5
(34,902)
(42,012)
6,989
33
Outside equity interest
22
167
-
-
-
7
143,565
136,150
191,156
175,078
Total equity
The above statements of financial position should be read in conjunction with the accompanying notes.
31
STATEMENTS OF CASH FLOWS for the year ended 30 June 2004
NOTES
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
CONSOLIDATED
PARENT ENTITY
2004
2003
2004
2003
$’000
$’000
$’000
$’000
190,738
241,784
94,597
94,296
(170,655)
(203,888)
(83,785)
(81,579)
581
548
490
788
Interest and other costs of finance paid
(1,185)
(1,924)
(1)
(30)
Income taxes paid
(2,012)
(12,087)
(467)
(6,384)
30 (a)
17,467
24,433
10,834
7,091
12
(2,352)
(5,286)
(1,206)
(765)
-
(538)
-
-
2
43
-
14
-
14
(1,652)
(52,135)
(1,652)
(52,135)
(256)
-
(156)
-
(4,217)
(57,959)
(3,000)
(52,900)
Net cash provided by operating activities
Cash flows from investing activities
Payment for property, plant and equipment
Payment for investments
Proceeds on disposal of fixed assets
Payment for acquisition of controlled entity
net of cash acquired
Payment for trademarks and other intangibles
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
-
-
-
-
Repayment of borrowings
(7,820)
(9,810)
-
(909)
-
-
(5,144)
(1,209)
controlled entities)
-
(10,352)
-
(10,352)
Proceeds from share issue
-
80,367
-
80,367
Cost of share issue, prospectus and initial listing
-
(2,352)
-
(2,352)
(7,820)
57,853
(5,144)
65,545
5,430
24,327
2,690
19,736
26,422
4,141
12,680
(7,056)
(448)
(2,046)
-
-
31,404
26,422
15,370
12,680
Net advances to controlled entities
Dividends paid (including pre-acquisition to minorities in
Net cash provided by (used in) financing activities
Net increase in cash held
Cash at beginning of the financial year
Effect of exchange rates on cash holdings in foreign currencies
Cash at the end of the financial year
9
The above statements of cash flows should be read in conjunction with the accompanying notes.
32
NOTES TO THE ACCOUNTS For the year ended 30 June 2004
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial report is a general purpose financial report that has been prepared in accordance with the requirements of the Corporations Act 2001,
applicable Accounting Standards, Urgent Issues Group Consensus Views and other authoritative pronouncements of the Australian Accounting
Standards Board. The financial report has been prepared on an accrual basis and is based on historical costs and does not take into account
changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair values of the consideration
given in exchange for assets. The accounting policies have been consistently applied, unless otherwise stated.
Information about how the transition to Australian equivalents to IFRS is being managed, and the key differences in accounting policies that are
expected to arise, is set out in note 1(r).
The following is a summary of the material accounting policies adopted by the consolidated entity in the preparation of the financial report.
(a) Principles of consolidation
The consolidated accounts comprise the accounts of Globe International Limited ("Parent Entity") a company limited by shares, domiciled and
incorporated in Australia, and all of its controlled entities. A controlled entity is any entity controlled by Globe International Limited. Control exists
where Globe International Limited has the capacity to dominate the decision making in relation to the financial and operating policies of another
entity so that the other entity operates with Globe International Limited to achieve the objectives of Globe International Limited. A list of controlled
entities is contained in Note 14 to the financial statements.
All inter company balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been
eliminated on consolidation. Outside equity interests in the results and equity of controlled entities are shown separately in the consolidated
statement of financial performance and statement of financial position respectively.
Where controlled entities have entered or left the consolidated entity during the year, their operating results have been included from the date
control was obtained or until the date control ceased.
(b) Income tax
The consolidated entity adopts the liability method of tax effect accounting whereby the income tax expense shown in the profit and loss account
is based on the operating profit before income tax adjusted for any permanent differences.
Timing differences, which arise due to the different accounting periods in which items of revenue and expense are included in the determination of
operating profit before income tax and taxable income, are brought to account as either a provision for deferred income tax or an asset described
as future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received or the liability will become
payable.
Future income tax benefits arising from timing differences are not brought to account unless realisation of the asset is assured beyond reasonable
doubt. Future income tax benefits arising from tax losses are not brought to account unless there is virtual certainty of realisation of the benefit.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in
income taxation legislation and the expectation that the consolidated entity will derive sufficient future assessable income to enable the benefit to
be realised and comply with the conditions of deductibility imposed by the law.
33
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Tax consolidation legislation
Globe International Limited and its wholly owned Australian controlled entities have decided to implement tax consolidation legislation as of 1 July
2003. The Australian Taxation Office has not yet been notified of this decision.
As a consequence, Globe International Limited, as the head entity in the tax consolidated group, recognises current and deferred tax amounts
arising in relation to its own transactions, events and balances. Amounts receivable or payable under an accounting tax sharing agreement with the
tax consolidated entities are recognised separately as tax related amounts receivable or payable. Expenses and revenues arising under the tax
sharing agreement are recognised as a component of income tax expense (revenue).
(c) Foreign currency transactions and balances
Foreign currency transactions are initially translated into Australian currency at the rate of exchange at the date of the transaction. At balance date
amounts payable and receivable in foreign currencies are translated to Australian currency at rates of exchange current at that date. The gains or
losses arising from conversion of short term assets and liabilities, whether realised or unrealised, are included in profit from ordinary activities
before income tax.
Hedging is undertaken in order to minimise possible adverse financial effects of movements in exchange rates on specific purchases of goods and
services. Gains or costs arising upon entry into hedging transactions, together with subsequent exchange gains or losses resulting from those
transactions are deferred to the date of the purchase and included in the measurement of the purchase.
The assets and liabilities of overseas controlled entities, which are self-sustaining, are translated into Australian currency at rates of exchange
current at balance date, while its revenues and expenses are translated at average exchange rates during the year. Exchange differences arising on
translation are taken directly to foreign currency translation reserve.
(d) Acquisitions of assets
The purchase method of accounting is used for all acquisitions of assets regardless of whether equity instruments or other assets are acquired.
Cost is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus incidental costs
directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of the instruments is their market price as
at the acquisition date. Transaction costs arising on the issue of equity instruments are recognised directly in equity.
Goodwill is brought to account on the basis described in Note 1(j).
(e) Revenue recognition
Amounts disclosed as revenue are net of returns, trade allowances, goods and services tax (GST) and other taxes paid.
Revenue from a sale is recorded when goods have been despatched to a customer pursuant to a sales order and the associated risks have passed
to the carrier or customer.
34
Royalties are recognised in the period in which underlying sales are made by the licensee.
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.
Dividend revenue is recognised when the right to receive a dividend has been established.
(f) Inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost comprises direct material, direct
labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating
expenditure. Costs are assigned to inventory based on standard costs which closely approximate actual costs.
(g) Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated depreciation or amortisation. Depreciation is calculated to write off the cost of
each item over its expected useful life to the economic entity. The carrying amount of each item of property, plant and equipment is reviewed
annually by directors to ensure it is not in excess of the recoverable amount. The recoverable amount is assessed on the basis of the expected net
cash flows which will be received from the employment of the asset in the normal course of business and subsequent disposal. The expected net
cash flows have not been discounted to their present values in determining recoverable amounts.
The expected useful lives for each class of depreciable assets are:
Class of Asset
Useful Life
Leasehold Improvements
Period of Lease
Motor Vehicles
7 years
Plant and Equipment
4-13 years
Office Equipment, Furniture and Fittings
4-15 years
Leased Assets
3-5 years
(h) Investments
Non current investments are brought to account at cost or at directors’ valuation. The carrying amount of each investment is reviewed annually by
directors to ensure that it is not in excess of the recoverable amount. The recoverable amount is assessed from the investment’s current market
value or the underlying net assets in the particular entities. The expected net cash flows from investments have not been discounted to their
present value in determining the recoverable amounts.
(i) Leases
Finance leases are capitalised at the present value of the minimum lease payments. A corresponding lease liability is also established and each
lease payment is allocated between the liability and the finance charges.
35
The leased asset is amortised on a straight line basis over the term of the lease, or where it is likely that the consolidated entity will obtain
ownership of the asset, the life of the asset. Leased assets held at the reporting date are being amortised over periods ranging from 3 to 5 years.
Operating lease payments are expensed as incurred.
(j) Intangible assets
Goodwill
Where an entity or operation is acquired, the identifiable net assets acquired are measured at fair value. The excess of the fair value of the cost of
acquisition over the fair value of the identifiable net assets acquired, including any liability for restructuring costs, is brought to account as goodwill
and amortised on a straight line basis over the period during which the benefits are expected to arise, subject to a maximum of 20 years.
The directors have a policy of regularly reviewing the carrying value of goodwill and to the extent the value exceeds the recoverable amount, the
decrement in the carrying amount is recognised as an expense in net profit or loss in the reporting period in which the write down occurs.
Trademarks, licences and other intellectual property.
Trademarks and licences are brought to account at purchased cost or fair value as determined in accordance with Note 1(d), when the
consideration is non-monetary. Trademarks and licences are amortised on a straight line basis over their expected useful life, presently between 10
to 20 years.
Expenditure incurred in maintaining trademarks, developing, maintaining or enhancing trade names, copyright and other intellectual property
including technical know how, patents and registered designs, is written off against operating profit in the period in which it is incurred.
The directors have a policy of regularly reviewing the carrying value of each trademark and licence and, to the extent the value exceeds the
recoverable amount, the decrement in the carrying amount is recognised as an expense in net profit or loss in the reporting period in which the
write down occurs.
(k) Borrowing costs
Borrowing costs are recognised as expenses in the period in which they are incurred and include interest on bank overdrafts and short term and
long term borrowings.
(l) Employee benefits
Wages, salaries and annual leave
Provision is made for the consolidated entity’s liability for employee benefits arising from services rendered by employees to balance date.
Employee benefits expected to be settled within one year together with benefits arising from wages and salaries, annual leave and sick leave
which will be settled after one year, have been measured at the amounts expected to be paid when the liabilities are settled. Other employee
benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those
entitlements.
Superannuation
Contributions are made by the consolidated entity to employee superannuation funds and are charged as expenses when incurred.
36
Long Service Leave
The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in the provision for employee
benefits at the amounts expected to be paid when the liabilities are settled. Amounts expected to be settled after one year have been measured
at the present value of the estimated future cash flows. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service.
Employee benefits on costs
Employee benefits on costs, including payroll tax, are recognised and included in employee benefit liabilities and costs when the employee benefits
to which they relate are recognised as liabilities.
Equity based compensation benefits
Equity based compensation benefits are provided to employees via the Globe Employee Share Plan, Option Plan and Executive Long Term Incentive
Plan. Information relating to these plans is set out in note 27.
No accounting entries are made in relation to the Globe Employee Option plan until the options are exercised, at which time the amounts
receivable from employees are recognised in the statement of financial position as share capital. There are no amounts recognised in the
remuneration of executives’ note 26 due to the remote probability of exercise due to the low share price relative to the exercise price.
The cost of shares purchased on market and then transferred to employees for no cash consideration under the employee share plan is recognised
as a liability and as part of employee benefit costs when the employee becomes entitled to the shares.
The cost of shares purchased on market to deliver against the performance rights under the Executive Long Term Incentive Plan are expensed in
three equal instalments over a three year period to match the vesting of the performance rights.
(m) Cash
For the purpose of the statement of cash flows, cash includes:
• cash on hand and at call deposits with banks or financial institutions, net of bank overdrafts; and
• investments in money market instruments with less than 30 days to maturity.
(n) Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing the operating profit after income tax by the weighted average number of ordinary shares
outstanding during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect
of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to
have been issued for no consideration in relation to dilutive potential ordinary shares.
37
(o) Rounding of amounts
The parent entity has applied relief available under ASIC Class Order 98/100 and accordingly, amounts in the financial report have been rounded off
to the nearest $1,000.
(p) Comparative figures
Where required by accounting standards comparative figures have been adjusted to conform with changes in presentation for the current financial
year.
(q) Website costs
Costs in relation to the development and maintenance of websites are charged as expenses in the period in which they are incurred.
(r) International Financial Reporting Standards (IFRS)
The Australian Accounting Standards Board (AASB) is adopting IFRS for application to reporting periods beginning on or after 1 January 2005. The
AASB will issue Australian equivalents to IFRS, and the Urgent Issues Group will issue abstracts corresponding to International Accounting
Standards Board (IASB) interpretations originated by the International Financial Reporting Interpretations Committee or the former Standing
Interpretations Committee. The adoption of Australian equivalents to IFRS will be first reflected in the consolidated entity’s financial statements for
the half-year ending 31 December 2005 and the year ending 30 June 2006.
Entities complying with Australian equivalents to IFRS for the first time will be required to restate their comparative financial statements to
amounts reflecting the application of IFRS to that comparative period. Most adjustments required on transition to IFRS will be made,
retrospectively, against opening retained losses as at 1 July 2004.
The consolidated entity has established a project team to manage the transition to Australian equivalents to IFRS, including training of staff and
system and internal control changes necessary to gather all the required information. The project team is chaired by the Chief Financial Officer and
reports to the audit committee. To date the project team has analysed most of the Australian equivalents to IFRS and has identified a number of
accounting policy changes that will be required. In some cases choices of accounting policies are available and some of these choices are still
being analysed to determine the most appropriate accounting policy for the consolidated entity.
The major changes identified to the consolidated entity’s existing accounting policies to date, include the following:
(i) Income tax
Under the Australian equivalent to IAS 12 Income Taxes, deferred tax balances are determined using the balance sheet method which
calculates temporary differences based on the carrying amounts of an entity’s assets and liabilities in the statement of financial position
and their associated tax bases. In addition, current and deferred taxes attributable to amounts recognised directly in equity are also
recognised directly in equity.
This will result in a change to the accounting policy, under which deferred tax balances are determined using the income statement
method, items are only tax effected if they are included in the determination of pre tax accounting profit or loss and/or taxable income
or loss and current and deferred taxes cannot be recognised directly in equity.
38
NOTES TO THE ACCOUNTS for the year ended 30 June 2004
(ii) Intangible assets – goodwill
Under the Australian equivalent to IFRS 3 Business Combinations, amortisation of goodwill will be prohibited, and will be replaced by
an annual impairment test focusing on discounted future cash flows associated with the related cash generating unit.
This will result in a change to the current accounting policy, under which goodwill is amortised on a straight line basis over the period
during which the benefits are expected to arise and not exceeding 20 years.
(iii) Financial instruments
Under the Australian equivalent to IAS 39 Financial Instruments: Recognition and Measurement, there will be changes as a result of
Foreign exchange contracts held for hedging purposes being accounted for as cash flow hedges. Changes in the fair value of those
contracts will be recognised directly in the profit and loss account until the hedged transaction occurs, in which case the amounts
recognised in the profit and loss account will be included in the initial cost of the assets acquired. Currently, the costs or gains arising
under contracts together with any realised or unrealised gains from measurement are included in assets or liabilities as deferred losses
or deferred gains.
The above should not be regarded as a complete list of changes in accounting policies that will result from the transition to Australian equivalents
to IFRS, as not all standards have been fully reviewed yet, and some decisions have not yet been made where choices of accounting policies are
available. For these reasons it is not yet possible to quantify the impact of the transition to Australian equivalents to IFRS on the consolidated
entity’s financial position and reported results.
NOTE 2. REVENUE
CONSOLIDATED
PARENT ENTITY
2004
2003
2004
2003
$’000
$’000
$’000
$’000
184,220
204,548
85,505
78,784
1,507
1,447
338
1,934
185,727
205,995
85,843
80,718
Exchange gains net
740
-
1,285
-
Interest income (i)
581
548
490
788
43
-
14
-
502
540
466
2,756
Revenue from operating activities
Net sales
Royalty income
Revenue from outside the operating activities
Proceeds on disposal of fixed assets
Other income
Total revenue from ordinary activities
1,866
1,088
2,255
3,544
187,593
207,083
88,098
84,262
(i) Interest received from:
Related Entities
-
-
-
291
Other entities
581
548
490
497
Total interest income
581
548
490
788
39
NOTE 3. PROFIT/(LOSS) FROM ORDINARY ACTIVITIES
CONSOLIDATED
PARENT ENTITY
Profit/(loss) from ordinary activities before income tax includes
the following specific gains and expenses:
2004
2003
2004
2003
$’000
$’000
$’000
$’000
1
-
-
-
95,782
115,418
43,340
41,802
143
1,742
75
(45)
(399)
412
-
-
1,185
2,357
1
30
1,074
1,347
206
50
50
80
24
24
Gains
Net gain on disposal of fixed assets
Expenses
Cost of sales
Bad and doubtful debts
Provision for write down in Investment in Other to recoverable
amount
Borrowing costs
Interest and finance charges paid
Depreciation
Leasehold improvements
Motor vehicles
340
370
89
104
Office equipment, furniture and fittings
1,116
2,197
732
920
Total Depreciation
2,580
3,994
1,051
1,098
959
3,886
91
1,345
-
2,212
9
40
Goodwill
2,430
35,592
-
-
Trademarks
1,724
19,893
-
-
Plant and equipment
Write down of inventory to net realisable value
Net loss on disposal of fixed assets
Amortisation
432
530
-
-
4,586
56,015
-
-
Rent for premises
3,785
4,279
2,233
1,698
Remuneration of the auditors of the holding company
2004
2003
2004
2003
Licences
Total Amortisation
Operating lease expenses
(in whole dollars)
- Audit of the holding company
- Audit of controlled entities
- Other services
$
$
$
$
195,000
255,000
195,000
255,000
99,627
20,000
-
-
170,333
23,000
150,235
23,000
464,960
298,000
345,235
278,000
-
275,000
-
-
Remuneration of other auditors
- Audit of controlled entities
40
NOTE 4. INCOME TAX
CONSOLIDATED
PARENT ENTITY
2004
2003
2004
2003
$’000
$’000
$’000
$’000
12,031
(64,817)
9,762
(845)
3,610
(19,445)
2,928
(253)
Non deductible amortisation
997
16,025
-
-
Non allowable expenditures
19
67
19
6
The income tax expense for the financial year differs from the amount
calculated on the profit /(loss). The differences are reconciled as follows:
Profit/(loss) from ordinary activities before income tax expense
Income tax calculated at 30%
Tax effect of permanent differences:
Non assessable foreign currency translation
Deductible capital allowances
Other
(Over-provision)/under provision prior year
Differences in tax on overseas income
Income tax expense/(benefit)
10
(30)
-
-
(145)
(145)
(145)
(145)
-
(193)
-
-
14
(8)
4
-
249
(1,389)
-
-
4,754
(5,118)
2,806
(392)
(42,012)
17,687
33
486
7,110
(59,699)
6,956
(453)
-
-
-
-
(34,902)
(42,012)
6,989
33
NOTE 5. RETAINED PROFITS / (LOSSES)
Retained profits / (losses) at beginning of the financial year
Net profit / (loss) attributable to the members of the parent entity
Dividends provided for or paid
Retained profits/(losses) at the reporting date
NOTE 6. FOREIGN CURRENCY TRANSLATION RESERVE
Foreign currency translation reserve at beginning of the financial year
Increase / (decrease) recognised in statement of financial performance
Foreign currency translation reserve at the reporting date
(5,905)
(775)
(9,022)
(84)
38
(5,130)
9,022
(8,938)
(5,867)
(5,905)
-
(9,022)
41
NOTE 7. EQUITY
CONSOLIDATED
Total equity at the beginning of the financial year
Total changes in equity recognised in the statement of financial performance
PARENT ENTITY
2004
2003
2004
2003
$’000
$’000
$’000
$’000
136,150
118,159
175,078
101,649
7,148
(64,829)
15,978
(9,391)
100
85,172
100
85,172
-
(2,352)
-
(2,352)
Transactions with owners as owners:
Contributions of equity
Payment of costs associated with owner’s equity contributions
Total changes in outside equity interest
Total equity at the reporting date
167
-
-
-
143,565
136,150
191,156
175,078
9,298
6,383
NOTE 8. EARNINGS PER SHARE
Earnings used in calculation of basic earnings per share ($’000)
Basic earnings per share (cents per share)
7,110
(59,699)
1.7
(14.4)
414,505,769
414,365,201
7,110
(59,699)
1.7
(14.4)
414,505,769
414,365,201
The weighted average number of shares on issue during the year
used in calculation of basic earnings per share
Earnings used in calculation of diluted earnings per share ($’000)
Diluted earnings per share (cents per share)
The weighted average number of shares on issue during the year
used in calculation of diluted earnings per share
NOTE 9. CASH
Cash at bank
Short dated bills of exchange
25,332
20,125
6,072
6,297
6,072
6,297
31,404
26,422
15,370
12,680
31,404
26,422
15,370
12,680
Reconciliation of Cash
Cash at the end of the financial year as shown in the statement of cash
flows is reconciled to items in the balance sheet as follows:
Cash
42
NOTE 10. RECEIVABLES
CONSOLIDATED
Current
Trade debtors
Less: Provision for doubtful debts
Other debtors
PARENT ENTITY
2004
2003
2004
2003
$’000
$’000
$’000
$’000
34,083
27,676
16,820
15,456
(906)
(1,245)
(333)
(550)
33,177
26,431
16,487
14,906
831
1,209
1,936
797
34,008
27,640
18,423
15,703
-
-
64,573
53,084
-
-
64,573
53,084
2,324
2,725
-
464
Non current
Amounts receivable from controlled entities
NOTE 11. INVENTORIES
Raw materials – at cost
Work in progress – at cost
Finished goods – at cost
Raw materials – at net realisable value
Finished goods – at net realisable value
682
525
574
525
13,281
8,836
4,546
2,568
704
62
704
42
5,478
8,585
4,095
5,605
22,469
20,733
9,919
9,204
43
NOTE 12. PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED
Leasehold improvements – at cost
Less: accumulated depreciation
Motor vehicles – at cost
Plant and equipment – at cost
Office equipment, furniture & fittings
Total property, plant and equipment
PARENT ENTITY
2004
2003
2004
2003
$’000
$’000
$’000
$’000
1,835
6,323
5,471
2,074
(2,516)
(1,470)
(532)
(325)
3,807
4,001
1,542
1,510
337
421
109
167
(216)
(229)
(41)
(75)
121
192
68
92
2,656
2,483
710
684
(1,581)
(1,283)
(330)
(241)
1,075
1,200
380
443
7,125
5,962
4,488
3,569
(4,675)
(3,580)
(2,639)
(1,907)
2,450
2,382
1,849
1,662
7,453
7,775
3,839
3,707
Reconciliation of movement in carrying values
Reconciliations of the carrying values of each class of property, plant and equipment at the beginning and end of the current financial year for the
parent entity are as follows:
PARENT COMPANY FIXED ASSETS
RECONCILIATION OF MOVEMENT
IN CARRYING VALUES
LEASEHOLD
IMPROVEMENTS
MOTOR
VEHICLES
PLANT &
EQUIPMENT
OFFICE EQUIPMENT,
FURNITURE &
FITTINGS
TOTAL
$'000
$'000
$'000
$'000
$'000
1,510
92
443
1,662
3,707
238
23
26
919
1,206
(206)
(24)
(89)
(732)
(1,051)
-
(23)
-
-
(23)
1,542
68
380
1,849
3,839
Carrying value at the beginning of
financial year
Additions
Depreciation
Disposal of fixed assets
Carrying value at the reporting date
44
NOTE 12. PROPERTY, PLANT AND EQUIPMENT (continued)
Reconciliations of the carrying values of each class of property, plant and equipment at the beginning and end of the current financial year for the
consolidated entity are as follows:
CONSOLIDATED ENTITY - FIXED ASSETS
RECONCILIATION OF MOVEMENT
IN CARRYING VALUES
LEASEHOLD
IMPROVEMENTS
MOTOR
VEHICLES
PLANT &
EQUIPMENT
$'000
$'000
$'000
$'000
$'000
4,001
192
1,200
2,382
7,775
954
23
169
1,206
2,352
-
-
72
-
72
(74)
(4)
(26)
(20)
(124)
(1,074)
(50)
(340)
(1,116)
(2,580)
-
(40)
-
(2)
(42)
3,807
121
1,075
2,450
7,453
OFFICE EQUIPMENT,
FURNITURE &
FITTINGS
TOTAL
Carrying value at the beginning of
financial year
Additions
Assets of entities acquired
during the financial year
Foreign Currency Translation gain / (loss)
on Fixed Assets of overseas subsidiaries
Depreciation
Disposal of fixed assets
Carrying value at the reporting date
NOTE 13. INVESTMENTS
CONSOLIDATED
Shares in controlled entities (Note 14) at cost
Investment in other entities
PARENT ENTITY
2004
2003
2004
2003
$’000
$’000
$’000
$’000
-
80,234
80,258
950
910
-
38
Provision for write down to recoverable amount
-
(412)
-
-
Shares in other corporations - at cost
4
4
4
4
954
502
80,238
80,300
45
NOTE 14. CONTROLLED ENTITIES
NAME
COUNTRY
OWNERSHIP
INTEREST
2004
2003
%
%
Australia
100
100
Mooks Pty Ltd*
Australia
100
-
Stussy Sista Pty Ltd.*
Australia
100
-
Parent Entity:
Globe International Limited
Australia
Entities under the control of Globe International Ltd
Hardcore Enterprises Pty Ltd
Entities under the control of Hardcore Enterprises Pty Ltd*
(In 2003 all entities were under the control of Globe International Ltd)
Globe International Nominees Pty Ltd*
Globe International (NZ) Ltd
Stussy (Holdings) Pty Ltd*
Australia
100
-
New Zealand
100
-
Australia
100
-
Denmark
100
-
United States
100
-
Australia
100
100
Netherlands
100
100
France
100
-
France
100
-
France
100
-
Australia
100
100
United States
100
100
United States
100
100
Diaxis LLC
United States
100
100
Skateboard World Industries, Inc.
United States
100
100
Australia
50.1
-
Globe Europe ApS
Osata Enterprises, Inc.
Entities under the control of Stussy (Holdings) Pty Ltd
Stussy (Australia) Pty Ltd*
Entities under the control of Globe Europe ApS
Globe Europe BV
Globe France SAS
Entities under the control of Globe France SAS
Quattra SC
Entities under the control of Quattra SC
Grind Distribution SARL
Entities under the control of Osata Enterprises, Inc.
Kuglobe Australia Pty Ltd
Kuglobe, Inc.
Entities under the control of Kuglobe, Inc.
Kubic Marketing, Inc.
Entities under the control of Kubic Marketing, Inc.
Entities under the control of Globe International Nominees Pty Ltd
World Brands Pty Ltd
* Party to Deed of Cross Guarantee dated 29 June 2001 – relief from preparing financial statements obtained under ASIC Class Order 94/1418.
46
NOTE 14. CONTROLLED ENTITIES (continued)
ACQUISITION OF CONTROLLED ENTITIES (2004)
On 1 February 2004, the parent entity through its wholly owned subsidiary Globe France SAS acquired 100% of the issued ordinary voting shares of
Quattra, an action board sports footwear and apparel distributor. The operating results of the new controlled entity and its subsidiary, SARL Grind
SAS have been included in the consolidated statement of financial performance since the date of acquisition.
In the event that certain predetermined gross profit targets are achieved by the controlled entity and its subsidiaries for the years ended 30 June
2005 - 30 June 2007, additional consideration will be payable to the vendors. As at the date of this report it is not possible to determine if any
future payments will be made.
Details of the acquisition are as follows:
2004
$’000
Fair value of assets and liabilities acquired
Receivables
Inventories
Other current assets
Trade creditors and accruals
Income taxes payable
Bank loan
987
1,327
247
72
(1,129)
(137)
(1,236)
Cash
196
Net assets acquired
327
Goodwill on consolidation
1,521
Cash consideration
1,848
CONSOLIDATED
PARENT ENTITY
2004
2003
2004
2003
$’000
$’000
$’000
$’000
1,848
52,135
1848
52,135
Cash
(196)
-
(196)
-
Outflow of cash
1,652
52,135
1,652
52,135
Outlay of cash to acquire controlled entity net of cash acquired
Cash consideration
Less balances acquired
47
ACQUISITION OF CONTROLLED ENTITIES (2003)
On 2 July 2002 the parent entity acquired 100% of the issued shares of Kubic Marketing, Inc. The operating results of the newly controlled entity
have been included in the consolidated statement of financial performance since the date of acquisition.
In the event that certain predetermined EBITDA targets are reached by the controlled entity for the year ended 30 June 2004, additional
consideration of US$3.5m is payable to ex Kubic shareholders. Where the earnout is paid to key management, the earnout will be satisfied through
the issue of Globe shares. At the date of this report no additional payments are anticipated.
Details of the acquisition are as follows:
2003
$’000
Purchase consideration
68,594
Less: consideration satisfied by the issue of Globe Int’l Shares
(4,805)
Less: deferred notes issued
Cash consideration
(11,654)
52,135
Fair value of assets and liabilities acquired
Receivables
9,177
Inventories
14,599
Prepaid expenses
2,165
Other current assets
4,036
Deferred income taxes
1,800
Trademarks
Deposits and other assets
Trade creditors and accruals
Finance leases
Bank loan
4,086
28,636
911
(8,583)
(248)
(8,929)
Deferred tax liability
(559)
Subordinated notes
(10,583)
Other liabilities
(385)
Net assets acquired
36,123
Goodwill on consolidation
32,471
68,594
48
STATEMENT OF FINANCIAL PERFORMANCE – ASIC CLASS ORDER CLOSED GROUP
A deed of cross guarantee between Hardcore Enterprises Pty Ltd, Mooks Pty Ltd, Globe International Nominees Pty Ltd, Stussy (Australia) Pty Ltd,
Stussy Sista Pty Ltd, Stussy (Holdings) Pty Ltd ("the subsidiaries") and Globe International Limited was entered into on 29 June 2001 and relief
was obtained from preparing financial statements for the subsidiaries under ASIC Class Order 94/1418. Under the deed each entity guarantees to
support the liabilities and obligations of the others. The Statement of Financial Performance for the year ended 30 June 2004 and Statement of
Financial Position as at 30 June 2004 for the closed group, which is also the extended closed group, comprising Globe International Limited and the
subsidiaries is as follows:
STATEMENT OF FINANCIAL PERFORMANCE
Revenue from ordinary activities
Changes in inventories of finished goods and work in progress
2004
2003
$’000
$’000
104,463
108,562
1,779
(3,672)
Materials and consumables used
(50,663)
(50,594)
Employee benefits expense
(12,218)
(12,411)
(4,415)
(4,817)
(1)
-
(30,826)
(39,055)
8,119
(1,987)
(2,976)
(85)
5,143
(2,072)
(1,059)
(15,261)
(1,059)
(15,261)
4,084
(17,333)
Depreciation and amortisation expense
Borrowing costs expense
Selling, general and administrative expenses
Profit/(loss) from ordinary activities before income tax expense
Income tax expense relating to ordinary activities
Net profit/(loss) attributable to members of the closed group
Net exchange difference on translation of financial report of selfsustaining foreign operations
Total revenues, expenses and valuation adjustments attributable to
members of the closed group recognised directly in equity
Total changes in equity attributable to members of the closed group
other than those resulting from transactions with owners as owners
49
STATEMENT OF FINANCIAL POSITION - ASIC CLASS ORDER CLOSED GROUP
2004
2003
$’000
$’000
Cash
23,640
20,305
Receivables
17,829
18,503
Inventories
11,674
9,895
2,617
5,401
55,760
54,104
STATEMENT OF FINANCIAL POSITION
Current assets
Other
Total current assets
Non current assets
Receivables
5,700
-
3,924
3,740
Investments
77,296
78,342
Intangible assets
48,120
50,907
885
945
Total non current assets
135,895
133,934
Total assets
191,655
188,038
6,313
7,007
Deferred tax assets
Current liabilities
Accounts payable
-
-
Current tax liabilities
-
155
Provisions
1,038
914
Total current liabilities
7,351
8,076
Deferred tax liabilities
431
324
Provisions
384
334
Total non current liabilities
815
658
8,166
8,734
183,490
179,304
Contributed equity
184,167
184,067
Reserves
(15,771)
(14,713)
15,094
9,950
183,490
179,304
Non current liabilities
Total liabilities
Net assets
Equity
Retained profits
Total equity
50
NOTE 15. INTANGIBLE ASSETS
CONSOLIDATED
Trademarks
Less: accumulated amortisation
Licences
PARENT ENTITY
2004
2003
2004
2003
$’000
$’000
$’000
$’000
51,892
52,054
-
(23,072)
(21,663)
-
-
28,820
30,391
-
658
4,583
4,583
3,267
-
(1,532)
(1,100)
-
-
3,051
3,483
3,267
-
658
78,060
76,283
276
-
(40,528)
(38,358)
(20)
-
37,532
37,925
256
-
69,403
71,799
3,523
658
Future income tax benefit attributable to timing differences
3,907
2,392
885
934
Future income tax benefit attributable to tax losses
3,230
6,260
-
392
7,137
8,652
885
1,326
2,902
3,120
1,168
1,784
109
23
-
-
3,118
3,082
1,305
2,401
6,129
6,225
2,473
4,185
-
66
-
-
Trade deposits
-
431
-
-
Deferred expenses
6
22
-
-
6
519
-
-
Goodwill at cost
Total intangibles
NOTE 16. DEFERRED TAX ASSETS
NOTE 17. OTHER ASSETS
Current
Prepayments
Trade deposits
Income tax refund receivable
Non current
Prepayments
51
NOTE 18. ACCOUNTS PAYABLE
CONSOLIDATED
Trade creditors
Other creditors and accruals
PARENT ENTITY
2004
2003
2004
2003
$’000
$’000
$’000
$’000
11,569
4,804
3,318
1,795
6,012
5,783
2,918
2,590
17,581
10,587
6,236
4,385
NOTE 19. INTEREST BEARING LIABILITIES
NOTES
Current - secured
Bank loan
Finance leases
33(a)
1,254
-
-
-
25, 33(a)
-
200
-
-
1,254
200
5,290
8,651
-
-
6,544
8,851
-
-
7,617
12,840
-
-
7,617
12,840
-
-
Current - unsecured
Subordinated and deferred notes
33(a)
Non current - unsecured
Subordinated and deferred notes
33(a)
The bank loan has been secured by a pledge over the shares of a controlled entity. Details of interest rates applicable to this loan are
specified in Note 33(a).
The finance lease in 2003 was secured by a lien over computer equipment. Details of interest rates applicable to this lease are specified in
Note 33(a).
NOTE 20. TAX LIABILITIES
Current
Provision for income tax
1,661
3
-
-
507
528
429
136
184,067
184,167
184,067
Non current
Deferred income tax
NOTE 21. CONTRIBUTED EQUITY
Paid up capital
414,637,811 (2003-414,453,860) fully paid ordinary shares
52
184,167
NOTE 21. CONTRIBUTED EQUITY (continued)
NO. OF
SHARES
MOVEMENTS IN CONTRIBUTED EQUITY FOR THE YEAR
CONSOLIDATED
PARENT ENTITY
2004
2003
2004
2003
$’000
$’000
$’000
$’000
414,453,860
184,067
101,247
184,067
101,247
183,951
100
-
100
-
Shares issued pursuant to exercise of options (2003)
-
-
367
-
367
Placement of shares (Kubic purchase) (2003)
-
-
80,000
-
80,000
Issue of shares (Kubic purchase) (2003)
-
-
4,805
-
4,805
Transactions costs (2003)
-
-
(2,352)
-
(2,352)
414,637,811
184,167
184,067
184,167
184,067
Balance at beginning of year
Shares issued under agreement to purchase
Sandolls footwear business
Balance at the reporting date
NOTE 22. OUTSIDE EQUITY INTERESTS IN CONTROLLED ENTITIES
Interest in:
- Share capital
-
-
-
-
- Reserves
-
-
-
-
167
-
-
-
167
-
-
-
4,146
-
4,146
-
- Retained profits
NOTE 23. DIVIDENDS
Subsequent Event
Since the end of the financial year, the directors declared a final, fully
franked dividend of 1 cent per share
The financial effect of this dividend has not been brought to account in
the financial statements for the year ended 30 June 2004 and will be
recognised in subsequent financial reports
53
NOTE 24. FRANKING ACCOUNT
CONSOLIDATED
PARENT ENTITY
2004
2003
2004
2003
$’000
$’000
$’000
$’000
11,430
10,842
11,430
2,286
- not later than 1 year
-
202
-
-
- later than 1 year, not later than 5 years
-
-
-
-
Minimum finance lease payments
-
202
-
-
Less: future finance charges
-
(2)
-
-
Finance lease liabilities
-
200
-
-
Franking account balance at 30% tax rate
NOTE 25. CAPITAL AND LEASING COMMITMENTS
(a) Finance lease commitments:
Payable
-
Included in the accounts as interest-bearing liabilities (Note 19):
200
-
-
-
-
-
-
-
200
-
-
3,412
4,352
2,335
2,213
11,732
14,475
7,086
6,863
Current
-
Non current
(b) Operating lease commitments:
Non cancellable operating leases contracted for but not capitalised in the
financial statements
Payable
- not later than 1 year
- later than 1 year but not later than 5 years
- later than 5 years
54
4,123
6,115
4,123
5,659
19,267
24,942
13,544
14,735
NOTE 26. DIRECTOR AND EXECUTIVE DISCLOSURES
Directors
The names of parent entity directors who have held office at any time during the financial year are:
Chairman – non-executive director
Paul Isherwood
Executive directors
Peter Hill
Stephen Hill
Norman O’Bryan
Philip Brass
Executives (other than directors) with the greatest authority for strategic direction and management
Name
Position
Employer
Michael Sonand
Stephen Kelly
Chief Financial Officer
Globe international Limited
Matthew Hill
Global Strategic Development
Osata Enterprises Inc.
Gary Valentine
President Globe North America
Robert Sayre
President Dwindle Distribution
Matthew Wong
President Europe
Harry Truscott
President Australasia
REMUNERATION OF DIRECTORS AND EXECUTIVES
Principles used to determine the nature and amount of remuneration
The objective of the company’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results
delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders. The Board
ensures that executive reward satisfies the following key criteria for good reward governance practices:
• competitiveness and reasonableness;
• compensation linked and aligned to performance;
• transparency; and
• capital management.
In consultation with external remuneration consultants, the company has structured an executive remuneration framework that is market
competitive and complementary to the reward strategy of the organisation. It is aligned with shareholders interests in the following respect:
• it has economic profit as a core component of plan design;
• it focuses on sustained growth in share price and delivering constant profitability as well as focusing the executive on key non-financial drivers
of value;
55
NOTE 26. DIRECTOR AND EXECUTIVE DISCLOSURES (continued)
• it attracts and retains high calibre executives, as it:
• rewards capability and experience;
• reflects competitive reward for contribution to shareholder growth;
• provides a clear structure for earning rewards; and
• provides recognition for contribution.
The framework provides a mix of fixed and variable pay, and a blend of short and long-term incentives. As executives gain seniority with the group,
the balance of this mix shifts to a higher proportion of “at risk” rewards.
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-executive
directors’ fees and payments are reviewed annually by the Board. Non-executive directors do not participate in any incentive schemes.
Directors’ fees
The current base remuneration was last reviewed with effect from April 1 2003. The Chairman’s remuneration is inclusive of committee fees while
non-executive directors receive additional yearly fees for membership of the audit committee. The two executive and founding directors of the
Company have elected not to be paid directors’ fees.
Retirement allowances for directors
There are no retirement allowances for directors. Directors may, however, elect to have a portion of their remuneration paid into their personal
superannuation plans.
Executive pay
The executive pay and reward framework has four components:
• base pay;
• short-term performance incentives;
• long-term incentives; and
• other remuneration such as superannuation.
The combination of these comprises the executive’s total remuneration.
Base pay
The base pay is structured as a total employment cost package which may be delivered as a mix of cash and prescribed non-financial benefits at
the executive’s discretion.
56
Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. External remuneration consultants provide
analysis and advice to ensure base pay is set to reflect the market for a comparable role. Base pay for senior executives is reviewed annually to
ensure the executive’s pay is competitive with the market. An executive’s pay is also reviewed on promotion.
There are no guaranteed base pay increases fixed in any senior executive’s contracts.
Short term incentives
Should the Company achieve a predetermined profit target set by the board then a pool of short-term incentive (STI) is available for executives for
allocation during the annual review. Using a profit target ensures variable award is only available when value has been created for shareholders and
when profit is consistent with the business plan. The incentive pool is leveraged for performance above the threshold to provide an incentive for
executive out-performance.
Each executive has a target STI opportunity depending on the accountabilities of the role and impact on organisation or business unit performance.
For senior executives the maximum target bonus opportunity is 100% of their base salary.
The short term bonus payments may be adjusted up or down the line with under or over achievement against the target performance levels at the
discretion of the board.
The STI annual target payment is reviewed annually.
Details of remuneration
Details of the remuneration of each director of the Company and each of the five specified executives of the consolidated entity, including their
personally related entities, are set out in the following tables.
DIRECTORS OF GLOBE INTERNATIONAL LIMITED
PRIMARY
POST-EMPLOYMENT
CASH
SALARY & FEES
$
SUPERANNUATION
$
Paul Isherwood
120,000
12,800
132,800
Norman O’Bryan
34,400
36,450
70,850
Philip Brass
60,000
-
60,000
Peter Hill
-
-
-
Stephen Hill
-
-
-
214,400
49,250
263,650
NAME
Total
TOTAL
$
57
SPECIFIED EXECUTIVES OF THE CONSOLIDATED ENTITY
PRIMARY
NAME
CASH
SALARY & FEES
$
CASH
BONUS
$
POST-EMPLOYMENT
EQUITY
SUPERANNUATION
$
PERFORMANCE
RIGHTS
$
TOTAL
$
Michael Sonand
378,811
-
43,707
66,667
489,185
Gary Valentine (1)
390,636
7,021
-
26,667
424,324
Stephen Kelly
233,974
-
21,058
33,333
288,365
Robert Sayre (1)
227,684
32,182
-
26,667
286,533
Harry Truscott
150,030
50,000
12,202
26,667
238,899
Matthew Wong (1)
200,000
-
11,002
26,667
237,669
Matthew Hill (1)
Total
120,927
-
-
26,667
147,594
1,702,062
89,203
87,969
233,335
2,112,569
1) US /Europe based executives
Share based compensation – Employee Share Option Plan (ESOP)
The terms and conditions of each grant of options affecting remuneration in this or future reporting periods are as follows:
GRANT DATE
EXPIRY DATE
EXERCISE PRICE
VALUE PER OPTION
AT GRANT DATE
DATE EXERCISABLE
25 May 2001
25 May 2006
$1.00
$0.73
All are exercisable
9 January 2002
9 January 2007
$2.40
$0.88
1/3 after 9 Jan 03; 1/3 after 9 Jan 04; 1/3 after 9 Jan 05
1July 2002
1July 2007
$1.65
$0.66
1/3 after 1 Jul 03; 1/3 after 1 Jul 04; 1/3 after 1Jul 05
One option converts to one ordinary share. Staff eligible to participate in the plan are those who have been continuously employed by the
consolidated entity for a period of at least one year. Options are awarded to employees based on past service and/or performance conditions.
The options are issued free of charge. They are exercisable over three years. One third of the options granted vest each year of employment
completed. Other than the payment of the exercise price there are no other prerequisites for the exercise of the options providing participants are
employees of the consolidated entity when exercised.
Exercise price of the initial options was the 2001 initial public offer prospectus subscription price of $1.00 per share.
In respect of subsequent options issued the exercise price will be the weighted average price of Globe International Limited ordinary shares for the
period 5 days prior to the offer of the options.
58
Options expire after five years from the date of grant.
Options do not carry any voting, dividend or rights issues entitlement.
Share based compensation – Executive Long Term Incentive Plan (LTIP)
The terms and conditions of each grant of performance rights affecting remuneration in this or future reporting periods are as follows:
GRANT DATE
EXPIRY DATE
VESTING HURDLE*
VESTING DATE
29 October 2003
29 October 2006
$0.60
29 October 2004
29 October 2003
29 October 2006
$0.78
29 October 2005
29 October 2003
29 October 2006
$1.01
29 October 2006
* Vesting hurdle in year 1 is an absolute share price hurdle based on the average price over a period after the announcement of results. Vesting hurdles in years
2 and 3 are also based on achieving an average price over a period after the announcement of results, with an additional focus on Total Shareholder Return.
There is nil consideration payable by the participant to the Company for performance rights awarded under the LTIP.
The holder of the performance rights is not entitled to voting or dividend rights until the performance rights vest and the shares are issued.
The performance rights, subject to performance criteria vest in equal annual instalments over three years on each anniversary of the grant date. If
the performance criteria are not satisfied those rights will not vest and will be carried forward. If the performance criteria are not satisfied on the
vesting date in year three the entire issue of performance rights lapse.
Share based compensation – Employee Share Scheme
None of the directors or the specified executives are permitted to participate in the Employee Share Scheme.
Service agreements
Remuneration and other terms of employment of the Chief Executive Officer and the specified executives are formalised in service agreements.
Each of these agreements provides for the provision of performance-related cash bonuses and participation if applicable in other long term
incentive plans. Other major provisions of the agreements relating to remuneration are set out below.
Michael Sonand, Chief Executive Officer
• initial term 1 year - shall continue thereafter unless either party provides 3 months notice of termination
• contract will be reviewed annually in line with company policy
• no termination payments
59
Stephen Kelly, Chief Financial Officer
• initial term 1 year - shall continue thereafter unless either party provides 6 months notice of termination until June 2006, thereafter 3 months
notice of termination is required
Matthew Hill, Global Strategic Development
• no formal contract
Gary Valentine, President Globe North America
Robert Sayre, President Dwindle North America
• no expiry on contract – 3 months notice period
Matthew Wong, President Globe Europe
Harry Truscott, President Globe Australasia
Option holdings
The number of options over ordinary shares in the company held during the financial year by each of the specified executives of the consolidated
entity, including their personally related entities, are set out below. No further issues of options will be made under this plan.
NAME
Michael Sonand
Stephen Kelly
Matthew Hill
GRANTED
DURING THE
YEAR AS
REMUNERATION
EXERCISED
DURING THE YEAR
OTHER CHANGES
DURING
THE YEAR
BALANCE AT
THE END OF
THE YEAR
VESTED AND
EXERCISABLE AT
THE END OF
THE YEAR
500,000
-
-
-
500,000
266,667
-
-
-
-
-
-
-
-
-
-
-
-
Gary Valentine
550,000
-
-
-
550,000
550,000
Matthew Wong
550,000
-
-
-
550,000
550,000
-
-
-
-
-
-
250,000
-
-
-
250,000
250,000
Robert Sayre
Harry Truscott
60
BALANCE AT THE
START OF THE
YEAR
Performance rights holdings
The number of performance rights over ordinary shares in the company held during the financial year by each of the specified executives of the
consolidated entity, including their personally related entities, are set out below.
NAME
BALANCE AT THE
START OF THE
YEAR
GRANTED
DURING THE
YEAR AS
REMUNERATION
EXERCISED
DURING THE YEAR
OTHER CHANGES
DURING THE
YEAR
BALANCE AT
THE END OF THE
YEAR
VESTED AND
EXERCISABLE AT
THE END OF THE
YEAR
Michael Sonand
-
500,000
-
-
500,000
-
Stephen Kelly
-
250,000
-
-
250,000
-
Matthew Hill
-
200,000
-
-
200,000
-
Gary Valentine
-
200,000
-
-
200,000
-
Matthew Wong
-
200,000
-
-
200,000
-
Robert Sayre
-
200,000
-
-
200,000
-
Harry Truscott
-
200,000
-
-
200,000
-
Shareholdings
The number of shares in the company held during the financial year by each director of the Company and each of the five specified executives of
the consolidated entity, including their personally related entities, are set out below.
NAME
BALANCE AT THE
START OF THE
YEAR
RECEIVED DURING THE
YEAR ON THE EXERCISE OF
PERFORMANCE RIGHTS
AND/OR OPTIONS
OTHER CHANGES
DURING THE YEAR
BALANCE AT THE END
OF THE YEAR
Directors of Globe International Limited
Ordinary Shares
121,312,810
-
-
121,312,810
Stephen Hill
121,312,810
-
-
121,312,810
Philip Brass
1,472,475
-
327,525
1,800,000
Norman O’Bryan
1,107,250
-
300,000
1,407,250
1,065,000
-
135,000
1,200,000
12,762,189
-
-
12,762,189
1,175,000
-
-
1,175,000
Peter Hill
Paul Isherwood
Specified executives of the consolidated entity
Ordinary Shares
Matthew Hill
Matthew Wong
Gary Valentine
800,000
-
250,000
1,050,000
Michael Sonand
-
-
646,000
646,000
Stephen Kelly
-
-
300,000
300,000
Harry Truscott
150,000
-
-
150,000
-
-
-
-
Robert Sayre
61
Directors
Peter Hill and Stephen Hill were directors of the company throughout the financial period. Peter and Stephen Hill are both directors of Osata
Enterprises Pty Ltd. The Company rents property from this entity on commercial terms and during the financial year ended 30 June 2004, the
Company paid rent to the entity of $30,000.
Peter Hill and Stephen Hill are directors of Whyte House Productions Pty Ltd. During the financial year ended 30 June 2004, the company paid
$534,113 for production and promotion services provided by Whyte House Productions Pty Ltd on competitive, arms length terms.
Aggregate amounts of each of the above types of other transactions with directors of the Company are set out below.
CONSOLIDATED
Rent of office buildings /warehouse
Promotional work carried out by director related entities
PARENT ENTITY
2004
2003
2004
2003
$
$
$
$
30,000
33,000
30,000
33,000
534,113
311,000
534,113
311,000
NOTE 27. EMPLOYEE BENEFITS
EMPLOYEE BENEFITS AND RELATED ON COSTS LIABILITIES
Current
Employee benefits
1,104
974
1,038
914
1,104
974
1,038
914
384
334
384
334
384
334
384
334
1,488
1,308
1,422
1,248
2003
NUMBER
2004
NUMBER
2003
NUMBER
Non current
Employee benefits
Aggregate employee benefits liability
EMPLOYEE NUMBERS
2004
NUMBER
No. of employees at year end
62
360
382
207
194
NOTE 27. EMPLOYEE BENEFITS (continued)
(a) Employee Share Option Plan (ESOP)
The terms of the employee share option plan are as follows:
One option converts to one ordinary share. Staff eligible to participate in the plan are those who have been continuously employed by the
consolidated entity for a period of at least one year. Options are awarded to employees based on past service and/or performance conditions.
completed. Other than the payment of the exercise price there are no other prerequisites for the exercise of the options.
In respect of subsequent options issued the exercise price will be the weighted average price of Globe International Limited ordinary shares for the
period 5 days prior to the offer of the options.
No further issues will be made under this ESOP.
Set out below is a summary of the options granted under the plan.
CONSOLIDATED AND PARENT ENTITY - 2004
GRANT
DATE
EXPIRY
DATE
24-May-01
LAPSED
DURING THE
YEAR
BALANCE AT
THE END OF
THE YEAR
265,510
8,460,408
-
-
300,000
-
100,000
-
-
-
95,000
495,000
-
-
460,510
9,255,408
EXERCISED
DURING
THE YEAR
LAPSED
DURING THE
YEAR
BALANCE AT
THE END OF
THE YEAR
376,958
629,769
8,725,918
ISSUED DURING
THE YEAR
EXERCISED
DURING
THE YEAR
EXERCISE
PRICE
BALANCE
START OF THE
YEAR
24-May-06
$ 1.00
8,725,918
-
-
09-Jan-02
09-Jan-07
$ 2.40
300,000
-
27-Jun-02
27-Jun-07
$ 1.53
100,000
-
01-Jul-02
01-Jul-07
$ 1.65
590,000
9,715,918
Total
CONSOLIDATED AND PARENT ENTITY - 2003
GRANT
DATE
EXPIRY
DATE
24-May-01
09-Jan-02
ISSUED DURING
THE YEAR
EXERCISE
PRICE
BALANCE
START OF THE
YEAR
24-May-06
$ 1.00
9,732,645
09-Jan-07
$ 2.40
300,000
300,000
27-Jun-02
27-Jun-07
$ 1.53
100,000
100,000
01-Jul-02
01-Jul-07
$ 1.65
Total
590,000
10,132,645
590,000
590,000
376,958
629,769
9,715,918
63
CONSOLIDATED
2004
NUMBER
Options vested at the reporting date
PARENT ENTITY
2003
NUMBER
8,898
5,950
2004
NUMBER
2003
NUMBER
8,898
5,950
(b) Employee Share Scheme
A scheme under which shares may be issued by the Company to employees for no cash consideration was implemented by the Company during
the 2004 financial year. All Australian resident permanent employees (excluding directors and executives participating in the LTIP) who have been
continuously employed by the consolidated entity for a period of at least one year as at 31 December each year, are eligible to participate in the
scheme. Employees may elect not to participate. At the Board’s discretion, eligible employees may be offered up to $1,000 worth of fully paid
ordinary shares per year in Globe for no cash consideration.
The number of shares issued to participants in the scheme is the offer amount divided by the weighted average price at which the company’s
shares traded on the Australian Stock Exchange during the five days immediately before the date of offer.
2004
NUMBER
Shares issued under the plan to participating employees on 27 February 2004.
259,080
2003
NUMBER
-
2004
NUMBER
2003
NUMBER
259,080
-
Shares issued under the scheme may not be sold until the earlier of three years after issue or cessation of employment by the consolidated entity.
In all other respects the shares rank equally with other fully paid ordinary shares on issue.
Each participant was issued with 2,040 shares worth $1,000.00 based on the weighted average market price of $0.49.
(c) Executive Long Term Incentive Plan (LTIP)
A scheme under which senior executives are awarded performance rights was approved by shareholders at the 2003 annual general meeting. The
terms of the LTIP are as follows:
There is nil consideration payable by the participant to the Company for performance rights awarded under the LTIP.
The holder of the performance rights is not entitled to voting or dividend rights until the performance rights vest and the shares are issued.
The performance rights, subject to performance criteria vest in equal annual instalments over three years on each anniversary of the award date. If
the performance criteria are not satisfied those rights will not vest and will be carried forward. If the performance criteria are not satisfied on the
vesting date in year three the entire issue of performance rights lapse.
Set out below is a summary of the performance rights issued under the plan.
64
INSTALMENT
AWARD DATE
VESTING
DATES
NO. ISSUED
TSR VESTING
HURDLE
RIGHTS VESTED
DURING THE YEAR
1
29 October 2003
29 October 2004
716,670
$0.60*
-
2
29 October 2003
29 October 2005
716,669
$0.78
-
3
29 October 2003
29 October 2006
716,661
$1.01
-
* Vesting hurdle in year 1 is an absolute share price hurdle based on the average price over a period after the announcement of results. Vesting hurdles in years 2 and 3 are also based on
achieving an average price over a period after the announcement of results, with an additional focus on Total Shareholder Return.
(d) Superannuation
The Company and its controlled entities contribute to various industry superannuation fund plans. The plans operate on an accumulation basis and
provide lump sum benefits for members on retirement in addition to death and disablement insurance. The contributions of the Company and its
controlled entities are based on negotiated agreements with employees or employee groups.
NOTE 28. RELATED PARTY DISCLOSURES
Directors and specified executives
Disclosures relating to directors and specified executives are set out in Note 26.
Wholly owned group
Transactions with related parties in the wholly owned group.
During the financial year the parent entity and controlled entities entered into the following transactions with related parties, which were wholly
owned at any time during the year;
• loans were advanced and repayments received on long term intercompany accounts;
• interest was charged on outstanding intercompany balances;
• salary and related cost recharges were made by a related and subsequently controlled entity;
• provision of marketing and logistics services by a related and subsequently controlled entity;
• management fees were received from a controlled entity; and
• royalties were received from a controlled entity.
Payments for intercompany transactions are made through the intercompany loan accounts, which are subject to extended payment terms.
Amounts payable and receivable from parties in the wholly owned group are set out in the notes to these accounts.
The ownership interests in related parties in the consolidated entity are disclosed in Note 14.
All transactions with controlled entities have been eliminated on consolidation.
Ultimate controlling entity
The ultimate controlling entity is Globe International Limited.
65
NOTE 28. RELATED PARTY DISCLOSURES (continued)
Other related party transactions
CONSOLIDATED
Payments to purchase inventory
PARENT ENTITY
2004
2003
2004
2003
$’000
$’000
$’000
$’000
3,549
-
-
4,509
NOTE 29. FINANCIAL REPORTING BY SEGMENTS
Industry segment
The consolidated entity operates predominantly in the Action Sports footwear, apparel and accessories market.
2004 GEOGRAPHICAL SEGMENTS
AUSTRALASIA
NORTH
AMERICA
REST OF THE
WORLD
UNALLOCATED
TOTAL
$’000
$’000
$’000
$’000
$’000
101,019
53,430
29,771
-
184,220
Other revenue
1,924
1,419
30
-
3,373
Total revenue
102,943
54,849
29,801
-
187,593
10,350
3,559
5,892
-
19,801
1,117
1,436
27
-
2,580
-
-
262
2,168
2,430
Sales to customers outside the consolidated entity
Segment Result (EBITDA)
Less : depreciation
Less : amortisation of goodwill
Less : amortisation of intangibles
708
478
970
-
2,156
Less : net interest paid (received)
(560)
1,141
23
-
604
Operating profit/(loss) before tax
9,085
504
4,610
(2,168)
12,031
Consolidated profit/(loss) before tax
12,031
Less : tax expense
4,754
Consolidated operating profit after tax
7,277
Segment assets
70,053
38,963
32,671
32,276
178,963
Segment liabilities
11,959
21,151
2,288
-
35,398
and other non-current segment assets
1,254
1,034
164
-
2,452
Depreciation and amortisation
1,825
1,914
1,259
2,168
7,166
Acquisition of property, plant and equipment
66
NOTE 29. FINANCIAL REPORTING BY SEGMENTS (continued)
2003 GEOGRAPHICAL SEGMENTS
AUSTRALASIA
Sales to customers outside the consolidated entity
NORTH
AMERICA
REST OF THE
WORLD
UNALLOCATED
TOTAL
$’000
$’000
$’000
$’000
$’000
90,181
76,476
37,891
-
204,548
Other revenue
1,237
1,298
-
-
2,535
Total revenue
91,418
77,774
37,891
-
207,083
Segment Result (EBITDA)
7,341
(16,074)
5,734
-
(2,999)
Less : depreciation
1,149
2,830
15
-
3,994
Less : amortisation of goodwill
-
33,455
-
2,137
35,592
Less : amortisation of intangibles
1,270
18,184
969
-
20,423
Less : net interest paid (received)
(433)
2,242
-
-
1,809
Operating profit/(loss) before tax
5,355
(72,785)
4,750
(2,137)
(64,817)
Consolidated Profit/(Loss) Before Tax
(64,817)
Less : tax benefit
(5,118)
Consolidated operating loss after tax
Segment assets
(59,699)
60,402
42,554
29,386
37,925
170,267
6,195
27,456
466
-
34,117
and other non-current segment assets
1,420
46
4,667
-
6,133
Depreciation and amortisation
2,419
54,469
984
2,137
60,009
Segment liabilities
Acquisition of property, plant and equipment
INTERSEGMENT TRANSACTIONS
2004
$’000
2003
$’000
Payments due to Australasia from North America
-
1,933
Payments due to North America from Australasia
1,866
7,367
Segment revenue and operating profit before tax excludes the
effect of the following material inter-segment transfers which are
eliminated on consolidation
67
NOTE 30. NOTES TO THE STATEMENT OF CASH FLOWS
CONSOLIDATED
(a) Reconciliation of net cash provided by operating activities to
profit from ordinary activities after income tax
Operating profit/(loss) after taxation
PARENT ENTITY
2004
2003
2004
2003
$’000
$’000
$’000
$’000
7,277
(59,699)
6,956
(453)
(1)
2,212
9
40
Depreciation of non current assets
2,580
3,994
1,051
1,098
Amortisation of non current assets
4,586
56,015
-
-
Charges to other provisions
(121)
2,443
135
245
Foreign currency translation
(497)
(8,081)
-
-
(5,758)
31,332
(1,581)
5,902
(409)
13,967
(715)
3,942
133
4,686
616
634
Loss/(gain) on disposal of non current assets
Changes in net asset and liabilities adjusted for effects of purchase of
controlled entities during the financial year:
(Increase)/decrease in current receivables
(Increase)/decrease in inventory
(Increase)/decrease in prepayments/deposits
625
3,464
(1,139)
681
Increase/(decrease) in creditors / provisions / accruals
9,052
(25,900)
5,502
(4,998)
Net cash provided by/(used in) operating activities
17,467
24,433
10,834
7,091
(Increase)/decrease in other current assets
(b) Finance facilities
Credit standby arrangements:
Secured bank overdraft facility:
-
1,799
-
-
6,000
22,108
6,000
7,566
6,000
23,907
6,000
7,566
1,088
-
1,088
-
112
-
112
-
1,200
-
1,200
-
- amount used
7,026
4,082
5,283
2,434
- amount unused
7,111
-
8,854
-
14,137
4,082
14,137
2,434
- amount used
- amount unused
Other bank facilities
- amount used
- amount unused
Letters of credit
68
NOTE 31. NON CASH FINANCING AND INVESTING ACTIVITIES
CONSOLIDATED
Part acquisition of business by means of share issue
Part acquisition of controlled entity by means of share issue
PARENT ENTITY
2004
2003
2004
2003
$’000
$’000
$’000
$’000
100
-
100
-
-
4,805
-
4,805
100
4,805
100
4,805
NOTE 32. CONTINGENT LIABILITIES
Letters of credit
Letters of credit executed and outstanding at balance date amount to $7.0 million. These relate to the purchase of inventory during the 2004/2005
financial year.
Quattra/Grind Earn out
In the event that certain predetermined gross profit targets are achieved by the controlled entity and its subsidiaries for the years ended 30 June
2005 - 30 June 2007, additional consideration will be payable to the vendors. As at the date of this report it is not possible to determine if any
future payments will be made.
Sandolls Earn out
In the event that certain predetermined profit targets are achieved by the brand for the calendar year ended 31 December 2008, additional
consideration will be payable to the vendors. As at the date of this report it is not possible to determine if any future payments will be made.
NOTE 33. FINANCIAL INSTRUMENTS
(a) Interest rate risk
The consolidated entity’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in
market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities, is as follows:
69
NOTE 33. FINANCIAL INSTRUMENTS (continued)
1 YEAR
OR LESS
MORE THAN 5
YEARS
NONINTEREST
BEARING
TOTAL
AVERAGE
INTEREST
RATE (%)
FLOATING
INTEREST
RATE
2.8%
26,587
-
-
-
4,817
31,404
Trade receivables
N/A
-
-
-
-
33,177
33,177
Other receivables
N/A
2004 ($’000)
OVER 1 YEAR
TO 5 YEARS
Financial assets
Cash
-
-
-
-
831
831
26,587
-
-
-
38,825
65,412
3.8%
-
1,254
-
-
-
1,254
8.6%
-
5,290
7,617
-
-
12,907
Accounts payable
N/A
-
-
-
-
17,581
17,581
Lease liabilities
N/A
-
-
-
-
-
-
-
6,544
7,617
-
17,581
31,742
4.5%
20,232
-
-
-
6,190
26,422
Trade receivables
N/A
-
-
-
-
26,431
26,431
Other receivables
N/A
-
-
-
-
1,209
1,209
20,232
-
-
-
33,830
54,062
6.0%
-
8,651
12,840
-
-
21,491
N/A
-
-
-
-
10,587
10,587
8.6%
-
200
-
-
-
200
-
8,851
12,840
-
10,587
32,278
Financial liabilities
- secured
- unsecured
2003 ($’000)
Financial assets
Cash
Financial liabilities
Accounts payable
Lease liabilities
(b) Off balance sheet derivative financial instruments
The consolidated entity enters into forward exchange contracts to minimise the possible adverse financial effects of movements in exchange rates
on specific purchases of goods and services. Gains or costs arising upon entry into such hedging transactions, together with subsequent exchange
gains or losses resulting from those transactions are deferred up to the date of the purchase and included in the measurement of the purchase.
70
NOTE 33. FINANCIAL INSTRUMENTS (continued)
Details of outstanding contracts as at 30 June 2004 are as follows:
BUY
US $’000
MATURITY
AVERAGE
EXCHANGE RATE
SELL
A $’000
2004
-
-
-
-
2003
2,917
0-6 mths
0.6410
4,552
The following gains /(losses) have been deferred at 30 June 2004:
2004
$’000
Unrealised losses
2003
$’000
-
(179)
(c) Credit risk exposures
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the
carrying amount, net of any provisions for doubtful debts of those assets, as disclosed in the statements of financial position and notes to the
financial statements.
Except for the following concentrations of credit risks, the economic entity does not have any material credit risk exposure to any single debtor or
group of debtors under financial instruments entered into by the economic entity.
The following table details the consolidated entity’s maximum credit risk exposure as at the reporting date without taking account of the value of
any collateral or other security obtained. At balance date the following amounts are receivable (Australian dollar equivalents):
MAXIMUM CREDIT RISK
2004
2003
$’000
$’000
Australian dollars
17,335
15,241
United States dollars
12,063
9,730
New Zealand dollars
3,606
2,669
Euro dollars
Total receivables
1,004
-
34,008
27,640
(d) Net fair value of financial assets and liabilities
The consolidated entity’s financial assets and liabilities reported as assets and liabilities in the Statement of Financial Position are carried at
amounts that approximate net fair value.
71
DIRECTORS’ DECLARATION
The directors declare that:
(1) the financial statements and notes, as set out on pages 30 to 71 are in accordance with the Corporations Act 2001:
(a) comply with Accounting Standards and the Corporations Regulations 2001; and
(b) give a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2004 and of their performance,
as represented by the results of their operations and their cash flows, for the year ended on that date;
(2) in the directors’ opinion :
(a) the financial statements and notes are in accordance with the Corporations Act 2001; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable;
and
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group identified in
Note 14 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross
guarantee described in Note 14.
This declaration is made in accordance with a resolution of the Board of directors.
Dated 25th August 2004
72
Paul Isherwood
Norman O’Bryan
Chairman
Director
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF
PricewaterhouseCoopers
215 Spring Street
MELBOURNE VIC 3000
GPO Box 1331L
MELBOURNE 3001
Telephone (03) 8603 1000
Facsimile (03) 8603 6444
DX 77 Melbourne
GLOBE INTERNATIONAL LIMITED
Audit opinion
In our opinion, the financial report of Globe International Limited:
• gives a true and fair view, as required by the Corporations Act 2001 in Australia, of the financial position of Globe International Limited and the
Globe International Group (defined below) as at 30 June 2004, and of their performance for the year ended on that date, and
• is presented in accordance with the Corporations Act 2001, Accounting Standards and other mandatory financial reporting requirements in
Australia, and the Corporations Regulations 2001.
This opinion must be read in conjunction with the rest of our audit report.
Scope
The financial report and directors’ responsibility
The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying
notes to the financial statements, and the directors’ declaration for both Globe International Limited (the company) and the Globe International
Group (the consolidated entity), for the year ended 30 June 2004. The consolidated entity comprises both the company and the entities it
controlled during that year.
The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the
Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to
prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.
Audit approach
We conducted an independent audit in order to express an opinion to the members of the company. Our audit was conducted in accordance with
Australian Auditing Standards, in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The
nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control,
and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been
detected.
We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act
2001, Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding
of the company’s and the consolidated entity’s financial position, and of their performance as represented by the results of their operations and
cash flows.
INDEPENDENT AUDITOR’S REPORT
73
We formed our audit opinion on the basis of these procedures, which included:
• examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and
• assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made
by the directors.
When this audit report is included in an Annual Report, our procedures include reading the other information in the Annual Report to determine
whether it contains any material inconsistencies with the financial report.
While we considered the effectiveness of management’s internal controls over financial reporting when determining the nature and extent of our
procedures, our audit was not designed to provide assurance on internal controls.
Our audit did not involve an analysis of the prudence of business decisions made by directors or management.
Independence
In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations
Act 2001.
74
Lisa Harker
Melbourne
Partner
25 August 2004
INDEPENDENT AUDITOR’S REPORT
MOOKS
GALLAZ SKATE TEAM RIDER VIOLET KIMBLE
THE SHAREHOLDER INFORMATION SET OUT BELOW WAS APPLICABLE AS AT 11 AUGUST 2004
TOP 20 SHAREHOLDERS
NUMBER OF
FULLY PAID
ORDINARY SHARES
PERCENTAGE OF
ISSUED SHARES
Peter John Hill
121,312,810
29.26%
Stephen David Hill
121,312,810
29.26%
Merrill Lynch (Australia) Nominees Pty Limited
14,099,277
3.40%
Mr Matthew Patrick Hill
12,762,189
3.08%
Westpac Custodian Nominees Limited
8,801,683
2.12%
JP Morgan Nominees Australia Limited
6,676,208
1.61%
Bow Lane Nominees Pty Ltd
5,087,358
1.23%
National Nominees Limited
3,786,184
0.91%
Citicorp Nominees Pty Limited
2,908,212
0.70%
Moggs Creek Pty Ltd
2,730,000
0.66%
Permanent Trustee Australia Ltd (Syd)
2,591,264
0.62%
Permanent Nominees (Aust) Limited
2,500,000
0.60%
Mr Douglas Zappelli + Mr Leslie Zappelli
2,500,000
0.60%
Mr Henry Robert Hodge
1,945,000
0.47%
Philip Brass
1,800,000
0.43%
Anz Nominees Limited
1,740,602
0.42%
Berne No 132 Nominees Pty Ltd
1,705,000
0.41%
Poly Town Pty Ltd
1,501,005
0.36%
Pacific Securities Inc
1,500,000
0.36%
Norman O'Bryan
1,407,250
0.34%
Total
318,666,852
76.85%
Total Issued Capital
414,637,811
100.00%
Substantial Shareholders
Peter Hill
29.26%
Stephen Hill
29.26%
Distribution of Shareholders
1 - 1000 shares
1,001 - 5,000 shares
5,001 - 10,000 shares
10,001 - 100,000 shares
100,001 - and over shares
Total
Number of Holders
Number of Shares
569
396,167
1,663
5,015,131
953
8,192,525
1,218
37,489,840
163
363,544,148
4,566
414,637,811
The number of security investors holding less than a marketable parcel is 325 and they hold 152,704 securities.
77
UNQUOTED EQUITY SECURITIES
The Company has on issue 9,255,408 options under its employee share option plan at the date of this report. One option converts to one ordinary
share. Staff eligible to participate in the plan are those who have been continuously employed by the consolidated entity for a period of at least one
year. Options are awarded to employees based on past service and/or performance conditions.
completed. Other than the payment of the exercise price there are no other prerequisites for the exercise of the options.
In respect of subsequent options issued the exercise price will be the weighted average price of Globe ordinary shares for the period 5 days prior to
the offer of the options.
No further issues will be made under this ESOP.
YOU CAN DO SO MUCH MORE ONLINE
Did you know that you can access – and even update – information about your holdings in Globe International via the Internet?
You can access your information securely online via our share registrar’s – ASX Perpetual - website: www.asxperpetual.com.au
using your Securityholder Reference Number (SRN) or Holder Identification Number (HIN) as well as your surname (or company name) and
postcode (must be the postcode recorded on your holding record).
It’s fast and it’s easy. You can:
• Check your current and previous holding balances
• Choose your preferred annual report option
• Update your address details
• Update your bank details
• Confirm whether you have lodged your Tax File Number (TFN), Australian Business Number (ABN) or exemption
• Enter your email address and update your communications preferences
• Subscribe to email announcements
• Check transaction and dividend history
• Check the share prices and graphs
• Download a variety of instruction forms
Don’t miss out on your dividends
Dividend cheques that are not banked are required to be handed over to the State Trustee under the Unclaimed Monies Act so you are reminded to
bank cheques immediately.
78
Better still, why not have us bank your dividend payments for you
How would you like to have immediate access to your dividend payments? Your dividend payments can be credited directly into any nominated
bank, building society or credit union account in Australia. Not only can we do your banking for you, dividends paid by direct credit reach your
account as cleared funds, allowing you to access them on payment date.
Contact Information
You can contact the Share Registry by phone, via email, in person or in writing.
ASX Perpetual Registrars Limited.
GPO Box 1736
Melbourne Vic 3001
Hand deliveries to:
Level 4, 333 Collins Street, Melbourne
Telephone (within Australia): 1300 55 44 74
International: +61 3 9615 9999
Facsimile: (03) 8614 2903
International: +61 3 8614 2903
Email: registrars@asxperpetual.com.au
79
COMPANY PARTICULARS
DIRECTORS
Paul Isherwood
80
SENIOR MANAGEMENT AS AT 16 SEPTEMBER 2004
Non-Executive Chairman
Matthew Hill
Philip Brass
Michael Sonand
Chief Operating Officer
Norman O’Bryan
Stephen Kelly
Chief Financial Officer
Stephen Hill
Executive Director
Harry Truscott
President Australasia
Peter Hill
Executive Director
Gary Valentine
President Globe North America
Robert Sayre
President Dwindle Distribution
Matthew Wong
President Europe
PRINCIPAL REGISTERED OFFICE
300 Lorimer Street
Port Melbourne VIC 3207
Tel: +61 3 9681 9681
Fax: +61 3 9681 9046
COMPANY SECRETARY
Charlie Wood
300 Lorimer Street
Port Melbourne VIC 3207
Tel: +61 3 9681 9681
Fax: +61 3 9681 9046
SHARE REGISTRY
ASX Perpetual Registrars
Level 4, 333 Collins Street
Melbourne Vic 3000
Tel: 1300 554 474
Tel: +61 3 9615 9999
Fax: +61 3 8614 2903
www.asxperpetual.com.au
AUDITORS
333 Collins Street
Melbourne VIC 3000
LAWYERS
Sackville Wilks & Co
Melbourne VIC 3000
BANKERS
ANZ
Melbourne VIC 3000
WEBSITES
Corporate Website:
www.globecorporate.com
Feedback Website:
www.globefeedback.com
STOCK EXCHANGE LISTINGS
Globe International Limited shares are listed on the
Australian Stock Exchange. Ticker: GLB
COMPANY PARTICULARS
GLOBE SHOES SURF TEAM RIDER TAJ BURROW
IMITED
IONAL L
T
A
N
R
E
INT
GLOBE BECORPORATE.COM
O
WWW.GL
033
007 066
ABN 65

Globe International Annual Report 2004

Transcription

Similar documents

Traumatic partial optic nerve avulsion with luxated globe

PLANETPALS Print Earth Globe

Singer AND lover were executed then made to look

Read More

Conversion Kit Instructions for the Globe Gas Countertop Charbroiler

MACBETH