Financial Analysis of GWA Group Limited

This assignment conducts a financial analysis of GWA Group Limited, evaluating the non-current and intangible assets, provisions and contingencies, leases, and revenue. The report also assesses the revenue recognition policy and the reporting of leased assets.

Running head: FINANCIAL ANALYSIS
GWA Group Limited
Name of the Student:
Name of the University:
Author’s Note:

1GWA GROUP LIMITED
Executive Summary
The aim of the assignment is to conduct a financial analysis on the GWA Group Limited and
asses the financial report of the company in terms of the assets reported by the company. The
non-current asset and the intangible asset for the company were evaluated for the purpose of this
assignment and relevant analysis was done. The classification and the recording of the leased
assets of the company were taken into consideration for the purpose of the analysis of the
company. The revenue source for the company and the distribution of the same were assessed for
the assignment and the relevant changes in the same were assessed.

2GWA GROUP LIMITED
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Non-Current Assets.....................................................................................................................3
Intangible Assets..........................................................................................................................4
Provisions and Contingencies......................................................................................................4
Leases..........................................................................................................................................5
Revenue.......................................................................................................................................6
Conclusion.......................................................................................................................................7
Reference.........................................................................................................................................9

3GWA GROUP LIMITED
Introduction
GWA Group Limited primarily operates in the Australian company, does it business by
distributing household consumer products, and is listed in the Australian Stock Exchange with its
ticker symbol GWA. The company is having a sound employee base where the operations of the
company is divided into six divisions. The company is a leading supplier of the building fixtures
and fittings for commercial and household premises. The plant and machinery for the company
was assessed and evaluated thereby identifying the valuation method applied for the same. The
intangible assets of the company and the reported goodwill of the company was taken into
consideration for the purpose of the analysis of the company. The revenue recognition policy
followed by the company and the reported revenue of the company was analyzed (Vogel 2014).
Discussion
Non-Current Assets
a) The non-current assets of the company that was taken for the purpose of the analysis was
the plant and machinery of the company. The plant and machinery of the company was
reported at cost less any accumulated depreciation for the company. The measurement
method applied for the depreciation of the asset was the straight-line method. The non-
current assets of the company are reported at historical cost value (Wahlen, Baginski and
Bradshaw 2014).
b) The company can report the non-current assets of the company by applying the fair value
approach where the assets of the company would be reported at current value and that
same would show a faithful representation to the stakeholders of the company (Frias‐
Aceituno, Rodríguez‐Ariza and Garcia‐Sánchez 2014).

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Intangible Assets
a) The intangible assets reported by the company are primarily the goodwill of the company
acquired in business combination and is measured and reported at the initial cost value
for the company. The intangible assets of the company are reported at the cost value and
the relevant impairment of the assets of the company was done for assessing the fair
value of the asset (Nobes 2014).
b) The company has provided all relevant and necessary information about the company
where the impairment of the assets and the frequency of impairment of the non-current
assets were explained in the financial report of the company. The Intangible assets of the
company were impaired as the fair value of the assets were assessed to materially
different from the reported value of the assets. The impairment methods applied by the
company has been well communicated by the company where the impairment methods,
techniques and reporting are well communicated in the financial report of the company.
The company has made sufficient disclosure as per required by the stakeholders of the
company so that they can apply the same in assessing and evaluating the financial assets
of the company (Crowther 2018).
Provisions and Contingencies
a) Provisions has been reported and recognized by the company when the company has a
obligation because of the past events conducted by the company and the probability of
the outflow of the economic benefits is certain for settling the obligations of the
company. The company measures the provisions of the company by estimating the
expected future cash outflows from the company and then discounting the same
according to the specific risk liability of the company. The provisions recorded by the

5GWA GROUP LIMITED
company are warranty provision, restructuring provisions and site restoration provisions,
which are explained in a detailed manner in the financial report of the company (Bova
2016).
b) The company values the warranties given by the company on the current or past products
sold and the same has been included in the financial report of the company. The
provisions made by the company are recorded in the financial statement of the company
according to the sales volume done by the company and the correspondence cash outflow
from the same, which has been the keen feature. The company has made every possible
disclosure in the valuation and reporting method used by the company. The key loophole,
which can be found in such reporting, is that the provisions on warranties was based on
the historical data of the company and the same does not reflect economic reality on the
same (Hennes 2014).
Figure 1: Provisions of GWA Group Ltd
(Source: Gwagroup.com.au 2019).
Leases
a) The leased items reported or disclosed by the company are the operating lease, which the
company has currently in the financial statement of the company. The company has

6GWA GROUP LIMITED
various plant and equipment, property and motor vehicles, which are reported under the
operating lease, structure of the company. The tenure of the various assets of the
company has been reported to be around 2 years of time to 10 years of time, which is
dependent on the company depending on the type of assets and the requirement,
accessibility of the same as per the company’s perspective (Altamuro et al, 2014).
b) GWA Group Limited has presented and classified all the major assets of the company as
per the leasing structure and as per the classification of the assets of the company. The
property, plant and the motor vehicles of the company were some of the primary assets
that were taken on operating lease by the company. The tenure of the lease and the
classification, tenure of the lease was well presented by the company in the financial
report of the company (Barone, Birt and Moya 2014).
Revenue
a) GWA Group has classified the revenue base of the company by incorporating necessary
information according to the revenue earned on a geographical base earned by the
company. The company has reported the revenue of the company on a consolidation basis
and based on geographical segments where primary revenue of the company around 95%
of the revenue is generated from Australia and the rest from New Zealand. The revenue
reported by the company was around 453,171 in the year 2018 and was around 446,332
in the year 2017 (Gwagroup.com.au 2019).

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Figure 2: Revenue Base of GWA Group Limited.
(Source: Gwagroup.com.au 2019).
b) The revenue of the company has been measured at the fair value for the consideration
received by the company net of returns and discounts. The company does the recognition
of revenue when the ownership of the goods takes place thereby delivery of all goods are
done and the consideration of the inflow from the sale is probable. The measurement of
the revenue is recorded only when the cash inflows from the sales of goods is probable
and the ownership of risk has been transferred from one party to the other. The company
has classified all the information relating to the revenue earned by the company so that
the same can be used and applied by the users of the financial report for assessing the
financial performance of the company.
Conclusion
The analysis of the GWA Group Ltd was evaluated after assessing the financial
information presented by the company. The operations of the company has been primarily into
household consumer products and the classification of the various assets of the company were
evaluated. The non-current assets of the company and the valuation approach used by the
company for the reporting of the same was evaluated. The intangible assets of the company was
the goodwill of the company has been reported and well presented by the company and sufficient
disclosure has been made in regard to the same. The revenue base for the company was well
evaluated for the company where the classification of the revenue and the recognition approach
has been well presented in the financial report of the company. The revenue recognition policy

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followed by the company and the reported revenue of the company was analyzed. The company
has various plant and equipment, property and motor vehicles, which are reported under the
operating lease, structure of the company. On an overall basis, the company has presented all the
financial information and data of the company and made sufficient disclosures about the same.

9GWA GROUP LIMITED
Reference
Altamuro, J., Johnston, R., Pandit, S. and Zhang, H., 2014. Operating leases and credit
assessments. Contemporary Accounting Research, 31(2), pp.551-580.
Barone, E., Birt, J. and Moya, S., 2014. Lease accounting: A review of recent literature.
Accounting in Europe, 11(1), pp.35-54.
Bova, M.E., 2016. The Fiscal Costs of Contingent Liabilities. International Monetary Fund.
Crowther, D., 2018. A Social Critique of Corporate Reporting: A Semiotic Analysis of Corporate
Financial and Environmental Reporting: A Semiotic Analysis of Corporate Financial and
Environmental Reporting. Routledge.
Frias‐Aceituno, J.V., Rodríguez‐Ariza, L. and Garcia‐Sánchez, I.M., 2014. Explanatory factors
of integrated sustainability and financial reporting. Business strategy and the environment, 23(1),
pp.56-72.
Frias‐Aceituno, J.V., Rodríguez‐Ariza, L. and Garcia‐Sánchez, I.M., 2014. Explanatory factors
of integrated sustainability and financial reporting. Business strategy and the environment, 23(1),
pp.56-72.
Gwagroup.com.au. (2019). [online] Available at:
http://www.gwagroup.com.au/wp-content/uploads/Annual-Report-2018-GWA-Group.pdf
[Accessed 14 Jan. 2019].
Hennes, K.M., 2014. Disclosure of contingent legal liabilities. Journal of Accounting and Public
Policy, 33(1), pp.32-50.
Nobes, C., 2014. International classification of financial reporting. Routledge.

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Vogel, H.L., 2014. Entertainment industry economics: A guide for financial analysis. Cambridge
University Press.
Wahlen, J., Baginski, S. and Bradshaw, M., 2014. Financial reporting, financial statement
analysis and valuation. Nelson Education.