ANNUAL - GWA International

1 2017 ANNUAL REPORTGWA GROUP ANNUAL REPORT 20174 | GWA GROUP LIMITED | 2017 ANNUAL REPORTEARNINGSE arnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) 2% to $ millionEarnings Before Interest and Tax (EBIT) 3% to $ million Bathrooms & Kitchens EBIT 4% Door & Access Systems EBIT 14%STRATEGYC ontinued progress on strategy to deliver stronger platform to manage through the market cycleFive Year Financial Summary 1 Company Profile 2 Strategic Summary 3 Chairman s Review 4 Managing Director s Review of Operations 7 Health and Safety 10 GWA Bathrooms & Kitchens 11 GWA Door & Access Systems 12 Board of Directors 13 Directors Report 15 Financial Report 32 Other Statutory Information 77 Shareholder Information 78 CONTENTSREVENUER evenue 2% to $ million ahead of market growth with margin expansion delivering solid net profit and earnings growth Bathrooms & Kitchens revenue 3% Door & Access Systems revenue 2%$ million NET PROFITNet Profit After Tax (NPAT)

2 3% to $ million$ million FINANCIAL POSITION Strong financial position with net debt 10% and credit metrics continue to improve supporting growth plansRETURN Return on Funds Employed (ROFE) to PERFORMANCE HIGHLIGHTSFINAL DIVIDENDF ully-franked final dividend of 9 cents per share, bringing the FY17 full year dividend to cents per share fully-franked 10%Earnings per share 7% to cents per share Note: All references are to continuing operations which excludes Gliderol which was sold on 31 July 2015. All comparisons are to the year ended 30 June 2016 (FY16) unless otherwise GROUP LIMITED | 2017 ANNUAL REPORT | 1 Continuing operations2012/13(1) $ 0002013/14(1) $ 0002014/15(1) $ 0002015/16(1) $ 0002016/17 $ 000 Revenue from continuing operations565,365399,394426,218439,66644 6,332 Earnings before interest, tax, depreciation, amortisation (EBITDA) and significant items(3)87,16876,81981,73484,25086,156 EBITDA margin (%) and amortisation(20,398)(12,328)(8,970)(5,98 5)(5,562)Earnings before interest, tax (EBIT) and significant items(3)66,77064,49172,76478,26580,594 EBIT margin (%) (net)(13,324)(11,201)(7,329)(6,508)(5,33 8)Normalised profit before tax(3) 53,44653,29065,43571,75775,256(%) Tax expense(14,115)(15,452)(20,278)(19,837)( 21,585)Effective tax rate (%) profit after tax(3)

3 39,33137,83845,15751,92053,671 Significant items after tax(6,941)(6,664)(34,796) Net profit after tax from continuing operations32,39031,17410,36151,92053,671 Profit / (loss) from discontinued operations (net of income tax) (12,578)(26,544)1,761 Net profit / (loss) after tax for the period32,39018,596(16,183)53,68153,671 Net cash from operating activities63,34933,89843,50554,92457,171 Capital expenditure14,7035,5705,0623,6285,281 Net debt(4)162,243149,38594,76388,42079,756 Shareholders' equity426,742425,989305,894307,698320,60 3 Other Ratios and StatisticsInterest cover (times)(7) : net debt / (net debt + equity) (%)(4) on shareholders' equity (%) ( ) payout ratio (%)(6) per share (cents)(8) (%) return (cents)(5) - Share price (30 June) ($) yield at 30 June share price (%) of employees1,6801,6811,183876760 Basic earnings per share (cents) ( ) earnings per share (cents) earnings per share (cents) Continuing(2) (1) During the year ended 30 June 2016, the Gliderol business was sold with an effective date of 31 July 2015.

4 During the year ended 30 June 2015, the Dux Hot Water Business was sold with an effective date of 19 December 2014 and the Brivis heating & Cooling business was sold with an effective date of 2 February 2015. Accordingly, the operating activities of Gliderol, Dux and Brivis were classified as discontinued operations in FY16 and FY15 and presented separately from the results of continuing operations. The FY14 results have been re-presented to be comparable with FY16 and FY15. FY13 has not been re-presented and includes the operating activities of Gliderol, Dux and Brivis as part of continuing operations.(2) Excludes significant items.(3) Normalised profit before significant items is a non-IFRS financial measure reported to provide a greater understanding of the underlying business performance of the Group. The disclosures are extracted or derived from the FY13-FY15 financial reports and have not been subject to review or audit.

5 The non-IFRS financial measures included in this table exclude significant items that are detailed in the FY13-FY15 financial reports. (4) Net debt reflects the Group s borrowings and bank guarantees less cash (including cash classified within assets held for sale at 30 June 15).(5) A capital return of cents per share and a special dividend of cents per share from the Brivis and Dux net sale proceeds were paid to shareholders on 15 June 2015.(6) Dividend payout ratio is calculated as the Dividend per share (cents) divided by the Basic EPS for the Group (cents). Basic EPS is calculated using the weighted average number of ordinary shares at 30 June.(7) Interest cover (times) is calculated using EBITDA excluding non-recurring other significant items divided by net interest expense.(8) Dividend per share includes ordinary and special YEAR FINANCIAL SUMMARYGWA GROUP LIMITED | 2017 ANNUAL REPORT | 12 | GWA GROUP LIMITED | 2017 ANNUAL REPORTGWA Group Limited (GWA) listed on the Australian Securities Exchange in May 1993 and is a leading Australian supplier of building fixtures and fittings to households and commercial premises.

6 The Group has sales and distribution facilities located across Australia and a branch office in New Zealand. GWA is a member of the ASX 200 index of listed Australian operates a central-led business with corporate functions supporting two business divisions focused on customers in their target market segments. GWA s business divisions currently comprise:GWA Bathrooms & Kitchens is Australia s foremost designer, importer and distributor of iconic brands and products, servicing and enhancing residential and commercial bathrooms and kitchens across Australia and New Zealand. The product range is distributed under Australian brands including Caroma, Clark, Dorf, Fowler, Stylus and International brands including Schell, EMCO, Virtu and Sanitron. GWA Door & Access Systems is a leading Australian designer, manufacturer, importer and distributor of a comprehensive range of access and security systems and door hardware for use in residential and commercial premises.

7 The product range is distributed under Australian brands including Gainsborough, Trilock, TradePro, Austral Lock and International brands including Salto, Lorient and Eco Schulte. GWA Door & Access Systems was expanded in 2012 to include API Locksmiths which is an Australian supplier of security and access control systems and locksmithing services to major commercial has grown since listing as a result of the strong performance of the core building fixtures and fittings businesses and through successful acquisitions. The Group remains committed to growing shareholder wealth through organic growth initiatives in target market segments and acquisitions that add value to its core businesses by supporting expansion into new markets or providing access to new products and solutions. COMPANY PROFILE2 | GWA GROUP LIMITED | 2017 ANNUAL REPORTGWA GROUP LIMITED | 2017 ANNUAL REPORT | 3 OUR MISSION To build GWA as the most trusted and respected company in the building sectorOUR PURPOSEM aking life better with simple, superior water solutions Bathrooms & Kitchens with a superior range of access and security systems Door & Access Systems STRATEGIC SUMMARYGWA OPERATIONAL MEASURESM arket share, NSV, EBIT, ROFE, DIFOT, NPS, Safety, Engagement MAXIMISE SHAREHOLDER VALUE CREATION Key Financial Measures NPAT Growth, TSR.

8 ROFEOUR CULTURAL PILLARSWe are empowered to make a differenceWe strive to be the bestWe collaborate to achieve goalsWe are customer focused and consumer drivenWe care for each otherLeverage and build on core assets & brands to drive revenue and market share growth Add value to customers through improved insights, analytics and processes Build fit for future culture, engagement and capability Build an advantaged Supply Chain to deliver superior NPD, Quality and Service at best costDrive cost out in SG&A and Supply Chain to improve profitability and allow selective reinvestmentCORPORATE PRIORITIESGWA GROUP LIMITED | 2017 ANNUAL REPORT | 34 | GWA GROUP LIMITED | 2017 ANNUAL REPORTGWA continued to deliver improved financial results in FY17 with increased revenue and disciplined cost management driving higher earnings and profitability.

9 As a result, earnings per share and ordinary dividends to shareholders increased on the prior year with the company continuing to maintain a strong financial continues to make good progress on its strategy and your Board believes the company remains well positioned to capitalise on our market-leading position in our core markets to continue to deliver value for OVERVIEW GWA s revenue growth was ahead of the market with net sales increasing by 2 per cent to $ million on the prior Before Interest and Tax (EBIT), increased by 3 per cent to $ million from improved earnings in the Bathrooms & Kitchens division and a reduction in costs, partially offset by the decline in earnings from the Door & Access Systems profit after tax increased by 3 per cent to $ million. Earnings per share of cents increased by 7 per cent, driven by improved profitability and also due to the reduced weighted average number of shares on issue following the completion of the on-market share buyback program in the prior continued focus on effective use of capital across the business was reflected in an improvement in Return on Funds Employed of percentage points to per cent.

10 DIVIDENDS / CAPITAL MANAGEMENT Your Board maintains a policy to pay 65-85 per cent of net profit after tax as ordinary dividends. Consistent with this policy, the Board resolved to pay a final ordinary dividend of 9 cents per share, fully-franked. This brings the full-year ordinary dividend to cents per share, fully-franked compared to 15 cents for the prior The record date for entitlement to receive the final dividend will be 25 August 2017 with the dividend being paid on 5 September 2017. The Dividend Reinvestment Plan will not be offered to shareholders for the final ordinary dividend. GWA s financial position remains strong which provides the company with ongoing financial flexibility to implement its strategic growth agenda through the market cycle. Net debt at 30 June 2017, was $ million, compared to $ million in the previous year.