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Chairman's Report
Managing Director's Report
Finance Report
Review of Operations
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Directors' Report
    Remuneration Report
Auditor's Independence Declaration
Financial Statements
    Income Statements
    Balance Sheets
    Statements of Recognised Income and Expense
    Cash Flow Statements
Notes to the Financial Statements
Directors' Declaration
Independent Auditor's Report
Stock Exchange and Listing Requirements
Shareholder Communications
Group Results - Five Year Summary
Corporate Directory
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Notes forming part of the financial statements
For the year ended 30 June 2008
Note 1. Summary of significant accounting policies

The principal accounting policies adopted in
the preparation of the financial report are set
out below. These policies have been
consistently applied to all the years
presented, unless otherwise stated. The
financial report includes separate financial
statements for Wattyl Limited as an individual
entity and the consolidated entity consisting
of Wattyl Limited and its subsidiaries.
(a) Basis of preparation
This general purpose financial report
has been prepared in accordance with
Australian Accounting Standards, other
authoritative pronouncements of the
Australian Accounting Standards Board,
Urgent Issues Group Interpretations and
the Corporations Act 2001.
The financial report has been prepared on
the basis of historical cost, except for
derivative financial instruments, which have
been measured at fair value.
(b) Statement of compliance
Australian Accounting Standards include
Australian equivalents to International
Financial Reporting Standards (AIFRS).
Compliance with AIFRS ensures that the
financial report of Wattyl Limited complies
with International Financial Reporting
Standards (IFRS).
(c) Critical Accounting Estimates
The preparation of financial statements in
conformity with AIFRS requires the use of
certain critical accounting estimates. It also
requires management to exercise its
judgement in the process of applying the
Group’s accounting policies. Estimates and
judgements are continually evaluated and
are based on historical experience and other
factors, including expectations of future
events that are believed to be reasonable
under the circumstances.
The resulting accounting estimates will, by
definition, seldom equal the related actual
results. The estimates and assumptions that
have a significant risk of causing a material
adjustment to the carrying amounts of
assets and liabilities within the next financial
year are:
• Notes 1 (g), 1 (o) and 15 contain
information about the assumptions and
their risk factors relating to impairment.
• Notes 1 (q) and 16 contain information
about the principal actuarial
assumptions used in determining
pension obligations for the Group’s
defined benefit plan.
• Note 1 (y) contains information about
the assumptions, estimates and
uncertainty in relation to estimation of
restructuring provisions.
(d) Principles of consolidation
The consolidated financial statements
incorporate the assets and liabilities of all
subsidiaries of Wattyl Limited as at 30 June
2008 and the results of all subsidiaries for
the year then ended. Wattyl Limited and its
subsidiaries together are referred to in this
financial report as the Group or the
consolidated entity.
Subsidiaries are all those entities (including
special purpose entities) over which the
Group has the power to govern the financial
and operating policies, generally
accompanying a shareholding of more than
one-half of the voting rights. The existence
and effect of potential voting rights that are
currently exercisable or convertible are
considered when assessing whether the
Group controls another entity.
Subsidiaries are fully consolidated from the
date on which control is transferred to the
Group. They are de-consolidated from the
date that control ceases.
The purchase method of accounting is used
to account for the acquisition of subsidiaries
by the Group. (refer note 1 (t))
Intercompany transactions, balances and
unrealised gains on transactions between
Group companies are eliminated. Unrealised
losses are also eliminated unless the
transaction provides evidence of the
impairment of the asset transferred.
Accounting policies of subsidiaries have
been changed where necessary to ensure
consistency with the policies adopted by
the Group.
Investments in subsidiaries are accounted
for at cost in the individual financial
statements of Wattyl Limited.
(e) Revenue recognition
Revenue is measured at the fair value of
the consideration received or receivable.
Amounts disclosed as revenue are net of
returns, rebates and taxes paid. Revenue
is recognised from the sale of paint and
surface coatings. A sale is recorded when
goods have been delivered to the customer,
the customer has accepted the goods and
collection of the related receivable is
probable.
(f) Trade receivables
Trade receivables are recognised initially at
fair value and subsequently measured at
amortised cost, less provision for
impairment. Trade receivables are noninterest
bearing and generally 30 day terms,
however, some debtors have other trading
terms as negotiated.
Collection of trade receivables is reviewed
on an ongoing basis. Debts which are
known to be uncollectible are written off
when identified. An impairment provision is
recognised when there is objective evidence
that the Group will not be able to collect all
amounts due according to the original terms
of the receivables. Significant financial
difficulties of the debtor, probability that the
debtor will enter bankruptcy or financial
reorganisation, and default or delinquency in
payments are considered indicators that the
trade receivable is impaired.
(g) Property, plant and equipment
Each class of property, plant and equipment
is carried at cost or deemed cost less,
where applicable, accumulated depreciation
and any accumulated impairment losses.
Historical cost includes expenditure that is
directly attributable to the acquisition of the
items. Cost may also include transfers from
equity of any gains/losses on qualifying cash
flow hedges of foreign currency purchases
of property, plant and equipment.
Subsequent costs are included in the
asset’s carrying amount or recognised as a
separate asset, as appropriate, only when
it is probable that future economic benefits
associated with the item will flow to the
Group and the cost of the item can be
measured reliably. All other repairs and
maintenance are charged to the income
statement during the financial period in
which they are incurred.
An item of property, plant and equipment
is derecognised upon disposal or when no
future economic benefits are expected to
arise from the continued use of the asset.
Any gain or loss arising on de-recognition
of the asset (calculated as the difference
between the net disposal proceeds and the
carrying amount of the item) is included in
the income statement in the year the item is
derecognised.
Impairment
The recoverable amount of property, plant
and equipment is the higher of fair value
less costs to sell and value in use. In
assessing value in use, the estimated future
cash flows are discounted to their present
value using a pre-tax discount rate that
reflects current market assessments of the
time value of money and the risks specific
to the asset.
For an asset that does not generate largely
independent cash inflows, recoverable
amount is determined for the cash
generating unit to which the asset belongs,
unless the assets’ value in use can be
estimated to be close to its fair value.
An impairment exists when the carrying
value of asset or cash-generating unit
exceeds its estimated recoverable amount.
The asset or cash generating unit is then
written down to its recoverable amount.