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Annual Report 2010
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Annual Report 2010
FINANCIAL HIGHLIGHTS
Sales revenue from Continuing Operations ($’000)
4,746
∨ 2.5%
_________________________________________________________________________________
Rental income from Investment Properties ($’000)
3,109
∨ 35%
_________________________________________________________________________________
Profit Before Income Tax ($’000)
1,246
∧ 170%
_________________________________________________________________________________
Profit After Tax ($’000)
762
∧ 41%
_________________________________________________________________________________
Earnings Per Share (cents)
1.3
∧ 44%
_________________________________________________________________________________
Notice of Annual General Meeting
The 2010 Annual General Meeting of PPK Group Limited will be held at:
3:00pm on Tuesday, 23 November 2010 at The Grace Hotel, 77 York Street, Sydney
The business of the meeting is outlined in the Notice of Meeting and Proxy Form.
ASX Code:
Website:
Share Registry:
PPK Group Limited
Contents
PPK
www.ppkgroup.com.au
www.registries.com.au
ABN: 65 003 964 181
Chairman & Executive Director’s Overview
Five Year Financial Summary
Directors’ Report
Statement of Corporate Governance Practices – 2010
Financial Statements
Corporate Directory
3
6
7
20
30
Inside back cover
COVER:
Pictorial representation of the
location of
the Willoughby
Market Gardens ‘Kiah’ (Sydney,
New South Wales) syndicated
development project in which
PPK has an investment interest
and lead management role (see
page 3 for more details).
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CHAIRMAN AND EXECUTIVE DIRECTOR’S OVERVIEW
OVERVIEW OF PERFORMANCE
PPK Group Limited (“PPK”) reported a profit after tax of $0.762
million for the year ended 30 June 2010.
The full year result:
•
compares to a profit of $0.540 million in the corresponding
period last year; and
• equates to earnings per share of 1.3 cents for the period
(FY2009: 0.9 cents).
The performance of PPK in respect of the financial year ended 30
June 2010 includes:
Industrial properties owned by PPK at Seven Hills in New South
Wales and Dandenong South in Victoria were fully tenanted
throughout the year and are expected to remain so for the
duration of the 2011 financial year.
In August 2010, PPK entered into an unconditional Contract for
Sale of its property located at Kirrawee in New South Wales for a
price of $8.25 million. The sales price obtained by PPK represents
a profit before tax of approximately $1.45 million. Completion of
the sale is scheduled to take place in early November 2010.
As the Kirrawee property is unencumbered, PPK will retain the
full sale proceeds and will hold these funds for future investment
activities.
•
realised gains of $1.022 million on the disposal of shares held
by PPK as investments in selected listed companies;
INVESTMENTS
• a profit of $2.184 million generated on the sale in November
in Virginia,
investment property
located
2009 of an
Queensland;
• non-cash write downs:
- required under AIFRS Accounting Standards of $0.320
million in the value of listed shares and derivatives held by
PPK as at 30 June 2010;
-
in the value of the PPK investment property located at
Arndell Park, New South Wales (“Arndell Park Property”) of
$1.15 million, following an independent market valuation
undertaken in June 2010.
• a $684,000 non-cash share of losses by Cool or Cosy Limited
(COS) and Frigrite Limited (FRR) inclusive of impairments in
the value of these investments; and
• a profit of $2.4 million after tax and before non-cash
adjustments (4.14 cents per share) for investments and
property.
PROPERTY
Despite the non-cash write down in the value of the Arndell
Park Property, all other properties owned by PPK have been
independently assessed at values which are greater than the
historical cost of these assets recorded on the Company’s Balance
Sheet.
In November 2009, PPK sold its industrial property at Virginia in
Queensland for $5.2 million. This property had been vacant since
February 2009.
The Arndell Park Property remains vacant with the tenant having
vacated the premises on 31 August, 2009. Litigation continues
between PPK and the former tenant. All legal expenses and
holding costs in respect of the dispute and this property have
been expensed as they have been incurred.
At the date of this report, PPK has increased its shareholding in
COS to 23.34% and FRR to 33.9%. Each of these companies is
now considered to be an ‘associate’ of PPK for financial reporting
purposes; in the case of the COS from 29 October, 2009 and in
respect of FRR from 26 August, 2009.
The carrying value of PPK’s investments in FRR and COS was
restated at the time each of FRR and COS became an ‘associate’ of
PPK. This gave rise to a one-off non- cash investment gain. PPK
is now equity accounting after the tax earnings of both COS and
FRR and takes up in its earnings a share of the after tax profits (or
losses) of these entities for the relevant periods.
Otherwise, as part of its overall investment strategy, PPK
generated profits during the year from the sale of shares in
publicly listed entities held for resale.
In January 2010, PPK invested in and participated as the lead
manager of a syndicate for the purchase of 4.013 hectares of
prime residential land located at Willoughby in New South
Wales (“Willoughby Market Gardens” or “Kiah”). This land will be
developed over the next three (3) years with construction and
sale of seventy six (76) prestige residential dwellings. Based on
its proportionate shareholding in the entity responsible for the
purchase of the property to be developed, PPK will be entitled to
an 18.2% share of profits from the Kiah Project in its capacity as
an investor and secured lender to the project.
MINING EQUIPMENT MANUFACTURE
The earnings of Rambor Pty Ltd (“Rambor”) continued to be
impacted by the lack of export orders from its principal market
in Russia. However, Rambor has now received orders for the
manufacture and delivery of equipment to Russia in September
2010, with indications of further orders to come.
The prototype of equipment developed under the
joint
development contract between Rambor and Hilti Corporation
has undergone testing and met its key KPI targets. The
Colin Ryan
CHAIRMAN
Glenn Molloy
EXECUTIVE DIRECTOR
P A G E 3
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CHAIRMAN AND EXECUTIVE DIRECTOR’S OVERVIEW
equipment is now being developed for commercialisation. Sales
of the developed product are expected to commence in the third
quarter of the 2011 financial year.
COMMITMENT TO OCCUPATIONAL, HEALTH, SAFETY
& ENVIRONMENT
During this year, the Company continued its strong commitment
to the prevention of injuries and harm in the workplace with
positive results achieved through the continued success of its
comprehensive workplace health and safety systems and policies.
The year in review saw continuing focus and commitment
to health and safety through a group wide commitment
to maintaining the highest occupational health and safety
standards for the benefit of its employees, contractors and
visitors.
Information relating to occupational health and safety issues
continues to be regularly considered by the Board which makes
recommendations, where necessary, for the improvement in
workplace systems and practices.
The Company also has a comprehensive employment practices
manual which confirms minimum standards of behaviour of
employees, contractors, directors and officers while reinforcing
the
laws and
regulations including those relating to occupational health and
safety obligations.
importance of compliance with applicable
PPK is also committed to the minimisation of the consumption
of resources at all of its facilities and in its manufacturing
operations.
To this end, the Company has an established Environment Policy
which may be found on its website at www.ppkgroup.com.au.
PRIVACY
PPK has developed a Privacy Disclosure Statement consistent with
the National Privacy Principles incorporated in prevailing privacy
laws dealing with the collection, use, disclosure, security, access
and accuracy of information available to it during the course of its
business operations. The Company has appointed a designated
Privacy Officer to deal with queries regarding the application
of the policy. A copy of the PPK Privacy Disclosure Statement is
detailed on the Company website at www.ppkgroup.com.au.
The combined effect of these factors is expected to provide the
basis for an improved operating performance from Rambor in the
next reporting period.
DIVIDENDS
Based on an assessment of the Company’s core earnings, realised
profits and confidence in an improved earnings outlook in
respect of the 2011 financial year, the Board has resolved to pay
a final dividend of one (1) cent per share fully franked bringing
the total fully franked dividends for the year to two and one-half
(2.5) cents per share.
CORPORATE GOVERNANCE
PPK:
•
•
its adherence to the Company’s established
continues
corporate governance
framework consistent with the
ASX Principles of Good Corporate Governance and Best
Practice Recommendations (2nd edition) (“ASX Principles &
Recommendations”); and
intends to make an early transition, commencing from
the 2011 financial year, to changes to the ASX Principles
& Recommendations introduced by the ASX Corporate
Governance Council in June 2010.
Copies of the documents underlying the PPK Corporate
Governance Framework are publicly accessible on the Company’s
website at www.ppkgroup.com.au.
OUR PEOPLE
PPK’s people provide the Company with the competitive
advantage required to satisfy the needs of its customers,
shareholders and other stakeholders.
The Board would like to record its appreciation of the on-going
dedication and commitment of our employees during the year.
PPK will continue to promote the fostering of a supportive, family
oriented and co-operative work place within a performance
based environment where innovation, initiative and productivity
are encouraged and rewarded.
Human resource policies, practices and procedures are in place
each of which are designed to attract, engage and retain
the highest possible calibre of employees on the Company’s
prevailing circumstances.
P A G E 4
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CHAIRMAN AND EXECUTIVE DIRECTOR’S OVERVIEW
FUTURE DIRECTION & BUSINESS OUTLOOK
The future direction and business outlook for PPK is detailed
within the Review of Operations and under the heading
Future Direction & Business Outlook, each contained within the
Directors’ Report included in this year’s Annual Report.
In summary, PPK will focus on the following key areas, namely
the:
1. completion of the sale of its industrial property located at
Kirrawee in New South Wales which is scheduled to take
place in early November 2010;
2. resolution of the dispute involving PACT Group and the
Arndell Park Property in New South Wales which is currently
the subject of Court proceedings;
3. progression and active participation as lead manager of the
Willoughby Market Gardens ‘Kiah’ syndicated development
project;
4. commercialisation
initiatives
the Rambor
pneumatic handheld bolters designed for Hilti One-Step rock
anchor installations jointly developed with Hilti Corporation
during the 2010 financial year;
relating
to
5. pursuit of suitable growth opportunities, in both domestic
its retained manufacturing
and overseas markets, for
operation Rambor; these opportunities are expected to
deliver improved earnings performance from this business in
future periods; and
6.
identification of and investment in appropriate public and
private companies in which there exists an opportunity for
PPK to be actively involved in the management of these
businesses utilising its core management expertise.
Future investment earnings are dependent on the performance
of the ‘associates’ and other listed company investments in which
PPK holds an interest, improvements in economic outlook and
the stability of the Australian share market.
Colin Ryan
Chairman
Glenn Molloy
Executive Director
Sydney, 28 September 2010
∨ PPK property: Hydrive Close, South Dandenong, Victoria
P A G E 5
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Consolidated
Income Statement
Sales Revenue
Rental Income
Profit Before Income Tax
2010
2009
2008
2007
2006
$000
$000
$000
4,746
3,109
1,246
4,867
4,776
461
4,251
4,396
702
34,112
4,403
16,760
98,408
2,101
2,979
Net profit attributable to members of PPK Group
Limited
$000
762
540
607
10,111
4,292
Balance Sheet
Total assets
Net debt
$000
$000
57,427
50,184
64,144
63,473
123,693
21,444
12,087
21,069
9,184
58,235
Equity attributable to members of PPK Group
Limited
$000
34,794
35,449
38,309
46,959
46,187
Total equity
Share information
Dividends on ordinary shares
Dividends per ordinary share
Dividend payout ratio
Number of ordinary shares issued at year end
Market capitalisation
Ratios and statistics
Return on equity attributable to members of PPK
Group Ltd
Basic earnings per share
Net debt/equity
Debt/(Equity – Intangibles)
Interest cover on continuing operations
Net Tangible Assets per Share
$000
$000
cents
%
000
$000
%
cents
%
%
times
cents
34,794
35,449
38,309
46,959
46,338
1,450
2,759
6,998
4,562
4,425
2.5
190
58,007
22,623
4.75
511
58,007
16,242
11.5
1,153
59,253
41,477
7.0
45.1
61,186
47,725
2.1
1.3
61.6
63.0
3.07
58.6
1.5
0.9
34.1
34.9
3.04
59.6
1.6
1.0
55.0
56.3
2.25
63.1
21.5
15.9
19.6
19.9
42.8
75.3
6.5
103.1
68,153
51,115
9.3
6.3
126.0
139.9
5.1
61.1
P A G E 6
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DIRECTORS’ REPORT
Your directors present their report on the parent entity and its
subsidiaries for the financial year ended 30 June 2010.
DIRECTORS
The names of directors in office at any time during or since the
financial year are:
Colin Francis Ryan
David Alfred Hoff (resigned due to retirement on 7 September 2009)
Glenn Robert Molloy
Raymond Michael Beath
Jury Ivan Wowk
Directors have been in office since the start of the financial year to
the date of this report unless otherwise stated.
INFORMATION ON DIRECTORS
the directors’ qualifications, experience and
Details of
responsibilities together with details of other directorships of other
listed public companies in the preceding three (3) years are detailed
below:
Colin Ryan (73)
(Securities held or controlled as at the date of
this report: 500,000 shares)
B.Com., Dip Ed., CA
Chairman & Non-Executive, Independent
Director
Member of the Board since November 1995 and Chairman since
March 1999.
Member of the Audit Committee
Colin Ryan is an independent director of PPK Group Limited
and has no business relationship with the company or its
related bodies other than his directorship. Colin manages an
investment and professional consultancy business providing a
variety of professional management, financial and marketing
services to various businesses. This follows experience as a
Chartered Accountant and extensive service as an executive and
non-executive director of various public companies. Colin has a
Bachelor of Commerce degree from the University of New South
Wales, a Diploma of Education from Sydney University and is an
Associate Member of the Institute of Chartered Accountants.
Other listed public company directorships held in the last 3 years:
Nil
David Hoff (61)
(Securities held or controlled as at the date of
this report: 156,960 shares)
C.P.A
Managing Director
Member of the Board since November 2000.
Resigned due to retirement on 7 September 2009
David Hoff joined the Company as Chief Executive Officer in 1997.
He was appointed its Managing Director in November 2000 and
continued in this role until his retirement in September 2009.
Prior to commencing with PPK, David had several years experience
in financial accounting positions within a multinational
corporation in the mining industry followed by a position as
Chief Financial Officer of a publicly listed Australian real estate
development company. David has over 27 years experience in
the packaging industry, in general management and managing
director roles, gained with multinational corporations based
in the United States of America, Europe, and with a global
packaging company in the Asia region.
David is a Non-Executive Director and Chairman of Cool or Cosy
Limited (ASX: COS) and Frigrite Limited (ASX: FRR), entities in
each of which PPK holds a substantial investment interest. He
is currently engaged by PPK to provide selected consultancy
services to the consolidated entity excluding investments by the
Company in COS and FRR.
Other listed public company directorships held in the last 3 years:
Cool or Cosy Limited, Non-Executive Director (Appointed: 19
September 2007) & Chairman (Appointed 30 November 2007)
Frigrite Limited, Non-Executive Director (Appointed: 23 July
2008) & Chairman (Appointed: 12 December 2008)
Glenn Molloy (55)
(Securities held or controlled as at the date of
this report: 10,987,997 shares)
Executive Director (from 7 September 2009)
Member of the PPK Group Limited Board since
listing on 21 December 1994.
Founder of the former entity Plaspak Pty Limited in 1979.
Appointed Executive Director in September 2009
Glenn Molloy founded the former entity Plaspak Pty Ltd in 1979
and has acted as a director of the consolidated entity since that
time. He has extensive experience on public company boards,
and in advising publicly listed and private entities on commercial
aspects of mergers, acquisitions and divestment activities.
P A G E 7
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DIRECTORS’ REPORT CONTINUED
Glenn was appointed to the role of Executive Director in
September 2009 following the retirement and resignation of
David Hoff as Managing Director.
COMPANY SECRETARY
The Company Secretary in office at the end of the financial year
was Mr Robert Nicholls.
Other listed public company directorships held in the last 3 years:
Nil
INFORMATION ON COMPANY SECRETARY
Jury Wowk (59)
(Securities held or controlled as at the date of
this report: 212,302 shares)
BA., LLB
Non-Executive, Independent Director
Member of the PPK Group Limited Board since
listing on 21 December 1994.
Jury Wowk was a Partner of and is currently a consultant to HWL
Ebsworth Lawyers and has provided legal services to the PPK
Group since the establishment of Plaspak Pty Limited in 1979.
From 1987 to 1989, Jury performed the role of Operations
Manager at Plaspak Pty Ltd gaining valuable hands on practical
experience in the management of the company’s operations.
Jury has a Bachelor of Arts Degree and a Bachelor of Laws
Degree from the University of Sydney. He is also a Law Society
of New South Wales Accredited Specialist in Business Law and
an Associate Member of the Australian Institute of Company
Directors.
Other listed public company directorships held in the last 3 years:
HomeLeisure Limited, Non-Executive Director (Appointed: 29
July 2002; Ceased: 16 April 2007)
Allied Brands Limited, Non-Executive Director (Appointed: 5
February 2010; Ceased: 15 April 2010)
Raymond Beath (59)
(Securities held or controlled as at the date of
this report: 42,821 shares)
B.Com, F.C.A
Non-Executive, Independent Director
Member of the PPK Group Limited Board since
listing on 21 December 1994.
Chairman of the Audit Committee.
Raymond Beath is a Director of Holden & Bolster Avenir Pty
Limited, Chartered Accountants. He has a Bachelor of Commerce
(Accounting) degree from the University of New South Wales and
is a Fellow of the Institute of Chartered Accountants. Raymond
has advised the consolidated entity on taxation, corporate and
financial management since 1984 and has been non-executive
director of PPK Australia Pty Limited since 1986.
Other listed public company directorships held in the last 3 years:
Nil
Details of the qualifications and experience of the Company
Secretary are detailed below:
Robert Nicholls (41)
(Securities held or controlled as at the date of
this report: 27,000 shares)
MBA (Distinction), LL.B (Hons), Grad Dip Leg
Prac, Grad Dip CSP, FCIS, GAICD
Group Company Secretary
Robert is a practising solicitor and chartered company secretary.
Between April 2000 to July 2008, Robert performed the role of
Group General Counsel & Company Secretary providing legal and
company secretarial services for the PPK Group of Companies. In
July 2008, he was appointed Managing Director of Cool or Cosy
Limited, a company in which PPK holds a substantial investment
interest, and continues to provide company secretarial services to
PPK and its subsidiaries.
Prior to joining PPK in April 2000, Mr Nicholls performed roles
as a solicitor in private practice and with a Commonwealth
regulatory body.
Robert has a Masters of Business Administration (With
Distinction) from Charles Sturt University, Bachelor of Laws
(Honours) Degree from the University of Technology, Sydney,
Graduate Diploma in Legal Practice and Graduate Diploma in
Company Secretarial Practice. He is a Fellow of The Institute
of Chartered Secretaries and Administrators and Chartered
Secretaries Australia and a graduate of the Australian Institute
of Company Directors.
Relevant Associated Directorships:
Cool or Cosy Limited, Non-Executive Director (1 June 2007 to 7
July 2008); Managing Director (from 8 July 2008)
PRINCIPAL ACTIVITIES
The principal activities of the consolidated entity during the
financial year were the:
•
investment in publicly listed and privately held businesses;
• property ownership and management; and
• design, manufacture and distribution of portable
underground mining equipment.
There were no significant changes in the nature of the
consolidated entity’s principal activities during the financial year.
P A G E 8
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Additional information relating to PPK industrial properties is
detailed within this Directors’ Report under the heading After
Balance Date Events.
PPK continues to explore opportunities to make strategic
investments.
Major investment activity by PPK during the reporting period
included the following:
• disposal of shares held by PPK as investments in selected
listed companies yielding a realised gain of $1.022 million;
• acquisition of additional shares in Frigrite Limited (FRR) and
Cool or Cosy Limited (COS) bringing the total shareholding
held by PPK in:
- FRR to 27,010,324 (or 32.89% of the issued capital of FRR); and
- COS to 15,310,000 (or 23.34% of the issued capital of COS);
In January 2010, PPK invested in and participated as the lead
manager of a syndicate for the purchase of 4.013 hectares of
prime residential land located at Willoughby in New South
Wales (“Willoughby Market Gardens” or “Kiah” Project). This
land will be developed over the next three (3) years with
construction and sale of seventy six (76) prestige residential
dwellings. Based on its proportionate shareholding in the
entity responsible for the purchase of the property to be
developed, PPK will be entitled to an 18.2% share of profits
from the Kiah Project in its capacity as an investor and secured
lender to the project.
DIRECTORS’ REPORT CONTINUED
OPERATING RESULTS
The consolidated profit after tax of the consolidated entity for
the period ended 30 June 2010 amounted to $762,000 (2009:
$540,000).
DIVIDENDS PAID OR RECOMMENDED
Dividends paid or recommended for payment are as follows:
Final dividend in respect of the 2009 year
of 1.00 cents per ordinary share paid in
November 2009
Interim dividend in respect of the reporting
period of 1.5 cents per ordinary share paid in
March 2010
Final dividend in respect of the reporting
period of 1.00 cent per share to be paid in
November, 2010
$580,067
$870,100
$580,067
•
REVIEW OF OPERATIONS
Information on the entity’s operations, financial position,
business strategies and prospects for the future is detailed below
and further within the Chairman and Executive Director’s Review
included in the Annual Report accompanying these Financial
Statements.
PROPERTY AND OTHER INVESTMENTS
PPK will continue to explore suitable investment opportunities
which have the potential to add value for its shareholders.
PPK continues to maintain a portfolio of industrial properties and
strategic investments in a number of ASX listed companies.
MINING EQUIPMENT MANUFACTURE
During the year, PPK’s property portfolio consisted of five (5)
industrial properties:
• one located in Virginia, Queensland which was sold in
November 2009 for $5.166 million generating a $2.184
million profit on sale;
•
three (3) were leased to subsidiaries of PACT Group Pty Ltd
(“PACT Group”), the purchaser of the packaging business;
and
• one (1) was leased
in December 2009, to a private
manufacturing company for a term of three (3) years with a
three (3) year option.
PPK continues to be involved in litigation with PACT Group
over the property at Arndell Park in New South Wales, where
PPK contends it has a valid registered lease which expires on
8 September 2013. PACT Group is disputing the validity of the
registration of this lease and the matter is before the courts and
likely to be determined in the current financial year.
The Board will keep the market
developments regarding this on-going dispute.
informed of significant
During the 2010 financial year, Rambor Pty Ltd (“Rambor”):
•
•
continued to develop and release new products to the
market; and
signed a Development & Commercial Contract with global
company Hilti Corporation (“Hilti/Rambor Agreement”)
in
joint development and proposed
commercialisation of Rambor pneumatic handheld bolters
designed for Hilti One-Step rock anchor installations.
respect of the
The Hilti/Rambor Agreement provides that for a period of six
(6) years, Rambor has the exclusive right to sell pneumatic
handheld machinery for handheld One-Step applications.
Rambor and Hilti are actively working on the:
• proposed expansion of their joint offering of the Hilti One-
Step and Rambor bolter systems to include a full range of
handheld delivery platforms for the mining industry; and
•
international launch of the combined systems.
Based on these initiatives and current orders from customers
Rambor is expected to deliver an improved contribution to PPK’s
consolidated result in future periods.
P A G E 9
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DIVIDENDS
The Board has declared a final fully franked dividend of 1.00 cent
per share yielding a yearly dividend of 2.5 cents per share fully
franked.
FUTURE DIRECTION & BUSINESS OUTLOOK
With a portfolio of industrial properties in desirable geographical
locations continuing to provide the basis for core stable earnings
in the years ahead, PPK will focus on the following key areas,
namely the:
1. completion of the sale of its industrial property located at
Kirrawee in New South Wales which is scheduled to take
place in late October 2010;
2. resolution of the dispute involving PACT Group and the
Arndell Park Property in New South Wales which is currently
the subject of Court proceedings;
3. progression and active participation as lead manager of the
Willoughby Market Gardens ‘Kiah’ syndicated development
project;
4. commercialisation of Rambor pneumatic handheld bolters
designed for Hilti One-Step rock anchor installations jointly
developed with Hilti Corporation during the 2010 financial year;
5. pursuit of suitable growth opportunities, in both domestic
and overseas markets, for
its retained manufacturing
operation Rambor; these opportunities are expected to
deliver improved earnings performance from this business in
future periods; and
6.
identification of and investment in appropriate public and
private companies in which there exists an opportunity for
PPK to be actively involved in the management of these
businesses utilising its core management expertise.
Future investment earnings are dependent on the performance
of the ‘associates’ and other listed company investments in
which PPK holds an interest, improvements in economic outlook
and the stability of the Australian share market.
FINANCIAL POSITION
The net assets of the consolidated entity have decreased by
$655,000 from 30 June 2009.
The main changes in the financial position have resulted from the:
• accounting treatment relating to the impairment of available
for sale financial assets and derivatives; and
• payment of dividends at disclosed levels.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There have been no significant changes in the state of affairs
during the 2010 financial year or existing at the time of this report.
AFTER BALANCE DATE EVENTS
P A G E 1 0
PPK increased its substantial holding in Frigrite Limited (FRR)
on 1 July 2010 from 27,010,324 shares (or 32.89% of the issued
capital of FRR) to 27,841,862 (or 33.9% of the issued share
capital of FRR).
In August 2010, PPK entered into an unconditional Contract for
Sale of its property located at Kirrawee in New South Wales for a
price of $8.25 million. The sales price obtained by PPK represents
a profit before tax of approximately $1.45 million. Completion
of the sale is scheduled to take place in early November 2010.
The performance of Rambor during the 2010 financial year was
impacted by a lack of orders from its principal export market
of Russia. In September 2010, Rambor received orders for the
manufacture and delivery of its equipment to Russia with
indications of further orders to come. These orders are expected
to provide the basis for an improved operating performance
from and contribution to group earnings by Rambor in the
current reporting period.
PPK Properties Pty Ltd is in litigation with the tenant of Arndel
Park, Sydney property over the validity of the lease on this
property. It is anticipated that the dispute will be determined
by the Court in November 2010. The lease is due to expire in
August 2013.
In August 2010, the National Australia Bank (NAB) confirmed an
extension of the bank finance facility provided to PPK. As part of
the bank review and extension of the facilities provided to PPK,
the NAB has:
•
removed the registered first mortgage it held on the property
at Kirrawee in New South Wales; and
• obtained a registered first mortgage against the land and
buildings held by PPK at Arndell Park in New South Wales.
No other matter or circumstance has arisen since the end of the
financial year which is not otherwise dealt with in this report or
in the Consolidated Financial Statements that has significantly
affected or may significantly affect the operations of the
consolidated entity, the results of those operations or the state of
affairs of the consolidated entity in subsequent financial years.
FUTURE DEVELOPMENTS
The likely developments in the operations of the consolidated
entity and the expected results of those operations in financial
years subsequent to the year ended 30 June 2010 are included
in the Chairman and Executive Director’s Overview detailed in
the 2010 PPK Annual Report and in the Review of Operations
section of this Directors’ Report.
ENVIRONMENTAL ISSUES
PPK remains committed to:
•
the effective management of environmental issues having
the potential to impact on its remaining business; and
• minimising the consumption of resources utilised by its
operations.
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The Company has otherwise complied with all government
legislation and regulations with respect to disposal of waste
and other materials and has not received any notices of breach
of environmental laws and/or regulations. The Company’s
approach to environmental sustainability is outlined in its
Environmental Policy at www.ppkgroup.com.au.
The PPK Board believes the remuneration policy to be
appropriate and effective in its ability to attract, retain and
motivate directors and executives of the highest possible quality
and standard to manage the affairs of the consolidated entity,
as well as, create goal congruence between directors, executives
and shareholders.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of the Court to bring
proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of
taking responsibility on behalf of the Company for all or any part
of those proceedings.
The Company was not a party to any such proceedings during
the year.
REMUNERATION REPORT
Remuneration Report - Audited
This Remuneration Report details the nature and amount
of remuneration, including prescribed details under the
Corporations Regulations 2001, of each director and other key
management personnel for the consolidated entity and the
company and:
•
•
relevant group executives of the consolidated entity; and
company executives
(as each these italicised terms are defined in the Corporations
Act 2001)
receiving the highest remuneration for the year ended 30 June
2010.
Remuneration Policy
The remuneration policy of the Company has been designed
to align director and executive objectives with shareholder
and business objectives by providing a fixed remuneration
component and offering specific short-term incentives based
on key performance areas affecting the consolidated entity’s
financial results.
∧ PPK is a substantial Shareholder in Frigrite Limited (ASX Code: FRR)
The remuneration policy, setting the terms and conditions for
directors, executives and management was developed by the
Board. The policy for determining the nature and amount of
remuneration for board members and senior executives of the
consolidated entity is detailed in the paragraphs which follow.
Remuneration of non-executive directors is determined by the
Board from the maximum amount available for distribution
to the non-executive directors as approved by shareholders.
Currently this amount is set at $275,000 per annum in
aggregate as approved by shareholders at the 2003 Annual
General Meeting.
In determining the appropriate level of directors’ fees, data from
surveys undertaken of other public companies similar in size or
market section to the Company is taken into account.
During the year, the Board resolved to reduce the fees payable
to non-executive directors with effect from 1 September 2009
to reflect the existing size, nature and extent of the Company’s
operations.
Non-executive directors are remunerated by means of cash
benefits. They are not entitled to participate in performance
based remuneration practices unless approved by shareholders.
The Company will not generally use options as a means of
remuneration for non-executive directors and will continue to
remunerate those directors by means of cash benefits.
PPK does not provide retirement benefits for its non-executive
directors.
Executive directors do not receive director’s fees.
The Board of Directors is responsible for approving remuneration
policies and packages applicable to senior executives of the
company. The broad remuneration policy is to ensure that the
remuneration package properly reflects the person’s duties
and responsibilities and that the remuneration is competitive
in attracting, retaining and motivating people of the highest
possible quality and standard.
A review of the compensation arrangements for executive
directors and senior executives is conducted by the full Board at
a duly constituted Directors meeting.
The Board conducts its review annually based on established
criteria which includes:
•
•
the individual’s performance;
reference to market data for broadly comparable positions or
skill sets in similar organisations or industry;
P A G E 1 1
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DIRECTORS’ REPORT CONTINUED
•
the performance of the company or consolidated entity
during the relevant period; and
•
the broad remuneration policy of the consolidated entity.
A significant proportion of eligible bonus payments to key
management personnel, group executives and company
executives are linked to the earnings of either the:
Senior executives and executive directors may receive bonuses based
on the achievement of specific goals of the consolidated entity.
An executive incentive scheme approved by shareholders is in
place which provides the board with the discretion to grant
options and provide loans to Eligible Executives for the purpose
of acquiring Scheme Shares (as each of these italicised terms are
defined under the PPK Executive Incentive Scheme)(“PEIS”).
The Board exercises its discretion under the PEIS in a manner
consistent with the broad remuneration policy objectives of
the consolidated entity. The grant of options to executives is
linked to significant performance hurdles including the exercise
price of the options being subject to material improvement in
Company performance (measured by its share price) during a
restricted exercise period.
COMPANY PERFORMANCE, SHAREHOLDER WEALTH
AND DIRECTORS AND EXECUTIVES REMUNERATION
The Remuneration Policy has been designed to achieve the goal
congruence between shareholders, directors and executives.
The two methods employed in achieving this aim are:
• a performance based bonus for executives based on key
performance indicators (KPI’s) which include a combination
of short-term financial and non-financial indicators; and/or
•
the issue of options to executives as a means of long-term
incentive to encourage the alignment of personal and
shareholder interests.
There were no options issued to directors or executives during
the year.
The Board considers that the existing remuneration
arrangements regarding executives are appropriate in the
Company’s prevailing circumstances to achieve the desired
objectives of its Remuneration Policy.
These policy measures are chosen as they directly align the
individual’s reward to the KPI’s of the consolidated entity and to
its strategy and performance.
The Company considers this policy is an effective means of
maintaining shareholder wealth and in retaining quality
employees committed to the long term objectives of the
Company.
Eligible executives may be entitled to receive incentive
payments of between 10% and up to 15% of their base salary
during each full year of employment in which they achieve
pre-determined levels of productivity, goals and targets in
consultation with the Board and Executive Director.
•
•
consolidated entity; or
individual company
performs his or her primary duties and responsibilities.
in which the company executive
Advanced Fluid Systems Pty Limited, an entity related to
P.R.Mastalir, Managing Director of Rambor Pty Limited
(“Rambor”) and King Cobra Mining Equipment Pty Limited
(“King Cobra”), was paid a bonus payment relating to the
achievement of performance targets in respect of the company
earnings of Rambor and King Cobra for the 2009 financial year.
No other bonus payments have been made to key management
personnel for the consolidated entity and the company and:
•
•
group executives of the consolidated entity; and
company executives
in respect of objectives relating to the earnings of the Company
or consolidated entity during the year or in respect of the
preceding four (4) years.
The remaining proportion of eligible bonus payments relate
to non-financial performance measures which may include,
for example, people, safety, strategy and risk measures having
overall benefits for the consolidated entity. There were no
bonuses paid to executives in respect of the attainment of
predetermined non-financial performance indicators are
detailed within this report.
CONSEQUENCES OF COMPANY PERFORMANCE ON
SHAREHOLDER WEALTH
The following table outlines the impact of company
performance on shareholder wealth:
Earnings per
share (cents)
Full year ordinary
dividends (cents)
per share
Special dividend
(cents) per share
Year-end share
price
Shareholder
return (annual)
2010
1.3
2009
0.9
2008
1.0
2007
15.9
2006
6.3
2.5
2.5
-
-
6.5
5.0
7.0
6.5
-
-
$0.39
$0.28
$0.70
$0.78
$0.75
45.4%
(51.4%)
5.3%
13.2%
(8.8%)
The above table shows the annual returns to shareholders
calculated to include the difference in percentage terms
between the dividend yield for the year (based on the average
share price during the period) and changes in the price at which
shares in the Company are traded between the beginning and
the end of the relevant financial year.
P A G E 1 2
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In addition, the information provided in the table and this report highlights that the payment of bonuses to executives is closely
aligned to company performance.
In respect of the 2009 financial year, for example, no bonuses were paid or accrued to company executives relating to earnings
performance conditions pertaining to that year while bonuses were paid to selected executives in respect of the 2007 financial year
based on the positive performance of the consolidated entity in that year.
Further, the bonus payment disclosed in respect of relevant group executive Peter Mastalir in respect of the 2009 financial year is
based on the positive performance of the individual company in which the relevant group executive performs his or her primary
duties and responsibilities.
In contrast, there were no bonuses paid or accrued to company executives or relevant group executives in respect of the 2010 financial
year due to the fact that the required pre-determined performance targets linked to incentive payments were not achieved during
the period.
DETAILS OF REMUNERATION FOR THE YEAR ENDED 30 JUNE 2010
Directors’ and executive officers’ remuneration
Details of the nature and amount of each major element of compensation of each director, company executive and relevant group
executive who receive the highest remuneration for the year ended 30 June 2010 are included in the following table:
SHORT TERM INCENTIVES
Salary&
Fees
($)
Short Term
Incentive
Cash
Bonus
($)
Non-
Cash
Benefits
($)
POST
EMPLOYMENT
Superannuation
($)
LONG TERM INCENTIVES/BENEFITS
Long
Service
Leave
Post
Employment
Benefits
($)
Share
based
payments
($)
Total
($)
Proportion of
Remuneration
Performance
Related (%)
Directors
Non –Executive
C F Ryan
G R Molloy
R M Beath
J I Wowk
Executive
D A Hoff *
Total Directors
Company
Executive
R J Nicholls
Total Company
Executives
Relevant Group
Executive
P R Mastalir
Total Relevant
Group Executive
49,500
220,250
33,000
33,000
311,601
30,000
135,200
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,347
50,000
359,919
-
-
-
82,996
11,700
2,252
-
-
-
-
-
-
-
-
-
49,500
220,250
33,000
33,000
739,867
1,075,617
30,000
30,000
232,148
232,148
-
-
-
-
-
-
-
* Resigned due to retirement on 7 September 2010. Amounts disclosed as remuneration to this executive include a combination of
salary paid to the executive while Managing Director of the consolidated entity until retirement and consultancy fees paid to this
executive during the remainder of the financial year.
The named company executive and relevant group executive held the following positions during the period:
Company Executive
R J Nicholls
Relevant Group Executive
P R Mastalir
Position
Group Company Secretary
Position
Managing Director, Rambor Pty Ltd
There are no other company executives or relevant group executives.
P A G E 1 3
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The names and positions held by Key Management Personnel (as defined by the Corporations Act 2001 and Australian Accounting
Standards) of the consolidated entity during the year are as follows:
Key Management Personnel
Position
Non-Executive Director
Chairman
Managing Director (retired 7 September 2009)
Executive Director (from 7 September 2009)
Non-Executive Director
Non-Executive Director
SHORT TERM INCENTIVES
Salary&
Fees
($)
Short Term
Incentive
Cash Bonus
($)
Non-Cash
Benefits
($)
POST
EMPLOYMENT
Superannuation
($)
LONG TERM INCENTIVES/BENEFITS
Long
Service
Leave
Post
Employment
Benefits
($)
Share
based
payments
($)
Total
($)
72,000
48,000
48,000
48,000
223,745
30,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
57,757
85,000
8,687
31,000
-
-
-
135,200
106,589
81,432
11,700
2,643
Proportion
of
Remuneration
Performance
Related
(%)
-
-
-
-
-
-
31.6%
-
-
-
-
-
-
-
72,000
48,000
48,000
48,000
406,219
622,219
30,000
30,000
337,564
337,564
-
-
C F Ryan
D A Hoff
G R Molloy
J I Wowk
R M Beath
2009
Directors
Non –Executive
C F Ryan
G R Molloy
R M Beath
J I Wowk
Executive
D A Hoff
Total Directors
Company
Executives
R J Nicholls
Total Company
Executives
Relevant Group
Executive
P R Mastalir
Total Relevant
Group Executive
The named company executives and relevant group executive held the following positions during the period:
Company Executive
R J Nicholls
Relevant Group Executive
P R Mastalir
Position
Group Company Secretary
Position
Managing Director, Rambor Pty Ltd
There are no other company executives or relevant group executives.
The names and positions held by Key Management Personnel (as defined by the Corporations Act 2001 and Australian Accounting
Standards) of the consolidated entity during the year are as follows:
Key Management Personnel
C F Ryan
D A Hoff
G R Molloy
J I Wowk
R M Beath
Position
Non-Executive Director
Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
P A G E 1 4
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PERFORMANCE INCOME AS A PROPORTION OF TOTAL
REMUNERATION
Performance based bonuses are based on proportions of
salary and not on set monetary figures. This may result in the
proportion of remuneration related to performance varying
between individuals. The Board has set these bonuses to
encourage achievement of specific goals that have been given a
high level of importance in relation to growth and profitability
of the consolidated entity.
ANALYSIS OF BONUSES INCLUDED IN REMUNERATION
The vesting profile of the short-term incentive cash bonus
awarded as compensation to each director, company executive
and relevant group executives and which may have vested at the
date of this report are detailed below:
Short term incentive cash bonus
Included in
Remuneration
($)
Vested in
period
(%)
Forfeited in
period (A)
(%)
Available for
vesting in
future years
(B)
Director
D A Hoff
Relevant
group
executive
P R Mastalir
-
-
-
-
100%
100%
-
-
(A) The amounts forfeited are due to the performance of service
criteria not being met in relation to the current financial
reporting period.
(B) This relates to the amount of short term bonus which may
have accrued from the 2010 financial year and be payable in
future financial years.
The maximum potential value of the short term incentive is
dependent upon the attainment of specified threshold earnings
targets and the maximum potential value is dependant upon
actual earnings achieved.
No bonuses were paid to any director, company executive or
relevant group executives in respect of the current period.
The performance conditions relating to:
• D A Hoff comprised designated earnings per share (EPS)
targets for the consolidated entity; and
• P R Mastalir related to the achievement of pre-determined
and specified Earnings Before Interest & Tax (EBIT) targets for
Rambor.
Each of these performance incentive targets were not achieved
during the 2010 financial year and, therefore, the bonus was
forfeited.
The Company’s Secretary, R J Nicholls:
•
•
is engaged in a non-executive, consultative capacity; and
is not remunerated by means of specified performance
conditions and targets.
ANALYSIS OF PROSPECTIVE BONUS PAYMENTS FOR
FUTURE YEARS
The vesting profile of the short-term incentive cash bonus
which may otherwise be payable in future financial years if
the executive meets pre-determined service and performance
criteria awarded as compensation to each director, company
executive and relevant group executive are detailed below:
Short term incentive cash bonus
Value yet to vest or which may vest
Financial
years in which
bonus vests or
may vest
Minimum Maximum
Relevant
Group
Executive
P R Mastalir
2011
0
(A)
(A)
The maximum potential value of the short term
incentive cash bonus for future financial years cannot be
determined for this executive as vesting is dependent
upon the attainment of specified threshold earnings
targets and the maximum potential value is dependant
upon actual earnings achieved.
The performance conditions included in the determination of
the prospective bonus which may vest in future financial years
and be payable to P R Mastalir includes specified EBIT targets for
Rambor Pty Limited.
These performance conditions were selected because each seeks
to align the potential payment of bonuses to the creation of
shareholder value and growth of the Company’s operations.
Achievement of these performance conditions are assessed
by means of specifically defined targets and definitions of
the key requirements detailed within the relevant service
and consultancy agreements with the respective personnel.
The main reason for applying these methods of assessment
is that they are based on readily accepted measurements of
shareholder value creation and company earnings growth.
P A G E 1 5
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OPTIONS ISSUED AS PART OF REMUNERATION FOR
THE YEAR ENDED 30 JUNE 2010
Options may be issued to executives as part of their
remuneration. The options are issued to encourage goal
alignment between executives, directors and shareholders.
No options were issued to, or exercised by, directors or specified
executives during the year.
EMPLOYMENT CONTRACTS
• Remuneration - Consultancy fee payable during the period 1
September 2009 to 30 June 2010 was $250,000 per annum.
The Company must supply a mobile phone and laptop and
shall reimburse all expenses incurred in relation to provision
of the consultancy services.
• Duties - The duties of Mr Hoff include the oversight of general
administrative functions of the Company and supervising
special projects and/or the Company’s operating businesses.
David Hoff is required to attend to his duties 3 days per week
on average for 48 weeks per year. Mr Hoff is likely to be
invited to attend the Company Board Meetings.
The Company’s Managing Director, David Hoff, retired on 7
September 2009.
•
The remuneration and other terms of Mr Hoff’s employment
during the year were based on a previously executed written
Service Agreement.
The key provisions of the Service Agreement were as follows:
•
Term of agreement - 4 years commencing 1 July 2004.
• Base salary inclusive of superannuation to be reviewed
annually by the Board of Directors.
• Provision of a fully maintained motor vehicle.
• Payment of a post employment benefit equal to 12 months of
the current base salary and benefits in the event that either
party does not renew the Service Agreement on expiry of the
4 year term.
• Payment of a termination benefit on early termination by
the employer, other than in specified circumstances based on
misconduct or non-performance, equal to the current base
salary and benefits for 12 months or the remaining term of
the agreement whichever is the greater.
• A notice period of 6 months in respect of early termination of
the agreement.
The payment of a performance related cash bonus based on
the consolidated entity achieving specified earnings per share
targets.
On 7 September 2009, David Hoff retired as Managing Director
and as a Director of the Company.
Following his resignation, the Company and Mr Hoff agreed the
remuneration and other terms of David Hoff continuing in the
role of a consultant.
The key provisions of the consultancy arrangement are as
follows:
•
Initial period of 3 years
Term -
commencing on
1 September 2009. Unless either the Company or David Hoff
serves a written notice at least 120 days prior to the expiry
of the term, the consultancy arrangement will automatically
renew for a further term of 2 years. This renewal process may
continue indefinitely.
P A G E 1 6
Termination - The consultancy arrangement may be
terminated at any time by David Hoff by giving the Company
6 months written notice. The Company can terminate the
arrangement at any time with no cause by paying an amount
equivalent to the greater of the then current consultancy fee
for a term of 12 months, or the remainder of the term. In the
event Mr Hoff’s services are not provided for a continuous
period in excess of 3 months, the Company can terminate the
consultancy arrangement by paying an amount equivalent
to the current consultancy fee for a period of 12 months.
Both the Company and Mr Hoff can immediately terminate
the arrangement in the event the other breaches the terms
of the consultancy and that breach is not remedied within
4 weeks notice of that breach. The Company has immediate
termination rights for specified misconduct.
A performance review was undertaken in August 2010
regarding the performance of Mr Hoff and his related entity in
respect of the year ended 30 June 2010.
Glenn Molloy was appointed an Executive Director on 7
September 2009.
The remuneration and other terms of Mr Molloy’s employment
have been approved by the Board and include payment of the
amount of $3,500 per day worked for PPK plus reasonable out of
pocket expenses and the provision of a mobile phone and laptop
for business use.
Robert Nicholls and Prestige Corporate Services Pty Ltd, an
entity related to Mr Nicholls, provide company secretarial
consultancy services to the consolidated entity pursuant to the
terms of a Consultancy Agreement.
The key provisions of the Consultancy Agreement are as follows:
•
Term of Agreement – Initial period of 4 years commencing
8 July 2008 with an option to the Company to extend the
agreement for a further 2 years at the end of the initial
period;
• Base Consultancy Fee on commencement to be reviewed
annually by the Board of Directors;
• Payment of a termination benefit on early termination by
the employer, other than in specified circumstances based
on misconduct or non-performance, equal to the prevailing
remuneration amount for a 12 month period;
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• A notice period of 6 months in respect of early termination
of the agreement for non-performance or generally at the
election of Mr Nicholls; and
•
Immediate termination by the Company for specified
misconduct.
A performance review was undertaken in August 2010 regarding
the performance of Mr Nicholls and his related entity in respect
of the year ended 30 June 2010.
P.R.Mastalir and Advanced Fluid Systems Pty Limited, an entity
related to Mr Mastalir, provide consultancy services to Rambor
Pty Limited (“Rambor”) and King Cobra Mining Equipment Pty
Limited (“King Cobra”) pursuant to the terms of a Consultancy
Agreement.
The key provisions of the Consultancy Agreement are as follows:
•
Term of agreement - 5 years commencing 1 July 2007.
• Base Consultancy Fee upon commencement to be reviewed
annually by the Board of Directors.
• Restraints on competition for specified time periods in
certain geographical areas in respect of defined services and
activities in the event of termination.
•
Early termination provisions on the occurrence of specified
events such as, for example, insolvency or the failure or
inability to perform the contracted service.
• A notice period of 6 months in respect of early termination of
the agreement.
•
The payment of a performance related cash bonus based
on Rambor and/or King Cobra achieving specified earnings
before interest and taxation (EBIT) targets.
A performance review was undertaken in August 2010
regarding the performance of Mr Mastalir and his related entity
in respect of the year ended 30 June 2010.
There are no formalised written contracts in place with any
other specified executives.
End of Audited Remuneration Report
OPTIONS
There were no options outstanding as at the date of this report.
DIRECTORS’ INTERESTS
Particulars of Directors’ interests in shares as at the date of this
report are as follows:
C F Ryan
D A Hoff*
G R Molloy
J I Wowk
R M Beath
Ordinary Shares
500,000
156,960
10,987,997
212,302
42,821
Options
-
-
-
-
-
* Resigned due to retirement on 7 September 2009.
∧ Rambor spilling rig
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Balance
01-Jul-09
Granted as
remuneration
On exercise
of options
SHARES
Directors
C F Ryan
D A Hoff*
G R Molloy
J I Wowk
R M Beath
Company
Executives
500,000
156,960
10,329,098
187,302
42,821
R J Nicholls
27,000
Relevant
Group
Executive
P R Mastalir
-
Total
11,243,181
Net
change
other
Balance
as at the
date of this
report
-
-
658,899
25,000
-
500,000
156,960
10,987,997
212,302
42,821
-
-
27,000
-
683,899 11,900,080
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* Resigned due to retirement on 7 September 2010.
MEETINGS OF DIRECTORS
During the financial year, meetings of directors (including
committee meetings) were held.
Attendances were:
DIRECTORS’ MEETINGS
COMMITTEE MEETINGS
Number
Eligible to
attend
Number
Attended
Number
Eligible to
attend
Number
Attended
11
11
11
11
2
10
11
11
10
2
3
-
-
3
-
3
-
-
3
2
C F Ryan
G R Molloy
J I Wowk
R M Beath
DA Hoff
RISK & CONTROL COMPLIANCE STATEMENT
Under ASX Listing Rules and the ASX Corporate Government
Council’s Principles of Good Corporate Governance and Best
Practice Recommendations (“ASX Recommendations”), the
Company is required to disclose in its Annual Report the extent
of its compliance with the ASX Recommendations.
OPTIONS
Directors
C F Ryan
D A Hoff*
G R Molloy
J I Wowk
R M Beath
Company
Executives
R J Nicholls
Relevant
Group
Executive
P R Mastalir
Total
P A G E 1 8
Balance
01-Jul-09
Granted as
remuneration
Options
lapsed
Net change
other
Balance
as at the
date of this
report
Throughout the reporting period, and as at the date of signing
of this Directors’ Report, the Company was in compliance with
a majority of the ASX Recommendations in all material respects
as more fully detailed in the Statement of Corporate Governance
Practices on pages 20 to 29 of the PPK 2010 Annual Report.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
In accordance with the Recommendations, the Board has:
•
•
received and considered
from management
regarding the effectiveness of the Company’s management
of its material business risks; and
reports
received assurance from the chief executive officer and
the person performing the chief financial officer function
regarding the consolidated financial statements and the
effective operation of risk management systems and internal
controls in relation to financial reporting risks.
Material associates and joints ventures, which the company does
not control, are not dealt with for the purposes of this statement.
AUDIT COMMITTEE
The consolidated entity has an Audit Committee.
Details of the composition, role and Terms of Reference of the PPK
Audit Committee are contained in the Statement of Corporate
Governance Practices accompanying this Report and are available
on the Company’s website at www.ppkgroup.com.au
The PPK Audit Committee currently comprises the following Non-
Executive, Independent Directors:
R M Beath (Chairman)
C F Ryan
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AUDIT INDEPENDENCE
The lead auditor has provided the Auditor’s Independence
Declaration under section 307C of the Corporations Act 2001 (Cth)
for the year ended 30 June 2010 and a copy of this declaration is
set out on page 79 and forms part of the Directors’ Report.
ROUNDING OF ACCOUNTS
The parent entity has applied the relief available to it in ASIC Class Order
98/100 and, accordingly, amounts in the Financial Statements and
Directors’ Report have been rounded to the nearest thousand dollars.
Signed in accordance with a resolution of the Board of Directors.
Colin Francis Ryan
Director
Sydney, 28 September 2010
DIRECTORS’ REPORT CONTINUED
The Company’s lead signing and review External Audit Partner,
Executive Director and selected consultants attend meetings of the
Audit Committee by standing invitation.
DIRECTORS’ AND AUDITORS’ INDEMNIFICATION
During or since the end of the financial year the company has given
an indemnity or entered an agreement to indemnify, or paid or
agreed to pay insurance premiums as follows:
The Company has paid premiums to insure all directors of the parent
entity and officers of the consolidated entity against liabilities
for costs and expenses incurred by them in defending any legal
proceedings arising out of their conduct while acting in the capacity
of director or officer of the Company, other than conduct involving a
wilful breach of duty in relation to the Company. The amount of the
premium was $22,958.
DIRECTORS’ BENEFITS
Since 30 June 2009, no director has received or become entitled to
receive a benefit because of a contract made by the consolidated
entity, or a related body corporate with a director, a firm of which
a director is a member or an entity in which a director has a
substantial financial interest except for:
• Mr Raymond Beath is a director of Holden & Bolster Avenir
Pty Ltd which provided tax and accounting services to the
consolidated entity in the ordinary course of business.
• Mr Jury Wowk was a partner in HWL Ebsworth Lawyers and
is currently a consultant to HWL Ebsworth Lawyers which
has provided legal services to the consolidated entity in the
ordinary course of business.
This statement excludes a benefit included in the aggregate
amount of remuneration received or due and receivable by directors
and shown in the company’s accounts, or the fixed salary of a full-
time employee of the parent entity, controlled entity, or related
body corporate.
NON-AUDIT SERVICES
There were no non-audit services performed by the external
auditors, BDO Audit (NSW-VIC) Pty Ltd, during the year ended 30
June 2010.
∧ Rambor Trussmaster
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PPK GROUP LIMITED (“PPK” OR “THE COMPANY”)
APPROACH TO CORPORATE GOVERNANCE AND
RESPONSIBILITY
The PPK Board of Directors is committed to the principles
underpinning good corporate governance, applied in a manner
which is most suited to PPK, and to best addressing the directors’
accountability to shareholders and other stakeholders. This is
supported by an overriding organisation-wide commitment to
the highest standards of legislative compliance and financial and
ethical behaviour.
The Company continues to address directors’ accountability
to stakeholders in a manner consistent with the Company’s
individual circumstances enhanced through the introduction of
publicly available policies and procedures which are designed to
foster a culture of transparency in the way PPK is directed and
managed.
As a measure of its stated commitment to good corporate
governance principles, the Board will continue to:
•
review and continually improve its governance practices; and
• monitor developments in good corporate governance.
REPORT ON COMPLIANCE WITH THE ASX BEST
PRACTICE RECOMMENDATIONS
Currently, the ASX Listing Rules require listed companies to
include in their Annual Report a statement disclosing the extent
to which they have followed the recommendations set by the
ASX Corporate Governance Council (“ASX Recommendations”) in
the reporting period.
Listed companies must identify the ASX Recommendations that
have not been followed and provide reasons for the company’s
decision. Where a recommendation has been followed for only
part of the period the company must state the period during
which it had been followed.
As detailed within this Statement of Corporate Governance
Practices, PPK considers its governance practices comply
with each of the ASX Corporate Governance Principles and
Recommendations (“ASX Principles & Recommendations”)
except for those detailed, and for the reasons outlined, in this
Report.
For the reasons expressed within this Statement, PPK has
elected not to adopt ASX Recommendations 2.4, 4.2 and 8.1.
PPK has posted copies of its relevant corporate governance
policies and practices to its website consistent with the ASX
RECOMMENDATIONS
P A G E 2 0
PPK’s Statement of Corporate Governance Practices and copies of
its policies are available in the designated corporate governance
area of its website at www.ppkgroup.com.au.
TRANSITION TO REVISED PRINCIPLES &
RECOMMENDATIONS
On 30 June 2010, the ASX Corporate Governance Council
released amendments to the 2nd edition of the ASX Principles
and Recommendations in relation to diversity, remuneration,
trading policies and briefings (“Revised ASX Principles &
Recommendations”).
The change in the reporting requirements for each of the
amendments to the ASX Principles and Recommendations will:
• apply to PPK in relation to the financial year ending 30 June
2012; and
•
require disclosure by PPK in its 2012 Annual Report.
PPK intends, however, to make an early transition to the Revised
ASX Principles and Recommendations in the 2011 financial year.
DATE OF THIS STATEMENT
This statement outlines the:
• ASX Principles & Recommendations (2nd edition) identified
by the ASX as underlying good corporate governance; and
• main corporate governance practices of PPK during the year
to 30 June 2010, except where stated otherwise.
Principle 1: Lay solid foundations for management and
oversight
Companies should establish and disclose the respective
roles and responsibilities of board and management.
Recommendation 1.1: Formalise and disclose the functions
reserved to the board and those delegated to senior executives and
disclose those functions.
Recommendation 1.2: Disclose the process for evaluating the
performance of senior executives.
Recommendation 1.3: Provide the information indicated in the
Guide to reporting on Principle 1.
Formalisation of board and management functions.
The Board has formalised its roles and responsibilities into a
Charter. The Board Charter clearly defines the matters that are
reserved for the Board and those that the Board has delegated
to management.
In summary, the responsibilities of the PPK Board include:
• oversight of the Company,
including
its control and
accountability systems;
•
setting the Company’s major goals including the strategies
and financial objectives to be implemented by management;
• appointing, removing and controlling the Managing Director;
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•
•
•
ratifying the appointment and, where appropriate, the
removal of the Chief Financial Officer (“CFO”) and/or
Company Secretary;
input into and final approval of management’s development
of corporate strategy and performance objectives;
reviewing and ratifying systems of risk management and
internal compliance and control, codes of conduct and legal
compliance;
management regarding the group financial performance and
forecasted results, presentations and operational reports, and
the achievement of predetermined performance objectives.
Evaluations of the performance of senior executives for the 2010
financial year were conducted in August 2010. These evaluations
were undertaken in accordance with the process outlined in this
Statement.
Board Charter
• monitoring
senior management’s performance
and
implementation of strategy, and ensuring that appropriate
resources are available;
• approving and monitoring the progress of major capital
expenditure, capital management, and acquisitions and
divestitures;
• approving and monitoring financial and other reporting; and
•
corporate governance.
The Board has delegated responsibility to the Managing Director for:
• developing and implementing corporate strategies and
making recommendations on significant corporate strategic
initiatives;
• maintaining an effective risk management framework and
keeping the Board and market fully informed about material
risks;
• developing PPK’s annual budget, recommending it to the
Board for approval and managing day-to-day operations
within the budget;
• managing day-to-day operations
in accordance with
standards for social and ethical practices which have been set
by the Board;
• making recommendations for the appointment of key
management personnel, determining terms of appointment,
evaluating performance, and developing and maintaining
succession plans for key management roles; and
The roles and responsibilities of the Board and management
are detailed in the Board Charter which is available within the
designated corporate governance area of the Company website
at www.ppkgroup.com.au.
Principle 2: Structure the board to add value.
Companies should have a board of an effective
composition, size and commitment to adequately
discharge its responsibilities and duties.
Recommendation 2.1: A majority of the board should be
independent directors.
Recommendation 2.2: The chair should be an independent
director.
Recommendation 2.3: The roles of chair and chief executive officer
should not be exercised by the same individual.
Recommendation 2.4: The board should establish a nomination
committee.
Recommendation 2.5: Disclose the process for evaluating the
performance of the board, its committees and individual directors
Recommendation 2.6: Provide the information included in the
Guide to reporting on Principle 2
• approval of capital expenditure and business transactions
Independence
within predetermined limits set by the Board.
Senior Executive Performance Evaluation
The Board is responsible for approving the performance
objectives and measures for the Chief Executive Officer (“CEO”)
and assessing whether these objectives have been satisfied by
the performance of the CEO during the relevant period and in
accordance with agreed terms of engagement.
A PPK director will be considered independent where he or she is:
•
•
independent of management, that is, a non-executive
director; and,
free from any business or other relationship that could
materially interfere with, or could reasonably be perceived to
materially interfere with, the exercise of his or her unfettered
and independent judgement.
The CEO is responsible for approving the performance objectives
and measures of other senior executives in consultation with
the Board. The Board provides input into the evaluation of
performance by senior executives against the established
performance objectives.
The performance of senior executives is monitored by means of
scrutiny by the Board of regular monthly reports provided by
Materiality is assessed on a case by case basis by reference to
the director’s individual circumstances rather than general
materiality thresholds.
The PPK Board has made its own assessment to determine the
independence of each director on the Board. It is the Board’s view
that each of the current non-executive directors is independent,
namely: Mr C F Ryan, Mr J I Wowk and Mr R M Beath.
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In view of the size of the Company and the nature of its
activities, the Board considers that the current mix of skills,
qualifications and experience on the Board is consistent
with the long-term interests of the Company. The Board
will continue to monitor the requirement for independent
directors in the context of the Company’s communicated long
term objectives.
The Board has established criteria for assessing independence of
its directors and these can be found in the corporate governance
section of the PPK website at www.ppkgroup.com.au.
Composition of the Board
On 7 September 2009:
• Mr D A Hoff resigned as a Director; and
• Mr G R Molloy commenced as an Executive Director, of the
Company.
Following these changes, the PPK Board currently comprises
three (3) non-executive directors and one (1) executive director.
The composition of the Board is set based on the following
factors:
•
•
the Company’s Constitution provides for the number of
directors to be not less than three (3) and not more than ten
(10) as determined by the directors from time to time;
the Board has adopted a policy that the position of Chairman
will continue to be held by a non-executive director;
• consistent with the Company’s objective that the Board
should encompass a broad range of relevant expertise, the
present Board consists of directors with a collective of diverse
skills, qualifications and experience as more fully detailed in
the Company’s Annual Report and on its website at www.
ppkgroup.com.au.
PPK’s Constitution is available in the corporate governance area
of its website at www.ppkgroup.com.au.
There is no shareholding requirement imposed upon directors
under the Company’s Constitution, however, all of the directors
of PPK do hold shares in the Company.
Details of all holdings by directors in the Company are detailed
within the Directors’ Report.
Chairman
The Chairman is selected by the Board from the non-executive
directors.
The current Chairman, Mr C R Ryan, is a non-executive director
appointed by the Board. Mr Ryan has been a Director of PPK
since November 1995 and Chairman since March 1999. He is
considered an independent director.
Separation of roles of Chair and CEO
PPK’s Chairman and Executive Director have separate roles. The
roles and responsibilities of the Chairman and the Executive
Director are set out in the Board Charter which is available
within the designated corporate governance area of the
company website at www.ppkgroup.com.au.
Establishment of Nomination Committee
PPK has elected not to adopt Recommendation 2.4 because it
considers that its existing selection and appointment practices,
detailed within this Statement, are an efficient means of
meeting the needs of the company, particularly having regard to
the fact that PPK is a relatively small publicly listed company by
comparison to other listed entities which is reflected by the size
of its operations, board structure and composition.
The PPK Board currently consists of only four (4) members. It is
considered that further division of the Board for the purposes
of establishing a formal committee structure would not achieve
enhanced efficiency or enable the Board to add greater value to
this process.
The small size of the PPK Board, and the nature of its business,
means that PPK has the present capacity to consider director
competencies, selection and nomination practices in the context
of duly constituted meetings of the Board and as a part of its
self-evaluation processes.
Board Performance Evaluation
The Board has adopted an on-going, self-evaluation process
to measure its own performance and the performance of its
committee during the reporting period.
The Chairman meets periodically with individual directors
to discuss the performance of the Board and the director. In
addition, an evaluation is undertaken by the Chairman of the
contribution of directors retiring by rotation prior to the Board
endorsing their candidature.
The review process involves consideration of all of the Board’s
key areas of responsibility and accountability and is based on
an amalgamation of factors including capability, skill levels,
understanding of industry complexities, risks and challenges,
and value adding contribution to the overall management of
the business.
A performance evaluation for the Board, its committee and
directors took place during the reporting period in accordance
with the process detailed within this Statement.
The outcomes of the self-assessment program are used to
enhance the effectiveness of individual directors and the Board
collectively.
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Enhanced effectiveness of the Board and management is also
addressed through:
Board Meetings
The frequency of Board meetings and director’s attendance at
those meetings is detailed within the Directors’ Report. Directors
are expected to prepare for meetings in a manner which will
enable them to attend and participate at the meeting.
Directors are also required to make on-site visits and attend
workshops as required.
Induction Program
Procedures for induction of new directors are in place to allow
new directors to participate fully and actively in board decision
making at the earliest opportunity.
All directors are offered an induction program appropriate
to their experience upon appointment so as to familiarise
them with matters relating to the business, strategy and any
current issues under consideration by the Board. This program
consists of written background material on the company, its
products, services and operations; scheduled meetings with
the Chairman, Executive Director and key senior management
executives of the Company.
Director education
The Board encourages directors to continue their education by
participating in applicable workshops and seminars, attending
relevant site visits and undertaking relevant external education.
The Company Secretary provides directors with on-going
guidance on matters such as corporate governance, the
Company’s Constitution and the law.
Board Papers & Agendas
Board agendas are structured throughout the year in order to
ensure that each of the significant responsibilities of the Board
is addressed.
Directors receive board packs prior to each meeting which
detail financial, operational and strategy reports from senior
management who are available to discuss reports with the
Board.
Access to information
All directors have access to company records and information,
and receive regular detailed financial and operational reports
from senior management.
The Company Secretary is available to all Directors and may be
consulted on on-going issues of corporate governance, the PPK
Constitution and the law. In addition, the Chairman and other
independent non-executive directors regularly consult with
the Executive Director and Group Accountant, and may confer
and request additional information from any PPK employee.
Management are available to discuss reports, and any issue
arising, with the Board as required.
The Board collectively, each Board Committee and each
individual Director has the right, following appropriate
consultation, to seek independent professional advice at PPK’s
expense to help them carry out their responsibilities.
A copy of the process for performance evaluation of the board,
its committees and individual directors, and key executives is
available in the designated area for corporate governance on the
Company website at www.ppkgroup.com.au.
Term of office, skills, experience and expertise of each
director
The qualifications, experience and expertise of the directors, and
the respective terms in the office held by individual directors,
are set out in the Directors’ Report on pages 7 and 8 of the PPK
2010 Annual Report.
Independent Professional Advice
PPK has in place a procedure whereby, after appropriate
consultation, directors are entitled to seek independent
professional advice, at the expense of PPK, to assist them to
carry out their duties as directors. The policy of PPK provides
that any such advice is made available to all directors.
Procedure for Selection and Appointment of New Directors
The process for appointing a director within PPK is that,
when a vacancy exists, the Board identifies candidates with
the appropriate expertise and experience, using external
consultants as appropriate. The most suitable candidate is
appointed but must stand for election at the next Company
Annual General Meeting following the appointment.
Consistent with the current law there is no retirement age for
directors fixed by the Corporations Act 2001 (Cth) or ASX Listing
Rules, although a person of or over the age of seventy-two (72)
years of age may not be appointed, or re-appointed as a director
except pursuant to a resolution of the Company in accordance
with the Company’s Constitution.
The process for re-election of a director is in accordance with the
Company’s Constitution, which requires that each year, at least
one-third of the non-executive directors retire from office at the
Annual General Meeting. The retiring directors may be eligible
for re-election.
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Principle 3: Promote ethical and responsible decision-
making.
• use the powers of their position for a proper purpose, in the
interests of the Company;
Companies should actively promote ethical and
responsible decision-making.
Recommendation 3.1:
Establish a code of conduct and disclose the code or a summary of
the code as to the:
• practices necessary to maintain confidence in the company’s
integrity;
• practices necessary to take into account their legal obligations
and the reasonable expectations of shareholders; and
•
responsibility and accountability of individuals for reporting
and investigating reports of unethical practices.
Recommendation 3.2: Establish a policy concerning trading in
company securities by directors, senior executives and employees,
and disclose the policy or a summary of that policy.
Recommendation 3.3: Provide the information indicated in Guide
to reporting on Principle 3.
Code of Conduct
PPK is committed to the operation of its business in a manner
that meets or exceeds the ethical, legal, commercial and public
expectations that society has of the Company and the industry
in which it operates.
The Board has approved a Code of Conduct and Ethics which
applies to all directors, executives, management and employees
without exception. In addition, the conduct of directors and
executives is also governed by Code of Conduct for Directors and
Executives.
Each Code of Conduct is designed to ensure that:
• high standards of corporate and individual behaviour are
observed by all PPK directors and executives in the context
of their respective roles and the performance of their duties
with PPK;
• directors and executives are aware of their responsibilities
to PPK under the terms of their appointment or contract of
employment; and
• all of the stakeholders of the Company can be guided by the
stated values and policies of PPK.
In summary, the Code provides that directors and senior
executives must:
• act honestly, in good faith and in the best interests of the
Company;
• use due care, skill and diligence in the fulfilling their duties;
• not make improper use of information acquired their
position;
• not allow personal interests, or those of associates, conflict
with the interests of the Company;
• exercise independent judgement and actions;
• maintain the confidentiality of company
information
acquired by virtue of their position;
• not engage in conduct likely to bring discredit to the
Company; and
•
comply at all times with both the spirit and the letter of the
law, as well as, policies of the Company.
Directors of the Company may act in a professional capacity for
the Company or its controlled entities, other than as auditor of
the Company. These arrangements are subject to the restrictions
of the Corporations Act 2001 (Cth).
Disclosure of related party transactions is set out in Note 29 to the
Financial Statements.
Under the Constitution of the Company, and the Corporations Act
2001 (Cth), where the possibility of a conflict of interest exists
and involves a director, directly or indirectly, the director must
declare the fact, nature, character and extent of the conflict at
the first meeting of directors held after the relevant facts come
to the director’s knowledge.
The director concerned does not receive copies of the relevant
Board papers, if any, and withdraws from the Board meeting
while such matters are considered by the remainder of the
Board. Accordingly, the interested director takes no part in
discussions nor exercises any influence over other members of
the Board if a potential conflict of interest exists.
In addition, PPK has developed a series of policies designed to
promote ethical and responsible decision making by directors,
executives, employees and contractors of the Company,
including:
•
Trading Policy;
• Market Disclosure Policy;
• Privacy Policy;
• Occupational Health & Safety Policy;
•
•
Code of Conduct and Ethics (General); and
Code of Conduct for Directors’ & Executives.
Employees are actively encouraged to report activities or
behaviour to senior management, the Company Secretary or
the Board, which are a breach of the Code of Conduct and Ethics,
other PPK policies or regulatory requirements or laws.
The Company will investigate any concerns raised in a manner
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that is fair, objective and affords natural justice to all people
involved. The Company is committed to making necessary
changes to its processes and taking appropriate action in
relation to employees found to have behaved contrary to legal
and company standard requirements.
Trading Policy
Directors, senior executives and employees are subject to the
Corporations Act 2001 (Cth) relative to restrictions applying
for, acquiring and disposing of securities in, or other relevant
products of, the Company (or procuring another person to do
so), if they are in possession of inside information.
Inside information is that information which is not generally
available, and which if generally available, a reasonable person
would expect it to have a material effect on the price or value of
the securities in the Company.
Under the PPK Trading Policy, directors, senior executives and
employees of the Company are restricted from trading in
the Company’s securities during the period of one (1) month
preceding the making of an announcement to the market by the
Company relating to the:
• Company’s Annual results;
• Company’s Half Year results; and
• Chairman’s Address.
The Company notifies the ASX of any change in a director’s
interests in securities, and in contracts relevant to securities, as
required by the ASX Listing Rules.
Policy Disclosure
Recommendation 4.4: Provide the information indicated in Guide
to reporting on Principle 4.
Establishment of Audit Committee
The PPK Board has an established Audit Committee which
continues to provide assistance to the Board in accordance with
its established Terms of Reference.
Audit Committee Structure
PPK:
• does not comply with ASX Recommendation 4.2 regarding
the desired number of members of an audit committee; and
•
is not presently required to comply with the requirement for
at least three (3) members on its Audit Committee under the
current ASX Listing Rules.
The Company, therefore, otherwise complies with ASX
Recommendation 4.2.
The current PPK Audit Committee comprises only two (2) non-
executive directors and is chaired by Mr R M Beath who is not
Chairman of the Board.
The Board considers that the technical skills, qualifications and
experience represented by the involvement of members Mr R M
Beath and Mr C F Ryan are most suited to the effective discharge
of the responsibilities of the committee.
PPK does not consider that any further value will be added by
the inclusion of another member for the sake of satisfying this
requirement, particularly given the small size and diversity of
the PPK Board.
Copies of the PPK Code of Conduct & Ethics, Code of Conduct for
Directors and Executives and Trading Policy are available at www.
ppkgroup.com.au.
The Board will, however, continue to monitor the requirements
of this recommendation in the context of the Company’s
prevailing circumstances.
Principle 4: Safeguard integrity of financial reporting.
Audit Committee – Terms of Reference
Companies should have a structure to independently
verify and safeguard the integrity of their financial
reporting.
Recommendation 4.1: The Board should establish an audit
committee.
The PPK Audit Committee role and responsibilities, composition,
structure and membership requirements are detailed in a
formalised charter comprising the Audit Committee – Terms of
Reference.
The principal functions of the PPK Audit Committee as detailed
within the Terms of Reference are to:
Recommendation 4.2: Structure the audit committee so that it:
•
•
•
consists of only non-executive directors;
consists of a majority of independent directors;
is chaired by an independent chair, who is not chair of the
board;
• has at least three (3) members.
•
•
•
Recommendation 4.3: The audit committee should have a formal
charter.
review of the annual and half yearly financial reporting
carried out by PPK;
review of the accounting policies of PPK;
review the scope and audit programmes of the internal and
external auditors and any material issues arising from these
audits;
• oversee the independence of external auditors and determining
P A G E 2 5
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procedures for the rotation of audit partners; and
•
report to the Board on the effectiveness of PPK’s systems of
accounting and internal controls.
Reflecting the relative small size of the company, the full Board
remain responsible for:
•
•
•
the sufficiency of, and compliance with, ethical guidelines
and company policies affecting corporate governance,
financial reporting and corporate control together with
compliance with laws and external regulations;
identification of the full range of actual or potential risk
exposures which are material to PPK; and
the effectiveness of the group’s risk management systems
and strategies.
Meetings
The PPK Audit Committee prepares and maintains a register
of minutes of its meetings and these are included in the
Board papers for the next full Board meeting after each Audit
Committee meeting.
Reporting
The Chair of the Audit Committee reports to the Board as and
when required on matters relevant to the committee’s role and
responsibilities.
Engagement & Rotation of External Auditor
The Audit Committee is responsible for nominating the external
auditor to the Board for re-appointment. If the Audit Committee
recommends a change in external auditor to the Board, the
Board’s nomination of external auditor requires the approval of
shareholders. The Audit Committee recommends to the Board
the compensation of the external auditor.
The Audit Committee meets with the external auditor
throughout the year to review the adequacy of the existing
external audit arrangements with particular emphasis on the
scope, quality and independence of the audit.
It has been determined by the Audit Committee that the
external auditor will not provide services to the company where
the auditor would:
• have a mutual or conflicting interest with the Company;
• be in a position where they audit their own work;
•
function as management of the Company; or
• have their independence impaired or perceived to be
impaired in any way.
P A G E 2 6
Specifically, the external auditor will not normally provide the
following types of services to the Company:
• bookkeeping or other services relating to the accounting
records or financial statements of the group;
• financial information or information technology systems
design and implementation;
• appraisal and valuation services, fairness opinions or
contributions-in-kind reports;
• actuarial services;
•
• management
internal audit outsourcing services;
functions,
assignments or human
recruitment of senior management;
including
resource
temporary
staff
including
services,
• broker or dealer services, investment advisor, corporate
finance or investment banking services; and
•
legal and litigation support services.
Procedures are in place governing approval of any non-audit
work before the commencement of any engagement.
BDO Kendalls were appointed independent external auditors
of PPK on listing of the former entity Plaspak Group Limited
in 1994. In 2008, BDO Kendalls resigned as auditor and were
replaced by BDO Audit (NSW-VIC) Pty Ltd (“BDO Audit”)
following receipt of consent from ASIC and shareholder approval
at the Company’s 2008 Annual General Meeting respectively.
BDO Audit continues to act in this role in respect of the
consolidated entity.
The Board has elected to adopt a policy which is consistent
with the primary and secondary rotation obligations regarding
auditors such that:
•
•
the lead or review audit partner’s responsibilities may not
be performed by the same person for longer than five (5)
successive years (“primary rotation obligation”); and
the lead or review audit partner’s responsibilities may not be
performed by the same person for more than five (5) out of
seven (7) successive years (“secondary rotation obligation”).
In addition, the Board requires a minimum of two (2)
consecutive years “cooling off” period before an auditor
undergoing rotation can return to playing a significant role in
the audit of the Company.
During the reporting period, the lead External Audit Partner for
PPK was Mr Wayne Basford. Mr Basford has fulfilled this role in
respect of the Company since the 2006 financial year.
Details of the members of the Audit Committee
The Board’s Audit Committee consists of:
Mr R M Beath (Chairman)
Mr C F Ryan
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The lead signing and review External Audit Partner and the
Company’s Executive Director attend committee meetings by
standing invitation.
Market Disclosure Policy available at www.ppkgroup.com.au.
Principle 6: Respect the rights of shareholders.
The qualifications of each member of the committee are set out
in the Directors’ Report on pages 8 to 9 of the PPK 2010 Annual
Report.
Number of Meetings and Names of Attendees
The number of meetings held during the reporting period and
the attendees at these meetings is detailed within the Directors’
Report.
Companies should respect the rights of shareholders and
facilitate the effective exercise of those rights.
Recommendation 6.1: Design and disclose a communications
policy to promote effective communication with shareholders and
encourage effective participation by them at general meetings.
Recommendation 6.2: Provide the information indicated in Guide
to reporting on Principle 6.
Audit Committee Charter
Shareholder Communication Policy
The PPK Audit Committee Charter is available at www.ppkgroup.
com.au.
PPK recognises the right of shareholders to be informed of
matters, in addition to those prescribed by law, which affect
their investments in the Company.
Principle 5: Make timely and balanced disclosure.
Companies should promote timely and balanced
disclosure of all material matters concerning the
company.
Recommendation 5.1: Establish written policies and procedures
designed to ensure compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a senior executive
level for that compliance and disclose those policies or a summary
of those policies.
Recommendation 5.2: Provide the information indicated in Guide
to reporting on Principle 5.
Policies & procedures regarding disclosure requirements
The PPK Board is committed to keeping its shareholders, and the
market, fully informed of major developments having an impact
on the Company.
Comprehensive procedures are in place to identify matters
that are likely to have a material affect on the price, or value,
of the PPK securities and to ensure those matters are notified
to the ASX in accordance with ASX Listing Rule disclosure
requirements.
Senior management and the Board are responsible for
scrutinising events and information to determine whether the
disclosure of the information is required in order to maintain the
market integrity of the Company’s shares listed on the ASX.
The Company Secretary is responsible for all communications
with the ASX.
Compliance with Listing Rule Disclosure Requirements
The procedures relating to the notification of price sensitive
information to the ASX and the subsequent posting of
announcements on the PPK website are detailed within the PPK
The PPK Shareholder Communication Policy demonstrates PPK’s
commitment to:
• dealing fairly, transparently and openly with both current
and prospective shareholders;
•
•
the use of available channels and cost effective technologies
to reach shareholders who may be geographically dispersed
and in order to communicate promptly with all shareholders;
and
facilitating participation
dealing promptly with shareholder enquiries.
in shareholders meetings and
PPK communicates information to shareholders through:
•
its Annual Report;
• disclosures to the ASX and ASIC;
• notices and explanatory memoranda of annual general
meetings and general meetings;
• occasional letters from the Executive Director and Chairman
to inform shareholders of key matters of interest; and
the Company’s website at www.ppkgroup.com.au.
•
The Board encourages active participation by shareholders at
each Annual General Meeting, or other general meetings, to
ensure a high level of accountability and understanding of PPK’s
strategy, performance and goals.
Consistent with best practice, important issues are presented
to shareholders as single resolutions expressed in plain,
unambiguous language. Proceedings are held in a locality,
and at a readily accessible venue, conducive to maximising the
number of shareholders present, and able to participate, at
the meeting. Shareholders are provided with opportunities of
asking the Board questions regarding the management of the
Company.
P A G E 2 7
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Policy Disclosure
group’s risk management and control practices.
The ways in which PPK will communicate effectively with its
shareholders are detailed within the Cool of Cosy Shareholders
Communications Policy available at www.ppkgroup.com.au.
Principle 7: Recognise and manage risk
Companies should establish a sound system of risk
oversight and management and internal control.
Recommendation 7.1: Companies should establish policies for the
oversight and management of material business risks and disclose
a summary of those policies.
Recommendation 7.2: The board should require management to
design and implement the risk management and internal control
system to manage the company’s material business risks and
report to it on whether those risks are being managed effectively.
The board should disclose that management has reported to it as
to the effectiveness of the company’s management of its material
business risks.
Recommendation 7.3: The Board should disclose whether it has
received assurance from the chief executive officer (or equivalent)
and the chief financial officer (or equivalent) that the declaration
provided in accordance with section 295A of the Corporations Act
is founded on a sound system of risk management and internal
control and that the system is operating effectively in all material
respects in relation to financial reporting risks.
Recommendation 7.4: Companies should provide the information
indicated in the Guide to reporting on Principle 7.
Oversight and management of material business risks
The Board of PPK:
•
•
recognise that effective management of risk is an integral
part of good management and vital to the continued growth
and success of PPK;
for the oversight of the group’s risk
is responsible
management and
the
framework
development of risk profiles as a part of the overall business
and strategic planning process; and
including
control
• has implemented a policy framework designed to ensure
that the group’s risks are identified, analysed, evaluated,
monitored, and communicated within the organisation on an
on-going basis, and that adequate controls are in place and
functioning effectively.
The PPK Risk Management and Control Policy Framework
incorporates the maintenance of appropriate policies,
procedures and guidelines which address the Company’s unique
operating environment and is utilised by the Board as a means
of identifying opportunities and avoiding or mitigating losses in
the context of its businesses.
The Audit Committee assists the Board in its risk management
role by reviewing the financial and reporting aspects of the
P A G E 2 8
The Executive Director has ultimate responsibility for control
and management of operational risk and the implementation
of avoidance or mitigation measures within the group and
may delegate control of these risks to the appropriate level of
management at each site.
The Board regularly monitors the operational and financial
performance of the Company and the economic entity against
budget and other key performance measures. The Board also
receives and reviews advice on areas of operational and financial
risk and develops strategies, in conjunction with management,
to mitigate those risks.
Each month, reports are presented to the Board by the
Executive Director and retained consultants. The reports
encompass matters including actual financial performance
against budgeted forecasts, workplace health and safety,
legal compliance, corporate governance, strategy, quality
assurance and standards, human resources, industry and market
information, operational developments and environmental
conformance. Reports are prepared and submitted on a monthly
basis by the Group Accountant in relation to the overall financial
position and performance of the Company. In addition to
formalised written reporting procedures, the Board is regularly
briefed by the Executive Director, retained consultants and
senior management on emerging or developed trends in market
and operational conditions having the potential to impact on
the overall performance of the group.
Management has reported to the Board on the effectiveness
of the Company’s management of its material business risks in
respect of the year ended 30 June 2010.
This report was undertaken in accordance with the process
outlined in this Statement.
CEO & CFO Assurance
The Executive Director and Group Accountant of PPK report
annually in writing to the Board that:
•
consolidated financial statements of PPK and its controlled
entities for each subsequent half year and full financial year
present a true and fair view, in all material respects, of the
Group’s financial condition and operational results and are in
accordance with accounting standards; and
• declarations provided in accordance with section 295A of
the Corporations Act are founded on a sound system of risk
management and internal control, and that the system is
operating effectively in all material respects in relation to
financial reporting risks.
The Board has received assurance from the Executive Director
and the person performing the chief financial officer function
under Recommendation 7.3 in respect of the year ended 30 June
2010.
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This assurance was provided in accordance with the process
outlined in this Statement.
surveys undertaken of other public companies similar in size or
market section to PPK is taken into account.
Policy Disclosure
Non-executive directors of PPK are:
PPK has made a description of its Risk Oversight and
Management Framework comprising its internal compliance
and control system policy publicly available and posted it to its
website in the designated corporate governance area at www.
ppkgroup.com.au.
Principle 8: Remunerate fairly and responsibly.
Companies should ensure that the level and composition
of remuneration is sufficient and reasonable and that its
relationship to performance is clear.
Recommendation 8.1: The Board should establish a remuneration
committee.
Recommendation 8.2: Companies should clearly distinguish the
structure of non-executive directors’ remuneration from that of
executive directors and senior executives.
Recommendation 8.3: Companies should provide the information
indicated in the Guide to reporting on Principle 8.
Establishment of Remuneration Committee
PPK has elected not to adopt Recommendation 8.1 because
it considers that its existing remuneration practices, detailed
within this Statement, are an efficient means of meeting the
needs of the company, particularly having regard to the fact that
PPK is a relatively small publicly listed company by comparison
to other listed entities which is reflected by the size of its
operations, board and management structure and composition.
The PPK Board currently consists of only four (4) members. It is
considered that further division of the Board for the purposes of
establishing a formal remuneration committee structure would
not achieve enhanced efficiency or enable the Board to add
greater value to this process.
The small size of the PPK Board, the nature of its business and
its management structure, means that PPK has the present
capacity of giving due consideration to the overall remuneration
policies and strategies of the company during the conduct of its
regular board meetings and by appropriate recourse to relevant
market data and, where applicable, to external executive
remuneration consultants.
Executive Director & Non-Executive Director remuneration
The aggregate remuneration of non-executive directors is
approved by shareholders.
Individual directors’ remuneration is determined by the board
within the approved aggregate total.
In determining the appropriate level of director’s fees, data from
• not entitled
in performance based
remuneration practices unless approved by shareholders; and
to participate
•
currently remunerated by means of the payment of cash
benefits in the form of directors’ fees.
PPK does not currently have in place a retirement benefit
scheme or allowance for its non-executive directors.
Executive directors do not receive directors’ fees.
A review of the compensation arrangements for the Executive
Director and senior executives is conducted by the full Board at
a duly constituted Directors’ Meeting. The review is performed
annually and is based on criteria including the individual’s
performance, market rates paid for similar positions and the
results of the Company during the relevant period.
The broad remuneration policy objective of PPK is to ensure
that the emoluments provided properly reflect the person’s
duties and responsibilities and is designed to attract, retain
and motivate executives of the highest possible quality and
standard in the Company’s prevailing circumstances to enable
the organisation to succeed.
The PPK Executive Incentive Plan (“PEIS”) has been approved by
shareholders and provides the Board with the discretion to grant
options and provide loans to Eligible Executives (as defined
under the PEIS) for the purpose of acquiring Scheme Shares
under the PEIS.
The Board ensures that the payment of equity-based executive
remuneration is made in accordance with thresholds established
by the PEIS and exercises its discretion under the scheme
in a manner consistent with the broad remuneration policy
objectives of the Company.
PPK is committed to making timely disclosure of all relevant
information relating to its remuneration practices and policies in
the context of reporting obligations in its Corporate Governance
Statement, in its Annual Report, and pursuant to continuous
disclosure requirements.
Policy Disclosure
The Company’s policies relating to the remuneration of directors
and senior executives and the level of their remuneration are
detailed in the Directors’ Report on pages 11-18 of the PPK 2010
Annual Report and Note 5 to the 2010 Financial Statements.
Copies of the PPK Remuneration Policy and PEIS are publicly
available in the designated corporate governance area of its
website at www.ppkgroup.com.au.
P A G E 2 9
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FOR THE YEAR ENDED 30 JUNE 2010
REVENUES
Mining equipment manufacture
Investment properties
Investment activities
Interest receivable
TOTAL REVENUE
OTHER INCOME
EXPENDITURE
Mining equipment manufacture
Investment properties
Investment activities
Administrative expenses
Finance costs
TOTAL EXPENDITURE
Share of profit/(loss) from associates accounted for using the equity method
PROFIT BEFORE INCOME TAX EXPENSE
Income tax credit / (expense) attributable to profit
PROFIT AFTER INCOME TAX
OTHER COMPREHENSIVE INCOME
Changes in value on available-for-sale financial assets
Provision for deferred tax thereon
Unrealised impairment losses on available-for-sale financial assets
transferred to profit or loss from the asset revaluation reserve
Provision for deferred tax thereon
Realised gain on sale of available-for-sale financial assets
transferred to profit or loss from the asset revaluation reserve
Provision for income tax thereon
Other comprehensive income net of income tax
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Overall Operations
Basic earnings per share ( cents per share )
Diluted earnings per share ( cents per share )
Dividends per share
P A G E 3 0
Note
2(a)
2(b)
2(e)
2(d)
3
7
7
CONSOLIDATED
ENTITY
2010
$000s
CONSOLIDATED
ENTITY
2009
$000s
4,867
4,746
3,109
4,776
59 47
428
1,158
9,072
10,118
3,894
220
(4,538)
(3,515)
(700)
(1,165)
(1,118)
(11,036)
(684)
1,246
(3,872)
(783)
(2,755)
(1,308)
(1,159)
(9,877)
-
461
(484) 79
762
540
194
(264)
(58) 79
-
-
468
(140)
(147)
44
-
-
34
143
795 683
1.3
1.3
2.50
0.9
0.9
4.75
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2010
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Assets classified as held for sale
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Investments in associated companies - equity accounted
Financial assets
Investment Properties
Other Property, plant and equipment
Deferred tax assets
Intangible assets
Derivatives
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Interest Bearing Liabilities
Current tax liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Interest Bearing Liabilities
Deferred tax liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
SHAREHOLDERS' EQUITY
Contributed equity
Reserves
Retained earnings
TOTAL SHAREHOLDERS' EQUITY
Note
9
10
11
12
14(b)
10
13(b)
13(c)
14(a)
15
16(a)
17
18
19
20
16(b)
21
22
16 (b)
21
23
24
CONSOLIDATED
ENTITY
2010
$000s
CONSOLIDATED
ENTITY
2009
$000s
191
23
7,153 2,261
1,509 1,423
355
410
9,095 4,230
7,103
703
16,198 4,933
7,617 2,331
3,692
-
1,105 2,411
24,248 35,137
1,624 2,027
2,036 2,200
857
779
128
288
41,229 45,251
57,427 50,184
692
413
178
2,944
730
458
215
688
4,030 2,288
18,500 12,100
318
55
29
48
18,603 12,447
22,633 14,735
34,794 35,449
31,249 31,249
24 (9)
3,521 4,209
34,794 35,449
P A G E 3 1
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FOR THE YEAR ENDED 30 JUNE 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash payments to suppliers and employees
Other revenue
Dividends received
Interest received
Income tax paid
Note
CONSOLIDATED
ENTITY
2010
$000s
CONSOLIDATED
ENTITY
2009
$000s
7,992
(7,282)
241
191
451
(869)
9,920
(6,597)
5
47
397
(806)
Net cash provided by / ( used in ) operating activities
30 (a)
724
2,966
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investment property
Purchase of property, plant & equipment
Proceeds from sale of available-for-sale financial assets
Payments for available-for-sale financial assets
Payments for investments in associated companies
Payment for convertible notes
Payments for investment in derivatives
Payment for intangibles
5,166
(293)
2,452
(1,161)
(2,829)
(2,000)
(272)
(2)
4,920
(396)
401
(896)
-
(303)
-
(78)
Net cash provided by / (used in) investing activities
1,061
3,648
CASH FLOWS FROM FINANCING ACTIVITIES
Loans advanced
Payment for buyback of shares
(Repayment of)/Proceeds from bank loans
Loans repaid
Repayment of borrowings
Dividends paid
Interest paid
(8,700)
-
6,400
149
(23)
(1,450)
(1,118)
(149)
(784)
(7,393)
7,219
(392)
(2,759)
(1,159)
Net cash (used in) / provided by financing activities
(4,742)
(5,417)
Net increase / (decrease ) in cash held
Cash at the beginning of the financial year
(2,957)
36
1,197
(1,161)
Cash at the end of the financial year
30 (b)
(2,921)
36
P A G E 3 2
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2010
CONSOLIDATED ENTITY
At 1 July 2008
Total comprehensive income for the year
Profit for the year
Other comprehensive income
Fair value adjustment on available-for-sale financial assets
expensed on impairment
less deferred tax impact
Fair value adjustment on available-for-sale financial assets
less deferred tax impact
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Dividends paid
Shares repurchased
At 30 June 2009
Total comprehensive income for the year
Profit for the year
Other comprehensive income
Fair value adjustment on available-for-sale financial assets
expensed on impairment
less deferred tax impact
Fair value adjustment on available-for-sale financial assets
less deferred tax impact
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Dividends paid
Shares repurchased
At 30 June 2010
Issued
Capital
$000s
Retained
Earnings
$000s
Other
Reserves
$000s
Total
Equity
$000s
32,033
6,428
(152)
38,309
-
540
-
540
-
-
-
-
-
-
-
-
-
540
468
468
(140) (140)
(264)
(264)
79
79
683
143
-
(784)
(784)
31,249
(2,759)
-
(2,759)
4,209
-
-
-
(9)
(2,759)
(784)
(3,543)
35,449
- 762
-
762
-
-
-
-
-
-
-
-
-
762
(147)
44
194
(58)
33
-
-
-
31,249
(1,450)
-
(1,450)
3,521
-
-
-
24
(147)
44
194
(58)
795
(1,450)
-
(1,450)
34,794
P A G E 3 3
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Corporate Information
The financial statements of PPK Group Limited for the year ended 30 June 2010 were authorised for issue in accordance with a resolution of the directors
on 28th September 2010 and covers the Group consisting of PPK Group Limited and its subsidiaries as required by the Corporation Act 2001.
Separate financial statements for PPK Group Limited as an individual entity are no longer presented as a consequence of a change to the Corporations Act
2001, however, limited financial information for PPK Group Limited is provided as an individual entity in note 8.
PPK Group Limited is a company limited by shares, incorporated in Australia. Its shares are publicly traded on the Australian Stock Exchange.
(a) Basis of Preparation
The financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards and
other authorative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
The financial statements also comply with International Financial Reporting Standards (IFRS) as issued by The International Accounting Standards Board.
The financial statements have been prepared on an accruals basis and are based on historical costs, except for available-for-sale financial assets and
derivatives which have been measured at fair value and land and buildings, plant and equipment where impairment has been recognised when the fair
value of the asset is less than the historical cost.
Non-current assets and disposal groups held-for-sale are measured at the lower of carrying amounts and fair value less costs to sell.
The accounting policies have been consistently applied to the entities of the Group unless otherwise stated.
The Financial Statements are presented in Australian currency.
(b) Principles of Consolidation
Subsidiaries
The consolidated financial statements comprise the financial statements of PPK Group Limited and its subsidiaries at 30 June each year (“the Group”).
Subsidiaries are entities over which the Group has the power to govern the financial and operating policies generally 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. Potential voting rights
that are currently exercisable or convertible are considered when assessing control. Consolidated financial statements include all subsidiaries from the
date that control commences until the date that control ceases.
The financial statements of subsidiaries are prepared for the same reporting period as the parent, using consistent accounting policies.
All intercompany balances and transactions, including unrealised profits arising from intergroup transactions have been eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Associates
Associates are entities over which the Group has significant influence but not control. Associates are accounted for in the consolidated financial
statements using the equity method accounting. Under the equity method the Group’s share of the post-acquisition profits or losses of the associates is
recognised in consolidated profit or loss and the Group’s share of the post-acquisition movements in reserves of associates is recognised in consolidated
other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends
received from associates reduce the carrying amount of the investment in the consolidated financial statements.
When the Group’s share of post-acquisition losses in an associate exceeds its interest in the associate (including any unsecured receivables), the Group
does not recognise further losses unless it has obligations to, or has made payments, on behalf of the associate.
The financial statements of the associate are used to apply the equity method. The end of the reporting period of the associate and the parent are
identical and both use consistent accounting policies.
(c) Revenue and Revenue Recognition
Revenue is recognised at the fair value of consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowance and
duties and taxes paid. The following specific recognition criteria must also be met before revenue is recognised:
Sales of goods
Revenue from the sale of mining equipment is recognised when significant risk and rewards of rewards of ownership have passed to the buyer and can be
reliable measured. Risks and rewards are considered passed to the buyer when the goods have been delivered to the customer.
P A G E 3 4
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Rental income on investment properties is accounted for on a straight-line basis over the lease term. Contingent rentals are recognised as income in the
periods when they are earned.
Interest income
Interest income is recognised as it accrues using the effective interest rate method. The effective interest method uses the effective interest rate which is
the rate that exactly discounts the estimated future cash receipts over the expected life of the financial asset.
Asset sales
Gains and losses on sale of assets is recognised on a net basis. The gain or loss on disposal of assets is brought to account at the date an unconditional
contract of sale is signed, or if a conditional contract is signed, the date it becomes unconditional.
In the case of real estate sales under AASB 118 it becomes unconditional when title passes.
Dividends
Dividends are recognised when the right to receive payment is established.
(d) Inventories
Raw materials, work in progress and finished goods
Inventories are stated at the lower of cost and net realisable value. Costs comprise all direct materials, direct labour and an appropriate portion of variable
and fixed overheads. Fixed overheads are allocated on the basis of normal operating capacity. Costs are assigned to inventory using a standard costing
system. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated selling cost of completion and selling
expenses.
(e) Trade Receivables & other receivables
Trade and other receivables and are recognised initially at original invoice amounts less an allowance for uncollectible amounts and have repayment
terms between 30 - 45 days. Collectability is assessed on an ongoing basis. Debts which are known to be uncollectible are written off. An allowance
is made for doubtful debts where there is objective evidence that the Group may not be able to collect all amounts due according to the original
terms. Objective evidence of impairment include financial difficulties of the debtor, default of payment terms or debts more than 60 days past due. On
confirmation that the trade receivable will not be collectible the gross carrying value of the asset is written off against the associated provision.
From time to time the Group elects to renegotiate the terms of trade receivables due from customers with which it has previously had a good trading
history. Such renegotiations will lead to a change in the timing of payments rather than changes to the amount owed and are not, in the view of the
directors, sufficient to require the derecognition of the original instrument.
(f) Income Tax
The income tax expense for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction
adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax base of assets and liabilities and their
carrying amounts in the financial statements, and to unused tax losses.
Deferred tax assets are only recognised for deductible temporary differences, between carrying amounts of assets and liabilities for financial reporting
purposes and their respective tax bases, at the tax rates expected to apply when the assets are recovered or liabilities settled, based on those tax rates
which are enacted or substantially enacted for each jurisdiction. Exceptions are made for certain temporary differences arising on initial recognition of an
asset or liability if they arose in a transaction other than a business combination that at the time of the transaction did not affect either accounting profit
or taxable profit.
Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it is probable that future taxable amounts will be
available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries,
associates and interests in joint ventures where the parent entity is able to control the timing of the reversal of the temporary differences and it is
probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances relating to amounts recognised directly in other comprehensive income or equity are also recognised directly in other
comprehensive income or equity.
PPK Group Limited and its wholly owned Australian subsidiaries have implemented the tax consolidation legislation for the whole of the financial year.
PPK Group Limited is the head entity in the tax consolidated group. The stand-alone taxpayer/separate taxpayer within a group approach has been used
to allocate current income tax expense and deferred tax expense to wholly-owned subsidiaries that form part of the tax consolidated group.
P A G E 3 5
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Group Limited has assumed all the current tax liabilities and the deferred tax assets arising from unused tax losses for the tax consolidated group via
intercompany receivables and payables because a tax funding arrangement has been in place for the whole of the financial year. The amounts receivable/
payable under tax funding arrangements are due upon notification by the head entity. Interim funding notices may also be issued by the head entity to its
wholly-owned subsidiaries in order for the head entity to be able to pay tax instalments.
(g) Investment Property & Property, Plant and Equipment
Investment Properties
Investment properties are initially measured at cost including transaction costs. Subsequent to initial recognition, investment properties are carried at
cost, less depreciation and any impairment losses.
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.
Depreciation on investment properties is calculated on a straight-line basis over the estimated useful life of the asset of 50 50 years. Land is not
depreciated.
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at the end of each reporting period.
Gains and losses on disposals are calculated as the difference between the net disposal proceeds and the asset’s carrying amount and are included in
profit or loss in the year that the item is derecognised.
Other Property, plant and equipment
Other Property, plant and equipment are brought to account at cost less, where applicable, any accumulated depreciation or amortisation.
The cost of fixed assets constructed within the Group includes the cost of materials used in construction, direct labour and an appropriate proportion of
fixed and variable overheads.
The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, is depreciated over their useful
lives to the Group commencing from the time the asset is held ready for use. Leasehold improvements are amortised over the shorter of either the
unexpired period of the lease or the estimated useful lives of the improvements.
The gain or loss on disposal of all fixed assets is determined as the difference between the carrying amount of the asset at the time of disposal and the
proceeds of disposal, and is included in the profit before income tax of the Group in the year of disposal.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Depreciation Rate
Straight Line
Buildings
Leasehold Improvements
Plant & Equipment
Leased Plant & Equipment
2 %
over the term of the lease
3-50 %
3-33 %
Non-current assets classified as held for resale
Non-current assets classified as held for sale are those assets whose carrying amounts will be recovered principally through a sale transaction rather than
through continuing use and sale is considered highly probable. These assets are stated at the lower of their carrying amount and fair value less costs to
sell and are not depreciated or amortised.
Interest expense continues to be recognised on liabilities of a disposal group classified as an asset held for sale.
An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for subsequent
increases in fair value less costs to sell of an asset but not exceeding any cumulative impairment losses previously recognised.
A discontinued operation is a component of the Group that has been disposed of or is classified as held for sale and that represents a separate major line
of business or geographical operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary
acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the statement of comprehensive
income.
P A G E 3 6
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Investments and Other Financial Assets
All investments and other financial assets are initially stated at cost, being the fair value of consideration given plus acquisition costs.
Purchases and sales of investments are recognised at trade date which is the date on which the Group commits to purchase or sell the asset.
Accounting policies for each category of investments and other financial assets subsequent to initial recognition are set out below.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferredto another party whereby the
entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised
where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished
or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in
profit or loss.
Classification and subsequent measurement
(i) Loans and receivables
Loans and receivables are non-derivative financial assets with a fixed or determinable payments that are not quoted on an active market and are
subsequently measured at amortised cost using the effective interest rate method.
The host debt contract of a convertible note is classified as loans and receivables. The host debt contract is measured initially at the residual amount after
separating the embedded option derivative. The host debt contract is subsequently at amortised cost using the effective interest rate method.
(ii) Held-to-maturity investments
Held to maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the group’s
intention to hold the investments to maturity. They are subsequently measured at amortised cost using the effective interest rate method.
(iii) Available-for-sale financial assets
Available-for-sale financial assets comprise investments in listed and unlisted entities and any non-derivatives that are not classified as any other
category of financial assets, and are classified as non-current assets. (unless management intends to dispose of the investment within 12 months
of the end of the reporting period). After initial recognition, these investments are measured at fair value with gains or losses recognised in other
comprehensive income (available-for-sale investments revaluation reserve). Where there is a significant or prolonged decline in the fair value of an
available-for-sale (which constitutes objective evidence of impairment) the full amount including any amount previously charged to other comprehensive
income is recognised in profit or loss. Purchases and sales of available-for-sale are recognised on settlement date with any change in fair value between
trade date and settlement being recognised in other comprehensive income. On sale the amount held in available-for-sale reserves associated with that
asset is recognised in profit or loss as a reclassification adjustment.
Investments in subsidiaries, associates and joint venture entities are accounted for in the consolidated financial statements as described in note 1(b).
Reversal of impairment losses on equity instruments classified as available-for-sale cannot be reversed through profit or loss. Reversals of impairment
losses on debt instruments classified as available-for-sale can be reversed through profit or loss where the reversal relates to an increase in the fair value
of the debt instrument occurring after impairment loss was recognised in profit or loss.
The fair value of quoted investments are determined by reference to Securities Exchange quoted market bid prices at the close of business at the end of
the reporting period. For investments where there is no quoted market price, fair value is determined by reference to current market value of another
instrument which is substantially the same or is calculated based on the expected cash flows of the underlying net asset base of the investment.
(iv) Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method.
(v) Derivatives
Share options embedded in a convertible note is not closely related to the debt host contract and are separated from the host debt contract and accounted
for as a separate derivative. The share options are initially measured at fair value using the Black Scholes model or the listed market price if one exists.
Other share options are classified as a derivative and initially measured at fair value net of transaction costs.
Subsequent adjustments to fair value of the share options are taken to profit or loss.
P A G E 3 7
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The group does not use derivative financial instruments such as forward exchange contracts and interest rate swap to mitigate risks associated with
interest rate and foreign exchange fluctuations.
(vi) Held for trading financial assets
Investments classified as Held for Trading are measured at fair value with gains or losses recognised in the profit or loss.
A financial asset is classified Held for Trading if acquired principally for the purpose of selling in the short term or if it is a derivative that is not designated
as a hedge.
(i) Leased Assets
For leases, a distinction is made between finance leases which effectively transfers from the lessor to the lessee substantially all the risks and benefits
incidental to ownership of the leased property, and operating leases under which the lessor retains all such risks and benefits. Where fixed assets are
acquired by means of finance leases, the lower of the present value of lease payments or the fair value of the leased property is established as an asset at
the beginning of the lease term and amortised on a straight line basis over its expected useful life. A corresponding liability is also established and each
lease payment is allocated between such liability and interest expense so as to achieve a constant rate of interest on the remaining balance of the liability.
Operating lease payments are charged to profit or loss on a straight line basis over the period of the lease.
(j) Foreign Currency
Transactions and Balances
Foreign currency transactions during the period are converted to Australian currency at rates of exchange applicable at the dates of the transactions.
Amounts receivable and payable in foreign currency at the end of the reporting period are converted at the rates of exchange rates ruling at the end of the
reporting period. The gains and losses from conversion of short term balances, whether realised or unrealised, are recognised in profit or loss.
(k) Trade and Other payables
These amounts represent unpaid liabilities for goods received and services provided to the group prior to the end of the financial year.
The amounts are unsecured and are normally settled within 30 to 60 days, except for imported items for which 90 or 120 day payment terms are normally
available.
(l) Interest Bearing Liabilities
All loans and borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost.
Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the loans and
borrowings using the effective interest method. Bank loans are subject to set-off arrangements.
(m) Employee Benefit Provisions
Salary, wages and annual leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the end of the reporting
period are recognised in other liabilities or provision for employee benefits in respect of employees’ services rendered up to the end of the reporting
period and are measured at amounts expected to be paid when the liabilities are settled.
Long service leave
Liabilities for long service leave are recognised as part of the provision for employee benefits and measure as the present value of expected future
payments to be made in respect of services provided by employees to the end of the reporting period using the projected unit credit method.
Consideration is given to expected future salaries and wages levels, experience of employee departures and period of service.
Expected future payments are discounted using national government bond rates at the end of the reporting period with terms to maturity that match as
close as possible, the estimated future cash outflows.
Retirement benefit obligations
The Group contributes to defined contribution superannuation funds for employees. All funds are accumulation plans where the Group contributed
various percentages of employee gross incomes, the majority of which were as determined by the superannuation guarantee legislation.
Benefits provided are based on accumulated contributions and earnings for each employee. There is no legally enforceable obligation on the Group
to contribute to the superannuation plans other than requirements under the superannuation guarantee legislation. Contributions are recognised as
expenses as they become payable.
P A G E 3 8
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(n) Cash
For the purposes of the statement of cash flows, cash includes cash on hand and at call deposits with banks or financial institutions, net of bank
overdrafts.
(o) Intangible assets
Brands Names
Expenditure on internally generated brand names are expensed as incurred. Acquired Brand names are stated at cost and are considered to have indefinite
(o) Intangible assets (cont)
useful lives and are not amortised. The useful life is assessed annually to determine whether events or circumstances continue to support an indefinite
useful life assessment. The carrying value of brand names is reviewed annually for impairment.
Research and Development
Research costs are expensed as incurred. Development expenditure incurred on an individual project is capitalised if the product or service is technically
feasible, adequate resources are available to complete the project, it is probable that future economic benefits will be generated and expenditure
attributable to the project can be measured reliably. Expenditure capitalised comprises costs of materials, services, direct labour and an appropriate
proportion of overheads. Other development costs are expensed when incurred. Capitalised development expenditure is stated at cost less accumulated
amortisation and any impairment losses and amortised over the period of expected future sales from the related projects which vary from 3 - 5 years. The
carrying value of development costs is reviewed annually when the asset is not yet available for use, or when events or circumstances indicate that the
carrying value may be impaired.
Patents, Trademarks and Licences
Patents, trademarks and licences have a finite useful life and are carried at cost less accumulated amortisation and impairment losses.
Amortisation is calculated on a straight line basis over the number of years of their expected benefit which ranges from 3 to 10 years.
Goodwill
Goodwill represents the excess of the consideration transferred and the amount of the non-controlling interest in the acquiree over the fair value of
the identifiable assets, liabilities and contingent liabilities. Goodwill is not amortised but is measured at cost less any accumulated impairment losses.
Goodwill is reviewed annually for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying value may be
impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combinations synergies. Impairment is determined by
assessing the recoverable amount of the cash-generating unit to which the goodwill relates. Impairment losses on goodwill cannot be reversed.
(p) Impairment of Assets
At the end of each reporting period the Group assesses whether there is an indication that individual assets are impaired. Where impairment indicators
exist, recoverable amount is determined and impairment losses are recognised in profit or loss statement where the asset’s carrying value exceeds its
recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing value in use,
the estimated future cash flows are discounted to the 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.
Where it is not possible to estimate recoverable amount for an individual asset, recoverable amount is determined for the cash-generating unit to which
the asset belongs.
(q) Finance costs
All interest costs are recognised in profit or loss the period in which they are incurred.
(r) Share-Based Payments
The Group recognises an expense for all share-based remuneration, including deferred shares and options, and amortises those expenses over the
relevant vesting periods.
No expense has been recognised in respect of options granted before 7 November 2002. Shares are recognised when options are exercised and the
proceeds received are allocated to share capital.
P A G E 3 9
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(s) Rounding of Amounts
The parent entity applied the relief available under ASIC Class Order 98/100 and accordingly, amounts in the financial statements and directors’ report
have been rounded to the nearest thousand dollars, or in certain cases, to the nearest dollar.
(t) Dividends
Provision is made for dividends declared, and no longer at the discretion of the Group, on or before the end of the reporting period but not distributed at
the end of the reporting period.
(u) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to members of PPK Group Limited, by the weighted average number of ordinary
shares outstanding during the financial year, adjusted for bonus elements in ordinary shares during the year.
Diluted earnings per share
Earnings used to calculate diluted earnings per share are calculated by adjusting the basic earnings by the after-tax effect of dividends and interest
associated with dilutive potential ordinary shares. The weighted average number of shares used is adjusted for the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(v) GST
Revenues and expenses are recognised net of GST except where GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is
included as part of receivables or payables in the Statement of Financial Position. Cash flows are included in the statement of cash flows on a gross basis
and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are
classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
(w) New Accounting Standards and interpretations
The AASB has issued new and amended accounting standards and interpretations that have mandatory application dates for future reporting periods and
which the company has decided not to early adopt. A discussion of those future requirements and their impact on the group is as follows:
•
AASB 9: Financial Instruments and AASB 2009-11: Amendments to Australian Accounting Standards arising from AASB 9 [AASB 1, 3, 4, 5, 7,
101, 102, 108, 112, 118, 121, 127, 128, 131, 132, 136, 139, 1023 & 1038 and Interpretations 10 & 12] (applicable for annual reporting periods
commencing on or after 1 January 2013)
These standards are applicable retrospectively and amend the classification and measurement of financial assets. The company is in compliance with
these accounting standards and has determined that there is no impact to the company financial report from the implementation of these amended
accounting standards.
The changes made to accounting requirements include:
– simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value
– simplifying the requirements for embedded derivatives
– removing the tainting rules associated with held-to-maturity assets
– removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost
– allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in
other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is
no impairment or recycling on disposal of the instrument
– requiring financial assets to be reclassified where there is a change in an entity’s business model as they are initially classified based on
(a) the objective of the entity’s business model for managing the financial assets; and
(b) the characteristics of the contractual cash flows.”
P A G E 4 0
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(w) New Accounting Standards and interpretations (cont)
• AASB 2009–5: Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 5, 8, 101, 107, 117, 118,
136 & 139] (applicable for annual reporting periods commencing from 1 January 2010).
These standards detail numerous non-urgent but necessary changes to accounting standards arising from the IASB’s annual improvements project. No
changes are expected to materially affect the company.
• AASB 2009-8 “Amendments to Australian Accounting Standards – Group Cash-settled Share-based Payment Transactions [AASB 2]” (applicable for
annual reporting periods commencing on or after 1 January 2010)
These amendments clarify the accounting for group cash-settled share-based payment transactions in the separate or individual financial statements
of the entity receiving the goods or services when the entity has no obligation to settle the share-based payment transaction. The amendments
incorporate the requirements previously included in Interpretation 8 and Interpretation 11 and as a consequence these two Interpretations are
superseded by the amendments. These amendments are not expected to impact the Group.
• AASB Interpretation 19 “Extinguishing Financial Liabilities with Equity Instruments” (applicable for annual reporting periods commencing from 1 July
2010).
This Interpretation deals with how a debtor would account for the extinguishment of a liability through the issue of equity instruments. The
Interpretation states that the issue of equity should be treated as the consideration paid to extinguish the liability, and the equity instruments issued
should be recognised at their fair value unless fair value cannot be measured reliably in which case they shall be measured at the fair value of the liability
extinguished. The Interpretation deals with situations where either partial or full settlement of the liability has occurred. This Interpretation is not
expected to impact the Group.
• AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual Improvements Project Amendments to Australian Accounting
Standards arising from the Annual Improvements Project [AASB 3, AASB 7, AASB 121, AASB 128, AASB 131, AASB 132 & AASB 139] (commencing from
1 July 2010 and 1 July 2013 respectively)
This standard makes various amendments as a result of the annual improvements project:
- AASB 1 First-time Adoption of Australian Accounting Standards - Use of deemed cost for operations subject to rate regulation
- AASB 7 Financial Instruments: Disclosures - Clarification of disclosures
- AASB 101 Presentation of Financial Statements - Clarification of statement of changes in equity
- AASB 134 Interim Financial Reporting - Significant events and transactions
- Interpretation 13 Customer Loyalty Programmes - Fair value of award credits
These amendments are not expected to impact the Group.
• AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB 7, AASB 101 &
AASB 134 and Interpretation 13] (commencing from 1 July 2010 and 1 July 2013 respectively)
This standard makes various amendments as a result of the annual improvements project to:
- The transition requirements for contingent consideration from a business combination that occurred before the effective date of revised AASB 3.
- Transition requirements for amendments arising as a result of AASB 127 Consolidated and Separate Financial Statements.
The effect of these amendments is not expected to impact the Group.
Critical accounting estimates and judgements
The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current
information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally
and within the group.
P A G E 4 1
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Critical accounting estimates and judgements (cont)
Key estimates - Impairment
The Group assesses impairment at the end of each reporting period by evaluating conditions specific to the group that may lead to impairment of assets.
Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable
amounts incorporate a number of key estimates.
Available-for-sale financial assets
The continued volatility in the Australian share market had a significant impact on the fair value of listed investments.
The Group reviewed each of its listed investments to consider whether there was any indication that individual investments were impaired.
Based on all the information available to the Directors it was determined that the Group’s investment in in the following listed companies were impaired:
Industrea Limited
Allied Brands Limited
As a result an impairment loss of $700,000 (2009 $1,696,000) was taken up in profit or loss on these investments.
The Directors determined that no other listed investments were impaired at the end of the reporting period.
Investment in Associates
The Group reviewed its investments in associate companies to consider whether there was any indication that the individual investments were
impaired.
The share price of Cool or Cosy Limited has fallen significantly from when it became an associate to 30 June 2010, based on the Directors have
determined that the Group’s investment in Cool or Cosy Limited was impaired at 30 June 2010.
An impairment loss of $589,000 was taken up in profit or loss on this investment (refer Note 2(d) for disclosure of this impairment).
Investment Properties
An independent valuation of all investments properties was undertaken in May 2010. All investment properties have been included in the financial
statements at cost. The independent valuation indicated that the current market value of one property was below cost, as a result an impairment has
been recognised on the land & buildings that the Group owns at Arndel Park, New South Wales.
An impairment loss of $1,159,000 was taken up in profit or loss on this property.
Other Receivables
The Group has been in a dispute with the tenant of the Arndel Park property as to whether a valid lease is in exists. The Group has invoiced the tenant for
rent on a monthly basis since August 2009. The rent remains outstanding at 30 June 2010. It is expected that the matter will be resolved by the Courts
in the December 2010 half-year. A provision for doubtful debts of this outstanding receivable of $1,249,000 has been taken up in profit or loss pending
resolution of the dispute by the Courts.
No impairment has been recognised in respect of goodwill, brand names, plant and equipment or convertible notes for the current financial year.
Refer to note 17 for details of assumptions used in estimating the recoverable amount of intangible assets.
Key judgements - Classification as Held for Sale
The Group classifies assets as held for sale where an asset (or disposal group) is available for immediate sale in its present condition subject only to terms
that are usual and customary for sales of such assets (or disposal groups) and the sale is highly probable. For the sale to be assessed as highly probable,
management must be committed to a plan to sell the asset (or disposal group), and an active program to locate a buyer and complete the plan must
have been initiated. Further, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair
value. In addition, the sale should be expected to qualify for recognition as a completed sale within one year from the date of classification and actions
required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
P A G E 4 2
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Group has land located at Arndel Park, New South Wales currently on the market for sale and consequently have classified this asset as Held for Sale.
Although this property has been on the market for sale for more than 12 months, it is considered appropriate to still classify this property as Held for Sale,
as it has continued to be actively marketed through a period of adverse economic conditions, which have impacted on the ability to achieve a sale.
The Group has also classified land & buildings located at Kirrawee, New South Wales as held for sale. The property has been actively marketed for sale or
lease for 12 months. Subsequent to the end of the reporting period contracts were exchanged for the sale of this property consequently this property has
been classified as an asset Held for Sale.
Notes
( c)
NOTE 2 REVENUE, OTHER INCOME & EXPENSES FROM OPERATIONS
(a) REVENUE
Sale of goods
Rental income from investment properties
Dividends received - other parties
Interest receivable
(b) OTHER INCOME
Net gain on disposal of investment properties
Net gain on sale of available-for-sale financial assets
Fair value adjustment on derivatives
Foreign currency translation gains
Sundry income
(c) INTEREST INCOME
Other persons
Directors
(d) SHARE OF LOSS FROM ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD
Fair value adjustment to carrying value of available-for-sale financial assets
at the time the entities became associates
Impairment to carrying value of associate at year end
Share of after tax profit (loss) from associates accounted for under the equity method
(e) EXPENSES
Profit before income tax has been determined after:
Amortisation of intangibles
Cost of sales - mining equipment manufacture
Depreciation - investment properties
- plant and equipment
Fair value adjustment on derivatives
Foreign currency translation losses
Impairment - investment properties
Impairment of available-for-sale financial assets
- Listed investments
CONSOLIDATED
ENTITY
2010
$000s
CONSOLIDATED
ENTITY
2009
$000s
4,746
3,109
59
1,158
9,072
4,867
4,776
47
428
10,118
2,184
1,022
380
-
308
3,894
13
132
-
70
5
220
1,158
-
1,158
417
11
428
580
(589)
(675)
(684)
-
-
80
113
3,279
2,583
432
486
918
478
410
888
-
23
1,159
1,059
-
-
740
1,696
P A G E 4 3
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 2 REVENUE, OTHER INCOME & EXPENSES FROM OPERATIONS (CONTINUED)
Interest paid - other
Doubtful debts - trade receivables
- other receivables
Defined contribution superannuation expense
Employee benefit expenses
Research and development expense
Rental expense on operating leases
(f) INDIVIDUALLY SIGNIFICANT ITEMS - Gains or ( losses )
Net Gain on Sale of rental property
Fair value adjustment on derivatives
Realised gain on sale of Industrea Ltd shares
Fair value adjustment on exercise of IDL options
Realised gain on sale of Alchemy Resources Ltd shares
Impairment of investment property
Provision for doubtful debts - other receivables
Impairment of available-for-sale financial assets
NOTE 3
INCOME TAX EXPENSE
(a) The prima facie tax payable/(benefit) on the profit before income
tax is reconciled to the income tax as follows:
Profit before tax
Prima facie tax payable at 30% (2009: 30%)
Fully franked dividend received
Share of after tax loss of associate companies
Research & Development concession
Building allowance
Difference between accounting and tax cost base
of investment properties disposed of during the year
Sundry items
Over provision relating to prior year
Income tax expense / ( credit )
The applicable weighted average effective
tax rates are as follows:
(b) The components of tax expense comprise
Current tax
Deferred tax
Under / (over) provision in respect of prior years
P A G E 4 4
CONSOLIDATED
ENTITY
2010
$000s
1,118
CONSOLIDATED
ENTITY
2009
$000s
1,159
12
1,249
207
1,706
142
114
12
-
276
1,660
73
106
2,184
13
(267) (1,059)
130
588
-
647
-
415
-
(1,159)
(1,249)
-
(740) (1,696)
419 (2,612)
1,246
461
374
138
(18)
203
(30)
(64)
(14)
-
(26)
(78)
-
3
16
(55)
6
(50)
484
(79)
39%
-17%
621
(153)
16
484
721
(750)
(50)
(79)
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 3 INCOME TAX EXPENSE (CONTINUED)
(c) Deferred tax recognised (reversed) directly in other comprehensive
income through Available-for-sale Financial
Asset Reserve relating to valuing investments at fair value
(d) Tax Consolidation
PPK Group Limited ("PPK") has formed a consolidated group for income tax purposes, effective on and from
1 July 2003, with each of its wholly owned Australian subsidiaries.
PPK, as the head entity, has recognised all current income tax assets and liabilities relating to the
consolidated group.
The entities within the Group have entered into a tax sharing agreement where each subsidiary will
compensate PPK for the amount of tax payable that would be calculated as if the subsidiary was a tax
paying entity.
CONSOLIDATED
ENTITY
2010
$000s
CONSOLIDATED
ENTITY
2009
$000s
15
61
NOTE 4
AUDITORS' REMUNERATION
Remuneration of the auditor of the group and parent entity for :
- auditing or reviewing the financial statements
- non audit services ( accounting / technical advice )
NOTE 5
KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Key management personnel disclosures
Short-term benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
77,085
-
77,085
76,835
-
76,835
665,698
50,000
-
359,919
-
1,075,617
497,532
85,000
8,687
31,000
-
622,219
Further information regarding the identity of key management personnel and their compensation can be found in the Audited Remuneration Report
contained in the Directors' Report of this annual report.
(b) Equity Instruments
Details of options and rights held directly, indirectly or beneficially by key management personnel and their related parties are as follows:
There were no options and rights held directly, indirectly or beneficially by key management personnel and their related parties in the current financial
year.
All options and rights held expired in the 2008 financial year.
P A G E 4 5
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FOR THE YEAR ENDED 30 JUNE 2010
NOTE 5 KEY MANAGEMENT PERSONNEL DISCLOSURES (CONTINUED)
(c) Shareholdings
Number of Shares held by Parent Entity Directors and other key management personnel
Parent Entity Directors
Mr C.F. Ryan
Mr G.R. Molloy
Mr R.M.Beath
Mr J.I. Wowk
Mr D.A. Hoff
(Director to 7 September 2009)
Parent Entity Directors
Mr C.F. Ryan
Mr G.R. Molloy
Mr R.M.Beath
Mr J.I. Wowk
Mr D.A. Hoff
(d) Loans
Balance
1.7.09
Received as
Options
Remuneration Exercised
Net Change
Other
Balance
30.6.10
500,000
10,245,358
42,821
187,302
156,960
11,132,441
-
-
-
-
-
-
- -
-
742,639
- -
-
25,000
- (156,960)
500,000
10,987,997
42,821
212,302
0
-
610,679
11,743,120
Balance
1.7.08
Received as
Options
Remuneration Exercised
Net Change
Other
Balance
30.6.09
500,000
8,752,400
42,821
87,302
856,960
10,239,483
-
-
-
-
-
-
-
-
-
-
-
-
-
1,492,958
-
100,000
(700,000)
500,000
10,245,358
42,821
187,302
156,960
892,958
11,132,441
Loans advanced to Parent Entity Directors, Executives and Key management personnel
2010
There were no loans or advances to parent entity directors, executives and key management personnel in the current financial year.
The details of loans and advances to parent entity directors, executives and key management personnel that were repaid in the previous financial year are
as follows:
2009
Parent Entity Directors
Mr D.A. Hoff
Balance Net Change
Balance
1.7.08
$
439,250
Other
$
(439,250)
30.6.09
$
-
439,250
(439,250)
-
Interest Paid
or Payable
Highest
Indebtedness
During the
Year
$
11,523
$
439,250
Loans to key management personnel excluding directors were made pursuant to the Plaspak Executive Incentive Scheme to assist in the exercise of
options to acquire shares in the Parent Entity. Loans are limited to 70% of the current market value of the shares at the time of the loan. Loans are for a
term of 5 years or immediately repayable on termination of employment.
Interest only is payable monthly in arrears at a rate which is 3.25% above the current Reserve Bank of Australia Cash Rate. Security for the loans is by way
of a holding lock over the shares acquired with the loans. The loans are limited recourse, limited to the realisable value of the shares. The lender has the
right to sell or buy back the shares in the event that the value of the shares held as security falls below the purchase price of the shares or the amount lent
to acquire the shares. During the 2009 financial year the shares were sold and the proceeds used to repay the loan to the Managing Director. The loans to
key management personnel were repaid at the time employment ceased.
(e) Other transactions with directors
Refer to note 29 for further details of transactions with directors and director related entities.
P A G E 4 6
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 6
DIVIDENDS
(a) Dividends paid
Final ordinary dividend of 1.00c per share for 2009 year - 100% franked at 30% tax rate
( prior year 3.25c per share )
Interim ordinary dividend of 1.50c per share for 2010 year - 100% franked at 30% tax rate
(prior year 1.50c per share - 100% franked)
(b) Dividends declared after the end of the reporting period
Final ordinary dividend of 1.00c per share - 100% franked and
amounting to $580,000 not included as declared after the end of the reporting period.
(c) Franked dividends
The franked portions of the final dividends recommended after
30th June 2010 will be franked out of existing franking credits
or out of franking credits arising from the payment of income tax
in the year ending 30th June 2010.
Franking credits available for subsequent financial years based
on a tax rate of 30% (2009 - 30%)
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
580 1,889
870 870
1,450 2,759
4,054 3,987
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
(a) franking credits that will arise from the payment of the current tax liability
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date, and
(d) franking credits that may be prevented from being distributed in subsequent financial years.
The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of subsidiaries were paid as
dividends.
The impact on the franking account of dividends recommended after year end but before the financial statements were authorised for issue and not
recognised as a liability at year end will be a reduction on the franking account of $249,000 (2009: $249,000).
Under legislation that took effect on 1st July 2002, the amount recorded in the franking account is the amount of Australian income tax paid, rather
than franking credits based on after tax profits, and amounts debited to that account in respect of dividends paid after 30 June 2002 are the franking
credits attaching to those dividends rather than the gross amount of the dividends.
P A G E 4 7
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 7
EARNINGS PER SHARE
Basic earnings per share (cents per share)
Continuing operations
Diluted earnings per share ( cents per share )
Continuing operations
(a) Reconciliation of Earnings to Net Profit
Earnings used in calculating Basic EPS
Continuing operations
Earnings used in calculating Diluted EPS
Continuing operations
(b) Weighted average number of ordinary shares outstanding during the year
used in calculation of basic EPS
Potential ordinary shares assumed to have been issued for no consideration
Weighted average number of ordinary shares outstanding during the year
used in calculation of diluted EPS
NOTE 8
PARENT ENTITY INFORMATION
CONSOLIDATED CONSOLIDATED
ENTITY
2009
$000s
ENTITY
2010
$000s
1.3
1.3
0.9
0.9
762 540
762 540
No.
58,006,650
-
No.
58,271,808
-
58,006,650
58,271,808
The following details information related to the parent entity, PPK Group Limited at 30 June 2010. The information presented here has been prepared
using consistent accounting policies as presented in Note 1.
2010
PARENT ENTITY
$000s
2009
PARENT ENTITY
$000s
Current assets
Non-current assets
Total Assets
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Contributed equity
Reserves
Retained earnings
Total Equity
(Loss)/Profit for the year
Other comprehensive income for the year
Total comprehensive (loss)/income for the year
Refer to note 27 for details of Cross Guarantees.
P A G E 4 8
35,259
42,004
77,263
24,810
18,561
43,371
33,892
31,249
8
2,635
33,892
(695)
-
(695)
34,453
41,651
76,104
28,015
12,279
40,294
35,810
31,249
8
4,553
35,810
654
-
654
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 9
CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short-term bank deposits
Cash at bank and on hand
Cash at bank consists of temporary surplus funds which are non interest bearing.
Reconciliation of Cash
The above figures are reconciled to the cash at the end of the financial
year as shown in the statement of cash flows as follows:
Cash and cash equivalents
Bank overdrafts
NOTE 10
TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Less: Allowance for doubtful debts
Other Receivables
Less: Allowance for doubtful debts
Loans and receivables
- other loans - secured
- convertible notes
- trade finance facility - secured
Non-Current
Loans and receivables
- other loans - secured
- convertible notes
NOTE
CONSOLIDATED CONSOLIDATED
ENTITY
2009
$000s
ENTITY
2010
$000s
23
191
-
-
23 191
23
(2,944)
191
(155)
19
(2,921)
36
(a)
(b)
(c )
(e)
(d)
(c )
(e)
946
-
946
954
(32)
922
1,751
(1,249)
502
4,872
833
-
5,705
7,153
4,498
3,119
7,617
1,816
(626)
1,190
-
-
149
149
2,261
-
2,331
2,331
(a) Trade Receivables
Current trade receivables are non-interest bearing and are generally 30 day terms. A provision for doubtful debts is raised when there is objective
evidence that it is considered unlikely that any amounts will be recovered.
(b) Other Receivables
Other receivables are non-interest bearing and are generally 30 day terms. A provision for doubtful debts has been raised for the loans in other receivables
where it is considered that there is some doubt as to whether the amounts will be recovered.
(c) Other loans
Other loans are funds advanced to the PPK Willoughby Funding Unit Trust during the year. The amounts are secured by a registered first mortgage over
property owned by PPK Willoughby Pty Ltd as trustee for The Willoughby Market Gardens Purchaser Unit Trust and a first ranking fixed and floating charge
over that entity.
The current loan has interest rate of 13.5% per annum calculated daily and compounded monthly with principal and interest due for repayment in the
first half of the 2011 financial year.
The non-current loan has interest rate of 15% per annum calculated daily and compounded annually. The loan is for a maximum period of 4 years with
principal and interest due for repayment in second half of the 2014 financial year.
P A G E 4 9
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 10 TRADE AND OTHER RECEIVABLES (CONTINUED)
Movement in balance of loan to PPK Willoughby Funding Unit Trust - current
Opening Balance
Funds advanced
Fee due for providing finance
Less principal and interest repaid
Interest revenue added to carrying value
Movement in balance of loan to PPK Willoughby Funding Unit Trust - non-current
Opening Balance
Funds advanced
Less principal and interest repaid
Interest revenue added to carrying value
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
-
4,500
68
-
4,568
304
4,872
-
-
-
-
-
-
-
-
4,200
-
4,200
298
4,498
-
-
-
-
-
-
(d) Trade finance facility
Trade finance facility was provided to Cool or Cosy Limited to finance the purchase of certain stock lines from approved suppliers. The facility is up to a
maximum of $800,000 and interest is charged at the Reserve Bank cash rate plus 4.75%. Repayment of amounts advanced are required within 120 days
of receipt of goods. Security is by way of a first ranking floating charge over the air-conditioning stock of Cool or Cosy Ltd, limited to the maximum value
of the facility. The average interest rate for the year was 7.75%. The facility was fully repaid in August 2009 and has not been utilised since that date. The
group received 4,000,000 options in Cool or Cosy Limited for providing this facility (refer Note 18 for further details of options held).
(e) Convertible notes
Convertible notes are funds invested in listed companies that can be converted to shares. The amounts are secured over a first or second ranking fixed and
floating charge over the companies assets. On acquisition the note is split into its loan component and is recorded at amortised cost and is classified as
a receivable and its derivative element is recorded at its fair value and is classified as a derivative. The convertible notes maybe redeemed by the issuing
company, prior to conversion into shares, for 110% of their face value.
The discount to their face value is taken as interest received over the life of the note. Interest is received on the convertible notes at a fixed rate each
quarter.
The weighted average interest rate for the year on these notes was 12.53%
Movement in balance of convertible notes in listed companies
Opening Balance
Investment in convertible note
Less part of cost assigned to cost of embedded option
Less conversion into shares
Interest revenue added to carrying value
Current - repayment due within 12 months
Non-current - repayment due after 12 months
P A G E 5 0
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
2,331
1,997
2,000
(123)
303
-
(352) -
3,856
96
3,952
833
3,119
3,952
2,300
31
2,331
-
2,331
2,331
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 10 TRADE AND OTHER RECEIVABLES (CONTINUED)
Provision for doubtful debts - Receivables
Current trade, term and other receivables and loans are assessed for recoverability based on the underlying terms of the contract. A provision for doubtful
debts is recognised when there is objective evidence that it is considered unlikely or there is some doubt as to whether the amounts will be recovered.
These amounts have been included in the administrative expenses or investment properties expenses as appropriate. Movements in the provision for
impairment are as follows:
Consolidated Group 2010
Current
Trade receivables
Other receivables
Consolidated Group 2009
Current
Trade receivables
Other receivables
Opening
balance
$000s
Charge for
the year
$000s
Amounts
written off
$000s
Closing
balance
$000s
32
626
12
1,249
(44)
(626)
-
1,249
658
1,261
(670)
1,249
145
32
626 - - 626
(125)
12
There are no provisions for impairment for Non-current Trade and other receivables for the current year or prior year for both the Group and the parent entity.
771
12
(125)
658
Trade receivables aging analysis
The ageing analysis of trade receivables for amounts not impaired for the Group is as follows
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
Not past due
Past due 1 - 30 days
Past due 31 - 60 days
Past due over 60 days
With respect to trade receivables that are neither impaired or past due, there are no indications as at the end
of the reporting period that the debtors will not meet their obligations as they fall due.
Other receivables aging analysis
The ageing analysis of other receivables for amounts not impaired for
the Group is as follows
Not past due
Past due 1 - 30 days
Past due 31 - 60 days
Past due over 60 days
With respect to other receivables that are neither impaired or past due, there are no indications as at the end
of the reporting period that the debtors will not meet their obligations as they fall due.
578
207
103
58
517
152
110
143
946
922
307
171
24
-
502
539
408
215
28
1,190
P A G E 5 1
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FOR THE YEAR ENDED 30 JUNE 2010
NOTE 11
INVENTORIES
On hand
Finished goods at cost
Finished goods at net realisable value
Work in Progress
Raw materials
Refer to note 22 for details of inventory pledged as security
NOTE 12
OTHER CURRENT ASSETS
Prepayments
The carrying amount of prepayments approximates fair value.
CONSOLIDATED CONSOLIDATED
ENTITY
2009
$000s
ENTITY
2010
$000s
642
84
540
243
591
43
530
259
1,509
1,423
410
410
355
355
NON-CURRENT ASSETS
NOTE 13
FINANCIAL ASSETS
(a) Investments (at cost) in subsidiary comprise:
Rutuba Pty Limited
Seven Hills Property Pty Ltd
PPK Property Trust
Dandenong South Property Pty Ltd
PPK Willoughby Pty Ltd
PPK Willoughby Holdings Pty Ltd
PPK Aust. Pty Ltd
Trigger Sprays Pty Ltd
PPK Investment Holdings Pty Ltd
PPK Easy Living Pty Ltd
Easy Living Unit Trust
PPK Investment Holdings Pty Ltd
PPK Properties Pty Ltd
Landmark Property Syndicate No 4
York Group Limited
Rambor Pty Ltd
King Cobra Mining Equipment Pty Ltd
COUNTRY OF
INCORPORATION
BENEFICIAL PERCENTAGE OWNED
BY CONSOLIDATED ENTITY
PARENT ENTITY
2010
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2009
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2010
2009
$000s
$000s
-
8,051
6,339
9,430
-
-
5,497
-
-
-
-
-
-
-
12,056
-
-
41,373
-
8,051
6,339
9,430
-
-
5,497
-
-
-
-
-
-
-
12,056
-
-
41,373
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
The proportion of ownership interest is equal to the proportion of voting power held.
The above investments in subsidiaries are all in ordinary class shares.
P A G E 5 2
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 13
FINANCIAL ASSETS
(b) Investments in Associated companies - equity accounted
Listed Investments - Summary of movement in carrying value
Opening Balance
Transfer from available-for-sale financial assets
Additions at cost
Fair value adjustment to the carrying value of available-for-sale financial assets
at the time the entities became associates - to profit and loss
Fair value adjustment to the carrying value of available-for-sale financial assets
at the time the entities became associates - to equity
Share of after tax profit/(loss) from associates accounted for under the equity method
Impairment of carrying value of associates
Dividends received from associates
Information relating to associates is set out below
OWNERSHIP
INTEREST
2010
%
32.89%
23.34%
22.86%
Name of Company
Listed
Frigrite Limited
Cool or Cosy Limited
Unlisted entities
PPK Willoughby Funding Unit Trust
(40 units of $1 each are held)
Total listed and unlisted entities
Fair value of listed investments in associates
Frigrite Limited
Cool or Cosy Limited
Share of associates' profit or (loss)
Profit or (loss) before income tax
Income tax expense or (credit)
Profit or (loss) after income tax
Summarised financial information of associates
Frigrite Limited
Assets
Liabilities
Equity
Revenues
Profit or (loss) before income tax
Income tax expense or (credit)
Profit or (loss) after income tax
Contingent liabilities of associate
Share incurred jointly with other investors
Contingent liabilities relating to liabilities of the associates
for which the company is severally liable
CONSOLIDATED CONSOLIDATED
ENTITY
ENTITY
2010
$000s
2009
$000s
-
1,463
2,830
580
-
-
-
-
215
(675)
(589)
(132)
3,692
-
-
-
-
-
2009
%
CONSOLIDATED
ENTITY
2010
$000s
CONSOLIDATED
ENTITY
2009
$000s
-
2,693
999
-
3,692 -
-
-
3,692
3,207
999
4,206
(696)
(21)
(675)
38,849
29,217
9,632
130,856
(1,563)
(489)
(1,074)
-
-
-
-
-
-
-
-
-
49,303
42,072
7,231
173,944
(3,157)
(455)
(2,702)
-
-
-
P A G E 5 3
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FOR THE YEAR ENDED 30 JUNE 2010
NOTE 13 FINANCIAL ASSETS CONTINUED
Cool or Cosy Limited
Assets
Liabilities
Equity
Revenues
Profit or (loss) before income tax
Income tax benefit
Profit or (loss) after income tax
Contingent liabilities of associate
Share incurred jointly with other investors
Contingent liabilities relating to liabilities of the associates
for which the company is severally liable
PPK Willoughby Funding Unit Trust
Assets
Liabilities
Equity
Revenues
Profit or (loss) before income tax
Income tax expense or (credit)
Profit or (loss) after income tax
Contingent liabilities of associate
Share incurred jointly with other investors
Contingent liabilities relating to liabilities of the associates
for which the company is severally liable
An independent valuation of the land owned by the PPK Willoughby Funding
Unit Trust group in August 2010 has valued that land "as is" at $32.6 million.
(c) Available-for-sale financial assets
( i ) Listed Investments - at fair value
- Shares in listed corporations
Opening Balance
Transfer to investments in associated companies
Additions at cost
Conversion of convertible notes into listed investments
Exercise of options held
Fair Value adjustments
Impairment
Disposals
Listed investments are recorded at fair value based on the ASX closing price at the 30 June of the
relevant financial period.
( ii ) Unlisted Investments - at cost less impairment
- Shares and units held in other corporations
Cost
Impairment
Unlisted investments are recorded at cost less impairment which represents fair value at nil.
( iii ) Total Listed & Unlisted Investments
P A G E 5 4
CONSOLIDATED
ENTITY
2010
$000s
CONSOLIDATED
ENTITY
2009
$000s
5,250
5,280
(30)
11,316
1,146
33
1,179
4,635
5,767
(1,132)
10,065
(2,020)
33
(1,987)
-
-
-
31,203
31,205
(2)
(2)
-
(2)
-
-
-
2,411
(1,463)
729
400
1,366
(22)
(740)
(1,576)
1,105
3,276
-
896
-
-
204
(1,696)
(269)
2,411
249
(249)
-
249
(249)
-
1,105
2,411
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 13 FINANCIAL ASSETS CONTINUED
Gains or losses arising from changes in the fair value of available-for-sale financial assets are initially recognised directly in other comprehensive income
through a reserve, unless they are impaired. When the available-for-sale financial asset is disposed of, any gain or loss arising from the sale is taken out of
the reserve and included in profit or loss.
A significant or prolonged decline in the fair value of a security below its cost is considered an indicator that the securities are impaired.
If such evidence exists for available-for-sale financial assets, the value of the impairment is assessed and the difference between the cost and the
impaired value, less any impairment loss on that financial asset previously recognised in the profit or loss, is removed from other comprehensive income
and recognised in profit or loss. Any subsequent reversal of impairment will be recognised in other comprehensive income through the reserve.
Impairment losses recognised in profit or loss on equity instruments classified as available-for-sale are not reversed through profit or loss.
NOTE 14
INVESTMENT PROPERTIES
(a) Non current
Freehold land & buildings - at cost
Land
Buildings
Less: Accumulated depreciation
Less: Provision for impairment
Total Investment Properties
(b) Current - classified assets held for sale
Freehold land & buildings - at cost
Land
Buildings
Less: Accumulated depreciation
Land at Arndell Park and Land & Buildings at Kirrawee are being marketed for sale and have been classified as
assets held for sale.
Subsequent to the end of the reporting period contracts were exchanged on the Kirrawee property and
settlement is expected in the December 2010 half year.
Reconciliations
Balance at the beginning of the year
Transfers from other property, plant & equipment
Expenditure subsequent to acquisition
Disposals
Depreciation expense
Impairment expense
Less Classified as assets held for sale
Land & Buildings
Total investment properties of continuing operations
NOTE
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
12,980
16,272
22,463
15,117
(3,598)
(2,690)
18,865
12,427
25,407
35,137
(1,159) -
35,137
24,248
3,053
703
4,621 -
(571) -
4,050 -
703
7,103
35,840
15 -
25
(2,923)
(432)
(1,159)
31,351
(7,103)
24,248
41,169
17
39
(4,907)
(478)
-
35,840
(703)
35,137
P A G E 5 5
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FOR THE YEAR ENDED 30 JUNE 2010
NOTE 14 INVESTMENT PROPERTIES (CONTINUED)
NOTE
CONSOLIDATED CONSOLIDATED
The following amounts have been recognised in profit or loss
Rental income
Direct operating expenses arising from investment property
that generated rental income during the period
Direct operating expenses arising from investment property
that did not generate rental income during the period
ENTITY
2010
$000s
ENTITY
2009
$000s
3,109
4,776
2,018
337
747
36
The Virginia, Queensland, land & building was sold for $5.166 million resulting in profit on sale over it's carrying value of $2.184 million.
( 2009 - The Riverwood, NSW, land & building was sold for $4.92 million resulting in profit on sale over it's carrying value of $13,000).
A independent valuation of Land & Buildings was undertaken in May 2010 on investment properties.
The independent valuation valued the investment properties at $37.8 million.
Capital gains tax that could be paid if the Land & Buildings were sold at the end of the reporting period at the independent valuation is $2.0 million.
These valuations have been reflected in the financial statements to the extent that the value of one of the properties was considered impaired.
Non-current assets pledged as security
Refer to note 22(b) for information on non-current assets pledged as security by the parent entity or its subsidiaries.
The Group tests for impairment and measures recoverable amount based on value-in-use based on the discounted future cash flows derived from
continued use of assets.
Impairment losses are included in the line item "Administrative expenses" in profit or loss. During the year the a provision for impairment of $1.159
million was made against the carrying value of the land and buildings at Arndell Park, NSW.
Leases as Lessor
The investments properties are leased to tenants under long term operating leases with rentals payable monthly.
In relation to one of the properties there is a current dispute as to whether a valid lease is in place. It is expected that the Courts will determine the
dispute during the 2011 financial year.
If the Courts find in favour of the Group then the minimum lease payments under non cancellable operating leases of the investment properties not
recognised in the financial statements would be receivable as follows:
- not later than 1 year
- later than 1 year but not
later than 5 years
- later than 5 years
If the Group is unsuccessful in the legal action then them minimum lease payments under non cancellable
operating leases of the investment properties not recognised in the financial statements would be
receivable as follows:
- not later than 1 year
- later than 1 year but not later than 5 years
- later than 5 years
Refer to Subsequent Event Note 31 for further details as to the current position in relation to investment properties.
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
3,095
3,801
-
6,896
3,382
8,293
720
12,395
1,751
2,288
990
-
2,741
4,137
720
7,145
P A G E 5 6
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 15
OTHER PROPERTY PLANT AND EQUIPMENT
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Capital works in progress - at cost
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
424
ENTITY
2009
$000s
398
(185)
(148)
239
2,873
(1,531)
1,342
43
250
2,921
(1,168)
1,753
24
Total property, plant and equipment of continuing operations
1,624
2,027
Reconciliations
Reconciliations of the carrying amounts of each class of plant & equipment are set out below.
Leasehold
Plant &
Improvements Equipment
$'000
$'000
Capital Works
In Progress
$'000
Total
$'000
Consolidated - 2010
Carrying amount at start of year
Additions
Manufactured plant & equipment for hire
Disposals
Transfers to inventories
Transfers to Investment properties - Note 14
Depreciation & Amortisation expense
24
1,753
29
19
194 -
(60) -
(127) -
2,027
250
76
28
194
-
(60)
-
(127)
-
- - - -
(486)
(39)
(447) -
Carrying amount at end of year
239
1,342
43
1,624
Consolidated - 2009
Carrying amount at start of year
Additions
Manufactured plant & equipment for hire
Disposals
Transfers to inventories
Transfers to Investment properties - Note 14
Depreciation & Amortisation expense
Carrying amount at end of year
28
13
1,836
340
285
2,149
357
4
- - - -
- - - -
(52)
-
(17)
- -
(410)
2,027
(52) -
(17)
(371) -
24
1,753
(39)
250
P A G E 5 7
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FOR THE YEAR ENDED 30 JUNE 2010
NOTE 16
TAX
(a) Assets
Deferred tax assets comprise temporary differences attributable to:
Amounts recognised in profit and loss
Doubtful Debts
Employee benefits
Building depreciation
Depreciation of intangibles
Impairment of investments
Fair value adjustment on derivatives
Inventory
s40-880 Black hole expenses
Other
Movements
Opening balance
Credit/(charged) to profit or loss
Prior year adjustment
There are no unrecognised capital losses for which no deferred tax asset has been recognised.
(b) Liabilities
CURRENT
Income Tax provision of continuing operations
NON-CURRENT
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit and loss
Rent receivable
Plant and equipment depreciation
Building depreciation
Fair value adjustment of derivatives
Fair value adjustment of Investments
Other
Deferred tax liability of continuing operations
Movements
Opening balance
(Credit)/charged to profit or loss
(Credit)/charged to other comprehensive income
Prior year adjustment
P A G E 5 8
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
375
79
527
-
938
88
3
2
24
2,036
2,200
(124)
(40)
2,036
198
215
606
28
1,122
-
3
5
23
2,200
2,070
130
-
2,200
458
730
33
4
-
-
7
11
55
318
(278)
15
-
55
61
32
196
14
(7)
22
318
876
(619)
61
-
318
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 17
INTANGIBLE ASSETS
Licences, software and patents - at cost
Less: Accumulated amortisation
Goodwill
- Mining equipment manufacturing
Brand names - at cost
Intangible Assets of continuing operations
Reconciliations
Licences, software and patents - at cost
Balance at the beginning of year
Additions - external purchases
Transfers from Plant and Equipment
Impairment of costs brought forward
Disposals
Amortisation charge
(Amortisation charges are included in Mining equipment manufacture or Administration expenses in profit or loss. )
Goodwill
Balance at the beginning of year
Additions / Disposals / Impairment
Brand Names
Balance at the beginning of year
Additions / Disposals / Impairment
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
652
(525)
127
155
497
779
205
2
-
-
-
(80)
127
155
-
155
497
-
497
650
(445)
205
155
497
857
240
78
-
-
-
(113)
205
155
-
155
497
-
497
Licences, software and patents have a finite useful life. They are recorded at cost and amortised on a straight line basis over the number of years of their
expected life which ranges from 3 to 10 years.
Goodwill is assessed to have an indefinite life, it is tested annually for impairment with any impairment losses being charged to profit or loss.
Brand names have been assessed to have an indefinite useful life. These brands are registered with the relevant agencies. The registrations are renewed
at insignificant cost to the group. This, combined with continued support for the brands by product development, advertising and marketing expenditure,
has allowed the group to determine that the assets have an indefinite useful life. They are recorded at cost and tested annually for impairment.
Impairment losses are charged to profit or loss.
Impairment disclosures
Intangible assets deemed to have indefinite lives are allocated to the Group's cash generating units identified according to operating segments.
P A G E 5 9
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 17 INTANGIBLE ASSETS (CONT.)
A segment level summary of the intangible assets deemed to have indefinite lives is as follows:
Year ended 30 June 2010
Mining Equipment Manufacturing
Year ended 30 June 2009
Mining Equipment Manufacturing
Brand
Names
$'000
497
497
Goodwill
$'000
155
155
Total
$'000
652
652
The recoverable amount of intangibles in the mining equipment manufacturing cash-generating units are determined based on value-in-use
calculations. Value-in-use is calculated based on the present value of 5 year discounted cash flow projections based on budgets approved by management.
The growth rate used in these budgets does not exceedthe long term average growth rate for the business in which cash-generating units operate.
The following assumptions were used in the value-in-use calculations:
Mining Equipment Manufacturing
Growth
Rate
3.50%
2010
Discount
Rate
12.50%
Growth
Rate
5.00%
2009
Discount
Rate
12.00%
The budgets used by management use historical weighted average growth rates, adjusted for the current economic conditions to project revenue.
Costs are calculated taking into account historical gross margins as well as estimated weighted average inflation rates over the period which are consistent
with inflation rates applicable to the locations in which the segments operate. Discount rates are pre-tax and are adjusted to incorporate risks associated
with a particular segment.
The estimated recoverable amount of intangible assets exceeds the carrying amount of these assets at 30 June 2010. If a discount rate of 25.0% was used
instead of 12.5%, and if sales growth was limited to the inflation rate of 3.0% instead of 3.5%, the estimated recoverable amount of the intangible assets
would equal the carrying value.
NOTE 18
DERIVATIVES
Non-Current Assets
Options in listed companies at fair value
Options in listed companies
Opening Balance
Additions at cost
Fair Value adjustments
Value of options exercised
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
128
288
288
395
380
(935)
128
1,347
-
(1,059)
-
288
Options consist of various listed and unlisted options in listed companies. They are initially recorded at cost with adjustments to fair value taken to profit
or loss.
If options are unlisted the group uses the Black Scholes model to determine fair value.
The Directors have elected not to record the nominal values that Black Scholes model places on the unlisted options where the exercise price of the option
is significantly above the June share price of the underlying security.
For unlisted options there is no ready market on which they can be traded and the likelihood of sale and realising this value at 30 June is unlikely.
All options can be exercised at anytime up to their expiry date.
Details of options held are as follows:
P A G E 6 0
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 18 DERIVATIVES (CONT.)
Number
Exercise
Price
Option
Expiry date
Within 1 Year 1 to 2 years
$000s
$000s
2 to 5 years
$000s
Total
$000s
2010
Company
Alchemy Ltd
Frigrite Ltd
Allied Brands Ltd
Cool or Cosy Ltd
Cool or Cosy Ltd
2009
Company
Industrea Ltd
Allied Brands Ltd
Allied Brands Ltd
Allied Brands Ltd
Cool or Cosy Ltd
Cool or Cosy Ltd
Listed
Unlisted
Listed
350,000
10,000,000
2,136,007
Unlisted 6,250,000
3,300,000
Unlisted
Unlisted
Unlisted
Unlisted
Listed
Unlisted
Unlisted
2,875,000
200,000
300,000
2,136,007
6,250,000
3,300,000
0.25
0.20
0.60
0.15
0.15
0.15
0.35
0.45
0.60
0.15
0.15
31-Aug-10
20-Aug-12
28-Dec-10
16-Aug-10
17-Dec-11
52
76
-
-
-
- 52
-
76
-
-
-
-
-
-
- -
-
- -
128
128 - -
28-Sep-09
22-May-10
14-Oct-09
28-Dec-10
16-Aug-10
17-Dec-11
288
-
-
-
-
-
288
-
-
-
-
- -
-
-
-
-
-
-
-
-
288
-
-
-
-
-
288
Derivative Instruments used by the Group
The Group has elected not to hedge account. As a result the value of foreign currency liabilities is taken up at the spot rate at the end of the reporting
period and the value of all derivativesis taken up as a hedge asset or liability. Gains and losses resulting to fair value are taken to profit or loss.
CURRENT LIABILITIES
NOTE 19
TRADE AND OTHER PAYABLES
Trade payables
Sundry payables and accruals
NOTE 20
INTEREST BEARING LIABILITIES
Bank overdraft -secured
Hire purchase liabilities - Secured
Interest bearing liabilities of continuing operations
(a) Bank overdraft and bank loans - secured
The bank overdraft, bank loans and certain hire purchase liabilities are secured by certain
charges over the group's freehold properties, assets and undertakings.
Bank overdrafts have been reflected after taking account of legal right of set-off which was
established with the bank and whereby interest is charged on the net balance.
(b) Total secured liabilities - see note 22
NOTE
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
328
85
413
20(a)
26
2,944
-
2,944
508
184
692
155
23
178
P A G E 6 1
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 21
PROVISIONS
Current
Annual leave
Long service leave
Non Current
Long service leave
Total Provisions
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
121
94
215
48
263
143
545
688
29
717
Annual leave and current long service leave comprise amounts payable that are vested and could be expected to be settled within 12 months of the end
of the reporting period.
Non current long service leave comprise amounts that are not vested at the end of the reporting period and the amount and timing of the payments to be
made when leave is taken is uncertain. Refer accounting policy Note 1(m) for more detail.
ANNUAL
LEAVE
2010
$000s
LONG SERVICE
LEAVE
2009
$000s
143
112
(134)
-
121
574
23
(451)
(4)
142
121
94
- 48
142
CONSOLIDATED CONSOLIDATED
121
ENTITY
2010
$000s
ENTITY
2009
$000s
18,500
18,500
12,100
12,100
2,944
18,500
-
21,444
155
12,100
23
12,278
Provisions made during the year
Provisions used during the year
Increase (decrease) in discount due to time and change in the discount rate
Balance at end of year
Current
Non-current
NON-CURRENT LIABILITIES
NOTE 22
INTEREST BEARING LIABILITIES
Bank Loans - Secured
Interest bearing liabilities of continuing operations
(a) Secured liabilities
Total secured liabilities ( current and non-current ) are:
Bank overdrafts
Bank loans
Hire purchase liabilities
Bank overdrafts and loans are secured as noted in note 20 above.
Lease and Hire Purchase liabilities are effectively secured as the rights to those assets revert to
the lessor or hirer in the event of default.
P A G E 6 2
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 22 INTEREST BEARING LIABILITIES (CONTINUED)
(b) Assets pledged as security
The carrying amounts of non-current assets pledged as security are:
First mortgage
Freehold investment properties
Assets classified as held for sale
Registered Mortgage Debentures over company assets and cross guarantees & indemnities
Freehold investment properties
Term receivables
Financial Assets
Investments in associated companies
Plant & equipment
Intangible Assets
Derivatives
Total non-current assets pledged as security
NOTES
14(a)
14(b)
14(a)
The following current assets are also pledged as security under the registered mortgage and cross
guarantees & indemnities
Cash assets
Term receivables
Receivables - current
Inventories
Other current assets
Total current assets pledged as security
Total assets pledged as security
The total financial assets included in the above pledged as security for liabilities is $10,193,000 ( 2009 $7,194,000 )
(c) Unused credit facilities
(i) The consolidated entity had access to the following lines of credit at the end of the reporting period:
Total facilities available
Bank Overdraft
Bank Loans
Not utilised at the end of the reporting period
Bank Overdraft
Bank Loans
Utilised at the end of the reporting period
Bank Overdraft
Bank Loans
CONSOLIDATED
ENTITY
2010
$000s
CONSOLIDATED
ENTITY
2009
$000s
11,906
7,103
12,342
7,617
1,105
3,692
1,624
779
128
46,296
23
-
1,448
1,509
410
3,390
18,502
703
16,635
2,331
2,411
-
2,027
857
288
43,754
191
149
2,112
1,423
355
4,230
49,686
47,984
3,000
23,080
26,080
56
4,580
4,636
2,944
18,500
21,444
3,000
23,080
26,080
2,845
10,980
13,825
155
12,100
12,255
The major facilities are summarised as follows:
Banking overdrafts
Bank overdraft facilities are arranged with the National Australia Bank with the general terms and conditions being set from time to time. Overdraft
balances are subject to set-off arrangements whereby credit balances can be netted off against debit balances with the total facility and interest being
applied to the net balance.
Commercial bill facilities
$23,080,000 variable interest rate facilities provided by the National Australia Bank Ltd
Further details of the banking facilities with the NAB are included in note 25( c).
Interest rates on facilities range from 5.74% to 9.93% inclusive of bank margins.
P A G E 6 3
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
SHAREHOLDERS' EQUITY
NOTE 23
CONTRIBUTED EQUITY
PAID-UP CAPITAL
58,006,650 ordinary shares fully paid
Movements in ordinary share capital
Balance at the beginning of the financial year
Shares repurchased under approved buy back scheme
CONSOLIDATED
ENTITY
2010
$000s
CONSOLIDATED
ENTITY
2009
$000s
31,249
31,249
31,249
-
32,033
(784)
31,249
The shares have no par value. Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of
shares held. Each ordinary share is entitled to one vote at shareholder meetings.
31,249
Movements in number of ordinary shares
Balance at the beginning of the financial year
Shares repurchased under approved buy back scheme
No.
No.
58,006,650
-
59,252,613
(1,245,963)
58,006,650
58,006,650
Capital Risk Management
The Group considers its capital to comprise its ordinary share capital, share premium and accumulated retained earnings.
In managing its capital, the Group’s primary objective is to ensure its continued ability to provide a consistent return for its equity shareholders through a
combination of capital growth and distributions and through the payment of annual dividends to its shareholders. In order to achieve this objective, the
Group seeks to maintain a gearing ratio that balances risks and returns at an acceptable level and also to maintain a sufficient funding base to enable the
Group to meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these aims, either through
altering its dividend policy, new share issues, share buy-backs, or the reduction of debt, the Group considers not only its short-term position but also its
long-term operational and strategic objectives .
It is the Group’s policy to maintain its gearing ratio within the range of 20% - 50% (2009: 20% - 50%). The Group’s gearing ratio at the balance sheet date
is shown below :
Gearing ratios
Total borrowings
less Cash and cash equivalents
Net debt
Total equity
Total capital
Gearing Ratio
CONSOLIDATED
ENTITY
2010
$000s
CONSOLIDATED
ENTITY
2009
$000s
21,444
(23)
21,421
34,770
56,191
38%
12,278
(191)
12,087
35,458
47,545
25%
The increase in gearing has been brought about in order to facilitate the Groups' investment activities during the year.
The Group intends to maintain these gearing levels going forward. There have been no other significant changes to the Group’s capital management
objectives, policies and processes in the year nor has there been any change in what the Group considers to be its capital.
P A G E 6 4
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 24
RESERVES
Available-for-sale financial assets
Share options
Movement in reserves
Share options
Opening balance
Closing balance
Available-for-sale financial assets reserve
Opening balance
Fair value adjustment
Deferred tax impact
Transfer to (profit) or loss
Deferred tax impact
Closing balance
CONSOLIDATED
ENTITY
2010
$000s
CONSOLIDATED
ENTITY
2009
$000s
16
8
24
8
8
(17)
194
(58)
(147)
44
16
(17)
8
(9)
8
8
(160)
(264)
79
468
(140)
(17)
The available-for-sale financial assets reserve carries fair value adjustments made to available-for-sale financial assets which are recognised in other
comprehensive income.
When the available-for-sale financial asset is either sold or considered impaired the amount held in this reserve is recognised in the profit or loss.
NOTE 25
FINANCIAL RISK MANAGEMENT
The Group's financial instruments include investments in deposits with banks, receivables, equities, derivatives, payables and interest bearing liabilities.
The accounting classifications of each category of financial instruments as defined in note 1(i) and their carrying amounts are set out below.
Weighted
Average
Interest
Rate
0.0%
13.95%
15.0%
12.5%
0.0%
0.0%
0.0%
0.0%
Consolidated 2010
Financial Assets
Receivables
Loans receivable
Loans receivable
Convertible notes
Loans and receivables
Cash and cash equivalents
Available-for-sale financial assets
Investments in associated companies
Financial assets at fair value through
profit
or loss - held for trading (derivatives)
Total financial assets
Fixed Interest Rate
Maturing
Floating
Interest
Rate
Within 1 Year 1 to 5 Years
Non-Interest
Bearing
Total
Note
$000s
$000s
$000s
$000s
$000s
10
10
10
10
9
13c
13b
18
-
-
-
-
-
-
-
-
-
-
4,872
-
833
5,705
-
-
-
-
5,705
-
4,498
3,119
7,617
-
-
-
-
7,617
1,448
-
-
1,448
23
1,105
3,692
128
6,396
1,448
4,872
4,498
3,952
14,770
23
1,105
3,692
128
19,718
P A G E 6 5
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 25 FINANCIAL RISK MANAGEMENT (CONTINUED)
Weighted
Average
Interest
Rate
Financial Liabilities
Bank Overdrafts
Bank Loans
Trade & Other Payables
Total financial liabilities at amortised
cost
Consolidated 2009
Financial Assets
Receivables
Loans receivable
Convertible notes
Loans and receivables
Cash
Available-for-sale financial assets
Financial assets at fair value through
profit
or loss - held for trading (derivatives)
Total financial assets
Financial Liabilities
Bank Overdrafts
Bank Loans
Trade & Other Payables
Lease & Hire Purchase Liabilities
Total financial liabilities at amortised
cost
9.3%
6.1%
0.0%
0.0%
9.3%
11.6%
0.0%
0.0%
0.0%
10.7%
6.8%
0.0%
7.0%
Note
20
22(a)
19
10
10
10
9
13b
18
20
22(a)
19
20 & 26
Fixed Interest Rate
Maturing
Within 1 Year 1 to 5 Years
Non-Interest
Bearing
Total
Floating
Interest
Rate
$000s
$000s
$000s
$000s
$000s
2,944
-
-
-
18,500
-
21,444
-
149
-
149
-
-
-
149
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,331
2,331
-
-
-
-
2,331
-
413
413
2,112
-
-
2,112
191
2,411
288
5,002
155
12,100
-
-
12,255
-
-
-
23
-
-
-
-
-
-
692
-
23
-
692
2,944
18,500
413
21,857
2,112
149
2,331
4,592
191
2,411
288
7,482
155
12,100
692
23
12,970
Fair Value
The carrying values of financial assets and liabilities listed above approximate their fair value except for Convertible notes which have a fair value of
$4,065,000 (2009 $2,375,000) and non-current loans receivable which have a fair value of $4,083,000 at the end of the reporting period.
Estimated discounted cash flows were used to measure fair value, except for fair values of financial assets that were traded in active markets that are
based on quoted market prices.
The Group's investments and obligations expose it to market, liquidity and credit risks. The nature of the risks and the policies the Group has for controlling
them and any concentrations of exposure are discussed as follows:
(i) Hierarchy
The following tables classify financial instruments recognised in the statement of financial position of the group according to the hierarchy stipulated in
AASB 7 as follows:
- Level 1 - the instrument has quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2 - a valuation technique is used using inputs other than quoted prices within Level 1 that are observable for the financial instrument, either
directly (i.e. as prices), or indirectly (i.e. derived from prices); or
- Level 3 - a valuation technique is used using inputs that are not based on observable market data (unobservable inputs).
P A G E 6 6
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 25 FINANCIAL RISK MANAGEMENT (CONTINUED)
Group - 2010
Assets
Fair value through profit or loss
Derivatives
Available for sale financial assets:
Listed equity securities
Unlisted equity securities
Level 1
Level 2
Level 3
Total
52
1,105
-
1,157
76
-
-
76
-
-
-
-
128
1,105
-
1,233
Financial risk Management
The Board of Directors has overall responsibility for the establishment and oversight of the financial risk management framework. PPK Group's activities
expose it to a range of financial risks including market risk, credit risk and liquidity risk. The Group's risk management policies and objectives are therefore
designed to minimise the potential impacts of these risks on the results of the Group where such impacts may be material. The Board receives monthly
reports, which it reviews and regularly discuss the effectiveness of the processes put in place and the appropriateness of the objectives and policies to
support the delivery of the Group's financial targets while protecting future financial security.
The Board also has in place informal policies over the use of derivatives and does not permit their use for speculative purposes.
(a) Market risk
Market risk is the risk that the fair value of future cash flows of the Group's financial instruments will fluctuate because of changes in market prices.
Market risk comprises three types of risk: interest rate risk, equity price risk and currency risk.
(i) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a security, will fluctuate due to changes in interest rates. Exposure to interest risk
arises due to holding floating rate interest bearing liabilities, investments in cash and cash equivalents and loans to related parties and other persons.
Although a change in the current market interest rate may impact the fair value of the Group's fixed interest financial liabilities and other receivables,
it does not impact the Group profit after tax or equity as these financial liabilities and other receivables are carried at amortised cost and not fair value
through profit or loss. Floating interest rates attached to the Group's and parent's financial assets and liabilities give rise to cash flow interest
rate risk. Any changes in the current market rate will affect the cash flows payable on floating rate interest bearing liabilities and hence impact the
Group's profit after tax.
Sensitivity disclosure analysis
The Group's exposure to its floating interest rate financial assets and liabilities is as follows:
Financial Assets
Cash
Receivables
Financial Liabilities
Bank overdraft
Bank Loans
Net Exposure
The group has performed sensitivity analysis relating to its interest rate risk based on the Group's year end
exposure. This sensitivity demonstrates the effect on after tax results and equity which could result from a
movement in interest rates of +/- 1%.
Change in after tax profit
- increase in interest rate by 1%
- decrease in interest rate by 1%
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
-
-
-
2,944
18,500
21,444
(21,444)
-
149
149
155
12,100
12,255
(12,106)
(150)
150
(85)
85
P A G E 6 7
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FOR THE YEAR ENDED 30 JUNE 2010
NOTE 25 FINANCIAL RISK MANAGEMENT (CONTINUED)
(ii) Equity Price risk
Equity securities price risk is the risk that changes in market prices will affect the fair value of future cash flows of the Group's financial instruments.
The group is exposed to equity price risk through the movement in share prices of the companies in which it is invested. These are determined by market
forces and and are outside control of the group. The risk of loss is limited to the capital invested in relation to shares and options held.
The market value of listed companies fluctuate and the fair value of the available-for-sale financial assets and derivatives of the group changes
continuously.
Changes in fair value of available-for-sale financial assets are recognised through the asset revaluation reserve unless the there is objective evidence that
available-for-sale financial assets have been impaired. Impairment losses are recognised in profit or loss.
Unlisted investments do not have a quoted price in an active market and their fair value cannot be reliably measured, so they remain valued at cost after
their initial recognition.
However when there is objective evidence of impairment of these unlisted investments, such impairment losses are recognised in profit or loss.
The value of unlisted investments the end of the reporting period was nil as the group considers that there is little or no likelihood of any return from
these investments.
The group also has investments by way of derivates in listed companies, these are held as options. Any gains or losses in the fair values of these derivatives
are taken directly to profit or loss for the year.
The Group's portfolio of investments in listed companies is concentrated in small number of companies. The individual performances of these companies
exposes the group to a greater concentration of risk than just that of general market forces if a more wide-spread portfolio were held. However, because
of this concentration of holdings the Directors are able to regularly monitor the performance of the companies within its portfolio, Cool or Cosy Ltd and
Frigrite Ltd that became associated companies during the year.
Sensitivity disclosure analysis
The Group's and parent's exposure to equity price fluctuations on the fair value of its available-for-sale financial assets and derivatives is as follows:
Financial Assets
Available-for-sale financial assets
Investments in listed companies
Derivatives
Options in listed companies
The Group has performed sensitivity analysis relating to its exposure equity price risk based on it's year end
asset holdings. This sensitivity demonstrates the effect on after tax results and equity which could result from
a movement in equity prices at year end of +/- 10%.
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
1,105 2,411
128 288
1,233 2,699
14
(14)
Change in after tax profit
- increase in equity price by 10%
- decrease in equity price by 10%
Change in equity
- increase in equity price by 10%
- decrease in equity price by 10%
(iii) Currency Risk
Currency risk is the risk that the fair value or future cash flows of a financial item will fluctuate as a result of movements in international exchange rates.
The Group is exposed to exchange rate transaction risk on foreign currency sales and purchases primarily with respect to the United States dollar (USD).
Of the total sales revenue for the Group some 33% (2009 40%) is in export sales, all sales from 1 January 2009 are designated in AUD thus limiting the
currency risk exposure.
The group does not take forward cover or hedge and was therefore at risk in relation to foreign currency movements during the year.
The group has maintained a USD bank account for receiving payments (if any) from trade receivables and making payment to trade payables.
The account is held with a major Australian Bank, which limits the group's exposure to credit risk associated with this deposit.
143
(143)
73
(73)
219
(219)
P A G E 6 8
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 25 FINANCIAL RISK MANAGEMENT (CONTINUED)
Sensitivity disclosure analysis
The Group's exposure to currency fluctuations on its USD assets and liabilities at year end is as follows:
Financial Assets
Cash and cash equivalents
Trade receivables
Financial Liabilities
Other payables
Net exposure
The group has performed sensitivity analysis relating to its foreign currency exposure on year end amounts
that are not hedged. This sensitivity demonstrates the effect on after tax results and equity which could result
from a movement in AUS against the USD at year end of +/- 10%.
Change in after tax profit
- AUD strengthens against USD by 10%
- AUD weakens against USD by 10%
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
16
-
16
188
-
188
-
-
16
188
(2)
2
(12)
15
(b) Credit Risk
The group's maximum exposure to credit risk is generally the carrying amount net of any provisions for doubtful debts. The Groups exposure is minimised by
the fact that the trade receivables balance is with a diverse range of Australian and Multi-national customers. The Group has in place informal policies for
establishing credit approval and limits so as to manage the risk.
The group also has a credit risk exposure in relation to cash at bank. The group's policy is ensure funds are placed only with major Australian banks
thus minimising the group's exposure to this credit risk.
The group's credit risk relating to tenants is primarily the risk that they will fail to honour their lease agreements. The lease agreements with the Arndell Park
and Dandenong properties are secured by a guarantee from the head entity, Visy Industrial Plastics Pty Ltd, and the lease in relation to the Seven Hills property
is supported by a bank guarantee.
Loans receivable from the associate entity PPK Willoughby Funding Unit Trust are secured by a registered first mortgage over property owned by that entity.
Convertible notes in listed companies have a first or second ranking fixed and floating charge over all the assets of the issuing companies and their
subsidiaries.
Trade and other receivables that are neither past due or impaired are considered to be of high credit quality. Refer to note 10 for detail the Group's trade and
other receivables.
The group's exposure to credit risk at the end of the reporting period by country of loans and receivables is as follows:
Loans and receivables by country
Australia
United States of America
United Kingdom
Germany
Indonesia
New Zealand
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
14,401
204
142
5
2
16
14,770
4,453
101
35
-
-
3
4,592
P A G E 6 9
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 25 FINANCIAL RISK MANAGEMENT (CONTINUED)
The groups exposure to credit risk at the end of the reporting period by industry of loans and receivables is as follows:
Loans and receivables by industry
Property development
Plastic Packaging
Mining Equipment
Insulation and air-conditioning
Retail franchising
Manufacturing
Property and investing
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
9,370
349
946
1,236
852
1,997
20
14,770
-
637
922
1,366
1,172
245
250
4,592
(c) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities.
The Group’s objective to mitigate liquidity risk is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts,
bank loans and hire purchase contracts.
The Group's exposure to liquidity risk is not significant based on available funding facilities and cash flow forecasts.
Details of the groups financing facilities are set-out in note 22.
Financial Liabilities maturity analysis
The tables below reflect the undiscounted contractual settlement terms for the groups financial liabilities of a fixed period of maturity, as well as the
earliest possible settlement period for all other financial liabilities. As such the amounts may not reconcile to the statement of financial position. Bank
loans provided by the NAB are subject to an annual review with the next review date being 30 November 2011, with the facilities requiring renewal on 30
November 2011 and 30 November 2013.
In August 2010 the NAB confirmed that they would extend current facilities to 30 November 2011 in relation to the bank overdraft and 30 November 2013
in relation to the bank loans.
Bank overdraft facility is provided by the NAB with the current facility expiring on 30 November 2011.
The renewal dates that were applicable at the end of the reporting period have been used for disclosure of maturity dates of bank overdraft and loans.
Even though the facilities are subject to an annual reviewit is considered more appropriate to use the renewal dates as there is no reason to believe that
the facilities will be altered by the bank at the time of annual review.
Carrying
amount
< 6 months 6 - 12 months
1 - 3 years
> 3 years
Contractual
Cash flows
Consolidated 2010
Financial Liabilities (current & non-current)
Non derivatives
Trade, Other Payables
Bank Loans & overdrafts
413
21,444
413
3,625
Total Financial Liabilities
21,857
4,038
Consolidated 2009
Financial Liabilities (current & non-current)
Non derivatives
Trade, Other Payables
Bank Loans & overdrafts
Hire Purchase Liabilities
Total Financial Liabilities
P A G E 7 0
692
12,255
23
12,970
692
487
23
1,202
-
567
567
-
325
-
325
-
18,972
18,972
-
12,371
-
12,371
-
-
-
-
-
-
413
23,164
23,577
692
13,183
23
13,898
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 26
HIRE PURCHASE AND LEASE COMMITMENTS
(a) Hire Purchase commitments payable:
- not later than 1 year
- later than 1 year but not later than 5 years
Minimum hire purchase payments
Less: Future finance charges not
provided in the financial statements
Total hire purchase liability
Provided in the financial statements as:
Current liabilities
(b) Operating lease commitments
Operating lease rentals 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
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
-
-
-
-
-
-
82
13
-
95
23
-
23
-
23
23
51
-
-
51
The Group leases premises in Nowra under non cancellable operating leases. The terminating date of the leases is 31 January 2011 and 31 January 2012,
the Group has an option to renew the lease expiring in 2011 for a further period of 1 year, there is no option renewal on the lease expiring in 2012.
There are no contingent rentals as part of finance lease arrangements and no restrictions on the ability of PPK Group Ltd and its subsidiaries from
borrowing further funds or paying dividends.
NOTE 27
CONTINGENT LIABILITIES
(a) Group
Cross guarantees of the Group's banking and finance facilities totalling $26,080,000 (2010: $26,080,000) of which $21,444,000 (2009: $12,255,000)
was drawn at the end of the reporting period.
NOTE 28
SEGMENT INFORMATION
The group has adopted AASB 8 Operating Segments from 1 July 2009 whereby segment information is presented using a "management approach", i.e.
segment information is provided on the same basis as information used for internal reporting purposes by the chief operating decision makers. There
has been no changes to the reporting segments following the amendment to the standard. Information regarding segment assets is not provided to the
Directors. As such, the group has early adopted the amendment to AASB 2009-5 so that segment asset information need not be disclosed.
Operating segments have been determined on the basis of reports reviewed by the Directors. The Directors are considered to be the chief operating
decision makers of the group. The reportable segments are as follows:
- The Investment property segment owns the properties from which the Group previously carried out its manufacturing operations.
These properties were retained and leased at commercial rents to the purchasers of those businesses.
- The Investment segment owns primarily listed and some unlisted investments and has also made loans from which earns income and capital
growth. Investments in associate companies are included in this segment.
- The Mining equipment segment manufactures portable underground mining equipment.
P A G E 7 1
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 28 SEGMENT INFORMATION (CONTINUED)
(a) Year ended 30 June 2010
Segment revenue from external customers
Sales revenue
Rental income
Interest received
Dividends received
Segment other income
Net gain on disposal of rental property
Other segment income
Total Revenue and other income
Segment net profit
Reconciliation of segment net profit to group net profit before tax
Amounts not included in segment profit but reviewed by the Board
Share of loss from associates accounted for using the equity method
Unallocated corporate expenses
Unallocated interest expense
Consolidated operating profit before income tax
Income tax (expense)
Consolidated profit after income tax
(b) Year ended 30 June 2009
Segment revenue from external customers
Sales revenue
Rental income
Interest received
Dividends received
Segment other income
Net gain on disposal of rental property
Other segment income
Total Revenue and other income
Segment net profit
Reconciliation of segment net profit to group net profit before tax
Amounts not included in segment profit but reviewed by the Board
Unallocated corporate expenses
Unallocated interest expense
Consolidated operating profit before income tax
Income tax (expense)
Consolidated profit after income tax
P A G E 7 2
Investment
Properties
$000s
Investing
$000s
Mining
Equipment
Manufacturing
$000s
Total of
Continuing
Operations
$000s
-
3,109
-
-
3,109
2,184
-
2,184
5,293
1,778
-
-
1,158
59
1,217
4,746
-
-
-
4,746
-
1,710
1,710
2,927
-
-
-
4,746
2,195
208
4,746
3,109
1,158
59
9,072
2,184
1,710
3,894
12,966
4,181
(684)
(1,133)
(1,118)
1,246
(484)
762
Investment
Properties
$000s
Investing
$000s
Mining
Equipment
Manufacturing
$000s
Total of
Continuing
Operations
$000s
-
4,776
-
-
4,776
13
-
13
4,789
4,006
-
-
428
47
475
4,867
-
-
-
4,867
-
137
137
612
-
70
70
4,937
(2,295)
1,062
4,867
4,776
428
47
10,118
13
207
220
10,338
2,773
(1,306)
(1,006)
461
79
540
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 28 SEGMENT INFORMATION (CONTINUED)
(c) Geographic location of Customers
The group operates in Australia the mining equipment manufacturing segment but has sales revenue from customers located overseas.
Other income is with customers based in Australia
Additional disclosure of sales revenue by geographical location is as follows:
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
Australia
China
Germany
United States of America
United Kingdom
New Zealand
Other countries
3,168
-
138
581
559
150
150
4,746
2,899
842
507
418
113
-
88
4,867
The geographical location of receivables, relating to these sales, is disclosed in Note 25 of these financial statements.
All Non-current receivables are from customers based in Australia.
Rental income of $2,717,000 (2009 $3,835,000) was derived from a group of companies with common parent ownership. These revenues are attributable
to the investment property segment.
NOTE 29
RELATED PARTIES
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless
otherwise stated.
Transactions are inclusive of GST.
Transactions with related parties:
(a) Share transactions of directors:
Directors and director-related entities have acquired or disposed of ordinary shares in the Parent entity during
the financial year as follows :
PPK Group Limited - acquired
PPK Group Limited - disposed
Net movement
Directors and director-related entities hold directly, indirectly
or beneficially as at the end of reporting period the following equity
interests in the group:
2010
No.
000s
2009
No.
000s
768
(157)
611
1,593
(700)
893
PPK Group Limited - ordinary shares
11,132
11,132
P A G E 7 3
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FOR THE YEAR ENDED 30 JUNE 2010
NOTE 29 RELATED PARTIES (CONT.)
(b) Associated companies
Interest Revenue
Frigrite Limited
Cool or Cosy Limited
PPK Willoughby Funding Unit Trust
Dividend Revenue
Frigrite Limited
Fees received
Frigrite Limited
PPK Willoughby Funding Unit Trust
Loans advanced to associates
Frigrite Limited
PPK Willoughby Funding Unit Trust
Subscription for new ordinary shares in associates
Frigrite Limited
Subscription for new options (derivatives) in associates
Frigrite Limited
NOTE 30
CASH FLOW INFORMATION
(a) Reconciliation of profit after income tax to the cash provided by operating activities
Profit after income tax
Cash flows in operating result attributable to non-operating activities:
Interest paid
Cash flows in operating activities but not attributable to operating result:
Payments from employee provisions
Dividends received from associated companies
Non-cash flows in operating profit:
Amortisation
Depreciation
Impairment of land & buildings
Interest received on convertible notes
Interest received on other loans
Recognition of income from rent free periods deferred on acquisition
Impairment of available-for-sale-assets
Transfers to provisions
Other Income
Share of loss from associated companies
(Profits) on sale of available for sale assets
Fair value adjustments on derivatives
Loss/(Profits) on sale of property, plant & equipment
Increase/(decrease) in tax payable
decrease/(increase) in deferred tax assets
Increase/(decrease) in deferred tax liabilities
Changes in assets and liabilities,
decrease/(increase) in trade and other debtors
decrease/(increase) in prepayments
(increase)/decrease in inventories
(decrease)/increase in trade creditors and accruals
Net cash/(used in) provided by
operating activities
P A G E 7 4
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
250 -
144 -
602 -
132 -
178 -
67 -
1,877
8,700
2,244
123
762
1,118
-
-
-
540
1,159
(585)
(145)
132 -
113
888
-
(31)
80
918
1,159
(104)
(603)
(55)
107
1,696
700
226
1,392
(67)
-
684 -
(132)
1,059
(13)
(136)
(130)
(619)
(1,022)
(380)
(2,184)
(272)
164
(277)
(704)
(55)
40
(279)
724
(793)
7
(320)
(348)
2,966
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 30 CASH FLOW INFORMATION (CONTINUED)
(b) Reconciliation of Cash
For the purposes of the statement of cash flows, cash includes:
Cash on hand
Call deposits with financial institutions
Bank overdrafts - secured
(c) Non-cash Financing and Investing Activities
During the financial year, the group had an the following non cash adjustments,
Conversion of convertible notes to available-for-sale financial assets
CONSOLIDATED CONSOLIDATED
ENTITY
2010
$000s
ENTITY
2009
$000s
3 3
188
20
(155)
(2,944)
(2,921)
352
352
36
-
-
NOTE 31
EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD
Investment Properties
The investment property at Kirrawee New South Wales has had a contract for sale exchanged for a sale price of $8.25 million. The contract is due for
settlement at the end of October 2010, a profit before tax of approximately $1.45 million will be recorded on this sale.
PPK Properties Pty Ltd is in litigation with the tenant of Arndel Park, Sydney property over the validity of the lease on this property. It is anticipated
that the dispute will be determined by the Court in November 2010. The lease is due to expire in August 2013.
In August 2010 the National Australia Bank confirmed an extension of the bank finance facility (as disclosed in note 25). As part of this review and
extension the NAB has removed the registered first mortgage it held on the property at Kirrawee, New South Wales and taken an registered first
mortgage against the land & buildings at Arndell Park, New South Wales.
Investing Activities
The volatility of the Australian securities market in the future could impact upon the value attributed to the group's investments in listed companies, in
future reporting periods.
No other matters or circumstances have arisen since the end of the period which significantly affected the operations of the group, the results
of those operations or the state of affairs of the group in the financial year subsequent to 30 June, 2010.
P A G E 7 5
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DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2010
The Directors of the Company declare that:
1.
The Financial Statements comprising the Statement of Comprehensive Income, Statement of Financial Position, Statement of Cash Flows, Statement
of Changes in Equity and accompanying Notes to the Financial Statements are in accordance with the Corporations Act 2001 and:
(a) comply with Accounting Standards and the Corporations Regulations 2001; and
(b) give a true and fair view of the consolidated entity’s financial position as at 30 June 2010 and of its performance for the year ended on that date.
The Company has included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial
Reporting Standards.
In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
The remuneration disclosures included on pages 11 to 17 of the Directors’ Report (as part of the audited Remuneration Report), for the year ended
30 June 2010, comply with section 300A of the Corporations Act 2001.
The Directors have been given the declarations by the chief executive officer and the person performing the chief financial officer function required
by section 295A of the Corporations Act 2001.
2.
3.
4.
5.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by:
Colin Ryan
Director
Sydney, 28 September 2010
Glenn Molloy
Director
P A G E 7 6
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
INDEPENDENT AUDITOR’S REPORT
P A G E 7 7
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P A G E 7 8
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AUDITOR’S INDEPENDENCE DECLARATION
P A G E 7 9
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PPK GROUP LIMITED AND SUBSIDIARIES
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
1. Shareholding
(a) Distribution of shareholders at 20th August 2010
Category (size of holding)
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Number of
Shareholders
2010
000s
Number of
Shareholders
2009
000s
132
415
350
457
54
138
456
368
492
49
1,408
1,503
(b) The number of shareholdings held in less than marketable parcels is 147
(c) The names of the substantial shareholders listed in the holding company's register at the 20th August 2010
Corso Investments Pty Ltd
ANZ Nominees Ltd
Equipment Co of Australia Pty Ltd
Applied Colour Pty Limited
John E Gill Operations Pty Ltd
(d) Voting rights
The consolidated entity has one class of ordinary shares with equal voting rights attached to them.
Number
of shares
000s
2010
10,998
7,281
6,618
1,970
1,569
Number
of shares
000s
2009
10,289
8,664
6,618
2,200
1,569
(e) Twenty largest shareholders
Name
John E Gill Operations Pty Ltd
Number of
ordinary fully
paid shares
held
000s
10,998
1 Corso Management Pty Ltd
7,281
2 ANZ Nominees Ltd
6,618
3 Equipment Co of Australia Pty Ltd
1,970
4 Applied Colour Pty Limited
1,569
5
1,059
6 Metal Industries Pty Ltd
698
7 Contemplator Pty Ltd
635
8 Ruminator Pty Ltd
609
9 Citicorp Nominees Pty Limited
500
10 Ryan Consultancy Group Pty Ltd
11 Flagstaff Superannuation Pty Ltd
470
12 Mr Robert Joseph Faulks & Mrs Patricia Baynton Faulks 439
425
13 Mr Ian MacDonald
14 Ms Alison Irving
342
300
15 Mr Charles Peter Taylor
300
16 Chandos Nursing Home Pty Ltd
281
17 Bell Potter Nominees Ltd
262
18 Mr Edward James Stephen Dally & Mrs Selina Dally
260
19 Majana Pty Ltd
255
20 Mrs Patricia Baynton Faulks
Percentage
held of listed
ordinary
capital
%
18.94
12.55
11.41
3.40
2.71
1.83
1.20
1.10
1.05
0.86
0.81
0.76
0.73
0.59
0.52
0.52
0.48
0.45
0.45
0.44
P A G E 8 0
35,271
60.79
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P P K G R O U P L I M I T E D A N N U A L R E P O R T 2 0 1 0
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
2. The name of the company secretary is
Mr Robert Nicholls.
3. The address of the principal registered office in Australia is
25-27 Waratah Street, Kirrawee, NSW 2232
Telephone (02) 9521 8444
Fax (02) 9521 4561
Email info@ppkgroup.com.au
4. Registers of securities are held at the following addresses:
New South Wales
Registries Limited
Level 7
207 Kent Street, Sydney NSW 2000
Telephone 1300 737 760
Fax: 1300 653 459
Email: registries@registries.com.au
5. Security Exchange Listing
Quotation has been granted for all the ordinary shares of the company on all Member Exchanges of the
Australian Securities Exchange Ltd.
P A G E 8 1
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CORPORATE DIRECTORY AS AT 29 SEPTEMBER 2010
DIRECTORS
Colin Ryan
B.Com.,Dip.Ed.,CA
DIRECTOR AND CHAIRMAN
(non-executive)
Glenn Molloy
DIRECTOR executive
Raymond Beath
B.Com.,F.C.A
DIRECTOR (non-executive)
Jury Wowk
B.A., LL.B
DIRECTOR (non-executive)
COMPANY SECRETARY
Robert Nicholls
MBA (Distinction), LL.B (Hons)
Grad Dip Leg Prac., Grad Dip CSP, FCIS,
GAICD
HEAD OFFICE &
REGISTERED OFFICE
PPK Group Limited
25-27 Waratah Street
Kirrawee NSW 2232
Telephone 02 9521 8444
Facsimile 02 9521 4561
www.ppkgroup.com.au
SHARE REGISTRY
Registries Limited
Level 7, 207 Kent Street
Sydney NSW 2000
Telephone 02 9290 9600
Facsimile 02 9279 0664
www.registries.com.au
AUDITORS
BDO Audit (NSW-VIC)
Allianz Centre
2 Market Street
Sydney NSW 2000
Telephone 02 9286 5555
Facsimile 02 9286 5599
PPK GROUP PROPERTIES
New South Wales
8 Contaplas Street
Arndell Park NSW 2148
14 Contaplas Street
Arndell Park NSW 2148
13A Station Road
Seven Hills NSW 2147
25-27 Waratah Street
Kirrawee NSW 2232
Victoria
36-42 Hydrive Close
Remington Industrial Estate
Dandenong South VIC 3175
PPK GROUP BUSINESSES
New South Wales
Rambor Pty Limited
108 Albatross Road
South Nowra NSW 2541
Telephone 02 4422 6323
Facsimile 02 4422 5423
www.rambor.com.au
PPK-cover-hi-res.pdf 1 2/09/10 5:15 PM
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M
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CM
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CMY
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