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PROPERTY DEVELOPMENT
Annual Report 2012
Contents
Chairman & Executive Director’s Overview
Five Year Financial Summary
Corporate Governance Statement
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Financial Statements
Independent Auditor’s Report
Shareholder Information
Corporate Directory
PPK GROuP LIMITED | ABN 65 003 964 181
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Annual General Meeting
The 2012 Annual General Meeting of
PPK Group Limited will be held at 3.00pm
on Tuesday, 20 November 2012 at The Grace
Hotel, 77 York Street, Sydney NSW Australia
ASX
PPK
Website
www.ppkgroup.com.au
Share Registry
www.boardroomlimited.com.au
In the 2012 year, PPK Group Limited (PPK) has achieved a significant turnaround in performance
reporting a profit after tax of $1,543,000 compared to a loss after tax for the 2011 year of
$2,515,000, an improvement of $4,058,000.
INDUSTRIAL PROPERTIES
PPK has continued to manage its remaining three industrial
properties located at Arndell Park, Seven Hills and
Dandenong South.
PROPERTY DEVELOPMENT
PPK has continued to expand its involvement
in property developments.
RAMBOR – MINING SERVICES
Rambor had another strong year in 2012 achieving its budgeted sales and earnings.
Sales were up by 26.4% while earnings remained relatively static as a result of the
product mix.
PPK will continue to explore suitable investment and growth
opportunities which have the potential to add value for its
shareholders.
FINANCIAL HIGHLIGHTS
Sales revenue from Continuing Operations ($000s)
Rental income from Investment Properties ($000s)
Profit before Income Tax ($000s)
Profit after Tax ($000s)
Earnings Per Share (cents)
3%
26.4%
7,711 5
2,211 5
1,968 5 Loss to Profit
1,543 5 Loss to Profit
2.9 5 Loss to Profit
1
PPK GROUP LIMITED
ANNUAL REPORT
ChAIRMAN AND ExECUTIVE DIRECTOR’S OVERVIEw
PPK will continue to explore suitable investment and
growth opportunities which have the potential to add
value for its shareholders.
2
JuRY WOWK CHAIRMAN
GLENN MOLLOY EXECUTIVE DIRECTOR
In the 2012 year, PPK Group Limited (PPK)
has achieved a significant turnaround in
performance reporting a profit after tax of
$1,543,000 compared to a loss after tax for
the 2011 year of $2,515,000, an improvement
of $4,058,000.
PPK’s continuing business operations can now be identified as:
•
Industrial properties.
• Rambor – mining services.
•
•
Property development.
Financing.
During the year PPK continued to actively participate and assist
in the administration process and recapitalisation of:
FRR Limited (formerly Frigrite Limited) (FRR);
•
•
ISL Limited (formerly Intelligent Solar Limited) (ISL); and
• Allied Brands Limited (ABQ).
Both FRR and ISL entered into Deeds of Company Arrangement,
were recapitalised and their administrations completed.
FRR has relisted on the ASX and ISL is in the process of doing so.
PPK retains shareholdings in both FRR and ISL which shareholdings
will realise a return to PPK when disposed of at the appropriate
time.
PPK also still retains a shareholding and convertible note
holding in ABQ which is currently progressing through a Deed of
Company Arrangement which should be effectuated during the
2013 year. This will achieve a relisting of ABQ on the ASX and a
return on the shareholding and convertible note holding of PPK.
Industrial Properties
PPK has continued to manage its remaining three industrial
properties located at Arndell Park, Seven Hills and Dandenong
South.
The Dandenong South property remains fully leased to PACT
Group Pty Ltd until August 2015. PPK will continue to explore
the prospects of selling the property at the right time and at the
right price.
The Seven Hills property will be vacated by the existing tenant
on expiry of the current lease at the end of October 2012. The
property will then be refurbished and marketed for lease or sale.
The Arndell Park property was leased on a number of short
term tenancies which whilst covering outgoings and expenses
associated with the property made a minimal contribution
to earnings.
On 17 September 2012, the subsidiary companies which own
the vacant land and the industrial property at Arndell Park
entered into binding contractual agreements in relation to the
properties pursuant to which agreements:
•
•
the industrial property was leased for a term of five years
with two five year options at a commencing rental of
$1.1 million per annum plus outgoings with minimum
annual 4% increases; and
Put and Call Options were granted which, depending on
the decisions of the purchaser and PPK have an effective
end date of 15 July 2014.
Assuming an exercise of either the Put or the Call Option the net
proceeds of sale will be approximately $12.2 million against a
book value of $12.7 million, an impairment of $500,000.
In the event that the tenant exercises the Call Option during
the 2013 year (and depending on what stage of the year),
the sale will result in a maximum loss of $300,000 or a small
profit from the property during the 2013 year. This is as a result
of the blending of the impairment with rental income and/or
interest savings.
3
On a full year basis:
•
assuming an exercise of the Put or the Call Option and
the sale proceeds being applied to retire debt, interest
savings will then add 1.0 cents per share to earnings; or
•
if the property remains leased the rental income and
the outgoings recovery will add 1.5 cents per share
in earnings.
Rambor – Mining Services
Rambor had another strong year in 2012 achieving its
budgeted sales and earnings. Sales were up by 26.4%
while earnings remained relatively static as a result of the
product mix.
Rambor has continued to develop and extend its
relationship with Hilti Corporation as well as its product
range and distribution coverage into new geographic
markets.
Rambor’s success and reputation as a leading
manufacturer and supplier of mining equipment to the
coal industry are a credit to its management team and their
dedicated workforce.
Initial expectations for the 2013 year were for continued
growth in sales and earnings, however, on present
indications these may possibly be impacted by the current
slow down in the resources sector.
Property Development
PPK has continued to expand its involvement in property
developments.
PPK has continued its investments and involvement in the:
•
Kiah Willoughby Project; and
•
Nerang Street Southport Project.
The Kiah Willoughby project in which PPK holds an 18.28%
interest, although delayed by the extended wet weather
experienced in Sydney, remains on track to deliver the
expected returns.
The 14 Stage 1 homes are scheduled for completion and
settlement of sales in October 2012 at which time profits
will commence to flow through to PPK.
The Development Application for the 16 Stage 2 homes
has been approved by Council, 13 of the homes have been
presold, construction finance approved and construction
will commence in November 2012.
Infrastructure works, including the park are well advanced
and the Development Application for Stages 3 and 4 has
been lodged and is progressing through the system.
PPK and EDG Capital who is coordinating the project with
PPK remain confident that this project will meet all its
financial expectations.
PPK has a lead role and a 25% interest in the Nerang Street
Southport project.
PPK Southport Pty Ltd is finalising contractual arrangements
for acquisition of an adjoining property which will enhance
the commercial viability of the project site.
Rental income earned from leasing the site to a car park
operator largely covers the holdings costs on the site whilst
negotiations continue with:
•
prospective end users should it be decided to proceed
to develop the site; and
•
parties who have expressed an interest in acquiring the
site, which if appropriate terms are agreed, would be
on sold without development.
Through its subsidiary, PPK Easy Living Pty Ltd, PPK has
coordinated the:
•
establishment of two syndicates; and
•
purchase of two retirement villages.
PPK holds a 50% interest in each of the:
Easy Living unit Trust (ELUT); and
•
•
Easy Living Bundaberg Trust (ELBT).
4
PPK GROUP LIMITED ANNUAL REPORT Outlook
PPK has started FY 2013 on a strong footing with expectations
of further improvement in earnings compared to FY 2012.
If expectations are met PPK will be in a position to resume
payment of fully franked dividends and provide an improving
return to shareholders.
Jury Wowk
Chairman
Glenn Molloy
Executive Director
ELuT has completed the acquisition of a profitable 60 unit
retirement village in Elizabeth Vale, South Australia which
will be strata titled and resold.
ELBT is in the process of acquiring a profitable 54 unit
retirement village in Bundaberg, Queensland which will
also be strata titled and resold.
PPK anticipates a positive contribution to earnings from each
of ELuT and ELBT, both whilst renting the retirement villages
and then on resale of the strata titled units.
Financing
Through its subsidiary, PPK Finance Pty Ltd, PPK has:
•
•
coordinated the establishment of the SLOT Loan Trust; and
established the TMD Loan Trust.
PPK holds a 51.4% interest in the SLOT Loan Trust which has
provided secured, by first mortgage finance to Supported
Living on Tweed Pty Ltd, a non associated party operating
retirement villages in northern NSW and Queensland.
The secured finance facilities were settled in August with the
establishment fee received and the first year’s interest pre paid.
Accordingly, the SLOT Loan Trust will deliver an immediate
earning contribution to PPK.
PPK currently holds a 100% interest in the TMD Loan Trust which
was established to provide finance to TMD Investments Pty
Ltd a member of the SubZero Group, a leading mining services
provider in the Hunter Valley. The finance facility is secured by
first mortgage over a new mining truck maintenance facility at
Muswellbrook which will significantly enhance the capability
and services provided by SubZero Group.
The first tranche of the TMD Loan Trust facility was settled
in September 2012 and the establishment fee and interest
income received will deliver immediate earnings contributions
to PPK in FY 2013.
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PPK will continue to explore
suitable investment and growth
opportunities which have the
potential to add value for its
shareholders.
$2,211,000
RENTAL INCOME
$7,711,000
SALES REVENUE
$52,179,000
TOTAL ASSETS
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PPK GROUP LIMITED ANNUAL REPORT FIVE YEAR FINANCIAL SUMMARY
Consolidated
Income Statement
Sales Revenue
Rental Income
Profit (loss) Before Income Tax
Net profit (loss) attributable to members of PPK Group Limited
Balance Sheet
Total assets
Net debt
2012
2011
2010
2009
2008
$000s
$000s
$000s
$000s
7,711
2,211
6,102
2,146
4,746
3,109
1,968
(1,691)
1,246
1,543
(2,515)
762
4,867
4,776
461
540
4,251
4,396
702
607
$000s
52,179
50,453
57,427
50,184
64,144
$000s
12,346
9,893
21,444
12,087
21,069
Equity attributable to members of PPK Group Limited
$000s
29,206
29,782
34,794
35,449
38,309
Total equity
Share information
Dividends on ordinary shares
Dividends paid during reporting period per ordinary share
Dividend payout ratio
$000s
29,208
29,782
34,794
35,449
38,309
$000s
1,298
1,128
1,450
2,759
6,998
cents
%
2.5
84
2.0
n/a
2.5
190
4.75
511
11.5
1,153
Number of ordinary shares issued at year end
000s
51,625
53,813
58,007
58,007
59,253
Market capitalisation
Ratios and statistics
Return on equity attributable to members of PPK Group Limited
Basic earnings per share
Net debt/equity
Debt/(Equity-Intangibles)
Interest cover on continuing operations
Net Tangible Assets per Share
$000s
19,618
16,144
22,623
16,242
41,477
%
cents
%
%
times
cents
5.3
2.9
42.3
44.4
2.43
53.8
(8.4)
(4.5)
33.2
34.1
3.02
54.0
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
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CORPORATE GOVERNANCE
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.
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.
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.
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: Companies should establish the functions
reserved to the board and those delegated to senior executives
and disclose those 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;
appointing, removing and controlling the Executive Director;
the appointment and, where appropriate, the removal of the
Chief Financial Officer (“CFO”) and/or Company Secretary;
input into and final approval of the corporate strategy and
performance objectives;
approving systems of risk management and internal
compliance and control, codes of conduct and legal
compliance;
• 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 Executive 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;
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• developing PPK’s annual budget, recommending it to the
Board for approval and managing day-to-day operations
within the budget; and
• managing day-to-day operations in accordance with
standards for social and ethical practices which have been set
by the Board.
Recommendation 1.2: Companies should disclose the process for
evaluating the performance of senior executives.
The Board is responsible for approving the performance
objectives and measures for the Executive Director and assessing
whether these objectives have been satisfied by the performance
of the Executive Director during the relevant period and in
accordance with agreed terms of engagement.
The Executive Director 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
management regarding the group financial performance and
forecasted results, presentations and operational reports, and the
achievement of predetermined performance objectives.
Recommendation 1.3: Provide the information indicated in the
Guide to reporting on Principle 1.
The Company has provided this information. 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.
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.
The PPK is comprised of 4 directors or whom Mr J I Wowk, Mr R
M Beath and Mr G D Webb are considered to be independent
directors.
Mr Glenn Molloy is an executive director and accordingly is not
considered to be independent director.
Recommendation 2.2: The chair should be an independent
director.
Mr C R Ryan, an independent director, chaired the Board until his
resignation on 1 August 2011
Mr J I Wowk, an independent director, was appointed as the
Chairman on 13 September 2011.
Recommendation 2.3: The roles of chair and chief executive officer
should not be exercised by the same individual.
The roles of chair and the Company’s executive director are not be
exercised by the same individual.
Recommendation 2.4: The board should establish a nomination
committee.
The PPK Board has not established a nomination committee.
PPK GROUP LIMITED ANNUAL REPORT Where a vacancy arises or it is considered appropriate to vary the
composition of the Board of Directors, the full Board generally
participates in any review of the Board’s composition and the
qualifications and experience of candidates. Directors are selected
upon the basis of their specialist skills and business background
so as to provide an appropriate mix of skills, perspective and
business experience.
Recommendation 2.5: Disclose the process for evaluating the
performance of the board, its committees and individual directors
The Board has adopted an on-going, self-evaluation process
to measure its own performance and the performance of its
committee and individual directors.
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.
Recommendation 2.6: Provide the information included in the
Guide to reporting on Principle 2
The Company has provided this information.
PRINCIPLE 3: Promote ethical and responsible
decision-making.
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.
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. 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;
• use the powers of their position for a proper purpose, in the
interests of the Company;
• not make improper use of information acquired in 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.
Trading Policy;
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:
•
• Market Disclosure Policy;
• Privacy Policy;
• Occupational Health & Safety Policy; and
• Code of Conduct and Ethics (General).
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
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.
RECOMMENDATION 3.2: Companies should establish a policy
concerning diversity and disclose the policy or a summary of that
policy. The policy should include requirements for the board to
establish measurable objectives for achieving gender diversity for
the board to assess annually both the objectives and progress in
achieving them.
The Company has established a Diversity Policy Statement which
is available on the Company’s website.
RECOMMENDATION 3.3: Companies should disclose in each
annual report the measurable objectives for achieving gender
diversity set by the board in accordance with the diversity policy
and progress towards achieving them.
The Company is committed to promoting a culture of diversity in
the workplace including gender diversity.
The number of women participating throughout the workplace is
reviewed on an annual basis and reported to the Board.
The Company’s policies and procedures are reviewed on an
annual basis to ensure that they adequately focus on the
participation of women in the workforce.
Women are considered for all positions in the Company extending
through to senior management and the Board as and when
opportunities or vacancies arise.
The Company aims to achieve gender diversity across all levels
of its organisation subject to the availability of suitably qualified
candidates.
RECOMMENDATION 3.4: Companies should disclose in each
annual report the proportion of women employees in the whole
organisation, women in senior executive positions and women on
the board.
The Company’s workforce organisation is comprised of 43 people
of which 6 are women.
The Company’s Accountant is a woman.
9
The Company has a Board of four of which none are women.
Recommendation 3.3: Provide the information indicated in Guide
to reporting on Principle 3.
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.
The Company has provided this information.
PRINCIPLE 4: Safeguard integrity of financial
reporting.
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 Board has established an audit committee.
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.
During the reporting period, the Board’s Audit Committee
consisted of two members, both of whom are non-executives:
• Mr R M Beath (Committee Chairman)
• Mr C F Ryan (resigned due to retirement on 1 August 2011)
• Mr J I Wowk was appointed as a member of the Audit
Committee on 1 August 2011.
During the reporting period, the PPK Audit Committee was
chaired by Mr R M Beath who was not Chairman of the Board.
Due to the size of the Company and the nature of its operations
the Board considers that an Audit Committee comprised of two
members is appropriate.
Recommendation 4.3: The audit committee should have a formal
charter.
The Board has established Terms of Reference for the Audit
Committee. The Terms of Reference set out in detail the purpose,
composition and membership, meeting procedures, roles
and responsibilities of the committee and the authorities of
the committee. The Terms of Reference are available on the
Company’s website.
Recommendation 4.4: Provide the information indicated in Guide
to reporting on Principle 4.
The Company has provided this information.
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.
The PPK Board is committed to keeping its shareholders, and the
market, fully informed of major developments having an impact
on the Company.
10
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.
Recommendation 5.2: Provide the information indicated in Guide
to reporting on Principle 5.
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
Market Disclosure Policy available at www.ppkgroup.com.au
PRINCIPLE 6: Respect the rights of shareholders.
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.
PPK has adopted a Shareholder Communication Policy. PPK
communicates information to shareholders through:
• disclosures to the ASX including the Company’s Annual
Report;
• notices and explanatory memoranda of annual general
meetings and general meetings; 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.
Recommendation 6.2: Provide the information indicated in Guide
to reporting on Principle 6.
The Company has provided this information.
PRINCIPLE 7: Recognise and manage risk.
Recommendation 7.1: Companies should establish policies for the
oversight and management of material business risks and disclose
a summary of those policies.
The Board of PPK has established a Risk Oversight and
Management Framework. In accordance with this framework the
Board of PPK:
•
recognises that effective management of risk is an integral
part of good management and vital to the continued growth
and success of PPK;
is responsible for the oversight of the group’s risk
management and control framework including the
development of risk profiles as a part of the overall business
and strategic planning process; and
•
• has implemented policies 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.
CORPORATE GOVERNANCECONTINUEDPPK GROUP LIMITED ANNUAL REPORT 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.
The PPK Risk Management and Control Policy Framework 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 group’s
risk management and control practices.
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.
The Executive Director 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 2012.
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.
The Board has received such written assurances from the
Executive Director and the person performing the chief financial
officer function in respect of the year ended 30 June 2012.
Recommendation 7.4: Companies should provide the information
indicated in the Guide to reporting on Principle 7.
The Company has provided this information.
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: The remuneration committee should be
structured so that it:
•
•
• has at least three members.
consists of a majority of independent directors;
is chaired by an independent director; and
The PPK Board has not established a formal Remuneration
Committee as PPK is a relatively small publicly listed company
and remuneration matters relating to the Executive Director
and Senior Executives are considered by the full Board where
appropriate.
Recommendation 8.3: Companies should clearly distinguish the
structure of non-executive directors’ remuneration from that of
executive directors and senior executives.
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
surveys undertaken of other public companies similar in size or
market section to PPK is taken into account.
Non-executive directors of PPK are:
• not entitled to participate in performance based remuneration
•
practices unless approved by shareholders; and
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 on a regular basis by
the full Board 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.
Recommendation 8.4: Companies should provide the information
indicated in the Guide to reporting on Principle 8.
The Company has provided this information where appropriate.
11
DIRECTORS’ REPORT
Your directors present their report on the parent entity and its subsidiaries for the financial year ended 30 June 2012.
DIRECTORS
The names of directors in office at any time during or since the financial year are:
•
Jury Ivan Wowk
• Glenn Robert Molloy
• Raymond Michael Beath
• Graeme Douglas Webb (appointed on 1 August 2011)
• Colin Francis Ryan (resigned due to retirement on 1 August 2011)
Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.
INFORMATION ON DIRECTORS
Details of the current directors’ qualifications, experience and responsibilities are detailed below:
Jury Wowk (61) BA., LLB Non-Executive Chairman, Independent Director
Member of the PPK Group Limited Board since listing on 21 December 1994.
Appointed Chairman on 13 September 2011.
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 1979.
From 1987 to 1989, Jury performed the role of Operations Manager at Plaspak Pty Ltd.
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:
•
Frigrite Limited, Non-executive Director
(Appointed: 22 September 2010; Ceased: 29 November 2011)
• Allied Brands Limited, Non-Executive Director
(Appointed: 4 February 2010; Ceased: 15 April 2010)
•
•
Intelligent Solar Limited, Non-executive Director
(Appointed: 30 November 2010; Ceased 15 December 2011)
Eureka Group Holdings Limited, Non-executive Director & Chairman
(Appointed: 30 November 2010; Ceased: 17 May 2011)
• Zylotech Limited, Non-executive Director
(Appointed: 1 April 2009; Ceased: 30 September 2009)
Glenn Molloy (57) Executive Director
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.
Glenn was appointed to the role of Executive Director in September 2009 following the
retirement and resignation of David Hoff as Managing Director.
Other listed public company directorships held in the last 3 years: Nil
12
PPK GROUP LIMITED ANNUAL REPORT
Raymond Beath (61) 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
Graeme Webb (61) Non-Executive Director
Graeme Webb is a substantial shareholder of PPK Group Limited.
Graeme is Chairman of EDG Capital Limited and has over 40 years of experience in building,
construction and property development undertaking over $200 million of projects during
his career to date.
In addition, Graeme has a broad range of business experience having acted as a director
and/or chairman of a number of private and public companies engaged in a range of
industries including plastics packaging, merchant banking, aluminium fabrication, glazing
and glass toughening.
Other listed public company directorships in the last 3 years: Nil
INFORMATION ON COMPANY SECRETARY
Mr Andrew Cooke was appointed as Joint Group Company
Secretary effective from 9 May 2012. Mr Robert Nicholls
resigned as Group Company Secretary effective 5 July 2012.
OPERATING RESULTS
The profit after tax of the consolidated entity for the
period ended 30 June 2012 amounted to $1,551,000
(2011: Loss of $2,515,000).
Details of the qualifications and experience of the
Company Secretary are detailed below:
Andrew J. Cooke (52) LL.B, FCIS
Group Company Secretary
Andrew has extensive experience in law, corporate finance
and as the Company Secretary of a number of ASX listed
companies. He is responsible for corporate administration
together with stock exchange and regulatory compliance.
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 other significant changes in the nature of
the consolidated entity’s principal activities during the
financial year.
DIVIDENDS PAID OR RECOMMENDED
Dividends paid or recommended for payment are as follows:
Interim dividend in respect of the
reporting period of 1.0 cent per ordinary
share paid on 8 June 2012:
No final dividend will be paid:
$516,926
Nil
Whilst PPK has a strong cash position, because of the
write-downs and impairments which impacted on retained
earnings in the 2010 and 2011 years, on the basis of
the ATO’s analysis of the law in ATO Ruling 2012/5 the
payment of a dividend by PPK in its current circumstances
will constitute a return of capital by PPK. A return of
capital requires shareholder approval and has differing,
and potentially complex, tax implications for individual
shareholders. In the circumstances, the directors have
resolved not to pay a final dividend for the 2012 year.
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.
13
Property
Property rental income has remained steady compared to
the 2011 year.
Future Direction and Business Outlook
In future periods, PPK will focus on the following key areas,
namely, the:
The Dandenong, Victoria property has a lease in place until
August 2015.
The Seven Hills, New South Wales property will be vacated
by the existing tenant on expiry of the current lease at
the end of October 2012. The property is currently being
marketed for lease or sale.
Rambor
Rambor performed well in the 2012 year achieving its
budgeted sales and earnings.
Rambor continues to expand its product range and to
extend its distribution coverage into new geographic
markets. However, continued growth and expansion may
possibly to be impacted by the current slowdown in the
resources sector.
PPK Willoughby Pty Ltd
The Kiah Willoughby Project in which PPK holds an 18.28%
interest, although delayed by the extended wet weather
experienced in Sydney, remains on track to deliver the
expected returns.
The 14 Stage 1 homes are scheduled for completion and
settlement of sales in October 2012 at which time profits
will commence to flow through to PPK.
PPK Southport Pty Ltd
PPK has a lead role and a 25% interest in the Nerang Street
Southport Project Trust.
The amalgamation of an adjoining site is progressing and
this amalgamation will add to the potential of the project.
PPK Easy Living Pty Ltd
PPK holds a 50% interest in each of the:
•
•
Easy Living unit Trust (ELuT); and
Easy Living (Bundaberg) Trust (ELBT).
ELuT has completed the acquisition of a profitable 60 unit
retirement village in Elizabeth Vale, South Australia will be
strata titled and re-sold.
ELBT is in the process of acquiring a profitable 54 unit
retirement village in Bundaberg, Queensland which will
also be strata titled and re-sold.
14
• progression of and active participation in the Kiah
Project in its capacity as lead manager;
•
•
consolidation and extension of Rambor market share
and expansion of its product range; and
identification of and participation in appropriate
investment opportunities, particularly in undervalued
property and retirement village assets which have
significant development potential.
FINANCIAL POSITION
The net assets of the consolidated entity have decreased
by $574,000 from 30 June 2011.
The change in net assets is not considered by the Board
to be material, however, changes in the financial position
have occurred due to:
• payment of dividends at disclosed levels; and
•
the on-market buy-back of 2,187,349 shares at a cost
of $766,000 (or an average of 35 cents per share)
pursuant to the on-market buy back scheme in place
during the reporting period the particulars of which
appear below under the heading Significant Changes in
the State of Affairs.
SIGNIFICANT CHANGES IN THE STATE OF
AFFAIRS
On-Market Buy-Back Scheme
During the reporting period, PPK had in place the following
on-market buy-back schemes:
•
•
a scheme which commenced on 20 October 2010
and concluded on 19 October 2011 and pursuant to
which a total of 1,606,441 shares were bought back
in the financial year ended 30 June 2012 for a total
consideration of $555,584; and
a scheme which commenced on 16 November 2011
and will conclude on 15 November 2012, or at such
earlier time as determined by PPK pursuant to the
terms of the buy-back. During the period from the
commencement of this scheme to the end of the
financial year ended 30 June 2012, PPK acquired a
total of 580,908 shares under the scheme at a cost
of $210,416 (or an average price of approximately
36.2 cents per share).
Since the end period to the date of this report, PPK acquired
a further 466,982 shares under the scheme at a cost of
$177,773.
There have been no other significant changes in the state
of affairs during the 2012 financial year or existing at the
time of this report.
DIRECTORS’ REPORTCONTINUEDPPK GROUP LIMITED ANNUAL REPORT MATTERS SUBSEQUENT TO THE END OF THE
FINANCIAL YEAR
On 20 September 2012, the Group made an ASX
announcement advising that it had entered into binding
contractual agreements in relation to its property at
Arndell Park. The property has been leased for a term of
five years with two five year options at a commencing
rental of $1.1 million per annum plus outgoings with
minimum annual 4% increases. Contemporaneously, the
parties have entered into Put and Call Options which,
depending on the decisions of the purchaser and PPK have
an effective end date of 15 July 2014. Assuming an exercise
of either the Put or the Call Option, the net proceeds of
the sale will be approximately $12.2 million against a
book value of $12.7 million giving rise to an impairment
of $500,000.
In August 2012, the SLOT Loan Trust provided first
mortgage secured finance to Supported Living on Tweed
Pty Ltd, a non-associated party operating retirement
villages in northern NSW and Queensland. The net finance
provided by the Group in relation to this loan is $1,300,000.
In September 2012, the Group agreed to provide finance
of $5 million to TMD Investments Pty Ltd, a member of
the SubZero Group. The loan will be secured by a first
mortgage over a new mining truck maintenance facility
at Muswellbrook with the funds being advanced by
31 October 2012.
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 2012 are included in the Chairman and
Executive Director’s Review detailed in the 2012 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.
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.
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 (Audited)
The Directors of PPK present the Remuneration Report
for non-executive directors, executive directors and other
key management personnel, prepared in accordance
with the Corporations Act 2001 and the Corporations
Regulations 2001.
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.
The PPK Board believes the remuneration policy to be
appropriate and effective in its ability to attract, retain
and motivate directors and executives of high quality and
standard to manage the affairs of the consolidated entity,
as well as, create goal congruence between directors,
executives and shareholders.
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.
15
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 high 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;
the performance of the Company or consolidated
entity during the relevant period; and
the broad remuneration policy of the consolidated entity.
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 and no bonus payments were made
to key management personnel in respect of the 2012
financial 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.
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)
2012
2.9
2.5
–
$0.38
35%
2011
(4.5)
2.0
–
$0.30
(16.3%)
2010
2009
2008
1.3
2.5
–
$0.39
45.4%
0.9
2.5
–
$0.28
(51.4%)
1.0
6.5
5.0
$0.70
5.3%
The above table shows the annual returns to shareholders calculated to include the difference in percentage terms
between the dividend yield for the year (based on the average share price during the period) and changes in the price
at which shares in the Company are traded between the beginning and the end of the relevant financial year.
16
DIRECTORS’ REPORTCONTINUEDPPK GROUP LIMITED ANNUAL REPORT Details of Remuneration for the year ended 30 June 2012
Directors’ and other Key Management Personnel remuneration
Details of the nature and amount of each element of the remuneration of each key management personnel (‘KMP”)
of PPK Group Limited are shown in the table below:
Short Term Incentives
Post
Employment
Long Term Incentives/Benefits
Salary &
Fees
($)
Short Term
Incentive
Cash Bonus
($)
Non-
Cash
Benefits
($)
Super-
annuation
($)
Long
Service
Leave
($)
Post
Employment
Benefits
($)
Share
based
payments
($)
Total
($)
Proportion of
Remuneration
Performance
Related
(%)
Directors
Non-Executive
J I Wowk
R M Beath
GD Webb
C F Ryan*
Executive
G R Molloy
133,513
30,000
27,500
3,750
191,000
Total Directors
385,763
Other Key Management Personnel
D A Hoff
250,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total Key
Management
Personnel
635,763
–
–
* Resigned due to retirement on 1 August 2011.
2011
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
133,513
30,000
27,500
3,750
– 191,000
– 385,763
– 250,000
–
– 635,763
–
–
–
–
–
–
Short Term Incentives
Post
Employment
Long Term Incentives/Benefits
Salary
& Fees
($)
Short Term
Incentive
Cash Bonus
($)
Non-
Cash
Benefits
($)
Super-
annuation
($)
Long
Service
Leave
($)
Post
Employment
Benefits
($)
Share
based
payments
($)
Total
($)
Proportion of
Remuneration
Performance
Related
(%)
Directors
Non-Executive
C F Ryan*
R M Beath
J I Wowk
Executive
G R Molloy
45,000
30,000
47,220
221,000
Total Directors
343,220
–
–
–
–
–
Other Key Management Personnel
D A Hoff
250,000
50,000
Total Key
Management
Personnel
593,220
50,000
* Resigned due to retirement on 1 August 2011.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
45,000
30,000
47,220
221,000
343,220
–
–
–
–
–
300,000
17%
–
643,220
17
Performance Income as a Proportion of
Total Remuneration
No bonuses were paid to Key Management Personnel
during the year.
No performance criteria or bonuses have been set by
the Board for Key Management Personnel for future
financial years.
Options issued as part of remuneration for
the year ended 30 June 2012
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
other Key Management Personnel during the year.
Employment Contracts
Mr David Hoff
On 7 September, 2009, David Hoff retired as Managing
Director and as a Director of the Company. Following his
retirement, the Company and Mr Hoff entered into an
initial contract for Mr Hoff to provide consulting services.
The key provisions of the initial consultancy contract are
as follows:
Term: Initial period of 3 years expiring on 31 August 2012,
automatically renewing for a further 2 years unless either
the Company or Mr Hoff serve a written notice to terminate
at least 120 days prior to the expiry date.
Remuneration: Consultancy fee payable during the period
1 July 2011 to 30 June 2012 was $250,000. The Company
supplied a mobile phone and laptop and reimbursed all
reasonable expenses incurred in providing consultancy
services. under the terms of the contract a performance
review was undertaken in August 2011 regarding the
performance of Mr Hoff and his related entity in respect
of the year ended 30 June 2011. This did not result in any
change to Mr Hoff’s consultancy fee or any additional
payments to Mr Hoff or his related entity.
Duties: 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 attend
the Company Board Meetings.
Termination: The consultancy contract may be
terminated at any time by David Hoff giving the Company
6 months written notice. The Company may terminate
the arrangement with no cause by paying an amount
equivalent to the greater of the then current 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 of 3 months, the Company can terminate 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 contract 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.
The Company issued a notice of termination to Mr Hoff in
April 2012 advising that his initial consultancy agreement
would end on 31 August 2012. A new Consultancy
agreement has been reached between the parties on terms
as follows:
Term: Commencing on 1 September 2012 – no fixed term.
Remuneration: Consultancy fee payable $10,000 per
month. Attendances at Board Meetings, if required at
$2,000 per meeting.
Duties: Oversight of the mining manufacturing business,
Rambor Pty. Ltd and the Company’s industrial property
portfolio.
Termination: The consultancy agreement may be
terminated with no cause at any time by either party
serving 3 months written notice.
Mr Glenn Molloy
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.
There are no formalised written contracts in place with any
other key management personnel.
(End of Audited Remuneration Report)
18
DIRECTORS’ REPORTCONTINUEDPPK GROUP LIMITED ANNUAL REPORT OPTIONS
There were no options outstanding as at the date of this report.
DIRECTORS’ INTERESTS
Particulars of Directors’ interests in shares and options as at the date of this report are as follows:
J I Wowk
G R Molloy
G D Webb*
R M Beath
C F Ryan**
Ordinary Shares
Options
212,302
11,944,566
7,126,666
42,821
500,000
–
–
–
–
–
* Appointed 1 August 2011.
** Resigned to due to retirement on 1 August 2011 – shares held as at the date of retirement.
Further information regarding the above interests and net movements throughout the reporting period is disclosed in
Note 5 (Key Management Personnel Disclosures) to the Financial Statements accompanying this Directors’ Report.
In addition all of the current Directors of the Company have an interest in various unit trusts, the trustees of which are
subsidiaries of the Company. As unit holders, the Directors have advanced, or agreed to advance loan funds, to the
trustees in proportion to the number of units held by them on usual commercial terms for the purpose of undertaking
commercial lending in which the Company has an indirect equity interest – along with other unassociated investors.
Details of the units and the trusts in which each Director has a relevant interest and of the nature of that relevant interest
are set out in the tables below:
J I Wowk:
Trusts – registered holder(s)
Number of units
Willoughby Funding unit Trust – Dealcity Pty Ltd
Nerang Street Southport Project Trust – Dealcity Pty Ltd
Easy Living unit Trust – Dealcity Pty Ltd
Easy Living (Bundaberg) Trust – Dealcity Pty Ltd
SLOT Loan Trust – Dealcity Pty Ltd
G R Molloy:
2
33
20
40
100
Trusts – registered holder(s)
Number of units
Willoughby Funding unit Trust – Wavet Fund No. 2 Pty Limited
Nerang Street Southport Project Trust – Wavet Fund No. 2 Pty Limited
Easy Living unit Trust – Wavet Fund No. 2 Pty Limited
Easy Living (Bundaberg) Trust – Wavet Fund No. 2 Pty Limited
– Quality Dispensers Super Fund Pty Ltd
SLOT Loan Trust – VIP Golf Australia Pty Ltd
– Corso Investments Pty Ltd
– Quality Dispensers Super Fund Pty Ltd
10
286
180
200
60
500
100
150
Nature of Interest
(all indirect)
Director & Member
Director & Member
Director & Member
Director & Member
Director & Member
Nature of Interest
(all indirect)
Director & Member
Director & Member
Director & Member
Director & Member Director
Director & Member Director
19
R M Beath:
Trusts – registered holder(s)
Number of units
Willoughby Funding unit Trust – Zenaval Pty Ltd
Easy Living unit Trust – Zenaval Pty Ltd
Easy Living (Bundaberg) Trust – Zenaval Pty Ltd
SLOT Loan Trust – Zenaval Pty Ltd
G D Webb:
Trusts – registered holder(s)
Willoughby Funding unit Trust – GRG Finance Pty Ltd
– Phillip Street Properties Pty Ltd
Nerang Street Southport Project Trust
– GRG Finance Pty Ltd
Easy Living unit Trust – GRG Finance Pty Ltd
Easy Living (Bundaberg) Trust – Stadurn Pty Ltd
Nature of Interest
(all indirect)
Director & Member
Director & Member
Director & Member
Director & Member
1
20
20
50
Number of units
Nature of Interest
(all indirect)
20
20
231
40
60
Director
Director
Director
Director
Director
MEETINGS OF DIRECTORS
During the financial year, meetings of directors (including committee meetings) were held.
Attendances were
Jury Ivan Wowk
Glenn Robert Molloy
Raymond Michael Beath
Graeme Douglas Webb
Colin Francis Ryan
Directors’ Meetings
Committee Meetings
Number Eligible
to attend
Number
Attended
Number Eligible
to attend
Number
Attended
16
16
16
15
1
16
14
15
11
1
3
–
3
–
–
3
–
3
–
–
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.
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 as set out in
the PPK 2012 Annual Report.
In accordance with the Recommendations, the Board has:
•
•
received and considered reports from management
regarding the effectiveness of the Company’s
management of its material business risks; and
received assurance from the people performing
each of the chief executive officer and chief financial
officer functions 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.
20
DIRECTORS’ REPORTCONTINUEDPPK GROUP LIMITED ANNUAL REPORT 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.
During the reporting period, the PPK Audit Committee
consisted of the following Non-executive, Independent
Directors:
• R M Beath (Chairman)
•
J I Wowk (appointed as a member of the Audit
Committee on 1 August 2011)
• C F Ryan (resigned due to retirement on 1 August
2011).
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.
DIRECTORS’ BENEFITS
Since 30 June 2011, 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.
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 during the year.
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 2012 and a copy of
this declaration 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.
Jury Wowk
Chairman
Glenn Molloy
Executive Director
SYDNEY, 25 September 2012
21
AUDITOR’S INDEPENDENCE DECLARATION
Grant Thornton Audit Pty Ltd
ABN 91 130 913 594
Level 19, 2 Market Street
Sydney NSW 2000
GPO Box 2551
Sydney NSW 2001
T +61 2 9286 5555
F +61 2 9286 5599
E info.nsw@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of PPK Group Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of PPK Group Limited for the year ended 30 June 2012, I declare that,
to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
I S Kemp
Partner – Audit & Assurance
Sydney, 25 September 2012
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton
Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.
Liability limited by a scheme approved under Professional Standards Legislation
22
PPK GROUP LIMITED ANNUAL REPORT
CONSOLIDATED STATEMENT OF COMPREhENSIVE INCOME
for the year ended 30 June 2012
Revenue
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 / (loss) before income tax expense
Consolidated Entity
2012
$000s
2011
$000s
Notes
7,711
2,211
65
1,337
11,324
820
(6,265)
(752)
(98)
(1,660)
(1,410)
6,102
2,146
23
1,589
9,860
3,253
(4,665)
(1,071)
(5,671)
(1,567)
(1,418)
(10,185)
(14,392)
9
(412)
1,968
(1,691)
2(a)
2(b)
2(e)
2(d)
Income tax (expense) attributable to profit
3
(417)
(824)
Profit / (loss) after income tax
Profit / (loss) is attributable to:
Owners of PPK Group Limited
Non-controlling interests
Other comprehensive income
Changes in value on available-for-sale financial assets
Provision for income tax thereon
unrealised impairment losses on available-for-sale financial assets transferred to the profit
or loss from the asset revaluation reserve
Provision for income tax thereon
Realised gain on sale of available-for-sale financial assets transferred to the profit or loss
from the asset revaluation reserve
Provision for income tax thereon
Other comprehensive income net of income tax
Total Comprehensive Income / (loss) for the year
Total comprehensive income / (loss) for the year is attributable to:
Owners of PPK Group Limited
Non-controlling interests
Overall Operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
The accompanying notes form part of these financial statements.
1,551
(2,515)
1,543
8
1,551
84
(25)
–
–
(163)
49
(55)
(2,515)
–
(2,515)
163
(49)
(13)
4
(10)
3
98
1,496
(2,417)
1,488
8
1,496
2.9
2.9
7
7
(2,417)
–
(2,417)
(4.5)
(4.5)
23
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2012
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Financial assets at fair value through profit or loss
Total current assets
Non-current assets
Trade and other receivables
Investments in associated entities – equity accounted
Other financial assets
Investment Properties
Other property, plant and equipment
Deferred tax assets
Intangible assets
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 / (Accumulated losses)
Capital and reserves attributable to owners of PPK Group Ltd
Non-controlling interests
Total equity
The accompanying notes form part of these financial statements.
24
Notes
9
10
11
12
13(b)
10
13(a)
13(c)
14(a)
15
16(a)
17
18
19
16(b)
20
21
16
20
22
23
Consolidated Entity
2012
$000s
2011
$000s
9,079
2,696
1,162
323
327
9,681
4,367
1,813
395
–
13,587
16,256
6,276
9
756
5,166
–
745
27,276
24,486
1,273
1,589
1,413
38,592
52,179
695
925
422
311
2,353
1,412
1,646
742
34,197
50,453
625
1,074
122
247
2,068
20,500
18,500
29
89
20,618
22,971
29,208
35
68
18,603
20,671
29,782
29,016
29,782
67
123
122
(122)
29,206
29,782
2
–
29,208
29,782
PPK GROUP LIMITED ANNUAL REPORT CONSOLIDATED STATEMENT OF CASh FLOwS
for the year ended 30 June 2012
Cash Flows from Operating Activities
Cash receipts from customers
Cash payments to suppliers and employees
Other revenue
Dividends received
Proceeds from sale financial assets at fair value through profit or loss
Purchase of financial assets at fair value through profit or loss
Interest received
Income tax paid
Interest paid
Consolidated Entity
2012
$000s
2011
$000s
Notes
11,476
(8,400)
219
65
2,301
(2,562)
537
(42)
(1,410)
7,624
(6,517)
1,627
23
–
–
1,141
(831)
(1,418)
Net cash provided by / ( used in ) operating activities
29(a)
2,184
1,649
Cash Flows from Investing Activities
Proceeds from sale of investment property
Purchase of investment property
Proceeds from sale of plant & equipment
Purchase of property, plant & equipment
Proceeds from sale of available-for-sale financial assets
Purchase of available-for-sale financial assets
Proceeds from sale of investment in associated entities
Payments for investments in associated entities
Proceeds from redemption of convertible notes
Payment for intangibles
–
8,085
(3,100)
9
(384)
–
(618)
–
–
2,169
(59)
–
8
(533)
516
(87)
15
(19)
–
(11)
Net cash (used in) / provided by investing activities
(1,983)
7,974
Cash Flows from Financing Activities
Loans advanced
Payment for buyback of shares
Proceeds from bank loans
Proceeds from other loans
Loans repaid
Dividends paid
Transactions with non-controlling interests
Net cash (used in) / provided by financing activities
Net increase / (decrease ) in cash held
Cash at the beginning of the financial year
Cash at the end of the financial year
The accompanying notes form part of these financial statements.
(1,184)
(766)
1,850
642
600
(1,298)
2
–
(1,467)
–
–
4,500
(1,128)
–
(154)
1,905
47
11,528
8,607
8,654
(2,921)
8,607
29(b)
25
CONSOLIDATED STATEMENT OF ChANGES IN EQUITY
for the year ended 30 June 2012
Consolidated Entity
At 1 July 2010
Total comprehensive income for the year
(Loss) for the year
Other comprehensive income
Issued
Capital
$000s
Retained
Earnings
$000s
Other
Reserves
$000s
Total
Attributable
to Owners of
PPK Group Ltd
$000s
Non-
controlling
Interests
$000s
31,249
3,521
24
34,794
–
(2,515)
–
(2,515)
–
Fair value adjustment on available-for-sale financial assets
expensed on impairment
less deferred tax impact
Realised gain on available-for-sale financial assets
less deferred tax impact
Fair value adjustment on available-for-sale
financial assets
less deferred tax impact
Total comprehensive (loss) / income for the year
Transactions with owners in their capacity as owners
Dividends paid
Shares repurchased
At 30 June 2011
–
–
–
–
–
–
–
–
(1,467)
(1,467)
29,782
–
–
–
–
–
–
(2,515)
(1,128)
–
(1,128)
(122)
(13)
4
(10)
3
163
(49)
98
–
–
–
122
(13)
4
(10)
3
163
(49)
(2,417)
(1,128)
(1,467)
(2,595)
29,782
1,543
–
1,543
Total comprehensive income for the year
Profit for the year
Other comprehensive income
Realised gain on available-for-sale financial assets
less deferred tax impact
Fair value adjustment on available-for-sale
financial assets
less deferred tax impact
Total comprehensive income / (loss) for the year
Transactions with owners in their capacity as owners
Dividends paid
Trust distributions
Shares repurchased
Change in holding of non-controlling interest
in subsidiaries
–
–
–
–
–
–
–
–
–
–
–
1,543
(1,298)
(766)
–
–
–
(766)
(1,298)
(163)
49
84
(25)
(55)
–
–
–
–
At 30 June 2012
29,016
123
67
26
(163)
49
84
(25)
1,488
(1,298)
(766)
–
(2,064)
29,206
Total
Equity
$000s
34,794
(2,515)
(13)
4
(10)
3
163
(49)
(2,417)
(1,128)
(1,467)
(2,595)
29,782
1,551
(163)
49
84
(25)
1,496
(1,298)
(8)
(766)
2
(2,070)
29,208
–
–
–
–
–
–
–
–
–
–
–
–
–
8
–
–
–
–
8
–
(8)
–
2
(6)
2
PPK GROUP LIMITED ANNUAL REPORT
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012
1. STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES
Corporate Information
The financial statements of PPK Group Limited for the
year ended 30 June 2012 were authorised for issue
in accordance with a resolution of the directors on
25 September 2012 and covers 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 Securities 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. PPK Group
Limited is a for-profit entity for the purposes of preparing
the financial statements. 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 were
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 consolidated entity unless otherwise
stated. The financial statements are presented in
Australian currency.
(b) Basis 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.
Non-controlling interests, being the equity in a subsidiary
not attributable, directly or indirectly, to the parent, are
reported separately within the equity section of the
consolidated statement of financial position and statement
of comprehensive income. The non-controlling interests
in the net assets comprise their interests at the date of the
original business combination and their share of changes
in equity since that date.
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 other comprehensive income or loss
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 and distributions 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 group 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:
27
1. STATEMENT OF SIGNIFICANT ACCOuNTING
POLICIES continued
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.
Rental Income
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
Revenue 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 Group’s 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
28
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 there is
reasonable certainty 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
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT income tax expense and deferred tax expense to wholly-
owned subsidiaries that form part of the tax consolidated
group. PPK 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 years. Land is not depreciated.
The assets’ residual values and useful lives are reviewed
and adjusted, if appropriate, at the end of the 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 the profit or
loss statement 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
consolidated entity 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
consolidated entity 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
2%
Leasehold Improvements
over the term of the lease
Plant & Equipment
3 – 50 %
Leased Plant & Equipment
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 profit or loss.
(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
transferred to 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.
29
1. STATEMENT OF SIGNIFICANT ACCOuNTING
POLICIES continued
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 investments 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 financial assets 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. Reversal 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 the impairment loss was recognised in profit or loss.
30
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, fair
price 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.
The group does not use derivative financial instruments
such as forward exchange contracts and interest rate
swaps to mitigate risks associated with interest rate and
foreign exchange fluctuations.
(vi) Financial assets at fair value through profit or loss
Financial assets are classified at “fair value through profit
or loss” when they are held for trading for the purpose
of short-term profit taking or if it is a derivative that is
not designated as a hedge. Such assets are subsequently
measured at fair value with changes in carrying amount
being included in profit or loss.
(i) Leases
Leases of property, plant & equipment where the Group
has substantially all the risks and rewards of ownership are
classified as finance leases and capitalised at inception of
the lease at the fair value of the leased property, or if lower,
at the present value of the minimum lease payments. Lease
payments are apportioned between the finance charges and
reduction of the lease liability so as to achieve a constant
rate of interest on the remaining balance of the liability.
Finance charges are charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest
on the remaining balance of the liability for each period.
Capitalised leased assets are depreciated over the shorter of
the estimated useful life of the asset or the lease term. Leases
where the lessor retains substantially all the risks and rewards
of ownership of the net asset are classified as operating leases.
Payments made under operating leases (net of incentives
received from the lessor) are charged to profit or loss on a
straight-line basis over the period of the lease.
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT When assets are leased out under finance leases, the
present value of the lease payments is recognised as
a lease receivable. The difference between the gross
receivable and the present value of the receivable is
recognised as unearned finance income. Lease income is
recognised over the lease term using the net investment
method which reflects a constant periodic rate of return.
Lease income from operating leases is recognised in profit
or loss on a straight-line basis over the lease term. Initial
direct costs incurred in negotiating operating leases
are added to the carrying value of the leased asset and
recognised as an expense over the lease term on the same
basis as the lease income.
(j) Foreign Currency
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 balance date
are converted at the rates of exchange rates ruling at year
end. 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 and parent
entity 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) Borrowings
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 the income statement
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.
(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 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,
at the same time every year.
Research and Development
Research is recognised as an expense as incurred. Costs
incurred on development (relating to the design and
testing of new or improved products) are recognised as
intangible assets when it is probable that the project will,
after considering its commercial and technical feasibility,
be completed and generate future economic benefits
and its costs can be measured reliably. The expenditure
capitalised comprises all directly attributable cost,
including costs of materials, services, direct labour and an
appropriate proportion of overheads.
31
1. STATEMENT OF SIGNIFICANT ACCOuNTING
POLICIES continued
Other development expenditures that do not meet
these criteria are recognised as an expense as incurred.
Development costs previously recognised as an expense
are not recognised as an asset in a subsequent period.
Capitalised development costs are recorded as intangible
assets at cost less any accumulated amortisation and
impairment losses and amortised over the period of
expected future sales from the related projects which vary
from 5 – 7 years. The carrying value of development costs is
reviewed annually when the asset is not yet ready 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 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 each reporting date 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 the
profit or loss 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.
32
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) Borrowing costs
All borrowing costs are expensed when 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.
(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 financial year but not distributed at the end of the
reporting period.
The requirements for paying dividends under Section 254T
of the Corporations Act 2011 were amended in June 2010.
The old “profits” test has been deleted and been replaced
with a “solvency” test and an “asset” test. Dividends can no
longer be paid unless:
(a) Assets exceed liabilities immediately before the
dividend is declared and the excess is sufficient for
the payment of dividends; and
(b) The payment of the dividend is fair and reasonable
to the company’s shareholder as a whole; and
(c) The payment of the dividend does not materially
prejudice the company’s ability to pay its creditors.
These new rules apply to all dividends declared on or after
the date of Royal Assent of 29 June 2010.
(u) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the
profit attributable to owners 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
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT 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 cash flow statement 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 not yet adopted
The AASB has issued a number of new and amended
Accounting Standards and Interpretations that have
mandatory application dates for future reporting periods,
some of which are relevant to the Group. The Group has
decided not to early adopt any of the new and amended
pronouncements. The Group’s assessment of the new and
amended pronouncements that are relevant to the Group
but applicable in future reporting periods is set out below:
AASB 9: Financial Instruments (December 2010) and AASB
2010–7: Amendments to Australian Accounting Standards
arising from AASB 9 (December 2010) (applicable for annual
reporting periods commencing on or after 1 January 2015).
These Standards are applicable retrospectively and
include revised requirements for the classification
and measurement of financial instruments, as well
as recognition and derecognition requirements for
financial instruments.
The key 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
cashflows; and
requiring an entity that chooses to measure a financial
liability at fair value to present the portion of the
change in its fair value due to changes in the entity’s
own credit risk in other comprehensive income, except
when that would create an accounting mismatch. If
such a mismatch would be created or enlarged, the
entity is required to present all changes in fair value
(including the effects of changes in the credit risk of the
liability) in profit or loss.
The Group has not yet been able to reasonably estimate
the impact of these pronouncements on its financial
statements.
AASB 2010–8: Amendments to Australian Accounting Standards
– Deferred Tax: Recovery of Underlying Assets [AASB 112] (applies
to periods beginning on or after 1 January 2012).
This Standard makes amendments to AASB 112: Income
Taxes and incorporates Interpretation 121: Income Taxes –
Recovery of Revalued Non-Depreciable Assets into AASB 112.
under the current AASB 112, the measurement of deferred
tax liabilities and deferred tax assets depends on whether
an entity expects to recover an asset by using it or by
selling it. The amendments introduce a presumption that
an investment property is recovered entirely through
sale. This presumption is rebutted if the investment
property is held within a business model whose objective
is to consume substantially all of the economic benefits
embodied in the investment property over time, rather
than through sale.
The amendments are not expected to significantly impact
the Group.
AASB 10: Consolidated Financial Statements, AASB 11: Joint
Arrangements, AASB 12: Disclosure of Interests in Other
Entities, AASB 127: Separate Financial Statements (August
2011), AASB 128: Investments in Associates and Joint Ventures
(August 2011) (applicable for annual reporting periods
commencing on or after 1 January 2013).
33
1. STATEMENT OF SIGNIFICANT ACCOuNTING
POLICIES continued
AASB 10 replaces parts of AASB 127: Consolidated and
Separate Financial Statements (March 2008, as amended)
and Interpretation 112: Consolidation – Special Purpose
Entities. AASB10 provides a revised definition of control
and additional guidance so that a single control model
will apply to all investees.
AASB 2011–9: Amendments to Australian Accounting
Standards – Presentation of Items of Other Comprehensive
Income AASB 101, (applicable for annual reporting periods
commencing on or after 1 July 2012).
The main change arising from this Standard is the
requirement for entities to group items presented in other
comprehensive income (OCI) on the basis of whether they
are potentially reclassifiable to profit or loss subsequently.
The Group has not yet been able to reasonably estimate
the impact of this Standard on its financial statements.
This Standard affects presentation only and is therefore not
expected to significantly impact the Group.
AASB 11 replaces AASB 131: Interests in Joint Ventures
(July 2004, as amended).
AASB 11 requires joint arrangements to be classified as either
‘joint operations’ (where the parties that have joint control of
the arrangement have rights to the assets and obligations for
the liabilities) or ‘joint ventures’ (where the parties that have
joint control of the arrangement have rights to the assets of
the arrangement). Joint ventures are required to adopt the
equity method of accounting (proportionate consolidation
is no longer allowed). The amendments are not expected
to significantly impact the Group.
AASB 12 contains the disclosure requirements applicable to
entities that hold an interest in a subsidiary, joint venture,
joint operation or associate.
AASB 12 also introduces the concept of a ‘structured entity’,
replacing the ‘special purpose entity’ concept currently
used in Interpretation 112, and requires specific disclosures
in respect of any investments in unconsolidated structured
entities. This Standard will affect disclosures only and is not
expected to significantly impact the Group.
To facilitate the application of AASBs 10, 11 and 12, revised
versions of AASB 127 and AASB 128 have also been issued.
These Standards are not expected to significantly impact
the Group.
AASB 13 defines fair value, sets out in a single Standard
a framework for measuring fair value, and requires
disclosures about fair value measurement.
AASB 13 requires:
•
inputs to all fair value measurements to be categorised
in accordance with a fair value hierarchy; and
• enhanced disclosures regarding all assets and liabilities
(including, but not limited to, financial assets and
financial liabilities) to be measured at fair value.
These Standards are not expected to significantly 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.
Key estimates – Impairment
The Group assesses impairment at each reporting date
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 Group reviews each of its listed investments at each
reporting date to consider whether there is any indication
that individual investments are impaired.
Based on all the information available to the Directors
it was determined that the Group’s investment in the
following listed companies were impaired:
Eureka Group Limited
Alchemy Resources Limited
As a result an impairment loss of $60,000 (2011: $117,000)
was taken up in profit or loss on these investment.
The Directors determined that no other listed available-for-
sale financial assets were impaired at balance date.
Investment in Associates
The Group’s investments in associate entities are reviewed
at each reporting date to consider whether there is any
indication that individual investments are impaired.
Based on all the information available to the Directors
it was determined that there were no impairments
(2011: $4,140,000) of the Group’s investments in
associated entities.
34
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT Investment Properties
An independent valuation of all investments properties
was undertaken in May 2010 (except for the property
that was purchased during the year, refer Note 14).
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 was recognised
on the land & buildings that the Group owns at Arndell
Park, New South Wales in prior financial years.
Based on all the information available to the Directors it was
determined that no further impairment adjustment was
required for any investment property in the current year.
Deferred Tax Asset
An assessment was made on the recoverability of the
deferred tax asset recognised in the accounts. The deferred
tax asset has only been recognised to the extent that there
is reasonable certainty of realising future taxable amounts
sufficient to use losses incurred.
Capital losses with a tax asset value of $1,315,000
(2011: $1,315,000) have not been recognised and
carried forward as a deferred tax asset.
Loans and Receivables
The Group’s loans and receivables disclosed in Note 10
are reviewed at each reporting date to consider whether
there is any indication that individual loans or receivables
are impaired.
Based on all the information available to the Directors
it was determined that there was no impaired loans
or receivables (2011: $nil).
Goodwill, Brand Names, Plant and Equipment
No impairment has been recognised in respect of
goodwill, brand names, plant and equipment 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
The Group has land located at Arndell Park, New South
Wales which has been marketed for sale for a number of
years. In prior years this property was classified as “Assets
classified as held for sale”. Although the property continues
to be actively marketed, it is considered appropriate to re-
classify this property as non-current investment property,
as there is no certainty that a firm purchase commitment
will be highly probable within one year.
35
2. REVENUE, OTHER INCOME AND EXPENSES FROM OPERATIONS
for the year ended 30 June 2012
(a) Revenue
Sale of goods
Rental income from investment properties
Dividends received
Interest receivable
Notes
(c)
(b) Other Income
Net gain on disposal of investment properties
Net gain on disposal of plant and equipment
Net gain on sale of available-for-sale financial assets
Net gain on sale of financial assets at fair value through profit or loss
Reversal of doubtful debts – other receivables
Received on redemption of convertible note impaired prior year
Fair value adjustment on conversion of convertible notes to investment
in associated companies
Value of available-for-sale financial asset received on redemption of convertible notes
Fair value adjustment on available-for-sale no longer classified as an associate
Proceeds from rental property dispute resolution
Foreign currency translation gains
Sundry income
(c) Interest Income
Other persons
Associated entities
(d) Share of profit (loss) from associates accounted for using the equity method
Share of profit (loss) from associates accounted for under the equity method
(e) Expenses
Profit (loss) before income tax includes the following specific expenses:
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
Impairment to carrying value of associates
Impairment of other receivables – convertible notes
Interest paid – other
Doubtful debts – trade receivables
– other receivables
Defined contribution superannuation expense
Employee benefit expenses
Rental expense on operating leases
36
Consolidated Entity
2012
$000s
2011
$000s
7,711
2,211
65
1,337
11,324
–
9
157
66
64
169
–
101
35
192
–
27
820
463
874
1,337
9
9
26
4,612
310
523
833
–
8
–
60
–
–
1,410
20
–
270
2,630
233
6,102
2,146
23
1,589
9,860
1,514
5
10
–
–
–
95
–
–
1,585
2
42
3,253
398
1,191
1,589
(412)
(412)
48
3,275
339
528
867
76
–
169
117
4,140
1,322
1,418
–
237
208
1,921
160
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT
3. INCOME TAX EXPENSE
(a) The prima facie tax payable / (benefit) on the profit / (loss) before income tax is
reconciled to the income tax expense as follows:
Profit (loss) before tax
Prima facie tax payable / (benefit) at 30% (2011: 30%)
Fully franked dividend received
Share of after tax loss of associate companies
Research & Development concession
Building allowance
Sundry items
(Over) provision relating to prior year
Adjustment related to non-controlling interest in profit
Tax losses not recognised as own asset
Income tax expense
The applicable weighted average effective tax rates are as follows:
(b) The components of tax expense comprise:
Current tax
Deferred tax
(Over) / under provision in respect of prior years
Consolidated Entity
2012
$000s
2011
$000s
1,968
(1,691)
590
(507)
(20)
–
(15)
(54)
4
(86)
(2)
–
417
21%
429
74
(86)
417
(7)
123
(30)
(54)
–
(16)
–
1,315
824
n/a
511
329
(16)
824
(c) Deferred tax recognised directly in equity through Available-for-sale Financial Asset
Reserve relating to valuing investments at fair value
(23)
41
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.
4. AUDITORS’ REMUNERATION
Remuneration of the auditor of the group and parent entity for :
– auditing or reviewing the financial report
Grant Thornton
BDO
– non audit services ( accounting / technical advice )
Grant Thornton
BDO
Consolidated Entity
2012
$000s
2011
$000s
52,000
26,310
–
75,573
–
–
–
–
78,310
75,573
37
5. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Key management personnel disclosures
Short-term benefits
Post-employment benefits
Termination benefits
Consolidated Entity
2012
2011
635,763
643,220
–
–
–
–
635,763
643,220
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
There were no options and rights held directly, indirectly or beneficially by key management personnel and their related
parties in the current financial year.
(c) Shareholdings
Number of Shares held by Parent Entity Directors and other key management personnel.
Balance
1 July 2011
Received as
Remuneration
Options
Exercised
Net Change
Other
Balance
30 June 2012
500,000
11,935,986
42,821
212,302
6,618,320
19,309,429
156,960
156,960
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(500,000)
–
8,580
11,944,566
–
–
42,821
212,302
508,346
7,126,666
16,926
19,326,355
–
–
156,960
156,960
Balance
1 July 2010
Received as
Remuneration
Options
Exercised
Net Change
Other
Balance
30 June 2011
500,000
10,987,997
42,821
212,302
–
11,743,120
156,960
27,000
183,960
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
500,000
947,989
11,935,986
–
–
42,821
212,302
6,618,320
6,618,320
7,566,309
19,309,429
–
156,960
(27,000)
(27,000)
–
156,960
Parent Entity Directors
Mr C F Ryan (retired 1 August 2011)
Mr G R Molloy
Mr R M Beath
Mr J I Wowk
Mr G Webb
Other Key Management Personnel
Mr D A Hoff
Parent Entity Directors
Mr C F Ryan (retired 1 August 2011)
Mr G R Molloy
Mr R M Beath
Mr J I Wowk
Mr G Webb (appointed 1 August 2011)
Other Key Management Personnel
Mr D A Hoff
Mr R J Nicholls
38
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT (d) Loans
There were no loans or advances to parent entity directors, executives and key management personnel in the current
financial or previous financial years.
(e) Other transactions with directors
Refer to Note 28 for further details of transactions with directors and director related entities.
6. DIVIDENDS
(a) Dividends paid
Final ordinary dividend of 1.50c per share for 2011 year – 100% franked at 30% tax rate
(prior year 1.00c per share )
Interim ordinary dividend of 1.00c per share for 2012 year – 100% franked at 30% tax rate
(prior year 1.00c per share – 100% franked)
(b) Dividends declared after balance date
At a meeting of Directors held on 21 August 2012 it was resolved that no
Final ordinary dividend will be paid in relation to the 2012 financial year.
(c) Franked dividends
Consolidated Entity
2012
$000s
2011
$000s
781
577
517
1,298
551
1,128
Franking credits available for subsequent financial years based on a tax rate of 30% (2011 – 30%)
3,837
4,016
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 Group satisfies the relevant tests under the Corporations Act 2011 to pay a
dividend, however on the basis of the analysis of the law by the Australian Taxation Office as set out in ATO Ruling 2012/5
the payment of a dividend by the Group in its current circumstances may constitute a return of capital by the Group.
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.
39
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
Consolidated Entity
2012
cents
2011
cents
2.9
(4.5)
2.9
$000s
(4.5)
$000s
1,543
(2,515)
1,543
(2,515)
No.
No.
(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
52,322,800
56,398,923
–
–
52,322,800
56,398,923
8. PARENT ENTITY INFORMATION
The following details information related to the parent entity, PPK Group Limited at 30 June 2012. The information
presented here has been prepared using consistent accounting policies as presented in Note 1.
Current assets
Non-current assets
Total Assets
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Contributed equity
Reserves – share options
Accumulated losses
Total Equity
(Loss) profit for the year
Other comprehensive income for the year
Total comprehensive income (loss) for the year
40
Consolidated Entity
2012
$000s
2011
$000s
44,654
33,513
78,167
32,824
18,500
51,324
26,843
38,979
39,001
77,980
29,742
18,505
48,247
29,733
29,016
29,782
8
(2,181)
26,843
8
(57)
29,733
(2,124)
(2,692)
–
–
(2,124)
(2,692)
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT 9. CURRENT ASSETS
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.
Short-term bank deposits are funds held at call which are 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
10. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Less: Allowance for doubtful debts
Other Receivables
Less: Allowance for doubtful debts
Loans and receivables
Associated entities – secured
Convertible notes
Less: Allowance for impairment
Total other receivables
Total trade and other receivables
Non-Current
Loans and receivables
– Associated entities – secured
Other Non current Assets of continuing operations
Consolidated Entity
2012
$000s
2011
$000s
Notes
771
8,308
9,079
24
9,657
9,681
19
9,079
(425)
8,654
9,681
(1,074)
8,607
Consolidated Entity
2012
$000s
2011
$000s
Notes
(a)
(b)
(c)
(d)
(c)
1,205
(20)
1,185
1,410
(173)
1,237
274
833
(833)
–
274
1,982
–
1,982
622
(237)
385
–
3,322
(1,322)
2,000
2,000
2,696
4,367
6,276
6,276
5,166
5,166
41
10. TRADE AND OTHER RECEIVABLES continued
(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 unit trusts that are associates of the Group. The amounts are secured by second
mortgages over property owned by each of the trusts. The interest rate received by the Group on loans range from 8% to
15% with the rate being fixed for the term of the loan at the time it is made.
The current loans have interest rates ranging from 8% to 15% per annum calculated daily and compounded monthly with
principal and interest.
The non-current loans have interest rates ranging from 8% to 15% per annum calculated daily and compounded either
monthly or annually. The loan to PPK Willoughby. Funding unit Trust is for a maximum period of 4 years with principal and
interest due for repayment in second half of the 2014 financial year, the balance outstanding on this loan is $5,944,000
(2011: $5,166,000). The loan to Nerang Street Southport unit Trust is due for repayment in June 2015, the balance
outstanding on this loan is $332,000 (2011: $nil).
Movement in balance of secured loans – current
Opening Balance
Funds advanced
Less principal and interest repaid
Interest revenue added to carrying value
Movement in balance of secured loans – non-current
Opening Balance
Funds advanced
Less principal and interest repaid
Interest revenue added to carrying value
Consolidated Entity
2012
$000s
2011
$000s
–
873
(674)
199
75
274
4,872
–
(5,080)
(208)
208
–
5,166
4,498
312
–
5,478
798
6,276
–
–
4,498
668
5,166
(d) Convertible notes
The Group had invested in Convertible notes in listed companies that could be converted to shares. The notes were
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 is 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.
Convertible notes, with a face value of $2,000,000, held in FRR Limited (formerly Frigrite Limited) were redeemed by the issuing
company. A total cash consideration of $2,056,000 was received. In addition 11,250,000 fully paid ordinary shares in FRR Limited
were issued to the Group, on the redemption of the notes, which had a value of $101,250 when the company relisted.
42
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT Convertible notes, with a face value of $502,000 held in ISL Limited were redeemed by the issuing company. A total cash
consideration of $169,000 was received. In addition 6,110,918 fully paid ordinary shares in ISL Limited were issued to the
Group on the redemption of the notes. No further consideration is to be received on these notes. As the company was
still in the process of relisting at year end, no value has been assigned to these shares.
Allied Brands Limited is currently progressing through a Deed of Company Arrangement, convertible notes with a face
value of $850,000 are held by the Group in this company. Full impairment of the carrying value of these notes was made
in the 2011 year.
In 2011 a provision for impairment of $1,322,000 was made against the carrying value of convertible notes as there
was considerable doubt as to the recoverability of the investments in convertible notes held in Allied Brands Limited
and ISL Limited (formerly Intelligent Solar Limited). No interest was received on these notes during the current or prior
financial years.
Movement in balance of convertible notes in listed companies
Opening Balance
Redemption of convertible notes
Less conversion into shares
Interest revenue added to carrying value
Less reversal of / (provision) for impairment
Consolidated Entity
2012
$000s
2011
$000s
2,000
(2,225)
–
(225)
56
(169)
169
–
3,952
–
(727)
3,225
97
3,322
(1,322)
2,000
Provision for Impairment of Receivables
Current trade, term and other receivables and loans are assessed for recoverability based on the underlying terms of the
contract. A provision for impairment is recognised when there is an objective evidence that an individual trade or term
receivable is impaired. The reversal of prior year impairments have been included in other income, the impairments were
included in Investment Activity or Administrative expenditure in 2011. Movements in the provision for impairment are
as follows:
Opening
balance
Charge for
the year
Reversal
of charge
Amounts
written off
Closing
balance
Consolidated Group 2012
Current
Trade receivables
Other receivables
Convertible notes
Consolidated Group 2011
Current
Trade receivables
Other receivables
Convertible notes
–
237
1,322
1,599
–
1,249
–
1,249
20
–
–
20
–
237
1,322
1,559
–
(64)
(169)
(233)
–
–
–
–
–
–
(320)
(320)
–
(1,249)
–
(1,249)
20
173
833
1,026
–
237
1,322
1,559
The parent entity has no provisions for impairment of receivables, in the current year or the prior year. 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.
43
10. TRADE AND OTHER RECEIVABLES continued
Trade receivables aging analysis
The ageing analysis of trade receivables for amounts not impaired for the Group and parent is as follows:
Not past due
Past due 1 – 30 days
Past due 31 – 60 days
Past due over 60 days
Consolidated Entity
2012
$000s
2011
$000s
905
166
27
87
1,506
185
166
125
1,185
1,982
With respect to trade receivables that are neither impaired or past due, there are no indications as at reporting date 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 and parent is as follows
Not past due
Past due 1 – 30 days
Past due 31 – 60 days
Past due over 60 days
Consolidated Entity
2012
$000s
2011
$000s
970
125
18
124
1,237
231
119
3
32
385
With respect to other receivables that are neither impaired or past due, there are no indications as at reporting date that
the debtors will not meet their obligations as they fall due.
11. INVENTORIES
On hand
Finished goods at cost
Finished goods at net realisable value
Work in Progress
Raw materials
Refer to Note 21 for details of inventory pledged as security.
44
Consolidated Entity
2012
$000s
2011
$000s
670
–
151
341
804
79
667
263
1,162
1,813
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT 12. OTHER CURRENT ASSETS
Prepayments
The carrying amount of prepayments approximates fair value.
13. FINANCIAL ASSETS
13(a) Investments in Associated entities – equity accounted
Summary of movement in carrying value
Opening Balance
Additions at cost (current year < $1,000 refer below for details)
Convertible notes converted to shares
Interest due on convertible notes converted to shares
Fair value adjustment to shares on conversion of notes – to profit and loss
Share of profit / (loss) from associates accounted for under the equity method
Impairment of carrying value of associates
Trust distributions or dividends received from associates
Information relating to associates is set out below:
Unlisted entities
Consolidated Entity
2012
$000s
2011
$000s
323
323
395
395
Consolidated Entity
2012
$000s
2011
$000s
–
–
–
–
–
9
–
–
9
3,692
20
727
18
95
(412)
(4,140)
–
–
Ownership Interest
2012
%
2011
%
2012
Units held
$1 Each
2011
units Held
$1 Each
Details of units held in associated trusts
Nerang Street Southport Project Trust
PPK Willoughby Funding unit Trust
25.00%
22.86%
–
22.86%
Distributions receivable from associated trusts
Nerang Street Southport Project Trust
PPK Willoughby Funding unit Trust
275
40
315
2012
$000s
9
–
9
–
40
40
2011
$000s
–
–
–
During the year the Group participated in the establishment of the Nerang Street Southport Project Trust. At the time of
establishment the only asset of the unit trust were the issued units. The Group holds 25% of the issued units in this trust
and 100% of the share capital in the trustee company, PPK Southport Pty Ltd. The trust is considered to be an associate of
the Group.
45
13. FINANCIAL ASSETS continued
13(a) Investments in Associated entities – equity accounted continued
PPK willoughby Funding Unit Trust Group
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
2012
$000s
2011
$000s
54,353
54,395
40,373
40,404
(42)
4
(11)
–
(11)
–
–
–
(31)
4
(28)
–
(28)
–
–
–
The PPK Willoughby Funding unit Trust holds 80% of the issued units in the PPK Willoughby Purchaser unit Trust. The
disclosure of financial information is for the consolidated group PPK Willoughby Funding unit Trust and its subsidiary PPK
Willoughby Purchaser unit Trust. 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.
Nerang Street Southport Project 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
2012
$000s
4,542
4,541
1
167
36
–
36
–
–
–
2011
$000s
–
–
–
–
–
–
–
–
–
–
Listed Companies
Name of Company
FRR Limited (formerly Frigrite Limited)
ISL Limited (formerly Intelligent Solar Limited)
46
Ownership Interest
2012
%
2011
%
Consolidated Entity
2012
$000s
2011
$000s
7.63%
7.28%
27.92%
26.39%
–
–
–
–
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT FRR Limited (formerly Frigrite Limited) and ISL Limited (formerly Intelligent Solar Limited) were both placed in
administration in the 2011 year. During the 2012 year both companies effectuated a Deed of Company Arrangement.
FRR Limited relisted on the Australian Stock Exchange on 6th June 2012. ISL Limited is in the process of complying with
ASX requirements for relisting.
As a result of the Deeds of Company Arrangement, the Group’s shareholding in each of FRR Limited and ISL Limited has
reduced (as detailed above) and neither FRR Limited or ISL Limited are now associates of the Group.
The Group’s investments in FRR Limited and ISL Limited is included in available-for-sale Financial Assets, Note 13(c) for 2012.
The Group has made a fair value adjustment to the carrying value of the shares in FRR Limited as the company is no longer
an associate and it has relisted. The fair value adjustment is taken to the profit and loss only at the time the entity has
relisted as the value of the Group’s shareholding can only be ascertained at the time of relisting. Details of the fair value
adjustment for the FRR Limited shares held by the Group is included in Other Income, Note 2(b).
Fair value of listed investments in associates
PRR Limited
ISL Limited
Share of associated companies’ profit or (loss)
(Loss) before income tax
Income tax benefit
(Loss) after income tax
13(b) Financial assets – at fair value through profit or loss
Current
(i) Listed Investments – at fair value
– Shares in listed corporations
Opening Balance
Additions at cost
Disposals
Consolidated Entity
2012
$000s
2011
$000s
–
–
–
–
–
–
–
–
–
(412)
–
(412)
Consolidated Entity
2012
$000s
2011
$000s
–
2,562
(2,235)
327
–
–
–
–
A financial asset is classified at fair value through profit or loss if it is classified as held for trading. It is principally acquired
for the purpose of selling or repurchasing in the near term or it is part of a portfolio of financial assets that are managed
together and for which there is evidence of a recent pattern of short-term profit-taking.
upon initial recognition it is designated as at fair value through profit or loss and all subsequent movements in fair value
are recognised in profit or loss.
47
13. FINANCIAL ASSETS continued
13(c) Financial Assets – available-for-sale financial assets
Non-Current
(i) Listed Investments – at fair value
– Shares in listed corporations
Opening Balance
Additions at cost
Fair value of shares received on redemption of convertible notes held
Fair value adjustment on reclassification of investment in associate now classified as
available-for-sale financial asset
Exercise of options held
Fair Value adjustments
Impairment
Disposals
Consolidated Entity
2012
$000s
2011
$000s
745
617
101
35
–
(79)
(60)
(603)
756
1,105
–
–
–
140
150
(117)
(533)
745
Listed investments are recorded at fair value based on the ASX closing price at the 30 June of the relevant financial period.
Gains or losses arising from changes in the fair value of available-for-sale financial assets are initially recognised directly in
equity through 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 the 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 difference
between the impaired value and the fair value will be recognised in equity through the reserve.
Impairment losses recognised in the profit or loss on equity instruments classified as available-for-sale are not reversed
through profit or loss.
(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 and unlisted Investments
Current
Non-Current
48
Consolidated Entity
2012
$000s
2011
$000s
249
(249)
–
327
756
1,083
249
(249)
–
–
745
745
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT
13(d) Controlled Entitles
Subsidiaries of PPK Group Limited:
Rutuba Pty Limited
Seven Hills Property Holdings Pty Ltd
PPK Properties Pty Ltd
PPK Property Trust
Dandenong South Property Pty Ltd
PPK Willoughby Holdings Pty Ltd
PPK Willoughby Pty Ltd
PPK Aust. Pty Ltd
PPK Investment Holdings Pty Ltd
PPK Easy Living Pty Ltd
Easy Living unit Trust
Easy Living Bundaberg Trust
PPK Finance Pty Ltd
SLOT Loan Trust
PPK Southport Pty Ltd
York Group Limited
Rambor Pty Ltd
King Cobra Mining Equipment Pty Ltd
Country of
Incorporation
Notes
Percentage owned
2012
%
2011
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
a
b
c
d
e
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
100%
51.4%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
–
–
–
–
100%
100%
100%
100%
a PPK Willoughby Holdings Pty Ltd acts as the trustee company of the PPK Willoughby Funding unit Trust. The Group
holds 22.86% of issued units of this trust which is considered an associate of the Group.
b PPK Willoughby Pty Ltd acts as the trustee company of the PPK Willoughby Purchaser unit Trust. PPK Willoughby
Funding unit Trust holds 80% of issued units of this trust.
c PPK Easy Living Pty Ltd acts as the trustee company of the Easy Living unit Trust and the Easy Living Bundaberg Trust.
The Group holds a 50% of the issued units in each of these trusts.
d PPK Finance Pty Ltd acts as the trustee company of the Slot Loan Trust. The Group holds a 51.4% of the issued units
of this trust.
e PPK Southport Pty Ltd acts as the trustee company of the Nerang Street Southport Project Trust. The Group holds
25% of issued units of this trust which is considered an associate of the Group.
49
14. INVESTMENT PROPERTIES
(a) Non current
Freehold land & buildings – at cost
Land
Buildings
Less: Accumulated depreciation
Less: Provision for impairment
Total Investment Properties
Reconciliations
Non-Current
Balance at the beginning of the year
Acquisition of land and building at cost
Expenditure subsequent to acquisition
Disposals
Depreciation expense
Impairment expense
Less transferred from /(to) Classified as assets held for sale
Land & buildings
Total investment properties of continuing operations
Current – assets classified as held for sale
Balance at the beginning of the year
Transfer (to) / from non-current investment properties
Disposals
Depreciation expense
The following amounts have been recognised in the statement of comprehensive income
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
50
Consolidated Entity
2012
$000s
2011
$000s
14,633
13,683
17,281
(3,310)
13,971
28,604
(1,328)
27,276
24,486
3,100
–
–
(310)
–
15,131
(3,000)
12,131
25,814
(1,328)
24,486
24,248
–
14
–
(310)
(169)
27,276
23,783
–
703
27,276
24,486
–
–
–
–
–
7,103
(703)
(6,371)
(29)
–
2,211
2,146
713
1,000
39
71
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT Acquisition and Disposals
The Easy Living unit Trust completed the acquisition of a 60 unit retirement village in Elizabeth Vale, South Australia. There
were no disposals of investment properties in the financial year. (2011: The Kirrawee, NSW, land & building was sold for
$8.085 million resulting in profit on sale over it’s carrying value of $1.514 million).
Valuation of Investment Properties
An independent valuation of Land & Buildings was undertaken in May 2010 and valued the investment properties
at $29.7 million. This does not include the building purchased in March 2012 by The Easy Living unit Trust which is
considered by the Directors to have a fair value, equal to its cost of $3.1 million. Capital gains tax that could be paid if
the Land & Buildings were sold at balance date at the independent valuation is $1.13 million. These valuations have been
reflected in the accounts to the extent that the value of one of the investment properties was considered impaired.
Impairment
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 “Investment property”
expenditure in the profit or loss, no additional provision for impairment was deemed necessary. (2011: $169,000 was
made against the carrying value of the land and buildings at Arndell Park, NSW).
Non-current assets pledged as security
Refer to Note 21(b) for information on non-current assets pledged as security by the parent entity or its subsidiaries.
Leases as Lessor
The investments properties are leased to tenants under long term operating leases with rentals payable monthly.
– not later than 1 year
– later than 1 year but not later than 5 years
– later than 5 years
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
Total property, plant and equipment of continuing operations
Consolidated Entity
2012
$000s
2011
$000s
1,225
2,143
–
3,368
1,623
3,368
–
4,991
Consolidated Entity
2012
$000s
2011
$000s
491
(308)
183
3,275
(2,209)
1,066
24
1,273
486
(240)
246
2,905
(1,763)
1,142
24
1,412
51
15. OTHER PROPERTY PLANT AND EQuIPMENT continued
Reconciliations
Reconciliations of the carrying amounts of each class of plant & equipment are set out below.
Leasehold
Improvements
$000s
Plant &
Equipment
$000s
Capital Works
In Progress
$000s
Total
$000s
246
–
6
–
–
(69)
183
239
43
–
–
19
(55)
246
1,142
130
248
–
–
(454)
1,066
1,342
177
298
(202)
–
(473)
1,142
Consolidated – 2012
Carrying amount at start of year
Additions
Manufactured plant & equipment for hire
Disposals
Transfers
Depreciation and Amortisation expense
Carrying amount at end of year
Consolidated – 2011
Carrying amount at start of year
Additions
Manufactured plant & equipment for hire
Disposals
Transfers
Depreciation and Amortisation expense
Carrying amount at end of year
16. TAX
(a) Assets
Deferred tax assets comprise temporary differences attributable to:
Amounts recognised in profit and loss
Doubtful Debts
Employee benefits
Building depreciation
Plant and equipment depreciation
Impairment of investments
Realised capital losses
Inventory
Other
Movements
Opening balance
Credit/(charged) to profit or loss
Prior year adjustment
52
24
1,412
–
–
–
–
–
24
43
–
–
–
(19)
–
24
130
254
–
–
(523)
1,273
1,624
220
298
(202)
–
(528)
1,412
Consolidated Entity
2012
$000s
2011
$000s
308
120
418
66
223
419
4
31
471
95
440
–
164
448
3
25
1,589
1,646
1,646
(57)
–
1,589
2,036
(390)
–
1,646
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT
Assessment was made on the recoverability of the deferred tax asset recognised in the accounts. The deferred tax asset has
only been recognised to the extent that there is reasonable certainty of realising capital profits. unrealised capital losses
with a tax asset value of $1,315,000 (2011: $1,315,000) have not been recognised and carried forward as a deferred tax asset.
(b) Liabilities
Current
Income tax provision
Non-Current
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit and loss
Rent receivable
Plant and equipment depreciation
Other
Amounts recognised in equity
Fair value adjustment of available-for-sale financial assets
Deferred tax liability
Movements
Opening balance
(Credit)/charged to profit or loss
(Credit)/charged to equity
Prior year adjustment
17. INTANGIBLE ASSETS
Licences, software and patents – at cost
Less: Accumulated amortisation
Goodwill
– Mining equipment manufacturing
Development Costs – at cost
– Mining equipment manufacturing
Brand names – at cost
Intangible Assets
Consolidated Entity
2012
$000s
2011
$000s
422
122
20
(22)
6
4
25
29
35
17
(23)
–
29
29
(44)
2
(13)
48
35
55
(61)
41
–
35
Consolidated Entity
2012
$000s
2011
$000s
688
(565)
123
636
(546)
90
155
155
638
497
1,413
–
497
742
53
17. INTANGIBLE ASSETS continued
Reconciliations
Licences, software and patents – at cost
Balance at the beginning of year
Additions – external purchases
Amortisation charge
Goodwill
Balance at the beginning of year
Additions / Disposals / Impairment
Development Costs
Balance at the beginning of year
Additions at cost
Brand Names
Balance at the beginning of year
Additions / Disposals / Impairment
Consolidated Entity
2012
$000s
2011
$000s
90
59
(26)
123
155
–
155
–
638
638
497
–
497
127
11
(48)
90
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.
Costs incurred on development (relating to the design and testing of new or improved products) are recognised as
intangible assets when it is probable that the project will, after considering its commercial and technical feasibility, be
completed and generate future economic benefits and generate future economic benefits and its costs can be measure
reliably. The expenditure capitalised comprises all directly attributable cost, including costs of materials, services, direct
labour and an appropriate proportion of overheads. Other development expenditures that do not meet these criteria are
recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an
asset in a subsequent period. Capitalised development costs are recorded as intangible assets and amortised from the
point at which the asset is ready for use on a straight-line basis over its useful life, 7 years.
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 consolidated entity. This, combined with continued support
for the brands by product development, advertising and marketing expenditure, has allowed the consolidated entity
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.
54
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT Impairment disclosures
Intangible assets deemed to have indefinite lives are allocated to the Group’s cash generating units identified according to
business segment.
A segment level summary of the intangible assets deemed to have indefinite lives is as follows:
Year ended 30 June 2012
Mining Equipment Manufacturing
Year ended 30 June 2011
Mining Equipment Manufacturing
Brand Names
$000s
Goodwill
$000s
Total
$000s
497
497
155
155
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 exceed the
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:
Growth
Rate
2012
Discount
Rate
Growth
Rate
2011
Discount
Rate
Mining Equipment Manufacturing
5.00%
12.50%
5.00%
12.50%
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 2012. If a discount rate of 66.7% was used instead of 12.5%, and if sales growth was limited to the inflation rate
of 2.4% instead of 5.0%, the estimated recoverable amount of the intangible assets would equal the carrying value.
18. TRADE AND OTHER PAYABLES
Trade payables
Sundry payables and accruals
Payables of continuing operations
Consolidated Entity
2012
$000s
2011
$000s
614
81
695
543
82
625
55
19. INTEREST BEARING LIABILITIES
Bank overdraft – secured
Bank loans – secured
Interest bearing liabilities of continuing operations
Notes
19(a)
19(a)
Consolidated Entity
2012
$000s
2011
$000s
425
500
925
1,074
–
1,074
(a) Bank overdraft and bank loans – secured
The bank overdraft and bank loans are secured by certain charges over the consolidated entity’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 21
20. PROVISIONS
Current
Annual leave
Long service leave
Non Current
Long service leave
Total Provisions
Consolidated Entity
2012
$000s
2011
$000s
201
110
311
89
400
153
94
247
68
315
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.
21. INTEREST BEARING LIABILITIES
Bank Loans – secured
Other Loans – secured
Interest bearing liabilities
(a) Secured liabilities
Total secured liabilities ( current and non-current ) are:
Bank overdrafts
Bank loans – PPK Group Limited
Bank loans – The Easy Living unit Trust
Other Loans – The Easy Living unit Trust
Bank overdrafts and bank loans are secured as noted in Note 19 above.
56
Consolidated Entity
2012
$000s
2011
$000s
19,850
18,500
650
–
20,500
18,500
425
18,500
1,850
650
1,074
18,500
–
–
21,425
19,574
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT (b) Assets pledged as security
The carrying amounts of non-current assets pledged as security are:
First mortgage
Freehold investment properties
Notes
14(a)
Registered Mortgage Debentures over company assets and cross guarantees & indemnities
14(a)
Freehold investment properties
Term receivables
Financial Assets
Investments in associated entities
Plant & equipment
Intangible Assets
Consolidated Entity
2012
$000s
2011
$000s
27,276
24,486
–
6,276
756
9
1,273
1,413
–
5,166
745
–
1,412
742
Total non-current assets pledged as security
37,003
32,551
The following current assets are also pledged as security under the registered mortgage
and cross guarantees and indemnities
Cash assets
Term receivables
Receivables – current
Inventories
Financial assets at fair value through profit or loss
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
$19,134,000 ( 2011: $19,959,000 )
(c) Unused credit facilities
(i) The consolidated entity had access to the following lines of credit at balance date:
Total facilities available
Bank Overdraft
Bank Loans
Master asset finance facility
Not utilised at balance date
Bank Overdraft
Bank Loans
Master asset finance facility
utilised at balance date
Bank Overdraft
Bank Loans
Master asset finance facility
9,079
274
2,422
1,162
327
323
9,681
2,000
2,367
1,813
–
395
13,587
16,256
50,590
48,807
2,000
22,340
1,500
25,840
1,575
1,990
1,500
5,065
425
20,350
–
3,000
20,840
1,500
25,340
1,926
2,340
1,500
5,766
1,074
18,500
–
20,775
19,574
57
21. INTEREST BEARING LIABILITIES continued
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
Provided by the National Australia Bank Ltd (NAB).
$20,490,000 (2011: $20,840,000) variable interest rate facilities provided by the NAB. Further details on the banking
facilities with the NAB are included in Note 24(c). Banking facilities with the NAB are subject to annual review and six
monthly satisfaction of banking covenants. There is no reason to believe that facilities will not be routinely renewed.
At year end the interest rates on the facilities range from 5.66% to 7.94% (2011: 7.17% to 8.83%) inclusive of bank margins.
Provided by the Commonwealth Bank of Australia Ltd (CBA).
$1,850,000 variable interest rate facilities provided by the CBA. Further details on the banking facilities with the CBA
are included in Note 24(c). Banking facilities with the CBA are for two years and subject to a six monthly satisfaction of
banking covenants. There is no reason to believe that facilities will be renewed at the end of the term. At year end the
interest rate on the facility was 6.65% inclusive of bank margins.
22. CONTRIBUTED EQUITY
Consolidated Entity
2012
$000s
2011
$000s
Paid-up Capital
51,625,430 (2011 53,812,779) ordinary shares fully paid
29,016
29,782
Movements in ordinary share capital
Balance at the beginning of the financial year
Shares repurchased under approved buy back scheme
29,782
(766)
29,016
31,249
(1,467)
29,782
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.
Movements in number of ordinary shares
Balance at the beginning of the financial year
Shares repurchased under approved buy back scheme
2012
No.
2011
No.
53,812,779
58,006,650
(2,187,349)
(4,193,871)
51,625,430
53,812,779
Capital Risk Management
The Group considers its capital to comprise its ordinary share capital, share premium and retained earnings /
(accumulated losses).
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.
58
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT It is the Group’s policy to maintain its gearing ratio within the range of 20% – 50% (2010: 20% – 50%). The Group’s gearing
ratio at the end of the reporting period is shown below:
Gearing ratios
Total borrowings
less Cash and cash equivalents
Net debt
Total equity
Total capital
Gearing Ratio
Consolidated Entity
2012
$000s
2011
$000s
21,425
(9,079)
12,346
29,139
41,485
30%
19,574
(9,681)
9,893
29,660
39,553
25%
The increase in gearing is a result of the Group’s purchase an investment property and a additional of loan to fund the
purchase. 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.
23. RESERVES
Available-for-sale financial assets
Share options
Movement in reserves
Share options
Opening balance
Closing balance
Available-for-sale financial assets
Opening balance
Revaluation
Deferred tax impact
Transfer to (profit) / loss
Deferred tax impact
Closing balance
Consolidated Entity
2012
$000s
2011
$000s
59
8
67
8
8
114
84
(25)
(163)
49
59
114
8
122
8
8
16
150
(45)
(10)
3
114
The available-for-sale financial assets reserves carries fair value adjustments made to available-for-sale financial assets
which are recognised in other comprehensive income.
When the available-for-sale financial assets is either sold or considered impaired the amount held in this reserve is
recognised in the profit or loss.
59
24. 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.
Floating
Fixed Interest Rate Maturing
Weighted
Average
Interest
Rate
Notes
Interest
Rate
$000s
Within
1 Year
$000s
1 to 5 Years
$000s
Non-
Interest
Bearing
$000s
Consolidated 2012
Financial Assets
Receivables
Loans receivable
Loans receivable
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
10
10
10
9
13c
13a
0.0%
15.0%
8.0%
4.6%
0.0%
0.0%
Total financial assets
13b
0.0%
Financial Liabilities
Bank Overdrafts
Bank Loans
Other Loans
Trade & Other Payables
Total financial liabilities at amortised cost
Consolidated 2011
Financial Assets
Receivables
Loans receivable
Loans receivable
Convertible notes
Loans and receivables
Cash
Available-for-sale financial assets
Investments in associated companies
Financial assets at fair value through
profit or loss – held for trading
Total financial assets
Financial Liabilities
Bank Overdrafts
Bank Loans
Trade and Other Payables
Total financial liabilities at amortised cost
60
19
21
21
18
10
10
10
10
9
13c
13a
13b
19
21
18
8.6%
7.0%
8.0%
0.0%
0.0%
14.0%
15.0%
10.7%
5.3%
0.0%
0.0%
0.0%
8.7%
7.2%
0.0%
Total
$000s
2,422
6,276
274
8,972
9,079
756
9
–
2,422
6,276
–
–
–
6,276
2,422
25
756
9
–
–
–
–
6,276
–
–
650
–
650
–
–
5,166
–
327
3,539
327
19,143
–
–
–
695
695
425
20,350
650
695
22,120
2,367
2,367
–
–
–
5,166
2,367
–
–
–
–
24
745
–
–
–
5,166
2,000
9,533
9,681
745
–
–
–
–
–
–
9,054
–
–
–
9,054
425
20,350
–
–
20,775
–
–
–
–
–
9,657
–
–
–
–
–
274
274
–
–
–
–
274
–
–
–
–
–
–
–
–
2,000
2,000
–
–
–
–
9,657
2,000
5,166
3,136
19,959
1,074
18,500
–
19,574
–
–
–
–
–
–
–
–
–
–
625
625
1,074
18,500
625
20,199
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT Fair Value
The carrying values of financial assets and liabilities listed above approximate their fair value except for non current loans
receivable which have a fair value of $5,651,000 (2011: $4,914,000).
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 and parent’s investments and obligations expose it to market, liquidity and credit risks. The nature of the
risks and the policies the Group and parent has for controlling them and any concentrations of exposure are discussed
as follows:
Hierarchy
The following tables classify financial instruments recognised in the statement of financial position of the group according
to the hierarchy stipulated in AASB7 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
financial instruments, 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).
Assets
Group 2012
Fair value through profit or loss
Listed equity securities
Available-for-sale financial assets
Listed equity securities
unlisted equity securities
Group 2011
Fair value through profit or loss
Listed equity securities
Available-for-sale financial assets
Listed equity securities
unlisted equity securities
Level 1
Level 2
Level 3
Total
327
756
–
1,083
–
745
–
745
–
–
–
–
–
–
–
–
–
–
9
9
–
–
–
–
327
756
9
1,092
–
745
–
745
61
24. FINANCIAL RISK MANAGEMENT continued
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 and parent entity’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
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%
62
Consolidated Entity
2012
$000s
2011
$000s
9,054
9,054
9,657
9,657
425
20,350
20,775
(11,721)
1,074
18,500
19,574
(9,917)
(82)
82
(69)
69
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT (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.
As the market value of listed companies fluctuate the fair value of the available-for-sale financial assets and financial assets
at fair value through profit or loss of the group change 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 at balance date was nil as the group
considers that there is little or no likelihood of any return from these investments. Changes in the fair value of financial
assets at fair value through profit or loss 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.
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
its financial assets at fair value through profit or loss is as follows:
Financial Assets
Available-for-sale financial assets
Investments in listed companies
Financial assets at fair value through profit or loss
Investments 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%.
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%
Consolidated Entity
2012
$000s
2011
$000s
756
745
327
1,083
–
745
26
(26)
76
(76)
5
(5)
48
(48)
63
24. FINANCIAL RISK MANAGEMENT continued
(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 28%
(2011: 31%) 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.
Sensitivity disclosure analysis
The Group’s and parent’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 Entity
2012
$000s
2011
$000s
13
–
13
–
13
13
–
13
–
13
(1)
1
(1)
1
(b) Credit Risk
The Group’s maximum exposure to credit risk is generally the carrying amount net of any provisions for doubtful debts.
The Group’s 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 Dandenong property 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 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. Refer to Note 10 for detail the Group’s trade and other receivables.
64
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT The group’s exposure to credit risk at balance date by country of loans and receivables is as follows:
Loans and receivables by country
Australia
united States of America
united Kingdom
Germany
Liechtenstein
New Zealand
The groups exposure to credit risk at balance date by industry of loans and receivables is as follows:
Loans and receivables by industry
Property development
Plastic Packaging
Mining Equipment
Manufacturing
Property and investing
Consolidated Entity
2012
$000s
2011
$000s
8,818
9,207
–
27
91
36
–
204
100
–
17
5
8,972
9,533
6,400
101
1,205
170
1,096
8,972
5,166
87
1,982
2,188
110
9,533
(c) Liquidity risk
Liquidity risk is the risk that the Group and parent 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 and parents 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 21.
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 2012, with the facilities requiring renewal on 30 November 2012, and
30 November 2013. Bank overdraft facility is provided by the NAB with the current facility expiring on 30 November 2012.
The Bank loans provided by the NAB have facilities that expire on 30 November 2012 and 30 November 2013. A facility
of $2,490,000 expires on 30 November 2012, $500,000 of this facility is currently used. A facility of $18,080,000 expires
on 30 November 2013, $18,000,000 of this facility is currently used. The CBA facility expires on 23 March 2014 and is for
an amount of $1,850,000 that is fully utilised. These new renewal dates have been used for disclosure of maturity dates
of bank overdraft and loans, even though they are subject to an annual review as there is no reason to believe that the
facilities will be altered by the bank at the time of annual review.
65
24. FINANCIAL RISK MANAGEMENT continued
Carrying
amount
$000s
< 6 months
$000s
6–12 months
$000s
1–3 years
$000s
> 3 years
$000s
Contractual
Cash flows
$000s
Consolidated 2012
Financial Liabilities
(current & non-current)
Trade & Other Payables
Bank Loans & overdrafts
Other Loans
Total Financial Liabilities
Consolidated 2011
Financial Liabilities
(current & non-current)
Trade & Other Payables
Bank Loans & overdrafts
Other Loans
695
20,775
650
22,120
695
1,556
25
2,276
625
19,574
–
625
1,767
–
Total Financial Liabilities
20,199
2,392
25. LEASE COMMITMENTS
–
605
25
630
–
654
–
654
–
20,395
100
20,395
–
20,319
–
20,319
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
–
–
706
706
695
22,556
856
24,107
–
–
–
–
625
22,740
–
23,365
Consolidated Entity
2012
$000s
2011
$000s
104
–
–
104
117
15
–
132
The Group leases premises in Nowra and Sutherland under non cancellable operating leases. The terminating date of the
leases is October 2012 and May 2013. The Group has an option to renew the lease for the Sutherland premises, expiring in
October 2012, for a further period of 2 years. The Group has an option to renew the lease for the Nowra premises, expiring
in May 2013, for a further period of 1 year.
26. CONTINGENT LIABILITIES
Group
Cross guarantees of the Group’s banking and finance facilities with the NAB totalling $24,090,000 (2011: $25,340,000)
of which $18,925,000 (2011: $19,574,000) was drawn at balance date.
66
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT 27. SEGMENT INFORMATION
The Group applies AASB 8 Operating Segments 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.
Information regarding segment assets is not provided to the Directors, segment assets therefore have not been 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 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 have either been leased at commercial rates or sold when considered
appropriate.
The Investment Segment owns primarily listed and some unlisted investments, it has also made loans from which it
earns interest. Investments in associated companies are included in this segment.
The Mining Equipment Segment manufactures portable underground mining equipment.
(a) Year ended 30 June 2012
Business Segments
Segment Revenue from external customers
Sales revenue
Rental income
Interest received
Dividends received
Segment other income
Net gain on disposal of plant & equipment
Other segment income
Investment
Properties
$000s
Investing
$000s
Mining
Equipment
Manufacturing
$000s
Total of
Continuing
Operations
$000s
–
2,211
–
–
2,211
–
192
192
–
–
1,332
65
1,397
–
592
592
7,711
–
5
–
7,711
2,211
1,337
65
7,716
11,324
9
27
36
9
811
820
Total Revenue and other income
2,403
1,989
7,752
12,144
Segment expenses include
Depreciation and amortisation
Impairments – available-for-sale financial assets
Segment result
Reconciliation of segment net profit to group net profit before tax
Amounts not included in segment profit but reviewed by the Board
Share of profit from associates accounted for using the equity
method
unallocated corporate expenses
unallocated interest expense
Consolidated operating (loss) before income tax
Non-controlling interests share of after tax profit
Income tax (expense)
Consolidated profit after income tax attributable to owners
of PPK Group Limited
310
–
–
60
548
–
1,651
1,891
1,487
858
60
5,029
9
(1,660)
(1,410)
1,968
(8)
(417)
1,543
67
27. SEGMENT INFORMATION continued
(b) Year ended 30 June 2011
Business Segments
Segment Revenue from external customers
Sales revenue
Rental income
Interest received
Dividends received
Segment other income
Net gain on disposal of plant & equipment
Other segment income
Total Revenue and other income
Segment expenses include
Depreciation and amortisation
Impairments – investment in associates
– convertible notes
– investment properties
– available-for-sale
Segment result
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 (loss) before income tax
Income tax (expense)
Consolidated (loss) after income tax attributable to owners
of PPK Group Limited
Investment
Properties
$000s
Investing
$000s
Mining
Equipment
Manufacturing
$000s
Total of
Continuing
Operations
$000s
–
2,146
–
–
2,146
1,514
1,585
3,099
5,245
343
–
–
169
–
4,174
–
–
1,589
23
1,612
–
105
105
1,717
–
4,140
1,322
–
117
(3,954)
6,102
–
–
–
6,102
–
49
49
6,151
548
–
–
–
–
1,486
6,102
2,146
1,589
23
9,860
1,514
1,739
3,253
13,113
891
4,140
1,322
169
117
1,706
(412)
(1,567)
(1,418)
(1,691)
(824)
(2,515)
(c) Geographic location of Customers
Although the group operates in Australia, the mining equipment manufacturing segment has sales revenue from
customers located overseas. Additional disclosure of sales revenue by geographical location of external customers that
represent 10% or more of total entity sales revenue is as follows:
Australia
Germany
united States of America
united Kingdom
New Zealand
Liechtenstein
Other countries
Consolidated Entity
2012
$000s
2011
$000s
5,584
966
428
243
8
472
10
7,711
4,209
501
664
521
155
–
52
6,102
The geographical location of receivables, relating to these sales, is disclosed in Note 25 of these accounts. All Non current
receivables are from customers based in Australia.
68
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT
28. 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:
Directors and key management personal and their related entities have made loans to the
Easy Living unit Trust. The loans are to be secured by a second mortgage over property
held by the trust. The loans are repayable on 16 February 2017 and interest is payable on
the loans at 8% per annum.
Loan advanced to the Group
Interest paid and credited to loan
Balance outstanding
Director and related interests in members
Directors and director-related entities hold directly, indirectly or beneficially as at the
reporting date the following equity interests in members of the consolidated entity:
PPK Group Limited – ordinary shares
The Easy Living unit Trust – units
The Easy Living Bundaberg Trust – units
The SLOT Loan Trust – units
Transactions with Associates
Interest receivable from associates
PPK Willoughby Funding unit Trust
Nerang Street Southport Project Trust
Loans and receivables from associates
Current
PPK Willoughby Funding unit Trust
Nerang Street Southport Project Trust
Non Current
PPK Willoughby Funding unit Trust
Nerang Street Southport Project Trust
Consolidated Entity
2012
$000s
2011
$000s
350
11
361
–
–
–
2012
Number
2011
Number
19,326,355
19,309,429
260
380
900
–
–
–
Consolidated Entity
2012
$000s
2011
$000s
852
22
874
124
150
274
5,943
333
6,276
1,191
–
1,191
–
–
–
5,166
–
5,166
69
29. CASH FLOW INFORMATION
(a) Reconciliation of profit / (loss) after income tax to the cash provided by operating activities
Profit / (Loss) after income tax
Cash flows in operating activities but not attributable to operating result:
Non controlling interest equity distribution
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
Impairment of other receivables – convertible notes
Transfers to provisions
Other Income
Share of (profit) / loss from associates
Impairment of carrying value of investment in associates
Loss/(Profits) on sale of available-for-sale assets
(Profits) on sale of shares at fair value through profit and loss
(Profits) on sale of shares in associates
Fair value adjustments on derivatives
Fair value adjustments on available-for-sale assets
(Profits) on sale of plant & equipment
(Profits) on sale of property
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 financial assets at fair value through profit and loss
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
(b) Reconciliation of Cash
For the purposes of the cash flow statement, 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 consolidated entity had the following non cash adjustments,
expense/(income);
Fair value adjustment on derivatives
Impairment of available-for-sale financial assets
These related to shares and options held in listed company investments.
70
Consolidated Entity
2012
$000s
2011
$000s
1,543
(2,515)
(8)
–
26
833
–
–
(800)
–
60
–
(122)
–
(9)
–
(157)
–
–
(136)
(9)
–
300
97
(6)
(327)
750
72
7
70
48
867
169
(97)
(296)
(2)
22
1,322
289
–
412
4,140
5
–
(15)
76
–
(5)
(1,514)
(336)
390
(61)
–
(1,173)
15
(304)
212
2,184
1,649
2
9,077
(425)
8,654
3
9,678
(1,074)
8,607
–
60
60
76
22
98
NOTES TO ThE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JuNE 2012CONTINUEDPPK GROUP LIMITED ANNUAL REPORT 30. EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD
On 20 September 2012, the Group made an ASX announcement advising that it had entered into binding contractual
agreements in relation to its property at Arndel Park. The property has been leased for a term of five years with two five
year options at a commencing rental of $1.1 million per annum plus outgoings with minimum annual 4% increases.
Contemporaneously, the parties have entered into Put and Call Options which, depending on the decisions of the
purchaser and PPK have an effective end date of 15 July 2014. Assuming an exercise of either the Put or the Call Option,
the net proceeds of the sale will be approximately $12.2 million against a book value of $12.7 miliion giving rise to an
impairment of $500,000.
In August 2012, the SLOT Loan Trust provided first mortgage secured finance to Supported Living on Tweed Pty Ltd, a
non-associated party operating retirement villages in northern NSW and Queensland. The net finance provided by the
Group in relation to this loan is $1,300,000.
In September 2012, the Group agreed to provide finance of $5 million to TMD Investments Pty Ltd, a member of the
SubZero Group. The loan will be secured by a registered first mortgage over a new mining truck maintenance facility
at Muswellbrook with the funds being advanced by 31 October 2012.
No other matter or circumstance has arisen since the end of the financial year which is not otherwise dealt with in the
Directors’ Report or the Consolidated Financial Statements, that has significantly affected or may significantly affect
the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent years.
71
DIRECTORS’ DECLARATION FOR THE YEAR ENDED 30 JuNE 2012
1. In the opinion of the Directors of PPK Group Limited (“the Company”)
(a) the consolidated financial statements, notes and the Remuneration report in the Directors’ report are in accordance
with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2012 and of its performance for the
financial year ended on that date; and
(ii) complying with the Australian Accounting Standards (including Australian Accounting Interpretations) and
the Corporations Regulations 2001;
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1(a).
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
2.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the
persons performing the functions of Chief Executive Officer and the Chief Financial Officer for the financial year ended
30 June 2012.
This declaration is signed in accordance with a resolution of the Directors.
Jury wowk
Chairman
Glenn Molloy
Executive Director
SYDNEY, 25 September 2012
72
PPK GROUP LIMITED ANNUAL REPORT INDEPENDENT AUDITORS’ REPORT
Grant Thornton Audit Pty Ltd
ABN 91 130 913 594
Level 19, 2 Market Street
Sydney NSW 2000
GPO Box 2551
Sydney NSW 2001
T +61 2 9286 5555
F +61 2 9286 5599
E info.nsw@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of PPK Group Limited
Report on the financial report
We have audited the accompanying financial report of PPK Group Limited (the “Company”),
which comprises the consolidated statement of financial position as at 30 June 2012, the
consolidated statement of comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the year then ended, notes comprising a summary
of significant accounting policies and other explanatory information and the directors’
declaration of the consolidated entity comprising the Company and the entities it controlled at
the year’s end or from time to time during the financial year.
Directors responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report that
gives a true and fair view of the financial report in accordance with Australian Accounting
Standards and the Corporations Act 2001. This responsibility includes such internal controls as
the Directors determine are necessary to enable the preparation of the financial report to be
free from material misstatement, whether due to fraud or error. The Directors also state, in the
notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation
of Financial Statements, that the financial report, comprising the financial statements and notes,
complies with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards which require us to
comply with relevant ethical requirements relating to audit engagements and plan and perform
the audit to obtain reasonable assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the
Company’s preparation and fair presentation of the financial report in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Directors, as well as evaluating the overall
presentation of the financial report.
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia
Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.
Liability limited by a scheme approved under Professional Standards Legislation
73
PPK GROUP LIMITED ANNUAL REPORT
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
a
the financial report of PPK Group Limited is in accordance with the Corporations Act
2001, including:
i
ii
giving a true and fair view of the consolidated entity’s financial position as at 30
June 2012 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
b
the financial report also complies with International Financial Reporting Standards as
disclosed in the notes to the financial statements.
Report on the remuneration report
We have audited the remuneration report included in pages 15 to 18 of the directors’ report for
the year ended 30 June 2012. The Directors of the Company are responsible for the preparation
and presentation of the remuneration report in accordance with section 300A of the
Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report,
based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s opinion on the remuneration report
In our opinion, the remuneration report of PPK Group Limited for the year ended 30 June
2012, complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
I S Kemp
Partner – Audit & Assurance
Sydney, 25 September 2012
74
INDEPENDENT AUDITORS’ REPORTCONTINUEDPPK GROUP LIMITED ANNUAL REPORT
ShAREhOLDER INFORMATION AS AT 25 SEPTEMBER 2012
1. Shareholding
(a) Number of PPK shareholders: 1,103
(b) Total shares issued: 51,191,778
(c) Percentage of total holdings by or on behalf of the 20 largest shareholders: 64.18%
(d) Distribution schedule of holdings
Category (size of holding)
Number of Shareholders
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
less than marketable parcel
120
327
265
341
50
1,103
136
(e) Voting rights: Every member present personally or by proxy or attorney etc, shall, on a show of hands,
have one vote and on a poll shall have one vote for every share held.
SUBSTANTIAL SHAREHOLDERS
Substantial Shareholders
Wavet Holdings Pty Ltd
Warakirri Asset Management Pty Ltd
Equipment Co of Australian Pty Ltd
TOP 20 HOLDERS OF ORDINARY FULLY PAID SHARES
Shareholder
1 Wavet Fund No 2 Pty Ltd
2 JP Morgan Nominees Australia Limited
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