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Hyster-Yale Materials HandlingINDUSTRIAL PROPERTY
MINING SERVICES
PROPERTY DEVELOPMENT
ANNUAL REPORT 2013
CONTENTS
Chairman’s and Executive Director’s Overview
Five Year Financial Summary
Corporate Governance Statement
Directors’ Report
Remuneration Report (Audited)
Auditor’s Independence Declaration
Financial Statements
Independent Auditor’s Report
Shareholder Information
2
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76
Corporate Directory
Inside Back Cover
ANNUAL GENERAL MEETING
The 2013 Annual General Meeting of PPK Group
Limited will be held at 3.00pm on Tuesday,
26 November 2013 at The Grace Hotel,
77 York Street, Sydney NSW Australia
ASX
PPK
WEBSITE
www.ppkgroup.com.au
SHARE REGISTRY
www.boardroomlimited.com.au
PPK Group Limited | ABN 65 003 964 181
In FY2013, PPK Group Limited has continued the trend of improving its
earnings, profit and dividend payout.
The Directors are continuing to work on realising full value for the PPK assets
and providing an improved dividend flow, share price and ultimate return for
our shareholders.
RAMBOR – MINING
SERVICES
Rambor has continued its success
and reputation as a leading
manufacturer and supplier
of mining.
PROPERTY
DEVELOPMENT
The Kiah Willoughby project
continues to set new benchmarks
in quality and selling prices and
is on track to deliver profits as
forecast in FY2014 and FY2015.
INDUSTRIAL
PROPERTIES
PPK has continued to manage
its remaining three industrial
properties located at Arndell Park,
Seven Hills and Dandenong South.
FINANCIAL HIGHLIGHTS
Sales revenue from Continuing Operations ($’000)
Rental income from Investment Properties ($’000)
Profit before Income Tax ($’000)
Profit after Tax attributable to members ($’000)
Earnings Per Share (cents)
5,002
3,060
3,455
2,383
4.7
-35%
38%
76%
55%
59%
1
CHAIRMAN’S AND EXECUTIVE DIRECTOR’S OVERVIEW
In the 2013 financial year,
PPK Group Limited (PPK) has
continued the trend of improving
its earnings, profit and dividend
payout.
JURY WOWK
CHAIRMAN
GLENN MOLLOY
EXECUTIVE DIRECTOR
In FY2013, PPK has:
•
recorded a profit after tax attributable to members of
$2.383 million compared to $1.543 million in FY2012
(up 54%); and
• paid a total dividend of 3.5 cents per share fully franked
compared to 1.0 cents per share fully franked in FY2012.
Three of PPK’s divisions, Industrial Properties, Property
Development and Financing performed extremely well
whilst the fourth, Rambor – Mining Services performed
admirably in what was a difficult year for mining services
businesses.
Industrial Properties
PPK has continued to manage its remaining three
industrial properties located at Arndell Park, Seven Hills
and Dandenong South. All three properties are now
fully leased to strong established tenants and provide
a full rental return and strong cash flow.
The Arndell Park and Seven Hills properties are subject to
options to purchase by the existing tenants providing a
prospect that each of these properties may be sold within
the next 12 to 18 months.
Property Development
PPK has continued its investment and involvement in
the “Kiah” Willoughby project in which PPK holds an
18.28% interest.
Sales of all 14 homes in Stage 1 have proceeded to
completion. 13 sales were completed in December 2012.
The sale of the 14th home (which was retained as an
exhibition home) settled in September 2013. PPK’s share of
the profit from the sale of the 13 Stage 1 homes contributed
to FY2013 earnings.
Construction of the 16 homes in Stage 2 (which
have all been sold) will be completed in October/
November 2013. All 16 sales are scheduled to settle
prior to 31 December 2013 and will provide a healthy
contribution to FY2014 earnings.
Development approvals and funding are in place for the
construction of the remaining 46 homes in Stages 3, 4
and 5. 18 of the homes have been presold for a total of
$34,752,500 in pre-sales. Construction has commenced on
the Stage 3 homes. On completion of the infrastructure
works for Stages 4 and 5, early in the 2014 calendar year,
work will commence on the Stage 4 and 5 homes.
2
PPK GROUP LIMITED ANNUAL REPORT The Kiah Willoughby project continues to set new
benchmarks in quality and selling prices and is on track
to deliver profits as forecast in FY2014 and FY2015.
PPK has continued it’s lead role in the Nerang Street
Southport Project Trust (Trust) which in August 2013
completed the acquisition of an adjoining property for a
part cash and party equity consideration. This has reduced
PPK’s equity interest in the Trust entity from 25% to 18.74%
but has provided the Trust with a larger development site
in a key location with improved development potential.
The Trust participants are now reviewing the alternatives
of either on selling the property as is, or preparing and
lodging a development application and then, either
proceeding with a development of the property or on
sale with a development approval.
The Easy Living Unit Trust (ELUT) and Easy Living
(Bundaberg) Unit Trust (ELBUT) continue to own and lease
out the 60 unit retirement village in Elizabeth Vale, South
Australia and 54 unit retirement village in Bundaberg,
Queensland. Both ELUT and ELBUT have made, and will
continue to make positive contributions to PPK earnings
until such time as each of the villages are either sold in line
or strata titled and resold as strata titled units. The on sale/
resale of the villages is anticipated within the next 12 to
15 months.
Financing
The significant first Mortgage secured loans made to:
•
•
Supported Living on Tweed Pty Ltd by the SLOT Loan
Trust (in which PPK holds a 51.4% interest); and
TMD Investments Pty Ltd, a member of the SubZero
Group, a leading mining services provider in the Hunter
Valley by the TMD Loan Trust (in which PPK holds a
100% interest);
continue to provide high level interest returns.
Each of the borrowers are currently in the process of
arranging repayment of their loans by either sale or
refinancing of the security properties.
Rambor – Mining Services
Rambor has continued its success and reputation as a
leading manufacturer and supplier of mining equipment to
the coal industry and remains a credit to its management
team and their dedicated work force.
Like all mining services providers Rambor experienced
a slow down in sales and a reduced profit in the current
difficult environment for all mining services businesses.
However, earnings improved in the second half of FY2013
and Rambor made a significant contribution in pre-tax
profit for the full year.
Projections are for an improved performance in FY2014
as Rambor leverages off:
•
its technical expertise; and
• unique engineering services offering;
to deliver cost and efficiency improvements to mining
companies for whom these are critical factors in the
current environment.
Net Assets, Dividends and Forecast
Present indications are for a continuing steady
improvement in earnings in FY2014.
The value of assets owned by PPK has shown an
improvement and PPK’s net assets value is in the range
of $0.70 cents to $0.75 cents per share. This net asset
value per share is based on a calculation which takes into
account the current market value of PPK’s assets as distinct
from the book value reflected in the Financial Statements.
The Directors are continuing to work on realising full value
for the PPK assets and providing an improved dividend
flow, share price and ultimate return for our shareholders.
Jury Wowk
Chairman
Glenn Molloy
Executive Director
3
JURY WOWK
Non-Executive Chairman,
Independent Director
Glenn Molloy
Executive Director
Raymond Beath
Graeme Webb
David Hoff
Non-Executive
Independent Director
Non-Executive Director
Alternate Non-Executive
Director
“ IN FY2013 PPK GROUP
LIMITED (PPK) HAS
CONTINUED THE TREND
OF IMPROVING ITS
EARNINGS, PROFIT AND
DIVIDEND PAYOUT.”
$3,060,000
RENTAL INCOME
$5,002,000
SALES REVENUE
$59,531,000
TOTAL ASSETS
4
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
Equity attributable to members of PPK Group
Limited
Total equity
Dividend and Share information
Interim dividend
Final Dividend
Full year ordinary dividend
Dividend payout ratio
Number of ordinary shares issued at year end
Market capitalisation
Ratios and statistics
Return on equity attributable to members of
PPK Group Limited
Basic earnings per share
Net debt/equity
Debt/(Equity-Intangibles)
Interest cover on continuing operations
Net Tangible Assets per Share
2013
2012
2011
2010
2009
$000
$000
$000
5,002
3,060
3,455
7,711
2,211
1,968
6,102
2,146
(1,691)
4,746
3,109
1,246
4,867
4,776
461
$000
2,383
1,543
(2,515)
762
540
$000
$000
$000
$000
cents
cents
cents
%
000
$000
%
cents
%
%
times
cents
59,531
26,336
30,329
30,455
1.5
2.0
3.5
74
52,179
12,346
29,206
29,208
1.0
0.0
1.0
34
50,453
9,893
29,782
29,782
1.0
1.5
2.5
n/a
57,427
21,444
34,794
34,794
1.5
1.0
2.5
192
50,184
12,087
35,449
35,449
1.5
1.0
2.5
277
50,639
22,281
51,625
19,618
53,813
16,144
58,007
22,623
58,007
16,242
7.9
4.7
86.5
92.5
3.66
55.7
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
5
STATEMENT OF CORPORATE GOVERNANCE PRACTICES – 2013
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;
• developing PPK’s annual budget, recommending it
to the Board for approval and managing day-to-day
operations within the budget;
• managing day-to-day operations in accordance with
standards for social and ethical practices which have
been set by the Board.
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.
6
PPK GROUP LIMITED ANNUAL REPORT 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.
PRINCIPLE 3: Promote ethical and responsible
decision-making.
Companies should actively promote ethical and
responsible decision-making.
Recommendation 2.1: A majority of the board should
be independent directors.
The PPK is comprised of 4 directors or whom Mr Jury Wowk,
Mr Ray Beath and Mr Glenn 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.
The Chairman Mr Jury Wowk, is considered to be an
independent director.
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. 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.
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.
In addition, PPK has developed a series of policies designed
to promote ethical and responsible decision making by
directors, executives, employees and contractors of the
Company, including:
•
Trading Policy;
• Market Disclosure Policy;
• Privacy Policy;
• Occupational Health & Safety Policy;
• Code of Conduct and Ethics (General).
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.
7
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 Ray Beath (Committee Chairman)
• Mr Jury Wowk.
During the reporting period, the PPK Audit Committee was
chaired by Mr 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.
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 based
on merit across all levels of its organisation subject to
organisational capacity.
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
33 people of which 2 are women.
The Company has a Board of four of which none are women.
Recommendation 3.5: Provide the information
indicated in Guide to reporting on Principle 3.
The Company has provided this information.
8
STATEMENT OF CORPORATE GOVERNANCE PRACTICES – 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT 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 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.
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 invaccordance with ASX Listing Rule
disclosure requirements.
Senior management and the Board are responsible for
scrutinising events and information to determine whether
the disclosure of the information is required in order to
maintain the market integrity of the Company’s shares
listed on the ASX.
The Company Secretary is responsible for all
communications with the ASX.
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
9
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.
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.
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 2013.
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 2013.
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.
Recommendation 7.4: Companies should provide the
information indicated in the Guide to reporting on
Principle 7.
The Company has provided this information.
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.
10
STATEMENT OF CORPORATE GOVERNANCE PRACTICES – 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT 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.
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:
•
•
consists of a majority of independent directors;
is chaired by an independent director; and
• has at least three members.
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.
11
DIRECTORS’ REPORT
Your directors present their report on the parent entity and its subsidiaries for the financial year ended 30 June 2013.
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
David Alfred Hoff (alternate for Raymond Beath 5 February 2013 to 7 July 2013)
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 (62) 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)
Intelligent Solar Limited, Non-executive Director (Appointed: 30 November 2010;
Ceased 15 December 2011)
Eureka Group Holdings Limited, Non-executive Director and Chairman
(Appointed: 30 November 2010; Ceased: 17 May 2011)
Glenn Molloy (58) 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:
•
SubZero Group Limited, Non-executive Director (Appointed 10 April 2013;
continuing), Chairman (Appointed 10 April 2013; ceased 31 July 2013)
12
PPK GROUP LIMITED ANNUAL REPORT Raymond Beath (62) 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 (62) 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
David Hoff (64) Alternate Non-Executive Director for Raymond Beath from
5 February 2013 to 7 July 2013
Mr David Hoff was appointed as an alternate Director for Mr Raymond Beath while
Mr Beath was on leave from 5 February to 7 July 2013.
Mr Hoff has a long history of association with the Company and was previously a
Director of the company for 9 years until his retirement in 2009. David has international
experience in the packaging industry, the mining industry and real estate development.
Other listed public company directorships in the last 3 years:
•
•
Intelligent Solar Limited, Non-executive Director and Chairman
(Appointed: 19 September 2007; Ceased: 15 December 2011)
Frigrite Limited, Non-executive Director and Chairman (Appointed: 23 July 2008;
Ceased: 29 November 2011).
13
Information on Company Secretary
Andrew J. Cooke (53) LL.B, FCIS
Group Company Secretary
Mr. Andrew Cooke was appointed as Group Company
Secretary on 9 May 2012.
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.
Operating Results
The profit after tax of the consolidated entity for the
period ended 30 June 2013 amounted to $2,748,000
(2012: Profit of $1,551,000).
Dividends Paid or Recommended
Dividends paid or recommended for payment are as follows:
The Seven Hills, New South Wales property has a lease in
place until March 2018 and the Arndell Park, New South
Wales property has a lease in place until September 2017.
Both these properties are subject to an option to purchase
by the existing tenants, providing a prospect that each
of these properties may be sold within the next 12 to
18 months.
Rambor
Rambor experienced a slow down in sales and a reduced
profit contribution in the current difficult environment for
all mining services businesses.
Rambor continues to expand its product range and to
extend its distribution coverage into new geographic
markets. Projections are for an improved performance
in the 2014 financial year.
PPK Willoughby Pty Ltd
PPK holds an 18.28% interest in the Kiah Willoughby Project.
Sales of all 14 Stage 1 homes proceeded to completion
in FY2013. The 16 Stage 2 homes are scheduled for
completion and settlement of sales in October or
November 2013 contributing profit in FY2014.
PPK Southport Pty Ltd
PPK has continued its lead role the Nerang Street Southport
Project Trust, which in August 2013 completed the
acquisition of an adjoining site for a part cash part equity
consideration. This has reduced PPK’s equity interest in the
Trust from 25% to 18.74%.
Interim dividend in respect of the
reporting period of 1.5 cents per ordinary
share paid on 22 March 2013.
A final dividend on respect of the
reporting period of 2.0 cents per ordinary
share will be paid on 18 October 2013.
$765,000
$1,015,000
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).
Review Of Operations
Information on the entity’s operations, financial position,
business strategies and prospects for the future is
detailed below and further within the Chairman and
Executive Director’s Review included in the Annual Report
accompanying these Financial Statements.
Property
Property rental income increased by 38% compared to the
2012 year as all three properties are now fully leased.
The Dandenong, Victoria property has a lease in place until
August 2015.
14
ELUT has continued to own and lease out a 60 unit
retirement village in Elizabeth Vale, South Australia.
ELBT completed the acquisition of a 54 unit retirement
village in Bundaberg, Queensland which is now fully leased.
It is anticipated that both these villages will in the next
12 to 15 months be either sold in line or strata titled and
resold as strata titled units.
PPK Finance Pty Ltd
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. PPK holds a
51.4% interest in the Trust.
DIRECTORS’ REPORTCONTINUEDPPK GROUP LIMITED ANNUAL REPORT Pursuant to a Secured Loan Agreement entered into in
September 2012, the TMD Loan Trust has provided finance
of $5 million to TMD Investments Pty Ltd, a member of the
SubZero Group. The loan is secured by a first mortgage
over a new mining vehicle and equipment maintenance
facility at Muswellbrook. PPK holds 100% of the issued
units in the TMD Loan Trust.
These loans have provided high level interest returns to
PPK. It is anticipated that both these loans will be repaid
in the first half of FY2014.
Future Direction and Business Outlook
PPK will continue to focus on the following key areas:
• 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 assets which have significant development
potential.
Financial Position
The net assets of the consolidated entity have increased by
$1,247,000 from 30 June 2012.
The main changes in the financial position have resulted from:
•
•
•
profit earned by the group as disclosed;
payment of dividends at disclosed levels; and
the on market buy-back of 860,654 shares at a cost of
$343,732 (or an average of 40 cents per share) pursuant
to the on-market buy back schemes in place during the
reporting period the particulars of which are 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 16 November 2011
and concluded on 15 November 2012 and pursuant
to which a total of 537,932 shares were bought back
in the financial year ended 30 June 2013 for a total
consideration of $205,398; and
a scheme which commenced on 10 December 2012 and
will conclude on 9 December 2013, 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 2013, PPK acquired a total of 322,722 shares
under the scheme at a cost of $138,334.
Since the end period to the date of this report, PPK
acquired a further 125,938 shares under the scheme
at a cost of $55,412.
There have been no other significant changes in the state
of affairs during the 2013 financial year or existing at the
time of this report.
Matters Subsequent to the End of the
Financial Year
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 2013 are included in the Chairman and Executive
Director’s Review detailed in the 2013 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.
15
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.
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.
16
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.
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 2013 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.
DIRECTORS’ REPORTCONTINUEDPPK GROUP LIMITED ANNUAL REPORT Consequences of company performance on shareholder wealth
The following table outlines the impact of company performance on shareholder wealth:
Earnings per share (cents)
Full year ordinary dividends (cents) per share
Year-end share price
Shareholder return (annual)
2013
2012
4.7
3.5
$0.44
25%
2.9
1.0
$0.38
30%
2011
(4.5)
2.5
$0.30
(16.7%)
2010
2009
1.3
2.5
$0.39
45.4%
0.9
2.5
$0.28
(51.4%)
The above table shows the annual returns to shareholders calculated to include the difference in percentage terms
between the dividend yield for the year (based on the average share price during the period) and changes in the price
at which shares in the Company are traded between the beginning and the end of the relevant financial year.
Details of Remuneration for the year ended 30 June 2013
Directors’ and other Key Management Personnel remuneration
Details of the nature and amount of each element of the remuneration of each key management personnel (‘KMP”) of
PPK Group Limited are shown in the table below:
Short Term Incentives
Post
Employment
Long Term Incentives
Short Term
Incentive
Cash
Bonus
($)
Salary &
Fees
($)
Non-Cash
Benefits
($)
Super-
annuation
($)
Long
Service
Leave
($)
Post
Employment
Benefits
($)
Share
based
payments
($)
Proportion of
Remuneration
Performance
Related
(%)
Total
($)
Directors
Non-Executive
J I Wowk
R M Beath
GD Webb
Executive
149,983
15,000
30,000
G R Molloy
163,000
Total Directors
357,983
Other Key Management Personnel
D A Hoff
166,542
Total Key
Management
Personnel
524,525
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
149,983
15,000
30,000
163,000
357,983
–
166,542
–
524,525
–
–
–
–
–
–
–
17
2012
Short Term Incentives
Post
Employment
Long Term Incentives
Short Term
Incentive
Cash
Bonus
($)
Salary &
Fees
($)
Non-Cash
Benefits
($)
Super-
annuation
($)
Long
Service
Leave
($)
Post
Employment
Benefits
($)
Share
based
payments
($)
Proportion of
Remuneration
Performance
Related
(%)
Total
($)
Directors
Non-Executive
J I Wowk
R M Beath
G D Webb
C F Ryan*
Executive
G R Molloy
Total Directors
133,513
30,000
27,500
3,750
191,000
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.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
133,513
30,000
27,500
3,750
–
191,000
385,763
–
–
–
–
–
250,000
17%
–
635,763
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 2013
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: This contract expired after an initial period of 3 years
on 31 August, 2012.
18
Remuneration: Consultancy fee payable during the period
1 July 2012 to 31August 2012 was $41,667. The Company
supplied a mobile phone and laptop and reimbursed all
reasonable expenses incurred in providing consultancy
services.
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.
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
Ordinary Shares
Options
212,302
11,944,566
7,498,153
42,821
–
–
–
–
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
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
David Alfred Hoff *
* As alternate for Raymond Beath
Directors’ Meetings
Committee Meetings
Number
Eligible to
attend
Number
Attended
Number
Eligible to
attend
Number
Attended
12
12
12
12
5
11
12
7
7
5
3
–
3
–
1
2
–
2
–
1
Risk and 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 2013 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 person performing the
executive director function regarding the consolidated
financial statements and the effective operation of risk
management systems and internal controls in relation
to financial reporting risks.
Material associates and joints ventures, which the company
does not control, are not dealt with for the purposes of this
statement.
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
D A Hoff (as alternate for R M Beath)
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 2013, 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 2013 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 2013
21
AUDITOR’S INDEPENDENCE DECLARATION
22
PPK GROUP LIMITED ANNUAL REPORT CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2013
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 from associates accounted for using the equity method
Profit before income tax expense
Income tax (expense) attributable to profit
Profit after income tax
Profit 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
Realised gain on sale of available-for-sale financial assets
transferred to profit or loss from the asset revaluation reserve
Provision for income tax thereon
Other comprehensive income net of income tax
Total Comprehensive Income for the year
Total comprehensive income 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.
Consolidated Entity
2012
2013
$000s
$000s
Notes
2(a)
2(b)
2(e)
2(d)
3
7
7
5,002
3,060
38
2,173
10,273
7,711
2,211
65
1,337
11,324
667
820
(4,301)
(6,265)
(812)
(53)
(1,514)
(1,298)
(7,978)
493
3,455
(707)
2,748
2,383
365
2,748
(180)
54
(36)
10
(152)
2,596
2,231
365
2,596
4.7
4.7
(752)
(98)
(1,660)
(1,410)
(10,185)
9
1,968
(417)
1,551
1,543
8
1,551
84
(25)
(163)
49
(55)
1,496
1,488
8
1,496
2.9
2.9
23
PPK GROUP LIMITED ANNUAL REPORT CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2013
Notes
9
10
11
12
13(b)
10
13(a)
13(c)
14(a)
15
16(a)
17
18
19
16(b)
20
21
22
16(b)
20
23
24
Consolidated Entity
2012
2013
$000s
$000s
1,345
8,850
1,017
312
–
9,079
2,696
1,162
323
327
11,524
13,587
10,472
493
2,259
6,276
9
756
30,430
27,276
993
1,375
1,985
48,007
59,531
493
6,720
58
520
1,273
1,589
1,413
38,592
52,179
695
925
422
311
7,791
2,353
18,080
2,881
235
89
21,285
29,076
30,455
20,500
–
29
89
20,618
22,971
29,208
28,673
29,016
(85)
1,741
30,329
126
67
123
29,206
2
30,455
29,208
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
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
Trade and Other Payables
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Contributed equity
Reserves
Retained earnings
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
PPK GROUP LIMITED ANNUAL REPORT CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2013
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
2013
$000s
$000s
Notes
8,320
(6,420)
57
38
360
–
987
(586)
11,476
(7,762)
219
65
2,301
(2,562)
537
(42)
(1,298)
(1,410)
Net cash provided by / ( used in ) operating activities
30(a)
1,458
2,822
Cash Flows from Investing Activities
Purchase of investment property
Proceeds from sale of plant and equipment
Purchase of property, plant and equipment
Proceeds from sale of available-for-sale financial assets
Purchase of available-for-sale financial assets
Proceeds from redemption of convertible notes
Payment for intangibles
(3,438)
(3,100)
–
(142)
2,530
(2,912)
–
(584)
9
(384)
–
(618)
2,169
(697)
Net cash (used in) / provided by investing activities
(4,546)
(2,621)
Cash Flows from Financing Activities
Other receivables – loans advanced
Other receivables – loans repaid
Payment for buyback of shares
Proceeds from bank loans
Proceeds from other borrowings
Borrowings 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.
(9,697)
(1,184)
144
(343)
3,150
3,625
(335)
(765)
–
(4,221)
(7,309)
8,654
1,345
30(b)
600
(766)
1,850
642
–
(1,298)
2
(154)
47
8,607
8,654
25
PPK GROUP LIMITED ANNUAL REPORT CONSOLIDATED STATEMENT OF CHANGES IN EqUITY FOR THE YEAR ENDED 30 JUNE 2013
Retained
Earnings
(Accumulated
losses)
$000s
Issued
Capital
$000s
Total
Attributable
to Owners of
PPK Group Ltd
$000s
Non-
controlling
Interests
$000s
Other
Reserves
$000s
Total
Equity
$000s
Consolidated Entity
At 1 July 2011
29,782
(122)
122
29,782
–
29,782
Total comprehensive income for the year
–
1,543
–
1,543
8
1,551
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 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
–
–
(766)
–
(766)
–
–
–
–
1,543
(1,298)
–
–
–
(1,298)
(163)
49
84
(25)
(55)
–
–
–
–
–
–
(163)
49
84
(25)
1,488
(1,298)
–
(766)
–
(2,064)
At 30 June 2012
29,016
123
67
29,206
–
–
–
–
(163)
49
84
(25)
8
1,496
–
(8)
–
2
(6)
2
(1,298)
(8)
(766)
2
(2,070)
29,208
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
less deferred tax impact
Total comprehensive income for the year
Transactions with owners in their capacity as owners
–
–
–
–
–
–
–
(343)
(343)
28,673
2,383
–
2,383
365
2,748
–
–
–
–
2,383
(765)
–
(765)
1,741
(36)
10
(180)
54
(152)
–
–
–
(85)
(36)
10
(180)
54
–
–
–
–
(36)
10
(180)
54
2,231
365
2,596
(765)
(343)
(1,108)
30,329
–
(241)
–
(765)
(241)
(343)
(241)
(1,349)
126
30,455
Dividends paid
Trust distributions
Shares repurchased
At 30 June 2013
26
PPK GROUP LIMITED ANNUAL REPORT NOTE 1 STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES
Corporate Information
The financial statements of PPK Group Limited for the
year ended 30 June 2013 were authorised for issue
in accordance with a resolution of the directors on
24 September 2013 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.
PPK Group Limited is a for-profit entity for the purpose
of preparing the financial statements.
New and amended standards adopted by
the group
AASB 2011-9 Amendments to Australian Accounting
Standards – Presentation of Items of Other
Comprehensive Income (Applies annual reporting
periods beginning on or after 1 July 2012).
AASB 2011-9 requires entities to group items presented
in Other Comprehensive Income (OCI) on the basis of
whether they are potentially reclassifiable to profit or
loss subsequently, and changes the title of ‘statement of
comprehensive income’ to ‘statement of profit or loss and
other comprehensive income’.
The adoption of the new and revised Australian
Accounting Standards and Interpretations has had no
significant impact on the Group’s accounting policies or
the amounts reported during the current half-year period.
The adoption of AASB 2011-9 has resulted in changes to
the Group’s presentation of its financial statements.
(a) Basis of Preparation
The financial statements are general purpose financial
statements which have been prepared in accordance with
Australian Accounting Standards and other authorative
pronouncements of the Australian Accounting Standards
Board and the Corporations Act 2001.
The financial statements also comply with International
Financial Reporting Standards (IFRS) as issued by
The International Accounting Standards Board. The financial
statements have been prepared on an accruals basis
and are based on historical costs, except for available-
for-sale financial assets and derivatives which have been
measured at fair value and land and buildings, plant and
equipment where impairment has been recognised when
the fair value of the asset is less than the historical cost.
Non-current assets and disposal groups held-for-sale are
measured at the lower of carrying amounts and fair value
less costs to sell.
The accounting policies have been consistently applied
to the entities of the 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 and
accompany 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
asthe 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 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.
27
PPK GROUP LIMITED ANNUAL REPORT NOTE 1 STATEMENT OF SIGNIFICANT
(d) Inventories
ACCOUNTING POLICIES continued
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.
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.
The financial statements of the associate are used to apply
the equity method. The end of the reporting period of
the associate and the parent are identical and both use
consistent accounting policies.
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.
(c) Revenue and Revenue Recognition
Revenue is recognised at the fair value of consideration
received or receivable. Amounts disclosed as revenue are
net of returns, trade allowance and duties and taxes paid.
The following specific recognition criteria must also be met
before revenue is recognised:
Sales of goods
Revenue from the sale of mining equipment is recognised
when significant risk and rewards of rewards of ownership
have passed to the buyer and can be reliably 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.
28
(e) Trade Receivables and 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.
Collectibility is assessed on an ongoing basis. Debts which
are known to be uncollectible are written off. An allowance
is made for doubtful debts where there is objective
evidence that the Group may not be able to collect all
amounts due according to the original terms. Objective
evidence of impairment include financial difficulties of
the debtor, default of payment terms or debts more than
60 days past due. On confirmation that the trade receivable
will not be collectible the gross carrying value of the asset
is written off against the associated provision.
From time to time the Group elects to renegotiate the
terms of trade receivables due from customers with
which it has previously had a good trading history. Such
renegotiations will lead to a change in the timing of
payments rather than changes to the amount owed and
are not, in the view of the directors, sufficient to require the
derecognition of the original instrument.
(f) Income Tax
The income tax expense for the period is the tax payable
on the current period’s taxable income based on the
national income tax rate for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable
to temporary differences between the tax base of assets
and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
Deferred tax assets are only recognised for deductible
temporary differences, between carrying amounts of
assets and liabilities for financial reporting purposes and
their respective tax bases, at the tax rates expected to
apply when the assets are recovered or liabilities settled,
based on those tax rates which are enacted or substantially
enacted for each jurisdiction. Exceptions are made for
certain temporary differences arising on initial recognition
of an asset or liability if they arose in a transaction other
than a business combination that at the time of the
transaction did not affect either accounting profit or
taxable profit.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT 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
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 and 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 each balance sheet
date. 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 income
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
Buildings
Depreciation Rate
Straight Line
2 %
Leasehold Improvements
over the term of the lease
Plant and Equipment
Leased Plant and Equipment
3–50 %
3–33 %
(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.
De-recognition
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
NOTE 1 STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES continued
Classification and subsequent measurement
(i) Loans and receivables
Loans and receivables are non-derivative financial assets
with 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 recognised 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 financial asset
(which constitutes objective evidence of impairment) the
full amount including any amount previously charged to
other comprehensive income is recognised in profit or loss.
Purchases and sales of available-for-sale 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 are
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 and 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
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT 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.
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 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. 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
Brand 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.
31
NOTE 1 STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES continued
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 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 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 annually for
impairment annually, or more frequently if events or
changes in circumstances indicate that the carrying value
may be impaired. Gains and losses on the disposal of an
entity include the carrying amount of goodwill relating to
the entity sold.
Goodwill acquired is allocated to each of the cash-
generating units expected to benefit from the
combinations synergies. Impairment is determined by
assessing the recoverable amount of the cash-generating
unit to which the goodwill relates. Impairment losses on
goodwill cannot be reversed.
(p) Impairment of Assets
At 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
income statement where the asset’s carrying value exceeds
its recoverable amount. Recoverable amount is the higher
of an asset’s fair value less costs to sell and value in use. For
the purpose of assessing value in use, the estimated future
cash flows are discounted to the present value using a pre-
tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
Where it is not possible to estimate recoverable amount for
an individual asset, recoverable amount is determined for
the cash-generating unit to which the asset belongs.
(q) Borrowing costs
All borrowing costs are expensed when incurred.
(r) 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.
(s) 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 2001 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.
32
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT (t) 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 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.
(u) 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 balance sheet.
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.
(v) New Accounting Standards and
interpretations not yet adopted
No new accounting standards and interpretations, that are
available for early adoption at 30 June 2013, but not yet
adopted, will result in any material change to the financial
statements.
The Group has determined that there will be no material
change on the Group’s financial reports following
adoption of these standards in future years, as either their
application is only required to be applied prospectively,
they are disclosure standards only and there will be no
material impact on amounts recognised in the financial
statements or they are disclosure standards only that will
require various additional disclosures.
AASB 9 Financial Instruments (effective from 1 January 2015)
The AASB aims to replace AASB 139 Financial Instruments:
Recognition and Measurement in its entirety. The
replacement standard (AASB 9) is being issued in
phases. To date, the chapters dealing with recognition,
classification, measurement and derecognition of financial
assets and liabilities have been issued. These chapters are
effective for annual periods beginning 1 January 2015.
Further chapters dealing with impairment methodology
and hedge accounting are still being developed.
The amendments require that any changes in fair value
attributable to the liability‘s credit risk be recognised in
other comprehensive income instead of profit or loss.
The amendments apply retrospectively from date of initial
application. Therefore, at this stage, it is not yet possible
for the entity to quantify the impact on the financial
statements of first time application of these amendments.
Consolidation Standards
A package of consolidation standards are effective
for annual periods beginning or after 1 January 2013.
Information on these new standards is presented below.
The Group‘s management have yet to assess the impact
of these new and revised standards on the Group‘s
consolidated financial statements.
AASB 10 Consolidated Financial Statements (AASB 10)
AASB 10 supersedes the consolidation requirements in
AASB 127 Consolidated and Separate Financial Statements
(AASB 127) and Interpretation 112 Consolidation – Special
Purpose Entities. It revised the definition of control
together with accompanying guidance to identify an
interest in a subsidiary. However, the requirements and
mechanics of consolidation and the accounting for any
non-controlling interests and changes in control remain
the same.
AASB 11 Joint Arrangements (AASB 11)
AASB 11 supersedes AASB 131 Interests in Joint Ventures
(AASB 131). It aligns more closely the accounting by
the investors with their rights and obligations relating
to the joint arrangement. It introduces two accounting
categories (joint operations and joint ventures) whose
applicability is determined based on the substance of the
joint arrangement. In addition, AASB 131‘s option of using
proportionate consolidation for joint ventures has been
eliminated. AASB 11 now requires the use of the equity
accounting method for joint ventures, which is currently
used for investments in associates.
AASB 12 Disclosure of Interests in Other Entities (AASB 12)
AASB 12 integrates and makes consistent the disclosure
requirements for various types of investments, including
unconsolidated structured entities.
33
AASB 2011-7 Amendments to Australian Accounting
Standards arising from the Consolidation and Joint
Arrangements Standards
This Standard gives effect to many consequential
changes arising from the issuance of the new Standards.
For example, references to AASB 127 Consolidated and
Separate Financial Statements are amended to AASB 10
Consolidated Financial Statements or AASB 127 Separate
Financial Statements, and references to AASB 131 Interests
in Joint Ventures are deleted as that Standard has been
superseded by AASB 11 and AASB 128 (August 2011).
AASB 2012-6 Amendments to Australian Accounting
Standards – Mandatory Effective Date of AASB 9 and
Transition Disclosures
AASB 2012-6 amends the mandatory effective date of
AASB 9 so that AASB 9 is required to be applied for annual
reporting periods beginning on or after 1 January 2015
instead of 1 January 2013. It also modifies the relief from
restating prior periods by amending AASB 7 to require
additional disclosures on transition from AASB 139 to AASB
9 in some circumstances.
AASB 2011-4 Amendments to Australian Accounting
Standards to Remove Individual Key Management Personnel
Disclosure
The Standard amends AASB 124 Related Party Disclosures
to remove the individual key management personnel
(KMP) disclosures required by Australian specific
paragraphs. This amendment reflects the AASB‘s view that
these disclosures are more in the nature of governance
disclosures that are better dealt within the legislation,
rather than by the accounting standards.
In March 2013, the Australian government released
Corporations Legislation Amendment Regulation
2013 which proposed to insert these disclosures into
Corporations Regulations 2001 to ensure the disclosure
requirements continue to be operative for financial years
commencing on or after 1 July 2013. The closing date for
submissions was 10 May 2013.
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.
NOTE 1 STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES continued
It introduces new disclosure requirements about the risks
to which an entity is exposed from its involvement with
structured entities.
Consequential amendments to AASB 127 Separate Financial
Statements (AASB 127) and AASB 128 Investments in
Associates and Joint Ventures (AASB 128)
AASB 127 Consolidated and Separate Financial Statements
was amended to AASB 127 Separate Financial Statements
which now deals only with separate financial statements.
AASB 128 brings investments in joint ventures into
its scope. However, AASB 128‘s equity accounting
methodology remains unchanged.
AASB 13 Fair Value Measurement (AASB 13)
AASB 13 does not affect which items are required to be
fair-valued, but clarifies the definition of fair value and
provides related guidance and enhanced disclosures about
fair value measurements. It is applicable for annual periods
beginning on or after 1 January 2013. The Group‘s
management have yet to assess the impact of this
new standard.
Amendments to AASB 119 Employee Benefits (AASB 119
Amendments)
The AASB 119 Amendments include a number of targeted
improvements throughout the Standard. The main
changes relate to defined benefit plans.
AASB 2012-2 Amendments to Australian Accounting
Standards – Disclosures – Offsetting Financial Assets and
Financial Liabilities
This Standard amends the required disclosures in AASB 7
to include information that will enable users of an entity‘s
financial statements to evaluate the effect or potential
effect of netting arrangements, including rights of set-off
associated with the entity‘s recognised financial assets
and recognised financial liabilities, on the entity‘s financial
position. This Standard also amends AASB 132 to refer
to the additional disclosures added to AASB 7 by this
Standard. The Group’s management has yet to assess the
impact of these amendments.
AASB 2012-3 Amendments to Australian Accounting Standards
– Offsetting Financial Assets and Financial Liabilities
This Standard adds application guidance to AASB 132 to
address inconsistencies identified in applying some of
the offsetting criteria of AASB 132, including clarifying
the meaning of “currently has a legally enforceable right
of set-off” and that some gross settlement systems may
be considered equivalent to net settlement. The Group’s
management has yet to assess the impact of these
amendments.
34
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT Key estimates – Impairment
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
(2012: $1,315,000) have not been recognised and carried
forward as a deferred tax asset.
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.
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:
Alchemy Limited
As a result an impairment loss of $22,000 (2012: $60,000)
was taken up in profit or loss on this 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 of the
Group’s investments in associated entities.
Investment Properties
An independent valuation of the industrial properties was
undertaken in May 2010. All properties have been included
in the financial statements at cost. The independent
valuation of the industrial properties indicated that the
market value of one property was below cost and as a
result an impairment was recognised in prior years on
the land and buildings the Group owns at Arndell Park,
New South Wales.
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.
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 (2012: $nil).
35
NOTE 2 REVENUE, OTHER INCOME AND EXPENSES FROM OPERATIONS
(a) Revenue
Sale of goods
Rental income from investment properties
Dividends received – other parties
Interest receivable
(b) Other Income
Net gain on disposal of 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
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
Sundry income
(c) Interest Income
Other persons
Associated entities
(d) Share of profit from associates accounted for using the equity method
Share of profit from associates accounted for under the equity method
(e) Expenses
Profit before income tax includes the following specific expenses:
Amortisation of intangibles
Cost of sales – mining equipment manufacture
Depreciation – investment properties
– plant and equipment
Foreign currency translation losses
Impairment of available-for-sale financial assets – Listed investments
Interest paid – other
Doubtful debts – trade receivables
Defined contribution superannuation expense
Employee benefit expenses
Rental expense on operating leases
Notes
(c)
Consolidated Entity
2012
2013
$000s
$000s
5,002
3,060
38
2,173
10,273
7,711
2,211
65
1,337
11,324
–
264
–
–
–
47
322
–
34
667
1,230
943
2,173
493
493
12
2,815
308
392
700
1
22
1,298
4
223
2,377
174
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
36
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT
NOTE 3 INCOME TAX EXPENSE
(a) The prima facie tax payable on the profit before income tax is reconciled
to the income tax expense as follows:
Profit (loss) before tax
Prima facie tax payable at 30% (2012: 30%)
Fully franked dividend received
Research and Development concession
Building allowance
Sundry items
(Over) provision relating to prior year – research and development concession
Adjustment related to non-controlling interest in profit
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
(c) Deferred tax recognised directly in equity through Available-for-sale Financial Asset
Reserve relating to valuing investments at fair value
Consolidated Entity
2012
2013
$000s
$000s
3,455
1,037
(12)
(15)
(54)
–
(177)
(72)
707
20%
398
486
(177)
707
54
1,968
590
(20)
(15)
(54)
4
(86)
(2)
417
21%
429
74
(86)
417
(25)
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.
NOTE 4 AUDITORS’ REMUNERATION
Remuneration of the auditor of the group and parent entity for :
– auditing or reviewing the financial report
Grant Thornton
BDO
Consolidated Entity
2012
2013
$000s
$000s
81,856
–
81,856
52,000
26,310
78,310
37
NOTE 5 KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Key management personnel disclosures
Short-term benefits
Consolidated Entity
2012
2013
$000s
$000s
524,525
524,525
635,763
635,763
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.
Parent Entity Directors
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
Other Key Management Personnel
Mr D.A. Hoff
(d) Loans
Balance
1 July 2012
Received as
Remuneration
Options
Exercised
Net Change
Other
Balance
30 June 2013
11,944,566
42,821
212,302
7,126,666
19,326,355
156,960
156,960
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11,944,566
42,821
212,302
364,987
7,491,653
364,987
19,691,342
–
–
156,960
156,960
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
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 29 for further details of transactions with directors and director related entities.
38
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT NOTE 6 DIVIDENDS
(a) Dividends paid
No Final ordinary dividend was paid for the 2012 year
(prior year 1.50¢ per share – 100% franked at 30% tax rate)
Interim ordinary dividend of 1.50¢ per share for 2013 year – 100% franked at 30% tax rate
(prior year 1.00¢ per share – 100% franked)
Consolidated Entity
2012
2013
$000s
$000s
–
781
765
765
517
1,298
(b) Dividends declared after balance date
At a meeting of Directors held on 27 August 2013 it was resolved that a 2.00 cent
fully franked Final ordinary Dividend will be paid in relation to the 2013 financial year.
1,015
–
(c) Franked dividends
Franking credits available for subsequent financial years based on a tax rate of 30% (2012 – 30%)
3,695
3,837
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.
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.
NOTE 7 EARNINGS PER SHARE
Basic earnings per share (cents per share)
Continuing operations
Diluted earnings per share (cents per share )
Continuing operations
(a) Reconciliation of Earnings to Net Profit
Earnings used in calculating Basic EPS
Continuing operations
Earnings used in calculating Diluted EPS
Continuing operations
Consolidated Entity
2012
2013
cents
cents
4.7
4.7
2.9
2.9
$000s
$000s
$000s
2,383
$000s
1,543
2,383
1,543
No.
No.
(b) Weighted average number of ordinary shares outstanding during the year used
in calculation of basic EPS
Weighted average number of ordinary shares outstanding during the year used
in calculation of diluted EPS
51,084,022
52,322,800
51,084,022
52,322,800
39
NOTE 8 PARENT ENTITY INFORMATION
The following details information related to the parent entity, PPK Group Limited at 30 June 2013. 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
Accumulated losses
Total Equity
Profit (loss) for the year
Other comprehensive income for the year
Total comprehensive income (loss) for the year
NOTE 9 CURRENT ASSETS
Cash and cash equivalents
Cash at bank and on hand
Short-term bank deposits
Cash at bank and on hand
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 overdraft
Consolidated Entity
2012
2013
$000s
$000s
45,658
33,835
79,493
33,622
19,878
53,500
25,993
44,654
33,513
78,167
32,824
18,500
51,324
26,843
28,672
29,016
8
(2,687)
25,993
259
–
259
8
(2,181)
26,843
(826)
–
(826)
Consolidated Entity
2012
2013
$000s
$000s
Notes
1,345
–
1,345
1,345
–
1,345
771
8,308
9,079
9,079
(425)
8,654
19
40
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT NOTE 10 TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Less: Allowance for doubtful debts
Other Receivables
Less: Allowance for doubtful debts
Loans and receivables
– other loans, associate entities – secured
– other loans, other persons – secured
– convertible notes
Less: Allowance for impairment
Non-Current
Loans and receivables
– other loans, associate entities – secured
– other loans, associate entities – unsecured
– other loans, other persons – secured
– other loans, other persons – unsecured
(a) Trade Receivables
Consolidated Entity
2012
2013
$000s
$000s
Notes
(a)
(b)
(c)
(d)
(e)
(c)
(d)
1,105
(24)
1,081
966
–
230
6,573
–
6,803
8,850
6,608
369
3,187
308
1,205
(20)
1,185
1,410
(173)
274
–
833
(833)
274
2,696
5,944
332
–
–
10,472
6,276
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, associated entities
Other loans are funds advanced to unit trusts that are associates of the Group. Some amounts are unsecured whilst other
amounts are secured by a registered first mortgage over property owned by some of the trusts. The interest rates received
by the Group on these 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 of 8% 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 secured 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 2015 financial year, the balance outstanding on this loan
is $6,608,000 (2012: $5,944,000). The unsecured loan to Nerang Street Southport Unit Trust is due for repayment in
June 2015, the balance outstanding on this loan is $369,000 (2012: $332,000).
41
NOTE 10 TRADE AND OTHER RECEIVABLES continued
(d) Other loans, other persons
Other loans, other persons are funds advanced to third parties. The amounts are secured by a registered first mortgage
over property owned by the borrower. The interest rate received by the Group on loans range from 15% to 18% with the
rate being fixed for the term of the loan at the time it is made.
The current loans have interest rates of 15% per annum calculated daily with interest either due monthly in arrears or
compounded monthly with principal and interest.
The non-current loans have interest rates ranging from 15% to 18% per annum calculated daily with interest either paid
in advance, monthly in arrears or compounded monthly with principal and interest.
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 and unsecured loans – non-current
Opening Balance
Funds advanced
Less principal and interest repaid
Trust distribution capitalised
Interest revenue added to carrying value
Consolidated Entity
2012
2013
$000s
$000s
274
6,623
(176)
6,721
82
6,803
6,276
3,300
(228)
9
9,357
1,115
10,472
–
873
(674)
199
75
274
5,166
312
–
–
5,478
798
6,276
42
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT
(e) 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 those 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 $850,000 held in Allied Consolidated Limited were redeemed by the issuing
company, a total of 2,936,097 fully paid ordinary shares in Allied Consolidated Ltd were issued to the Group, on
redemption of the notes, which had a value of $47,770 when the company relisted.
Movement in balance of convertible notes in listed companies
Opening Balance
Redemption of convertible notes
Interest revenue added to carrying value
Less reversal of / (provision for impairment)
Consolidated Entity
2012
2013
$000s
$000s
–
–
–
–
–
–
–
2,000
(2,225)
(225)
56
(169)
169
–
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 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. 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 2013
Current
Trade receivables
Other receivables
Convertible notes
Consolidated Group 2012
Current
Trade receivables
Other receivables
Convertible notes
20
173
833
1,026
–
237
1,322
1,559
4
–
–
4
20
–
–
20
–
–
–
–
–
(64)
(169)
(233)
–
(173)
(833)
(1,006)
–
–
(320)
(320)
24
–
–
24
20
173
833
1,026
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
NOTE 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
2013
$000s
$000s
683
217
101
80
905
166
27
87
1,081
1,185
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
2013
$000s
$000s
855
76
15
20
966
970
125
18
124
1,237
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.
44
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT NOTE 11 INVENTORIES
On hand
Finished goods at cost
Work in Progress
Raw materials
Refer to Note 21 for details of inventory pledged as security.
NOTE 12 OTHER CURRENT ASSETS
Prepayments
The carrying amount of prepayments approximates fair value.
Consolidated Entity
2012
2013
$000s
$000s
554
199
264
670
151
341
1,017
1,162
Consolidated Entity
2012
2013
$000s
$000s
312
312
323
323
45
NOTE 13 FINANCIAL ASSETS
13(a) Investments in Associated entities – equity accounted
Summary of movement in carrying value
Opening Balance
Share of profit from associates accounted for under the equity method
Trust distributions or dividends received from associates
Information relating to associates is set out below:
Unlisted entities
Consolidated Entity
2012
2013
$000s
$000s
9
493
(9)
493
–
9
–
9
Ownership Interest
2013
%
2012
%
2013
Units Held
$1 Each
2012
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%
25.00%
22.86%
Share of Profits receivable from associated trusts
Nerang Street Southport Project Trust
PPK Willoughby Funding Unit Trust
275
40
315
275
40
315
$000s
$000s
–
493
493
9
–
9
The Group holds 25% of the issued units in the Nerang St Southport Project 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.
46
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT 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
Consolidated Entity
2012
2013
$000s
$000s
53,889
51,685
2,203
19,548
2,725
–
2,725
–
–
–
54,353
54,395
(42)
4
(11)
–
(11)
–
–
–
The PPK Willoughby Funding Unit Trust hold 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.
Consolidated Entity
2012
2013
$000s
$000s
Nerang Street Southport Project Trust
Assets
Liabilities
Equity
Revenues
Profit before income tax
Income tax expense or (credit)
Profit 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
4,725
4,723
2
267
1
–
1
–
–
–
4,542
4,541
1
167
36
–
36
–
–
–
47
NOTE 13 FINANCIAL ASSETS continued
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
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
Fair Value adjustments
Impairment
Disposals
Consolidated Entity
2012
2013
$000s
$000s
327
–
(327)
–
–
2,562
(2,235)
327
Consolidated Entity
2012
2013
$000s
$000s
756
2,912
47
322
(181)
(23)
(1,574)
2,259
745
617
101
35
(79)
(60)
(603)
756
48
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT 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 an equity reserve through other comprehensive income, 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
Consolidated Entity
2012
2013
$000s
$000s
249
(249)
–
–
2,259
2,259
249
(249)
–
327
756
1,083
49
NOTE 13 FINANCIAL ASSETS continued
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
TMD Loan Trust
PPK Southport Pty Ltd
York Group Limited
Rambor Pty Ltd
King Cobra Mining Equipment Pty Ltd
Notes
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
(a)
(b)
(c)
(d)
(e)
Percentage owned
2013
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
100%
51.4%
100%
100%
100%
100%
100%
2012
%
1
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
100%
51.4%
–
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 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. PPK Finance Pty Ltd acts as the trustee company of the TMD Loan Trust. The Group holds 100% 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.
50
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT NOTE 14 INVESTMENT PROPERTIES
(a) Non current
Freehold land and 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
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
Consolidated Entity
2012
2013
$000s
$000s
15,263
20,113
(3,618)
16,495
31,758
(1,328)
30,430
27,276
3,160
302
–
(308)
–
14,633
17,281
(3,310)
13,971
28,604
(1,328)
27,276
24,486
3,100
–
–
(310)
–
30,430
27,276
3,060
2,211
772
40
713
39
Acquisition and Disposals
The Easy Living (Bundaberg) Unit Trust completed the acquisition of a retirement village in Bundaberg, Queensland.
There were no disposals of investment properties in the financial year.
Valuation of Investment Properties
An independent valuation of the industrial Land and Buildings was undertaken in May 2010 and valued these investment
properties at $29.7 million. This does not include the retirement living buildings purchased by The Easy Living (Bundaberg)
Unit Trust and The Easy Living Unit Trust which are considered by the Directors to have a fair value, equal to their cost of
$6.26 million. No capital gains tax would be payable if the industrial Land and Buildings were sold at balance date at the
independent valuation due to capital losses. 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.
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.
51
NOTE 14 INVESTMENT PROPERTIES continued
Leases as Lessor
The industrial 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
NOTE 15 OTHER PROPERTY PLANT AND EqUIPMENT
Consolidated Entity
2012
2013
$000s
$000s
2,665
7,313
–
9,978
1,225
2,143
–
3,368
Consolidated Entity
2012
2013
$000s
$000s
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 contining operations
431
(301)
130
3,198
(2,335)
863
–
993
Reconciliations
Reconciliations of the carrying amounts of each class of plant and equipment are set out below.
Leasehold
Improve-
ments
$’000
Plant &
Equipment
$’000
Capital Works
In Progress
$’000
183
–
–
–
(53)
130
246
–
6
(69)
183
1,066
137
57
(6)
–
(391)
863
1,142
130
248
(454)
1,066
24
278
–
–
(302)
–
–
24
–
–
–
24
Consolidated – 2013
Carrying amount at start of year
Additions
Manufactured plant and equipment for hire
Disposals
Transfers to investment properties (Note 14)
Depreciation and Amortisation expense
Carrying amount at end of year
Consolidated – 2012
Carrying amount at start of year
Additions
Manufactured plant and equipment for hire
Depreciation and Amortisation expense
Carrying amount at end of year
52
491
(308)
183
3,275
(2,209)
1,066
24
1,273
Total
$’000
1,273
415
57
(6)
(302)
(444)
993
1,412
130
254
(523)
1,273
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT NOTE 16 TAX
(a) Assets
Deferred tax assets comprise temporary differences attributable to:
Amounts recognised in profit and loss
Doubtful Debts
Employee benefits
Building depreciation
Plant and equipment depreciation
Impairment of investments
Realised capital losses
Inventory
Other
Movements
Opening balance
Credit/(charged) to profit or loss
Prior year adjustment
Consolidated Entity
2012
2013
$000s
$000s
7
183
396
65
–
694
5
25
308
120
418
66
223
419
4
31
1,375
1,589
1,589
(214)
–
1,646
(57)
–
1,375
1,589
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 $999,000 (2012: $1,315,000) and realised capital losses with a tax asset value of $316,000
(2012: $nil) have not been recognised and carried forward as a deferred tax asset.
Consolidated Entity
2012
2013
$000s
$000s
(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
Tax deferred trust distribution from associate
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
58
422
138
(12)
148
–
274
(39)
235
29
270
(64)
–
235
20
(22)
6
4
25
29
35
17
(23)
–
29
53
NOTE 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
Reconciliations
Licences, software and patents – at cost
Balance at the beginning of year
Additions – external purchases
Amortisation charge
(Amortisation charges are included in Cost of Goods Sold and Administration expenses in
the profit or loss)
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
2013
$000s
$000s
787
(563)
224
688
(565)
123
155
155
1,109
497
1,985
638
497
1,413
123
113
(12)
224
155
–
155
638
471
1,109
497
–
497
90
59
(26)
123
155
–
155
–
638
638
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 measured
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.
54
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT 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.
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 2013
Mining Equipment Manufacturing
Year ended 30 June 2012
Mining Equipment Manufacturing
Brand Names
$’000
Goodwill
$’000
Total
$’000
497
155
652
497
155
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:
2013
2012
Growth
Rate
Discount
Rate
Growth
Rate
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 2013. If a discount rate of 60.5% 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.
55
NOTE 18 TRADE AND OTHER PAYABLES
Trade payables
Sundry payables and accruals
NOTE 19 INTEREST BEARING LIABILITIES
Bank overdraft – secured
Bank loans – secured
Other loans – unsecured
Consolidated Entity
2012
2013
$000s
$000s
381
112
493
614
81
695
Consolidated Entity
2012
2013
$000s
$000s
–
5,420
1,300
6,720
425
500
–
925
Notes
19(a)
(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.
NOTE 20 PROVISIONS
Current
Annual leave
Redundancy
Long service leave
Non Current
Long service leave
Total Provisions
Consolidated Entity
2012
2013
$000s
$000s
199
179
142
520
89
609
201
–
110
311
89
400
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.
56
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT NOTE 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
Bank loans – The Easy Living (Bundaberg) Unit Trust
Other loans – The Easy Living Unit Trust
(b) Unsecured liabilities
Other loans – other persons
Consolidated Entity
2012
2013
$000s
$000s
18,080
–
18,080
19,850
650
20,500
–
19,800
1,850
1,850
–
425
18,500
1,850
–
650
23,500
21,425
1,300
24,800
–
21,425
Bank overdrafts and bank loans are secured as noted in Note 19 above.
(c) Assets pledged as security
The carrying amounts of non-current assets pledged as security are:
First mortgage
Freehold investment properties
14(a)
30,430
27,276
Registered Mortgage Debentures over company assets and cross guarantees and indemnities 14(a)
Freehold investment properties
Term receivables
Financial Assets
Investments in associated entities
Plant and equipment
Intangible Assets
–
10,472
2,259
493
993
1,985
–
6,276
756
9
1,273
1,413
Total non-current assets pledged as security
46,632
37,003
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
1,345
6,803
2,047
1,017
–
312
9,079
274
2,422
1,162
327
323
11,524
13,587
58,156
50,590
The total financial assets included in the above pledged as security for liabilities is $23,154,000 (2012: $19,134,000)
57
NOTE 21 INTEREST BEARING LIABILITIES continued
(d) 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
Consolidated Entity
2012
2013
$000s
$000s
1,000
24,190
–
25,190
1,000
690
–
1,690
–
23,500
–
2,000
22,340
1,500
25,840
1,575
1,990
1,500
5,065
425
20,350
–
23,500
20,775
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).
$19,800,000 (2012: $18,500,000) variable interest rate facilities provided by the NAB. Further details on the banking
facilities with the NAB are included in Note 25(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 7.29% (2012: 5.66% to 7.94%) inclusive of bank margins.
Provided by the Commonwealth Bank of Australia Ltd (CBA).
$3,700,000 variable interest rate facilities provided by the CBA.
Further details on the banking facilities with the CBA are included in Note 25(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 not be renewed at the end of the term. At year end the interest rate on the facility was
5.6% (2012: 6.65%) inclusive of bank margins.
During the financial year the group breached one banking covenant relating to its EBITDA requirements to CBA. As a
result, the loan has been classified as current as required by AASB 101. Subsequent to year end the bank agreed to waive
the breach.
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.
58
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT
NOTE 22 TRADE AND OTHER PAYABLES
Other Loans – secured
Other Loans – unsecured
Consolidated Entity
2012
2013
$000s
$000s
1,229
1,652
2,881
–
–
The Group has loans owing to the non-controlling interest investors in the Easy Living Unit Trust, Easy Living Bundaberg
Trust and SLOT Loan Trust. The loans in the Easy Living Unit Trust and Easy Living Bundaberg Trust are secured by a
registered second mortgage over the properties owned by each of the trusts and a registered second ranking fixed and
floating charge over the assets of each trust. They are repayable in 2017. The loans in the SLOT loan Trust are unsecured
and are repayable by September 2014.
The current terms of the loans are that they are interest free, and are in proportion to the number of units each investor
holds in each of the trusts. The non-controlling investors in each of the unit trusts are entitled to trust distributions each
year, of the trusts net profit in proportion to the number of units they hold.
The group considers that under the existing terms of the loans and their anticipated repayment date that their carrying
value approximates the present value of the loans.
NOTE 23 CONTRIBUTED EqUITY
Consolidated Entity
2012
2013
$000s
$000s
Paid-Up Capital
50,764,776 (2012: 51,625,430) ordinary shares fully paid
28,673
29,016
Movements in ordinary share capital
Balance at the beginning of the financial year
Shares repurchased under approved buy back scheme
29,016
(343)
28,673
29,782
(766)
29,016
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
2013
No.
2012
No.
51,625,430
53,812,779
(860,654)
(2,187,349)
50,764,776
51,625,430
59
NOTE 23 CONTRIBUTED EQUITY continued
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 .
It is the Group’s policy to maintain its gearing ratio within the range of 20% – 50% (2012: 20% – 50%). The Group’s gearing
ratio at the balance sheet date is shown below:
Gearing ratios
Total borrowings
less Cash and cash equivalents
Net debt
Total equity
Total capital
Gearing Ratio
NOTE 24 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
2013
$000s
$000s
24,800
(1,345)
23,455
30,414
53,869
21,425
(9,079)
12,346
29,139
41,485
44%
30%
Consolidated Entity
2012
2013
$000s
$000s
(93)
8
(85)
8
8
59
(180)
54
(36)
10
(93)
59
8
67
8
8
114
84
(25)
(163)
49
59
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.
60
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT NOTE 25 FINANCIAL RISK MANAGEMENT
The Group’s financial instruments include investments in deposits with banks, receivables, equities, derivatives, payables
wand interest bearing liabilities. The accounting classifications of each category of financial instruments as defined in
Note 1(i) and their carrying amounts are set out below.
Weighted
Average
Interest Rate Notes
Floating
Interest
Rate
$000s
Fixed Interest Rate Maturing
Within
1 Year
$000s
1 to 5
Years
$000s
Non-Interest
Bearing
$000s
Total
$000s
Consolidated 2013
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
Total financial assets
Financial Liabilities
Bank Loans
Other Loans
Trade and Other Payables – non-current
Trade and Other Payables – current
Total financial liabilities at amortised cost
Consolidated 2012
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
Other Loans
Trade and Other Payables
Total financial liabilities at amortised cost
0.0%
14.8%
14.8%
10
10
10
9
3.3%
0.0% 13(c)
0.0% 13(a)
0.0% 13(b)
5.8%
10.0%
0.0%
0.0%
0.0%
14.0%
15.0%
8.0%
4.6%
0.0%
0.0%
21
21
22
18
10
10
10
10
9
13c
13a
0.0%
13b
8.6%
7.0%
8.0%
0.0%
19
21
21
18
–
–
–
408
–
–
–
408
23,500
–
–
–
23,500
–
–
–
–
9,054
–
–
–
9,054
425
20,350
–
–
20,775
–
–
6,803
6,803
–
–
–
–
6,803
–
1,300
–
–
1,300
–
–
–
274
274
–
–
–
–
274
–
–
–
–
–
–
6,977
–
6,977
–
–
–
–
6,977
–
–
–
–
–
–
–
6,276
–
6,276
–
–
–
–
6,276
–
–
650
–
650
2,047
–
2,047
937
2,259
493
2,047
6,977
6,803
15,827
1,345
2,259
493
–
5,736
–
19,924
–
–
2,881
493
3,374
23,500
1,300
2,881
493
28,174
2,422
–
–
2,422
25
756
9
2,422
–
6,276
274
8,972
9,079
756
9
327
3,539
327
19,143
–
–
–
695
695
425
20,350
650
695
22,120
61
NOTE 25 FINANCIAL RISK MANAGEMENT continued
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 $9,946,000 (2012: $5,983,000).
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).
Level 1
Level 2
Level 3
Total
Assets
Group 2013
Fair value through profit or loss
Listed equity securities
Available-for-sale financial assets
Listed equity securities
Unlisted equity securities (associates)
Group 2012
Fair value through profit or loss
Listed equity securities
Available-for-sale financial assets
Listed equity securities
Unlisted equity securities (associates)
–
2,259
–
2,259
327
756
–
1,083
–
–
–
–
–
–
–
–
–
–
493
493
–
–
9
9
–
2,259
493
2,752
327
756
9
1,092
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.
62
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT (i) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a security, will fluctuate due to changes in interest
rates. Exposure to interest risk arises due to holding floating rate interest bearing liabilities, investments in cash and cash
equivalents and loans to related parties and other persons. Although a change in the current market interest rate may
impact the fair value of the Group’s fixed interest financial liabilities and other receivables, it does not impact the Group
profit after tax or equity as these financial liabilities and other receivables are carried at amortised cost and not fair value
through profit or loss. Floating interest rates attached to the Group’s and parent’s financial assets and liabilities give rise
to cash flow interest rate risk. Any changes in the current market rate will affect the cash flows payable on floating rate
interest bearing liabilities and hence impact the Group’s profit after tax.
Sensitivity disclosure analysis
The Group’s exposure to its floating interest rate financial assets and liabilities is as follows:
Financial Assets
Cash
Receivables
Financial Liabilities
Bank overdraft
Bank Loans
Net Exposure
The group has performed sensitivity analysis relating to its interest rate risk based on
the Group’s year end exposure. This sensitivity demonstrates the effect on after tax
results and equity which could result from a movement in interest rates of +/- 1%.
Change in after tax profit
– increase in interest rate by 1%
– decrease in interest rate by 1%
(ii) Equity Price risk
Consolidated Entity
2012
2013
$000s
$000s
408
–
408
–
23,500
23,500
9,054
–
9,054
425
20,350
20,775
(23,092)
(11,721)
(162)
162
(82)
82
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 a 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.
63
NOTE 25 FINANCIAL RISK MANAGEMENT continued
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%
(iii) Currency Risk
Consolidated Entity
2012
2013
$000s
$000s
2,259
756
–
2,259
327
1,083
1
(1)
157
(157)
26
(26)
76
(76)
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 22%
(2012: 21%) 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. In 2012 the Group had maintained a USD bank account for receiving payments (if any) from trade
receivables and making payment to trade payables. The account has now been closed.
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
Consolidated Entity
2012
2013
$000s
$000s
–
–
–
–
–
13
–
13
–
13
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
AUD against the USD at year end of +/- 10%.
64
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT Change in after tax profit
– AUD strengthens against USD by 10%
– AUD weakens against USD by 10%
Consolidated Entity
2012
2013
$000s
$000s
–
–
(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 first mortgage over property owned by the ultimate
borrower entity being the Willoughby Market Gardens Purchaser Unit Trust.
Refer to Note 10 for detail the Group’s trade and other receivables.
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
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 industry
Retirement Villages
Manufacturing
Property and investing
Consolidated Entity
2012
2013
$000s
$000s
19,083
228
9
-
2
8,818
-
27
91
36
19,322
8,972
7,205
79
8,041
3,179
70
757
19,332
6,400
101
1,205
-
170
1,096
8,972
(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.
65
NOTE 25 FINANCIAL RISK MANAGEMENT continued
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 balance sheet. Bank loans provided by the NAB are subject to an annual review with the next review date
being 30 November 2013, with the facilities requiring renewal on 30 November 2013, and 31 January 2015. Bank overdraft
facility is provided by the NAB with the current facility expiring on 31 January 2014. The Bank loans provided by the NAB
have facilities that expire on 30 November 2013 and 31 January 2015. A facility of $2,410,000 expires on 30 November
2013, $1,800,000 of this facility is currently used. A facility of $18,080,000 expires on 31 January 2015, $18,000,000 of this
facility is currently used.
The CBA facilities expire on 23 March 2014 and 8 October 2014 each is for an amount of $1,850,000 that is fully utilised.
During the financial year the group breached a banking covenant relating to its EBITDA requirements to CBA. As a result,
the loan has been classified as current in accordance with AASB 101. Subsequent to year end the bank agreed to waive
the breach. 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.
Carrying
amount < 6 months
6–12
months
1–3 years
> 3 years
Contractual
Cash flows
Consolidated 2013
Financial Liabilities (current and non-current)
Trade and Other Payables
Bank Loans and overdrafts
Other Loans – other persons
Other Loans – trade and other payables
Total Financial Liabilities
Consolidated 2012
Financial Liabilities (current and non-current)
Trade and Other Payables
Bank Loans and overdrafts
Other Loans
Total Financial Liabilities
NOTE 26 LEASE COMMITMENTS
493
23,500
1,300
2,881
28,174
695
20,775
650
22,120
493
2,377
1,009
–
3,879
695
1,556
25
2,276
–
–
2,440
20,554
315
–
2,755
–
1,652
20,554
–
605
25
630
–
20,395
100
20,495
–
–
–
1,229
1,229
–
–
706
706
493
25,371
1,324
2,881
30,069
695
22,556
856
24,107
Operating lease commitments
Operating lease rentals contracted for but not capitalised in the financial statements payable:
– not later than 1 year
– later than 1 year but not later than 5 years
– later than 5 years
Consolidated Entity
2012
2013
$000s
$000s
121
96
–
217
104
–
–
104
The Group leases premises in Nowra under non cancellable operating leases. The terminating date of the lease is
31st May 2015. The Group has options to renew the lease for the Nowra premises, for a period of up to 2 years.
66
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT NOTE 27 CONTINGENT LIABILITIES
Group
Cross guarantees of the Groups banking and finance facilities with the NAB totalling $22,190,000 (2012: $24,340,000)
of which $20,500,000 (2012: $18,925,000) was drawn at balance date.
NOTE 28 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 three industrial properties and two retirement villages.
The Investment Segment owns primarily listed and some unlisted investments, it has also made loans from which it
earns interest. Investments in associated entities are included in this segment.
The Mining Equipment Segment manufactures portable underground mining equipment.
(a) Year ended 30 June 2013
Business Segments
Segment Revenue from external customers
Sales revenue
Rental income
Interest received
Dividends received
Segment other income
Net gain on disposal of plant and equipment
Other segment income
Investment
Properties
$000s
Investing
$000s
Mining
Equipment
Manufacturing
$000s
Total of
Continuing
Operations
$000s
–
3,060
–
–
–
–
2,173
38
5,002
–
–
–
5,002
3,060
2,173
38
3,060
2,211
5,002
10,273
–
–
–
–
661
661
6
–
6
6
661
667
Total Revenue and other income
3,060
2,872
5,008
10,940
Segment expenses include
Depreciation and amortisation
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
328
2,248
–
2,819
370
707
699
5,774
493
(1,514)
(1,298)
3,455
(365)
(707)
2,383
67
NOTE 28 SEGMENT INFORMATION continued
(b) 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 and equipment
Other segment income
Total Revenue and other income
Segment expenses include
Depreciation and amortisation
Impairments – available-for-sale
Segment result
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
2,403
1,989
7,752
12,144
310
–
–
60
1,651
1,891
548
–
1,487
858
60
5,029
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
9
(1,660)
(1,410)
1,968
(8)
(417)
1,543
(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:
Consolidated Entity
2012
2013
$000s
$000s
Australia
Germany
United States of America
United Kingdom
New Zealand
Liechtenstein
Other countries
3,922
5,584
–
682
278
2
119
–
966
428
243
8
472
10
5,002
7,711
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 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT NOTE 29 RELATED PARTIES
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated. Transactions are inclusive of GST.
Transactions with related parties:
The Group has made loans to the ASX listed entity SubZero Group Limited. Mr Glenn Molloy is a Director of SubZero Group
Limited. The loans are unsecured and repayable as to $150,000 in the 2014 financial year and $150,000 in October 2014
and carry an interest rate of 15%.
Total advanced by the Group
Interest credited to loan
Loans repaid to the Group
Balance outstanding
Consolidated Entity
2012
2013
$000s
$000s
300
8
–
308
–
–
–
–
Directors and key management personnel and their related entities had made:
•
•
Loans to the Easy Living Unit Trust, secured by a second mortgage over property held by the trust.
Loans are repayable on 16 February 2017 and are interest free under current terms (2012: 8% interest).
Consolidated Entity
2012
2013
$000s
$000s
Balance at start of year
Loans advanced to the Group
Loans repaid by the Group
Total advanced to the Group
Interest paid and credited to loan
Trust distribution credited to loan
Balance outstanding
Loans to the Easy Living Bundaberg Trust, secured by a second mortgage over property
held by the trust.
Loans are repayable on 8 October 2017 and are interest free under current terms.
Balance at start of year
Loans advanced to the Group
Loans repaid by the Group
Total advanced to the Group
Trust distribution credited to loan
Balance outstanding
Loans to the SLOT Loan Trust, are unsecured.
Loans are repayable on 30 September 2014 and are interest free under current terms.
Balance at start of year
Loans advanced to the Group
Loans repaid by the Group
Total advanced to the Group
Trust distribution credited to loan
Balance outstanding
365
–
(15)
350
–
–
350
–
425
(18)
407
–
407
–
1,200
(204)
996
170
1,166
The unit holder in each trust has contributed loans in proportion to their equity interest in each trust. The net profit of
each trust is distributed to the unit holders.
–
350
–
350
11
4
365
–
–
–
–
–
–
–
–
–
–
–
–
69
NOTE 29 RELATED PARTIES continued
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:
Number
Number
19,691,342
19,326,355
260
380
900
891
44
935
–
230
230
260
380
900
852
22
874
124
150
274
6,606
369
6,975
5,943
333
6,276
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
70
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013CONTINUEDPPK GROUP LIMITED ANNUAL REPORT NOTE 30 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 result attributable to non-operating activities:
Cash flows in operating activities but not attributable to operating result:
Non controlling interest equity distribution
Non-cash flows in operating profit:
Amortisation
Depreciation
Interest received on other loans
Impairment of available-for-sale-assets
Transfers to provisions
Share of (profit) / loss from associates
Loss/(Profits) on sale of available-for-sale assets
Fair value adjustments on available-for-sale assets
(Profits) on sale of plant and equipment
Increase/(decrease) in tax payable
decrease/(increase) in deferred tax assets
Increase/(decrease) in deferred tax liabilities
Changes in assets and liabilities
decrease/(increase) in financial assets at fair value through profit and loss
decrease/(increase) in trade and other debtors
increase/(decrease) in intangible asset investment
decrease/(increase) in prepayments
decrease/(increase) in inventories
(decrease)/increase in trade creditors and accruals
Consolidated Entity
2012
2013
$000s
$000s
2,748
1,551
(365)
(8)
12
700
(1,197)
22
213
(493)
(264)
(369)
6
(364)
218
206
327
(367)
471
11
145
(202)
26
833
(800)
60
(122)
(9)
(157)
(136)
(9)
300
89
(6)
(327)
750
638
72
7
70
Net cash/(used in) provided by operating activities
1,458
2,822
(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 an the following non cash
adjustments, expense/(income);
Impairment of available-for-sale financial assets
These related to shares and options held in listed company investments.
1
1,344
–
1,345
3
9,678
(1,074)
8,607
22
22
60
60
NOTE 31 EVENTS SUBSEqUENT TO THE END OF THE REPORTING PERIOD
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 2013
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 2013 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 2013.
This declaration is signed in accordance with a resolution of the Directors.
Jury Wowk
Chairman
Glenn Molloy
Executive Director
Sydney, 25 September 2013
72
PPK GROUP LIMITED ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT
73
PPK GROUP LIMITED ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT
74
PPK GROUP LIMITED ANNUAL REPORT
75
SHAREHOLDER INFORMATION AS AT 18 SEPTEMBER 2013
Shareholding
(a) Number of PPK Shareholders: 994
(b) Total Shares Issued: 50,638,838
(c) Percentage of total holdings by or on behalf of the 20 largest shareholders: 68.52%
(d) Distribution schedule of holdings
Category (size of holding)
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
less than marketable parcel
Number of
Shareholders
113
299
240
293
49
115
(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.
TOP 20 HOLDERS OF ORDINARY FULLY PAID SHARES
Substantial Shareholders
Wavet Holdings Pty Ltd
Equipment Co of Australian Pty Ltd
Warakirri Asset Management Pty Ltd
Shares to Which Entitled
% of issued capital
11,339,566
7,498,153
7,358,915
Holder Name
Wavet Fund No 2 Pty Ltd
Equipment Company of Australia Pty Ltd
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