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ANNUAL REPORT
2014
CONTENTS
1
2
4
6
Company Profile and Growth Strategy
2015 Goals
2014 Highlights
Executive Chairman’s Report
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Board of Directors
16
Executive Management
18
Corporate Governance Statement
27
Financial Report
IBC
Corporate Directory
COrpOraTE DirECTOry
ppK Group Limited
aBN 65 003 964 181
A public company incorporated in New South Wales and listed on the Australian Securities Exchange
(ASX Code: PPK)
Directors
Robin Levison (Executive Chairman)
Jury I. Wowk (Non-Executive Deputy Chairman)
Glenn R. Molloy (Executive Director)
Raymond M. Beath (Non-Executive Director)
Graeme D. Webb (Non-Executive Director)
Company Secretary
Andrew J. Cooke
Head and Registered Office
PPK Group Limited
Level 27,
10 Eagle Street
Brisbane QLD 4000
Telephone
Email
Web Site:
+61 7 3054 4500
info@ppkgroup.com.au
www.ppkgroup.com.au
Auditors
Grant Thornton Audit Pty Limited
Level 17, 383 Kent Street
Sydney NSW 2000
Australia
Telephone:
Fax:
+ 61 2 8297 2400
+61 2 9299 4445
Share Registry
Boardroom Pty Limited
Level 7, 207 Kent Street
Sydney NSW 2000
Australia
Tel
Fax
1300 737 760
1300 653 459
International
Tel
Fax
+61 2 9290 9600
+61 2 9279 0664
www.boardroomlimited.com.au
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COMPANY PROFILE AND GROWTH STRATEGY
1
Conversely, there are a number of
mining businesses which are not
aligned with PPK’s growth direction
including open cut mine fleet
contracting, mine consulting and
planning and mine site development
and operations, and companies within
these segments of the market will not
be considered for future acquisition.
PPK is headquartered in Brisbane and
operates manufacturing plants and
service and support centres in Port
Kembla, Tomago (Newcastle)and
Nowra, and will shortly open its China
head office in Beijing.
PPK Group Ltd (PPK) is an expanding
ASX listed company whose core
operations are being progressively
refocused on to the manufacture,
supply and maintenance of mining
equipment and technology products
that are utilised to enhance
customer’s safety, productivity,
efficiency and automation levels.
• Utilising funds generated from
the above to acquire established,
successful businesses in the
mining sector to take advantage
of historically low entry prices,
and if appropriate opportunities
are identified, to make
selective investment in other
property ventures.
The company will continue to derive
revenue from selected property
investment and property development
activities which have historically been
the primary group revenue earners.
Under a revitalised growth strategy
being architected and led by
Executive Chairman, Robin Levison,
who previously guided Industrea
Limited from a $2 million into a $450
million market cap company, PPK’s
growth strategy is focused on:
• Capitalising on stronger property
and equity market conditions
to progressively rotate out of
selected industrial and development
properties, loan book and
share investments.
Mining businesses acquired by PPK
under this strategy must satisfy the
following investment criteria:
• Existing equipment or technology
with a proven ability to enhance
end user’s safety, efficiency,
automation and productivity levels
• Near or market leading product
categories with an established or
potential export capability
• A synergistic fit with PPK’s existing
manufacturing businesses
• Immediately earnings accretive.
Beijing
China Office (to be opened shortly)
Brisbane
Head Office
Newcastle
COALTRAM Manufacturing Facility
Port Kembla
COALTRAM. Service & Repair Facility/Alternators
Nowra
Rambor Manufacturing Facility
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2015 GOALS
Expand PPK’s mining equipment operations through selected
acquisitions of synergistic businesses at prices representing
discernable value for shareholders and which are immediately
earnings accretive.
Drive additional cost savings, efficiencies and productivity gains from
within PPK’s existing businesses and grow each organically.
Leverage off the opening of a new China head office to generate first
exports of PPK products into China and to open opportunities for the
import of class leading components into Australia as OEM products.
Investigate other potential export opportunities in key targeted
overseas markets.
Further strengthen PPK’s balance sheet and reduce group debt.
Gain additional cost savings across all areas of existing operations.
Continue the progressive, orderly rotation out of current property
assets and other historical investments to generate funds for new
acquisitions, additional working capital and group debt reduction; and
continue to monitor any new profitable property investments that will
add to shareholder value.
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“ Continue the successful
rotation out of property
assets and other historical
investments to generate funds
for new acquisitions and
additional working capital”
4
2014 HIGHLIGHTS
Positive progress was made in FY2014 in reinvigorating PPK and
commencing the implementation of the new growth strategy. Among the
major achievements the company made during the year under review were:
Appointment of Robin Levison as Executive Chairman and the
announcement of a new forward growth blueprint for PPK with a
focus on acquiring undervalued, market leading mining equipment
and technology businesses.
Forging a strong cornerstone for the future expansion of PPK
Mining Equipment through acquiring the established and market
leading COALTRAM business and acquiring, post balance date, the
MONEx Electronic Engine Management System technology.
Strengthening key customer relationships, including BHP Illawarra
Coal, through commissioning a new state-of-the-art mining
equipment and technology service and support facility in the
strategic Illawarra mining basin.
Commencing the announced rotation out of selected property
assets at upper quartile prices to generate additional working
capital, fund future acquisitions and retire debt with the sale of
the Arndell Park site for $12.2 million and divestment of PPK’s
retirement village interests for $7.8 million, which is due for
settlement in December 2014.
Relocating PPK’s head office to Brisbane and strengthening the
senior executive team through the appointment of a new, highly
experienced Chief Financial Officer, and the two major architects
of Industrea’s highly successful expansion into China, as head of
Global Mining and President – PPK China Operations.
Providing major performance incentives for directors and key
executive managers through the issue of shares, ensuring the
complete alignment of key personnel and shareholder interests.
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Primary sales
targets
Secondary sales
targets
Australia (Bowen Basin &
Hunter Illawarra)
China
South Africa
Russia
USA
+100% +150%
+23%
Group Revenue
Revenue from Mining
Equipment and
Technology
Net Assets
$20,550,000
$12,568,000
$37,400,000
Group Revenue
Revenue from Mining
Equipment and
Technology
Net
Assets
6
eXecUtiVe cHairman’S rePort
It gives me considerable pleasure to
present my first Annual Report to
the shareholders of PPK Group Ltd
(PPK), and to report on what I believe
has been the positive, measureable
progress made in implementing the
revitalised growth strategy as outlined
at the company’s Annual General
Meeting in late 2013.
In summary, some of the key
achievements made on behalf of
shareholders since that time include:
• Establishing a stronger and market
competitive mining equipment
and technology business through
the acquisition of the established
COALTRAM business and the
subsequent purchase, post balance
date, of the MONEx Electronic
Engine Management System
technology.
• Doubling group revenue from the
prior year, reflecting the increasing
scale and scope of PPK following
the initial execution of the group’s
growth strategy in 2014.
• Commencing the orderly divestment
of selected property assets at high
quartile prices with the post balance
date settlement of the Arndell Park
industrial property for $12.24 million.
• Commissioning of a new state-of-
the-art diesel equipment service
and support facility at Port Kembla
to strengthen PPK’s established
market presence in the Hunter/
Illawarra coal basins.
• Relocating the corporate head office
to Brisbane and establishing an
experienced executive management
team following several key
appointments including a new Chief
Financial Officer, new Head of Global
Mining and new President-PPK
China Operations.
• Laying the groundwork for
a successful foothold in the
potentially lucrative Chinese
underground mine market through
securing a new China head
office which will open shortly,
and appointing initial, key local
employees.
Financial
PerFormance and
management
For the year to 30 June 2014, PPK
posted a net profit after tax of $2.519
million, up from $2.383 million the
prior year.
A series of one-off items associated
with implementing the company’s
previously announced growth strategy,
including the cost of securing key
personnel considered critical to its
successful implementation, and a
gain on purchase of the COALTRAMs
business impacted on the year’s result.
Group revenue for the year doubled
from $10.273 million to $20.550
million, primarily reflecting the
expansion of PPK’s mining equipment
and technology manufacturing
business with $12.568 million
attributable from this source
(FY2013 $5.002 million). Revenues
derived from investment properties,
investment activities and interest
received totalled $7.982 million
compared to $5.271 million the
prior year.
Directors have declared a final dividend
of 2 cents fully franked per share lifting
the full year dividend to 3.5 cents per
share fully franked. Book closing date
for dividend entitlements is 27 October
2014, with the final dividend payable
on 10 November 2014.
It is the board’s policy that wherever
possible, and accounting for the
financial position of the company, it
will continue to pay regular interim and
final dividends each year.
During FY2014 PPK raised $4.881
million to acquire and provide
working capital for the COALTRAM
business via:
• A Share Placement of 5,380,232
fully paid ordinary shares at 75
cents per share to professional or
sophisticated investors
• A Share Purchase Plan under which
1,128,833 fully paid ordinary shares
were issued at 75 cents per share.
These capital raisings were strongly
supported by PPK’s shareholders,
including the directors, along with a
number of new investors.
While the company remains totally
committed to its well documented
acquisition strategy, this will be
judiciously balanced against the
overriding need to maintain a prudent
and relatively conservative approach
to debt and capital management,
and the maintenance of a strong
balance sheet.
In line with this policy, it is pleasing to
note that the company’s net assets
increased by $7 million to $37.4 million
as at 30 June 2014.
Under the company’s capital
management plan, any debt associated
with PPK’s current property assets,
will be repaid in entirety at settlement.
PPK GROUP LIMITED 7
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“ Group revenue for the
year doubled from
$10.273 million to
$20.550 million, primarily
reflecting the expansion
of PPK’s mining quipment
and manufacturing
technology businesses”
8
STRONGER CORPORATE
STRUCTURE
Management Team Bolstered
Several key personnel appointments
were made in FY2014 to bolster
the company’s resources at both
a senior executive and operational
management level. These
appointments will ensure PPK has the
resources and expertise to maintain
the successful execution of our
growth strategy and sustain future
earnings growth.
Dale McNamara and Zhang Jinping,
who both served in senior positions
with me at Industrea Limited prior to
its acquisition by a US multinational,
were appointed as Director Global
Mining and President of PPK China
Operations respectively. Both
men have extensive experience
in the Chinese coal industry and
in establishing and expanding
commercially successful businesses
in that country, and were responsible
for building Industrea’s exports of
underground mining equipment and
technology into China from a zero base
to a value approaching $100 million
over several years.
Mr McNamara has over 30 years’
experience in the coal mining industry
in Australia and China. He founded
Wadam Industries, a China-focused
subsidiary of Industrea, and served
as its Managing Director from 1993
till 2012. Mr Zhang holds a mining
bachelor degree from China Henan
Polytechnic University and has 30
years experience in underground
coal mining operations in China. He
was a senior employee of China Coal
Research Institute for 12 years and
Chief Representative in China for
Wadam Industries and Industrea for
18 years.
In addition, Peter Barker was
appointed Chief Financial Officer
in June 2014. Mr Barker is a Fellow
of CPA Australia, holds an MBA
and BCom, and brings extensive
domestic and international commercial
experience to PPK. He joined PPK
following a senior position with a
privately held technology group in
Hong Kong. Prior to this he was Chief
Financial Officer at Computershare.
During the year under review PPK also
recruited a select number of highly
experienced personnel to strengthen
the Mining Equipment business’
management resources. Among
several key appointments made in
FY2014 were a new General Manager
and new Field Service Manager for
PPK Mining Equipment
Head Office Relocation
Towards the end of the financial year
PPK completed the relocation of its
corporate head office from Sydney
to Brisbane’s CBD. It is considered
this location will best serve the future
interests of shareholders and allow for
the ordered execution of the company’s
growth strategy. I, along with Peter
Barker our CFO, and several other
managers are now all working from
this location, which also provides the
company strategic geographic access
to both the key coal producing regions
in Queensland and New South Wales.
REVIEW OF OPERATIONS
Mining Equipment and Technology
In line with the previously announced
realignment of PPK’s operational
focus, considerable time and
resources were expended during
FY2014 in expanding the company’s
mining equipment and technology
manufacturing business.
In March 2014 PPK completed the $13
million acquisition of the COALTRAM
mining equipment manufacturing
business from Diversified Mining
Services. COALTRAM is an
established and highly respected
brand name within the Australian
underground mining market, with
its class leading products deployed
by companies including BHP,
BMA, Centennial Coal, Glencore,
Mastermyne and Xstrata.
The acquisition underscores the
financial rationale behind PPK’s
strategy of identifying and capitalising
on counter cyclical acquisitions nearing
the lower end of the pricing spectrum,
with the business’ net assets having
a conservative value of over $17
million ($15.8 million after allowing for
future tax liabilities associated with
the purchase).
The businesses acquired under the
COALTRAM purchase include:
• Manufacture, service and support
of the trademark COALTRAM
underground transport
utility vehicle;
• Manufacture and distribution of
Australia’s leading flameproof
alternator for use in methane gas
prone underground environments;
and
• Equipment hire with a range of
clients including BHP, Centennial
Coal and Glencore.
Recognised for its durability, flexibility
and safety, the COALTRAM utility
vehicle can be manufactured in
configurations of 8, 10 and 13 tonnes,
and is equipped with an array of
features designed specifically for
high methane gas underground
coalmine environments.
The COALTRAM vehicle category is
the most commonly found in these
underground mine environments,
given their multiplicity of applications
including material movement, supply
handling, movement of long wall
components and other utility tasks.
The flameproof alternator
manufacturing business included in the
acquisition is a market-leading supplier
whose product is IEC internationally
certified for use in high methane
gas prone mines, and through this
certification has gained an established
export revenue base from a number of
multinational OEM manufacturers.
In an initiative which further
strengthens the earnings capacity of
PPK Mining Equipment, in August 2014
PPK acquired the MONEx Electronic
Management System (EMS)
technology, associated intellectual
property, manufacturing line and
existing inventory for $2.8 million.
PPK GROUP LIMITED 9
Prior to acquiring full ownership of
EMS, PPK held shared ownership
in parts of the EMS technology and
intellectual property. This acquisition
represents a highly strategic and
profitable fit for PPK, as it provides
the group with sole Original
Equipment Manufacturer status for
all COALTRAM vehicles and opens
additional potential sales avenues
via re-powering other underground
flameproof and explosion proof
vehicles with EMS technology. PPK
is already evaluating possible export
opportunities for these fabricated
vehicles to China and South Africa.
To complement COALTRAM’s
existing world class quality controlled
manufacturing plant in Tomago,
Newcastle and to consolidate PPK’s
foothold in the strategic Hunter/
Illawarra coal basins, in June 2014 the
company commissioned a new state-
of-the-art service and support centre
at Port Kembla. This new facility is
equipped to not only service and
maintain COALTRAM products, but
also to capitalise on the exit of several
multinational equipment providers from
the regional market, to service and
support other diesel mining products.
The COALTRAM service facility’s
relocation from Newcastle to Port
Kembla also provides significant
logistic benefits to, and strengthens
our relationship with major customer
BHP Illawarra Coal, which has around
60 of the 100 COALTRAM vehicles
deployed in Australia, operating from
various mines in the Illawarra.
To optimise efficiencies, PPK’s
alternator business was also
relocated to the new Illawarra service
centre, with the move to a more
technologically advanced facility
expected to bolster the business’s
already strong export channels.
PPK’s original mining equipment
business Rambor, experienced a
dampened trading performance in
FY2014, which reflected the tightening
mining market. A strong focus in the
current financial year is being placed
on reducing cost structures and new
product development and innovation.
These measures, along with the
benefits and synergies of being part
of a much larger mining services
operation are expected to improve
its performance in the current
financial year.
CHINA MARkET
EXPANSION
One of PPK’s operational priorities in
FY2014 was laying the foundations
for a beachhead into the potentially
lucrative Chinese underground
coal market.
While there is continuing commentary
on the slow down of China’s
phenomenal growth rates, it is often
overlooked that the country’s huge
economy continues to consume
around 4 billion tons of coal per annum,
of which 90% is extracted from often
high methane gas prone underground
mines. The Chinese government
continues to enforce the consolidation
and modernisation of the country’s
coal sector through closing small
producers, and focusing production on
fewer but larger and more professional
miners. As part of this policy China’s
coal miners are also being directed to
lift safety, productivity and automation
levels, which are all attributes PPK’s
current and future mining equipment
and technology are specifically
designed to deliver.
ANNUAL REPORT 2O14 10
Dale McNamara, PPK’s Director Global
Mining and Zhang Jinping, President-
PPK China Operations, both have
extensive experience in the Chinese
coal sector, and their knowledge base
and industry contacts have proved
invaluable in laying an initial foundation
in this lucrative market.
As a result of these endeavours, at the
time of this report’s publication, PPK
has finalised the lease of premises in
Beijing as a Chinese head office, hired
a number of key employees and is well
advanced on establishing our Chinese
legal entity subsidiary.
The initial progress made to date in
China has already unlocked preliminary
sales opportunities, with the company
fielding initial market enquiries and
preparing a number of quotes and
pricing estimates.
With time it is envisaged that we
will both export PPK manufactured
components, products and
technology that offer Chinese
customers decided safety, efficiency,
automation and productivity gains,
as well as import carefully selected
speciality components into Australia
as high quality, cost competitive
OEM products.
PROPERTY INVESTMENT
AND DEVELOPMENT
Industrial Property
As previously disclosed in late FY2014,
PPK contracted to sell one of its three
industrial properties at Arndell Park.
This divestment has now settled for
$12.24 million, with the net proceeds,
following pay down of associated debt,
allocated as working capital and to help
fund future acquisitions or other select
property investments should they
arise. The two remaining industrial
properties at Seven Hills, New South
Wales and Dandenong, Victoria remain
fully tenanted and will, at a time
considered appropriate in what is a
continually strengthening property
cycle, be placed on the market for sale
as separate parcels.
Both properties have attracted broad
interest from potential purchasers, and
we are confident that once formally
marketed, both will attract keen
buyer demand.
Retirement Villages
In line with PPK’s strategy of divesting
selected property assets, particularly
those considered outside the expertise
of the company, in early 2014 PPK
contracted to sell its interest in two
freehold retirement village assets at
Bundaberg, Queensland, and Elizabeth
Vale, South Australia, for $8.2 million.
Settlement of both interests is
confirmed to occur in December 2014,
at which time around $6 million will be
used to reduce debt and the remainder
allocated as working capital.
Property Development
PPK has an 18.2% interest in the
Kiah Willoughby residential project
located in Sydney’s lower north
shore area. This staged development
project has generated strong market
demand since its inception, and made
a solid contribution to revenue in
FY2014. The project is scheduled for
completion by June 2015, with around
$9 million in revenue attributable to
PPK as loan repayments, accumulated
interest and profits over this period.
The company’s other property
development asset is an 18.74%
interest in the Nerang Street Project
Trust, which owns an 11,000 square
meter development site at Southport,
on the Gold Coast. This site is
currently being marketed for sale, to
capitalise on stronger local property
market conditions.
Future Property Investment
Over recent years, PPK’s operations
have primarily focused on, and its
revenue predominantly derived
from, property investment and
property development.
As previously disclosed, PPK intends
to capitalise on a stronger property
market cycle, by progressively
divesting selected properties at higher
quartile prices, with funds realised
rotated into identified acquisition
opportunities, working capital and
continued debt reduction.
While the focus of future acquisition
activity will be on undervalued
businesses in the mining equipment
and technology sectors, PPK will
continue to monitor property related
opportunities which offer discernible
value to shareholders, and may
selectively invest in such opportunities
if identified.
FY2015 OUTLOOk
It is expected that a continuation
of the external market conditions
prevailing in FY2014 into the current
financial year will provide additional
opportunities for PPK to leverage
longer-term value for shareholders.
From the perspective of the property
sector, continuing buoyant conditions
should enable the divestment of
additional assets at prices nearing
the upper quartile. These positive
conditions will also benefit the
concluding stages and successful
completion of PPK’s involvement
in the Kiah Willoughby residential
development, with as previously
outlined should return around $9
million in proceeds to PPK in the
current financial year. We expect that
proceeds from any additional property
asset divestments made in the current
financial year, will in line with our stated
policy, be used to further reduce group
debt levels.
The continuing execution of PPK’s
growth mandate is firmly predicated
on the time honoured and historically
proven adage of ‘buy low, sell high’.
While it is readily apparent that
Australia’s mining cycle is at the lower
end of the spectrum, and that in
the short term this impacts to some
degree on the sale of our existing
mining equipment and technology
businesses, it also continues to offer
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“ It is expected that a
continuation of the
external market conditions
prevailing in FY2014 into
the current financial year
will provide additional
opportunities for PPK to
leverage longer-term value
for shareholders”
12
an opportunity to acquire class leading
mining services assets at prices
considered virtually impossible only a
few years back.
As at the date of this report’s
publication, we are continuing to
identify and be presented with a range
of potential acquisition opportunities.
At the current time, PPK holds
the decided strategic advantage
of ‘cherry picking’ the best of the
crop at our chosen price, as there
remains limited competition evaluating
these opportunities.
We continue to monitor opportunities
and, as previously foreshadowed,
expect to make additional mining
equipment and technology
acquisitions, and are confident that
again they will provide significant value
for shareholders.
As with all asset cycles, the resource
commodities market is historically
proven to reach its lowest quartile
before entering a concerted upswing
phase. PPK’s current and future
products are all to some degree
targeted at the underground coal
market, and in particular metallurgical
or coking coal which is used primarily
for steel making. The demand and
pricing for metallurgical coal has
remained far firmer than for thermal
coal, used for power generation,
and which has undergone a well
documented price decline.
The CEO of Komatsu Ltd, the
world’s second largest manufacturer
of building and mining equipment
has commented that “the mining
equipment market (in China) could
be very close to bottoming out and
that he expects to see more mining
companies seeking quotations for
products.” (“Komatsu CEO Flags
China Slump as Mining Nears Bottom”.
Masumi Suga and Jason Rogers,
Bloomberg, Jul 2, 2014 12:15 PM
GMT+1000).
In September respected industry
analysts HDR Salva released a report
in which they stated that a massive
23 gigawatts of electricity generating
capacity will come on stream in South-
East Asia by 2018, requiring about 40
million tonnes of coal. The report also
forecast that another 50 gigawatts
would come on stream in China and
India. HDR Salva believe Australian
exporters will be ideally placed to
satisfy this demand, particularly as
Indonesia’s thermal coal supply growth
has slowed this year.
The board shares the view that the
bottom of the thermal coal cycle
maybe nearing and that once this
occurs a gradual upswing in coal
demand and prices will eventuate.
The board and myself are confident
that the strategy currently being
pursued will ensure PPK is strongly
positioned to fully capitalise on
the eventual upswing in the global
resources market.
In FY2015, we anticipate that the
physical presence a Chinese head
office provides, along with the
extensive experience and contacts our
Head of Global Mining and President-
PPK China Operations have, that our
initial export opportunities to this vast
market will be unlocked.
The opening in FY2014 of our
new state-of-the-art service and
support centre at Port Kembla, has
strengthened our relationship with
several key mining customers in that
market, and created a strong, recurring
revenue stream from servicing and
repair work. We are confident that
these revenues will at the very least
continue as strongly in the current
financial year.
Before concluding this report, I would
like to highlight to shareholders that
the other directors, key executive staff
members and myself cumulatively hold
a 39.95% stake in the company.
As such, our personal financial
interests, along with the continued
successful execution of PPK’s growth
strategy, are irrevocably aligned with
the future interests of all shareholders.
Given our expectations for the current
year, and barring any unforseen
conditions and events occurring,
we expect to maintain dividend
payments in FY2015 at levels at least
commensurate with those paid in the
period under review.
I sincerely thank all shareholders for
their continued support, and pledge
that my endeavours, along with
those of other directors and senior
executives, will be solely focused
on creating sustained, longer-term
shareholder value for all those with a
vested stake in the company.
I also wish to extend a special
thanks to all PPK employees for
their dedication and diligence over
the past year as they have all made
a contribution to the undoubted
progress made by the group over
this time.
Robin Levison
Executive Chairman
PPK GROUP LIMITED 13
“ The board and myself
are confident that the
strategy currently being
pursued, will ensure PPK
is strongly positioned to
fully capitalise on the
eventual upswing in the
global resources market”
ANNUAL REPORT 2O14 14 BOARD OF DIRECTORS
ROBIN LEVISON CA, MBA, F.A.I.C.D
Executive Chairman
Robin Levison was appointed to the Board of PPK Group Limited as Executive Chairman on
22 October 2013. Mr Levison joined Industrea Limited in 2005, following a successful career
in accountancy and merchant banking. As Managing Director, he implemented and executed
a successful growth strategy under which the company’s range of specialist mining and
productivity equipment targeting the underground coal mining sector expanded significantly.
Through a mix of strong organic growth and strategic acquisitions, Mr Levison oversaw a
significant increase in Industrea’s revenue base, and group employee numbers climb to in excess
of 1000 people located globally, which eventually led to the company being acquired by General
Electric (GE). The company’s products and services were sold extensively to countries including
Australia, China, India, Indonesia, Russia, Japan, USA and Chile. Mr Levison holds a Masters of
Business Administration from the University of Queensland, is a Chartered Accountant and is a
Graduate and Fellow of the Australian Institute of Company Directors.
JURY WOWk BA., LLB
Non-Executive Deputy Chairman, Independent Director
Jury Wowk has been a member of the PPK Group Limited Board since listing on 21 December
1994. He served as Chairman of the Company from 13 September 2011 to 22 October 2013 and
was appointed as Deputy Chairman 22 October 2013. He 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, Mr Wowk performed the role of Operations Manager at Plaspak
Pty Ltd.
He 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.
GLENN MOLLOY
Executive Director
Glenn Molloy is a substantial shareholder of PPK Group Limited and has been a member of the
PPK Group Limited Board since listing on 21 December 1994. He is the founder of the former
entity Plaspak Pty Limited in 1979 and was appointed Executive Director in September 2009.
Mr 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. Mr Molloy was appointed to the role of Executive Director in
September 2009 following the retirement and resignation of David Hoff as Managing Director.
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RAYMOND BEATH B.Com, F.C.A
Non-Executive, Independent Director
Raymond Beath has been a member of the PPK Group Limited Board since listing on
21 December 1994 and is currently Chairman of the Audit Committee. He 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. Mr Beath 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.
GRAEME WEBB
Non-Executive Director
Graeme Webb is a substantial shareholder of PPK Group Limited. He 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, Mr Webb 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.
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ROBIN LEVISON CA, MBA, F.A.I.C.D
Executive Chairman
Robin Levison was appointed to the Board of PPK Group Limited as Executive Chairman on
22 October 2013. Mr Levison joined Industrea Limited in 2005, following a successful career
in accountancy and merchant banking. As Managing Director, he implemented and executed
a successful growth strategy under which the company’s range of specialist mining and
productivity equipment targeting the underground coal mining sector expanded significantly.
Through a mix of strong organic growth and strategic acquisitions, Mr Levison oversaw a
significant increase in Industrea’s revenue base, and group employee numbers climb to in excess
of 1000 people located globally, which eventually led to the company being acquired by General
Electric (GE). The company’s products and services were sold extensively to countries including
Australia, China, India, Indonesia, Russia, Japan, USA and Chile. Mr Levison holds a Masters of
Business Administration from the University of Queensland, is a Chartered Accountant and is a
Graduate and Fellow of the Australian Institute of Company Directors.
GLENN MOLLOY
Executive Director
Glenn Molloy is a substantial shareholder of PPK Group Limited and has been a member of the
PPK Group Limited Board since listing on 21 December 1994. He is the founder of the former
entity Plaspak Pty Limited in 1979 and was appointed Executive Director in September 2009.
Mr 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. Mr Molloy was appointed to the role of Executive Director in
September 2009 following the retirement and resignation of David Hoff as Managing Director.
DALE MCNAMARA
Director – Global Mining
Dale McNamara has more than 30 years experience in operational and management roles in the
coal mining industry in Australia and China. He founded Wadam Industries, a subsidiary of ASX
Listed Industrea Ltd, and served as its Managing Director from 1993. He was then appointed
as Deputy Chief Executive Officer of Industrea in 2009. Following the takeover of Industrea in
November 2012 Dale assumed the position of Global Director, Mining with the new owner.
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ZHANG JINPING
President — PPK China Operations
Zhang Jinping graduated from China Henan Polytechnic University with a Mining bachelor
degree and has 30 years experience in underground coal mining operations in China. He was
a senior employee of China Coal Research Institute for 12 years and Chief Representative
based in Beijing, China for both Wadam Industries and Industrea for 18 years. Mr Zhang has
a significant understanding of the Chinese coal sector and the major participants active in
that market.
PETER BARkER
Chief Financial Officer
Peter Barker joined PPK Group as CFO on 1 July 2014.
Having worked and lived in multiple countries in Europe, Asia and North America, he brings
extensive domestic and international experience to PPK. Immediately prior to returning to
Australia to join PPK he was in Hong Kong with a privately held technology group. Before
this Peter was the CFO of Computershare Ltd from 2009 to 2013. Peter is a Fellow of CPA
Australia and holds an MBA and B.Comm.
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CORPORATE GOVERNANCE STATEMENT
This statement has been approved by the Board of the
Company. The statement has been prepared as at 22
September 2014 with reference to the 3rd Edition of
the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations.
PRINCIPLE 1: LAY SOLID FOUNDATIONS
FOR MANAGEMENT AND OVERSIGHT
RECOMMENDATION 1.1
A listed entity should disclose:
(e) review performance of senior staff (if any);
(f) review financial performance against Key Performance
Indicators on a quarterly basis;
(g) approve acquisition and disposal of assets, products
and technology;
(h) approve operating budgets, capital, development and
other large expenditures;
(i) review risk management and compliance;
(j) oversee the integrity of the Company’s control and
(a) the respective roles and responsibilities of its Board
accountability systems;
and management; and
(b) those matters expressly reserved to the Board and
those delegated to management
The Board of Directors has been charged by shareholders
with overseeing the affairs of the Company to ensure that
they are conducted appropriately and in the interests of all
shareholders. The Board defines the strategic goals and
objectives of the Group, as well as broad issues of policy
and establishes an appropriate framework of Corporate
Governance within which the Board members and
management must operate. The Board reviews and monitors
management and the Group’s performance. The Board
has also taken responsibility for establishing control and
accountability systems/processes and for monitoring senior
executive performance and implementation of strategy.
The roles and responsibilities of the Board have been set
out in a Board charter which is available on the Company’s
website. Amongst other things the Board charter sets out
the role and responsibility of the chair of the Board.
The Board has specifically identified the following matters
for which it will be responsible:
(a) reviewing and determining the Company’s strategic
direction and operational policies;
(b) review and approve business plans, budgets and
forecasts and set goals for management;
(c) overseeing management’s implementation of the
Company’s strategic objectives and its performance
generally;
(d) appoint and remunerate senior staff (if any);
(k) Oversee the Company’s processes for making timely
and balanced disclosure of all material information
concerning it that a reasonable person would expect
to have a material effect on the price or value of the
Company’s shares;
(l) reporting to shareholders;
(m) ensure compliance with environmental, taxation,
Corporations Act and other laws and regulations; and
(n) monitoring the effectiveness of the Company’s
governance practices.
Management is charged with the day to day running and
administration of the Company consistent with the objectives
and policies as set down by the Board. Within this framework,
the Executive Chairman is directly accountable to the Board
for the performance of the management team.
RECOMMENDATION 1.2
A listed entity should:
(a) undertake appropriate checks before appointing
a person, or putting forward to security holders a
candidate for election, as a Director; and
(b) provide security holders with all material information
in its possession relevant to a decision whether or
not to elect or re-elect a Director.
The Company does undertake checks before it appoints a
person, or puts forward to shareholders a new candidate
for election, as a Director. These checks include references
as to the person’s character, experience and education. The
Company does not propose to check criminal records or
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the bankruptcy history for potential new Board members
however may consider such checks where necessary or
appropriate in the future.
The Company will include all material information in its
possession relevant to a decision whether or not to elect
or re-elect a Director in the relevant Notice of Meeting.
Information relating to each of the Directors is also provided
on the Company’s website.
RECOMMENDATION 1.3
A listed entity should have a written agreement with each
Director and senior executive setting out the terms of
their appointment.
The Company has not established written agreements with
its non-executive directors which set out the terms of their
appointment. Accordingly the appointment of Directors
is governed by the relevant provisions of the Company’s
Constitution.
Directors are not appointed for a fixed term but are,
excluding any Managing Director, subject to re-election by
shareholders at least every three years in accordance with
the Constitution of the Company.
A Director appointed to fill a casual vacancy or as an
addition to the Board, only holds office until the next
general meeting of shareholders and must then retire. After
providing for the foregoing, one-third of the remaining
Directors (excluding the Managing Director) must retire at
each Annual General Meeting of shareholders.
The Company does maintain written agreements with each
of its executive directors and with senior executives which
set out the terms of their appointment.
RECOMMENDATION 1.4
The Company Secretary of a listed entity should be
accountable directly to the board, through the chair, on all
matters to do with the proper functioning of the board.
The Company Secretary has been appointed on the basis
that he will be accountable directly to the Board, through
the chair, on all matters to do with the proper functioning of
the Board.
All Directors of the board have access to the Company
Secretary who is appointed by the Board. The Company
Secretary reports to the Chairman, in particular to matters
relating to corporate governance.
RECOMMENDATION 1.5
A listed entity should:
(a) have a diversity policy which includes requirements
for the board or a relevant committee of the Board
to set measurable objectives for achieving gender
diversity and to assess annually both the objectives
and the entity’s progress in achieving them;
(b) disclose that policy or a summary of it; and
(c) disclose as at the end of each reporting period the
measurable objectives for achieving gender diversity
set by the board or a relevant committee of the
Board in accordance with the entity’s diversity policy
and its progress towards achieving them, and either:
(1)
the respective proportions of men and women
on the Board, in senior executive positions and
across the whole organisation (including how
the entity has defined “senior executive” for
these purposes); or
(2) if the entity is a “relevant employer” under the
Workplace Gender Equality Act, the entity’s
most recent “Gender Equality Indicators”, as
defined in and published under that Act.
The Company has established a Diversity Policy Statement
which is available on the Company’s website.
PPK is committed to an inclusive workplace that embraces
and promotes diversity. The Company believes that
the promotion of diversity on its Board and within the
organisation generally is good practice.
Diversity at PPK refers to all the characteristics that
make individuals different from each other. It includes
characteristics or factors such as religion, race, ethnicity,
language, gender, sexual orientation, disability, age or any
other area of potential difference.
PPK values the unique contributions made by people with
diverse backgrounds, experiences and perspectives, and
believes that greater diversity of thought throughout the
organisation will lead to more informed decision making and
ultimately better business outcomes.
The Company’s policy is to recruit and manage its
employees on the basis of their competence, performance
and potential, regardless of the individual’s background or
points of difference.
Diversity at PPK is about the commitment to equality and
the treating of all individuals with respect.
The Company is committed to promoting a culture of
diversity in the workplace by:
• recruiting and managing on the basis of an individual’s
competence and performance;
• respecting the unique attributes that each individual
brings to the workplace;
• fostering an inclusive and supportive culture to enable
people to develop to their full potential;
• taking action to prevent and stop bullying, discrimination
or harassment;
• rewarding and remunerating fairly;
• offering flexible work practices which recognise that
employees may have different domestic responsibilities
throughout their career;
• maintaining policies and procedures to provide
employees at all levels of the Company with guidelines
for behaviour.
ANNUAL REPORT 2O14 20
Our commitment to diversity forms part of our culture
dedicated to retaining the best qualified employees,
management and Board. Our commitment applies in all
phases of employee engagement including recruitment,
selection, development, promotion, rewards and
remuneration.
The Board acknowledges the benefits of and will seek
to achieve diversity during the process of employment
at all levels without detracting from the principal criteria
for selection and promotion of people to work within the
Company based on merit.
The measurable objectives for achieving gender diversity
will be appropriate for the size and nature of the Company
and may include initiatives and programs and/or targets in
respect of:
• the number of women on the Board;
• the number of women employed by the Company;
• the nature of the roles in which women are employed,
including on full time, part time or contracted bases, and
in leadership, management, professional speciality or
supporting roles.
At 30 June 2014:
• there were no women on the Board of PPK;
• there were 10 women employed by the Company;
• women within the PPK organisation were predominantly
employed in full time administrative roles.
RECOMMENDATION 1.6
A listed entity should:
(a) have and disclose a process for periodically evaluating
the performance of the Board, its committees and
individual Directors; and
(b) disclose, in relation to each reporting period, whether
a performance evaluation was undertaken in the
reporting period in accordance with that process.
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 process of evaluation
is set out in detail and available on the Company’s website.
The Executive Chairman together with the Deputy
Chairman meet periodically with individual directors to
discuss the performance of the Board and the director.
In addition, an evaluation is undertaken by the Executive
Chairman together with the Deputy 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.
The Board believes that this approach is appropriate given
its size and the nature of the Company’s operations. No
formal evaluation was undertaken in the reporting period
ended 30 June 2014.
RECOMMENDATION 1.7
A listed entity should:
(a) have and disclose a process for periodically
evaluating the performance of its senior executives;
and
(b) disclose, in relation to each reporting period,
whether a performance evaluation was undertaken
in the reporting period in accordance with that
process.
The Board is responsible for approving the performance
objectives and measures for executive directors and
assessing whether these objectives have been satisfied
by the performance of the executive directors during the
relevant period and in accordance with agreed terms of
engagement.
The Executive Chairman 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.
PRINCIPLE 2: STRUCTURE THE BOARD
TO ADD VALUE
RECOMMENDATION 2.1
The Board of a listed entity should:
(a) have a nomination committee which:
(1)
has at least three members, a majority of whom
are independent Directors, and
(2) is chaired by an independent director; and
disclose
(3) the charter of the committee
(4) the members of the committee; and
(5) as at the end of each reporting period, the
number of times the committee met throughout
the period and the individual attendances of the
members at those meetings; or
(b) if it does not have a nomination committee, disclose
that fact and the processes it employs to address
Board succession issues and to ensure that the Board
has the appropriate balance of skills, knowledge,
experience, independence and diversity to enable it to
discharge its duties and responsibilities effectively.
Due to the size of the Company and the number of Board
members, the Board does not have a formal nomination
committee. Any new Directors will be selected according
to the needs of the Company at that particular time, the
composition and the balance of experience on the Board
as well as the strategic direction of the Company. Where
PPK GROUP LIMITED 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.
At each annual general meeting, the following Directors retire:
i. one third of Directors (excluding the Managing Director or
Chief Executive Officer, if he/she is a Director, if any);
ii. Directors appointed by the Board to fill casual vacancies or
(i) Directors are entitled to seek independent professional
advice at the Company’s expense. Prior written
approval of the Chairman is required but this is not
unreasonably withheld.
(ii) Directors having a conflict of interest with an item for
discussion by the Board must absent themselves from
a Board meeting where such item is being discussed
before commencement of discussion on such topic.
21
Details of each Directors experience and length of service
can be found on the Company’s website and are reported in
the Company’s Financial Report on an annual basis.
otherwise; and
RECOMMENDATION 2.4
iii. Directors who have held office for more than three years
since the last general meeting at which they were elected.
A majority of the Board of a listed entity should be
independent Directors.
RECOMMENDATION 2.2
A listed entity should have and disclose a Board skills
matrix setting out the mix of skills and diversity that
the Board currently has or is looking to achieve in
its membership.
The Board does review its composition from time to time
taking into account the length of service on the Board,
age, qualification and experience, any requirements of
the Company’s constitution, and in light of the needs and
direction of the Company, together with such other criteria
considered desirable for composition of a balanced Board
and the overall interests of the Company.
A Director is expected to resign if the remaining Directors
recommend that a Director should not continue in office,
but is not obliged to do so.
Details of each Directors experience and length of service
can be found on the Company’s website and are reported in
the Company’s Financial Report on an annual basis.
RECOMMENDATION 2.3
A listed entity should disclose:
(a) the names of the directors considered by the Board
to be independent Directors;
(b) if a director has an interest, position, association or
relationship of the type described in Box 2.3 but the
Board is of the opinion that it does not compromise
the independence of the director, the nature of
the interest, position, association or relationship in
question and an explanation of why the Board is of
that opinion; and
(c) the length of service of each Director.
The PPK Board is currently comprised of 5 directors of
whom Mr Jury Wowk, Mr Ray Beath and Mr Glenn Webb
are considered to be independent directors.
Mr Robin Levison is the Executive Chairman and accordingly
is not considered to be an independent director.
Mr Glenn Molloy is also an executive director and
accordingly is not considered to be an independent director.
In addition, the Board has adopted a series of safeguards
to ensure that independent judgement is applied when
considering the business of the Board:
The PPK Board is currently comprised of 5 directors, a
majority of whom are independent directors.
RECOMMENDATION 2.5
The chair of the Board of a listed entity should be an
independent Director and, in particular, should not be the
same person as the CEO of the entity.
The Executive Chairman Mr Robin Levison is not considered
to be an independent director due to his executive
responsibilities and accordingly the Company does not
comply with this recommendation. The Board considers that
Mr Levison has an outstanding track record of successfully
expanding mining services businesses both organically
and via acquisitions and accordingly believes that it is
appropriate for him to lead PPK’s future strategic direction
which is focused on mining services activities.
The Deputy Chairman Mr Jury Wowk, is considered to be an
independent director.
As Mr. Levison is Executive Chairman and the Company
does not have a Managing Director or Chief Executive
Officer the roles of chair and its chief executive officer
are exercised by the same individual and accordingly the
Company does not comply with this recommendation. As
stated above, the Board considers that Mr Levison has an
outstanding track record of successfully expanding mining
services businesses both organically and via acquisitions
and accordingly believes that it is appropriate for him to
lead PPK’s future strategic direction which is focused on
mining services activities. Before joining PPK Mr Levison
had been the Managing Director of Industrea Limited
following a successful career in accountancy and merchant
banking. As Managing Director of Industrea, he implemented
and executed a successful growth strategy under which
the company’s range of specialist mining and productivity
equipment targeting the underground coal mining sector
expanded significantly. The Board considers that Mr. Levison
is well placed to lead PPK with the objective of achieving
similar success through a mix of organic growth and
strategic acquisitions. The Board considers that Mr Levison
is uniquely qualified to lead PPK as he holds a Masters of
Business Administration from the University of Queensland,
is a Chartered Accountant and is a Graduate and Fellow of
the Australian Institute of Company Directors.
ANNUAL REPORT 2O14 RECOMMENDATION 2.6
A listed entity should have a program for inducting
new Directors and provide appropriate professional
development opportunities for Directors to develop and
maintain the skills and knowledge needed to perform
their role as Directors effectively
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The Company provides new Directors with an induction
package including copies of the Board Charter and relevant
policies and procedures.
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.
Directors are encouraged to pursue appropriate professional
development opportunities to develop and maintain their
skills and knowledge in order to perform their role as
Directors effectively.
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.
All Board members have access to professional independent
advice at the Company’s expense, provided they first obtain
the Chairman’s approval, with such approval not being
withheld unreasonably.
PRINCIPLE 3: ACT ETHICALLY AND
RESPONSIBLY
RECOMMENDATION 3.1
A listed entity should:
(a) have a code of conduct for its Directors, senior
executives and employees; and
(b) disclose that code or a summary of it.
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 a Code of
Conduct for Directors and Executives. In summary, these
Codes provide 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;
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.
PRINCIPLE 4: SAFEGUARD INTEGRETY IN
CORPORATE REPORTING
RECOMMENDATION 4.1
The Board of a listed entity should:
(a) have an audit committee which:
(1) has at least three members, all of whom are
non executive Directors and a majority of whom
are independent Directors; an
(2) is chaired by an independent Director, who is not
the chair of the Board, and disclose:
(3) the charter of the committee;
(4) the relevant qualifications and experience of the
members of the committee; and
(5) in relation to each reporting period, the number
of times the committee met throughout the
period and the individual attendances of the
members at those meetings; or
• not make improper use of information acquired in their
(b) if it does not have an audit committee, disclose that
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.
fact and the processes it employs that independently
verify and safeguard the integrity of its corporate
reporting, including the processes for the
appointment and removal of the external auditor and
the rotation of the audit engagement partner.
The Company has established an audit committee which
is comprised of Mr. Ray Beath and Mr. Jury Wowk. Due to
the small size of the Company and the number of Board
members, the committee is not comprised of three members.
Mr. Ray Beath acts as Chairman of the audit committee. Mr.
Beath is an independent Director and not the Chair of the
Board. Mr. Wowk is also an independent Director.
PPK GROUP LIMITED 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.
Details relating to the relevant qualifications and experience
of the members of the committee and the number of
times the committee met throughout the reporting period
and the individual attendances of the members at those
meetings are set out on an Annual Basis in the Directors
Report contained in the Company’s Year End Financial
Report which is released to the market and posted on the
Company’s website.
RECOMMENDATION 4.2
The Board of a listed entity should, before it approves the
entity’s financial statements for a financial period, receive
from its CEO and CFO a declaration that, in their opinion,
the financial records of the entity have been properly
maintained and that the financial statements comply with
the appropriate accounting standards and give a true
and fair view of the financial position and performance of
the entity and that the opinion has been formed on the
basis of a sound system of risk management and internal
control which is operating effectively.
The Company’s Executive Chairman and Chief Financial
Officer will report in writing to the Board on a yearly and
half-yearly basis to confirm that:
(i) the financial records of the entity have been properly
maintained and that the financial statements comply
with the appropriate accounting standards;
(ii) the Company’s financial statements are complete and
present a true and fair view, in all material respects,
of the financial condition and performance of the
Company; and
(iii) the above statement is founded on a sound system
of internal control and risk management which
implements the policies adopted by the Board and that
the Company’s risk management and internal controls
are operating effectively in all material respects.
RECOMMENDATION 4.3
A listed entity that has an AGM should ensure that its
external auditor attends its AGM and is available to answer
questions from security holders relevant to the audit.
The Company’s external auditor attends the AGM and is
available to answer questions from shareholders relevant to
the audit.
PRINCIPLE 5: MAkE TIMELY AND
BALANCED DISCLOSURE
RECOMMENDATION 5.1
A listed entity should:
(a) have a written policy for complying with its
continuous disclosure obligations under the Listing
Rules; and
(b) disclose that policy or a summary of it.
The PPK Board is committed to keeping its shareholders,
and the market, fully informed of major developments
having an impact on the Company.
The Company has a Market Disclosure Policy which is
available on the Company’s website.
23
Comprehensive procedures are in place to identify matters
that are likely to have a material affect on the price, or
value, of the PPK securities and to ensure those matters
are notified to the ASX in accordance with ASX Listing Rule
disclosure requirements.
Senior management and the Board are responsible for
scrutinising events and information to determine whether
the disclosure of the information is required in order to
maintain the market integrity of the Company’s shares listed
on the ASX.
The Company Secretary is responsible for all communications
with the ASX.
PRINCIPLE 6: RESPECT THE RIGHTS OF
SECURITY HOLDERS
RECOMMENDATION 6.1
A listed entity should provide information about itself and
its governance to investors via its website.
Information about the Company and its governance are
available on the Company’s website. The Company’s
website provides detailed corporate information and has a
specific section relating to corporate governance.
RECOMMENDATION 6.2
A listed entity should design and implement an investor
relations program to facilitate effective two-way
communication with investors.
PPK recognises the right of shareholders to be informed of
matters, in addition to those prescribed by law, which affect
their investments in the company.
The Company has a formal Shareholder Communication
Policy which is available on the Company’s website.
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
It is the Company’s communication policy to communicate
with shareholders and other stakeholders in an open,
regular and timely manner so that the market has sufficient
information to make informed investment decisions on the
operations and results of the Company.
Investors and other stakeholders are invited to subscribe
to an email alert facility on the Company’s website so that
they can receive material announcements which have been
released by the Company to the market via an email in a
timely manner.
ANNUAL REPORT 2O14 RECOMMENDATION 6.3
A listed entity should disclose the policies and processes
it has in place to facilitate and encourage participation at
meetings of security holders.
24
The Board encourages active participation by shareholders
at each Annual General Meeting, or other general meetings
of the Company.
The Company does not have formal policies or process in
place to facilitate or encourage participation at shareholder
meetings. The Company will despatch a Notice of
Meeting and Explanatory Statement to shareholders
in accordance with statutory requirements. In addition
details of any shareholder meeting will be posted on the
Company’s website.
At any meeting of shareholders, shareholders will be
encouraged to ask questions of the Board of Directors in
relation to the matters to be considered at such meeting and
where appropriate relating to the operation of the Company.
RECOMMENDATION 6.4
A listed entity should give security holders the option to
receive communications from, and send communications
to, the entity and its security registry electronically.
The Company provides shareholders with the option to
receive communications from, and send communications to,
the entity and its security registry electronically.
PRINCIPLE 7: RECOGNISE AND
MANAGE RISk
RECOMMENDATION 7.1
The Board of a listed entity should:
(a) have a committee or committees to oversee risk,
each of which:
(1) has at least three members, a majority of whom
are independent Directors; and
(2) is chaired by an independent director, and
disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the
number of times the committee met throughout
the period and the individual attendances of the
members at those meetings; or
(b) if it does not have a risk committee or committees
that satisfy (a) above, disclose that fact and the
processes it employs for overseeing the entity’s risk
management framework.
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 or a committee of the Board should:
(a) review the entity’s risk management framework at
least annually to satisfy itself that it continues to be
sound; and
(b) disclose, in relation to each reporting period,
whether such a review has taken place.
The PPK Risk Management and Control Policy Framework
is utilised by the Board as a means of identifying
opportunities and avoiding or mitigating losses in the
context of its businesses.
The Audit Committee assists the Board in its risk
management role by reviewing the financial and
reporting aspects of the group’s risk management and
control practices.
The Executive Chairman has ultimate responsibility for
control and management of operational risk and the
implementation of avoidance or mitigation measures within
the group and may delegate control of these risks to the
appropriate level of management at each site.
The Board regularly monitors the operational and financial
performance of the Company and the economic entity
against budget and other key performance measures.
The Board also receives and reviews advice on areas of
operational and financial risk and develops strategies, in
conjunction with management, to mitigate those risks.
Each month, reports are presented to the Board by the
Executive Chairman and the Chief Financial Officer and
relevant senior executives 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 Chief Financial Officer 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 Chairman 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 Chairman 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 2014.
PPK GROUP LIMITED 25
RECOMMENDATION 7.3
A listed entity should disclose:
(a) if it has an internal audit function, how the function
is structured and what role it performs; or
(b) if it does not have an internal audit function, that
fact and the processes it employs for evaluating and
continually improving the effectiveness of its risk
management and internal control processes.
In light of the nature and extent of the Company’s
operations and activities, the Company has not established
an internal audit function.
The Board continuously reviews the activities of the Group
to identify key business and operational risks and, where
possible, will implement policies and procedures to address
such risks and where approval to establish appropriate
internal control processes.
The Board is provided with regular reporting on the
management of operations and the financial condition of the
Company aimed at ensuring that risks are identified, assessed
and appropriately managed as and when they arise.
RECOMMENDATION 7.4
A listed entity should disclose whether it has any
material exposure to economic, environmental and social
sustainability risks and, if it does, how it manages or
intends to manage those risks.
In light of the nature and extent of the Company’s
operations its business activities have limited sustainability
implications at this stage of its business strategy.
PRINCIPLE 8: REMUNERATE FAIRLY AND
RESPONSIBLY
RECOMMENDATION 8.1
The Board of a listed entity should:
RECOMMENDATION 8.2
A listed entity should separately disclose its policies and
practices regarding the remuneration of non-executive
Directors and the remuneration of executive Directors
and other senior executives.
The aggregate remuneration of non-executive directors is
approved by shareholders.
Individual directors’ remuneration is determined by the board
within the approved aggregate total.
In determining the appropriate level of director’s fees, data
from surveys undertaken of other public companies similar
in size or market section to PPK is taken into account.
Non-executive directors of PPK are:
• not entitled to participate in performance based
remuneration practices unless approved by shareholders;
and
• currently remunerated by means of the payment of cash
benefits in the form of directors’ fees.
PPK does not currently have in place a retirement benefit
scheme or allowance for its non-executive directors.
Executive directors do not receive directors’ fees.
A review of the compensation arrangements for the
Executive Chairman, 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.
(a) have a remuneration committee which:
RECOMMENDATION 8.3
(1) has at least three members, a majority of whom are
independent Directors; and
A listed entity which has an equity-based remuneration
scheme should:
(2) is chaired by an independent director, and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the number
of times the committee met throughout the period
and the individual attendances of the members at
those meetings; or
(b) if it does not have a remuneration committee, disclose
that fact and the processes it employs for setting the
level and composition of remuneration for Directors
and senior executives and ensuring that such
remuneration is appropriate and not excessive.
The PPK Board has not established a formal Remuneration
Committee as PPK is a relatively small publicly listed
company and remuneration matters relating to executive
Directors and Senior Executives are considered by the full
Board where appropriate.
(a) have a policy on whether participants are permitted
to enter into transactions (whether through the
use of derivatives or otherwise) which limit the
economic risk of participating in the scheme; and
(b) disclose that policy or a summary of it.
The Company is in the process of implementing Employee
Share Incentive Schemes. The Company has not yet
established a formal policy on whether participants are
permitted to enter into transactions (whether through the
use of derivatives or otherwise) which limit the economic
risk of participating in the scheme.
The Corporations Act prohibits the key management
personnel of an ASX listed company established in Australia,
or a closely related party of such personnel, from entering
into an arrangement that would have the effect of limiting
their exposure to risk relating to an element of their
remuneration that either has not vested or has vested but
remains subject to a holding lock.
ANNUAL REPORT 2O14 26
PPK GROUP LIMITED 2014 FINANCIAL REPORT
27
28
Directors’ Report
41
Auditor’s Independence Declaration
42
Consolidated Statement of Profit or Loss and Other Comprehensive Income
43
Consolidated Statement of Financial Position
44
Consolidated Statement of Cash Flows
45
Consolidated Statement of Changes in Equity
46
Notes to the Accounts
84
Directors’ Declaration
85
Independent Auditor’s Report
88
Shareholder Information
4
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DIRECTORS’ REPORT
Your directors present their report on the parent entity and its subsidiaries for the financial year ended 30 June 2014.
DIRECTORS
The names of directors in office at any time during or since the financial year are:
Robin Levison (appointed: 22 October 2013)
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:
Robin Levison CA MBA FAICD (Age 56)
Executive Chairman,
Appointed Executive Chairman of the PPK Group Limited Board on 22 October 2013.
Robin Levison holds a Masters of Business Administration from the University of Queensland and is a Member of the
Institute of Chartered Accountants in Australia. Robin has 14 years of public company management experience. During this
time he has served as Managing Director at Industrea Limited and Spectrum Resources Limited and has held senior roles at
KPMG, Barclays Bank and Merrill Lynch. Robin is also Deputy Chair of the University of Queensland Business, Economics
and Law Alumni Ambassador Council, Director of St Aidan’s Foundation Limited and is a Graduate and Fellow of Australian
Institute of Company Directors.
Other listed public company directorships held in the last 3 years:
Industrea Limited, Managing Director and Chief Executive Officer (Appointed: May 2005; Ceased: December 2012)
Eureka Group Holdings Limited, Non-executive Director & Chairman (Appointed: 24 December 2013)
Jury Wowk BA., LLB (age 63)
Non-Executive Deputy Chairman, Independent Director
Member of the PPK Group Limited Board since listing on 21 December 1994
Chairman from 13 September 2011 to 22 October 2013.
Appointed Deputy Chairman 22 October 2013.
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.
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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)
29
Glenn Molloy (Age 59)
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; Ceased 25 November 2013), Chairman
(Appointed 10 April 2013; ceased 31 July 2013)
Raymond Beath B.Com, F.C.A (Age 64)
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.
Other listed public company directorships held in the last 3 years: Nil
Graeme Webb (Age 63)
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 (65)
Alternate Non-Executive Director for Raymond Beath from 5 February 2013 to 7 July 2013
David Hoff was appointed as an alternate Director for 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: Nil
ANNUAL REPORT 2O14 30
INFORMATION ON COMPANY SECRETARY
Andrew J. Cooke LL.B, FCIS (Age 54)
Group Company Secretary
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:
• design, manufacture, distribution and servicing of underground mining equipment;
• property ownership and management; and
• investment in publicly listed and privately held businesses.
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 2014 amounted to $2,951,000 (2013: Profit of
$2,748,000).
DIVIDENDS PAID OR RECOMMENDED
Dividends paid or recommended for payment are as follows:
Interim dividend in respect of the reporting period of 1.5 cents per ordinary share paid
on 9 May 2014.
A final dividend on respect of the reporting period of 2.0 cents per ordinary share will be
paid on 10 November 2014.
$1,089,000
$1,453,000
Both dividends are fully franked.
REVIEW OF OPERATIONS
The review of operations is outlined in the Executive Chairman’s Report set out on pages 6 to 12 and which forms part of
this report.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
• Acquisition of COALTRAMS
In March 2014 the Group completed the acquisition of the COALTRAMS business.
The acquisition represents a strong cornerstone from which the Group can achieve the continued expansion of the
Group’s manufacturing and service operations through future acquisitions and organic growth. The $13 million cost of
acquisition was settled in cash.
• Issue of Share Capital
In April 2014 the Group issued 6,509,065 shares as part of a capital raising plan to fund the acquisition of COALTRAMS.
Proceeds from the 75 cents per share issue were $4,881,799, each share has the same terms and conditions as the
existing ordinary shares.
PPK GROUP LIMITED • Issue of Shares under a Share and Loan Plans
31
On 28 April 2014 shares totalling 15,500,000 were issued to key Senior Executives. The shares were issued at 70 cents
each and each parcel was fully funded by a limited recourse loan for a term of 3 years at an initial interest rate of 6.45%.
Since issue $232,500 has been recorded as payment for those shares, being the interim dividend entitlement in respect
of those shares paid on 9th May 2014. Under the applicable Accounting Standards, the Share and Loan Plans gave rise to
a share-based payment expense totalling $1,329,900.
• On-Market Buy-Back Scheme
During the reporting period, PPK had in place an on-market buy-back scheme which commenced on 10 December 2012
and concluded on 9 December 2013 and pursuant to which a total of 125,938 shares were bought back in the financial
year ended 30 June 2014 for a total consideration of $56,007.
There have been no other significant changes in the state of affairs during the 2014 financial year or existing at the time of
this report.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
Completion of the MONEx acquisition occurred on 28 August 2014 with 50% of the $2.8 million purchase price paid up-
front with the balance payable over 12 equal monthly instalments.
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 2014 are included in the Executive Chairman’s Review set out on pages 6 to 12
and which forms part of this report.
ENVIRONMENTAL ISSUES
PPK remains committed to:
• the effective management of environmental issues having the potential to impact on its businesses; 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.
ANNUAL REPORT 2O14 32
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.
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 shares or options to executives as a means of long-term incentive to encourage the alignment of personal
and shareholder interests.
PPK GROUP LIMITED On 28 April 2014 a General Meeting of Shareholders approved the issue of 15,500,000 shares to key management
personnel. The shares were issued to each of the Senior Executives as a parcel of “sign-on” shares at an issue price of 70
cents per share under a Share and Loan Plan in which the Group agreed to fully fund the acquisition of each parcel of plan
shares by way of a limited recourse loan for a term of 3 years at an initial interest rate of 6.45% per annum.
33
The primary objectives of the Share and Loan Plan are to:
• align the interests of the Senior Executives with the interests of the Group and its shareholders and other stakeholders
by rewarding their performance with the delivery of sustainable shareholder value;
• motivate and retain the services of the Senior Executives;
• ensure that the Senior Executives’ remuneration is competitive and aligned with remuneration in the Australian mining
services market; and
• encourage the performance and growth the Mining Services Division of the Group.
Details of the Share and Loan Plans issue are disclosed in the table below.
Senior Executive
Plan Shares
Loan Amount
Share-based payment
Robin Levison
Dale McNamara
Zhang Jinping
Total
7,500,000
4,000,000
4,000,000
$5,250,000
$2,800,000
$2,800,000
$643,500
$343,200
$343,200
15,500,000
$10,850,000
$1,329,900
The following is a summary of the key terms and conditions of each Share and Loan Plan:
• Interest is payable on the loan at the benchmark interest rate from time to time determined under section 136 of
the Fringe Benefits Tax Assessment Act 198. Interest accrues monthly but any unpaid interest is capitalised at
6 monthly intervals.
• The shares rank equally with other ordinary shares on issue with respect to dividends, distribution or return of capital.
The Group may in its absolute discretion set off against the outstanding balance of any loan and accrued interest any
amount that is required to be paid in cash in respect of Plan Shares, including any dividends, distribution or return of
capital, net of any tax payable on that amount.
• Limited Recourse: if the Senior Executive fails to repay the outstanding loan balance in accordance with the Plan, they
are under no obligation to repay the full amount of the Outstanding Loan Balance and the Group must accept the net
proceeds of the sale or buy-back of the Plan Shares in full satisfaction of the Outstanding Loan Balance.
Under the applicable Accounting Standards, the Plans gave rise to a share-based payment expense which were measured
by reference to the fair value of the Plan Shares as at the date on which the Share Plan Resolutions were passed. As the
Plan Shares were acquired by way of limited recourse loans the fair value of the Plan Shares were measured using an
option pricing model in accordance with the Accounting Standard. The fair value of each share issued under the share loan
plan at the date of shareholder approval was $0.0858. The company has recognised an after tax, non-cash share-based
payment of $1,329,900 during the financial year with a corresponding credit to Shareholders’ Equity in the form of a Share
Option Reserve.
The treatment of the Plan Shares under the applicable Accounting Standards as options requires that the value of the loans
and issue price of the shares are not recorded as Loans Receivables or Share Capital of the Group until repayment or part
repayment of the loans occurs. The Plan Shares were entitled to dividends totalling $232,500 from the dividend paid on 9
May 2014. This amount was applied to reduce the loans and increase Share Capital in accordance with both the Plan rules
and applicable Accounting Standards.
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.
ANNUAL REPORT 2O14 34
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)
2014
2013
2012
4.8
3.5
$0.66
58%
4.7
3.5
$0.44
25%
2.9
1.0
$0.38
30%
2011
(4.5)
2.5
$0.30
(17%)
2010
1.3
2.5
$0.39
45%
The above table shows the annual returns to shareholders calculated to include the difference in percentage terms between
the dividend yield for the year (based on the average share price during the period) and changes in the price at which
shares in the Company are traded between the beginning and the end of the relevant financial year.
Details of Remuneration for the year ended 30 June 2014
DIRECTORS’ AND OTHER kEY MANAGEMENT PERSONNEL REMUNERATION
Details of the nature and amount of each element of the remuneration of each key management personnel (‘KMP”) of PPK
Group Limited are shown in the table below:
2014
SHORT TERM INCENTIVES
POST
EMPLOY-
MENT
LONG TERM INCENTIVES/BENEFITS
Salary&
Fees
($)
Short Term
Incentive
Cash Bonus
($)
Non-
Cash
Benefits
($)
Super-
annuation
($)
Long
Service
Leave
Post
Employment
Benefits
($)
Share
Based
Payments
($)
Proportion of
Remuneration
Performance
Related
(%)
Total
($)
Directors
Non –Executive
J I Wowk
R M Beath
GD Webb
Executive
R Levison
G R Molloy
Total Directors
197,871
30,000
30,000
200,500
145,500
603,871
Other Key
Management Personnel
D A Hoff
D McNamara
Z Jinping
Total other
130,000
86,666
70,666
287,332
Total Key
Management Personnel
891,203
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,469
-
3,469
-
1,542
1,542
3,084
6,553
-
-
-
-
-
-
-
-
-
-
-
-
-
-
197,871
30,000
30,000
643,500
-
847,469
145,500
643,500
1,250,840
-
343,200
343,200
686,400
130,000
431,408
415,408
976,816
-
1,329,900
2,227,656
2014
Directors
Non –Executive
J I Wowk
R M Beath
GD Webb
Executive
R Levison
G R Molloy
Total Directors
Other Key
Management Personnel
D A Hoff
D McNamara
Z Jinping
Total other
Total Key
Management Personnel
197,871
30,000
30,000
200,500
145,500
603,871
130,000
86,666
70,666
287,332
891,203
POST
EMPLOY-
MENT
SHORT TERM INCENTIVES
LONG TERM INCENTIVES/BENEFITS
Salary&
Short Term
Incentive
Non-
Cash
Super-
Long
Employment
Post
Share
Based
Fees
Cash Bonus
Benefits
annuation
Service
Benefits
Payments
($)
($)
($)
($)
Leave
($)
($)
Total
($)
Proportion of
Remuneration
Performance
Related
(%)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,469
-
3,469
-
1,542
1,542
3,084
6,553
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
197,871
30,000
30,000
643,500
-
847,469
145,500
643,500
1,250,840
343,200
343,200
686,400
130,000
431,408
415,408
976,816
-
1,329,900
2,227,656
2013
35
SHORT TERM INCENTIVES
POST
EMPLOY-
MENT
LONG TERM INCENTIVES/BENEFITS
Salary&
Fees
($)
Short Term
Incentive
Cash Bonus
($)
Non-
Cash
Benefits
($)
Super-
annuation
($)
Long
Service
Leave
Post
Employment
Benefits
($)
Share
Based
Payments
($)
Proportion of
Remuneration
Performance
Related
(%)
Total
($)
Directors
Non –Executive
J I Wowk
R M Beath
GD Webb
Executive
G R Molloy
Total Directors
149,983
15,000
30,000
163,000
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
-
-
-
-
-
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 2014
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 apart from those
disclosed above as a consequence of the Share and Loan Plans.
Employment Contracts
Mr. Robin Levison
Employment and consultancy agreements are in place between the parties on terms as follows:
Term: Commencing on 1 October 2013 – no fixed term.
Remuneration: Base remuneration under the agreements $290,000 per annum.
Duties: Executive Chairman.
Termination: The consultancy agreement may be terminated with no cause at any time by PPK Group Limited by giving not less
than 12 months written notice or by Mr Levison giving not less than 6 months written notice.
Mr. Dale McNamara
Employment and consultancy agreements are in place between the parties on terms as follows:
Term: Commencing on 1 November 2013 and 1 April 2014 – no fixed term.
Remuneration: Base remuneration under the agreements $200,000 per annum.
Duties: PPK’s director of Global Mining.
Termination: The consultancy agreement may be terminated with no cause at any time by PPK Group Limited by giving not less
than 12 months written notice or by Mr McNamara giving not less than 6 months written notice.
ANNUAL REPORT 2O14 36
Mr. Zhang Jinping
Employment and consultancy agreements are in place between the parties on terms as follows:
Term: Commencing on 1 November 2013 and 1 April 2014 – no fixed term.
Remuneration: Base remuneration under the agreements $200,000 per annum.
Duties: President – PPK China Operations.
Termination: The consultancy agreement may be terminated with no cause at any time by PPK Group Limited by giving not less
than 12 months written notice or by Mr Zhang giving not less than 6 months written notice.
Mr. David Hoff
A consultancy agreement was in place 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 Hoff’s consultancy agreement ended on 30 June 2014.
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.
PPK GROUP LIMITED SHARES HELD BY DIRECTOR AND kEY MANAGEMENT PERSONNEL
37
The number of ordinary shares held by directors and Key Management Personnel during the 2014 reporting period is set
out below:
Directors
R Levison
G Molloy (1)
R Beath
J Wowk
G Webb
Balance at
Start of year
Net change
Other
Shares
Purchased
New Share
Issue
Share and
Loan Plan
Issue
Held at the
End of the
Reporting
Period
-
-
4,000,000
266,667
7,500,000
11,766,667
11,944,566
(120,000)
42,821
212,302
7,491,653
-
-
-
680,434
200,000
200,000
874,979
19,691,342
(120,000)
5,955,413
1,050,000
57,179
87,688
1,093,308
2,554,912
-
-
-
-
13,555,000
300,000
500,000
9,460,000
7,500,000
35,581,667
Key Management Personnel
D McNamara
Z Jinping
D Hoff (2)
-
-
-
-
156,960
156,960
(156,960)
(156,960)
-
-
-
-
-
-
4,000,000
4,000,000
-
4,000,000
4,000,000
-
8,000,000
8,000,000
(1) Adjustment for shares incorrectly recorded as Mr Molloy having a relevant interest in.
(2) Mr Hoff’s consultancy agreement concluded at 30 June 2014.
(End of Audited Remuneration Report)
OPTIONS
Apart from the Share Loan Plans as discussed above there were no options outstanding as at the date of this report.
OTHER INTERESTS IN RELATED ENTITIES OF THE GROUP
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
Nature of Interest (all indirect)
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
2
33
20
40
100
Director & Member
Director & Member
Director & Member
Director & Member
Director & Member
ANNUAL REPORT 2O14 38
G R Molloy:
Trusts - registered holder(s)
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
R M Beath:
Trusts - registered holder(s)
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:
Number of Units
Nature of Interest (all indirect)
10
286
180
200
60
500
100
150
Director & Member
Director & Member
Director & Member
Director & Member
Director
Director & Member
Director
Number of Units
Nature of Interest (all indirect)
1
20
20
50
Director & Member
Director & Member
Director & Member
Director & Member
Trusts - registered holder(s)
Number of Units
Nature of Interest (all indirect)
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
20
20
231
40
60
Director
Director
Director
Director
Director
PPK GROUP LIMITED
MEETINGS OF DIRECTORS
During the financial year, meetings of directors (including committee meetings) were held.
39
Attendances were:
DIRECTORS’ MEETINGS
COMMITTEE MEETINGS
Number Eligible to
attend
Number
Attended
Number Eligible to
attend
Number
Attended
Robin Levison
Jury Ivan Wowk
Glenn Robert Molloy
Raymond Michael Beath
Graeme Douglas Webb
9
12
12
12
12
9
12
12
12
7
-
3
-
3
-
-
3
-
3
-
RISk & CONTROL COMPLIANCE STATEMENT
Under ASX Listing Rules and the ASX Corporate Government Council’s Principles of Good Corporate Governance and Best
Practice Recommendations (“ASX Recommendations”), the Company is required to disclose in its Annual Report the extent
of its compliance with the ASX Recommendations.
Throughout the reporting period, and as at the date of signing of this Directors’ Report, the Company was in compliance
with a majority of the ASX Recommendations in all material respects as more fully detailed in the Statement of Corporate
Governance Practices as set out in the PPK 2014 Annual Report.
In accordance with the Recommendations, the Board has:
• received and considered reports from management regarding the effectiveness of the Company’s management of its
material business risks; and
• received assurance from the people performing each of the chief executive officer and chief financial officer functions
regarding the consolidated financial statements and the effective operation of risk management systems and internal
controls in relation to financial reporting risks.
Material associates and joint ventures, which the company does not control, are not dealt with for the purposes of
this statement.
AUDIT COMMITTEE
The consolidated entity has an Audit Committee. Details of the composition, role and Terms of Reference of the PPK Audit
Committee are contained in the Statement of Corporate Governance Practices accompanying this Report and are available
on the Company’s website at www.ppkgroup.com.au
During the reporting period, the PPK Audit Committee consisted of the following Non-executive, Independent Directors:
R M Beath (Chairman)
J I Wowk
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.
ANNUAL REPORT 2O14 40
DIRECTORS’ BENEFITS
Since 30 June 2014, 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 2014 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.
ROBIN LEVISON
Executive Chairman
Sydney, 30 September 2014
GLENN MOLLOY
Executive Director
PPK GROUP LIMITED
AUDITOR’S INDEPENDENCE DECLARATION
41
ANNUAL REPORT 2O14 CONSOlIDaTED STaTEMENT OF PROFIT OR lOSS
aND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014
42
Consolidated Entity
REVENUE
Mining equipment manufacture
Investment properties
Investment activities
Interest receivable
Total Revenue
OTHER INCOME
Gain from a bargain purchase in business combination
Other
EXPENDITURE
Mining equipment manufacture
Investment properties
Investment activities
Administrative expenses
Share Based payment expense
Business combination acquistion costs
Finance costs
TOTal EXPENDITURE
Share of profit / (loss) from associates
accounted for using the equity method
PROFIT / (lOSS) BEFORE INCOME TaX EXPENSE
Income tax (expense) attributable to profit
PROFIT / (lOSS) aFTER INCOME TaX
Profit / (loss) is attributable to:
Owners of PPK Group Limited
Non-controlling interests
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified to profit or loss
Changes in value of available-for-sale financial assets
Provision for income tax thereon
Unrealised impairment losses on available-for-sale financial assets
transferred to the profit or loss statement from the available-for-sale reserve
Provision for income tax thereon
Realised gain on sale of available-for-sale financial assets
transferred to the profit or loss statement from the available-for-sale reserve
Provision for income tax thereon
Other comprehensive income net of income tax
Total Comprehensive Income / (loss) for the year
Total comprehensive income / (loss) for the year is attributable to:
Owners of PPK Group Limited
Non-controlling interests
Overall Operations
Basic earnings per share ( cents per share )
Diluted earnings per share ( cents per share )
The accompanying notes form part of these financial statements
Notes
2(b)
2(d)
2(a)
29
2(c)
5
2(f)
2(e)
3
24
7
7
2014
$000s
12,568
4,414
1,268
2,300
20,550
2,828
52
2,880
(12,195)
(1,817)
(828)
(1,900)
(1,330)
(731)
(1,569)
(20,370)
-
3,060
(109)
2,951
2,519
432
2,951
53
(15)
263
(78)
(109)
33
147
3,098
2,666
432
3,098
4.8
4.6
2013
$000s
5,002
3,060
38
2,173
10,273
-
667
667
(4,301)
(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
PPK GROUP LIMITED CONSOlIDaTED STaTEMENT OF FINaNCIal POSITION
AS AT 30 JUNE 2014
Consolidated Entity
43
Notes
9
10
11
12
14(a)
10
13(a)
13(c)
14(b)
15
16(a)
17
18
19
16(b)
20
21
22
16
20
23
24
2014
$000s
4,904
19,235
10,612
1,069
35,820
18,517
54,337
-
493
1,437
11,479
6,718
2,132
4,607
26,866
81,203
7,401
19,230
264
1,833
28,728
13,281
-
1,482
279
15,042
43,770
37,433
33,731
1,392
2,160
37,283
150
37,433
2013
$000s
1,345
8,850
1,017
312
11,524
-
11,524
10,472
493
2,259
30,430
993
1,375
1,985
48,007
59,531
493
6,720
58
520
7,791
18,080
2,881
235
89
21,285
29,076
30,455
28,673
(85)
1,741
30,329
126
30,455
CURRENT aSSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Assets held for sale
TOTal CURRENT aSSETS
NON-CURRENT aSSETS
Trade and other receivables
Investments in associated entities - equity accounted
Other financial assets
Investment Properties
Other Property, plant and equipment
Deferred tax assets
Intangible assets
TOTal NON-CURRENT aSSETS
TOTal aSSETS
CURRENT lIaBIlITIES
Trade and other payables
Interest Bearing Liabilities
Current tax liabilities
Provisions
TOTal CURRENT lIaBIlITIES
NON-CURRENT lIaBIlITIES
Interest Bearing Liabilities
Trade and Other Payables
Deferred tax liabilities
Provisions
TOTal NON-CURRENT lIaBIlITIES
TOTal lIaBIlITIES
NET aSSETS
SHaREHOlDERS’ EQUITY
Contributed equity
Reserves
Retained earnings / (Accumulated losses)
Capital and reserves attributable to owners of PPK Group Ltd
Non-controlling interests
TOTal EQUITY
The accompanying notes form part of these financial statements
ANNUAL REPORT 2O14 CONSOlIDaTED STaTEMENT OF CaSH FlOWS
FOR THE YEAR ENDED 30 JUNE 2014
44
Consolidated Entity
Notes
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
Interest received
Income tax paid
Interest paid
Net cash provided by / ( used in ) operating activities
31(a)
CaSH FlOWS FROM INVESTING aCTIVITIES
Purchase of investment property
Proceeds from sale of plant & equipment
Purchase of property, plant & equipment
Proceeds from sale of available-for-sale financial assets
Purchase of available-for-sale financial assets
Payment for acquisition of business, net of cash acquired
Payment for intangibles
Net cash (used in) / provided by investing activities
CaSH FlOWS FROM FINaNCING aCTIVITIES
Other receivables - loans advanced
Other receivables - loans repaid
Payment for buyback of shares
Proceeds from new issue of shares
Proceeds from bank loans
Proceeds from other borrowings
Repayment of other borrowings
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
31(b)
2014
$000s
15,765
(16,979)
44
62
-
1,416
(196)
(1,569)
(1,457)
-
8
(396)
2,754
(1,583)
(13,000)
(174)
(12,391)
(759)
8,002
(56)
4,882
4,000
5,292
(1,960)
(1,868)
(126)
17,407
3,559
1,345
4,904
2013
$000s
8,320
(6,420)
57
38
360
987
(586)
(1,298)
1,458
(3,438)
-
(142)
2,530
(2,912)
-
(584)
(4,546)
(9,697)
144
(343)
-
3,150
3,625
(335)
(765)
-
(4,221)
(7,309)
8,654
1,345
The accompanying notes form part of these financial statements
PPK GROUP LIMITED CONSOlIDaTED STaTEMENT OF CHaNGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2014
Issued
Capital
$000s
Retained
Earnings
$000s
Options
Reserve
$000s
Available-
for-sale
Reserve
$000s
Total
Attributable to
Owners of
PPK Group Ltd
$000s
Non-
controlling
Interests
$000s
Total
Equity
$000s
45
CONSOlIDaTED ENTITY
at 1 July 2012
Total comprehensive income
for the year
Profit for the year
Other comprehensive income
Realised gain on available-for-sale
financial assets
less deferred tax impact
Fair value adjustment on
available-for-sale financial assets
less deferred tax impact
Total comprehensive income /
(loss) for the year
Transactions with owners in their
capacity as owners
Dividends paid
Trust distributions
Shares repurchased
at 30 June 2013
Total comprehensive income
for the year
Profit for the year
Other comprehensive income
Fair value adjustment on
available-for-sale financial assets
expensed on impairment
less deferred tax impact
Realised gain on available-for-sale
financial assets
less deferred tax impact
Fair value adjustment on
available-for-sale financial assets
less deferred tax impact
Total comprehensive income /
(loss) for the year
Transactions with owners in their
capacity as owners
Dividends paid
Trust distributions
Shares issued - ordinary
Shares issued - share and
loan plan
Shares repurchased
Employee share-based payment
Change in holding of non-
controlling interest in subsidiaries
At 30 June 2014
29,016
123
-
-
-
-
-
-
-
-
(343)
(343)
28,673
-
-
-
-
-
-
-
-
-
-
4,882
232
(56)
-
-
5,058
33,731
2,383
-
-
-
-
2,383
(765)
-
(765)
1,741
2,519
-
-
-
-
-
-
2,519
(2,100)
-
-
-
-
-
-
(2,100)
2,160
The accompanying notes form part of these financial statements
8
-
-
-
-
-
-
-
-
-
8
-
-
-
-
-
-
-
-
-
-
-
-
-
1,330
-
1,330
1,338
59
-
(36)
10
(180)
54
(152)
-
-
-
(93)
29,206
2
29,208
2,383
365
2,748
(36)
10
(180)
54
-
-
-
-
(36)
10
(180)
54
2,231
365
2,596
(765)
(343)
(1,108)
30,329
-
(241)
(765)
(241)
-
(343)
(241)
126
(1,349)
30,455
-
2,519
432
2,951
263
(78)
(109)
33
53
(15)
147
-
-
-
-
-
-
-
-
54
263
(78)
(109)
33
53
(15)
-
-
-
-
-
-
263
(78)
(109)
33
53
(15)
2,666
432
3,098
(2,100)
-
4,882
232
(56)
1,330
-
4,288
37,283
-
(408)
-
-
(2,100)
(408)
4,882
232
-
-
-
(56)
1,330
-
(408)
3,880
150
37,433
ANNUAL REPORT 2O14 NOTES TO THE CONSOlIDaTED
FINaNCIal STaTEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1
STaTEMENT OF SIGNIFICaNT
aCCOUNTING POlICIES
Corporate Information
46
The financial statements of PPK Group Limited for the year
ended 30 June 2014 were authorised for issue in accordance
with a resolution of the directors on 30 September 2014 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 for-profit company limited by shares,
incorporated in Australia. Its shares are publicly traded on the
Australian Stock Exchange.
(a) Basis of Preparation
The financial statements are general purpose financial statements
which have been prepared in accordance with Australian
Accounting Standards and other authorative pronouncements of
the Australian Accounting Standards Board and the Corporations
Act 2001.
The financial statements also comply with International Financial
Reporting Standards (IFRS) as issued by The International
Accounting Standards Board. PPK Group Limited is a for-
profit entity. 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 financial statements consolidate those of the Parent
Company PPK Group Limited and all of its subsidiaries at 30 June
each year (“the Group”).
The Parent Company, regardless of the nature of its involvement
with an entity (the investee), determines whether it is a parent by
assessing control.
This occurs when it is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to affect
those returns.
Potential voting rights that are currently exercisable or convertible
are considered when assessing control.
Consolidated financial statements include all subsidiaries from the
date that control commences until the date that control ceases.
The financial statements of subsidiaries are prepared for the same
reporting period as the parent, using consistent accounting policies.
The Parent Company, regardless of the nature of its involvement
with an entity (the investee), determines whether it is a parent
by assessing control. 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, presented as part of equity, represent
the portion of a subsidiary’s profit or loss and net assets that is
not held by the Group. The Group attributes total comprehensive
income or loss of subsidiaries between the owners of the parent
and the non-controlling interests based on their respective
ownership interests.
Associates
Associates are entities over which the Group has significant
influence but not control. Associates are accounted for in the
consolidated financial statements using the equity method
accounting. Under the equity method the Group’s share of the
post-acquisition other comprehensive income or loss of the
associates is recognised in consolidated profit or loss and the
Group’s share of the post-acquisition movements in reserves of
associates is recognised in consolidated other comprehensive
income. The cumulative post-acquisition movements are adjusted
against the carrying amount of the investment. Dividends and
distributions received from associates reduce the carrying amount
of the investment in the consolidated financial statements.
When the Group’s share of post-acquisition losses in an associate
exceeds its interest in the associate (including any unsecured
receivables), the Group does not recognise further losses
unless it has obligations to, or has made payments, on behalf of
the associate.
The financial statements of the associate are used to apply the
equity method. The end of the reporting period of the associate
and the parent are identical and both use consistent accounting
policies.
(c) Revenue and Revenue Recognition
Revenue is recognised at the fair value of consideration received
or receivable. Amounts disclosed as revenue are net of returns,
trade allowance and duties and taxes paid. The following
specific recognition criteria must also be met before revenue is
recognised:
Sales of goods
Revenue from the sale of mining equipment is recognised when
significant risk and rewards of rewards of ownership have passed
to the buyer and can be reliable measured. Risks and rewards
are considered passed to the buyer when the goods have been
delivered to the customer. Spare parts sales are recognised
when spare parts leave the warehouse and risks and rewards of
ownership have passed.
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.
PPK GROUP LIMITED NOTE 1
STaTEMENT OF SIGNIFICaNT
aCCOUNTING POlICIES (continued)
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.
Reclassification of income
In prior years, the gain on sale of available for sale financial assets
was recorded as other income. It was resolved that the gain
for this year be classified as investment income and not other
income. This is now consistent with the presentation of other
investment income and expenses.
(d) Inventories
Raw materials, work in progress and finished goods
Inventories are stated at the lower of cost and net realisable
value. Costs comprise all direct materials, direct labour and
an appropriate portion of variable and fixed overheads. Fixed
overheads are allocated on the basis of normal operating capacity.
Costs are assigned to inventory using a standard costing system.
Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated selling cost of completion
and selling expenses.
(e) Trade Receivables & other receivables
Trade and other receivables and are recognised initially at original
invoice amounts less an allowance for uncollectable amounts
and have repayment terms between 30 - 45 days. Collectability
is assessed on an ongoing basis. Debts which are known to be
uncollectable 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 collectable 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
47
The income tax expense for the period is the tax payable on the
current period’s taxable income based on the national income
tax rate for each jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences
between the tax base of assets and liabilities and their carrying
amounts in the financial statements, and to unused tax losses.
Deferred tax assets are only recognised for deductible temporary
differences, between carrying amounts of assets and liabilities
for financial reporting purposes and their respective tax bases, at
the tax rates expected to apply when the assets are recovered or
liabilities settled, based on those tax rates which are enacted or
substantially enacted for each jurisdiction. Exceptions are made
for certain temporary differences arising on initial recognition
of an asset or liability if they arose in a transaction other than a
business combination that at the time of the transaction did not
affect either accounting profit or taxable profit.
Deferred tax assets are only recognised for deductible temporary
differences and unused tax losses if there is reasonable certainty
that future taxable amounts will be available to utilise those
temporary differences and losses.
Deferred tax assets and liabilities are not recognised for
temporary differences between the carrying amount and tax
bases of investments in subsidiaries, associates and interests in
joint ventures where the parent entity is able to control the timing
of the reversal of the temporary differences and it is probable that
the differences will not reverse in the foreseeable future.
Current and deferred tax balances relating to amounts recognised
directly in other comprehensive income or equity are also
recognised directly in other comprehensive income or equity.
PPK Group Limited and its wholly owned Australian subsidiaries
have implemented the tax consolidation legislation for the whole
of the financial year. PPK Group Limited is the head entity in the
tax consolidated group. The 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 & 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.
ANNUAL REPORT 2O14 48
NOTE 1
STaTEMENT OF SIGNIFICaNT
aCCOUNTING POlICIES (continued)
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 profit or loss statement in the
year that the item is derecognised.
Property, plant and equipment
Property, plant and equipment are brought to account at
cost less, where applicable, any accumulated depreciation
or amortisation. The cost of fixed assets constructed within
the Group includes the cost of materials used in construction,
direct labour and an appropriate proportion of fixed and
variable overheads.
The depreciable amount of all fixed assets including buildings
and capitalised leased assets, but excluding freehold land, is
depreciated over their useful lives to the consolidated entity
commencing from the time the asset is held ready for use.
Leasehold improvements are amortised over the shorter of either
the unexpired period of the lease or the estimated useful lives of
the improvements.
The gain or loss on disposal of all fixed assets is determined as
the difference between the carrying amount of the asset at the
time of disposal and the proceeds of disposal, and is included in
the profit before income tax of the consolidated entity in the year
of disposal.
The depreciation rates used for each class of depreciable
assets are:
Class of Fixed Asset
Depreciation Rate
Straight Line
Buildings
2%
Leasehold Improvements
over the term of the lease
Plant & Equipment
Leased Plant & Equipment
3-50%
3-33%
Non-Current Assets Classified as Held for Resale
Non-current assets classified as held for sale are those assets
whose carrying amounts will be recovered principally through a
sale transaction rather than through continuing use and sale is
considered highly probable. These assets are stated at the lower
of their carrying amount and fair value less costs to sell and are
not depreciated or amortised. Interest expense continues to be
recognised on liabilities of a disposal group classified as an asset
held for sale.
An impairment loss is recognised for any initial or subsequent
write-down of the asset to fair value less costs to sell. A gain is
recognised for subsequent increases in fair value less costs to sell
of an asset but not exceeding any cumulative impairment losses
previously recognised.
A discontinued operation is a component of the group that has
been disposed of or is classified as held for sale and that represents
a separate major line of business or geographical operations, is part
of a single co-ordinated plan to dispose of such a line of business
or area of operations, or is a subsidiary acquired exclusively with a
view to resale. The results of discontinued operations are presented
separately on the face of the profit or loss.
(h)
Investments and Other Financial Assets
All investments and other financial assets are initially recorded
at cost, being the fair value of consideration given plus
acquisition costs. Purchases and sales of investments are
recognised at trade date which is the date on which the Group
commits to purchase or sell the asset. Accounting policies
for each category of investments and other financial assets
subsequent to initial recognition are set out below.
Derecognition
Financial assets are derecognised where the contractual rights
to receipt of cash flows expires or the asset is transferred to
another party whereby the entity no longer has any significant
continuing involvement in the risks and benefits associated
with the asset. Financial liabilities are derecognised where the
related obligations are either discharged, cancelled or expire. The
difference between the carrying value of the financial liability
extinguished or transferred to another party and the fair value of
consideration paid, including the transfer of non-cash assets or
liabilities assumed, is recognised in profit or loss.
Classification and subsequent measurement
(i)
Loans and receivables
Loans and receivables are non-derivative financial assets with a
fixed or determinable payments that are not quoted on an active
market and are subsequently measured at amortised cost using
the effective interest rate method.
The host debt contract of a convertible note is classified as loans
and receivables. The host debt contract is measured initially at the
residual amount after separating the embedded option derivative.
The host debt contract is subsequently at amortised cost using
the effective interest rate method.
(ii) Held-to-maturity investments
Held to maturity investments are non-derivative financial assets
that have fixed maturities and fixed or determinable payments,
and it is the group’s intention to hold the investments to maturity.
They are subsequently measured at amortised cost using the
effective interest rate method.
(iii) Available-for-sale financial assets
Available-for-sale financial assets comprise investments in
listed and unlisted entities and any non-derivatives that are
not classified as any other category of financial assets, and are
classified as non-current assets (unless management intends to
dispose of the investments within 12 months of the end of the
reporting period). After initial recognition, these investments are
measured at fair value with gains or losses recognised in other
comprehensive income (available-for-sale investments revaluation
reserve). Where there is a significant or prolonged decline in the
fair value of an available-for-sale (which constitutes objective
evidence of impairment) the full amount including any amount
previously charged to other comprehensive income is recognised
in profit or loss.
PPK GROUP LIMITED
49
NOTE 1
STaTEMENT OF SIGNIFICaNT
aCCOUNTING POlICIES (continued)
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.
Capitalised leased assets are depreciated over the shorter of
the estimated useful life of the asset or the lease term. Leases
where the lessor retains substantially all the risks and rewards
of ownership of the net asset are classified as operating leases.
Payments made under operating leases (net of incentives
received from the lessor) are charged to profit or loss on a
straight-line basis over the period of the lease. 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
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.
Foreign currency transactions during the period are converted to
Australian currency at rates of exchange applicable at the dates
of the transactions. Amounts receivable and payable in foreign
currency at balance date are converted at the rates of exchange
rates ruling at year end. The gains and losses from conversion
of short term balances, whether realised or unrealised, are
recognised in profit or loss.
(iv) Financial liabilities
(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 profit or loss 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.
Non-derivative financial liabilities (excluding financial guarantees)
are 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 & 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.
ANNUAL REPORT 2O14 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
20 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) Share-Based Payments
The Group recognises an expense for all share-based
remuneration and amortises those expenses over the relevant
vesting periods where required.
(s) Rounding of Amounts
The parent entity applied the relief available under ASIC
Class Order 98/100 and accordingly, amounts in the financial
statements and directors’ report have been rounded to the
nearest thousand dollars, or in certain cases, to the nearest dollar.
50
NOTE 1
STaTEMENT OF SIGNIFICaNT
aCCOUNTING POlICIES (continued)
Long service leave
Liabilities for long service leave are recognised as part of the
provision for employee benefits and measure as the present
value of expected future payments to be made in respect of
services provided by employees to the end of the reporting
period using the projected unit credit method. Consideration is
given to expected future salaries and wages levels, experience
of employee departures and period of service. Expected future
payments are discounted using national government bond rates at
the end of the reporting period with terms to maturity that match
as close as possible, the estimated future cash outflows.
Retirement benefit obligations
The Group contributes to defined contribution superannuation
funds for employees. All funds are accumulation plans where
the Group contributed various percentages of employee gross
incomes, the majority of which were as determined by the
superannuation guarantee legislation. Benefits provided are based
on accumulated contributions and earnings for each employee.
There is no legally enforceable obligation on the Group to
contribute to the superannuation plans other than requirements
under the superannuation guarantee legislation. Contributions are
recognised as expenses as they become payable.
(n) Cash
For the purposes of the statement of cash flows, cash includes
cash on hand and at call deposits with banks or financial
institutions, net of bank overdrafts.
(o)
Intangible assets
Brands Names
Expenditure on internally generated brand names are expensed
as incurred. Acquired Brand names are stated at cost and are
considered to have indefinite useful lives and are not amortised.
The useful life is assessed annually to determine whether events
or circumstances continue to support an indefinite useful life
assessment. The carrying value of brand names is reviewed
annually for impairment, at the same time every year.
Research and Development
Research is recognised as an expense as incurred. Costs incurred
on development (relating to the design and testing of new or
improved products) are recognised as intangible assets when it is
probable that the project will, after considering its commercial and
technical feasibility, be completed and generate future economic
benefits and 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.
PPK GROUP LIMITED NOTE 1
STaTEMENT OF SIGNIFICaNT
aCCOUNTING POlICIES (continued)
(t) Dividends
Provision is made for dividends declared, and no longer at the
discretion of the Group, on or before the end of the financial year
but not distributed at the end of the reporting period.
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 shareholders as a whole; and
51
All transaction costs incurred in relation to business combinations
other than those associated with the issue of a financial
instrument are recognised as expenses in profit or loss
when incurred. The acquisition of a business may result in the
recognition of goodwill or a gain from a bargain purchase.
(x)
New and revised Standards that are effective for these
financial statements
Several new and revised standards are effective the annual
reporting periods beginning on or after 1 July 2013. Information of
these is presented below:
- AASB 10 - Consolidated Financial Statements
The definition of control has been revised and new guidance
presented. Management have reviewed their control assessments
which are unchanged.
(c) The payment of the dividend does not materially
prejudice the company’s ability to pay its creditors.
- AASB 11 - Joint Arrangemenets
(u) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to owners of PPK Group Limited, by the weighted
average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares
during the year.
Diluted earnings per share
Earnings used to calculate diluted earnings per share are
calculated by adjusting the basic earnings by the after-tax
effect of dividends and interest associated with dilutive potential
ordinary shares. The weighted average number of shares used
is adjusted for the weighted average number of shares assumed
to have been issued for no consideration in relation to dilutive
potential ordinary shares.
(v) GST
Revenues and expenses are recognised net of GST except
where GST incurred on a purchase of goods and services is not
recoverable from the taxation authority, in which case the GST
is recognised as part of the cost of acquisition of the asset or as
part of the expense item. Receivables and payables are stated
with the amount of GST included. The net amount of GST
recoverable from, or payable to, the taxation authority is included
as part of receivables or payables in the 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.
(w) Business Combinations
Business combinations occur where an acquirer obtains
control over one or more businesses. A business combination is
accounted for by applying the acquisition method. The business
combination will be accounted for from the date that control
is attained, whereby the fair value of the identifiable assets
acquired and liabilities (including contingent liabilities) assumed
is recognised.
AASB11 also raises the categories of joint arrangement. The
option to proportionately consolidate investments in Joint
Arrangements has been removed. The Group does not account
for its investments in this manner and therefore the change
makes no difference to the financial reporting for the group.
- AASB 12 - Disclosure of Interests in Other Entities
This standard makes consistent the disclosure of various types
of investments including structured entities and un-consolidated
entities. These disclosures have been incorporated into Note 13.
- AASB 13 - Fair Value Measurement
Clarifies the definition of fair value and provides guidance on fair
value measurement. The Group already adopts best practice
when valuing the assets which are held at fair value. The fair
value disclosures have been incorporated into Note 25.
- AASB 19 - Employee Benefits (as amended)
Changes were made to the accounting for defined benefit plans
and the definition of short term employee benefits was amended
to include benefits expected to be settled wholly within one year.
The Group considers that annual leave benefits remain current
liabilties of the Group. The Group does not provide defined
benefit plans to past or present employees. Other changes in the
standard to not have material effects of the Group.
(y)
New Accounting Standards and interpretations not
yet adopted
No new accounting standards and interpretations, that are
available for early adoption at 30 June 2014, 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.
ANNUAL REPORT 2O14
52
NOTE 1
STaTEMENT OF SIGNIFICaNT
aCCOUNTING POlICIES (continued)
Standards issued but not yet adopted are as follows
- AASB 9 - Financial Instruments (applies from 1 January 2018)
Simplifies measurement and classification of financial liabilities.
- IFRS 15 - Revenue from Contracts with Customers (applies
from 1 January 2017)
Sets out revised principles for the presentation of revenue and
the nature and timing of such.
- AASB 1031 - Materiality (applies from 1 January 2014)
This standard has been amended as an interim measure while
other standards are updated to refer to the Reporting Framework
and not AASB 1031.
Critical accounting estimates and judgements
The directors evaluate estimates and judgements incorporated
into the financial report based on historical knowledge and best
available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and
economic data, obtained both externally and within the group.
Key estimates - Impairment
The Group assesses impairment at each reporting date by
evaluating conditions specific to the group that may lead to
impairment of assets. Where an impairment trigger exists,
the recoverable amount of the asset is determined. Value-in-
use calculations performed in assessing recoverable amounts
incorporate a number of key estimates.
Available-for-sale financial assets
The Group reviews each of its listed investments at each
reporting date to consider whether there is any indication that
individual investments are impaired. Based on all the information
available to the Directors it was determined that the Group’s
investment in the following listed companies were impaired:
Alchemy Limited
Kimberley Diamonds Limited
SubZero Group Limited
As a result an impairment loss of $828,000 (2013 $22,000) was
taken up in profit or loss on these investment. The Directors
determined that no other listed available-for-sale financial assets
were impaired at balance date.
Investment in Associates
The Group’s investments in associated 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
All investment properties are carried at cost less impairment (if
any). The last independent valuation of investment properties
was carried out in May 2010. Subsequent to that date, at each
reporting day, the Directors have used property market reports
and, when received, unsolicited offers on the investment
properties when forming their view on determining the fair value
of the investment properties disclosed in the financial statements.
During the current financial year the tenant at the Arndell Park
property took up their option to purchase the property. The net
sale proceeds were below the carrying value and as such the
property was impaired by a further $240,000. Based on all the
information available to the Directors it was determined that no
further impairment adjustment was required for any investment
property in the current year.
Deferred Tax Asset
An assessment was made on the recoverability of the deferred
tax asset recognised in the accounts. The deferred tax asset
has only been recognised to the extent that there is reasonable
certainty of realising future taxable amounts sufficient to
use losses incurred. Capital losses with a tax asset value of
$1,315,000 (2013 $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. 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 classified land and buildings at Arndell Park as
held for sale as an option to purchase has been execised. The
Group has also classified its two retirements villages in Adelaide
and Bundaberg as held for sale since the properties are subject
to a put and call option and it is expected that the options will be
exercised and settled prior to December 2014.
PPK GROUP LIMITED NOTES TO aND FORMING PaRT OF THE FINaNCIal
STaTEMENTS FOR THE YEAR ENDED 30 JUNE 2014
Consolidated Entity
53
NOTE 2
REVENUE, OTHER INCOME & EXPENSES FROM OPERaTIONS
Notes
(a) REVENUE
Sale of goods
Rental income from investment properties
Investment activities
Interest receivable
(b) INVESTMENT aCTIVITIES
Dividends received - other parties
Gain on sale of available-for-sale financial assets
(b)
(d)
(c) OTHER INCOME
Gain on bargain purchase of business combination
OTHER ITEMS
Net gain on disposal of plant and equipment
Sundry income
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
Gain on sale of available-for-sale financial assets
(d) INTEREST INCOME
Other persons
Associated entities
(e) SHaRE OF PROFIT (lOSS) FROM aSSOCIaTES
aCCOUNTED FOR USING THE EQUITY METHOD
Share of profit (loss) from associates accounted for under the equity method
(f) EXPENSES
Profit (loss) before income tax includes the following specific expenses:
Amortisation of intangibles
Cost of sales - mining equipment manufacture
Depreciation - investment properties
- plant and equipment
Foreign currency translation losses
Impairment - investment properties
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
2014
$000s
12,568
4,414
1,268
2,300
20,550
62
1,206
1,268
2,828
8
44
-
-
-
52
2,880
1,311
989
2,300
-
-
199
8,102
325
652
977
-
240
828
1,569
12
446
3,953
794
2013
$000s
5,002
3,060
38
2,173
10,273
38
-
38
-
-
34
47
322
264
667
667
1,230
943
2,173
493
493
12
2,815
308
392
700
1
-
22
1,298
4
223
2,377
174
ANNUAL REPORT 2O14 54
Consolidated Entity
Notes
NOTE 3 INCOME TaX EXPENSE
(a) The prima facie tax payable / (benefit) on the profit / (loss) before
income tax is reconciled to the income tax expense as follows:
Profit (loss) before tax
Prima facie tax payable / (benefit) at 30% (2013: 30%)
Fully franked dividend received
Share based payment
Research & Development concession
Building allowance
Gain on bargain purchase not taxable
Costs associated with purchase of business combination
(Over) provision relating to prior year - research & development concession
Adjustment related to non-controlling interest in profit
Capital losses realised not previously recognised
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) provision in respect of prior years
(c) Deferred tax recognised in other comprehensive income through Available-for-sale
Financial Asset Reserve relating to valuing investments at fair value
2014
$000s
3,060
918
(18)
399
(15)
(54)
(848)
189
(55)
(84)
(323)
109
4%
453
(289)
(55)
109
(15)
2013
$000s
3,455
1,037
(12)
-
(15)
(54)
-
-
(177)
(72)
-
707
20%
398
486
(177)
707
54
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
- non audit services ( accounting / technical advice )
Grant Thornton
$
$
131,000
-
131,000
81,856
-
81,856
PPK GROUP LIMITED
Consolidated Entity
55
2014
$000s
2013
$000s
Notes
NOTE 5 KEY MaNaGEMENT PERSONNEl REMUNERaTION
(a) Key management personnel remunueration
Short-term benefits
Post-employee benefits
Share-based payments
891,203
6,553
1,329,900
2,227,656
524,525
-
-
524,525
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, except as discussed in the remuneration report in relation to the share loan plans.
(c) Loans
There were no loans or advances to parent entity directors, executives and key management personnel in the current financial or previous
financial years, except as discussed in the remuneration report in relation to the share loan plans.
(d) Other transactions with directors
Refer to note 30 for further details of transactions with directors and director related entities.
NOTE 6 DIVIDENDS
(a) Dividends paid
Final ordinary dividend of 2 cents per share was paid for 2013 year
(prior year no final dividend was paid - 100% franked at 30% tax rate)
Interim ordinary dividend of 1.50c per share for 2014 year -
100% franked at 30% tax rate (prior year 1.00c per share - 100% franked)
(b) Dividends declared after balance date
At a meeting of Directors held on 26 August 2014 it was resolved that a 2.00 cent fully franked
Final ordinary Dividend will be paid in relation to the 2014 financial year.
1,011
1,089
2,100
-
765
765
1,453
1,015
(c) Dividends for Share and loan Plan
PPK Group Ltd has a share and loan plan in place with certain key executives.
During the year they were issued with 15.5 million shares in the Group at an issue price of 70c per share.
The Group provided the executitves with a non-recourse loan to pay for the shares, which is of 3 years duration.
Each share held in the share and loan plan is entitled to dividends declared on ordinary shares. These dividends are
are not paid in cash to the executives. Instead they are credited against their repective share loans and reduce the
amounts of interest and/or principle outstanding to the Group.
The plan is treated as an option for accounting purposes and a one-off share based payment has been recogniseed
during the current financial year for these plans. There are no further share based payments expected to arise from this plan.
The repayment of loans by way of dividend or cash repayment is treated as an increase to issued capital for accounting purposes.
The detailed terms and conditions of the share and loan plan were outlined in the Explanotory Memorandum to the Notice
of General Meeting held 28th April 2014.
(d) Franked dividends
Franking credits available for subsequent financial years based on a
tax rate of 30% (2013 - 30%)
2,888
3,695
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.
ANNUAL REPORT 2O14
56
Notes
NOTE 7 EaRNINGS PER SHaRE
Basic earnings per share (cents per share)
Continuing operations
Diluted earnings per share ( cents per share )
Continuing operations
(a) Reconciliation of Earnings to Net Profit
Earnings used in calculating Basic EPS
Continuing operations
Earnings used in calculating Diluted EPS
Continuing operations
(b) Weighted average number of ordinary shares outstanding during the year
used in calculation of basic EPS
Weighted average number of ordinary shares outstanding during the year
used in calculation of diluted EPS
Consolidated Entity
2014
Cents
4.8
4.6
2013
Cents
4.7
4.7
$000s
$000s
2,519
2,519
No.
2,383
2,383
No.
52,319,258
51,084,022
54,994,600
51,084,022
(c) The difference between the weighted average ordinary shares used in the basic EPS and diluted EPS calculation arises from the issue
of 15,500,000 shares pursuant to the share and loan plan (see note 6). This occurred in April 2014, part way during the financial year.
NOTE 8 PaRENT ENTITY INFORMaTION
The following detailed information relates to the parent entity, PPK Group Limited at 30 June 2014. 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
Share based payment reserve
Option reserve
Retained earnings
Total Equity
Profit (loss) for the year
Other comprehensive income for the year
Total comprehensive income (loss) for the year
CURRENT aSSETS
NOTE 9 CaSH aND CaSH EQUIValENTS
Cash at bank and on hand
Cash at bank and on hand
61,597
33,545
95,142
44,130
21,066
65,196
29,946
33,730
1,330
8
(5,122)
29,946
(2,435)
-
(2,435)
45,658
33,835
79,493
33,622
19,878
53,500
25,993
28,672
-
8
(2,687)
25,993
259
-
259
4,904
4,904
1,345
1,345
Cash at bank consists of temporary surplus funds which are non-interest bearing.
Short-term bank deposits are funds held at call which are interest bearing.
Reconciliation of Cash
The above figures are reconciled to the cash at the end of the financial
year as shown in the statement of cash flows as follows:
Cash and cash equivalents
31
4,904
4,904
1,345
1,345
PPK GROUP LIMITED 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
- other loans, associate entities - unsecured
- other loans, other persons - unsecured
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
Other Non current Assets of continuing operations
Notes
(a)
(b)
(c)
(d)
(c)
Consolidated Entity
57
2014
$000s
6,892
(36)
6,856
1,463
-
1,463
7,316
3,487
27
86
10,916
19,235
-
-
-
-
-
2013
$000s
1,105
(24)
1,081
966
-
966
230
6,573
-
-
6,803
8,850
6,608
369
3,187
308
10,472
(a) Trade Receivables
Current trade receivables are non-interest bearing and are generally 30-60 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. The amounts are secured by a registered first mortgage over
property owned by each of the trusts. The interest rate received by the Group on current and non-current loans range from 0% to 15% with the
rate being fixed for the term of the loan at the time it is made.
The loan to PPK Willoughby Funding Unit Trust is for a maximum period of 4 years with principal and interest due for repayment in second half of
the 2015 financial year, the balance outstanding on this loan is $6,569,000 (2013 $6,834,000). The loan to Nerang Street Southport Unit Trust is
due for repayment in June 2015, the balance outstanding on this loan is $746,000 (2013 $369,000).
(d) Other loans, other persons
Other loans,other persons are funds advanced to non-related third parties. The amounts are secured by a registered first mortgage over property
owned 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.
The prior year 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.
ANNUAL REPORT 2O14 58
Consolidated Entity
Notes
NOTE 10 TRaDE aND OTHER RECEIVaBlES (continued)
Movement in balance of secured loans - current
Opening Balance
Reclassified from non-current
Funds advanced
Trust distribution capitalised
Less principal and interest repaid
Interest revenue added to carrying value
Movement in balance of secured loans - non-current
Opening Balance
Funds advanced
Trust distribution capitalised
Less reclassified as current
Less principal and interest repaid
Interest revenue added to carrying value
2014
$000s
6,803
10,472
742
216
(9,596)
8,637
2,279
10,916
10,472
-
-
(10,472)
-
-
-
-
2013
$000s
274
-
6,623
-
(176)
6,721
82
6,803
6,276
3,300
9
-
(228)
9,357
1,115
10,472
Provision for Impairment of Receivables
Current trade, term and other receivables and loans are assessed for recoverability based on the underlying terms of the contract.
A provision for impairment is recognised when there is an objective evidence that an individual trade or term receivable is impaired.
The reversal of prior year impairments have been included in other income, the impairments were included in Investment Activity.
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 2014
Current
Trade receivables
Other receivables
Convertible notes
Consolidated Group 2013
Current
Trade receivables
Other receivables
Convertible notes
24
-
-
24
20
173
833
1,026
12
-
-
12
4
-
-
4
-
-
-
-
-
-
-
-
-
-
-
-
-
(173)
(833)
(1,006)
36
-
-
36
24
-
-
24
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.
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
616
2,776
2,665
799
6,856
683
217
101
80
1,081
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.
PPK GROUP LIMITED NOTE 10 TRaDE aND OTHER RECEIVaBlES (continued)
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
59
2014
$000s
2013
$000s
Notes
1,442
-
-
21
1,463
855
76
15
20
966
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.
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.
NON-CURRENT aSSETS
NOTE 13 FINaNCIal aSSETS
13(a) Investments in associated entities - equity accounted
Summary of movement in carrying value
Opening Balance
Share of profit / (loss) 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
Details of units held in associated trusts
Nerang Street Southport Project Trust
PPK Willoughby Funding Unit Trust
7,393
2,951
268
10,612
1,069
1,069
493
-
-
493
554
199
264
1,017
312
312
9
493
(9)
493
Ownership Interest
2014
%
2013
%
18.75%
22.86%
25.00%
22.86%
Units Held
$1 Each
Units Held
$1 Each
275
40
315
275
40
315
Details of associates
Nerang Street Southport Project Trust
- Name of Joint Arrangement: Nerang Street Southport Project Trust.
- Nature of Activities: Owning and leasing of commercial land as passive investor in the trust alongside other investors.
- Principle place of business: Level 31 , 264 George St Sydney NSW 2000
PPK Willoughby Funding Unit Trust
- Name of Joint Arrangement: PPK Willoughby Funding Unit Trust.
- Nature of Activities: Participation in residential land development as passive investor in the trust alongside other investors.
- Principle place of business: Level 31 , 264 George St Sydney NSW 2000
Distributions receivable from associated trusts
Nerang Street Southport Project Trust
PPK Willoughby Funding Unit Trust
$000s
$000s
-
-
-
-
493
493
ANNUAL REPORT 2O14
60
Consolidated Entity
Notes
NOTE 13 NON-CURRENT ASSETS (continued)
PPK Willoughby Funding Unit Trust Group
Current Assets
Non-current Assets
Current Liabilties
Non-current Liabilities
Equity
Revenues
Profit or (loss) before income tax
Income tax expense or (credit)
Profit or (loss) after income tax
Specific Disclosures:
- cash and cash equivalents included in current assets
- current financial liabilities (excluding trade and other payables and provisions) included
in current liabilities
- non-current financial liabilities (excluding trade and other payables and provisions)
included in non-current liabilities
- depreciation and amortisation
- interest income
- interest expense
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
2014
$000s
83,266
-
80,807
-
2,459
1,809
583
175
408
488
67,124
-
-
27
-
-
-
-
2013
$000s
4,444
49,445
4,811
46,875
2,203
19,548
2,725
808
1,917
171
-
46,874
-
18
-
-
-
-
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. The
Group has not included it’s share of profit from associates in the current financial year, which was estimated at $0.106million, due to the
Associates’ financial reports not being finalised in time.
Nerang Street Southport Project Trust
Current Assets
Non-current Assets
Current Liabilities
Non-current Liabilities
Equity
Revenues
Profit or (loss) before income tax
Income tax expense or (credit)
Profit or (loss) after income tax
Specific Disclosures:
- cash and cash equivalents included in current assets
- current financial liabilities (excluding trade and other payables and provisions) included
in current liabilities
- non-current financial liabilities (excluding trade and other payables and provisions)
included in non-current liabilities
- depreciation and amortisation
- interest income
- interest expense
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
491
6,813
34
7,299
(29)
105
(31)
-
(31)
426
-
7,316
-
8
1
-
-
-
143
4,582
21
4,702
2
267
1
-
1
32
-
4,949
-
1
-
-
-
-
The Group holds 18.75% (2013 25%) of the issued units in this trust and 100% of the share capital in the trustee company, PPK Southport
Pty Ltd. The trust is considered to be an associate of the Group.
PPK GROUP LIMITED NOTE 13 NON-CURRENT aSSETS (continued)
13(b) Financial assets - at fair value through profit or loss
Current
(ii) Listed Investments - at fair value
- Shares in listed corporations
Opening Balance
Additions at cost
Disposals
Consolidated Entity
61
2014
$000s
2013
$000s
Notes
-
-
-
-
327
-
(327)
-
A financial asset is classified at fair value through profit or loss if it classified as held for trading. It is principally acquired for the purpose
of selling or repurchasing in the near term or it is part of a portfolio of financial assets that are managed together and for which there is
evidence of a recent pattern of short-term profit-taking. Upon initial recognition it is designated at fair value through profit or loss and all
subsequent movements in fair value are recognised in profit or loss.
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
2,259
1,581
-
-
205
(828)
(1,780)
1,437
756
2,912
47
322
(181)
(23)
(1,574)
2,259
Listed investments are recorded at fair value based on the ASX closing price at the 30 June of the relevant financial period.
Gains or losses arising from changes in the fair value of available-for-sale financial assets are initially recognised directly in equity in other
comprehensive income through a reserve, unless they are impaired. When the available-for-sale financial asset is disposed of any gain or
loss arising from the sale is taken out of the reserve and included in the profit or loss. A significant or prolonged decline in the fair value of
a security below its cost is considered an indicator that the securities are impaired. If such evidence exists for available-for-sale financial
assets, the value of the impairment is assessed and the difference between the cost and the impaired value, less any impairment loss on
that financial asset previously recognised in the profit or loss, is removed from other comprehensive income and recognised in profit or loss.
Any subsequent difference between the impaired value and the fair value will be recognised in equity through the reserve. Impairment losses
recognised in the profit or loss on equity instruments classified as available-for-sale are not reversed through profit or loss.
(ii) Unlisted Investments - at cost less impairment
- Shares and units held in other corporations
Cost
Impairment
Unlisted investments are recorded at cost less impairment which represents fair value at nil.
(iii) Total Listed & Unlisted Investments
Current
Non-Current
249
(249)
-
-
1,437
1,437
249
(249)
-
-
2,259
2,259
ANNUAL REPORT 2O14 62
NOTE 13 NON-CURRENT aSSETS (continued)
NOTE 13(d)
Controlled Entitles
Subsidiaries of PPK Group limited:
Country of
Incorporation
Notes
Percentage owned
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
PPK Mining Equipment Group Pty Ltd
(formerly Anderson Group of Companies Pty Ltd)
PPK Mining Equipment Pty Limited
PPK Mining Repairs Alternators Pty Ltd
PPK Mining Equipment Hire Pty Ltd (formerly Anderson Mining Hire Pty Ltd)
Coaltec Pty Ltd
PPK IP Pty Ltd (formerly DMS Tech 1 Pty Ltd)
PPK China Pty Ltd (formerly Trigger Sprays Pty Ltd)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
a
b
c
d
e
2013
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
100%
51.4%
100.0%
100%
100%
100%
100%
2014
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
100%
51.4%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(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.
(a) PPK Southport Pty Ltd acts as the trustee company of the Nerang Street Southport Project Trust. The Group holds 18.75%
(2013 - 25%) of issued units of this trust which is considered associate of the Group.
13(e) Subsidiary with material non-controlling interests
The Group includes three subsidiaries with Non-Controlling Interests (‘NCI’).
Proportion of Ownership
Interest Held
Profit Allocated to NCI
(‘000s)
Accumulated NCI
(‘000s)
Distributions and
Dividends Paid to NCI
Name
30-June-14
30-June-13
30-June-14
30-June-13
30-June-14
30-June-13
30-June-14
30-June-13
Easy Living
(Bundaberg) Trust
Easy Living Trust
Slot Loan Trust
50%
50%
51.43%
50%
50%
51.43%
62
88
282
55
68
242
94
56
-
57
69
-
50
75
283
408
-
-
241
241
PPK GROUP LIMITED
Notes
Consolidated Entity
2014
$000s
63
2013
$000s
NOTE 14 INVESTMENT PROPERTIES
(a) assets classified as held for sale
Freehold land & buildings - at cost
Land
Buildings
Less: Accumulated depreciation
Less: Provision for impairment
Total assets held for sale
Reconciliations
Current
Balance at the beginning of the year
Add transferred to Current from non-current
Land & buildings
Total investment properties of continuing operations
(b) Non-Current
Freehold land & buildings - at cost
Land
Buildings
Less: Accumulated depreciation
Less: Provision for impairment
Total Investment Properties
Reconciliations
Non-Current
Balance at the beginning of the year
Acquisition of land and building at cost
Expenditure subsequent to acquisition
Disposals
Depreciation expense
Impairment expense
Less transferred (to) Classified as current assets held for sale
Land & buildings
Total investment properties of continuing operations
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
acquisition and Disposals
There were no disposals of investment properties in the financial year.
10,038
11,304
(1,256)
10,048
20,086
(1,569)
18,517
-
18,517
18,517
5,225
8,941
(2,687)
6,254
11,479
-
11,479
30,430
-
131
-
(325)
(240)
29,996
(18,517)
11,479
4,414
1,781
36
-
-
-
-
-
-
-
-
-
-
15,263
20,113
(3,618)
16,495
31,758
(1,328)
30,430
27,276
3,160
302
-
(308)
-
30,430
-
30,430
3,060
772
40
Valuation of Investment Properties
The directors consider the fair value of the retirement villages be be equal to their book value being $6.26 million.
The directors consider the fair value of the industrial properties to be approximately $30 million.
No capital gains tax would be payable if the Land & Buildings were sold at balance date at the independent valuation due to capital losses.
Impairment
During the current financial year the tenant at the Arndell Park property took up their option to purchase the property. The net sale
proceeds were below the carrying value and as such the property was impaired by a further $240,000. 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.
ANNUAL REPORT 2O14 64
Notes
Consolidated Entity
2014
$000s
2013
$000s
NOTE 14 INVESTMENT PROPERTIES (continued)
Non-current assets pledged as security
Refer to note 21(b) for information on non-current assets pledged as security
by the parent entity or its subsidiaries.
leases as lessor
The investments properties are leased to tenants under long term operating
leases with rentals payable monthly.
- not later than 1 year
- later than 1 year but not
later than 5 years
- later than 5 years
Refer to Subsequent Event Note 30 for further details as to the current position in
relation to investment properties.
NOTE 15 OTHER PROPERTY PlaNT aND EQUIPMENT
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Capital works in progress - at cost
Total property, plant and equipment of continuing operations
Reconciliations
Reconciliations of the carrying amounts of each class of plant & equipment are set out below.
1,721
1,545
-
3,267
431
(340)
91
9,209
(2,582)
6,627
-
6,718
Consolidated - 2014
Carrying amount at start of year
Acquired with business combination
Additions
Manufactured plant & equipment for hire
Disposals
Transfers
Depreciation & Amortisation expense
Carrying amount at end of year
Consolidated - 2013
Carrying amount at start of year
Additions
Manufactured plant & equipment for hire
Disposals
Transfers
Depreciation & Amortisation expense
Carrying amount at end of year
Leasehold
Improvements
$’000
Plant &
Equipment
$’000
Capital Works
In Progress
$’000
130
-
-
-
-
-
(39)
91
183
-
.
-
(53)
130
863
6,120
114
151
(8)
-
(613)
6,627
1,066
137
57
(6)
-
(391)
863
-
-
-
-
-
-
-
-
24
278
-
-
(302)
-
-
2,665
7,313
-
9,978
431
(301)
130
3,198
(2,335)
863
-
993
Total
$’000
993
6,120
114
151
(8)
-
(652)
6,718
1,273
415
57
(6)
(302)
(444)
993
PPK GROUP LIMITED
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
Warranty
Deccommisioning and make good
Plant and equipment depreciation
Impairment of investments
Realised capital losses accounted for
Inventory
Other
Movements
Opening balance
Aquired with business combination
Credit/(charged) to profit or loss
Prior year adjustment
Consolidated Entity
65
2014
$000s
2013
$000s
Notes
11
316
449
257
60
65
330
614
5
25
2,132
1,375
487
270
-
2,132
7
183
396
-
-
65
-
694
5
25
1,375
1,589
-
(214)
-
1,375
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.
(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
Recoginised on bargain purchase of assets
Tax cost base adjustment on stock
Tax cost base adjustment fixed assets
Tax cost base adjustment on intangibles
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
Acquired on business combination
(Credit)/charged to equity
Prior year adjustment
264
58
112
(12)
148
659
417
136
1,460
22
1,482
235
(23)
1,212
58
-
1,482
138
(12)
148
-
-
-
274
(39)
235
29
270
-
(64)
-
235
ANNUAL REPORT 2O14 66
Consolidated Entity
Notes
NOTE 17 INTaNGIBlE aSSETS
Licences, software and patents - at cost
Less: Accumulated amortisation
Goodwill
- Mining equipment manufacturing
Development Costs - at cost
- Mining equipment manufacturing
Less: Accumulated amortisation
Brand names - at cost
Intangible Assets of continuing operations
Reconciliations
licences, software and patents - at cost
Balance at the beginning of year
Aquired with business combination
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
Amortisation charge
Brand Names
Balance at the beginning of year
Additions / Disposals / Impairment
2014
$000s
2,882
(538)
2,344
155
1,756
(145)
1,611
497
4,607
224
2,000
174
(54)
2,344
155
-
155
1,109
647
(145)
1,611
497
-
497
2013
$000s
787
(563)
224
155
1,109
-
1,109
497
1,985
123
-
113
(12)
224
155
-
155
638
471
-
1,109
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 20 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 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 estimated useful life of 7 years.
Brand names have been assessed to have an indefinite useful life. These brands are registered with the relevant agencies. The
registrations are renewed at insignificant cost to the consolidated entity. This, combined with continued support for the brands by
product development, advertising and marketing expenditure, has allowed the consolidated entity to determine that the assets have an
indefinite useful life. They are recorded at cost and tested annually for impairment. Impairment losses are charged to profit or loss.
PPK GROUP LIMITED
NOTE 17 INTaNGIBlE aSSETS (continued)
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:
Brand Names
$’000
Year ended 30 June 2014
Mining Equipment Manufacturing
Year ended 30 June 2013
Mining Equipment Manufacturing
497
497
Goodwill
$’000
155
155
Total
$’000
652
652
67
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:
Mining Equipment Manufacturing
Growth
Rate
1.00%
2014
Discount
Rate
9.50%
Growth
Rate
5.00%
2013
Discount
Rate
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 2014. If a discount rate of 60% was used instead of 9%, and if sales growth was limited
to the inflation rate of 0% instead of 1.0%, the estimated recoverable amount of the intangible assets would equal the carrying value.
Consolidated Entity
CURRENT lIaBIlITIES
NOTE 18 TRaDE aND OTHER PaYaBlES
Trade payables
Sundry payables and accruals
Payables of continuing operations
NOTE 19 INTEREST BEaRING lIaBIlITIES
Bank loans - secured
Other loans - unsecured
Interest bearing liabilities of continuing operations
Total secured liabilities - see note 21
Notes
2014
$000s
2,744
4,657
7,401
14,230
5,000
19,230
2013
$000s
381
112
493
5,420
1,300
6,720
ANNUAL REPORT 2O14 68
Consolidated Entity
NOTE 20 PROVISIONS
Current
Annual leave
Redundancy
Warranty
Decommissioning and make good
Long service leave
Non Current
Long service leave
Total Provisions
Notes
20 (a)
20 (b)
2014
$000s
755
-
858
220
-
1,833
279
2,112
2013
$000s
199
179
-
-
142
520
89
609
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. Warranty provisions comprise estimated costs to perform repairs to mining equipment while under warranty.
Make good proviision comprise estimated costs to return leased premises to their original condition on expiry of the lease.
(a) Reconciliation of Provision for Warranty
Opening Balance
Acquired as part of business combination
Increases (decreases) to provision
Closing Balance
(a) Reconciliation of Provision for Decommissioning and make good
Opening Balance
Acquired as part of business combination
Increases (decreases) to provision
Closing Balance
NON-CURRENT lIaBIlITIES
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
Bank loans - PPK Mining Equipment Pty Ltd
(b) Unsecured liabilities
Other loans - other persons
-
858
-
858
-
220
-
220
13,281
-
13,281
-
19,800
1,850
1,850
4,011
27,511
5,000
32,511
-
-
-
-
-
-
-
-
18,080
-
18,080
-
19,800
1,850
1,850
-
23,500
1,300
24,800
PPK GROUP LIMITED Consolidated Entity
2014
$000s
2013
$000s
69
11,479
30,430
Bank overdrafts and bank loans are secured as noted in note 19 above.
NOTE 21 INTEREST BEaRING lIaBIlITIES (continued)
(c) Assets pledged as security
The carrying amounts of non-current assets pledged as security are:
First mortgage
Freehold investment properties
Registered Mortgage Debentures over company assets and cross
guarantees & indemnities
Freehold investment properties
Term receivables
Financial Assets
Investments in associated entities
Plant & equipment
Intangible Assets
Notes
14(a)
14(a)
Total non-current assets pledged as security
The following current assets are also pledged as security under the registered
mortgage and cross guarantees & indemnities
Freehold investment properties
Cash assets
Term receivables
Receivables - current
Inventories
Other current assets
Total current assets pledged as security
Total assets pledged as security
-
-
1,437
493
6,718
4,607
24,734
18,517
4,904
10,916
8,319
10,612
1,069
54,337
79,071
The total financial assets included in the above pledged as security for liabilities is $25,576,000 ( 2013 $23,154,000 )
(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
1,000
27,591
-
28,591
1,000
80
-
1,080
-
27,511
-
27,511
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
-
10,472
2,259
493
993
1,985
46,632
-
1,345
6,803
2,047
1,017
312
11,524
58,156
1,000
24,190
-
25,190
1,000
690
-
1,690
-
23,500
-
23,500
ANNUAL REPORT 2O14
70
Provided by the National Australia Bank Ltd (NAB).
$19,800,000 (2013 $19,800,000) variable interest rate facilities provided by the NAB. Further details on the banking facilities with the
NAB are included in note 21c. 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 5.44%-5.66% (2013 5.66% to 7.94%) inclusive of bank margins.
Provided by the Commonwealth Bank of Australia Ltd (CBA).
$3,700,000 of variable interest rate facilities and $4,000,000 of market rate facilities are provided by the CBA.
Further details on the banking facilities with the CBA are included in note 25c.
Variable interest 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 5.66%
inclusive of bank margins. Market rate interest banking facilities with the CBA are for 3 years and subject to 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 6.55% inclusive of bank margins.
Consolidated Entity
NON-CURRENT lIaBIlITIES
NOTE 22 TRaDE aND OTHER PaYaBlES
Other Loans - secured
Other Loans - unsecured
Payables of continuing operations
Notes
2014
$000s
-
-
-
2013
$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 Bundberg 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 February 2015. 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.
SHaREHOlDERS’ EQUITY
NOTE 23 CONTRIBUTED EQUITY
PaID-UP CaPITal
72,647,903 (2013 50,764,776) ordinary shares fully paid
33,731
28,673
Movements in ordinary share capital
Balance at the beginning of the financial year
Shares repurchased under approved buy back scheme
New share issue
Treasury shares - share and loan plan
28,673
(56)
4,882
232
33,731
29,016
(343)
-
-
28,673
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
New share issue
New share issue - share plan and loan
No.
No.
50,764,776
(125,938)
6,509,065
15,500,000
51,625,430
(860,654)
-
-
72,647,903
50,764,776
PPK GROUP LIMITED
Consolidated Entity
71
2014
$000s
2013
$000s
Notes
NOTE 23 CONTRIBUTED EQUITY (continued)
Capital Risk Management
The Group considers its capital to comprise its ordinary share capital, reserves and retained earnings.
In managing its capital, the Group’s primary objective is to ensure its continued ability to provide a consistent return for its equity
shareholders through a combination of capital growth and distributions and through the payment of annual dividends to its
shareholders. In order to achieve this objective, the Group seeks to maintain a gearing ratio that balances risks and returns at an
acceptable level and also to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment
needs. In making decisions to adjust its capital structure to achieve these aims, either through altering its dividend policy, new share
issues, share buy-backs, or the reduction of debt, the Group considers not only its short-term position but also its
long-term operational and strategic objectives .
It is the Group’s policy to maintain its gearing ratio within the range of 20% - 50% (2013 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
32,511
(4,904)
27,607
35,891
63,498
43%
24,800
(1,345)
23,455
30,414
53,869
44%
There have been no significant change to the Group’s capital management objectives, policies and processes in the year nor has there
been any change in what the Group considers to be its capital.
NOTE 24 RESERVES
Available-for-sale financial assets
Share options
Movement in reserves
Share options
Opening balance
Employee share based payment - options
Closing balance
Available-for-sale financial assets
Opening balance
Revaluation
Deferred tax impact
Expensed on impairment
Deferred tax impact
Realised gains to (profit) / loss
Deferred tax impact
Closing balance
54
1,338
1,392
8
1,330
1,338
(93)
53
(15)
263
(78)
(109)
33
54
(93)
8
(85)
8
-
8
59
(180)
54
-
-
(36)
10
(93)
The available-for-sale financial assets reserve carries fair value adjustments made to available-for-sale financial assets which are recognised in
other comprehensive income.
When an available-for-sale financial asset is either sold or considered impaired the amount held in this reserve is recognised in the profit or loss.
ANNUAL REPORT 2O14
72
NOTE 25 FINaNCIal RISK MaNaGEMENT
The Group’s financial instruments include investments in deposits with banks, receivables, equities, derivatives, payables and interest
bearing liabilities. The accounting classifications of each category of financial instruments as defined in note 1(i) and their carrying amounts are
set out below.
Weighted
Average
InterestRate
Notes
Floating
Interest
Rate
$000s
Within
1 Year
$000s
1 to 5
Years
$000s
Non-Interest
Bearing
$000s
Fixed Interest Rate Maturing
Consolidated 2014
Financial Assets
Receivables
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 & Other Payables - non-current
Trade & Other Payables - current
Total financial liabilities at amortised cost
Consolidated 2013
Financial Assets
Receivables
Loans receivable
Loans receivable
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 Loans
Other Loans
Trade & Other Payables - non current
Trade & Other Payables - current
0.0%
14.8%
2.4%
0.0%
0.0%
0.0%
5.7%
10.0%
0.0%
0.0%
0.0%
14.8%
14.8%
3.3%
0.0%
0.0%
0.0%
5.8%
10.0%
0.0%
0.0%
10
10
9
13c
13a
13b
21
21
22
18
10
10
10
9
13c
13a
13b
21
21
22
18
Total
$000s
8,319
10,916
19,235
4,904
1,437
493
8,319
-
8,319
2,513
1,437
493
-
-
12,762
26,069
-
-
-
7,401
7,401
2,047
-
2,047
937
2,259
493
27,511
5,000
-
7,401
39,912
2,047
6,977
6,803
15,827
1,345
2,259
493
-
-
-
-
2,391
-
-
-
10,916
10,916
-
-
-
-
-
2,391
10,916
27,511
-
-
-
-
5,000
-
-
27,511
5,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
408
-
-
-
-
6,803
6,803
-
-
-
-
6,977
6,977
-
-
-
-
-
-
408
6,803
6,977
5,736
19,924
23,500
-
-
-
1,300
-
-
-
-
-
-
2,881
493
3,374
23,500
1,300
2,881
493
28,174
Total financial liabilities at amortised cost
23,500
1,300
PPK GROUP LIMITED
73
NOTE 25 FINaNCIal RISK MaNaGEMENT (continued)
Fair Value
The carrying values of financial assets and liabilities listed above approximate their fair value.
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 AASB13 as follows:
- Level 1 - the instrument has quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2 - a valuation technique is used using inputs other than quoted prices within Level 1 that are observable for financial instruments,
either directly (i.e. as prices), or indirectly (i.e. derived from prices); or
- Level 3 - a valuation technique is used using inputs that are not based on observable market data (unobservable inputs).
assets
Group 2014
Fair value through profit or loss
Listed equity securities
Available-for-sale financial assets
Listed equity securities
Group 2013
Fair value through profit or loss
Listed equity securities
Available-for-sale financial assets
Listed equity securities
Unlisted equity securities
Financial risk Management
Level 1
Level 2
Level 3
Total
-
1,437
1,437
-
2,259
-
2,259
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,437
1,437
-
2,259
-
2,259
The Board of Directors has overall responsibility for the establishment and oversight of the financial risk management framework. PPK
Group’s activities expose it to a range of financial risks including market risk, credit risk and liquidity risk. The Group’s risk management
policies and objectives are therefore designed to minimise the potential impacts of these risks on the results of the Group where such
impacts may be material. The Board receives monthly reports, which it reviews and regularly discuss the effectiveness of the processes
put in place and the appropriateness of the objectives and policies to support the delivery of the Group’s financial targets while
protecting future financial security. The Board also has in place informal policies over the use of derivatives and does not permit their
use for speculative purposes.
(a) Market risk
Market risk is the risk that the fair value of future cash flows of the Group’s and parent entity’s financial instruments will fluctuate
because of changes in market prices.
Market risk comprises three types of risk: interest rate risk, equity price risk and currency risk.
(i) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a security, will fluctuate due to changes in interest rates. Exposure
to interest risk arises due to holding floating rate interest bearing liabilities, investments in cash and cash equivalents and loans to related
parties and other persons. Although a change in the current market interest rate may impact the fair value of the Group’s fixed interest
financial liabilities and other receivables, it does not impact the Group profit after tax or equity as these financial liabilities and other
receivables are carried at amortised cost and not fair value through profit or loss. Floating interest rates attached to the Group’s and
parent’s financial assets and liabilities give rise to cash flow interest rate risk. Any changes in the current market rate will affect the cash
flows payable on floating rate interest bearing liabilities and hence impact the Group’s profit after tax.
ANNUAL REPORT 2O14
74
Notes
Consolidated Entity
2014
$000s
2013
$000s
NOTE 25 FINaNCIal RISK MaNaGEMENT (continued)
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 Loans
Net Exposure
2,391
-
2,391
27,511
27,511
(25,120)
408
-
408
23,500
23,500
(23,092)
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%
(176)
176
(162)
162
(ii) Equity Price risk
Equity securities price risk is the risk that changes in market prices will affect the fair value of future cash flows of the Group’s
financial instruments. The group is exposed to equity price risk through the movement in share prices of the companies in which it
is invested. These are determined by market forces and and are outside control of the group. The risk of loss is limited to the capital
invested in relation to shares and options held.
As the market value of listed companies fluctuate the fair value of the available-for-sale financial assets and financial assets at fair
value through profit or loss of the group change continuously. Changes in fair value of available-for-sale financial assets are recognised
through the available for sale reserve unless 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. 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.
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
1,437
-
1,437
2,259
-
2,259
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%
26
(26)
76
(76)
1
(1)
157
(157)
PPK GROUP LIMITED 75
NOTE 25 FINaNCIal RISK MaNaGEMENT (continued)
(iii) Currency Risk
Currency risk is the risk that the fair value or future cash flows of a financial item will fluctuate as a result of movements in international
exchange rates. The Group is exposed to exchange rate transaction risk on foreign currency sales and purchases primarily with respect
to the United States dollar (USD). Of the total sales revenue for the Group some 21% (2013: 22%) is in export sales, all sales from 1
January 2009 are designated in AUD thus limiting the currency risk exposure. The group does not take forward cover or hedge and was
therefore at risk in relation to foreign currency movements during the year. The group has maintained a USD bank account for receiving
payments (if any) from trade receivables and making payment to trade payables. The account is held with a major Australian Bank,
which limits the group’s exposure to credit risk associated with this deposit.
(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 that entity. 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:
Consolidated Entity
Notes
Loans and receivables by country
Australia
United States of America
United Kingdom
Germany
Liechtenstein
New Zealand
The groups exposure to credit risk at balance date by industry of loans and
receivables is as follows:
Loans and receivables by industry
Property development
Plastic Packaging
Mining Equipment
Retirement Villages
Manufacturing
Property and investing
2014
$000s
19,026
131
54
24
-
-
19,235
7,342
289
7,348
3,109
-
1,147
19,235
2013
$000s
19,083
228
9
-
2
-
19,322
7,205
79
8,041
3,179
70
757
19,331
ANNUAL REPORT 2O14 76
NOTE 25 FINaNCIal RISK MaNaGEMENT (continued)
(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 parent’s exposure to liquidity risk is not significant based on available funding facilities and cash flow forecasts.
Details of the groups financing facilities are set-out in note 21.
Financial Liabilities maturity analysis
The tables below reflect the undiscounted contractual settlement terms for the groups financial liabilities of a fixed period of maturity, as well
as the earliest possible settlement period for all other financial liabilities. As such the amounts may not reconcile to the balance sheet. Bank
loans provided by the NAB are subject to an annual review with the next review date being 30 November 2014.
Bank overdraft facility is provided by the NAB with the current facility expiring on 31 January 2016.
The Bank loans provided by the NAB have facilities that expire on 30 September 2014 and 31 January 2016. A facility of $1,380,000 expires
on 30 September 2014,
$1,380,000 of this facility is currently used. A facility of $18,500,000 expires on 31 January 2016, $18,420,000 of this facility is currently used.
The CBA variable interest facilities expire on 23 March 2015 and are each for an amount of $1,850,000 that is fully utilised.
The CBA market rate loan facility expires in April 2017 and is an amount of $4,000,000 that is fully utilised and amortised quarterly.
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.
Consolidated 2014
Financial Liabilities (current & non-current)
Trade & Other Payables
Bank Loans & overdrafts
Other Loans - other persons
Total Financial Liabilities
Consolidated 2013
Financial Liabilities (current & non-current)
Trade & Other Payables
Bank Loans & overdrafts
Other Loans - other persons
Other Loans - trade and other payables
Total Financial Liabilities
Carrying
amount
< 6 months
6 - 12
months
1 - 3 years
> 3 years
Contractual
Cash flows
7,401
27,511
5,000
7,401
2,164
5,125
39,912
14,690
493
23,500
1,300
2,881
28,174
493
2,377
1,009
-
3,879
-
3,565
-
3,565
-
2,440
315
2,755
-
23,611
-
23,611
-
20,554
-
1,652
20,554
-
-
-
-
-
-
-
1,229
1,229
7,401
29,340
5,125
41,866
493
25,371
1,324
2,881
30,069
PPK GROUP LIMITED
NOTE 26 lEaSE COMMITMENTS
(b) Operating lease commitments
Operating lease rentals contracted for but
not capitalised in the financial statements payable:
- not later than 1 year
- later than 1 year but not
later than 5 years
- later than 5 years
77
Consolidated Entity
2014
$000s
2013
$000s
Notes
3,865
9,370
-
13,235
121
96
-
217
The Group leases premises in Nowra under non cancellable operating leases. The terminating date of the lease is 31st May 2015.
The Group has an option to renew the lease for the Nowra premises, for a period of up to 2 years.
The Group leases premises in Tomago under non cancellable operating leases. The terminating date of the lease is 30th June 2017.
The Group has 2 options to renew the lease for the Tomago premises, for a period of up to 5 years each.
The Group leases premises in Port Kembla under non cancellable operating leases. The terminating date of the lease is 30th April 2018.
The Group has an option to renew the lease for the Port Kembla premises, for a period of up to 5 years.
The Group leases a office in Brisbane under non cancellable operating leases. The terminating date of the lease is 30 June 2015.
The Group leases 7 of its Coaltrams under non-cancellable operating leases. The terminating dates of the leases run to approximately
September 2019.
The Group operates a car fleet under an operating lease agreement.
NOTE 27 CONTINGENT lIaBIlITIES
Group Cross guarantees of the Groups banking and finance facilities totalling $20,880,000 (2013 $22,190,000) of which
$19,800,000 (2013 $20,500,000) 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, Coaltram vehicles and performs
service work.
ANNUAL REPORT 2O14 78
NOTE 28 SEGMENT INFORMaTION (continued)
(a) Year ended 30 June 2014
Business Segments
Investment
Properties
$000s
Investing
$000s
Mining
Equipment
$000s
Total of
Continuing
Operations
$000s
-
12,568
Segment Revenue from external customers
Sales revenue
Rental income
Interest received
Gain on sale of available-for-sale financial assets
Dividends received
Segment other income
Net gain on disposal of plant & equipment
Other segment income
Total Revenue and other income
Segment expenses include
Depreciation and amortisation
Impairments - available-for-sale financial assets
-
4,414
-
-
-
4,414
-
-
-
4,414
617
240
2,300
1,206
62
3,568
-
30
30
3,598
-
828
Segment result
2,597
2,770
Reconciliation of segment net profit to group net profit before tax
Amounts not included in segment profit but reviewed by the Board
Net gain on bargain purchase
Share based payment expense
Business combination transaction expense
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
(b) Year ended 30 June 2013
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
Segment result
-
3,060
-
-
3,060
-
-
-
-
3,060
-
-
2,173
38
2,211
-
661
661
661
328
-
2,248
2,819
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 profit
Income tax (expense)
Consolidated (loss) after income tax attributable to owners of PPK Group limited
-
-
-
12,568
8
14
22
12,590
360
-
395
5,002
-
-
-
5,002
6
-
6
5,008
370
707
12,568
4,414
2,300
1,206
62
20,550
8
44
52
20,602
977
1,068
5,762
2,828
(1,330)
(731)
(1,900)
(1,569)
3,060
(432)
(109)
2,519
5,002
3,060
2,173
38
10,273
6
661
667
10,940
698
5,774
493
(1,514)
(1,298)
3,455
(365)
(707)
2,383
PPK GROUP LIMITED
NOTE 28 SEGMENT INFORMaTION (continued)
(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:
79
Australia
Germany
United States of America
United Kingdom
New Zealand
Liechtenstein
Other countries
2014
$000s
12,008
235
195
130
-
-
-
12,568
2013
$000s
3,922
-
682
278
2
119
-
5,003
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.
NOTE 29 BUSINESS COMBINaTIONS
Summary of Acquisition
During the period PPK Group incorporated two new companies being PPK Mining Equipment Pty Ltd and PPK Mining Repairs
Alternators Pty Ltd. On 17 March 2014 these companies purchased specific business assets and assumed specific business liabilities of
Anderson Industries Australia Pty Ltd and DMS Mining Services Pty Ltd.
PPK Group also gained 100% control of Anderson Mining Hire Pty Ltd, DMS Tech 1 Pty Ltd, Coaltec Pty Ltd and Anderson Group
of Companies Pty Ltd on 17 March 2014. At the time of purchase, Anderson Mining Hire Pty Ltd was in the business of hiring out
Coaltram mining vehicles. DMS Tech 1 Pty Ltd and Coaltec Pty Ltd held or had the rights to intangible assets. Anderson Group of
Companies acted as a holding company.
This business combination was accounted for using the following fair values of assets and liabilities:
Assets Acquired
Inventory
Trade Receivables
Other Receivables
Prepayments
Fixed Assets
Deffered tax asset
Intangible Assets
Liabilities Assumed
Trade Creditors
Other Payables & accuals
Payroll liabilities & accruals
Provisions
Deferrred tax liability
Borrowings
Fair value of net assets acquired
Less: Cash consideration paid
Gain on bargain purchase
$000s
9,682
2,471
724
217
6,120
487
2,000
21,701
1,870
979
176
1,625
1,212
11
5,873
15,828
13,000
2,828
The business combination resulted in a gain on bargain purchase since the fair value of the net assets acquired was higher than the
consideration paid.
The gain on bargain purchase was recognised seperately in profit or loss.
ANNUAL REPORT 2O14 80
NOTE 29 BUSINESS COMBINaTIONS (continued)
Revenue and Profit Contribution
The acquiree businesses contributed $8.282m of revenue and $0.039m of net profit after tax to the group from the date of acquisition
17 March 2014 to 30 June 2014.
It is impracticable to disclose the profit that the businesses would have contributed if the acquisition had occurred on 1 July 2013 since
the businesses were run as part of a larger group and under different management without access to their records.
Acquisition Costs
Costs arising directly from the acquisition have been expensed directly in profit or loss and have been separately identified. The total
amount of acquistion costs is $0.731m.
Intangibles
An intangible asset has been recognised to the value of $2m. It represents the fair value of patents and associated intellectual property
purchased from the vendors which are used in the manufacture of the Coaltram engine management system.
Contingent Liabilities
There are no contingent liabilities arising fom the business combination as as 30 June 2014.
Contingent Consideration
There is no contingent consideration arising fom the business combination as as 30 June 2014.
NOTE 30 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 was a Director of SubZero Group Limited
from April 2013 to November 2013. The loan was repaid on 2 August 2014.
Loans advanced
Interest paid and credited to loan
Loans repaid
Balance outstanding
Notes
Consolidated Entity
2014
$000s
308
31
(261)
78
2013
$000s
300
0
8
308
Directors and key management personnel and their related entities had made loans to the Easy Living Unit Trust. The loans were 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.
The Easy Living Unit Trust is a subsidiary of the Group by virtue of its 50% ownership interest.
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
Reclassification of Key Management Personel
Trust distribution credited to loan
Balance outstanding
350
-
(50)
300
-
(25)
-
275
365
-
(15)
350
-
-
-
350
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 The Easy Living Bundaberg Trust is a subsidiary of the Group by virtue of its 50%
ownership interest.
Balance at start of year
Loans advanced to the Group
Loans repaid by the Group
Total advanced to the Group
Reclassification of Key Management Personel
Trust distribution credited to loan
Balance outstanding
407
-
(50)
357
(23)
-
334
-
425
(18)
407
-
-
407
PPK GROUP LIMITED NOTE 30 RElaTED PaRTIES (continued)
Loans to the SLOT Loan Trust, are secured Loans are repayable on 7 February 2015 and are interest free under current terms
The SLOT Loan Trust is a subsidiary of the Group by virtue of its 51% voting interest.
Consolidated Entity
81
Balance at start of year
Loans advanced to the Group
Loans repaid by the Group
Total advanced to the Group
Reclassification of Key Management Personel
Trust distribution credited to loan
Balance outstanding
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 receiveable 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
Notes
2014
$000s
1166
-
(148)
1,018
(292)
149
875
2013
$000s
0
1,200
(204)
996
-
170
1,166
35,581,667
260
380
900
19,691,342
260
380
900
1,881
101
1,982
-
28
28
6,570
746
7,316
891
44
935
-
230
230
6,606
369
6,975
ANNUAL REPORT 2O14 82
NOTE 31 CaSH FlOW INFORMaTION
(a) Reconciliation of profit/(loss) after income tax
to the cash provided by operating activities
Profit/(Loss) after income tax
Cash flows in operating activities but not
attributable to operating result:
Non controlling interest equity distribution
Non-cash flows in operating profit:
Amortisation
Depreciation
Impairment of land & buildings
Interest received on other loans
Impairment of available-for-sale-assets
Transfers to provisions
Other Income
Share of (profit) / loss from associates
Loss/(Profits) on sale of available-for-sale assets
(Profits) on sale of shares at fair value through profit and loss
Share based payment expense
Gain on bargain purchase
Fair value adjustments on available-for-sale assets
(Profits) on sale of plant & equipment
(Profits) on sale of property
Increase/(decrease) in tax payable
decrease/(increase) in deferred tax assets
Increase/(decrease) in deferred tax liabilities
Changes in assets and liabilities,
decrease/(increase) in financial assets at fair value through profit and loss
decrease/(increase) in trade and other debtors
decrease/(increase) in intangible asset investment
decrease/(increase) in prepayments
(increase)/decrease in inventories
(decrease)/increase in trade creditors and accruals
Net cash/(used in) provided by
operating activities
(b) Reconciliation of Cash
For the purposes of the cash flow statement, cash includes:
Cash on hand
Call deposits with financial institutions
Bank overdrafts - secured
(c) Non-cash Financing and Investing Activities
During the financial year, the consolidated entity had the following non cash adjustments,
expense/(income);
Gain on bargain purchase
Impairment of available-for-sale financial assets
These related to shares and options held in listed company investments.
Notes
Consolidated Entity
2014
$000s
2013
$000s
2,519
2,748
(432)
(365)
199
977
240
(884)
828
(110)
(44)
-
(1,206)
-
1,330
(2,828)
-
(8)
-
206
(270)
35
822
(2,855)
(647)
(540)
87
1,124
(1,457)
1
4,903
-
4,904
(2,828)
828
(2,000)
12
700
-
(1,197)
22
213
-
(493)
(264)
-
-
-
(369)
6
-
(364)
218
206
327
(367)
471
11
145
(202)
1,458
1
1,344
-
1,345
-
22
22
PPK GROUP LIMITED NOTE 32 EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD
83
Subsequent to year end the Group purchased the MONEx Electronic Engine Management System technology for $2.8 million.
The purchase was completed on 28th August 2014.
The purchase price will be paid in stages up to the final instalment in August 2015. The assets purchased include inventory,
intellectual property rights, tools and equipment. The purchase settled close to the date of preparation of this report and
as such the Group’s determination of accounting fair values for the assets is in progress. The Group is entitled to apportion
the purchase price across the purchased assets using whichever methods it sees as appropriate. Detailed apportonment
calculatons are in progress. 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
ANNUAL REPORT 2O14
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2014
84
1.
In the opinion of the Directors of PPK Group Limited:
(a) The consolidated financial statements and notes of PPK Group Limited are in accordance with the Corporations Act 2001, including
Giving a true and fair view of its financial position as at 30 June 2014 and of its performance for the financial year ended on that
date; and
(ii)
(b)
Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001; and
There are reasonable grounds to believe that PPK Group Limited 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 chief executive officer
and chief financial officer for the financial year ended 30 June 2014.
3. Note 2 confirms that the consolidated financial statements also comply with International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
Robin Levison
Executive Chairman
Glenn Molloy
Director
Dated this 30th day of September 2014
PPK GROUP LIMITED
INDEPENDENT aUDITOR’S REPORT
85
ANNUAL REPORT 2O14 86
PPK GROUP LIMITED
87
ANNUAL REPORT 2O14 SHaREHOlDER INFORMaTION
AS AT 15 SEPTEMBER 2014
88
(a) Number of PPK shareholders: 955
(b) Total shares issued: 72,647,903
(c) Percentage of total holdings by or on behalf of the 20 largest shareholders: 72.4%
(d) Distribution schedule of holdings
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
less than marketable parcel
Ordinary Shares
109
277
212
287
70
56
(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
Holder Name
Wavet Fund No 2 Pty Ltd
Ignition Capital Pty Ltd
Equipment Company of Australia Pty Limited
McNamara Investment Group Pty Ltd
Zhang Family Investment Group Pty Ltd
Contemplator Pty Ltd
Mr Dennis J & Mrs Graciela McGillicuddy
Mr Barry Silverstein
John E Gill Operations Pty Limited
Ignition Capital No 2 Pty Ltd
Mr Guy Lance Jones
Dealcity Pty Limited
Ruminator Pty Ltd
Ryan Consultancy Group Pty Ltd
John E Gill Trading Pty Ltd
Mr Robert Joseph Faulks & Mrs Patricia Baynton Faulks
Mr Ian Macdonald
Mr Leslie John Field & Mrs Eve Field
Onmell Pty Ltd
Charles Peter Taylor
TOTAL
12,739,000
11,016,667
9,460,000
4,000,000
4,000,000
2,552,484
1,200,000
1,199,981
1,077,993
750,000
750,000
500,000
500,000
500,000
490,992
459,535
425,000
355,936
328,000
320,000
%
17.535
15.164
13.022
5.506
5.506
3.513
1.652
1.652
1.484
1.032
1.032
0.688
0.688
0.688
0.676
0.633
0.585
0.490
0.451
0.440
52,625,588
72.438
Substantial Shareholders
Shares to Which Entitled
% of Issued Capital
Wavet Holdings Pty Ltd
Ignition Capital Pty Ltd and Associates
Equipment Company of Australia Pty Ltd
12,739,000
11,766,667
9,460,000
17.54
15.35
13.02
PPK GROUP LIMITED
CONTENTS
1
2
4
6
Company Profile and Growth Strategy
2015 Goals
2014 Highlights
Executive Chairman’s Report
14
Board of Directors
16
Executive Management
18
Corporate Governance Statement
27
Financial Report
IBC
Corporate Directory
COrpOraTE DirECTOry
ppK Group Limited
aBN 65 003 964 181
A public company incorporated in New South Wales and listed on the Australian Securities Exchange
(ASX Code: PPK)
Directors
Robin Levison (Executive Chairman)
Jury I. Wowk (Non-Executive Deputy Chairman)
Glenn R. Molloy (Executive Director)
Raymond M. Beath (Non-Executive Director)
Graeme D. Webb (Non-Executive Director)
Company Secretary
Andrew J. Cooke
Head and Registered Office
PPK Group Limited
Level 27,
10 Eagle Street
Brisbane QLD 4000
Telephone
Email
Web Site:
+61 7 3054 4500
info@ppkgroup.com.au
www.ppkgroup.com.au
Auditors
Grant Thornton Audit Pty Limited
Level 17, 383 Kent Street
Sydney NSW 2000
Australia
Telephone:
Fax:
+ 61 2 8297 2400
+61 2 9299 4445
Share Registry
Boardroom Pty Limited
Level 7, 207 Kent Street
Sydney NSW 2000
Australia
Tel
Fax
1300 737 760
1300 653 459
International
Tel
Fax
+61 2 9290 9600
+61 2 9279 0664
www.boardroomlimited.com.au
4
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ANNUAL REPORT
2014