ANNUAL REPORT
2016
CONTENTS
Executive Chairman’s Review
2016 Financial Report
Corporate Directory
Page
1
6
71
EXECUTIVE CHAIRMAN’S REPORT
The 2016 financial year continued to provide extremely difficult trading conditions for PPK Group Limited,
particularly in the mining equipment division. With the depressed trading conditions in the mining sector and
particularly the coal mining sector continuing on from FY2015, PPK determined there was a need to seek
extended support for the ongoing viability of the group with reference to a prospective merger, sale or equity
injection alternative in relation to its mining services businesses and/or PPK itself. Hence, on the 29th of
September 2015 the Company applied for the Voluntary Suspension of its shares from quotation on the ASX,
whilst negotiations with interested parties were undertaken. Further details of these events are available under
the Strategy Direction section of this report.
Unfortunately, at the date of this report it is still not clear whether there will be a sale, merger or equity injection
alternative of the PPK mining services businesses and/or PPK itself. Accordingly, the voluntary suspension of
PPK’s shares continues. However, the PPK Board is currently focussed on addressing the specific conditions to
permit a resumption in trading of shares in the Company. Further, given the date of release of this 2016 Annual
Report, it is recommended shareholders take time to also review the 2017 half year report, which is due for
release on or before 30 June 2017.
STRATEGY DIRECTION
As announced in 2013, PPK embarked on a growth strategy that was predicated on the view that the mining
cycle was approaching its bottom and there was an opportunity to create value by acquiring assets which would
generate consistent, increasing revenue streams and demonstrate significant growth in asset value as the mining
equipment and technology cycle rebounded and strengthened. While considerable progress was made against
this strategy during the FY14 and FY15 years, the sustained downturn in the mining sector, and in particular the
coal mining sector, have been well documented.
In September 2015, PPK announced a review of its mining services businesses including a prospective merger,
sale or equity injection alternatives in relation to its mining services businesses and/or PPK itself.
In December 2015, PPK entered into a non-binding and conditional Letter of Intent (LOI) with a major State
Owned Chinese mining equipment manufacturer (Counter Party) under which it is contemplated that the
Counter Party will acquire a controlling interest in PPK through the placement of new shares. Pursuant to the
terms of the LOI, PPK is not permitted to disclose the identity of the Counter Party.
During the 2016 financial year, the Counter Party appointed legal and accounting firms to undertake detailed
due diligence on PPK generally and, in particular, the PPK mining services businesses. Subsequent to the FY2016
period, financial and legal due diligence was completed and a non-binding offer negotiated pending the Counter
Party’s rigorous internal and external approval process. However, at the date of this report a binding agreement
(conditional or otherwise) is yet to be concluded.
In the meantime, the Mining Equipment division has continued to be supported by the sale of assets from PPK’s
Property and Investment divisions.
FINANCIAL RESULTS
PPK Group Limited (PPK) reported a net loss after tax attributable to owners of PPK of $7.763M for the 12 months
to 30 June 2016 (FY2015 $12.122M loss). Group revenue for the 12 months from mining equipment sales and
mining services was $26.075M (FY2015 $29.577M), revenue from investment properties was $0.585M (FY2015
$1.778M) and interest received was $0.495M (FY2015 $1.587M).
1
The $7.763M net loss comprised a first half loss of $4.994M and second half loss of $2.769M. The considerable
improvement in the second half result is largely reflecting a gain on partial sale of the company’s ASX traded
share portfolio ($1.5m) and PPK’s cost saving initiatives as outlined further below.
Underpinning the disappointing PPK Group result, was a net loss of $6.699M from the Mining Equipment
division, being $2.763M second half loss following a $3.936M first half loss. Further, the current year result was
impacted by impairments, writedowns, provisions and redundancy costs totalling $0.5M (FY2015: $13.7M).
Current year amounts include: available-for-sale investments $0.08M, inventory of $0.68M, redundancy costs
of $0.11M less write-back of onerous lease provision of net $0.37M ($0.55M less associated interest of $0.18M).
The Financial Results outlined above are reflective of the continued downturn endured by the mining sector, in
particular, underground coal mining. A number of Australian coal mines are currently operating in “care and
maintenance” mode, while operating mines are experiencing both capital and operational expense constraints.
Notably, PPK did not sell a single unit of its flagship Coaltram “Load, Haul, Dump” product domestically or
internationally during the financial year. Further, an extremely competitive maintenance, service and
rental/lease market resulted in varying degrees of margin suppression across PPK’s mining equipment products
and services range.
PPK did not acquire or merge any new businesses into the Group during FY2016, but rather focussed on
operational stability and cost reduction. To this extent, PPK has targeted cost savings of $5M per annum from
the Mining Equipment division, Corporate Head Office and Board. At 30 June 2016, costs exceeding $1.5M
annualised had been removed from the business and a further $3M in opportunities identified, including $1.6M
per annum in relation to an operating lease for 7 Coaltrams.
OPERATIONS
Major operational highlights during the year under review were:
•
•
•
Cost base removal of $1.5M annualised during the financial year, with a further $3M in opportunities
identified and subsequent tangible progress already exceeding $1.6M.
Successful completion of the Rambor / Firefly business merger announced in 2015, which saw the
closure of the Rambor Nowra facility and integration of the business into Firefly’s Mt Thorley facility.
Completed the acquisition of the MONEx Electronic Engine Management System technology.
• Material progress on the COALTRAM engine management system upgrades.
• Material progress on other product development investments including automated mobile bolter
upgrade, Alternator upgrade and hydraulic tensioner.
PPK Mining Equipment Businesses
As stated above, like many companies servicing the sector, PPK’s mining equipment businesses have been
materially impacted by the current market environment.
At the end of the financial year PPK’s mining equipment and technology businesses comprised:
• Manufacture, service, support, and hire of the class leading COALTRAM underground transport utility
vehicle;
• Manufacture and distribution of the global market leading flameproof alternator for use in methane
gas prone underground mines;
2
• Design, manufacture and overhaul of Exlec hazardous area electrical equipment; and
• Manufacture, service, support and hire of Rambor and Firefly mining equipment.
COALTRAM
In the prior year, PPK announced the first sale of a COALTRAM into the Chinese market. Despite positive
feedback following exhibition of the machine at the National China Coal Show in November 2015, no further
orders have been received.
In the year in review, PPK did not sell or deliver any COALTRAMs to customers (FY2015: 3 COALTRAMs delivered).
In the four years FY2011-2014 (prior to PPK ownership) the business delivered in excess of 100 units into the
market. The current lack of machine sales is reflective of unprecedented levels of capital expenditure restrictions
at a customer level both domestically and internationally.
MINING EQUIPMENT SERVICE FACILITIES
PPK successfully consolidated its Rambor operations at Nowra into both the Firefly Mt Thorley facility and PPK’s
Port Kembla centre. This process completed in early FY2016, which then resulted in the closure of the Nowra
Facility. Accordingly, PPK now operates three facilities in NSW located at Tomago, Port Kembla and Mt Thorley.
Property
Industrial Property
As at June 2016, PPK’s remaining industrial property at Seven Hills remains fully tenanted. As previously stated,
PPK would consider selling the Seven Hills property at the appropriate time and subject to achieving an upper
quartile sale price which provided full value for shareholders. This was achieved in January 2017 when the
property was sold for $7.875M resulting in a profit on sale of $4.433M.
Property Development
PPK continues to hold 22.86% interest in the Kiah Willoughby residential development which is scheduled to be
complete within the first quarter of FY2017. By 30 June 2016, almost all construction of the final stages of the
development had been completed with only final property sales, council approvals, customer settlements and
a number of legal matters to be resolved.
PPK also has an 18.75% stake in the Nerang Street Southport Project Trust (Trust), which owns an 11,000 square
metre development site at Southport, on the Gold Coast. The Trust is currently marketing this site for sale to
capitalise on the strengthening Gold Coast property market.
The proceeds from realisations mentioned above, along with those arising in the future, will be used to fund a
combination of debt reduction, new business acquisitions, select further property and other investment
opportunities, and capital management strategies.
Financial Investments
During the year, PPK advanced $2.647M in mortgage secured loans to entities owning /operating the Couran
Cove Resort based on South Stradbroke Island in Queensland. This investment was fully funded by non-bank
borrowings and these borrowings were repaid in September 2016. PPK had one other short term mortgage
secured loan totalling $0.4M that was repaid in full during the financial year.
In addition, the book value of PPK’s share investment portfolio is approximately $2.076M at balance date.
3
CORPORATE DEVELOPMENTS
Key Leadership Changes
In January 2016, PPK announced the resignation of Chief Executive Officer Peter Barker. Accordingly, Robin
Levison resumed the role of Executive Chairman.
CAPITAL MANAGEMENT
While the board is committed to transforming the size, scope and profitability of PPK, it is equally intent on
expanding the company in an ordered manner through maintaining a prudent and relatively conservative
approach to debt and capital management. With the current challenges in our Mining business, this strategy is
more important than ever.
Accordingly, as previously outlined, PPK is seeking to strengthen its balance sheet by continuing talks with
interested parties and in particular the State Owned Chinese mining equipment manufacturer referred
previously.
Further, the following debt re-structuring occurred during the year:
•
Re-financing of $2.79M in Commonwealth Bank debt secured by the mining equipment businesses to
be secured against the Seven Hills industrial property, thereby mitigating covenant compliance risk.
• Re-financing $2.3M in National Australia Bank debt to a non-bank lender, there by mitigating covenant
compliance risk.
As such the potential capital cost of all future planned acquisitions will be carefully evaluated to ensure that they
can be primarily funded internally, and that when required, additional funding via external debt or share issues,
will not overly negatively impact on PPK’s balance sheet or shareholder value.
OUTLOOK
Whilst the mining and general business environment remains challenging, the PPK focus continues to be:
Our Customers
a) Support our current and seek new underground coal mining customers through the sales, service,
provision of parts and leasing of our market leading Coaltram, Rambor and Firefly product lines, both
domestically and internationally.
b) Utilise our significant industry experience, connections and supply chain to provide high quality low
cost mining and drilling consumables and underground diesel parts, thus assisting our customers in
lowering their ongoing operational costs.
Our Products
c) Continue to be one of the few Australian original equipment makers (OEMs) incrementally investing in
the continual development of their products.
d) Partner internationally for the sale of current products and new technologies to international markets.
4
Our Business
e) Recognising the well documented economic challenges in the underground coal mining industry, which
we serve, leverage our resources and particularly our Board’s considerable experience to diversify our
revenue streams through investment in appropriate attractive property and financial investments.
f) Continue to manage the company as leanly and efficiently as possible.
Our Group
g) Maintain a disciplined and prudent approach to capital management.
h) Continue to progress the proposed transaction with the State Owned Chinese mining equipment
manufacturer, or should it not occur, pursue other merger or financing opportunities with interested
parties.
Disappointingly, the depressed trading conditions in the mining sector and particularly the coal mining sector
have remained. Whilst subsequently there are some very encouraging signs, picking any recovery in this industry
is extremely difficult.
Accordingly, the board has determined that PPK should, for the sake of diversity, adopt a two-pronged approach
of executing on the mining strategy as articulated, plus now continue to leverage its experience in commercial
and residential property development to invest in appropriate attractive property and other financial investment
opportunities with a number of potential transactions under active consideration.
Finally, based on the current trading performance and the continued focus on strong capital management, the
company does not anticipate paying a dividend for the current financial year. The Board is committed to
returning to dividend payments as soon as trading conditions allow.
Robin Levison
Executive Chairman
5
2016 FINANCIAL REPORT
CONTENTS
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholders Information
Page
7
23
24
25
26
27
29
67
68
70
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DIRECTORS' REPORT
Your directors present their report together with the financial statements of the consolidated entity, being PPK Group
Limited and its controlled entities (“PPK” or the “Group”) for the financial year ended 30 June 2016.
DIRECTORS
The names of directors in office at any time during or since the financial year are:
Robin Levison
Jury Ivan Wowk
Glenn Robert Molloy
Raymond Michael Beath
Graeme Douglas Webb
Dale William McNamara
(resigned 5 May 2017)
(resigned 7 March 2017)
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 special responsibilities are detailed below:
Robin Levison CA MBA F.A.I.C.D. (Age 59)
Executive Chairman
Member of the PPK Group Limited Board since 22 October 2013
Non-Executive Chairman from 29 April 2015 to 28 February 2016
Executive Chairman from 22 October 2013 to 29 April 2015. Reappointed Executive Chairman from 28 February
2016.
Robin Levison has 16 years of public company management and board 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 holds a Masters of Business Administration from the University of Queensland, is a Member of the Institute
of Chartered Accountants Australia and NZ and is a Graduate and Fellow of Australian Institute of Company
Directors. Robin is also Deputy Chair of the University of Queensland Business, Economics and Law Alumni
Ambassador Council.
Other listed public company directorships held in the last 3 years:
►
Eureka Group Holdings Limited, Non-executive Director & Chairman (Appointed: 24 December 2013)
Jury Wowk
Non-Executive Deputy Chairman, Independent Director
BA., LLB (Age 66)
Member of the PPK Group Limited Board since listing on 21 December 1994. Resigned 5 May 2017.
Chairman from 13 September 2011 to 22 October 2013.
Appointed Deputy Chairman 22 October 2013
Member of the Audit Committee
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
Graduate Member of the Australian Institute of Company Directors.
Other listed public company directorships held in the last 3 years: Nil
7
INFORMATION ON DIRECTORS (cont’d)
Glenn Molloy (Age 62)
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 PPK 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.
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 66)
Non-Executive, Independent Director
Member of the PPK Group Limited Board since listing on 21 December 1994. Resigned 7 March 2017.
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 Australia and NZ. 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 67)
Non-Executive Director
Member of the PPK Group Limited Board since 1 August 2011.
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 held in the last 3 years: Nil
Dale McNamara (Age 58)
Executive Director
Member of the PPK Group Limited Board since 30 April 2015.
Dale McNamara first joined PPK in an executive capacity in late 2013. Dale has more than 30 years of experience
in operational and management roles in the coal mining industry in Australia and China.
Dale founded Wadam Industries, a subsidiary of Industrea Ltd and served as its Managing Director since 1993.
Dale 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.
Other listed public company directorships in the last 3 years: Nil
8
INFORMATION ON COMPANY SECRETARY
Andrew J. Cooke (Age 56) LL.B, FCIS
Group Company Secretary
Andrew Cooke was appointed as Group Company Secretary on 9 May 2012.
Andrew has extensive experience in law, corporate finance and is 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 PPK during the financial year were the:
(cid:1)
(cid:1)
(cid:1)
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 PPK's principal activities during the financial year.
OPERATING RESULTS
PPK Group Limited (PPK) reported a net loss after tax attributable to owners of PPK of $7.763M for the 12 months
to 30 June 2016 (2015 $12.122M loss). Group revenue for the 12 months from mining equipment sales and mining
services was $26.075M (2015 $29.577M), revenue from investment properties was $0.585M (2015: $1.778M) and
interest received was $0.495M (2015 $1.587M). The current year result included impairments and provisions
totalling $0.505M (2015: $13.670M).
DIVIDENDS PAID OR RECOMMENDED
Dividends paid or recommended for payment are as follows:
No dividends were declared or paid during the year.
A final dividend has not been declared.
REVIEW OF OPERATIONS
The review of operations is outlined in the Executive Chairman’s Report set out on pages 1 to 5 and which forms part
of this report.
9
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
• Winding up and deconsolidation of SLOT Loan Trust
In September 2015, Supported Living on Tweed Pty Ltd (borrower) repaid $3.235M in loans payable to
the SLOT Loan Trust. In turn the SLOT Loan Trust repaid $1.684M to external lenders. These comprised
the primary assets and liabilities of the trust, accordingly, the SLOT loan trust has been wound up during
the year and accordingly been deconsolidated from the Group.
• Debt Restructure
During the year, PPK borrowed $2.550M from Neruj Pty Ltd ATF Wemole Funding Trust. The loan attracts
interest at 15% per annum, has an initial 12 month term and is secured by second mortgage over the
property located at 13A Stanton Road, Seven Hills. PPK Directors Glenn Molloy, Graeme Webb and Robin
Levison share beneficial ownership and control of the trust. Proceeds from this loan were primarily used
to fully repay the existing National Australia Bank commercial bill facility of $2.210M. In January 2017,
upon sale of the Seven Hills Industrial property, the Neruj loan was repaid in full.
In October 2015, the Commonwealth Bank market rate loan of $2.729M owed by PPK Mining Equipment
Pty Ltd (wholly owned PPK subsidiary) was assigned to Seven Hills Property Holdings Pty Ltd (wholly
owned PPK subsidiary) along with all the associated security interests. The assignment was funded by
Seven Hills Property Holdings Pty Ltd borrowing an equivalent amount from the Commonwealth Bank
under market rate loan facilities secured by first registered mortgage of the property located at 13A Stanton
Road, Seven Hills. The term of the Commonwealth Bank loan is 3 years, maturing on the 19th October
2018. In January 2017, upon sale of the Seven Hills Industrial property, the CBA loan was repaid in full.
• Other loans receivable and payable
In October 2015, PPK (CC) Pty Ltd (wholly owned subsidiary) acquired loans receivable totalling $2.647M
owed by Couran Cove Holdings Pty Ltd ATF CCH trust and secured by real property located at Couran
Cove Resort, South Stradbroke Island. There are multiple loan agreements comprising the loans
receivable with interest of 14 per cent per annum. These loans were repaid in full in September 2016, with
principal and interest proceeds totalling $2.905M.
As funding for the transaction above, PPK borrowed $2.000m and $1.000m from Atkone Pty Ltd and
Contemplator Pty Ltd, respectively, at 10% interest per annum on 2 year terms expiring September 2017.
The loans are secured by General Security Agreements over the assets of PPK (CC) Pty Ltd and PPK
Investment Holdings Pty Ltd, together with a Guarantee & Indemnity from PPK Group Limited and PPK
Investment Holdings Pty Ltd. During the year a further $0.450M was borrowed and $2.225M was repaid
leaving outstanding borrowings of $1.225M at 30 June 2016. A further $0.275M was advanced post year
end and in September 2016 these loans were repaid in full.
• Nowra facility closure
In December 2014, PPK completed the acquisition of the Firefly business. Operating from a base at Mt
Thorley, Firefly sells, services and hires a range of mobile pneumatic (air) powered products for the mining
industry. The Firefly business compliments PPK's existing Rambor pneumatic products business. Post-
acquisition, PPK consolidated Rambor's operations at Nowra into both the Firefly Mt Thorley facility and
PPK's Port Kembla centre. This process was completed in early FY 2016 and the Nowra facility was closed
generating considerable cost savings across the combined businesses.
•
Leased Coaltrams
On 27 June 2016, Glegra Pty Ltd ATF The Coaltram Trust (TCT) being a PPK director related entity (refer
related party disclosures within the Remuneration Report, page 18) acquired the rights and obligations of
the lessor on arms-length commercial terms. At 30 June 2016, total liabilities recognised in relation to the
lease were $2.840M comprising $1.210M unpaid lease payments (rental arrears) and $1.630M onerous
lease provision.
There have been no other significant changes in the state of affairs during the 2016 financial year or existing at the
time of this report.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
Refer note 31 to the financial statements.
FUTURE DEVELOPMENTS
The likely developments in the operations of PPK and the expected results of those operations in financial years
subsequent to the year ended 30 June 2016 are included in the Executive Chairman’s Report set out on pages 1
to 5 and which forms part of this report.
10
ENVIRONMENTAL ISSUES
PPK remains committed to:
(cid:1)
the effective management of environmental issues having the potential to impact on its remaining business;
and
(cid:1) 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.
11
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 Group’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 Group, 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 $0.275M
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:
(cid:1)
(cid:1)
(cid:1)
(cid:1)
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:
(cid:1)
(cid:1)
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.
12
REMUNERATION REPORT (audited) (cont.)
Shares or Options
No shares or options were issued to executives in the current financial year.
PPK Group Ltd has a share and loan plan in place with certain key executives. During the 2014 year, they were
issued with 15.500M shares in the Group at an issue price of $0.70 per share.
The Group provided the executives with a non-recourse loan to pay for the shares, which expired 27 April 2017.
The terms of the non-recourse loan provide no obligation on the senior executive to repay the full amount of the
outstanding loan balance and the Group has the option to sell or buy-back the plan shares as full satisfaction of the
outstanding loan balance. Each share held in the share and loan plan is entitled to dividends declared on ordinary
shares. These dividends are not paid in cash to the executives but they are credited against their respective 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 was recognised during
the 2014 financial year for these share 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, which during the current financial year was nil (2015: $0.542M).
The Board considers that the existing remuneration arrangements regarding executives are appropriate in the
Company’s prevailing circumstances to achieve the desired objectives of its Remuneration Policy.
These policy measures are chosen as they directly align the individual’s reward to the KPI’s of the consolidated
entity and to its strategy and performance.
The Company considers this policy is an effective means of maintaining shareholder wealth and in retaining quality
employees committed to the long term objectives of the Company.
Consequences of company performance on shareholder wealth
The following table outlines the impact of company performance on shareholder wealth:
2016
2015
2014
2013
2012
Earnings per share (cents)
Full year ordinary dividends
(cents) per share
(13.4)
-
(21.2)
1.5
4.8
3.5
4.7
3.5
2.9
1.0
Year-end share price
Shareholder return (annual)
$0.20
(50%)
$0.40
(37%)
$0.66
58%
$0.44
25%
$0.38
30%
The above table shows the annual returns to shareholders calculated to include the difference in percentage terms
between the dividend yield for the year (based on the average share price during the period) and changes in the
price at which shares in the Company are traded between the beginning and the end of the relevant financial year.
The share price for 2016 is the last traded price as at 29th September 2015, when the Group voluntarily suspended
trading on the ASX.
13
REMUNERATION REPORT (audited) (cont.)
Details of Remuneration for the year ended 30 June 2016
DIRECTORS’ AND OTHER KEY MANAGEMENT PERSONNEL REMUNERATION
Details of the nature and amount of each element of the remuneration of each key management personnel
(‘KMP”) of PPK Group Limited are shown in the table below:
2016
SHORT TERM INCENTIVES
EMPLOYMENT
LONG TERM INCENTIVES/BENEFITS
POST-
Salary&
Fees
($)
[3]
Short Term
Incentive
Cash
Bonus
($)
Non-
Cash
Benefits
($)
Superannu-
ation
($)
Long
Service
Leave
Post
Employ-
ment
Benefits
($)
Share
based
payments
($)
Total
($)
Proportion of
Remuneration
Performance
Related
(%)
Directors
Non –Executive
J I Wowk
R M Beath
GD Webb
Executive
R Levison [1]
G R Molloy
D McNamara
110,222
24,000
24,000
234,329
162,400
163,482
Total Directors
718,433
Other Key Management Personnel
P Barker [2]
J Beddow
Z Jinping
121,561
199,463
203,482
Total other
524,506
Total Key Management Personnel
1,242,939
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,750
-
4,750
9,500
12,667
18,208
4,750
35,625
45,125
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
110,222
24,000
24,000
239,079
162,400
168,232
727,933
134,228
217,671
208,232
560,131
1,288,064
-
-
-
-
-
-
-
-
-
-
-
-
[1] Robin Levison resumed the role of Executive Chairman on 28 February 2016 upon the resignation of Peter Barker, see [2] below.
[2] Peter Barker (Chief Executive Officer) resigned effective 28 February 2016.
[3] Amounts reported above include both paid and unpaid entitlements. A number of PPK directors have voluntarily elected to
temporarily defer payment of their consulting fee entitlements. Refer further to details on page 19. Further, in February 2017
Robin Levison forgave $0.215M in unpaid consulting fees, of which $0.062M was earned in the 2016 financial year and is
included in the amounts above.
14
REMUNERATION REPORT (audited) (cont.)
POST-
2015
SHORT TERM INCENTIVES
EMPLOYMENT
LONG TERM INCENTIVES/BENEFITS
Salary&
Fees
($)
[5]
Short Term
Incentive
Cash
Bonus
($)
Non-
Cash
Benefits
($)
Superannu-
ation
($)
Long
Service
Leave
Post
Employ-
ment
Benefits
($)
Share
based
payments
($)
Total
($)
Proportion of
Remuneration
Performance
Related
(%)
Directors
Non –Executive
R Levison [1]
J I Wowk
R M Beath
GD Webb
Executive
G R Molloy
D McNamara [2]
254,392
138,492
26,000
26,000
113,700
176,276
Total Directors
734,860
Other Key Management Personnel
P Barker [3]
J Beddow [4]
Z Jinping
228,439
33,692
202,943
Total other
465,074
Total Key Management Personnel
1,199,934
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,750
-
-
-
-
4,750
9,500
20,583
2,982
4,750
28,315
37,815
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
259,142
138,492
26,000
26,000
113,700
181,026
744,360
249,022
36,674
207,693
493,389
1,237,749
-
-
-
-
-
-
-
-
-
-
-
-
[1] Whilst remaining Chairman, Robin Levison passed his executive responsibilities to Peter Barker from 30 April 2015 to 28 Feb
2016, see [3] below. Robin Levison resumed his executive responsibilities on 28 Feb 2016.
[2] Dale McNamara was appointed as an executive director on 30 April 2015.
[3] Peter Barker was appointed Chief Executive Officer on 30 April 2015. Previously Chief Financial Officer from 1 July 2014 to 29
April 2015. Subsequently, Peter Barker resigned effective on 28 Feb 2016.
[4] Jason Beddow was appointed as Chief Financial Officer on 30 April 2015.
[5] Amounts reported above include both paid and unpaid entitlements. A number of PPK directors have voluntarily elected to
temporarily defer payment of their consulting fee entitlements. Refer further to details on page 19. Further, in February 2017
Robin Levison forgave $0.215M in unpaid consulting fees, of which $0.081M was earned in the 2015 financial year and is
included in the amounts above.
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 2016
Options may be issued to executives as part of their remuneration. The options are issued to encourage goal
alignment between executives, directors and shareholders.
No options were issued to, or exercised by, directors or other Key Management Personnel during the year.
Employment Contracts
Notwithstanding the entitlements outlined in the following, a number of PPK directors have voluntarily elected to
defer payment of their consulting fee entitlements, refer page 19 for further details.
15
REMUNERATION REPORT (cont’d)
Employment Contracts (cont’d)
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 $0.290M per annum. Mr Levison’s remuneration is
currently reduced by 20% reflecting the challenging industry conditions.
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 April 2014 – no fixed term.
Remuneration: Base remuneration under the agreements $0.200M per annum. Mr McNamara’s remuneration is
currently reduced by 20%, reflecting the challenging industry conditions.
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.
Mr. Zhang Jinping
Employment and consultancy agreements are in place between the parties on terms as follows:
Term: Commencing on 1 April 2014 – no fixed term.
Remuneration: Base remuneration under the agreements $0.200M 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. 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.
Jason Beddow
Employment agreements are in place with the parties on terms as follows:
Term: Commencing 30 April 2015 – no fixed term.
Remuneration: Fixed at $0.250M per annum (from May 2016, previously $0.180M) plus superannuation.
In addition:
(i)
(ii)
a potential short term incentive of up to a maximum of 25% of total fixed remuneration is subject to
meeting Board approved targets.
a potential long term incentive is subject to the achievement of financial and shareholder return measures
and hurdles set by the Board.
Duties: Chief Financial Officer
Termination: Either Mr Beddow or PPK may terminate his employment by giving three months’ notice.
16
SHARES HELD BY DIRECTORS AND KEY MANAGEMENT PERSONNEL
The number of ordinary shares held by directors and Key Management Personnel during the 2016 reporting period is
set out below:
Balance at
Start of year
11,766,667
13,524,519
300,000
650,000
9,460,000
4,132,500
39,833,686
-
-
4,000,000
4,000,000
43,833,686
Net
change
Other
Shares
Purchased
New Share
Issue
Share and
Loan Plan
Issue
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Held at the
End of the
Reporting
Period
11,766,667
13,524,519
300,000
650,000
9,460,000
4,132,500
39,833,686
-
-
4,000,000
4,000,000
43,833,686
Directors
R Levison
G Molloy
R Beath
J Wowk
G Webb
D McNamara
Key Management Personnel
P Barker
J Beddow
Z Jinping
Total
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 PARTIES OF THE GROUP
In addition the following Directors of PPK have an interest in various unit trusts, the trustees of which are subsidiaries
of the PPK Group. 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 PPK has an indirect equity interest - along with other unassociated investors.
Details of the units and the trusts in which each Director has a relevant interest and of the nature of that relevant
interest are set out in the tables below:
J I Wowk:
Trusts - registered holder(s)
Number of Units
Willoughby Funding Unit Trust
- Dealcity Pty Ltd
Nerang Street Southport Project Trust
– Dealcity Pty Ltd
G R Molloy:
2
33
Trusts - registered holder(s)
Number of Units
Willoughby Funding Unit Trust
- Wavet Fund No. 2 Pty Limited
Nerang Street Southport Project Trust
- Wavet Fund No. 2 Pty Limited
10
286
Nature of Interest
(all indirect)
Director & Member
Director & Member
Nature of Interest
(all indirect)
Director & Member
Director & Member
17
OTHER INTERESTS IN RELATED PARTIES OF THE GROUP (Cont’d)
R M Beath:
Trusts - registered holder(s)
Number of Units
Nature of Interest
(all indirect)
Willoughby Funding Unit Trust
- Zenaval Pty Ltd
G D Webb:
1
Director & Member
Trusts - registered holder(s)
Number of Units
Willoughby Funding Unit Trust
- GRG Finance Pty Ltd
- Phillip Street Properties Pty Ltd
Nerang Street Southport Project Trust
- GRG Finance Pty Ltd
20
20
231
Nature of Interest
(all indirect)
Director
Director
Director
OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
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.
The Group has secured a loan from Neruj Pty Ltd ATF Wemole Funding Trust. PPK Directors, Mr Glenn
Molloy, Mr Graeme Webb and Mr Robin Levison share beneficial ownership and control of this entity.
Loans advanced
Interest paid and credited to loan
Loans repaid
Balance outstanding
Consolidated Entity
2016
$000S
2,550
207
-
2,757
2015
$000S
-
-
-
-
The Group has made loans to Couran Cove Holdings Pty Ltd ATF CCH trust. Mr Glenn Molloy was a Director
and beneficiary of the CCH Trust. The loan was repaid in September 2016.
Loans advanced
Interest paid and credited to loan
Loans repaid
Balance outstanding
Consolidated Entity
2016
$000S
2,647
268
-
2,915
2015
$000S
-
-
-
-
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
Consolidated Entity
2016
$000S
-
-
-
-
2015
$000S
78
2
(80)
-
As noted earlier in this report, On 27 June 2016 Glegra Pty Ltd ATF The Coaltram Trust (TCT) being a wholly
owned entity of Mr Glenn Molloy, became the owner of the ex-UFME lease and thus the rights to the unpaid lease
rental arrears of $1.200M (2015 Nil) and $1.630M (2015 $2.000M) onerous lease provision.
18
OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL (CONT’D)
A number of PPK directors have voluntarily elected to temporarily defer payment of their director & consulting
fee entitlements. The following amounts remain unpaid as at reporting date:
Graeme Webb (Awaba Partnership)
Glenn Molloy (Corso Management Services)
Dale McNamara (McNamara Consultants Pty Ltd)
Robin Levison (Ignition Equity Partners)
Balance outstanding
Consolidated Entity
2016
$000S
65
184
111
443
803
2015
$000S
41
30
118
261
450
Directors and key management personnel and their related entities had made loans to the Easy Living Unit Trust
and the Easy Living Bundaberg Trust. Both loans were secured by a second mortgage over property held by the
trusts and were interest free.
On 30 September 2014 PPK disposed of its entire interests in the Easy Living Unit Trust and Easy Living
Bundaberg Trust.
The Easy Living Unit Trust was a subsidiary of the Group by virtue of its
50% ownership interest prior to its disposal by the Group on 30
September 2014.
Balance at start of year
Loans advanced to the Group
Loans repaid by the Group
Total advanced to the Group
Reclassification of Key Management Personnel
Trust distribution credited to loan
Loan capitalisation to trust units
Balance outstanding
The Easy Living Bundaberg Trust was a subsidiary of the Group by virtue
of its 50% ownership interest prior to its disposal by the Group on 30
September 2014.
Balance at start of year
Loans advanced to the Group
Loans repaid by the Group
Total advanced to the Group
Reclassification of Key Management Personnel
Trust distribution credited to loan
Loan capitalisation to trust units
Balance outstanding
Consolidated Entity
2016
$000S
2015
$000S
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
275
-
-
275
-
22
(297)
-
334
-
-
334
-
45
(379)
-
19
OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL (CONT’D)
Loans to the SLOT Loan Trust are secured loans repayable by October
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.
Balance at start of year
Loans repaid by the Group
Total advanced to the Group
Trust distribution credited to loan
Balance outstanding
The Easy Living Unit Trust - units
The Easy Living Bundaberg Trust - units
The SLOT Loan Trust - units
Transactions with Associates
Interest receivable from associates
PPK Willoughby Funding Unit Trust
Nerang Street Southport Project Trust
Loans and receivables from associates
Current
PPK Willoughby Funding Unit Trust[1]
Nerang Street Southport Project Trust
Consolidated Entity
2016
$000S
2015
$000S
891
(932)
(41)
41
-
875
(138)
737
154
891
Consolidated Entity
2016
number
-
-
-
2015
number
-
-
900
$000S
$000S
2,658
83
2,741
3,567
899
4,466
2,624
101
2,725
4,814
811
5,625
[1] The carrying value of the Loan receivables in the Group Financials has been reduced by an impairment
provision of $0.364M, refer to note 11.
(End of Audited Remuneration Report)
20
MEETINGS OF DIRECTORS
During the financial year, meetings of directors (including committee meetings) were held. Attendances were:
DIRECTORS’ MEETINGS
AUDIT COMMITTEE MEETINGS
Number
Eligible to attend
Number
Attended
Number Eligible to
attend
Number
Attended
11
11
11
11
11
11
11
9
11
8
10
10
-
4
-
4
-
-
-
3
-
3
-
-
Robin Levison
Jury Ivan Wowk
Glenn Robert Molloy
Raymond Michael Beath
Graeme Douglas Webb
Dale William McNamara
CORPORATE GOVERNANCE STATEMENT
PPK’s directors and management are committed to conducting the Group’s business ethically and in accordance with
high standards of corporate governance. A copy of PPK’s Corporate Governance Statement can be found in the
corporate governance section of PPK’s website at www.ppkgroup.com.au.
RISK & CONTROL COMPLIANCE STATEMENT
Under ASX Listing Rules and the ASX Corporate Governance Council’s Principles of Good Corporate Governance
and Best Practice Recommendations (“ASX Recommendations 3rd edition”), 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 PPK’s
corporate governance section as set out on its website.
In accordance with the Recommendations, the Board has:
(cid:1)
(cid:1)
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 details of the composition, role and Terms of Reference of the PPK Audit Committee 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, Chairman, Chief Financial Officer and selected
consultants attend meetings of the Audit Committee by standing invitation.
21
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 during 2016 of $0.087M 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.
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 2016 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
Brisbane, 23rd June 2017
GLENN MOLLOY
Executive Director
22
Level 18
King George Central
145 Ann Street
Brisbane QLD 4000
Correspondence to:
GPO Box 1008
Brisbane QLD 4001
T + 61 7 3222 0200
F + 61 7 3222 0444
E info.qld@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of PPK Group Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of PPK Group Limited for the year ended 30 June 2016, I declare that,
to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
Cameron Smith
Partner – Audit & Assurance
Brisbane, 23 June 2017
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
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Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.
23
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
REVENUE
Mining equipment
Investment properties
Investment activities
Interest receivable
TOTAL REVENUE
OTHER INCOME
EXPENDITURE
Mining equipment
Investment properties
Investment activities
Administrative expenses
Share-based payment expense
Business combination transaction expenses
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)/benefit attributable to profit
PROFIT (LOSS) AFTER INCOME TAX
PROFIT (LOSS) IS ATTRIBUTED TO:
Owners of PPK Group Limited
Non-controlling interest
OTHER COMPREHENSIVE INCOME
Items that may be re-classified to profit or loss
Changes in fair value of available-for-sale financial assets
Income tax relating to these items
Realised gain on sale of available-for-sale financial assets transferred to
the profit and loss statement from the available for sale reserve
Income tax relating to these items
Realised loss on sale of available-for-sale financial assets transferred to
the profit or loss statement from the available-for-sale reserve
Income tax relating to these items
Foreign currency translation of controlled entities
OTHER COMPREHENSIVE (LOSS) INCOME NET OF INCOME TAX
TOTAL COMPREHENSIVE (LOSS) FOR THE YEAR
TOTAL COMPREHENSIVE (LOSS) FOR THE YEAR IS
ATTRIBUTABLE TO:
Owners of PPK Group Limited
Non-controlling interest
Overall Operations
Basic Earnings (Loss) per share
Diluted Earnings (Loss) per share
The accompanying notes form part of these financial statements
Notes
3(b)
3(a)
3(c)
3(f)
4(a)
2016
$000S
26,075
585
-
495
27,155
1,597
(32,818)
(79)
(323)
(1,898)
(103)
-
(1,015)
(36,236)
(389)
(7,873)
133
(7,740)
(7,763)
23
(7,740)
1,035
-
(1,391)
-
5
-
(6)
(357)
(8,097)
(8,120)
23
(8,097)
Consolidated Entity
2015
$000S
29,577
1,778
25
1,587
32,967
8,626
(47,082)
(292)
(588)
(3,111)
(397)
(323)
(1,540)
(53,333)
(85)
(11,825)
3
(11,822)
(12,122)
300
(11,822)
1,826
-
(252)
-
18
-
2
1,594
(10,228)
(10,528)
300
(10,228)
8
8
(13.4) cents
(13.4) cents
(21.2) cents
(21.2) cents
24
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
Consolidated Entity
2016
$000S
945
9,659
9,956
419
-
20,979
857
19
2,032
3,425
7,824
-
252
14,409
35,388
6,762
5,806
-
1,806
14,374
2,730
-
1,298
4,028
18,402
16,986
34,625
2,629
(20,268)
16,986
-
16,986
2015
$000S
2,476
9,389
11,437
627
178
24,107
4,139
408
3,533
3,468
9,051
-
120
20,179
44,826
7,381
7,137
-
2,064
16,582
1,421
-
1,818
3,239
19,821
25,005
34,125
3,383
(12,505)
25,003
2
25,005
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Current tax receivable
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Other Receivables
Investments in associates - equity accounted
Financial assets
Investment Properties
Property, plant and equipment
Deferred tax assets
Intangibles
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Interest bearing liabilities
Current tax liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Interest bearing liabilities
Deferred tax liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained earnings (Accumulated losses)
Capital and reserves attributable to owners of PPK Group Ltd
Non-controlling interests
TOTAL EQUITY
Notes
10
11
12
13
17(a)
11
14(a)
14(b)
15(b)
16
17(a)
18
19
20
17(b)
21
22
17(b)
21
23
24
The accompanying notes form part of these financial statements
25
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
Consolidated Entity
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash payments to suppliers and employees
Dividends received
Interest received
Income taxes refunded (paid)
Interest paid
Net cash (used in) operating activities
30(a)
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for purchases of plant and equipment
Payment for purchase of land and buildings
Proceeds from sale of investment property
Proceeds from sale of property and equipment
Purchase of business combination
Business purchase acquisition costs
Proceeds from sale of available-for-sale financial assets
Proceeds on return of subsidiary capital upon winding up (net of cash lost on
deconsolidation)
Proceeds on sale of subsidiaries (net of cash lost in deconsolidation)[1]
Payments for available-for-sale financial assets
Payment for intangibles
Net cash provided by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Other receivables - loans advanced
Other receivables - loans repaid
Payment for buyback of shares
Proceeds from other borrowings
Repayment of other borrowings and bank loans
Dividends paid
Transactions with non-controlling interests
Net cash provided by (used in) financing activities
Net (decrease) in cash held
Cash at the beginning of the financial year
Effects of exchange rates on cash and cash equivalents
Cash at the end of the financial year
30(b)
2016
$000S
30,170
(36,242)
-
76
311
(545)
(6,230)
(284)
-
-
171
-
-
2,618
(2)
-
-
(179)
2,324
(3,165)
5,878
-
8,730
(9,043)
-
(23)
2,377
(1,529)
2,476
(2)
945
2015
$000S
33,910
(35,357)
25
1,560
(300)
(1,408)
(1,570)
(1,275)
(1,257)
24,567
18
(3,327)
(323)
1,935
-
943
(184)
(728)
20,369
(845)
2,552
(148)
4,096
(24,586)
(2,000)
(296)
(21,227)
(2,428)
4,904
-
2,476
[1] In addition to cash consideration, the proceeds on sale of subsidiaries included shares in the ASX listed purchaser entity in the 2015 comparatives, refer note 14(b)
for further details
The accompanying notes form part of these financial statements
26
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
Issued
Capital
$000S
Accumulated
Losses
$000S
Options
Reserve
$000S
Note
Available-
for-sale
Reserve
$000S
Foreign
Currency
Translation
Reserve
$000S
Total
Attributable
to Owners
of PPK
Group Ltd
$000S
Non-
Controlling
Interests
$000S
Total
Equity
$000S
CONSOLIDATED ENTITY
At 1 July 2015
Total comprehensive income for the year
Loss for the year
Other comprehensive (loss) income
Fair value adjustment on available-for-sale financial assets
Realised gain on available-for-sale financial assets transferred to
profit and loss from the available-for-sale reserve
Realised loss on available-for-sale financial assets transferred to
profit and loss from the available-for-sale reserve
Foreign currency translation of controlled entities
Total comprehensive (loss) income for the year
Transactions with owners in their capacity as owners
Dividends paid
Trust distributions
Shares issued – employee share based payment
Employee share-based payment
Changes in holding of non-controlling interests
7(a)
23
24
34,125
(12,505)
1,735
1,646
2
25,003
2
25,005
-
-
-
-
-
-
-
-
500
-
-
500
(7,763)
-
-
-
-
(7,763)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(500)
103
-
(397)
1,338
-
1,035
(1,391)
5
-
(351)
-
-
-
-
-
-
-
-
-
-
(6)
(6)
-
-
-
-
-
-
(7,763)
23
(7,740)
1,035
(1,391)
5
(6)
-
-
-
-
1,035
(1,391)
5
(6)
(8,120)
23
(8,097)
-
-
-
103
-
103
-
(23)
-
-
(2)
(25)
-
-
(23)
-
103
(2)
78
16,986
1,295
(4)
16,986
At 30 June 2016
34,625
(20,268)
The accompanying notes form part of these financial statements
27
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
Issued
Capital
$000S
Accumulated
losses
$000S
Options
Reserve
$000S
Note
Available-
for-sale
Reserve
$000S
Foreign
Currency
Translation
Reserve
$000S
Total
Attributable
to Owners
of PPK
Group Ltd
$000S
Non-
Controlling
Interests
$000S
Total
Equity
$000S
CONSOLIDATED ENTITY
At 1 July 2014
Total comprehensive income for the year
Profit for the year
Other comprehensive income
Fair value adjustment on available-for-sale financial
assets
Realised gain on available-for-sale financial assets
transferred to profit and loss from the available-for-sale
reserve
Realised loss on available-for-sale financial assets
transferred to profit and loss from the available-for-sale
reserve
Foreign currency translation of controlled entities
Total comprehensive income (loss) for the year
Transactions with owners in their capacity as owners
Dividends paid
Trust distributions
Shares issued - share and loan plan
Treasury shares repurchased
Employee share-based payment
7(a)
23
23
24
33,731
2,160
1,338
54
-
-
-
-
-
-
-
-
542
(148)
-
394
(12,122)
-
-
-
-
(12,122)
(2,543)
-
-
-
-
(2,543)
-
-
-
-
-
-
-
-
-
-
397
397
-
1,826
(252)
18
-
1,592
-
-
-
-
-
-
At 30 June 2015
34,125
(12,505)
1,735
1,646
-
-
-
-
-
2
2
-
-
-
-
-
-
2
37,283
150
37,433
(12,122)
300
(11,822)
1,826
(252)
18
2
-
-
-
-
1,826
(252)
18
2
(10,528)
300
(10,228)
(2,543)
-
(2,543)
-
542
(148)
397
(1,752)
25,003
(448)
-
-
-
(448)
2
(448)
542
(148)
397
(2,200)
25,005
The accompanying notes form part of these financial statements
28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1
CORPORATE INFORMATION
The financial statements of PPK Group Limited (“PPK” or “the Group”)
for the year ended 30 June 2016 were authorised for issue in
accordance with a resolution of the directors on 23rd June 2017 and
covers PPK Group Limited and its controlled entities as required by
the Corporation Act 2001.
PPK is a for-profit company limited by shares, incorporated in
Australia. Its shares are publicly traded on the Australian Securities
Exchange.
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 9.
The nature of the operations and principal activities of the Group are
described in the Directors’ Report.
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Preparation and Statement of Compliance
The financial statements are general purpose financial statements
which have been prepared in accordance with Australian Accounting
Standards and other authoritative pronouncements of the Australian
Accounting Standards Board and the Corporations Act 2001.
issued by The
The financial statements also comply with International Financial
Reporting Standards (IFRS) as
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 and intangible
assets 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 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
the
eliminated. Unrealised
transaction provides evidence of the impairment of the asset
transferred.
losses are also eliminated unless
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 of 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:
The accounting policies have been consistently applied to the entities
of the consolidated entity unless otherwise stated.
Sales of goods
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 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 substantive, whether or not they are
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.
Revenue from the sale of mining equipment is recognised when
significant risk and rewards of ownership have passed to the buyer
and can be reliably measured. Risks and rewards are considered
passed to the buyer when the goods have been delivered to the
customer.
Revenue from the sale of Coaltram vehicles or spare parts sales are
recognised when they 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.
29
Deferred tax assets and liabilities are not recognised for temporary
differences between
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.
the carrying amount and
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 and entered into a tax
sharing agreement for the whole of the financial year, where each
subsidiary will compensate PPK Group Limited for the amount of tax
payable that would be calculated as if the subsidiary was a tax paying
entity. 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.
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 and
impairment. 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.
NOTE 2
SUMMARY 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
Gain and loss on sale of assets is recognised on a net basis. The gain
or loss on disposal of assets is brought to account at the date an
unconditional contract of sale is signed, or if a conditional contract is
signed, the date it becomes unconditional. In the case of real estate
sales under AASB 118 it becomes unconditional when title passes.
Dividends
Dividends are recognised when the Group's right to receive payment
is established.
(d) Inventories
Raw materials, work in progress and finished goods
Inventories are stated at the lower of cost and net realisable value.
Costs comprise all direct materials, direct labour and an appropriate
portion of variable and fixed overheads. Fixed overheads are allocated
on the basis of normal operating capacity. Costs are assigned to
inventory using an actual 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 are recognised initially at original invoice
amounts less an allowance for uncollectable amounts and have
repayment terms between 30 - 60 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 includes 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 de-recognition
of the original instrument.
(f) Income Tax
The income tax expense for the period is the tax payable on the
current period's taxable income based on the national income tax rate
for each jurisdiction adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences between the tax base of
assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
Deferred tax assets are only recognised for deductible temporary
differences, between carrying amounts of assets and liabilities for
financial reporting purposes and their respective tax bases, at the tax
rates expected to apply when the assets are recovered or liabilities
settled, based on those tax rates which are enacted or substantially
enacted for each jurisdiction. Exceptions are made for certain
temporary differences arising on initial recognition of an asset or
liability if they arose in a transaction other than a business combination
that at the time of the transaction did not affect either accounting profit
or taxable profit.
Deferred tax assets are only recognised for deductible temporary
differences and unused tax losses if there is reasonable certainty that
future taxable amounts will be available to utilise those temporary
differences and losses.
30
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Depreciation Rate
Straight Line
Buildings
Leasehold Improvements
Plant & Equipment
Leased Plant & Equipment
2 %
over the term of the lease
3-50 %
3-33 %
(h) 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
losses previously
recognised.
impairment
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.
(i) 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 fixed
or determinable payments that are not quoted on an active market and
are subsequently measured at amortised cost using the effective
interest rate method.
The host debt contract of a convertible note is classified as loans and
receivables. The host debt contract is measured initially at the residual
amount after separating the embedded option derivative. The host
debt contract is subsequently at amortised cost using the effective
interest rate method.
(ii) Held-to-maturity investments
Held to maturity investments are non-derivative financial assets that
have fixed maturities and fixed or determinable payments, and it is the
Group's intention to hold the investments to maturity. They are
subsequently measured at amortised cost using the effective interest
rate method.
(iii) Available-for-sale financial assets
Available-for-sale financial assets comprise investments in listed and
unlisted entities and any non-derivatives that are not classified as any
other category of financial assets, and are classified as non-current
assets (unless management intends to dispose of the investments
within 12 months of the end of the reporting period). After initial
recognition, these investments are measured at fair value with gains
or losses recognised in other comprehensive income (available-for-
sale investments revaluation reserve). Where there is a significant or
prolonged decline in the fair value of an available-for-sale (which
constitutes objective evidence of impairment) the full amount including
any amount previously charged to other comprehensive income is
recognised in profit or loss.
Purchases and sales of 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 2(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.
The fair value of quoted investments is determined by reference to
Securities Exchange quoted market bid prices at the close of business
at the end of the reporting period. For investments where there is no
quoted market, fair price is determined by reference to current market
value of another instrument which is substantially the same or is
calculated based on the expected cash flows of the underlying net
asset base of the investment.
(iv) Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are
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.
31
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
(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.
(j) Leases
Leases of property, plant & equipment where the Group has
substantially all the risks and rewards of ownership are classified as
finance leases and capitalised at inception of the lease at the fair value
of the leased property, or if lower, at the present value of the minimum
lease payments. Lease payments are apportioned between the
finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability.
Finance charges are charged to profit or loss over the lease period so
as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. Capitalised leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term. Leases where the lessor retains substantially all the
risks and rewards of ownership of the net asset are classified as
operating leases. Payments made under operating leases (net of
incentives received from the lessor) are charged to profit or loss on a
straight-line basis over the period of the lease. 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.
(k) Foreign Currency
Foreign currency transactions during the period are converted to
Australian currency at rates of exchange applicable at the dates of the
transactions. Amounts receivable and payable in foreign currency at
balance date are converted at the rates of exchange rates at year end.
The gains and losses from conversion of short term balances, whether
realised or unrealised, are recognised in profit or loss.
(l) 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.
(m) 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.
the end of the reporting period and are measured at amounts
expected to be paid when the liabilities are settled.
Long service leave
Liabilities for long service leave are recognised as part of the provision
for employee benefits and measure as the present value of expected
future payments to be made in respect of services provided by
employees to the end of the reporting period using the projected unit
credit method. Consideration is given to expected future salaries and
wages levels, experience of employee departures and period of
service. Expected future payments are discounted using national
corporate 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
superannuation plans other
the
superannuation guarantee legislation. Contributions are recognised
as expenses as they become payable.
to contribute
to
requirements under
the Group
than
(o) 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.
(p) Intangible assets
Brands Names
Expenditure on internally generated brand names are expensed as
incurred. Acquired Brand names are stated at cost and are considered
to have indefinite useful lives and are not amortised. The useful life is
assessed annually to determine whether events or circumstances
continue to support an indefinite useful life assessment. The carrying
value of brand names is reviewed annually for impairment, at the
same time every year.
Research and Development
Research is recognised as an expense as incurred. Costs incurred on
development (relating to the design and testing of new or improved
products) are recognised as intangible assets when it is probable that
the project will, after considering its commercial and technical
feasibility, be completed and generate future economic benefits and
its costs can be measure reliably. The expenditure capitalised
comprises all directly attributable costs, 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.
(n) Employee Benefit Provisions
Patents, Trademarks and Licences
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
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.
32
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
(v) Earnings per share
Basic earnings per share
Goodwill
Goodwill represents the excess of the consideration transferred and
the amount of the non-controlling interest in the acquiree over the fair
value of the identifiable assets, liabilities and contingent liabilities.
Goodwill is not amortised but is measured at cost less any
accumulated impairment losses. Goodwill is reviewed for impairment
annually, or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired. Gains and losses on
the disposal of an entity include the carrying amount of goodwill
relating to the entity sold. Goodwill acquired is allocated to each of the
cash-generating units expected to benefit from the combinations
synergies. Impairment is determined by assessing the recoverable
amount of the cash-generating unit to which the goodwill relates.
Impairment losses on goodwill cannot be reversed.
(q) 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.
(r) Borrowing costs
All borrowing costs are expensed when incurred.
(s) Share-Based Payments
The Group recognises an expense for all share-based remuneration
and amortises those expenses over the relevant vesting periods
where required.
(t) 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.
(u) 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
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.
(w) 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.
(x) 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.
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.
(y) New and revised Standards that are effective for these
financial statements
PPK has adopted all of the new, revised or amending Accounting
Standards and Interpretations issued by the Australian Accounting
Standards Board “AASB” that are mandatory for the current reporting
period.
Adoption of these standards and interpretations did not have any
effect on the statements of financial position or performance of PPK.
Information of these standards is presented below.
(b) The payment of the dividend is fair and reasonable to the
company's shareholders as a whole; and
AASB 2012-3 Offsetting Financial Assets and Liabilities
(c) The payment of the dividend does not materially
prejudice the company's ability to pay its creditors.
► adds application guidance to AASB 132 Financial Instruments:
Presentation to address inconsistencies identified in applying
some of the offsetting criteria of AASB 132, including clarifying the
meaning of "currently has a legally enforceable right of set-off" and
that some gross settlement systems may be considered
equivalent to net settlement.
33
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
AASB 2013-3: Amendments to AASB 136 – Recoverable Amount
Disclosures for Non-Financial Assets
► includes the requirement to disclose additional information about
the recoverable amount of impaired assets if that amount is based
on fair value less costs of disposal.
(z) New Accounting Standards and interpretations not yet
adopted
No new accounting standards and interpretations, that are available
for early adoption at 30 June 2015, 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.
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.
For example financial assets can be designated and measured
at fair value through profit or loss at initial recognition if doing so
eliminates or significantly
reduces a measurement or
recognition inconsistency.
Furthermore AASB 9 introduces a new impairment model based
on expected credit losses.
AASB 15 - Revenue from Contracts with Customers (applies from 1
January 2017)
►
Establishes a new revenue recognition model and changes the
basis for deciding whether revenue is to be recognised over time
or at a point in time. It also provides new and more detailed
guidance on specific topics.
AASB 16 - Leases (applies from 1 January 2019)
►
The new standard will be effective for annual periods beginning
on or after 1 January 2019. Early application is permitted,
provided the new revenue standard, AASB 15 Revenue from
Contracts with Customers, has been applied, or is applied at the
same date as AASB 16. The key features of AASB 16 are as
follows:
Lessee accounting
•
•
•
•
Lessees are required to recognise assets and liabilities for
all leases with a term of more than 12 months, unless the
underlying asset is of low value.
A lessee measures right-of-use assets similarly to other
non-financial assets and lease liabilities similarly to other
financial liabilities.
Assets and liabilities arising from a lease are initially
measured on a present value basis. The measurement
includes non-cancellable
(including
inflation-linked payments), and also includes payments to
be made in optional periods if the lessee is reasonably
certain to exercise an option to extend the lease, or not to
exercise an option to terminate the lease.
lease payments
AASB 16 contains disclosure requirements for lessees.
The Group will adopt this standard from 1 July 2019 but the impact of
its adoption is yet to be assessed by the Group.
(aa) 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 is
determined for the asset or cash generating unit to which the asset
has been allocated. Where the recoverable amount is based on value
in use, discounted cash flow calculations have been prepared which
incorporate a number of key estimates. Estimated future cash flows
are based on past experience, actual operating results, annual
budgets, business plans and long term strategy for the cash
generating unit. In particular, past experience is relevant when forming
expectations in a recovering mining sector.
Key assumptions include:
Non-Manufacturing CGU:
Assumption
Revenue growth rates (yr 1)
Revenue growth rates (yr 2
to yr 5)
Terminal growth rate
Discount rate
2016
10%
3%
0.0%
9.28%
2015
9%
0%
0.0%
9.70%
Manufacturing CGU:
New Coaltram sales of between 4 to 10 per year (2015: 6 per year).
Terminal and discount rates are as per above.
The discount rate was calculated based on the Group’s weighted
average cost of capital, an average of beta’s within the industry, risk
free rate based on Australian government 10-year treasury bonds, a
market risk premium of 6% and a calculated cost of debt based on the
Group’s current debt and interest rates payable on this debt.
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 investments in the certain
listed companies were impaired resulting in the following impairment
losses being taken up in profit or loss on these investments.
Investment
SubZero Group Limited
IBuyNew Group Limited
Onterran Limited
2016
$000s
40
3
39
82
2015
$000s
556
-
-
556
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.
34
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.
(ab) Going Concern
The financial statements have been prepared on a going concern
basis, which contemplates continuity of normal business activities
and the realisation of assets and settlement of liabilities in the normal
course of business. As articulated in this report, the financial
performance for the group’s Mining Equipment business segment
has been materially impacted by the severe economic conditions
affecting the underground coal mining industry during the financial
year and subsequently. In particular, customer capital expenditure
restrictions have been detrimental to PPK’s Coaltram mining
equipment sales. Accordingly, in the 2016 financial year the Group
recorded a loss of $7.740M after tax and consumed $6.230M in
operating cash flows. On 23rd June 2017, being the date of approval
of the financial report, the Directors believe it is appropriate to
prepare the financial report on a going concern basis. In making this
assessment the directors have identified and considered:
•
•
•
•
As at the end of the 2016 financial year, and at all times
subsequently, the Group has been able to meet its
obligations as and when they fell due;
The Group currently enjoys low levels of debt financing
and the Directors are confident that additional debt
financing would be available if required;
Industry conditions and the operating performance of the
group’s mining equipment segment is improving and the
company is currently responding to enquiries for the sale
of Coaltram mining equipment with a number of
customers; and
The Group has a history of strong support from the
majority of shareholders and has an expectation that this
will continue.
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Investment Properties
All investment properties have been included in the financial
statements at cost. The last independent valuation of investment
properties was conducted in November 2014, which indicated that no
impairment was necessary.
Goodwill, Brand Names, Plant and Equipment
No impairment charges with respect to goodwill, brand names,
patents, licences and development costs were recognised during the
year ended 30 June 2016.
In 2015 impairment charges of $7.696M were recognised in respect
of goodwill, brand names, patents, licences and development costs
and $0.489M for plant and equipment for the financial year reflecting
the challenging industry conditions particularly in the second half of
the 2015 financial year. Refer to note 18 for details of assumptions
used in estimating the recoverable amount of intangible assets.
Deferred Tax Asset
Deferred tax asset is only recognised to the extent that there is
reasonable certainty of realising future taxable amounts sufficient to
recover the carrying value. Due to carry forward tax losses exceeding
$15.000M and an expectation that the current challenging industry
conditions would continue in the short term, the Directors assessed
that deferred tax assets would only be recognised to the extent of, and
offset against, available deferred tax liabilities.
No deferred tax assets were recognised during the year. No
impairment of previously recognised deferred tax assets was
recognised during the year (2015: $0.073M). Refer note 4 and note
17(a) for further details.
Inventory
Inventory is carried at the lower of cost or net realisable value.
Estimates of net realisable value are based on the most reliable
evidence available at the time the estimates are made of the amount
the inventories are expected to realise and the estimate of costs to
complete. Key assumptions require the use of management judgment
which are continually reviewed. Management’s assessment resulted
in an inventory write-down of $0.682M (2015: $2.191M) during the
year. Refer note 3(d).
Warranty Provision
Provisions for product warranties are based on current volumes of
products sold still under warranty and on historic quality rates for
mature products as well as estimates and assumptions on future
quality rates for new products and estimates of costs to remedy the
various qualitative issues that might occur. Total provisions for product
warranties as at year end was $0.040M (2015: $0.140M).
Key judgements
Cash Generating Units (CGU)
A key judgement has been the determination of cash generating units
relating to the assessment of assets for impairment. The Group has
determined the existence of two cash generating units for the mining
equipment segment: Manufacture (design, build and sale of capital
equipment) and Non-Manufacture (service, repair, hire and spare
parts distribution).
35
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 3
REVENUE, OTHER INCOME & EXPENSES FROM OPERATIONS
(a) REVENUE
Mining equipment sale / service / hire revenue
Rental income from investment properties
Dividends received – other parties
Interest receivable
(b) INTEREST INCOME
Other persons
Associated entities
(c) OTHER INCOME
Gain on bargain purchase of business combination
OTHER ITEMS
Net gain on sale of held for sale property
Net gain on sale of subsidiaries
Net gain on sale of available-for-sale financial assets
Foreign currency translation gain
Sundry income
(d) 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
Warranty costs
Inventory write down
Impairment – intangibles
Impairment – plant and equipment
Recognition / (unwind) of onerous contract liability
Impairment of listed investments - available-for-sale financial assets
Employee benefit expenses
Defined contribution superannuation expense
Employee share-based payment expense
Net loss on disposal of property, plant and equipment
Redundancy and relocation costs
Rental expense on operating leases
Doubtful debts - trade receivables
(e) FINANCE COSTS
Interest expense
Unwinding of discount relating to onerous lease liability
Notes
(b)
Consolidated Entity
2016
$000S
2015
$000S
26,075
585
-
495
27,155
344
151
495
29,577
1,778
25
1,587
32,967
692
895
1,587
-
1,636
-
-
1,548
1
48
1,597
1,597
46
13,254
43
1,208
1,251
104
682
-
-
(550)
82
11,985
1,005
103
58
111
3,973
152
835
180
1,015
4,478
1,894
605
-
13
6,990
8,626
353
12,238
199
1,342
1,541
341
2,191
7,696
489
2,000
556
12,853
1,137
397
-
738
4,249
66
1,540
-
1,540
36
Consolidated Entity
2016
2015
Notes
$000S
$000S
NOTE 3 REVENUE, OTHER INCOME & EXPENSES FROM OPERATIONS (Cont’d)
(f) SHARE OF PROFIT (LOSS) FROM ASSOCIATES
ACCOUNTED FOR USING THE EQUITY METHOD
Share of profit (loss) from associates accounted for under the equity method
NOTE 4 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% (2015: 30%)
(Non-assessable income) non-deductible expenses
Share based payment
Gain on bargain purchase not taxable
(Over) provision relating to prior year - research & development concession
Capital losses realised not previously recognised
Current year losses for which no deferred tax asset was recognised
Current year temporary differences for which no deferred tax asset or liability was recognised
Impairment of deferred tax asset previously recognised (net of deferred tax liability offset)
Income tax expense (benefit)
The applicable weighted average effective tax rates are as follows:
17(c)
17(c)
17(a)
(b) The components of tax expense comprise:
Current tax
Deferred tax
(Over) provision in respect of prior years
Income tax expense (benefit)
(c) Deferred tax recognised on other comprehensive income through Available-for-sale Financial
Asset Reserve relating to valuing investments at fair value
NOTE 5 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
(389)
(85)
(7,873)
(11,825)
(2,362)
(3,548)
144
31
-
(133)
(256)
1,998
445
-
(133)
0%
-
-
(133)
(133)
-
174
-
174
231
105
(491)
(74)
(1,141)
3,000
1,842
73
(3)
0%
(2)
73
(74)
(3)
-
144
-
144
37
NOTE 6 KEY MANAGEMENT PERSONNEL REMUNERATION
(a) Key management personnel remuneration
Short-term benefits
Post-employee benefits
Share-based payments
Consolidated Entity
2016
$000S
2015
$000S
Notes
1,243
45
-
1,288
1,200
38
-
1,238
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 noted in the remuneration report in relation to the share loan plans issued in 2014.
(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 noted in the remuneration report in relation to the share loan plans issued in 2014.
(d) Other transactions with directors
Refer to note 29 for further details of transactions with directors and director related entities.
NOTE 7 DIVIDENDS
(a) Dividends paid
2016 No interim ordinary dividend was declared or paid
(prior year 1.50c per share - 100% franked)
2015 No final ordinary dividend was declared or paid
(prior year 2.00c per share – 100% franked)
(b) Dividends declared after balance date
The directors have not declared a final dividend for the 2016 financial year.
(c) Dividends for Share and Loan Plan
-
-
-
-
1,090
1,453
2,543
-
The detailed terms and conditions of the share and loan plan were outlined in the Explanatory Memorandum to the Notice of General Meeting held
28th April 2014.
The dividend relating to the Share and Loan Plan for the current financial year was nil (2015: $0.542M), for further details refer to the Audited
Remuneration Report contained in the Directors’ Report.
(d) Franked dividends
Franking credits available for subsequent financial years based on a tax rate of 30% (2015 - 30%)
2,164
1,911
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.
38
NOTE 8 EARNINGS PER SHARE
Basic earnings per share (cents per share)
Continuing operations
Diluted earnings per share (cents per share)
Continuing operations [1]
(a) Reconciliation of Earnings to Net Profit
Earnings used in calculating Basic and Dilutive 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 [1]
[1] 15.500M loan plan shares (see note 7) were excluded from the computation of diluted earnings per share as
they would have resulted in a decrease in loss per share for continuing operations.
NOTE 9 PARENT ENTITY INFORMATION
Consolidated Entity
2016
Cents
2015
Cents
Notes
(13.4)
(21.2)
(13.4)
(21.2)
$000s
$000s
(7,763)
(12,122)
No.
No.
57,814,570
57,147,902
57,814,570
57,147,902
The following detailed information relates to the parent entity, PPK Group Limited at 30 June 2016. The information presented here has been
prepared using consistent accounting policies as presented in Note 2.
Current assets
Non-current assets
Total Assets
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Contributed equity [1]
Share based payment reserve
Option reserve
Retained earnings
Total Equity
Loss for the year (including impairments) [2]
Other comprehensive income for the year
Total comprehensive income (loss) for the year
[1] In addition to the Parent Entity contributed equity, the Group’s consolidated Contributed Equity includes
Treasury Shares of $0.148M related to the Employee Share Plan, refer note 23.
[2] Non-current asset balances include investments in subsidiaries which have been impaired so as to not
exceed the net assets of the Consolidated Group.
CURRENT ASSETS
NOTE 10 CASH AND CASH EQUIVALENTS
209
17,140
17,349
363
-
363
16,986
34,773
1,330
8
(19,125)
16,986
(16,345)
-
(16,345)
85
35,428
35,513
76
2,210
2,286
33,227
34,273
1,727
8
(2,780)
33,227
(2,852)
-
(2,852)
Cash at bank and on hand
30(b)
945
2,476
Cash at bank consists of temporary surplus funds which are non-interest bearing.
39
NOTE 11 TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Less: Allowance for doubtful debts
Other receivables
Less: Allowance for doubtful debts
Loans and receivables
- other loans, associates - secured
- other loans, other persons - secured
- other loans, associates - unsecured
- other loans, other persons - unsecured
Impairment of capitalised interest of Loans Receivables
Non-Current
Loans and receivables
- other loans, associates - secured
Consolidated Entity
2016
$000S
2015
$000S
Notes
(a)
(b)
(c)
(d)
(c)
3,449
(152)
3,297
202
-
202
3,567
2,915
42
-
(364)
6,160
9,659
857
857
3,555
-
3,555
663
-
663
1,494
3,637
29
11
-
5,171
9,389
4,139
4,139
(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 is 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 expected to be repaid during the 2017 financial year, the balance outstanding on this loan is
$3.567M (2015: $4.814M). The loan to Nerang Street Southport Unit Trust is expected to be repaid when the related property asset is sold, the
balance outstanding on this loan is $0.857M (2015: $0.811). In the current year $0.364M of the capitalised interest of the Willoughby investment
has been impaired and shown as an offset against interest received in the Statement of Profit or Loss.
(d) Other loans, other persons
Other loans, other persons are funds advanced to non-related third parties or related third parties on arms length terms. The amounts are secured
by a registered first mortgage over property owned by the borrower. The interest rate received by the Group on loans range from 14% to 20% with
the rate being fixed for the term of the loan at the time it is made. The current loans, predominantly relate to Couran Cove Holdings P/L ATF CCH
trust and have interest rates of 14% per annum calculated daily with interest either due monthly in arrears or compounded monthly. Refer note 29
for details on related party loans.
Movement in balance – current
Opening Balance
Reclassified to/from non-current
Funds advanced
Trust distribution capitalised
Expenses capitalised
Less principal and interest repaid
Interest revenue added to carrying value
5,171
3,328
3,146
-
18
(5,878)
5,785
375
6,160
10,916
(4,139)
845
123
22
(4,179)
3,588
1,583
5,171
40
NOTE 11 TRADE AND OTHER RECEIVABLES (Cont’d)
Movement in balance – non current
Opening Balance
Reclassified to/from non-current
Funds advanced
Trust distribution capitalised
Expenses capitalised
Less principal and interest repaid
Interest revenue added to carrying value
Provision for Impairment of Receivables
Consolidated Entity
2016
$000S
2015
$000S
Notes
4,139
(3,328)
-
4,139
-
-
-
-
811
46
857
-
-
-
-
4,139
-
4,139
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. Movements in the provision
for impairment are as follows:
Consolidated Entity
2016
Current
Trade receivables
Loans and receivables, associated entities
2015
Current
Trade receivables
Loans and receivables, associated entities
Opening
balance
$000S
Charge for
the year
Reversal of
charge
Amounts
written off
$000S
$000S
$000S
Closing
Balance
$000S
-
-
-
36
-
36
152
364
516
-
-
-
-
-
-
(36)
-
(36)
-
-
-
-
-
-
152
364
516
-
-
-
Trade receivables aging analysis
The ageing analysis of trade receivables for amounts not impaired for the Group is as follows:
Not past due
Past due 1 - 30 days
Past due 31 - 60 days
Past due over 60 days
2,271
876
74
76
2,385
991
153
26
3,297
3,555
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 obligation as they fall due.
41
NOTE 11 TRADE AND OTHER RECEIVABLES (Cont’d)
Other receivables aging analysis
The ageing analysis of other receivables for amounts not impaired for the Group is as follows:
Not past due
Past due 1 - 30 days
Consolidated Entity
2016
$000S
2015
$000S
Notes
201
-
201
551
112
663
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 obligation as they fall due.
NOTE 12 INVENTORIES
On hand
Raw Materials
Finished goods
Work in Progress
474
4,702
4,780
9,956
300
6,015
5,122
11,437
During 2016 $11.683M (2015: $11.150M) was recognised as an expense for inventories carried at net realisable value. This is recognised in
cost of sales.
During the year, the Group wrote down $0.682M in inventories to net realisable value (2015: $2.191M) (refer note 3(d)).
NOTE 13 OTHER CURRENT ASSETS
Prepayments
The carrying amount of prepayments approximates fair value.
NON-CURRENT ASSETS
NOTE 14 FINANCIAL ASSETS
14(a) Investments in Associates - 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
419
419
627
627
408
(389)
-
19
493
(85)
-
408
Unlisted entities
Details of units held in associated trusts
Nerang Street Southport Project Trust
PPK Willoughby Funding Unit Trust
Ownership Interest
2015
2016
%
%
2016
Units Held
$1 Each
2015
Units Held
$1 Each
18.75%
18.75%
22.86%
22.86%
275
40
315
275
40
315
42
Consolidated Entity
2016
$000S
2015
$000S
Notes
NOTE 14 FINANCIAL ASSETS (continued)
Details of associates
Nerang Street Southport Project Trust
- Nature of Activities: Owning and leasing of commercial land as passive investor in the trust alongside other
investors.
- Principal place of business: Level 21, 1 York St Sydney NSW 2000
PPK Willoughby Funding Unit Trust
- Nature of Activities: Participation in residential land development as passive investor in the trust alongside other
investors.
- Principal place of business: Level 21, 1 York St Sydney NSW 2000.
Distributions receivable from associated trusts
Nerang Street Southport Project Trust
PPK Willoughby Funding Unit Trust
PPK Willoughby Funding Unit Trust Group
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
-
19
19
65,995
15
65,914
-
96
27,043
(2,128)
-
(2,128)
430
56,811
-
9
48
102
-
-
-
-
408
408
80,551
23
78,346
-
2,228
27,054
(1,049)
-
(1,049)
748
67,169
-
9
98
1
-
-
-
The Group holds 22.86% (2015: 22.86%) of the issued units in this trust and 100% of the share capital in the trustee company PPK Willoughby
Holdings Pty Ltd.
43
NOTE 14 FINANCIAL ASSETS (continued)
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
Consolidated Entity
2016
$000S
2015
$000S
Notes
409
7,664
233
7,892
(52)
7
(15)
-
(15)
407
-
354
7,238
114
7,515
(37)
10
(9)
-
(9)
352
-
7,892
7,515
-
7
-
-
-
-
-
10
2
-
-
-
The Group holds 18.75% (2015 18.75%) 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.
14(b) 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 adjustments
Impairment
Disposals
3,533
-
1,035
(82)
(2,454)
2,032
1,437
2,407
1,808
(556)
(1,562)
3,533
Listed investments are recorded at fair value based on the ASX closing price at 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.
In the 2015 financial year, Additions at Cost included $2.221M in shares received as part of the consideration on sale of the Easy Living subsidiary
investments.
44
NOTE 14 FINANCIAL ASSETS (continued)
Impairment losses recognised in the profit or loss on equity instruments classified as available-for-sale are not reversed through profit or loss.
Consolidated Entity
2016
$000S
2015
$000S
Notes
( 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.
-
-
-
-
-
-
-
2,032
2,032
-
3,533
3,533
( iii ) Total Listed & Unlisted Investments
Current
Non-Current
NOTE 14(c)
Controlled Entitles
Subsidiaries of PPK Group Limited:
Rutuba Pty Limited
Seven Hills Property Holdings Pty Ltd
PPK Properties Pty Ltd
PPK Property Trust
Dandenong South Property Pty Ltd
PPK Willoughby Holdings Pty Ltd
PPK Willoughby Pty Ltd
PPK Aust. Pty Ltd
PPK Investment Holdings Pty Ltd
PPK Finance Pty Ltd
SLOT Loan Trust
TMD Loan Trust
PPK Southport Pty Ltd
York Group Limited
Rambor Pty Ltd
Rambor Manufacturing Pty Ltd
Rambor Logistics & Asset Management Pty Ltd
PPK Firefly Pty Ltd
PPK Exlec Pty Ltd
Exlec Holdings Pty Ltd
QES Air Pty Ltd
PPK Mining Equipment Group Pty Ltd
PPK Mining Equipment Pty Limited
PPK Mining Repairs Alternators Pty Ltd
PPK Mining Equipment Hire Pty Ltd
Coaltec Pty Ltd
PPK IP Pty Ltd (formerly DMS Tech 1 Pty Ltd)
PPK China Pty Ltd
PPK (Beijing) Mining Equipment Co., Ltd
PPK Plans Pty Ltd
PPK (CC) Pty Ltd
PPK Couran Cove Pty Ltd
Country of
Incorporation
Notes
Percentage Owned
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
Australia
China
Australia
Australia
Australia
a
b
c
c
d
e
f
g
g
2016
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2015
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51.4%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
(a) PPK Willoughby Holdings Pty Ltd acts as the trustee company of the PPK Willoughby Funding Unit Trust. The Group holds 22.86% of issued
units of this trust which is considered an associate of the Group (refer to note 14a).
(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.
45
NOTE 14 FINANCIAL ASSETS (Cont’d)
(c) PPK Finance Pty Ltd acted as the trustee company of the SLOT Loan Trust. The Group held 51.4% of the issued units of this trust. The SLOT
Loan Trust was wound up during the year. 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. PPK Finance Pty Ltd acts as the trustee company of the PPK Funding Trust. The Group holds 100% of the
issued units of this trust.
(d) PPK Southport Pty Ltd acts as the trustee company of the Nerang Street Southport Project Trust. The Group holds 18.75% of issued units of
this trust which is considered an associate of the Group. (refer to note 14(a))
(e) PPK (Beijing) Mining Equipment Co., Ltd was formed in conjunction with the opening of PPK’s office in Beijing, China.
(f) PPK Plans Pty Ltd was created as trustee for the PPK Long Term Incentive Plan Trust which administers the employee share plan.
(g) Incorporation of new subsidiaries
PPK (CC) Pty Ltd was incorporated on 15 September 2015. PPK Couran Cove Pty Ltd was incorporated on 16 September 2015.
14(d) Subsidiary with material non-controlling interests
As at reporting date the Group includes no subsidiaries with Non-Controlling Interests ('NCI'). The SLOT Loan Trust was wound up during the
year.
Proportion of Ownership
Interest Held
Profit Allocated to NCI
('000s)
Accumulated NCI ('000s)
Distributions and
Dividends Paid to NCI
Name
30-June-16
30-June-15
30-June-16
30-June-15
30-June-16
30-June-15
30-June-16
30-June-15
SLOT Loan Trust
0%
51.43%
23
300
-
-
23
300
NOTE 15 INVESTMENT PROPERTIES
(a) Assets classified as held for sale
Freehold land & buildings - at cost
Land
Buildings – at cost
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
Disposals
Total investment properties of continuing operations
Consolidated Entity
2016
$000S
2015
$000S
Notes
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,517
-
(18,517)
-
46
NOTE 15 INVESTMENT PROPERTIES (Cont’d)
(b) Non-Current
Freehold land & buildings - at cost
Land
Buildings – at cost
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
Total investment properties of continuing operations
The following amounts have been recognised in the statement of comprehensive income:
Rental income
Net gain on sale of held-for-sale property
Direct operating expenses arising from investment property that generated rental income during
the period
Direct operating expenses arising from investment property that did not generate rental income
during the period
Consolidated Entity
2015
2016
Notes
$000S
$000S
2,109
2,109
1,881
(565)
1,316
3,425
-
3,425
3,468
-
-
-
(43)
-
3,425
561
-
22
3
1,881
(522)
1,359
3,468
-
3,468
11,479
-
-
(7,812)
(199)
-
3,468
1,778
4,478
292
-
Acquisition and Disposals
In the prior period in October 2014, PPK sold all holdings in relation to the Arndell Park (NSW) investment property for consideration of
$12.420M.
In the prior period in June 2015, PPK sold all holdings in relation to the Dandenong South industrial property for consideration of $12.350M.
Total gains derived from the above property sales were nil for the current year (2015: $4.478M) (refer Note 3).
Impairment
Based on all the information available to the Directors it was determined that no impairment adjustment was required for any investment property
in the current year.
Valuation of Investment Properties
At balance date, PPK holds one industrial property located at 13A Stanton Road, Seven Hills, NSW.
In accordance with an Independent Valuation dated November 2015, the fair value of the industrial property is $7.700M.
Non-current assets pledged as security
Refer to note 22(c) for information on non-current assets pledged as security by the parent entity or its subsidiaries.
47
NOTE 15 INVESTMENT PROPERTIES (Cont’d)
Leases as Lessor
The investments properties are leased to tenants under long term operating leases with rentals
receivable monthly.
- not later than 1 year
- later than 1 year but not later than 5 years
- later than 5 years
NOTE 16 PROPERTY PLANT AND EQUIPMENT
Land and Buildings – at cost
Less: Accumulated depreciation
Plant and equipment – at cost
Less: Accumulated depreciation and impairment
Consolidated Entity
2015
2016
Notes
$000S
$000S
568
2,612
3,189
6,369
1,264
(39)
1,225
9,070
(2,471)
6,599
562
983
-
1,545
1,264
(14)
1,250
9,097
(1,296)
7,801
Total property, plant and equipment of continuing operations
7,824
9,051
Reconciliations
Reconciliations of the carrying amounts of each class of plant & equipment are set out below.
Consolidated – 2016
Carrying amount at start of year
Additions
Disposals
Transfers
Depreciation & Amortisation expense
Carrying amount at end of year
Consolidated – 2015
Carrying amount at start of year
Acquired with business combination
Additions
Disposals
Impairment
Depreciation & Amortisation expense
Carrying amount at end of year
Land &
Buildings
$000s
Plant &
Equipment
$000s
1,250
-
-
-
(25)
1,225
-
-
1,267
-
-
(17)
1,250
7,801
284
(227)
(76)
(1,183)
6,599
6,718
1,722
1,265
(90)
(489)
(1,325)
7,801
Total
$000s
9,051
284
(227)
(76)
(1,208)
7,824
6,718
1,722
2,532
(90)
(489)
(1,342)
9,051
The land and buildings relate to the Mt Thorley (NSW) industrial property out of which the Firefly and Rambor businesses operate. The property
was acquired simultaneously to the Firefly business.
48
NOTE 17 DEFERRED TAX ASSETS AND LIABILITIES
(a) Assets
CURRENT
Income tax receivable
NON-CURRENT
Deferred tax assets comprise temporary differences attributable to:
Amounts recognised in profit and loss
Doubtful Debts
Employee benefits
Building depreciation
Plant and equipment depreciation
Impairment of investments
Realised capital losses accounted for
Inventory
Other
Movements
Opening balance
Acquired with business combination
Credit/(charged) to profit or loss
Set off against deferred tax liability
Impaired through profit and loss
Consolidated Entity
2016
$000S
2015
$000S
Notes
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
178
178
-
-
-
-
-
-
-
-
-
2,132
102
-
(2,161)
(73)
-
4
A deferred tax asset is only recognised to the extent that there is reasonable certainty of realising future taxable amounts sufficient to recover the
carrying value. Due to carry forward tax losses exceeding $15.000M and an expectation that the current challenging industry conditions would
continue in the short term, the Directors assessed that deferred tax assets would only be recognised to the extent of, and offset against, available
deferred tax liabilities. As a result, an impairment of previously recognised deferred tax assets of nil (2015: $0.073M) was recognised.
(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
Recognised 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
Set off against deferred tax asset
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,482
-
701
(22)
(2,161)
-
49
Consolidated Entity
2016
$000S
2015
$000S
Notes
NOTE 17 DEFERRED TAX ASSETS AND LIABILITIES (Cont’d)
(c) Not Recognised in the Statement of Financial Position
Unrecognised deferred tax assets
Tax losses
Temporary differences
Total
Movements
Opening balance
Tax losses not recognised current year
Temporary differences not recognised current year
Charged to equity (reserves)
Closing balance
NOTE 18 INTANGIBLE ASSETS
Licences, software and patents - at cost
Less: Accumulated amortisation and impairment
Goodwill - Mining equipment manufacturing
Development Costs - Mining equipment manufacturing - at cost
Brand names - at cost
Intangible Assets of continuing operations
Reconciliations
Licences, software and patents - at cost
Balance at the beginning of year
Acquired with business combination
Additions - external purchases
Impairment charge
Amortisation charge
(Amortisation charges are included in Cost of Goods Sold and Administration expenses in the statement of
profit or loss and other comprehensive income)
Goodwill
Balance at the beginning of year
Acquired with business combination
Impairment charge
Development Costs
Balance at the beginning of year
Acquired with business combination
Additions at cost
Impairment charge
Amortisation charge
Brand Names
Balance at the beginning of year
Impairment charge
4,998
1,867
6,865
4,422
1,998
445
6,865
139
(60)
79
-
173
-
252
120
-
5
-
(46)
79
-
-
-
-
-
-
173
-
-
173
-
-
-
3,000
1,422
4,422
-
3,000
1,915
(493)
4,422
134
(14)
120
-
-
-
120
2,344
2,166
132
(4,198)
(324)
120
155
286
(441)
-
1,611
380
597
(2,559)
(29)
-
497
(497)
-
50
NOTE 18 INTANGIBLE ASSETS (Cont’d)
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 costs, 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. They are tested annually for impairment with any impairment losses being charged to profit or loss.
Brand names have been assessed to have an indefinite useful life. These brands are registered with the relevant agencies. The registrations are
renewed at insignificant cost to the consolidated entity. This, combined with continued support for the brands by product development, advertising
and marketing expenditure, has allowed the Group to determine that the assets have an indefinite useful life. They are recorded at cost and tested
annually for impairment. Impairment losses are charged to profit or loss.
Impairment disclosures
At balance date PPK assessed certain non-current assets at their cash generating unit level for impairment. No intangibles were written down
during the year (2015: $7.696M).
The remaining intangibles balance of $0.079M (2015: $0.120M) relates to acquired software.
CURRENT LIABILITIES
NOTE 19 TRADE AND OTHER PAYABLES
Trade payables
Sundry payables and accruals
Payables of continuing operations
NOTE 20 INTEREST BEARING LIABILITIES - CURRENT
Bank loans – secured
Other loans - secured
Other loans - unsecured
Interest bearing liabilities of continuing operations
Total secured liabilities - see note 22
NOTE 21 PROVISIONS
Current
Annual leave
Redundancy and relocation
Warranty
Decommissioning and make good
Onerous lease provision
Long service leave
Total current
Non-Current
Long service leave
Onerous lease provision
Total Non-current
Consolidated Entity
2016
$000S
2015
$000S
Notes
2,447
4,315
6,762
46
5,760
-
5,806
798
-
40
240
420
308
1,806
88
1,210
1,298
3,689
3,692
7,381
3,600
2,037
1,500
7,137
775
297
140
240
548
64
2,064
366
1,452
1,818
(a)
(b)
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 comprises 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 2(n) for more detail.
51
NOTE 21 PROVISIONS (Cont’d)
Warranty provisions comprise estimated costs to perform repairs to mining equipment while under warranty.
Make good provision comprise estimated costs to return leased premises to their original condition on expiry of the lease.
A $2.000M onerous lease provision was recognised for 2015 in relation to long term lease contracts entered into for seven COALTRAMS with an
industry finance provider. PPK has determined that the lease payments are considerably higher than corresponding revenue currently expected
in the short term hire environment. At 30 June 2016, the onerous lease provision is $1.630M, as a result of net writebacks of $0.370M (being
$0.550M gross writeback less $0.180M associated interest).
(a) Reconciliation of Provision for Warranty
Opening Balance
Increases (decreases) to provision
Closing Balance
(b) Reconciliation of Provision for Decommissioning and make good
Opening Balance
Increases (decreases) to provision
Closing Balance
NON-CURRENT LIABILITIES
NOTE 22 INTEREST BEARING LIABILITIES
Bank Loans - Secured
Interest bearing liabilities
(a) Secured liabilities
Total secured liabilities (current and non-current) are:
Bank loans - PPK Group Limited
Bank loans – Seven Hills Property Holdings Pty Ltd
Bank loans - PPK Mining Equipment Pty Ltd
Bank loans - PPK Mining Equipment Pty Ltd
Vendor loan - PPK Property Trust
Vendor loan - PPK Mining Equipment Pty Ltd
Non-bank loans – PPK (CC) Pty Ltd
Non-bank loans – PPK Investment Holdings Pty Ltd
(b) Unsecured liabilities
Other loans - other persons
Total Interest Bearing Liabilities
(c) Assets pledged as security
The carrying amounts of non-current assets pledged as security are:
First mortgage
Freehold investment properties
Land and buildings
Registered Mortgage Debentures over company assets and cross guarantees &
indemnities
Financial Assets
Investments in associated entities
Plant & equipment
Intangible Assets
Total non-current assets pledged as security
Notes
15
16
Notes
Consolidated
Entity
2016
$000S
140
(100)
40
240
-
240
2015
$000S
858
(718)
140
220
20
240
2,730
2,730
1,421
1,421
-
2,730
-
46
961
817
1,225
2,757
8,536
-
-
8,536
3,425
1,225
2,032
19
6,599
252
13,552
2,210
-
2,667
144
1,235
802
-
-
7,058
1,500
1,500
8,558
3,468
1,250
3,533
408
7,801
120
16,580
52
NOTE 22 INTEREST BEARING LIABILITIES (Cont’d)
Consolidated Entity
The following current assets are also pledged as security under the registered mortgage and
cross guarantees & indemnities:
Notes
Cash assets
Term receivables
Receivables - current
Inventories
Other current assets
Total current assets pledged as security
Total assets pledged as security
The total financial assets included in the above pledged as security for liabilities is $12.635M (2015: $19.537M).
(d) Unused credit facilities
The consolidated entity had access to the following lines of credit at balance date:
Total facilities available
Bank Overdraft
Bank Loans
Non Bank Loans
Master asset finance facility
Not utilised at balance date
Bank Overdraft
Bank Loans
Non Bank Loans
Master asset finance facility
Utilised at balance date
Bank Loans
Non Bank Loans
Master asset finance facility
2016
$000S
945
7,017
2,641
9,956
419
20,978
34,530
-
2,730
3,982
46
6,758
-
-
-
-
-
2,730
3,982
46
6,758
2015
$000S
2,476
9,310
4,218
11,437
627
28,068
44,648
940
4,877
-
144
5,961
940
-
-
-
940
4,877
-
144
5,021
The major facilities are summarised as follows:
Banking overdrafts
As at the date of this report the Group has no bank overdraft facilities (2015: $0.940M with National Australia Bank).
Commercial bill facilities
Provided by the National Australia Bank Ltd (NAB).
Variable interest rate facilities provided by the NAB facility were extinguished during the financial year and at reporting date were Nil
(2015 $2.210M). The interest rate on the facilities was 4.90% (2015: 4.89%) inclusive of bank margins.
Provided by the Commonwealth Bank of Australia Ltd (CBA).
$2.730M (2015: $2.667M) of market rate facilities are provided by the CBA, maturing in October 2018, secured by first mortgage over
the property located at 13A Stanton Road, Seven Hills.
Market rate interest banking facilities with the CBA were renegotiated during the year and are subject to interest only payments and
annual review. 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 7.03% (2015: 6.11%) inclusive of bank margins.
Further details on the banking facilities with the CBA are included in note 25(c).
Non Bank Loans
PPK (CC) Pty Ltd non-bank loans of $1.225M is provided on terms of interest at 10% per annum, and expires in September 2017. The
loans are secured by General Security Agreements over the assets of PPK (CC) Pty Ltd and PPK Investment Holdings Pty Ltd, together
with a Guarantee & Indemnity from PPK Group Limited and PPK Investment Holdings Pty Ltd.
PPK Investment Holdings Pty Ltd non-bank loan of $2.757M attracts interest at 15% per annum, has an initial 12 month term and is
secured by second mortgage over the property located at 13A Stanton Road, Seven Hills, NSW.
53
NOTE 22 INTEREST BEARING LIABILITIES (Cont’d)
Consolidated Entity
2016
$000S
2015
$000S
Notes
Vendor Loans
The PPK Mining Equipment Pty Ltd vendor loan relates to the MONEx business acquisition in the prior year and is secured by PPK
Group Ltd (parent company) guarantee. The loan is notional interest bearing at 6.5%. The PPK Property Trust vendor loan relates to
the Mt Thorley land and buildings and is secured by first registered mortgage over this property. The loan is fixed interest bearing at
8%.
Loans owing to the non-controlling interest investors in the SLOT Loan Trust were repaid during the year and the trust wound up.
PPK 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
73.315M (2015: 72.648M) ordinary shares fully paid
Movements in ordinary share capital
Balance at the beginning of the financial year
Shares repurchased under approved buy back scheme
New share issue – share based payment
Treasury shares – employee share plan
Treasury shares - share and loan plan
34,625
34,125
34,125
-
500
-
-
34,625
33,731
-
-
(148)
542
34,125
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.
Treasury shares purchased in the 2015 pursuant to an employee share plan of $0.148M have not been allotted to individual employees as at
balance date.
Refer note 24 for details of the new share issue in the current financial year under a business combination with a vendor employee.
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 and cancelled under approved buy back scheme
New share issue
New share issue - share plan and loan
No.
No.
72,647,903
-
666,667
-
73,314,570
72,647,903
-
-
-
72,647,903
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 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.
54
NOTE 23 CONTRIBUTED EQUITY (Cont’d)
Consolidated Entity
2016
$000S
2015
$000S
Notes
It is the Group’s policy to maintain its gearing ratio within the range of 20% - 50% (2015: 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
8,536
(945)
7,591
16,986
24,577
31%
8,558
(2,476)
6,082
25,005
31,087
20%
There have been no significant changes to the Group’s capital management objectives, policies and processes in the year nor has there been
any change in what the Group considers to be its capital.
NOTE 24 RESERVES
Available-for-sale financial assets [1]
Share options [2]
Foreign Currency translation [3]
Movement in reserves
Share options
Opening balance
Employee share based payment - options
Shares allocated under agreement
Closing balance
Available-for-sale financial assets
Opening balance
Revaluation
Realised gains to (profit) loss
Realised loss to (profit) loss
Closing balance
Foreign currency translation
Opening balance
Foreign currency translation
Closing balance
1,295
1,338
(4)
2,629
1,735
103
(500)
1,338
1,646
1,035
(1,391)
5
1,295
2
(6)
(4)
1,646
1,735
2
3,383
1,338
397
-
1,735
54
1,826
(252)
18
1,646
-
2
2
[1] 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.
[2]
The share options reserve is used to recognise the value of equity settled share-based payments provided to employees, including key management personnel,
as part of their remuneration and business vendors as part of business combination agreements. The current financial year share based payment expense of
$0.103M relates wholly to a business combination. In accordance with the terms of the business combination in October 2014 the vendor employee may receive
$1.000M in PPK Group Limited ordinary share capital in two $0.500M tranches over two years. As per this agreement and having met the vesting conditions the
vendor was issued 0.667M shares on 16 October 2015 being the first $0.500M tranche. Further the vesting conditions for the second tranche of $0.500M shares
due on 16 October 2016 were not met and accordingly no shares issued.
The terms and condition of the contract effectively makes the agreement a share options instrument under AASB 2 Share-based Payments and does not form part
of the consideration paid for the acquisition in accordance AASB 3 Business Combinations. The fair value of the options at issue date is deemed to represent the
value of employee services received over the vesting period, recognised as a proportional share-based payment expense during each reporting period, with the
corresponding credit taken to a Share Option Reserve.
[3]
The foreign currency translation reserve is used for consolidation purposes to recognise exchange differences arising on translation of PPK’s foreign subsidiary
PPK (Beijing) Mining Equipment Co., Ltd.
55
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 2(i) and their carrying amounts are set out
below.
Fixed Interest Rate Maturing
Weighted
Average
Interest Rate Notes
Floating
Interest
Rate
$000s
Within
1 Year
$000s
1 to 5
Years
$000s
Non-Interest
Bearing
$000s
Total
$000s
Consolidated 2016
Financial Assets
Receivables
Loans receivable
Loans and receivables
Cash and cash equivalents
Available-for-sale financial assets
Investments in associated companies
Total financial assets
Financial Liabilities
Bank Loans
Other Loans
Trade & Other Payables - current
Total financial liabilities at amortised cost
Consolidated 2015
Financial Assets
Receivables
Loans receivable
Loans and receivables
Cash and cash equivalents
Available-for-sale financial assets
Investments in associated companies
Total financial assets
Financial Liabilities
Bank Loans
Other Loans
Trade & Other Payables - current
Total financial liabilities at amortised cost
0.0%
14.5%
11
11
2.8%
0.0%
0.0%
10
14b
14a
2.6%
12.5%
0.0%
22d
22
19
0.0%
16.4%
11
11
2.0%
0.0%
0.0%
10
14b
14a
3.1%
9.1%
0.0%
22d
22
19
-
-
-
149
-
-
149
2,730
-
-
2,730
-
-
-
1,344
-
-
1,344
4,877
-
-
4,877
-
6,160
6,160
-
-
-
-
46
4,879
-
4,925
-
8,493
8,493
-
-
-
-
98
2,735
-
2,833
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
46
-
-
46
3,499
857
4,355
796
2,032
19
2,847
-
817
6,762
7,579
4,218
817
5,035
1,132
3,533
408
5,073
-
802
7,381
8,183
3,499
7,017
10,516
945
2,032
19
2,996
2,776
5,696
6,762
15,234
4,218
9,310
13,528
2,476
3,533
408
6,417
5,021
3,537
7,381
15,939
56
NOTE 25 FINANCIAL RISK MANAGEMENT (Cont’d)
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 2016
Available-for-sale financial assets
Listed equity securities
Group 2015
Available-for-sale financial assets
Listed equity securities
Note
Level 1
$000s
Level 2
$000s
Level 3
$000s
2,032
2,032
3,533
3,533
14b
-
-
-
-
-
-
-
-
Total
$000s
2,032
2,032
3,533
3,533
Financial risk Management
The Board of Directors has overall responsibility for the establishment and oversight of the financial risk management framework. PPK Group's
activities expose it to a range of financial risks including market risk, credit risk and liquidity risk. The Group's risk management policies and
objectives are therefore designed to minimise the potential impacts of these risks on the results of the Group where such impacts may be material.
The Board receives monthly reports, which it reviews and regularly discuss the effectiveness of the processes put in place and the appropriateness
of the objectives and policies to support the delivery of the Group's financial targets while protecting future financial security. The Board also has
in place informal policies over the use of derivatives and does not permit their use for speculative purposes.
(a) Market risk
Market risk is the risk that the fair value of future cash flows of the Group's and parent entity's financial instruments will fluctuate because of changes
in market prices.
Market risk comprises three types of risk: interest rate risk, equity price risk and currency risk.
(i) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a security, will fluctuate due to changes in interest rates. Exposure to interest
risk arises due to holding floating rate interest bearing liabilities, investments in cash and cash equivalents and loans to related parties and other
persons. Although a change in the current market interest rate may impact the fair value of the Group's fixed interest financial liabilities and other
receivables, it does not impact the Group profit after tax or equity as these financial liabilities and other receivables are carried at amortised cost
and not fair value through profit or loss. Floating interest rates attached to the Group's 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.
57
NOTE 25 FINANCIAL RISK MANAGEMENT (Cont’d)
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
Consolidated Entity
2016
$000S
2015
$000S
Notes
149
-
149
2,730
2,730
1,344
-
1,344
4,877
4,877
(2,581)
(3,533)
The Group has performed sensitivity analysis relating to its interest rate risk based on the Group's year end exposure. This sensitivity demonstrates
the effect on after tax results and equity which could result from a movement in interest rates of +/- 1%.
Change in after tax profit
- increase in interest rate by 1%
- decrease in interest rate by 1%
(ii) Equity Price risk
(18)
18
(25)
25
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 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.
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.
58
NOTE 25 FINANCIAL RISK MANAGEMENT (Cont’d)
Sensitivity disclosure analysis
The Group'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:
Consolidated Entity
2016
$000S
2015
$000S
Notes
Financial Assets
Available-for-sale financial assets
Investments in listed companies
Financial assets at fair value through profit or loss
Investments in listed companies
2,032
3,533
-
2,032
-
3,533
The Group has performed sensitivity analysis relating to its exposure of equity price risk based on its 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%
-
-
-
-
142
(142)
248
(248)
(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 was not exposed to exchange rate transaction risk on foreign currency sales during the year. The Group was not exposed to
significant exchange rate risk on purchases during the year. Sales revenue for the Group for the year was all denominated in Australian dollars (2015:
5% of sales were made primarily in USD). 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 operates an office in Beijing, China and maintains CNY and USD bank accounts in relation to this office. At
balance date these accounts comprised approximately 9.9% (2015: 1.7%) of cash at bank.
(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 to 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 agreement with 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 11 for detail on 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:
Australia
United States of America
Notes
Consolidated Entity
2016
$000S
10,879
-
10,879
2015
$000S
13,496
32
13,528
59
NOTE 25 FINANCIAL RISK MANAGEMENT (Cont’d)
(b) Credit Risk (Cont’d)
The Group’s exposure to credit risk at balance date by industry of loans and receivables is as follows:
Loans and receivables by industry
Property development
Mining Equipment
Retirement Villages
Property and investing
(c) Liquidity risk
Consolidated Entity
2016
$000S
2015
$000S
Notes
7,352
3,346
-
181
10,879
5,587
3,861
3,236
844
13,528
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 loans, other 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 Group’s financing facilities are set-out in note 22.
Financial Liabilities maturity analysis
The tables below reflect the undiscounted contractual settlement terms for the Group’s 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.
The CBA market rate loan facility of $2.730M (fully used at balance date) expires in October 2018 and is subject to quarterly review.
These renewal dates have been used for disclosure of maturity dates of bank overdraft and loans, even though they are subject to periodic
review as there is no reason to believe that the facilities will be altered by the bank at the time of annual review. This bank loan was subsequently
repaid in the 2017 reporting year, refer to Note 31.
Consolidated 2016
Financial Liabilities (current & non-current)
Trade & Other Payables
Bank Loans & overdrafts
Other Loans - other persons
Total Financial Liabilities
Consolidated 2015
Financial Liabilities (current & non-current)
Trade & Other Payables
Bank Loans & overdrafts
Other Loans - other persons
Total Financial Liabilities
Carrying
amount
$’000
<6 months
$’000
6-12
months
$’000
1-3 years
>3 years
Contractual
Cash flows
$’000
$’000
$’000
6,764
2,776
5,696
15,236
7,381
5,021
3,537
15,939
6,764
48
4,672
11,484
7,381
725
3,537
11,643
-
47
61
108
-
2,957
-
2,957
-
2,831
1,254
4,085
-
1,473
-
1,473
-
-
-
-
-
-
-
-
6,764
2,926
5,987
15,677
7,381
5,155
3,537
16,073
60
NOTE 26 LEASE COMMITMENTS
Operating lease commitments
Operating lease rentals contracted for but not capitalised in the financial statements payable:
- not later than 1 year
- later than 1 year but not later than 5 years
- later than 5 years
Consolidated Entity
2016
$000S
2015
$000S
Notes
3,712
5,027
-
8,739
4,004
8,849
-
12,853
The Group leases premises in Tomago, NSW, under a non-cancellable operating lease with an annual escalation clause of 3%. 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, NSW, under a non-cancellable operating lease with an annual CPI escalation. The terminating date of
the lease is 28th March 2019. The Group has an option to renew the lease for the Port Kembla premises, for a period of up to 5 years.
At balance date the Group had leases on 7 of its Coaltrams under non-cancellable operating leases. The terminating dates of the leases run to
approximately October 2019 to April 2020.
The Group operates a car fleet of 24 vehicles under operating lease agreements with terms up to 4 years.
NOTE 27 CONTINGENT ASSETS AND LIABILITIES
Cross guarantees of the Groups banking and finance facilities total $6.758M (2015: $5.961M) of which $6.758M (2015: $5.021M) was drawn at
balance date. The Group had bank guarantees which were released during the year relating to arrangements at the Tomago and Port Kembla
premises. The Group now has one bank guarantee of $0.140M which is 100% secured by a cash deposit of the same amount (2015: $0.986M).
Non bank guarantees and indemnities include:
Unlimited Guarantee and Indemnity from PPK Group Limited and PPK Mining Equipment Group Pty Ltd in relation to the 7 leased Coaltrams.
Unlimited Guarantee and Indemnity from PPK Group Limited in relation to the Tomago leased premises.
Guarantee and Indemnity of $0.500M from PPK Group Limited in favour of a key Coaltram parts supplier in relation to trade credit account.
Guarantee and Indemnity from PPK Group Limited in relation to the leased motor vehicle fleet.
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.
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 one industrial property.
- 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 design, manufacture, service, support, distribute and hire underground coal mining equipment, COALTRAM
vehicles, alternators, electrical equipment, drilling and bolting equipment and mining consumables.
61
NOTE 28 SEGMENT INFORMATION (Cont’d)
(a) Year ended 30 June 2016
Business Segments
Segment Revenue from external customers
Sales revenue
Rental income
Interest received
Dividends received
Segment other income
Net gain on sale of available-for-sale financial assets
Other segment income
Total Revenue and other income
Segment expenses include
Depreciation and amortisation
Impairment of available-for-sale financial assets
Impairment of Intangibles
Impairment of plant and equipment
Inventory write-down
Unwind of onerous contract liability
Segment result
Investment
Properties
$000s
Investing
$000s
Mining
Equipment
$000s
Total of
Continuing
Operations
$000s
-
585
-
-
585
-
4
4
589
79
-
-
-
-
-
510
-
-
495
-
495
1,548
1
1,549
2,044
-
82
-
-
-
-
1,721
26,075
-
-
-
26,075
-
44
44
26,119
1,218
-
-
-
682
(550)
(6,699)
Reconciliation of segment net profit to group net profit before tax
Amounts not included in segment profit but reviewed by the Board:
Share based payment expense
Unallocated corporate expense
Unallocated finance costs
Share of profit or loss from associates
Consolidated operating (loss) before income tax
Non-controlling interests share of after tax profit
Income tax benefit
Consolidated profit after income tax attributable to owners of PPK Group Limited
Segment Assets
Unallocated
Total Assets
Segment Liabilities
Unallocated
Total Liabilities
Investment
Properties
$000s
Investing
$000s
Mining
Equipment
$000s
4,824
9,373
20,928
3,704
4,265
8,655
26,075
585
495
-
27,155
1,548
49
1,597
28,752
1,297
82
-
-
682
(550)
(4,468)
(103)
(1,898)
(1,015)
(389)
(7,873)
(23)
133
(7,763)
Total
$000s
35,125
263
35,388
16,624
1,778
18,402
62
NOTE 28 SEGMENT INFORMATION (Cont’d)
(b) Year ended 30 June 2015
Segment Revenue from external customers
Sales revenue
Rental income
Interest received
Dividends received
Segment other income
Net gain on sale of available-for-sale financial assets
Net gain on disposal of investment property
Net gain on disposal of subsidiary
Other segment income
Total Revenue and other income
Segment expenses include
Depreciation and amortisation
Impairment of available-for-sale financial assets
Impairment of Intangibles
Impairment of plant and equipment
Inventory write-down
Recognition of onerous contract liability
Redundancy and relocation costs
Segment result
Investment
Properties
$000s
Investing Mining Equipment
$000s
$000s
Total of
Continuing
Operations
$000s
-
1,778
-
-
1,778
-
4,478
1,893
-
6,371
8,149
199
-
-
-
-
-
-
7,857
-
-
1,587
25
1,612
605
-
-
14
619
2,231
-
556
-
-
-
-
-
1,643
29,577
-
-
-
29,577
-
-
-
-
-
29,577
1,695
-
7,696
489
2,191
2,000
738
(17,505)
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 expense
Unallocated interest expense
Share of profit from associates
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
Segment Assets
Unallocated
Total Assets
Segment Liabilities
Unallocated
Total Liabilities
Investment
Properties
$000s
5,086
Investing
$000s
14,743
Mining
Equipment
$000s
24,668
3,453
3,156
11,891
29,577
1,778
1,587
25
32,967
605
4,478
1,893
14
6,990
39,957
1,894
556
7,696
489
2,191
2,000
738
(8,005)
1,636
(397)
(323)
(3,111)
(1,540)
(85)
(11,825)
(300)
3
(12,122)
Total
$000s
44,497
329
44,826
18,500
1,321
19,821
63
(c) Geographic location of Customers
Although the Group operates in Australia, the mining equipment segment has sales revenue from customers located overseas. Additional disclosure
of sales revenue by geographical location of external customers that represent 5% or more of total entity sales revenue is as follows:
Australia
China
United States of America
United Kingdom
The geographical location of receivables, relating to these sales, is disclosed in Note 25(b) of these accounts.
(d) Customer Concentration
The mining equipment segment revenues are concentrated on the top three customers as follows:
Customer 1
Customer 2
Customer 3
NOTE 29 RELATED PARTIES
Consolidated Entity
2016
$000s
26,419
15
183
43
26,660
2015
$000s
27,908
1,415
195
59
29,577
9,745
4,010
1,241
12,071
3,401
1,569
For details on transactions between related parties refer to the Audited Remuneration Report contained in the Directors'
Report of this annual report.
64
Consolidated Entity
2016
$000S
2015
$000S
Notes
NOTE 30 CASH FLOW INFORMATION
(a) Reconciliation of profit (loss) after income tax to the cash provided by operating
activities
Profit (loss) after income tax attributed to owners of PPK Group Limited
Cash flows in operating activities but not attributable to operating result:
Non-controlling interest equity distribution
(7,763)
(12,122)
23
300
Non-cash flows in operating profit:
Unrealised foreign exchange (gain) loss
Amount transferred from Plant and Equipment to Inventory
Amortisation
Depreciation
Interest accrued
Impairment of available-for-sale-assets
Impairment of intangibles
Impairment of plant and equipment
Share of (profit) loss from associates
Loss (profits) on sale of available-for-sale financial assets
Share based payment expense
(Gain) on bargain purchase
(Gain) on sale of subsidiaries
Loss (gain) on sale of plant & equipment
(Gain) on sale of property
Decrease (increase) in tax recoverable
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 receivables
Increase (decrease) in intangible asset investment
Decrease (increase) in prepayments
(Increase) decrease in inventories
(Decrease) increase in provisions
(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 intangibles
Impairment of plant and equipment
Impairment of available-for-sale financial assets (listed company investments)
17
17
10
(6)
73
46
1,251
(129)
82
-
-
389
(1,548)
103
-
-
58
-
178
-
-
-
-
721
-
208
1,481
(779)
(618)
(6,230)
2
943
-
945
-
-
-
-
-
-
-
353
1,541
105
556
7,696
489
85
(605)
397
(1,636)
(1,893)
-
(4,478)
(178)
(200)
2,234
(2,159)
12
2,687
-
439
803
1,430
2,574
(1,570)
1
2,475
-
2,476
(1,636)
7,696
489
556
7,105
65
NOTE 31 EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD
Onerous lease
On 27 June 2016, Glegra Pty Ltd ATF The Coaltram Trust (TCT) being a PPK director related entity (refer related party disclosures in the Audited
Remuneration Report in the Directors Report) acquired the rights and obligations of the lessor on arms-length commercial terms. At 30 June 2016,
total liabilities recognised in relation to the lease were $2.840M comprising $1.210M unpaid lease payments (rental arrears) and $1.630M onerous
lease provision. PPK has paid TCT rental arrears to 31st August 2016 and subsequent monthly amounts remain outstanding as mutually agreed
between PPK and TCT.
Other loans receivable and payable
In October 2015, PPK (CC) Pty Ltd (wholly owned subsidiary) acquired loans receivable totalling $2.647M owed by Couran Cove Holdings Pty Ltd
ATF CCH trust and secured by real property located at Couran Cove Resort, South Stradbroke Island. These loans were repaid in full in September
2016, with principal and interest proceeds totalling $2.905M.
Further to the Non-Bank Loan payable of $1.225M in note 22, an additional $0.275M was advanced post year end and the full amount of these loans
was repaid in September 2016.
In May 2017, secured loans of $1.25M were received from entities associated with PPK Director Glenn Molloy. Loan proceeds were used to repay the
Mt Thorley premises vendor loan of $1.037M and the balance for capital expenditure and net working capital purposes. These loans were provided
under a one year term and attract interest of 10% per annum. The loans are secured by a first ranking mortgage over the property located at 25 Thrift
Close Mt Thorley and General Security Agreements and Specific Security Agreements for entities related to these premises or the Firefly business
operating from these premises.
Sale of Industrial Property and Debt repayment
In January 2017, the Seven Hills (NSW) Investment property was sold for $7.875M resulting in a profit on sale of $4.433M. Proceeds on sale were
used to repay the Commonwealth Bank market rate loan of $2.729M and Neruj Pty Ltd ATF Wemole Funding Trust loan of $3.195M (inclusive of
interest and further advances from initial loan of $2.550M).
Share Portfolio
PPK’s share portfolio is materially comprised of one key ASX listed stock, being Eureka Group Holdings (EGH). As at 30 June 2015, the EGH share
price was $0.51 and PPK held 6.450M shares at a value of $3.290M. During the FY16 year 4.032M EGH shares were sold at an average price of
$0.646 per share, resulting in gross proceeds of $2.603M. Furthermore, to date in FY17, 2.038M shares have been sold at an average price of
$0.379 per share, for proceeds of $0.772M. The total EGH shareholding remaining as at the 12th June 2017 was 0.400M shares at $0.36.
Shares based payment and new share issue
Further to share based payment comments in note 24, in accordance with the terms of a business combination in October 2014 the vendor
employee may receive $1.000M in PPK Group Limited ordinary share capital in two $0.500M tranches over two years. As per this agreement and
having met the vesting conditions the vendor was issued 0.667M shares on 16 October 2015 being the first $0.500M tranche. Further, the vesting
conditions for the second tranche of $0.500M shares due on 16 October 2016 were not met and accordingly no shares issued.
Employee Share and Loan Plan
As noted in the Remuneration Report, key executives had a non-recourse loan which expired 27th April 2017. The outstanding loan balance has not
been repaid (pursuant to the non-recourse terms) and PPK is considering its options to sell or buy-back/cancel these shares.
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.
66
DIRECTORS' DECLARATION
FOR THE YEAR ENDED 30 JUNE 2016
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
(i) Giving a true and fair view of is financial position as at 30 June 2016 and of its
performance for the financial year ended on that date; and
(ii) Complying with Australia Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
b) 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 2016.
3. Note 2 confirms that the consolidation financial statements also comply with International
Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
ROBIN LEVISON
Executive Chairman
Dated this 23rd day of June 2017
GLENN MOLLOY
Director
67
Level 18
King George Central
145 Ann Street
Brisbane QLD 4000
Correspondence to:
GPO Box 1008
Brisbane QLD 4001
T + 61 7 3222 0200
F + 61 7 3222 0444
E info.qld@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of PPK Group Limited
Report on the financial report
We have audited the accompanying financial report of PPK Group Limited (the
“Company”), which comprises the consolidated statement of financial position as at 30 June
2016, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for
the year then ended, notes comprising a summary of significant accounting policies and
other explanatory information and the directors’ declaration of the consolidated entity
comprising the Company and the entities it controlled at the year’s end or from time to time
during the financial year.
Directors’ responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001. The Directors’ responsibility also includes such internal control as
the Directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
error. The Directors also state, in the notes to the financial report, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, the financial
statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. Those standards
require us to comply with relevant ethical requirements relating to audit engagements and
plan and perform the audit to obtain reasonable assurance whether the financial report is
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the
Company’s preparation of the financial report that gives a true and fair view in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Directors, as well as evaluating the
overall presentation of the financial report.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.
68
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
a
the financial report of PPK Group Limited is in accordance with the Corporations
Act 2001, including:
i
ii
giving a true and fair view of the consolidated entity’s financial position as 30
June 2016 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
b
the financial report also complies with International Financial Reporting Standards as
disclosed in the notes to the financial statements.
Emphasis of matter
Without qualification to our opinion, we draw attention to Note 2(ab) to the financial
report, which indicates that the group incurred a loss after tax of $7,740,000 for the year
ended 30 June 2016, and net operating cash outflows of $6,230,000 for the year then ended.
These conditions, along with other matters as set forth in Note 2(ab), indicate the existence
of a material uncertainty which may cast significant doubt about the group’s ability to
continue as a going concern and therefore, the group may be unable to realise its assets and
discharge its liabilities in the normal course of business, and at the amounts stated in the
financial report.
Report on the remuneration report
We have audited the remuneration report included in pages 12 to 20 of the directors’ report
for the year ended 30 June 2016. The Directors of the Company are responsible for the
preparation and presentation of the remuneration report in accordance with section 300A of
the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration
report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s opinion on the remuneration report
In our opinion, the remuneration report of PPK Group Limited for the year ended 30 June
2016, complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
Cameron Smith
Partner – Audit & Assurance
Brisbane, 23 June 2017
69
SHAREHOLDER INFORMATION
AS AT 9TH JUNE 2017
(a) Number of PPK shareholders: 915
(b) Total shares issued: 73,314,570
(c) Percentage of total holdings by or on behalf of the 20 largest shareholders: 73.81%
(d) Distribution schedule of holdings
Holdings Ranges
Holders
Total Units
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-9,999,999,999
Less than a marketable parcel
107
270
200
269
69
190
59,853
882,853
1,633,565
8,591,554
62,146,745
205,486
(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
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
John E Gill Operations Pty Limited
Mr Dennis Joseph McGillicuddy & Mrs Graciela McGillicuddy
Luton Pty Ltd
Mr Guy Lance Jones
Flynfam Pty Ltd
Mr Leslie John Field & Mrs Eve Field
Ruminator Pty Ltd
Mr Barry Silverstein
Dealcity Pty Limited
Ryan Consultancy Group Pty Ltd
Mr Robert Joseph Faulks & Mrs Patricia Baynton Faulks
Mr Ian Macdonald
Miss Samantha Molloy
Ms Alison Irving
Substantial Shareholders
Shares to Which Entitled
Wavet Holdings Pty Ltd
Ignition Capital Pty Ltd and Associates
Equipment Company of Australia Pty Ltd
12,969,519
11,766,667
9,460,000
12,919,519 17.622%
11,766,667 16.050%
9,460,000 12.903%
4,000,000
5.456%
4,000,000
5.456%
2,651,695
3.617%
1,568,985
2.140%
1,200,000
1.637%
800,000
1.091%
750,000
1.023%
666,667
0.909%
639,453
0.872%
543,883
0.742%
512,660
0.699%
500,000
0.682%
500,000
0.682%
459,535
0.627%
425,000
0.580%
408,570
0.557%
341,960
0.466%
54,114,594 73.812%
% of Issued
Capital
17.69
16.05
12.90
70
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) resigned 5 May 2017
Glenn R. Molloy (Executive Director)
Raymond M. Beath (Non-Executive Director) resigned 8 March 2017
Graeme D. Webb (Non-Executive Director)
Dale McNamara (Executive Director)
Company Secretary
Andrew J. Cooke
Head and Registered Office
PPK Group Limited
Level 27,
10 Eagle Street
Brisbane QLD 4000
Australia
Telephone:
Email:
Web Site:
+61 7 3054 4500
info@ppkgroup.com.au
www.ppkgroup.com.au
Auditors
Grant Thornton Audit Pty Limited
King George Central
Level 18,
145 Ann Street
Brisbane QLD 4000
Australia
Telephone:
Fax:
+61 7 3222 0200
+61 7 3222 0444
Share Registry
Boardroom Pty Limited
Grosvenor Place
Level 12,
225 George Street
Sydney NSW 2000
Australia
Telephone:
Fax:
International
Telephone:
Fax:
1300 737 760
1300 653 459
+61 2 9290 9600
+61 2 9297 0664
www.boardroomlimited.com.au
71