ANNUAL REPORT
2017
CONTENTS
Executive Chairman’s Review
2017 Financial Report
Corporate Directory
Page
1
8
67
Executive Chairman’s Report
Market Conditions Improving
For a majority of the 2017 financial year PPK Group Limited (PPK) encountered a continuation of the adverse
trading conditions which prevailed over prior periods. However, by year end there were discernible signs
emerging of what is anticipated to be a sustainable improvement in market conditions for the domestic coal
sector and in turn, PPK’s mining equipment and services businesses.
Significantly, this more positive market sentiment has continued into the first two months of the current financial
year and based on the cost constraint and efficiency enhancement programs successfully implemented over
the past 24 months the directors of PPK believe the company is now poised to incrementally grow revenue
and return to profitability over the remainder of this financial year and beyond.
Notwithstanding the impact that the substantial market downturn experienced since 2014 has had on the
company, due to the above initiatives PPK has started the current financial year in a relatively stronger position,
with no bank debt, no outstanding creditors beyond normal credit terms and recurring moderate month on
month revenue gains from the company’s mining services business.
PPK’s board has worked prudently and diligently to protect shareholders’ interests during the downturn in the
underground coal mining sector. As part of these endeavours the board explored prospective merger, sale or
equity injection opportunities in relation to its underlying mining equipment and services business and /or PPK
itself. In line with this initiative the company applied for the Voluntary Suspension of its shares from quotation
on the ASX in September 2015, to facilitate ongoing negotiations with prospective external parties including
the Shandong Energy Heavy Mining Equipment group.
While a final outcome from these negotiations is yet to materialise, the successful cost constraint, debt
reduction and slight margin improvement measures which had been achieved by the close of the 2017 financial
year, combined with the progressive strengthening of the domestic coal market, led the board to seek PPK’s
reinstatement to official ASX quotation on 16 August 2017.
There are now clear signs of a sustainable turnaround of the Australian underground coal mining sector, which
is being jointly driven by a combination of stronger coal prices and a competitive value rating of the Australian
dollar. This turnaround is reinforced by major coal producers such as BHP and Whitehaven announcing strong
profit hikes over the current reporting period.
In PPK’s key market catchment of the Hunter Valley, a more positive market sentiment is being clearly reflected
in the number of previously closed or “in care and maintenance” mode mines reopening as operational sites.
Prior to the pronounced downturn of the coal mining sector PPK were servicing or supporting approximately
1
24 fully operational coal mines in the region. However, at the peak of the industry downturn this number was
been drastically cut to around 9 mines, with virtually all operating under a severely constrained capital and
operational expense environment which had a dramatic impact on all equipment and service suppliers in the
region, including PPK.
Significantly, at the time of this report the number of Hunter Valley coal mines PPK is now supporting or
servicing on an operational basis has doubled from the number at the peak of the downturn, to around 18
currently.
It is worth highlighting that PPK has weathered this downturn in far better corporate shape than many of its
competitors operating in the Hunter Valley and Wollongong basin. Low levels of production from far fewer
mines coupled with ever tightening margins for suppliers have resulted in a number of attritional casualties,
with both private and listed mining services providers either closing or downsizing their businesses over the
past four years. As a result, PPK remains as one of the few dominant specialist suppliers of mining equipment
and services in the Hunter Valley and Illawarra regions, and as such is strategically positioned to reap the full
rewards of what is expected to be a continuing stronger coal market in the years ahead.
Financial Results
PPK recorded a net profit after tax attributable to owners of $0.560M for the 12 months to 30 June 2017 (FY
2016 $7.763M loss). Despite a continuation of adverse trading conditions for PPK’s mining equipment and
services businesses during much of the year under review, this was offset by the sale of the company’s
industrial property at Seven Hills during the year which netted a gain on sale of $4.433M and represented a
major contributor to the profit after tax reported by the group. Total group revenue for the 12 months increased
from $26.660M in the prior year to $29.218M. Revenue from mining equipment sales and mining services was
up marginally to $28.945M (FY 2016 $26.075M), revenue from investment properties was $0.273M (FY 2016
$0.585M) and interest received was $0.053M (FY 2016 $0.495M).
Strategic Direction
PPK’s overriding strategy over the past two years has been to prudently and conservatively manage the
company’s debt and capital base to preserve and sustain the operational stability of its core underlying
businesses in the underground mining equipment and mining services sectors.
The initiatives implemented by the board consistent with this strategy have been:
•
a reduction in PPK’s group wide cost base
2
•
•
•
•
the retirement of all PPK’s external bank debt
the introduction of tighter trading terms that have resulted in the company having nil outstanding
creditors beyond normal credit terms on its books
the relocation of PPK’s head office to Brisbane, closure of its China office and the consolidation of
selected businesses into single premises which have lowered overheads and increased operational
efficiencies
the sale of property and other investment assets at optimum market prices to provide working capital to
sustain and improve the operational capacity of PPK’s mining equipment and services businesses.
While the board has remained cognisant of the challenging market environment PPK has operated in, it has
also recognised the need to maintain the company’s core mining equipment products as “best in class” market
offers. As a result, PPK remains one of the few Australian original equipment makers (OEMs) to continue
incrementally investing in the development and improvement of its products with a view to heightening their
market competitiveness and appeal to potential buyers.
In light of what now appears to be a sustainable upturn in the coal sector, and a resultant return to more
favourable trading conditions, PPK’s forward focus will be on returning the company to a more profitable growth
path via a dual strategy of:
•
•
leveraging off the market leading reputations of its COALTRAM, Rambor and Firefly product lines to
progressively increase income from the sales, service, provision of parts and leasing of these products
harnessing the board’s proven skills and expertise in successfully executing profitable commercial
transactions to identify and invest in appropriately attractive property and financial investments to create
a diversified, secondary income stream for PPK.
Given the experiences of the past two years the board considers it imperative that PPK maintains a dual
edged revenue stream to lessen the company’s sole reliance on any single industry sector. It is important
to note that the proceeds from the sale of property and other investment assets over the past two years
has enabled PPK to secure the underlying stability and health of its key mining equipment and services
assets. The directors cumulatively have extensive experience in delivering highly profitable outcomes
from commercial property and other investment transactions for the benefit of shareholders.
This expertise is evidenced by the successful sale of the company’s Seven Hills industrial property during
the financial year which generated PPK a net gain of $4.433M, representing a 56% profit margin on the final
sale cost. This margin typifies the level of profit made on a majority of the property assets PPK has
transacted over recent years.
3
Resignation and appointment of Directors
Following the resignations of Ray Beath and Jury Wowk during the financial year, PPK’s board now
comprises Executive Chairman Robin Levison, Executive Directors Glenn Molloy and Dale McNamara (Mr
McNamara was re-elected in the 2017 financial year) and Non-Executive Director Graeme Webb.
The board, including ex-directors, have collectively played a pivotal role in stabilising and sustaining the
company, whose core assets are high calibre and globally competitive businesses, through what has proved
a highly challenging and adverse market environment.
The board and major shareholders, through managing PPK as leanly and efficiently as possible, while
preserving the underlying operational strength of the businesses it controls during these difficult times has
ensured all company shareholders are in a position to benefit from its planned rebound and future expansion
and have provided and will continue to provide financial support where necessary.
Operational Review
PPK Mining Equipment
At the close of the 2017 financial year PPK’s mining equipment and technology businesses continued to
comprise:
•
•
•
•
•
Manufacture, service, support and hire of the class leading COALTRAM multi-purpose vehicle range
designed for use in underground coal mines and which have the capacity to perform a wide range of
roles including material movement, supply handling, movement of long wall components and other utility
tasks.
Manufacture and distribution of the COALTRAM flameproof alternator which is a market leading and
IEC internationally certified application for use in global methane gas prone underground mines.
Design, manufacture and overhaul of Exlec hazardous area electrical equipment.
Design, manufacture and distribution of MONEx electronic engine management system.
Manufacture, service, support and hire of Rambor and Firefly mining equipment.
Despite the challenging conditions encountered over past years, PPK continued to conservatively invest time
and money in improving the marketability and functionality of some key mining equipment products. Chief
among these has been the successful development of an upgraded engine management system for the
COALTRAM product, which remains the only Tier 3 low emission underground diesel vehicle in the market.
PPK is continuing to collaborate with the Australian Coal Association Research Program (ACARP) in
developing new generation lower emissions engine technology. With regulatory authorities increasingly
4
enforcing lower emission environments in underground mine sites to improve Workplace Health and Safety
conditions, the advent of a world class leading low emission engine system for COALTRAM products will
undoubtedly provide a decisive and compelling competitive edge to its domestic and global marketability.
In other initiatives also aligned to PPK’s product expansion strategy, material progress was made during the
financial year on the upgrade of Rambor’s automated bolter and associated hydraulic products.
Based on a continuation of the rebound of Australia’s underground coal sector and the anticipated resumption
of miners’ capital expenditure programs, backed by the improvements being made to COALTRAM’s market
offer, directors anticipate to see the order pipeline for these products to progressively open again within the
next 6 to 12 months.
Mining Equipment Services
Due to prevailing adverse conditions, PPK’s mining equipment services business faced another challenging
year in the 2017 financial year, with heightened competition for business leading to sector wide pricing
pressure which impacted on the company’s margins.
As a result, considerable effort was placed on maintaining the business’s stability through cutting costs and
improving efficiencies wherever possible. As part of this program Rambor’s Nowra operations were relocated
into both the Firefly Mt Thorley facility and the Port Kembla service/support centre.
Pleasingly, during the latter part of the 2017 financial year there were emerging signs of margin improvement
for PPK’s mining equipment services business, being the dual result of more Hunter Valley mine sites being
reactivated to operational status and the steady decline in market place competition following the forced
closure of several local service suppliers. It is particularly noteworthy that during the months preceding the end
of the financial year the company’s mining services business experienced month on month revenue gains, a
trend which has pleasingly extended up to the time of this report’s release.
It is pleasing to report that this gradual upswing in business necessitated PPK for the first time in some period
to commence the selected recruitment of new skilled employees, which again reinforces the improving trading
environment the business is experiencing.
While it remains premature to accurately predict the full extent of the recovery evident to date, directors are
confident that both the mining equipment and services sides of PPK’s business are resourced and positioned
to fully capitalise on further growth opportunities that may arise as the cyclical upturn gains momentum.
5
Property
In January 2017 PPK sold its remaining industrial property asset at Seven Hills for what is considered an
optimum value price of $7.85M, reaping a net gain on sale of $4.433M. The company’s remaining property
assets comprise a 22.86% interest in the Kiah Willoughby residential development in New South Wales and
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 former asset is nearing project finality with only the
last remaining property sales, buyer settlements and some legal matters to be completed. In regard to the
latter asset the Trust is presently actively marketing the development site in order to recoup full value from
what is proving a continually strengthening Gold Coast property market.
As noted earlier in this report over recent years PPK’s board has consistently achieved superior financial
outcomes from all of the property investment ventures the company has been involved in. Given this track
record and the demonstrable skills directors collectively have in identifying and executing highly successful
property and financial investment opportunities, PPK is intent on where applicable, maintaining these activities
as a complementary string to PPK’s growth bow.
Stronger Outlook
During the latter stages of the 2017 financial year there were clear indications of a sustained strengthening of
the domestic coal sector which will have positive repercussions on PPK’s performance during the coming 12
months and its return to profitability over coming years.
There is no doubt that with the number of Hunter Valley coal mines having been recommissioned to operational
status that output volumes will continue to grow for the foreseeable future.
With many of these mines previously in “care and maintenance” mode for considerable time, and those that
remained operational during the downturn being subject to severe capital and operating expense constraints,
PPK believes there will be a strong level of pent up demand for the company’s equipment service, maintenance
and parts provision. The recurring monthly revenue gains referred to earlier clearly reflect the upswing in
demand now emerging from the market for the company’s mining equipment services offer.
Given the closure of several of PPK’s key competitors in this marketplace and the anticipated demand build
up in the current financial year PPK now has additional pricing flexibility to further improve margins from its
mining services business over the coming year.
As outlined earlier the company expects, based on the stronger market sentiment and the improvements made
to its COALTRAM range, for the first new orders for these products to occur within the next six to 12 months.
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While the board is seeking to divest its remaining few property assets over the course of the current financial
year, it remains intent on identifying potential investment opportunities in other property or financial ventures
which have the capacity to generate superior returns for shareholders.
Although PPK has removed exclusive negotiation rights from the Shandong Energy Heavy Mining Equipment
manufacturing group, the company will continue dialogue with other potential interested parties in relation to
possible merger, acquisition or investment opportunities in relation to PPK or its business units, if an outcome
is deemed to be in the best financial interest of shareholders.
Directors are confident based on trading over the first two months of the financial year and the more conducive
market conditions being experienced, of achieving an improved financial performance in the year ahead, and
by 30 June 2018 expect the group to be at some degree of profitability and to be modestly cash flow positive.
Robin Levison
Executive Chairman
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2017 FINANCIAL REPORT
CONTENTS
Page
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
9
21
22
23
24
25
27
62
63
66
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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 2017.
DIRECTORS
The names of directors in office at any time during or since the financial year are:
Robin Levison
Glenn Robert Molloy
Graeme Douglas Webb
Dale William McNamara
Raymond Michael Beath
Jury Ivan Wowk
(resigned 7 March 2017)
(resigned 5 May 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.
Member of the PPK Group Limited Audit Committee since 14 August 2017.
Executive Chairman from 22 October 2013 to 29 April 2015 and re-appointed from 28 February 2016.
Non-Executive Chairman from 29 April 2015 to 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 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)
Glenn Molloy (Age 62)
Executive Director
Member of the PPK Group Limited Board since listing on 21 December 1994.
Chairman of the PPK Group Limited Audit Committee since 14 August 2017.
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: 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
9
Dale McNamara (Age 59)
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
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
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
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)
design, manufacture, distribution and servicing of underground mining equipment; and
property ownership, management and debt and equity investments.
During the financial year, the Group divested most of its holdings in publicly listed and privately held companies. There
were no other significant changes in the nature of PPK's principal activities during the financial year.
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OPERATING RESULTS
PPK Group Limited (PPK) reported a net profit after tax attributable to owners of PPK of $0.560M for the 12 months
to 30 June 2017 (2016: $7.763M loss). Group revenue for the 12 months was $29.218M (2016: $26.660M) with
revenue from mining equipment sales and mining services of $28.945M (2016: $26.075M) and revenue from
investment properties of $0.273M (2016: $0.585M).
Other income of $5.108M (2016 $1.597M) was primarily the gain from the sale of the Seven Hills Industrial property
in January 2017 of $4.433M, gains from the sale of PPK’s share portfolio of $0.244M (2016: $1.548M), recovery of
a debt previously written off of $0.396M and other miscellaneous income of $0.030M (2016: $0.048M).
The Group benefitted from the reversal of an onerous lease provision of $1.630M (2016 $0.550M) as a result of
Glegra Pty Ltd ATF The Coaltram Trust significantly reducing the monthly lease costs effective from 1 April 2017
as explained later in this Director’s Report.
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 7 and which forms part
of this report.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Debt Restructuring
The Group continues to restructure its debt and pay down its loans. In September 2016, the loans owing by Couran
Cove Holdings Pty Ltd ATF CCH were repaid in full and the funds were used to repay the borrowings to Atkone Pty
Ltd and Contemplator Pty Ltd in their entirety.
In January 2017, PPK used the surplus proceeds from the sale of the Seven Hills Industrial property to fully repay
both the Neruj Pty Ltd ATF Wemole Funding Trust loan and the CBA loan. As a result of this sale, PPK no longer
has 100% ownership of investment properties.
In addition, PPK has sold the majority of its listed investments during the year and has used the proceeds to continue
to fund the operations of the business. At the year end, PPK retained a small portfolio of listed shares.
On 10 May 2017, PPK borrowed $650,000 from the Fiona Testamentary Trust, of which PPK Director Glenn Molloy
is a trustee, and $600,000 from the Wavet Fund No 2 Pty Ltd ATF Wavet Holdings Pty Ltd Superannuation Fund
No 2, of which PPK Director Glenn Molloy is a director. Both loans have an interest rate of 10% per annum, payable
quarterly, with the full amount of the loan to be repaid within one year. The proceeds have been used to repay the
outstanding borrowings to Sunlea Investments Pty Ltd, for the purchase of the land and property in Mt Thorley used
by the Group,
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.
Effective 1 May 2017, PPK Mining Equipment Hire Pty Ltd, a subsidiary company of PPK Mining Equipment Group
Pty Ltd, renegotiated the terms and conditions of the lease arrangements of the 7 Coaltrams it leases from Glegra
Pty Ltd ATF The CoalTram Trust (“Glegra”) as follows:
•
•
the monthly ongoing lease payments have reduced to $0.020M from $0.135M over the period of to the lease
term, a savings of $0.115M per month. The expiry dates of the leases vary with 4 terminating on 15 October
2019, 1 on 15 January 2020 and the remaining 2 on 13 April 2020.
A release and discharge from all claims now and in the future for rental arrears of $1.080M. The conditions
imposed to receive the release of the rental arrears have been met and future lease savings are about $3.728M
over the terms of the leases.
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The Group has a contingent liability of $4.808M, being the amount of the rental arrears of $1.080M waived and all
rent reductions of approximately $3.728M to the end of the lease term for each Coaltram, in the event that PPK
Mining Equipment Group Pty Ltd, PPK Mining Equipment Pty Ltd, PPK Mining Equipment Hire Pty Ltd, PPK Mining
Repairs Alternators Pty Ltd or PPK Firefly Pty Ltd experiences an insolvency event before 13 October 2020.
Glegra Pty Ltd ATF The CoalTram Trust has, in relation to the 7 leased Coaltrams, an unlimited guarantee and
indemnity from PPK Group Limited, PPK Mining Equipment Group Pty Ltd and PPK Mining Equipment Pty Ltd; and
a fixed and floating charge over all the assets of PPK Mining Equipment Hire Pty Ltd.
PPK Directors Glenn Molloy, Graeme Webb and Dale McNamara have a beneficial interest in Glegra.
There have been no other significant changes in the state of affairs during the 2017 financial year or existing at the
time of this report.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
PPK held its Annual General Meeting for the year ended 30 June 2015 and 30 June 2016 on Monday, 14 August
2017 and was relisted on the ASX on Wednesday, 16 August 2017.
On 4 September 2017, PPK Directors Robin Levison, Glenn Molloy and Graeme Webb provided a written
undertaking to PPK to transfer up to $2 million of funds for the purposes of enabling PPK to pay its debts as and
when they become due, should the need arise before 7 September 2018. This written undertaking is subject to
satisfactory commercial terms being agreed between the parties and if the funds are in the form of debt financing,
sufficient and satisfactory security for the loans be provided by PPK. As at the date of the Directors’ Report, these
funds have not been drawn down.
There were no other items that occurred subsequent to the end of the financial year.
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 2017 are included in the Executive Chairman’s Report set out on pages 1
to 7 and which forms part of this report.
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.
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.
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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 and/or fees 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.
Shares or Options
No shares or options were issued to executives in the current financial year.
During the 2014 reporting year, PPK Group Ltd issued certain directors and key executives 15.500M shares at an
issue price of $0.70 per share and provided the directors and executives with a non-recourse loan to pay for the
shares. 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. The non-recourse loan expired on 27 April 2017, the loans have not been paid
back and the Group is considering its options.
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.
13
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:
2017
2016
2015
2014
2013
2012
Earnings per share (cents)
Full year ordinary dividends
(cents) per share
0.8
-
(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
106%
$0.20
(50%)
$0.40
(37%)
$0.66
58%
$0.44
25%
$0.38
30%
The above table shows the annual returns to shareholders calculated to include the difference in percentage terms
between the dividend yield for the year (based on the average share price during the period) and changes in the
price at which shares in the Company are traded between the beginning and the end of the relevant financial year.
The share price for 2016 is the last traded price, prior to the year end, being 29th September 2015 when the Group
voluntarily suspended trading on the ASX.
Details of Remuneration for the year ended 30 June 2017
DIRECTORS’ AND OTHER KEY MANAGEMENT PERSONNEL REMUNERATION
Details of the nature and amount of each element of the remuneration of each key management personnel
(‘KMP”) of PPK Group Limited are shown in the table below:
2017
SHORT TERM INCENTIVES
EMPLOYMENT
LONG TERM INCENTIVES/BENEFITS
POST-
Salary&
Fees
($)
Short Term
Incentive
Cash
Bonus
($)
Non-
Cash
Benefits
($)
Superannu-
ation
($)
Long
Service
Leave
($)
Post
Employ-
ment
Benefits
($)
Share
based
payments
($)
Total
($)
Proportion of
Remuneration
Performance
Related
(%)
Directors
Non –Executive
GD Webb
R Beath
J Wowk
Executive
R Levison
G R Molloy
D McNamara
24,000
16,000
77,228
215,394
144,000
164,061
Total Directors
640,683
Other Key Management Personnel
J Beddow[1]
Z Jinping[2]
258,550
204,061
Total other
462,611
Total Key Management Personnel
1,103,294
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,750
-
4,750
9,500
23,750
4,750
28,500
38,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24,000
16,000
77,228
220,144
144,000
168,811
650,183
282,300
208,811
491,111
-
1,141,294
-
-
-
-
-
-
-
-
-
-
-
[1] J Beddow (Chief Financial Officer) resigned 30 June 2017.
[2] The position of President PPK China Operations was made redundant in June 2017 due to the closure of the China office.
[3] Amounts reported above include both paid and unpaid entitlements. A number of PPK directors have voluntarily elected to
temporarily defer payment of their consulting fee entitlements. Refer further to details on page 19.
14
REMUNERATION REPORT (audited) (cont.)
POST-
2016
SHORT TERM INCENTIVES
EMPLOYMENT
LONG TERM INCENTIVES/BENEFITS
Salary&
Fees
($)
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 Wowk
R 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.
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 voluntarily 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. 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.
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 voluntarily 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.
SHARES HELD BY DIRECTORS AND KEY MANAGEMENT PERSONNEL
As at the end of the financial year, the number of ordinary shares held by directors and Key Management Personnel
during the 2017 reporting period is set out below:
Directors
R Levison
G Molloy (Note 1)
G Webb
D McNamara
J Wowk
R Beath
Total Directors
Other Key Management Personnel
J Beddow
Z Jinping
Total Other
Total
Balance at
Start of year
11,766,667
Net
change
Other
-
13,524,519
(605,000)
9,460,000
4,132,500
650,000
300,000
39,833,686
-
4,000,000
4,000,000
43,833,686
-
-
-
-
-
-
-
-
-
Shares
Purchased
New Share
Issue
Share and
Loan Plan
Issue
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Held at the
End of the
Reporting
Period
11,766,667
12,919,519
9,460,000
4,132,500
650,000
300,000
39,833,686
-
4,000,000
4,000,000
43,833,686
Note 1 – net change in shares represents shares held in trust for a minor which were transferred to individual’s ownership in the 2017 financial year
Shares issued under the Share Loan Plans provided to certain directors and key management personnel, as
discussed earlier in the Remuneration Report, are included in the above table.
16
OPTIONS
There are no options outstanding.
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
R M Beath:
Trusts - registered holder(s)
Number of Units
Nature of Interest
(all indirect)
Director & Member
Director & Member
Nature of Interest
(all indirect)
Director & Member
Director & Member
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
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
2017
$000S
2016
$000S
-
87
87
-
948
948
2,658
83
2,741
3,567
899
4,466
[1] The carrying value of the Loan receivables in the Group Financials has been reduced by an impairment
provision of $0.565M (2016: $0.364M), refer to note 11.
17
OTHER TRANSACTIONS WITH RELATED PARTIES OF THE GROUP
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 secured a loan from the Fiona Testamentary Trust of which Glenn Molloy is a trustee.
Loans advanced
Interest credited to loan
Loans repaid
Balance outstanding
The Group secured a loan from Wavet No 2 Fund of which Glenn Molloy is a director.
Loans advanced
Interest credited to loan
Loans repaid
Balance outstanding
Consolidated Entity
2017
$000S
650
6
-
656
2016
$000S
-
-
-
-
Consolidated Entity
2017
$000S
600
6
-
606
2016
$000S
-
-
-
-
The Group secured a loan from Neruj Pty Ltd ATF Wemole Funding Trust. PPK Directors, Glenn Molloy, Graeme
Webb and Robin Levison share beneficial ownership and control of this entity. The loan was repaid in January
2017.
Opening balance of loans
Additional loans advanced
Interest paid and credited to loan
Loans repaid
Balance outstanding
Consolidated Entity
2016
$000S
2,757
585
239
3,581
-
2016
$000S
2,550
-
207
-
2,757
The Group has made loans to Couran Cove Holdings Pty Ltd ATF CCH Trust. Glenn Molloy was a Director
and beneficiary of the CCH Trust. The loan was repaid in September 2016.
Opening balance of loans
Interest paid and credited to loan
Loans repaid
Balance outstanding
Consolidated Entity
2017
$000S
2,915
52
2,967
-
2016
$000S
2,647
268
-
2,915
See Leased Coaltrams in the Significant Changes in the State of Affairs earlier in the Directors’ Report for
information in relation to the transaction with Glegra Pty Ltd ATF The Coaltram Trust of which Glenn Molloy,
Graeme Webb and Dale McNamara have a beneficial interest in Glegra Pty Ltd.
18
A number of PPK directors have voluntarily elected to temporarily defer payment of their director & consulting
fee entitlements. The following amounts are cumulative and 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
(End of Audited Remuneration Report)
MEETINGS OF DIRECTORS
Consolidated Entity
2017
$000S
89
274
171
390
924
2016
$000S
65
184
111
443
803
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
13
8
13
6
13
13
12
8
13
5
10
13
-
1
-
1
-
-
-
1
-
1
-
-
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)
received and considered reports from management regarding the effectiveness of the Company’s
management of its material business risks; and
(cid:1)
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.
19
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:
Raymond Beath (Chairman)
Jury Wowk
Upon the resignation of Raymond Beath and Jury Wowk, the responsibilities of the Audit Committee were undertaken
by the Board of Directors. At a Board meeting on 14 August 2017, the Board appointed Glenn Molloy as Chairman and
Robin Levison as a member of the Audit Committee.
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.
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 2017 of $0.076M (2016: $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 2017 and a copy of this declaration forms part of the Directors’ Report.
ROUNDING OF ACCOUNTS
The parent entity receives relief and exemption under ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191 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.
Signed in accordance with a resolution of the Board of Directors.
ROBIN LEVISON
Executive Chairman
Brisbane,11 September 2017
GLENN MOLLOY
Executive Director
20
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 2017, I declare that, to the best of
my knowledge and belief, there have been:
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
C D J Smith
Partner - Audit & Assurance
Brisbane, 11 September 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
‘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.
21
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Consolidated Entity
Revenue
Cost of sales
GROSS PROFIT
Other income
Mining services expenses
Property services expenses
Investment activity expenses
Administration expenses
Research and development costs
Share-based payment expenses
Share of profit (loss) from equity accounted investments
Finance costs
Finance income
Reversal of onerous contract provision
PROFIT (LOSS) BEFORE INCOME TAX EXPENSE
Income tax (expense)/benefit attributable to profit
PROFIT (LOSS) AFTER INCOME TAX EXPENSE
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 taxes relating to these items
Foreign currency translation of controlled entities
OTHER COMPREHENSIVE INCOME (LOSS) NET OF INCOME TAX
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR IS
ATTRIBUTABLE TO:
Owners of PPK Group Limited
Non-controlling interest
Overall Operations
Basic earnings (loss) per share
Diluted earnings (loss) per share
The accompanying notes form part of these financial statements
Notes
3.1, 30.1
3.2, 30.1
30.1
30.1
30.1
30.1
30.1
3.6
3.5
3.3
23.4
4
2017
$000S
29,218
(20,444)
8,774
5,108
(12,168)
(331)
(29)
(1,754)
(373)
-
-
(350)
53
1,630
560
-
560
560
-
560
(927)
-
(296)
-
-
-
(5)
(1,228)
(668)
(668)
-
(668)
2016
$000S
26,660
(20,970)
5,690
1,597
(11,503)
(79)
(323)
(1,898)
(345)
(103)
(389)
(1,015)
495
-
(7,873)
133
(7,740)
(7,763)
23
(7,740)
1,035
-
(1,391)
-
5
-
(6)
(357)
(8,097)
(8,120)
23
(8,097)
8
8
0.8 cents
0.8 cents
(13.4) cents
(13.4) cents
22
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Financial assets
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
The accompanying notes form part of these financial statements
Notes
10
11
12
14
13
19.1
11
15
14
17
18
19.3
20
21
22
19.2
23
24
19.2
23
25
26
Consolidated Entity
2017
$000S
1,104
5,870
10,198
275
324
-
17,771
-
19
-
-
6,483
-
386
6,888
24,659
4,549
1,282
-
1,918
7,749
-
-
592
592
8,341
16,318
34,625
1,401
(19,708)
16,318
-
16,318
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
23
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
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
32.1
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for purchases of plant and equipment
Proceeds from sale of investment property
Proceeds from sale of property and equipment
Proceeds from sale of available-for-sale financial assets
Proceeds on return of subsidiary capital upon winding up (net of cash lost on
deconsolidation)
Payments for available-for-sale financial assets
Payment for intangibles
Other receivables - loans advanced
Other receivables - loans repaid
Net cash provided by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
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
The accompanying notes form part of these financial statements
7
32.2
Consolidated Entity
2017
$000S
31,196
(38,096)
-
56
-
(771)
(7,615)
(215)
7,540
3
774
-
(22)
(171)
(47)
6,112
13,974
2,335
(8,531)
-
-
(6,196)
163
945
(4)
1,104
2016
$000S
30,170
(36,242)
-
76
311
(545)
(6,230)
(284)
-
171
2,618
(2)
-
(179)
(3,165)
5,878
5,037
8,730
(9,043)
-
(23)
(336)
(1,529)
2,476
(2)
945
24
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Notes
Issued Capital
$000S
Accumulated
Losses
$000S
Options
Reserve
$000S
Available-
for-sale
Reserve
$000S
Foreign
Currency
Translation
Reserve
$000S
Total
Attributable
to Owners
of PPK
Group Ltd
$000S
Non-
Controlling
Interests
$000S
CONSOLIDATED ENTITY
At 1 July 2016
Total comprehensive income for the year
Profit (loss) for the year
Other comprehensive income (loss)
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
Foreign currency translation of controlled entities
Total comprehensive (loss) income for the year
Transactions with owners in their capacity as owners
Dividends paid
At 30 June 2017
7
The accompanying notes form part of these financial statements
34,625
(20,268)
1,338
1,295
(4)
16,986
-
-
-
-
-
-
560
-
-
-
560
-
-
-
-
-
-
-
34,625
(19,708)
1,338
-
(927)
(296)
-
(1,223)
-
72
-
-
-
(5)
(5)
-
(9)
560
(927)
(296)
(5)
(668)
-
16,318
-
-
-
-
-
-
-
-
Total
Equity
$000S
16,986
560
(927)
(296)
(5)
(668)
-
16,318
25
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED ENTITY
At 1 July 2015
Total comprehensive income for the year
Loss 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 – employee share based payment
Employee share-based payment
Changes in holding of non-controlling interests
7
25
25
25
Notes
Issued Capital
$000S
Accumulated
losses
$000S
Options
Reserve
$000S
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
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
At 30 June 2016
The accompanying notes form part of these financial statements
34,625
(20,268)
1,295
(4)
16,986
26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 1
CORPORATE INFORMATION
The financial statements of PPK Group Limited (“PPK” or “the Group”)
for the year ended 30 June 2017 were authorised for issue in
accordance with a resolution of the directors on 11 September 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 (“ASX”).
•
principles that conflict with the guidance of AASB 11. This
requirement also applies to the acquisition of additional
interests in an existing joint venture operation that results in the
acquirer retaining joint control of the joint operation (note that
this requirement applies to the additional interest only, the
existing interest is not re-measured) and to the formation of a
joint operation when an existing business is contributed to the
joint operation by one of the parties that participate in the joint
operation; and
provide disclosures for business combinations as required by
AASB 3 and other Australian Accounting Standards.
Separate financial statements for PPK Group Limited (“Parent
Company”) 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:
•
•
Design, manufacture, distribution and servicing of
underground mining equipment
Property ownership, management and debt and equity
investments
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 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.
The financial statements also comply with International Financial
Reporting Standards (IFRS) as issued by the International Accounting
Standards Board. The financial statements have been prepared on an
accruals basis and are based on historical costs, except for available-
for-sale financial assets and derivatives which have been measured
at fair value, and land and buildings, plant and equipment 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 accounting policies have been consistently applied to the entities
of the consolidated entity unless otherwise stated.
2.2 New and revised standards that are effective for these
financial statements
A number of new and revised standards became effective for the first
time to annual reporting periods beginning on or after 1 July 2016.
Information on the more significant standard(s) is presented below:
AASB 2014-3 Amendments to Australian Accounting Standards –
Accounting for Acquisitions of Interests in Joint Operations
The amendments to AASB 11 Joint Arrangements state that an
acquirer of an interest in a joint operation in which the activity of the
joint operation constitutes a “business”, as defined in AASB 3
Business Combinations, should:
•
apply all of the principles on business combinations accounting
in AASB 3 and other Australian Accounting Standards except
AASB 2014-3 is applicable to annual reporting periods beginning on
or after 1 January 2016. The adoption of these amendments has not
had a material impact on the Group.
AASB 2014-4 Amendments to Australian Accounting Standards –
Clarification of Acceptable Methods of Depreciation and Amortisation
The amendments to AASB 116 prohibit the use of a revenue-based
depreciation method for property, plant and equipment. Additionally,
the amendments provide guidance in the application of the diminishing
balance method for property, plant and equipment.
The amendments to AASB 138 present a rebuttable presumption that
a revenue-based amortisation method for intangible assets is
inappropriate. This rebuttable presumption can be overcome (a
revenue-based amortisation method might be appropriate) only in two
(2) limited circumstances:
•
•
the intangible asset is expressed as a measure of revenue. For
example, when predominant limiting factor inherent in an
intangible asset is the achievement of a revenue threshold (for
instance, the right to operate a toll road could be based on a
fixed total amount of revenue to be generated from cumulative
tolls charged); or
the
when
consumption of the economic benefits of the intangible asset
are highly correlated.
it can be demonstrated
that revenue and
AASB 2014-4 is applicable to annual reporting periods beginning on
or after 1 January 2016. The adoption of these amendments has not
had a material impact on the Group.
AASB 2014-9 Amendments to Australian Accounting Standards –
Equity Method in Separate Financial Statements
The amendments introduce the equity method of accounting as one
of the options to account for an entity’s investments in subsidiaries,
joint ventures and associates in the entity’s separate financial
statements.
AASB 2014-9 is applicable to annual reporting periods beginning on
or after 1 January 2016. The adoption of these amendments has not
had a material impact on the Group.
AASB 2015-2 Amendments to Australian Accounting Standards –
Disclosure Initiative: Amendments to AASB 101
The Standard makes amendments to AASB 101 Presentation of
Financial Statements arising from the IASB’s Disclosure Initiative
project. The amendments:
•
•
clarify the materiality requirements in AASB 101, including an
emphasis on the potentiality detrimental effect of obscuring
useful information with immaterial information
clarify that AASB 101’s specified line items in the statement(s)
of profit or loss and other comprehensive income and the
statement of financial position can be disaggregated
27
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
•
•
•
add requirements for how an entity should present subtotals in
the statement(s) of profit or loss and other comprehensive
income and the statement of financial position
clarify that entities have flexibility as to the order in which they
present the notes, but also emphasise that understandability
and comparability should be considered by an entity when
deciding that order
remove potentially unhelpful guidance in AASB 101 for
identifying a significant accounting policy
AASB 2015-2 is applicable to annual reporting periods beginning on
or after 1 January 2016. The adoption of these amendments has not
had a material impact on the Group.
2.3 New and revised standards that have been issued but are not
yet effective
Certain new accounting standards and interpretations have been
published that are not mandatory for 30 June 2017 reporting periods
and have not been early adopted by the group. The group’s
assessment of the impact of these new standards and interpretations
is presented below.
AASB 9 Financial Instruments (December 2014)
AASB 9 addresses the classification, measurement and derecognition
of financial assets and financial liabilities, introduces new rules for
hedge accounting and a new impairment model for financial assets.
The main changes are:
•
•
•
•
•
financial assets that are debt instruments will be classified on:
(i) the objective of the entity’s business model for managing the
financial assets; and (ii) the characteristics of the contractual
cash flows.
allows an irrevocable election on initial recognition to present
gains and losses on investments in equity instruments that are
not held for trading in other comprehensive income instead of
profit and loss. Dividends in respect of these investments that
are a return on investment can be recognised in profit and loss
and there is no impairment or recycling on disposal of the
instrument.
introduces a “fair value through other comprehensive income”
measurement category for particular simple debt instruments.
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 that would arise from measuring assets or
liabilities, or recognising the gains and losses on them, on
different bases.
where the fair value option is used for financial liabilities the
change in fair value is to be accounted for as follows:
o
the change attributable to changes in credit risk are
presented in Other Comprehensive Income
the remaining change is presented in profit or loss
o
If this approach creates or enlarges an accounting mismatch in profit
or loss, the effect of the changes in credit risk are also presented in
profit and loss.
Otherwise, the following requirements have generally been carried
forward unchanged from AASB 139 to AASB 9:
•
•
classification and measurement of financial liabilities; and
derecognition requirements for financial assets and liabilities.
AASB 9 requirements regarding hedge accounting represents a
substantial overhaul of hedge accounting than enable entities to better
reflect their risk management activities in the financial statements.
Furthermore, AASB 9 introduces a new impairment model based on
expected credit losses. This model makes use of more forward
information and applies to all financial instruments that are subject to
impairment accounting.
AASB 9 is applicable to annual reporting periods beginning on or after
1 January 2018. The Group is yet to undertake a detailed assessment
of the impact of AASB 9. However, based on the Group’s preliminary
assessment, the Standard is not expected to have a material impact
on the transactions and balances recognised in the financial
statements when it is first adopted for the year ending 30 June 2019.
AASB 15 Revenue from Contracts with Customers
AASB 15 establishes a new revenue recognition model, expands and
improves revenue disclosure and provides new and more detailed
guidance on specific topics (ie multiple element arrangements,
variable pricing, warranties, licensing and rights of return). The
Standard replaces AASB 118 Revenue, AASB 111 Construction
Contracts and some revenue related Interpretations.
AASB 15 is applicable to annual reporting periods beginning on or
after 1 January 2018. The Group is yet to undertake a detailed
assessment of the impact of AASB 15. However, based on the
Group’s preliminary assessment, the Standard is not expected to have
a material impact on the transactions and balances recognised in the
financial statements when it is first adopted for the year ending 30
June 2019.
AASB 16 Leases
AASB 16 provides new guidance on the application of the definition of
lease and sale and lease back accounting, requires all leases to be
accounted for “on balance sheet” by lessees (other than short term
and low value asset leases) and requires new and different
disclosures about leases while largely retaining the existing lessor
accounting requirements. The Standard replaces AASB 117 and
some lease related Interpretations.
AASB 16 is applicable to annual reporting periods beginning on or
after 1 January 2019. The Group is yet to undertake a detailed
assessment of the impact of AASB 16. However, based on the
Group’s preliminary assessment, the Standard is not expected to have
a material impact on the transactions and balances recognised in the
financial statements when it is first adopted for the year ending 30
June 2020.
AASB 2014-5 Amendments to Australian Accounting Standards
arising from AASB 15
AASB 2014-5 incorporates the consequential amendments arising
from the issuance of AASB 15. Refer to AASB 15 Revenue from
Contracts with Customers above.
AASB 2014-7 Amendments to Australian Accounting Standards
arising from AASB 9 (December 2014)
AASB 2014-7 incorporates the consequential amendments arising
from the issuance of AASB 9. Refer to AASB 9 Financial Instruments
(December 2014) above.
AASB 2014-10 Amendments to Australian Accounting Standards –
Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture
inconsistency
AASB 2014-10 amendments address a current
between AASB 10 Consolidated Financial Statements and AASB 128
Investments in Associates and Joint Ventures. The amendment
effectively introduces an exception to the general requirement in
AASB 10 to recognise full gain or loss on the loss of control over a
subsidiary. The exception only applies to the loss of control over a
subsidiary that does not contain a business, if the loss of control is the
result of a transaction involving an associate or a joint venture that is
accounted for using the equity method. Corresponding amendments
have also been made to AASB 128.
28
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
AASB 2014-10 is applicable to annual reporting periods beginning on
or after 1 January 2018. The Group is yet to undertake a detailed
assessment of the impact of AASB 2014-10. However, based on the
Group’s preliminary assessment, the Standard is not expected to have
a material impact on the transactions and balances recognised in the
financial statements when it is first adopted for the year ending 30
June 2019.
AASB 2016-1 Amendments to Australian Accounting Standards –
Recognition of Deferred Tax Assets for Unrealised Losses
AASB 2016-1 amends AASB 112 Income Taxes to clarify how to
account for deferred tax assets related to debt instruments measured
at fair value, particularly where changes in the market interest rate
decrease the fair value of a debt instrument below cost.
AASB 2016-1 is applicable to annual reporting periods beginning on
or after 1 January 2017. When these amendments are first adopted
for the year ended 30 June 2018, there will be no material impact on
the financial statements.
AASB 2016-2 Amendments to Australian Accounting Standards –
Disclosure Initiative: Amendments to AASB 107
AASB 2016-2 amends AASB 107 Statement of Cash Flows to require
entities preparing financial statements in accordance with Tier 1
reporting requirements to provide disclosures that enable users of
financial statements to evaluate changes in liabilities arising from
financing activities, including both changes arising from cash flows
and non-cash changes.
AASB 2016-2 is applicable to annual reporting periods beginning on
or after 1 January 2017. When these amendments are first adopted
for the year ended 30 June 2018, there will be no material impact on
the financial statements.
AASB 2016-3 Amendments to Australian Accounting Standards –
Clarifications to AASB 15
AASB 2016-3 amendments clarify the application of AASB 15 in three
specific areas:
1.
Identify performance obligations by clarifying how to apply the
concept of “distinct”;
2. Determine whether a company is a principal or an agent in a
transaction by clarifying how to apply the control principle;
3. Determine whether a license transfers to a customer at a point
in time or over time by clarifying when a company’s activities
significantly affect the intellectual property to which the
customer has the rights.
The amendments also create two additional practical expedients
available for use when implement AASB 15:
1. For contracts that have been modified before the beginning of
the earliest period presented,
the amendments allow
companies to use hindsight when identifying the performance
obligations, determining the transaction price and allocating the
transaction price to the satisfied and unsatisfied performance
obligations.
2. Companies applying the full retrospective method are permitted
to ignore contracts already complete at the beginning of the
earliest period presented.
AASB 2016-3 is applicable to annual reporting periods beginning on
or after 1 January 2018. The Group is yet to undertake a detailed
assessment of the impact of AASB 15. However, based on the
Group’s preliminary assessment, the Standard is not expected to have
a material impact on the transactions and balances recognised in the
financial statements when it is first adopted for the year ending 30
June 2019.
AASB 2016 – 5 Amendments to Australian Accounting Standards –
Classification and Measurement of Share-based Payment
Transactions
AASB 2016-5 amends AASB 2 Share-based Payment to address:
1. The accounting for the effects of vesting and non-vesting
conditions on the measurement of cash-settled share-based
payments;
2. The classification of share-based payment transactions with a
net settlement feature for withholding tax obligations; and
3. The accounting for a modification to the terms and conditions
of a share-based payment that changes the classification of the
transaction from cash-settled to equity- settled.
AASB 2016-5 is applicable to annual reporting periods beginning on
or after 1 January 2018. The Group is yet to undertake a detailed
assessment of the impact of AASB 2016-5. However, based on the
Group’s preliminary assessment, the Standard is not expected to have
a material impact on the transactions and balances recognised in the
financial statements when it is first adopted for the year ending 30
June 2019.
AASB 2017-1 Amendments to Australian Accounting Standards –
Applying AASB 2017-1 Transfers of Investment Property, Annual
Improvements 2014-2016 Cycle and Other Amendments
AASB 2017-1 amends AASB 140 Investment Property to reflect the
principal that an entity transfers a property to, or from, investment
property when, and only when, there is a change of use of the property
supported by evidence that a change in use has occurred.
AASB 2017-1 is applicable to annual reporting periods beginning on
or after 1 January 2018. When these amendments are first adopted
for the year ended 30 June 2019, there will be no material impact on
the financial statements.
AASB 2017-2 Amendments to Australian Accounting Standards –
Further Annual Improvements 2014-2016 Cycle
AASB 2017-2 clarifies the scope of AASB 12 Disclosure of Interests
in Other Entities by specifying that the disclosure requirements apply
to an entity’s interests in other entities that are classified as held for
sale, held for distribution to owners in their capacity as owners or
discontinued operations in accordance with AASB 5 Non-current
Assets Held for Sale and Discontinued Operations.
AASB 2017-2 is applicable to annual reporting periods beginning on
or after 1 January 2017. When these amendments are first adopted
for the year ended 30 June 2018, there will be no material impact on
the financial statements.
Interpretation 22 Foreign Currency Transactions and Advance
Consideration
Interpretation 22 clarifies the date of the transaction for the purpose of
determining the exchange rate to use on initial recognition when
payments are made or received in advance of the related asset,
expense or income (or part thereof) as being the date on which an
entity initially recognises the non-monetary asset or liability arising
from the payment or receipt of advance consideration. If there are
multiple payments or receipts in advance, the entity shall determine a
date of the transaction for each payment or receipt of advance
consideration.
Interpretation 22 is applicable to annual reporting periods beginning
on or after 1 January 2018. When this Interpretation is first adopted
for the year ended 30 June 2019, there will be no material impact on
the financial statements.
29
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
IFRIC 23 Uncertainty Over Income Tax Treatments
IFRIC 23 clarifies how the recognition and measurement requirements
of IAS 12 Income Taxes are applied where there is uncertainty over
income tax treatments.
IFRIC 23 is applicable to annual reporting periods beginning on or
after 1 January 2019. When this Interpretation is first adopted for the
year ended 30 June 2020, there will be no material impact on the
transactions and balances recognised in the financial statements.
2.4 Reclassification of comparative amounts
To conform to the presentation of the Consolidated Statement of Profit
or Loss and Other Comprehensive Income for this financial year, the
balances in the previous financial year have been restated:
Original
Disclosure
$000s
Restated
$000s
26,075
585
(32,818)
26,660
(20,970)
(11,503)
(345)
Mining equipment
Investment properties
Revenue
Mining equipment
Cost of sales
Mining services equipment
Research and development
2.5 Basis of consolidation
The Group financial statements consolidate those of the Parent
Company, PPK Group Limited, and all of its subsidiaries at 30 June
each year.
The Parent Company controls the subsidiary if it is exposed, or has
rights, to variable returns from its involvement with the subsidiary and
has the ability to affect those returns through its power over the
subsidiary. Potential voting rights that are substantive, whether or not
they are exercisable or convertible, are considered when assessing
control. All subsidiaries have a reporting date of 30 June.
All intercompany balances and transactions, including unrealised
profits arising from intergroup transactions have been eliminated.
Unrealised losses are also eliminated unless the transaction provides
evidence of the impairment of the asset transferred.
Profit or loss and other comprehensive income of subsidiaries
acquired or disposed of during the year are recognised from the
effective date of acquisition, or up to the effective date of disposal, as
applicable.
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.
2.6 Business combination
The Group applies the acquisition method in accounting for business
combinations. The consideration transferred by the Group to obtain
control of a subsidiary is calculated as the sum of the acquisition-date
fair values of assets transferred, liabilities incurred and the equity
interests issued by the group, which includes the fair value of any
asset or liability arising from a contingent consideration arrangement.
Acquisition costs are expensed as incurred.
The Group recognises identifiable assets acquired and liabilities
assumed in a business combination regardless of whether they have
been previously recognised in the acquiree’s financial statements
prior to the acquisition. Assets acquired and liabilities assumed are
generally measured at their acquisition-date fair values.
Goodwill is stated after separate recognition of identifiable intangible
assets. It is calculated as the excess of the sum of: (a) fair value of
consideration transferred, (b) the recognised amount of any non-
controlling interest in the acquiree, and (c) acquisition-date fair value
of any existing equity interest in the acquiree, over the acquisition-date
fair values of identifiable net assets. If the fair values of identifiable
net assets exceed the sum calculated above, the excess amount (ie
gain on a bargain purchase) is recognised in profit or loss immediately.
2.7 Investments in 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.
2.8 Foreign currency translation
The consolidated financial statements are presented in Australian
Dollars ($AUD), which is also the functional currency of the Parent
Company.
Foreign currency transactions during the period are converted to
Australian currency at rates of exchange applicable at the dates of the
transactions (spot exchange rate). Foreign exchange gains and
losses, whether realised or unrealised, resulting from the settlement
of such transactions, amounts receivable and payable in foreign
currency at the reporting date, and from the re-measurement of
monetary items at year end exchange rates are recognised in profit
and loss.
Non-monetary items are not retranslated at year end and are
measured at historical cost (translated using the exchange rate at the
date of the transaction), except for non-monetary items measured at
fair value which are translated using the exchange rates at the date
when fair value was determined.
2.9 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:
Sale of goods
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.
30
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Rendering of Services
Revenue from the repair and maintenance of mining equipment is
recognised in the accounting period in which the services are
rendered. For fixed price contracts, revenue is recognised under the
percentage of completion method, based on the actual service
provided in proportion to the total services to be provided.
If circumstances arise that may change the original estimates of
revenues, costs or the percentage of progress towards completion,
estimates are revised. Any revisions may result in increases or
decreases of estimated revenues or costs and are reflected in the
profit or loss in the period in which the circumstances give rise to the
revision became known to management.
Rental Income
Rental income on mining equipment is accounted for on a straight-line
basis over the term of the rental agreement.
Rental income on investment properties is accounted for on a straight-
line basis over the lease term. Contingent rentals are recognised as
income in the periods when they are earned.
Interest income
Revenue is recognised as it accrues using the effective interest rate
method which is the rate that exactly discounts the estimated future
cash receipts over the expected life of the financial asset.
Dividends
Dividends are recognised when the Group's right to receive payment
is established.
2.10 Operating expenses
Operating expenses are recognised in the profit or loss upon utilisation
of the services or at the date of their origin. Expenditure for warranties
is recognised and charged against the associated provision when the
related revenue is recognised.
2.13 Finance costs
All borrowing costs directly attributable to the acquisition, construction
or production of a qualifying asset are capitalised during the period
that is necessary to complete and prepare the asset for its intended
use or sale. Other finance and borrowing costs are expensed in the
period in which they are incurred and reported in finance costs.
2.14 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.
2.15 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.
2.16 Inventories
Inventories include raw materials, work in progress and finished goods
and 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 based
on 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.
2.11 Profit or loss from discontinued operations
2.17 Investment property
A discontinued operation is a component of the entity that either has
been disposed of, or is classified as held for sale, and:
•
•
•
Represents a separate major line of business or geographical
area of operations
Is part of a single coordinated plan to dispose of a separate
major line of business or geographical area of operations; or
Is a subsidiary acquired exclusively with a view to resale
Profit or loss from discounted operations, including prior year
components of profit or loss, are presented in a single amount in the
statement of profit or loss and other comprehensive income. This
amount, which comprises the post-tax profit or loss of discontinued
operations and
from the
measurement and disposal of assets classified as held for sale (see
also Note 2.21).
the post-tax gain or
loss resulting
The disclosures for discontinued operations in the prior year relate to
all operations that have been discontinued by the reporting date for
the latest period presented,
2.12 Share-based payments
The Group recognises an expense for all share-based remuneration
and amortises those expenses over the relevant vesting periods
where required.
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.
2.18 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.
31
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
The depreciable amount of all fixed assets including buildings and
capitalised leased assets, but excluding freehold land, is depreciated
over their useful lives to the consolidated entity commencing from the
time the asset is held ready for use. Leasehold improvements are
amortised over the shorter of either the unexpired period of the lease
or the estimated useful lives of the improvements.
The gain or loss on disposal of all fixed assets is determined as the
difference between the carrying amount of the asset at the time of
disposal and the proceeds of disposal, and is included in the profit
before income tax of the consolidated entity in the year of disposal.
The depreciation rates used for each class of depreciable assets
are:
Class of Fixed Asset
Depreciation Rate
Straight Line
Buildings
Leasehold Improvements
Plant & Equipment
Leased Plant & Equipment
2 %
over the term of the lease
3-50 %
3-50 %
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.
2.19 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.
Patents, Trademarks and Licences
Patents, trademarks and licences have a finite useful life and are
carried at cost less accumulated amortisation and impairment losses.
Amortisation is calculated on a straight line basis over the number of
years of their expected benefit which ranges from 3 to 20 years.
Goodwill
Goodwill 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.
2.20 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.
2.21 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.
32
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
(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 2.25.
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.
(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.
2.22 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.
2.23 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.
2.24 Employee Benefit Provisions
Salary, wages and annual leave
Liabilities for wages and salaries, including non-monetary benefits and
annual leave expected to be settled within 12 months of the end of the
reporting period are recognised in other liabilities or provision for
employee benefits in respect of employees' services rendered up to
the end of the reporting period and are measured at amounts
expected to be paid when the liabilities are settled.
Long service leave
Liabilities for long service leave are recognised as part of the provision
for employee benefits and measure as the present value of expected
future payments to be made in respect of services provided by
employees to the end of the reporting period using the projected unit
credit method. Consideration is given to expected future salaries and
wages levels, experience of employee departures and period of
service. Expected future payments are discounted using national
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
2.25 Income Tax
The income tax expense for the period is the tax payable on the
current period's taxable income based on the notional 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.
33
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Deferred tax assets are only recognised for deductible temporary
differences, between carrying amounts of assets and liabilities for
financial reporting purposes and their respective tax bases, at the tax
rates expected to apply when the assets are recovered or liabilities
settled, based on those tax rates which are enacted or substantially
enacted for each jurisdiction. Exceptions are made for certain
temporary differences arising on initial recognition of an asset or
liability if they arose in a transaction other than a business combination
that at the time of the transaction did not affect either accounting profit
or taxable profit.
Deferred tax assets are only recognised for deductible temporary
differences and unused tax losses if there is reasonable certainty that
future taxable amounts will be available to utilise those temporary
differences and losses.
Deferred tax assets and liabilities are not recognised for temporary
differences between
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.
2.26 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:
2.26.1 Assets exceed liabilities immediately before the dividend is
declared and the excess is sufficient for the payment of dividends;
and
2.26.2 The payment of the dividend is fair and reasonable to the
company's shareholders as a whole; and
2.26.3 The payment of the dividend does not materially prejudice the
company's ability to pay its creditors.
2.27 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.
2.28 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.
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
2017
3%
3%
0.0%
9.19%
2016
10%
3%
0.0%
9.28%
Manufacturing CGU:
New Coaltram sales of between 4 to 10 per year (2016: 4 to 10 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.
34
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
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 there was an impairment of the Group's
investments in listed companies of $0.024M (2016: $0.082M) and no
other listed available-for sale financial assets were impaired at the
reporting date (2016: nil).
Investment in Associates
The Group's investments in associated entities are reviewed at each
reporting date to consider whether there is any indication that
individual investments are impaired. Based on all the information
available to the Directors it was determined that there were no
impairments of the Group's investments in associated entities.
Investment Properties
All investment properties 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.
2. Management then reviews the remainder of the stock items
and, for those which management consider to be slow moving:
•
•
•
•
•
Provides for 15% of the inventory value for those stock
items that have been held for 1 to 2 years;
Provides for 35% of the inventory value for those stock
items that have been held for 2 to 3 years;
Provides for 55% of the inventory value for those stock
items that have been held for 3 to 4 years;
Provides for 75% of the inventory value for those stock
items that have been held for 4 to 5 years;
Provides for 95% of the inventory value for those stock
items that have been held for more than 5 years.
3. Management then reviews the remainder of the stock items,
forecasts future stock sales for the next 1 year and, for those
stock items which appear to be in excess of sales, a provision is
made using the same formulas as that of slow moving stock.
4. Finally, management then performs a review of the remainder
of the stock items to determine if any additional provisions
should be made to determine net realizable value.
The review done in the 2017 financial year resulted in an inventory
write-down movement of $0.555M (2016: $0.852M) and a total
provision of $6.855M (2016: $6.659M). Refer Note 2.16.
Goodwill, Brand Names, Plant and Equipment
Warranty Provision
No impairment charges with respect to goodwill, brand names,
patents, licences and development costs were recognised during the
year ended 30 June 2017 (2016: $nil).
Refer to note 20 for details of assumptions used in estimating the
recoverable amount of intangible assets.
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 $0.098M (2016: $0.040M).
2.29 Critical accounting estimates and judgements
Decommissioning and Make Good Provision
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.
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
$8.091M 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 (2016: $nil). Refer Note 4 and Note 19.1
for further details.
Inventory
the
is carried at
lower of cost or net realisable
Inventory
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
is based on
management’s analysis of stock movements for all individual stock
items on a four step basis:
to complete. The net realizable value
1. Management reviews the stock items which had no sales and:
•
•
Provides for 50% of the inventory value for those stock
items which have no sales in the 1 to 3 years;
Provides for 100% of the inventory value for those stock
items which have no sales for more 3 years.
The Group has agreements to return leased premises and assets to
their contractually agreed condition at the expiry of the lease. The
provision is based on the pro rata estimate of costs to complete these
works at the expiry of the lease and the total provision as at year end
was $0.930M (2016: nil).
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).
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.
2.30 Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable
to owners of PPK Group Limited, by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for
bonus elements in ordinary shares during the year.
35
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
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.
2.31 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.
2.32 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. The Mining
Equipment business segment had a loss of $2.725M in the financial
year but the Group has benefitted from the sale of investment
property and received $7.540M in proceeds this financial year.
Accordingly, in the 2017 financial year the Group recorded a gain of
$0.560M after tax and consumed $7.730M in operating cash flows.
On 11 September 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 2017 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.
PPK Directors Robin Levison, Glenn Molloy and Graeme
Webb have provided a written undertaking to PPK to transfer
up to $2 million of funds for the purposes of enabling PPK to
pay its debts as and when they become due, should the need
arise before 7 September 2018. This written undertaking is
subject to satisfactory commercial terms being agreed
between the parties and if the funds are in the form of debt
financing, sufficient and satisfactory security for the loans be
provided by PPK. As at the date of the Directors’ Report,
these funds have not been drawn down.
2.33 Rounding of Amounts
The parent entity receives relief and exemption under ASIC
Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191 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.
36
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Notes
Consolidated Entity
2017
$000S
2016
$000S
NOTE 3
REVENUE, OTHER INCOME & EXPENSES FROM OPERATIONS
3.1 REVENUE
Mining equipment sale / service / hire revenue
Rental income from investment properties
3.2 OTHER INCOME
Net gain on sale of held for sale property
Net gain on sale of available-for-sale financial assets
Foreign currency translation gain
Recovery of debt previously written off
Sundry income
3.3 FINANCE INCOME
Interest from other persons
Interest from associated entities
3.4 EXPENSES
See Note 29.1 for a breakdown of expenses by segment and in total.
3.5 FINANCE COSTS
Interest expense
Unwinding/(reversal) of discount relating to onerous lease liability
3.6 SHARE OF PROFIT (LOSS) FROM ASSOCIATES
ACCOUNTED FOR USING THE EQUITY METHOD
Share of profit (loss) from associates accounted for under the equity method
See Note 15 for further detail of the investment in associates.
30.1
30.1
30.1
30.1
30.1
30.1
30.1
30.1
30.1
30.1
28,945
273
29,218
4,433
244
-
396
35
26,075
585
26,660
-
1,548
1
-
48
5,108
1,597
53
-
53
530
(180)
350
344
151
495
835
180
1,015
-
(389)
37
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% (2016: 30%)
(Non-assessable income) non-deductible expenses
Share based payment
(Over) provision relating to prior year - research & development concession
Capital losses realised not previously recognised
Capital gain on sale of investment property offset against losses carried
forward
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:
(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
Consolidated Entity
2017
$000S
2016
$000S
Notes
560
168
6
-
-
(1,330)
1,413
(257)
-
-
0%
-
-
-
-
-
149
-
149
(7,873)
(2,362)
144
31
(133)
(256)
-
1,998
445
-
(133)
0%
-
-
(133)
(133)
-
174
-
174
38
NOTE 6 KEY MANAGEMENT PERSONNEL REMUNERATION
6.1 Key management personnel remuneration
Short-term benefits
Post-employee benefits
Share-based payments
Notes
Consolidated Entity
2017
$000S
2016
$000S
1,102
39
-
1,141
1,243
45
-
1,288
During the reporting period, the Group recognises the Directors, the Chief Financial Officer and the President PPK China Operations as
being the only key management personnel. See the Directors’ Report for details of their remuneration policy and benefits.
6.2 Equity Instruments
There were no options and rights held directly, indirectly or beneficially by key management personnel and their related parties in the current
or previous financial year.
During the 2014 reporting year, PPK Group Ltd issued certain key executives 15.500M shares in the Group at an issue price of $0.70 per
share and provided the executives with a non-recourse loan to pay for the shares. 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. The non-recourse loan expired on 27 April 2017, the loans have not been paid
back and the Group is considering its options.
6.3 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.
6.4 Other transactions with directors
Refer to Note 28, Note 29 and the Audited Remuneration Report contained in the Directors’ Report of this annual report for further details
of transactions with directors and director related entities.
NOTE 7 DIVIDENDS
(a) Dividends paid
2017 No interim ordinary dividend was declared or paid
(prior year nil)
2016 No final ordinary dividend was declared or paid
(prior year nil)
(b) Dividends declared after balance date
The directors have not declared a final dividend for the 2017 financial year.
(c) Dividends for Share and Loan Plan
-
-
-
-
-
-
-
-
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 (2016: nil), 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% (2016 - 30%)
2,164
2,164
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.
39
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
Notes
Consolidated Entity
2017
Cents
0.8
0.8
2016
Cents
(13.4)
(13.4)
$000s
$000s
560
(7,763)
No.
No.
(b) Weighted average number of ordinary shares outstanding during the year used in calculation of
basic EPS
73,314,570
57,814,570
Weighted average number of ordinary shares outstanding during the year used in calculation of
diluted EPS [1]
73,314,570
57,814,570
[1] 15.500M loan plan shares (see Note 6.2) were excluded from the computation of diluted earnings per share in 2016 as they would have
resulted in a decrease in loss per share for continuing operations.
NOTE 9 PARENT ENTITY INFORMATION
The following detailed information relates to the parent entity, PPK Group Limited at 30 June 2017. 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
Notes
$000’s
220
16,812
17,032
164
-
164
$000’s
209
17,140
17,349
363
-
363
16,868
16,986
34,773
-
1,338
19,243
16,868
(118)
-
(118)
34,773
1,330
8
(19,125)
16,986
(16,345)
-
(16,345)
[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 25.
[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.
40
CURRENT ASSETS
NOTE 10 CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Cash at bank consists of temporary surplus funds which are non-interest
bearing.
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, associated entities - secured
- other loans, other persons - secured
- other loans, associated entities - unsecured
Impairment of capitalised interest of loans receivables
Non-Current
Loans and receivables
- other loans, associated entities - secured
Notes
Consolidated Entity
2017
$000’s
2016
$000’s
32.2
1,104
945
11.1
11.2
11.3
11.4
11.3
11.3
11.3
4,715
(159)
4,556
366
-
366
565
-
948
(565)
948
5,870
-
-
3,449
(152)
3,297
202
-
202
3,567
2,915
42
(364)
6,160
9,659
857
857
11.1 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.
11.2 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.
11.3 Other loans, associated entities - secured
Other loans are funds advanced to unit trusts that are associates of the Group. The loans were 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 was repaid during the 2017 financial year (2016: $3.567M). 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 $0.948M (2016:
$0.857). In the current year $0.565M (2016 $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 and Other Comprehensive Income.
11.4 Other loans, other persons - secured
The loan to Couran Cove Holdings Pty Ltd ATF CCH Trust was repaid during the 2017 financial year (2016: $2.915M). The loans were
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.
Refer Note 31 for details on related party loans.
Movement in balance – current
Opening Balance
Reclassified to/from non-current
Funds advanced
Expenses capitalised
Adjustment for carry forward loan – Nerang Street Southport Project Trust
Less principal and interest repaid
Interest revenue added to carrying value
6,160
857
47
4
(8)
(6,112)
948
-
948
5,171
3,328
3,146
18
-
(5,878)
5,785
375
6,160
41
NOTE 11 TRADE AND OTHER RECEIVABLES (continued)
Movement in balance – non-current
Opening Balance
Reclassified to/from non-current
Interest revenue added to carrying value
Provision for Impairment of Receivables
Notes
Consolidated Entity
2017
$000S
2016
$000S
857
(857)
-
-
-
4,139
(3,328)
811
46
857
Current trade, term and other receivables and loans are assessed for recoverability based on the underlying terms of the contract. A
provision for impairment is recognised when there is objective evidence that an individual trade or term receivable is impaired. Movements
in the provision for impairment are as follows:
Opening
balance
$000S
Charge for
the year
$000S
Reversal of
charge
$000S
Amounts
written off
$000S
Closing
Balance
$000S
Consolidated Entity
2017
Current
Trade receivables
Loans and receivables, associated entities
2016
Current
Trade receivables
Loans and receivables, associated entities
152
364
516
-
-
-
7
201
208
152
364
516
-
-
-
-
-
-
-
-
-
-
-
-
3,010
1,299
199
48
4,556
159
565
724
152
364
516
2,271
876
74
76
3,297
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
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.
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
366
-
366
202
-
202
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.
42
NOTE 12 INVENTORIES
At net realisable value
Raw materials
Finished goods
Work in progress
Notes
Consolidated Entity
2017
$000S
454
4,262
5,482
10,198
2016
$000S
474
4,702
4,780
9,956
During 2017 $13.559M (2016: $11,683M) 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 $0.436M in inventories to net realisable value (2016: $0.682M) (refer note 30.1).
NOTE 13 OTHER CURRENT ASSETS
Prepayments
NON-CURRENT ASSETS
NOTE 14 FINANCIAL ASSETS
Available-for-sale financial assets
Opening Balance
Additions at cost
Fair Value adjustments
Impairment
Disposals
324
324
419
419
2,032
22
(953)
-
(826)
275
3,533
-
1,035
(82)
(2,454)
2,032
The available-for-sale financial assets 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.
Impairment losses recognised in the profit or loss on equity instruments classified as available-for-sale are not reversed through profit or loss.
NOTE 14 FINANCIAL ASSETS (continued)
Total Available-for-sale financial assets
Current
Non-Current
275
-
275
-
2,032
2,032
43
NOTE 15 INVESTMENTS ACCOUNTED FOR USING THE EQUITY
METHOD
Investment in associates
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
Notes
Consolidated Entity
2017
$000S
2016
$000S
19
-
-
19
408
(389)
-
19
Unlisted entities
Ownership Interest
2017
%
2016
%
2017
Units Held
$1 Each
2016
Units Held
$1 Each
Details of units held in associated trusts
Nerang Street Southport Project Trust
PPK Willoughby Funding Unit Trust
18.75%
22.86%
18.75%
22.86%
275
40
315
275
40
315
The Group has not been able to obtain the financial information for each of the above Trusts for the year end 30 June 2017, however, the
directors do not consider this to be material to the Group for the following reasons:
Nerang Street Southport Project Trust
The Group is a passive investor in the Trust, alongside other investors, and owns 100% of the share capital in the trustee company, PPK
Southport Pty Ltd. PPK Directors Robin Levison, Glen Molloy and Graeme Webb are directors of the Trust.
The Trust’s principal place of business is Level 27, 10 Eagle Street, Brisbane, QLD 4000. The Trust owns development property in
Southport, Qld which is for sale. The Trust makes cash calls on the unitholders to cover its operating costs and the Group funds these
through a loan to the Trust (see note 11.3). As the nature of the Trust has not changed in this financial year, there is no material change
from the carrying value at the end of the previous financial year.
PPK Willoughby Funding Unit Trust
The Group is a passive investor in the Trust, alongside other investors, and owns 100% of the share capital in the trustee company PPK
Willoughby Holdings Pty Ltd. PPK Directors Robin Levison, Glen Molloy and Graeme Webb are directors of the Trust.
The Trust’s principal place of business is Level 27, 10 Eagle Street, Brisbane, QLD 4000. The Trust completed the development and sales
of its residential land project in Willoughby, NSW this financial year. The loan to the Trust was repaid (see Note 11.3) and capitalized
interest has been impaired, therefore, there is no material change from the carrying value at the end of the previous financial year.
44
NOTE 16 INVESTMENTS IN SUBSIDIARIES
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
PPK Funding 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
16.1
16.2
16.3
16.3
16.3
16.4
16.5
16.6
2017
%
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%
100%
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%
-
-
16.1 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 15.1).
16.2 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.
16.3 PPK Finance Pty Ltd acts as the trustee company of the PPK Funding Trust and the TMD Loan Trust. The Group holds 100% of the
issued units of both trusts.
16.4 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 15.1)
16.5 PPK (Beijing) Mining Equipment Co. Ltd was formed in conjunction with the opening of PPK’s office in Beijing, China. PPK is in the
process of liquidating this company.
16.6 PPK Plans Pty Ltd was created as trustee for the PPK Long Term Incentive Plan Trust which administers the employee share plan.
As at reporting date the Group includes no subsidiaries with Non-Controlling Interests.
45
NOTE 17 INVESTMENT PROPERTIES
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
Disposals
Depreciation 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
NOTE 18 PROPERTY PLANT AND EQUIPMENT
Land and Buildings – at cost
Less: Accumulated depreciation
Plant and equipment – at cost
Less: Accumulated depreciation and impairment
Consolidated Entity
2017
$000s
2016
$000s
Notes
-
-
-
-
-
-
-
3,425
3,401
(24)
-
273
4,433
-
-
1,264
(64)
1,200
9,150
(3,867)
5,283
2,109
1,881
(565)
1,316
3,425
-
3,425
3,468
-
(43)
3,425
561
-
22
3
1,264
(39)
1,225
9,070
(2,471)
6,599
Total property, plant and equipment of continuing operations
6,483
7,824
46
NOTE 18 PROPERTY PLANT AND EQUIPMENT (continued)
Reconciliations
Reconciliations of the carrying amounts of each class of plant & equipment are set out below.
Consolidated – 2017
Carrying amount at start of year
Additions
Disposals
Transfers
Impairment
Depreciation & amortisation expense
Carrying amount at end of year
NOTE 18 PROPERTY PLANT AND EQUIPMENT (continued)
Consolidated – 2016
Carrying amount at start of year
Acquired with business combination
Additions
Disposals
Depreciation & amortisation expense
Carrying amount at end of year
Land &
Buildings
$000s
Plant &
Equipment
$000s
1,225
-
-
-
-
(25)
1,200
1,250
-
-
-
(25)
1,225
6,599
174
(12)
(20)
(42)
(1,416)
5,283
7,801
284
(227)
(76)
(1,183)
6,599
Total
$000s
7,824
174
(12)
(20)
(42)
(1,441)
6,483
9,051
284
(277)
(76)
(1,208)
7,824
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 with the Firefly business.
Notes
Consolidated Entity
2017
$000s
2016
$000s
-
-
-
-
-
-
NOTE 19 DEFERRED TAX ASSETS AND LIABILITIES
19.1 Assets
CURRENT
Income tax receivable
NON-CURRENT
Deferred tax asset
Movements
Opening balance
Credit/(charged) to profit or loss
Set off against deferred tax liability
-
-
-
-
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 $8.091M 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.
-
-
-
-
19.2 Liabilities
CURRENT
Income Tax provision
NON-CURRENT
Deferred tax liability
Movements
Opening balance
(Credit)/charged to profit or loss
Set off against deferred tax asset
-
-
-
-
-
-
-
-
-
-
-
-
47
NOTE 19 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
19.3 Not Recognised in the Statement of Financial Position
Unrecognised deferred tax assets/deferred tax liabilities
Tax losses
Temporary differences
Total
Movements
Opening balance
Tax losses not recognised current year
Temporary differences not recognised current year
Closing balance
NOTE 20 INTANGIBLE ASSETS
Licences, software and patents - at cost
Less: Accumulated amortisation and impairment
Development costs - Mining equipment manufacturing - at cost
Less: Accumulated amortisation and impairment
Intangible assets of continuing operations
Reconciliations
Licences, software and patents - at cost
Balance at the beginning of year
Additions - external purchases
Amortisation charge
(Amortisation charges are included in cost of goods sold and
administration expenses in the statement of profit or loss and other
comprehensive income)
Development Costs
Balance at the beginning of year
Additions at cost
Impairment charge
Amortisation charge
Refer accounting policy Note 2.19 for more detail.
Impairment disclosures
Notes
Consolidated Entity
2016
$000S
2017
$000S
6,594
1,148
7,742
6,865
1,596
(719)
7,742
4,703
(4,605)
98
2,876
(2,588)
288
386
79
56
(37)
98
173
115
-
-
288
4,998
1,867
6,865
4,422
1,998
445
6,865
4,647
(4,568)
79
2,761
(2,588)
173
252
120
5
(46)
79
-
173
-
-
173
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 (2016: nil).
CURRENT LIABILITIES
NOTE 21 TRADE AND OTHER PAYABLES
Trade payables
Sundry payables and accruals
Payables of continuing operations
NOTE 22 INTEREST BEARING LIABILITIES - CURRENT
Bank loans – secured
Other loans - secured
Other loans - unsecured
Interest bearing liabilities of continuing operations
Total secured liabilities - see Note 24.1
2,256
2,293
4,549
20
1,262
-
1,282
2,447
4,315
6,762
46
5,760
-
5,806
48
NOTE 23 PROVISIONS
Current
Annual leave
Warranty
Decommissioning and make good
Onerous lease
Long service leave
Total current
Non-Current
Decommissioning and make good
Onerous lease
Long service leave
Total Non-current
Notes
23.1
23.2
23.3
23.4
23.5
23.3
23.4
23.5
Consolidated Entity
2017
$000S
837
40
711
-
330
1,918
459
-
133
592
2016
$000S
798
40
240
420
308
1,806
-
1,210
88
1,298
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 2.24 for more detail.
Warranty provisions comprise estimated costs to perform repairs to mining equipment while under warranty.
Make good provision comprise estimated costs to return leased premises and assets to their contractually agreed condition on expiry of the lease.
In 2015 PPK determined that the long term lease payments entered into for seven COALTRAMS with an industry finance provider were considerably
higher than corresponding revenue expected in the short term hire environment and, as a result, made a $2.000M onerous lease provision. At 30
June 2016, the onerous lease provision was $1.630M, as a result of net writebacks of $0.370M (being $0.550M gross writeback less $0.180M
associated interest). In 2017, the full amount of the onerous lease provision of $1.630M and the net interest of $0.350M was written back resulting
from the renegotiation of the monthly lease payments (see Note 28).
Current
23.1 Reconciliation of Provision for Annual leave
Opening balance
Increases (decreases) to provision
Closing balance
23.2 Reconciliation of Provision for Warranty
Opening balance
Increases (decreases) to provision
Closing balance
23.3 Reconciliation of Provision for Decommissioning and make
good
Opening balance
Increases (decreases) to provision
Closing balance
23.4 Reconciliation of Provision for Onerous lease contract
Opening balance
Increase (decrease) to provision
Closing balance
The increase/(decrease) to the provision consists of:
Unwinding/(reversal) of the onerous lease contract
Unwinding/(reversal) of the discount relating to the onerous lease contract
798
39
837
40
-
40
240
930
1,170
1,630
(1,630)
-
(1,450)
(180)
(1,630)
775
23
798
140
(100)
40
240
-
240
2,000
(370)
1,630
(550)
180
(370)
49
Notes
Consolidated Entity
2017
$000S
2016
$000S
NOTE 23 PROVISIONS (continued)
23.5 Reconciliation of Provision for Long service leave
Opening balance
Increase (decrease) to provision
Closing balance
Current
Non-current
Total
NON-CURRENT LIABILITIES
NOTE 24 INTEREST BEARING LIABILITIES
Bank Loans - Secured
Interest bearing liabilities
24.1 Secured liabilities
Total secured liabilities (current and non-current) are:
Bank loans – Seven Hills Property Holdings Pty Ltd
Bank loans - PPK Mining Equipment Pty Ltd
Vendor loan - PPK Properties Pty Ltd
Vendor loan - PPK Mining Equipment Pty Ltd
Non-bank loans – PPK (CC) Pty Ltd
Non-bank loans – PPK Investment Holdings Pty Ltd
Non-bank loans – PPK Properties Pty Ltd
24.2 Unsecured liabilities
Other loans - other persons
Total Interest Bearing Liabilities
24.3 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
The following current assets are also pledged as security under the
registered mortgage and cross guarantees & indemnities:
17
18
15
18
20
Cash assets
Term receivables
Financial assets
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 $7.248M (2016: $12.635M).
11
14
11
12
13
10
396
67
463
1,918
592
2,510
-
-
-
20
-
-
-
-
1,262
1,282
-
-
1,282
-
1,200
-
19
5,283
386
6,888
1,104
948
275
4,922
10,198
324
17,771
24,659
430
(34)
396
420
1,210
1,630
2,730
2,730
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
945
7,017
-
2,641
9,956
419
20,978
34,530
50
Notes
Consolidated Entity
2017
$000S
2016
$000S
NOTE 24 INTEREST BEARING LIABILITIES (continued)
24.4 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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,730
3,982
46
6,758
-
-
-
-
-
2,730
3,982
46
6,758
The major facilities are summarised as follows:
Banking overdrafts
As at the date of this report the Group has no bank overdraft facilities (2016: nil).
Commercial bill facilities
As at the date of this report the Group has no commercial bank bill facilities (2016 $2.730M). The market rate facilities provided
by the CBA, maturing in October 2018, were secured by first mortgage over the property located at 13A Stanton Road, Seven
Hills. This facility was repaid in January 2017 from the proceeds of the sale of the investment property. The interest rate on the
facility was 6.36% (2016: 7.03%) inclusive of bank margins.
Non Bank Loans
In May 2017, the Group secured loans of $0.650M from a trust, of which PPK Director Glenn Molloy is a trustee, and $0.600M from an entity,
of which PPK Director Glenn Molloy is a director. The loan proceeds were used to repay the Mt Thorley vendor loan (see below) of $1.037M
and the balance for capital expenditure and net working capital purposes. These loans incur interest at 10% per annum and are repayable
on 25 May 2018. 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.
The PPK (CC) Pty Ltd non-bank loans of $1.225M were repaid in September 2016. The non-bank loans incurred interest at 10%
per annum and were 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.
The PPK Investment Holdings Pty Ltd non-bank loan of $2.757M was repaid in January 2017. The non-bank loans incurred
interest at 15% per annum, was for an initial 12 month term and secured by second mortgage over the property located at 13A
Stanton Road, Seven Hills, NSW.
Vendor Loans
The PPK Properties Pty Ltd vendor loan relates to the Mt Thorley land and buildings and was secured by first registered mortgage
over this property and with interest at 8% per annum. The borrowing was refinanced in May 2017 (see above).
The PPK Mining Equipment Pty Ltd vendor loan was settled as part of the valuation of the MONEx business acquired in 2014 but
disputed and resolved in December 2016. The original borrowings incurred interest at 6.5% per annum and were secured by a
guarantee from PPK Group Limited.
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.
51
SHAREHOLDERS' EQUITY
NOTE 25 CONTRIBUTED EQUITY PAID UP CAPITAL
73.315M (2016: 73.315M) 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
Notes
Consolidated Entity
2017
$000S
2016
$000S
34,625
34,625
34,625
-
-
34,625
34,125
-
500
34,625
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.
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
New share issue
Capital Risk Management
No.
No.
73,314,570
-
73,314,570
72,647,903
666,667
73,314,570
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 to maintain a sufficient funding base to
enable the Group to meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these
aims, either through altering its dividend policy, new share issues, share buy-backs, or the reduction of debt, the Group considers not only its
short-term position but also its long-term operational and strategic objectives.
It is the Group’s policy to maintain its gearing ratio within the range of 20% - 50% (2016: 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
1,282
(1,104)
178
16,318
16,318
1%
8,536
(945)
7,591
16,986
24,577
31%
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.
52
NOTE 26 RESERVES
Available-for-sale financial assets
Share options
Foreign currency translation
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
Notes
26.1
26.2
26.3
Consolidated Entity
2017
$000S
72
1,338
(9)
1,401
1,388
-
-
1,338
1,295
(927)
(296)
-
72
(4)
(5)
(9)
2016
$000S
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)
26.1 Available-for-sale financial assets
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.
26.2 Share options
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 previous
financial year’s 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 could 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 initial vesting conditions the vendor was issued 0.667M shares
on 16 October 2015 being the first $0.500M tranche. 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 conditions 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.
26.3 Foreign currency translation
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.
53
NOTE 27 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 2.14, Note 2.15, Note 2.21, Note 2.22
and Note 2.23, and their carrying amounts are set out below.
Consolidated 2017
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 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
Fixed Interest Rate Maturing
Weighted
Average
Interest
Rate
Floating
Interest
Rate
$000s
Notes
Within
1 Year
$000s
1 to 5
Years
$000s
Non-
Interest
Bearing
$000s
0.0%
10.0%
0.0%
0.0%
0.0%
10.0%
0.0%
0.0%
14.5%
2.8%
0.0%
0.0%
2.6%
12.5%
0.0%
11
11
10
14
15
22
22
21
11
11
10
14
15
24
24
21
-
-
-
146
-
-
146
-
-
-
-
-
-
-
149
-
-
149
2,730
-
-
2,730
-
948
948
-
-
-
948
-
1,282
-
1,282
-
6,160
6,160
-
-
-
-
46
4,879
-
4,925
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,922
-
4,922
958
275
19
6,174
-
-
4,549
4,549
3,499
857
4,355
796
2,032
19
2,847
-
817
6,762
7,579
Total
$000s
4,922
948
5,870
1,104
275
19
7,268
-
1,282
4,549
5,831
3,499
7,017
10,516
945
2,032
19
2,996
2,776
5,696
6,762
15,234
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).
54
NOTE 27 FINANCIAL RISK MANAGEMENT (continued)
Assets
Group 2017
Listed equity securities
Group 2016
Listed equity securities
Note
14
14
Level 1
$000s
Level 2
$000s
Level 3
$000s
275
275
2,032
2,032
-
-
-
-
-
-
-
-
Total
$000s
275
275
2,032
2,032
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.
27.1 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.
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
146
-
146
-
-
146
149
-
149
2,730
2,730
(2,581)
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
(1)
1
(18)
18
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.
55
NOTE 27 FINANCIAL RISK MANAGEMENT (continued)
The Group's portfolio of investments in listed companies is concentrated in a small number of companies. The individual performances of
these companies exposes the Group to a greater concentration of risk than just that of general market forces if a more wide-spread portfolio
were held. However, because of this concentration of holdings the Directors are able to regularly monitor the performance of the companies
within its portfolio.
Sensitivity disclosure analysis
The Group's 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
Financial Assets
Available-for-sale financial assets
Investments in listed companies
Financial assets at fair value through profit or loss
Investments in listed companies
Notes
2017
$000S
275
-
275
2016
$000S
2,032
-
2,032
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%
-
-
19
-
-
142
- decrease in equity price by 10%
(iii) Currency Risk
Currency risk is the risk that the fair value or future cash flows of a financial item will fluctuate as a result of movements in international
exchange rates. The Group was not exposed to exchange rate transaction risk on foreign currency sales or foreign currency purchases
during the year. Sales revenue for the Group for the year was all denominated in Australian dollars and all sales in international currency
were less than 5% of total sales (2016: 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. Foreign currency purchases are converted to Australian dollars
at the time the purchase is made.
(142)
(19)
27.2 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 was primarily the risk that they will fail to honour their lease
agreements. The lease agreement with the Seven Hills property was 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:
The geographic location of customers, relating to these trade receivables, is disclosed in Note 30.4 of these accounts.
Australia
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
Property and investing
5,870
5,870
10,879
10,879
1,305
4,565
-
5,870
7,352
3,346
181
10,879
56
NOTE 27 FINANCIAL RISK MANAGEMENT (continued)
27.3 Liquidity risk
Liquidity risk is the risk that the Group and parent will encounter difficulty in meeting obligations associated with financial liabilities. The
Group’s objective to mitigate liquidity risk is to maintain a balance between continuity of funding and flexibility through the use of bank 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 24.
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.
Consolidated 2017
Financial Liabilities (current & non-current)
Trade & Other Payables
Bank Loans & overdrafts
Other Loans - other persons
Total Financial Liabilities
Consolidated 2016
Financial Liabilities (current & non-current)
Trade & Other Payables
Bank Loans & overdrafts
Other Loans - other persons
Total Financial Liabilities
Carrying
amount
<6 months
$’000
$’000
6-12
months
$’000
1-3 years
>3 years
Contractual
Cash flows
$’000
$’000
$’000
4,549
20
1,262
5,831
4,549
20
12
4,581
6,764
2,776
5,696
15,236
6,764
48
4,672
11,484
-
-
1,250
1,250
-
47
61
108
-
-
-
-
-
2,831
1,254
4,085
-
-
-
-
-
-
-
-
4,549
20
1,262
5,831
6,764
2,926
5,987
15,677
NOTES
Consolidated Entity
2017
$000S
2016
$000S
NOTE 28 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
971
2,452
-
3,423
3,712
5,027
-
8,739
NOTE 29 CONTINGENT ASSETS AND LIABILITIES
PPK Directors Robin Levison, Glenn Molloy and Graeme Webb have provided a written undertaking to PPK to transfer up to $2 million of
funds for the purposes of enabling PPK to pay its debts as and when they become due, should the need arise before 7 September 2018.
This written undertaking is subject to satisfactory commercial terms being agreed between the parties and if the funds are in the form of
debt financing, sufficient and satisfactory security for the loans be provided by PPK. As at the date of the Directors’ Report, these funds
have not been drawn down.
The Group has one bank guarantee of $0.140M which is 100% secured by a cash deposit of the same amount (2016: $0.140M).
Non bank guarantees and indemnities include:
Glegra Pty Ltd ATF The CoalTram Trust has, in relation to the 7 leased Coaltrams:
•
•
an Unlimited Guarantee and Indemnity from PPK Group Limited, PPK Mining Equipment Group Pty Ltd and PPK Mining
Equipment Pty Ltd; and
a fixed and floating charge over all the assets of PPK Mining Equipment Hire Pty Ltd.
The Group has a contingent liability of $4.808M, being the amount of the rental arrears of $1.080M waived and all rent reductions of
approximately $3.728M to the end of the lease term for each Coaltram, in the event that PPK Mining Equipment Group Pty Ltd, PPK Mining
Equipment Pty Ltd, PPK Mining Equipment Hire Pty Ltd, PPK Mining Repairs Alternators Pty Ltd or PPK Firefly Pty Ltd experiences an
insolvency event before 13 October 2020.
A key Coaltram parts supplier has a Guarantee and Indemnity of $0.500M from PPK Group Limited in relation to trade credit account.
The lease motor vehicle fleet provider has a Guarantee and Indemnity from PPK Group Limited in relation to the leased motor vehicle fleet.
57
NOTE 30 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 sold its only industrial property during the year.
- 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.
Investment
Properties
$000s
Investing
$000s
Mining
Equipment
$000s
Total
$000s
30.1 Year ended 30 June 2017
Business Segments
Segment Revenue from external customers
Sales revenue
Rental income
Dividends received
Segment other income
Net gain on sale of investment property
Net gain on sale of available-for-sale financial assets
Other segment income
Recovery of debt previously written off
Reversal of onerous contract provision
Finance income
Total Revenue and other income
Segment expenses include
Employee benefits expenses
Defined contribution superannuation expenses
Administration expenses
Rental expense on operating lease
Warranty costs
Doubtful debts
Redundancy and relocation expenses
Depreciation and amortisation
Impairment of available-for-sale financial assets
Impairment of plant and equipment
Inventory write-down
Provision for decommissioning and make good
Net loss on disposal of fixed assets
Cost of sales
Research and development
Interest expense
Unwind/(reversal) of discount on onerous lease
contract
Total expenses
Segment result
-
273
-
273
4,433
-
-
-
4,433
-
-
4,706
-
-
306
-
-
-
-
25
-
-
-
-
-
331
-
-
-
-
331
4,375
-
-
-
-
-
244
-
396
640
-
53
693
-
-
5
-
-
-
-
-
24
-
-
-
-
29
-
-
-
-
29
664
Reconciliation of segment net profit to group net profit before tax
Amounts not included in segment profit but reviewed by the Board:
Unallocated corporate expense
Consolidated operating (loss) before income tax
Income tax expense benefit (expense)
Consolidated profit after income tax attributable to owners of PPK Group Limited
28,945
28,945
-
-
273
-
28,945
29,218
-
-
35
-
35
1,630
-
30,610
3,419
295
2,580
2,710
98
159
23
1,467
-
42
436
930
9
12,168
20,444
373
530
(180)
33,335
(2,725)
4,433
244
35
396
5,108
1,630
53
36,009
3,419
295
2,891
2,710
98
159
23
1,492
24
42
436
930
9
12,528
20,444
373
530
(180)
33,695
2,314
(1,754)
560
-
560
58
NOTE 30 SEGMENT INFORMATION (continued)
Segment Assets
Unallocated
Total Assets
Segment Liabilities
Unallocated
Total Liabilities
30.2 Year ended 30 June 2016
Segment Revenue from external customers
Sales revenue
Rental income
Interest 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
Inventory write-down
Recognition of onerous contract liability
Redundancy and relocation costs
Segment result
Investment
Properties
$000s
Investing
$000s
Mining
Equipment
$000s
1,532
1,640
21,228
1,273
2
4,217
Investment
Properties
$000s
Investing
$000s
Mining
Equipment
$000s
-
585
-
585
-
4
4
589
79
-
-
-
-
-
-
495
1,495
1,548
1
1,549
2,044
-
82
-
-
-
26,075
-
-
26,075
-
44
44
26,119
1,218
-
682
(550)
-
Total
$000s
24,400
259
24,659
5,492
2,849
8,341
Total
$000s
26,075
585
495
27,155
1,548
49
1,597
28,752
1,297
82
682
(550)
-
510
1,721
(6,699)
(4,468)
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 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
Investing
$000s
Mining
Equipment
$000s
4,824
9,373
20,928
3,704
4,265
8,655
(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
59
NOTE 30 SEGMENT INFORMATION (continued)
30.3 Geographic location of Customers
The Group primarily operates in Australia with less than 1% of its revenue from the mining equipment segment from customers located
overseas.
The geographical location of receivables, relating to these sales, is disclosed in Note 27.2 of these accounts.
30.4 Customer Concentration
The mining equipment segment revenue are concentrated on the top three customers as follows:
Customer 1
Customer 2
Customer 3
NOTE 31 RELATED PARTIES
NOTES
Consolidated Entity
2017
$000S
10,637
5,724
3,820
2016
$000S
9,745
4,010
1,241
For details on transactions between related parties refer to Note 24.4, Note 28, Note 29 and the Audited Remuneration
Report contained in the Directors' Report of this annual report.
Notes
Consolidated Entity
2017
$000S
2016
$000S
NOTE 32 CASH FLOW INFORMATION
32.1 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
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 plant and equipment
Share of (profit) loss from associates
560
-
(4)
25
37
1,467
(237)
24
42
-
(7,763)
23
(6)
73
46
1,241
(129)
82
-
389
Loss (profits) on sale of available-for-sale financial assets
(244)
(1,548)
Share based payment expense
Loss (gain) on sale of plant & equipment
(Gain) on sale of property
Proceeds retained on sale of investment property
Decrease (increase) in tax recoverable
Changes in assets and liabilities:
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
-
9
(4,433)
335
-
(1,424)
-
95
(1,059)
(393)
(2,415)
(7,615)
103
58
-
-
178
721
-
208
1,481
(779)
(618)
(6,230)
60
NOTE 32 CASH FLOW INFORMATION (continued)
32.2 Reconciliation of Cash
For the purposes of the cash flow statement, cash includes:
Cash on hand
Call deposits with financial institutions
32.3 Non-cash Financing and Investing Activities
During the financial year, the consolidated entity had the following non
cash adjustments:
Offset of vendor loan plus capitalised rectification costs (WIP) in mutual
satisfaction of counter claims with third party
Notes
10
Consolidated Entity
2017
$000S
2016
$000S
1
1,103
1,104
(817)
(817)
2
943
945
-
-
NOTE 33 EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD
PPK held its Annual General Meeting for the year ended 30 June 2015 and 30 June 2016 on Monday, 14 August 2017 and was relisted on the ASX
on Wednesday, 16 August 2017.
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.
61
DIRECTORS' DECLARATION
FOR THE YEAR ENDED 30 JUNE 2017
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 2017 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 2017.
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 11th day of September 2017
GLENN MOLLOY
Director
62
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 audit of the financial report
Opinion
We have audited the financial report of PPK Group Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2017, 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 period then ended, and
notes to the consolidated financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:
a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
performance for the period ended on that date; and
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 2.32 in the financial report, which indicates that the Mining Equipment
segment incurred a loss of $2,725,000 and the Group incurred operating cash outflows of
$7,540,000 for the year ended 30 June 2017. As stated in Note 2.32, these events or conditions,
along with other matters as set forth in Note 2.32, indicate that a material uncertainty exists which
may cast significant doubt about the group’s ability to continue as a going concern. Our opinion is
not modified in respect of this matter.
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.
63
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
In addition to the matter described in the Material Uncertainty Related to Going Concern section,
we have determined the matters described below to be the key audit matters to be communicated
in our report.
Key audit matter
How our audit addressed the key audit matter
Inventory obsolescence provision – Note 2.16,
Note 2.20, Note 12
The Company is required to carry its inventory, which
is the most material asset on the Statement of
Financial Position, at the lower of cost or net
realisable value in accordance with AASB 102
Inventories.
The following factors add complexity or increase the
likelihood of errors in the determination of the
provision for obsolescence:
-
large inventory holdings and slower
inventory turnover indicate that there may
be obsolete stock on hand; and
- methods of estimating inventory provisions
involve significant management judgment,
including predictions about market
conditions and future sales.
This area is a key audit matter due to the materiality
of inventory to the Statement of Financial Position,
and the significant level of estimation involved in
applying the ‘lower of cost and net realisable value’
measurement methodology.
Revenue recognition – Note 2.9, Note 3.1
The Company’s revenue balance of $29,218,000 is
the largest item in the Statement of Comprehensive
Income.
The Company earns revenue from different business
streams, with each stream having differing revenue
recognition points under the Company’s revenue
recognition policies and Accounting Standards.
This area is a key audit matter due to the nature of
revenue arrangements, the systems and processes
used to transact sales and the importance of the
revenue balance to stakeholders.
Our procedures included, amongst others:
-
-
-
-
-
-
Performing testing on a sample of inventory
items to assess the cost basis and net
realisable value of inventories;
Assessing whether the recorded cost, after
factoring in provisioning adjustments, was
at the lower of cost and net realisable value;
Comparing the inventory obsolescence
provision to the Group’s accounting policy
and Accounting Standard requirements;
Evaluating the Group’s judgment of the
adequacy of the provision by assessing the
estimation model applied, the inputs to that
model, and the mathematical accuracy of
the model;
Agreeing the data underlying the model to
the accounting system or other sources;
and
Assessing the adequacy of the related
disclosures within the financial statements.
Our procedures included, amongst others:
-
-
-
-
-
-
Documenting systems and processes;
Testing of key controls within the revenue
processes;
Reviewing and testing the Group's revenue
recognition policies and processes to
ensure compliance with accounting
standards;
Testing a sample of revenue transactions to
assess appropriate revenue recognition
under the Group’s accounting policies and
accounting standards;
Performing trend analysis by month by
revenue stream; and
Assessing the adequacy of the related
disclosures within the financial statements.
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the period ended 30 June 2017, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
64
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard
Responsibilities of the Directors’ 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 and for 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.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to liquidate the Group or
to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 12 to 19 of the directors’ report for
the period ended 30 June 2017.
In our opinion, the Remuneration Report of PPK Group Limited, for the period ended 30 June
2017, complies with section 300A of the Corporations Act 2001.
Responsibilities
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.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
C D J Smith
Partner - Audit & Assurance
Brisbane, 11 September 2017
65
SHAREHOLDER INFORMATION
AS AT 5 September 2017
(a) Number of PPK shareholders: 913
(b) Total shares issued: 73,314,570
(c) Percentage of total holdings by or on behalf of the 20 largest shareholders: 73.87%
(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
269
199
269
69
201
59,853
874,753
1,623,565
8,619,654
62,136,745
410,960
(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
Miss Samantha Molloy
Mr Ian Macdonald
Ms Alison Irving
12,919,519
11,766,667
9,460,000
4,000,000
4,000,000
2,651,695
1,568,985
1,200,000
800,000
750,000
666,667
639,453
543,883
512,660
500,000
500,000
459,535
448,570
425,000
341,960
17.622
16.050
12.903
5.456
5.456
3.617
2.140
1.637
1.091
1.023
0.909
0.872
0.742
0.699
0.682
0.682
0.627
0.612
0.580
0.466
54,154,594
73.866
Substantial Shareholders
Shares to Which Entitled
% of Issued Capital
Wavet Holdings Pty Ltd
Ignition Capital Pty Ltd and Associates
Equipment Company of Australia Pty Ltd
Mcnamara Investment Group Pty Ltd
Zhang Family Investment Group Pty Ltd
12,969,519
11,766,667
9,460,000
4,000,000
4,000,000
17.62
16.05
12.90
5.456
5.456
66
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
67