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CNH IndustrialG R O U P L T D
AN N UAL R E P O RT 2021
Annual Report for the year ended 30 June 2021
PPK GROUP Limited
ABN 65 003 964 181
G R O U P L T D
Contents
Executive Chairman’s Report
2
8 Directors’ Report
33 Auditor’s Independence Declaration
34
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
36 Consolidated Statement of Financial Position
37 Consolidated Statement of Cash Flows
38 Consolidated Statement of Changes in Equity
40 Notes to the Consolidated Financial Statements
108 Directors’ Declaration
109 Independent Auditor’s Report
116 Shareholder Information
118 Corporate Directory
1
PPK Group Limited EXECUTIVE CHAIRMAN’S REPORT
Executive
Chairman’s
Report
The other significant change to our
business is the formal decision to
demerge the mining business and
focus totally on our technology
businesses going forward. This
has come about from the review
undertaken by the Board with the
decision to either list the mining
business as a separate entity on
an Australian stock exchange as a
separate business or to sell it outright
to another entity. As a result, the
financial statements and referencing
in the Annual Report will disclose the
mining business as a held-for-sale
Disposal Group.
It is difficult to reflect on 2021
without recognising the risk
that COVID-19 presented to our
community, our staff and our
stakeholders. We are very fortunate
that pro-active disciplines taken
by our staff, those working in the
industries and locations we operated
within and the focus on health and
safety resulted in no employees yet
being affected with COVID-19.
I am pleased with the strengthening
of our relationship with Deakin
University and acknowledge the
great contribution the management,
scientists and staff have given us
over the past year. Victoria has been
greatly affected by the government’s
response to COVID-19 with a multiple
number of lockdowns during the
financial year and continuing to
this day. Unfortunately, new BNNT
application projects have also been
hampered in progressing as much
as we would have liked during
this period.
While BNNT application projects
are our major focus, the Directors
have continued to review other
technology commercialisation
opportunities which culminated in
an investment in Advanced Mobility
Analytics Group (AMAG), announced
on 16 December 2020 with the
University of Queensland, and a new
PPE mask technology investment
outlined below.
TECHNOLOGY BUSINESS
OVERVIEW
BNNT Technology Limited
(BNNTTL)
Last year I mentioned that
BNNTTL had a single furnace
module producing high quality
pure BNNT and the need to move
to a multi-furnace module with
semi-automation. BNNTTL now
has two 4 furnace modules with
semi-automation capable of each
producing 50kg per annum of 95%
pure BNNT from a single weekly
shift. They are now expanding the
module configuration and building
two 6 furnace modules to be fully
automated with potential annual
production of an additional circa
300kg from these two modules per
annum, operating two shifts per
day once they are commissioned
which should be early next year.
The improvements in production
techniques have created a further
lowering of the cost of production
which will enable BNNTTL to
compete at the forefront of a wider
range of vertical international
markets.
We are seeing a continued increase
in enquiry from potential global
customers and research centres with
regard to the use of BNNT in their
respective products or research.
These positive responses leading
to increased sales are in addition
to the current sales to the existing
BNNT application projects that are in
progress and discussed in this report.
Li-S Energy Limited (Li-S)
Last year I mentioned the lithium-
sulphur battery project and in the
half year update I advised that the
$0.025 special fully franked dividend
would allow PPK shareholders to
participate in the upcoming Li-S IPO.
After several months of hard work
by Li-S directors, management and
advisers, Li-S has completed a $34.0
million oversubscribed capital raise
and on listing will issue 40.0 million
shares with an expected pre-IPO
market capitalisation of $544M.
I am pleased to report that the
2021 financial year has seen several
important milestones to PPK’s
transformation as a technology
incubation and commercialisation
business, primarily partnering
alongside Deakin University and
University of Queensland. Our focus
on defining and supporting industry
applications for BNNT continues to
open new doors for more innovative
products and advanced materials.
The financial prospects for the
Group continue to grow with these
innovations and new partnerships
and positions PPK strongly into the
near future.
Without doubt, the two most exciting
highlights have been the:
1.
2.
significant progress in automating
the BNNT manufacturing process
which now sees the Group
capable of producing commercial
volumes of high purity BNNT
and becoming the leading
manufacturer of BNNT in the
world.
Initial Public Offering (IPO) of
Li-S Energy Limited, which we are
expecting to list on the ASX in
September 2021. This is the first
IPO of a BNNT application project
to move from research to the
commercialisation phase and I am
excited about the opportunity
the lithium-sulphur battery has to
significantly transform the global
battery industry.
2
PPK Group Limited Technology
Energy
Ballistics
Investing in Boron Nitride
Nanotubes (BNNT),
commercialisation of High
Performance Batteries,
Ballistic Armour, Dental
Products & cutting edge
artificial intelligence.
Dental
Advanced Mobility
Analytics
3
PPK Group Limited EXECUTIVE CHAIRMAN’S REPORT (CONT’D)
Executive Chairman’s Report
Li-S shares were priced at $0.85c
prior to the IPO. As a result, the total
value of the $0.025 dividend paid
to PPK shareholders of $2.22M in
December 2020 (2.5c fully franked)
is now worth approximately $29M
to shareholders.
Li-S Energy is the first of the multiple
BNNT application projects that
has moved through the incubation
process to the next stage of
commercialisation. The capital raise
was significantly oversubscribed
from priority and public investors,
before institution and broker
allocations were considered. As a
result, there will be a scaling back of
shares requested by all investors but
this excess demand demonstrates
the value that PPK can provide to
these BNNT application projects
and its investment partners such
as Deakin.
I encourage all PPK shareholders to
review the Li-S Energy prospectus
on www.lis.energy.
White Graphene Limited (WGL)
On 3 December 2020 we announced
the white graphene project and
on 12 August 2021 we provided
an update on this project. White
graphene is a nanomaterial termed
boron nitride nanosheet (BNNS) and
referred to as white graphene due
to its unique quality to be almost
transparent.
White graphene shares many of the
important properties of BNNT such
as high strength, thermal stability
(up to 9000C), excellent thermal
conductivity, electrical insulation,
radiation shielding and non- toxic
to the human body.
The WGL project has experienced
delays over the past six months due
to COVID-19 impacts but it is now
at Stage One and we are currently
installing the equipment for the initial
manufacturing plant while, in parallel,
the research and development
continues to refine the many
operating parameters required to
commission the full scale continuous
production process planned for
the 1st quarter of 2022. Stage
Two will see more advanced and
automated production techniques
leading to significantly higher
volume outputs like those employed
in the production of BNNT as
mentioned earlier.
4
Preliminary results of the initial
research and testing has identified
significant benefits when using
white graphene in the industrial
applications listed below. WGL’s
priorities will be to demonstrate
these benefits and develop new
products to take to market:
– Greater strength, water resistance
and cleanability in paints for
timber and metal;
– Stronger fibreglass resins and
crack resistance faux leather;
– Stronger and lighter ballistic
polymers; and
– Increased electrical insulation
for wire coatings.
In 2018, Rice University, a leading
research university in the US,
published a paper identifying white
graphene as being the optimal
architecture for storing hydrogen.
Hydrogen is one of the cleanest ways
to generate electricity, however,
the drawbacks of hydrogen are
transportation, storage and safety.
A number of research reports
indicate the size of the global
hydrogen storage market is > USD
5 billion in 2021. WGL sees this as a
large opportunity and is researching
the incorporation of white graphene
in pipelines and vessels for hydrogen
transportation and storage.
WGL raised $2.800M in December
2020 by issuing 7.000M shares at
$0.40 per share. As a result, PPK
now owns 59.8%, Deakin owns 23.0%
and BNNTTL owns 9.2%.
Strategic Alloys Pty Ltd
(Strategic Alloys)
This project focuses on creating
a super strength aluminium and
manganese alloy by introducing
BNNT into its formulation. The initial
test results should be released in
the last quarter of 2021.
Recently the research and
development project has been
expanded to include base metal
additive manufacturing for
aluminium, nickel and titanium (three
key base metals). Preliminary results
from these tests are expected in
the next nine months.
The research is being undertaken
at joint venture partner Amaero’s
manufacturing plant and laboratories
at Notting Hill, Victoria and at Deakin
University in Geelong.
Multiple applications exist for
super strength aluminium alloys
and super strength titanium
alloys with industries including
aerospace, aviation and defence
seeking materials that are lighter,
stronger, more heat resistant and
more durable. The project is an
exciting opportunity to develop this
revolutionary technology in Australia
and create new products, industries,
employment and exports for years
to come.
PPK owns 45%, Amaero International
Limited (ASX: 3DA) owns 45% and
Deakin owns 10%.
3D Dental Technology Pty Ltd
(3D Dental)
The purpose of this project is to
infuse BNNT into frequently used
dental materials including zirconia
and lithium disilicate ceramics. The
project is expected to lower the
failure risk of most forms of dental
implants.
This project is currently ongoing
with the BNNT blending process into
the base dental materials nearing
completion and will be shortly
provided to our Joint Venture partner
for the purpose of 3D printing and
testing finished samples.
PPK has a 45% interest and Deakin
has a 10% interest in 3D Dental
Technology Limited.
BNNT Precious Metals Limited
(Precious Metals)
Precious Metals is a project designed
to test the infusion of BNNT as a
nano-reinforcement into gold and
silver to enable superior strength,
hardness and durability of these
metals for both industrial and the
jewellery market. The expected
outcome will be Ultra Gold and Ultra
Silver as pure metals (not alloyed)
with their molecular structures
enhanced with a BNNT integrated
reinforcement
PPK Group Limited Deakin has commissioned a nano-
scale meld machine and will be
using Deakin’s Additive Friction
Stir Deposition process which is a
solid-state additive manufacturing
technique that can be used to meld
BNNT into the molecular matrixes of
three key metals – gold, silver and
copper.
Gold and silver foils are used in
industries such as electronics,
aviation and space can then be
utilised at less weight and cost
to achieve the same, or better
performance specifications. Harder,
stronger and more wear resistant
gold and silver will also create
significant new opportunities for
jewellery products and automated
jewellery manufacturing.
PPK has a 45% interest and Deakin
has a 10% interest in Precious Metals.
Ballistic Glass Pty Ltd
(Ballistic Glass)
This project is to infuse BNNT in
bullet resistant glass to improve
resistance at a lower weight
resulting in significant cost savings.
Research continues into the effective
lamination of ballistic materials
with BNNT infused resins and base
ceramic and polymer materials. New
material samples and laminated
configurations, using real life
products, should enter ballistic
testing in the last quarter of this
calendar year.
The technology not only involves the
addition of the BNNT but also the
development of new manufacturing
methods in laminating both
transparent and non-transparent
composite materials.
PPK holds a 40% interest in Ballistic
Glass and CIB holds a 20% interest.
PPK’s currently holds a 20% interest
in AMAG at an initial investment
of $1.500M, with the PPK board
considering a further investment of
an additional $550,000 into AMAG,
which will increase our shareholding
in this business proportionally.
Mask Innovation Pty Ltd
(Mask IP)
As noted in the subsequent events
section of the Annual Report, last
week PPK acquired a Therapeutic
Goods Administration approved PPE
mask manufacturing business and
the associated assets to manufacture
N95/R2 (everyday use) and 3 ply
surgical (molded to a face) masks
as a going concern. PPK has also
acquired in a separate transaction,
the land and buildings housing the
mask business.
This acquisition is part of a wider
PPE technology development
opportunity with two potential joint
venture partners and university
research input.
PPK Mining Equipment Pty Ltd
(PPKME)
As noted in our 31 December 2020
half yearly report, the disruption
from COVID-19 and the China trade
conflict continued to impact the
business for the second half 2021.
On a positive note, with the increase
in metallurgical coal prices during
the financial year this has seen
an increase in enquiry from our
customers for purchases of some
of our new equipment, such as the
next generation coal tram, our new
12 seat personnel vehicle and our
new ceramic filter which can replace
particulate filters in all underground
machinery. In addition, we have
signed a collaboration agreement
with Ampcontrol, a leading
electrical engineering company, to
install their latest world-class BEV
technology into our vehicles. This
will assist with our divestment of the
mining business either by way of
independent listing or a trade sale.
Craig International Ballistics Pty
Ltd (CIB)
CIB is a leading supplier of body
armour to the Australian Defence
Force and Police Forces.
In 2021, CIB was expecting to achieve
the same level of revenue as 2020
but exceed the profit of the previous
year, however due to a major
contract being deferred late in this
financial year it recorded reduced
profitability. The deferred contract is
now expected to be delivered in the
2022 financial year.
CIB achieved a number of very
positive outcomes through the
financial year which included a
significant federal government grant
for the acquisition of an aerospace
autoclave, achieved a Level 2
Defence Industry and Security
Program (DISP) membership
and secured a number of new
domestic and international contracts
commencing in the 2022 financial
year. CIB is expecting a significant
increase in revenue and profit in the
2022 financial year.
PPK holds a 45% interest in CIB.
AMAG Holdings Australia Pty
Ltd (AMAG)
AMAG (Advance Mobility Analytics
Group) have developed the world’s
first Safe Mobility Alert Real Time
(SMART) Artificial Intelligence
delivered via Software-as-a-Service
to enable governments to achieve
Vision Zero and Safe Systems policy
objectives. During the year AMAG
has continued integrating video
analytics, artificial intelligence, deep
learning and advanced econometrics
techniques to provide analytics for
managing road safety and operations
and has entered into 12 contracts and
is negotiating 3 more with cities and
other government departments in a
number of countries for their SMART
Platform.
AMAG aims to become a world-
leading provider of predictive
analytics in transport. It is developing
a number of modules that it will
bring to market within a year with
the Traffic Safety module released
in 2020 and the Traffic Operations
module to be released in the next
three months.
5
PPK Group Limited Lastly it is with great sadness that
I mention the loss of Founder and
long-time director Graeme Webb
who passed away during the year
and will be sadly missed. PPK will
now undertake a Board skills review
process to ensure we appoint an able
replacement in due course who can
add appropriate value to the current
board skillset.
PPK will hold its AGM on Tuesday
30th November 2020 and, in keeping
with the current requirements, it will
be via video conferencing. Further
details will be provided and I look
forward to your attendance on line.
Robin Levison
Executive Chairman
EXECUTIVE CHAIRMAN’S REPORT (CONT’D)
Executive Chairman’s Report
SHAREHOLDER SUPPORT
I am pleased by the active support
PPK receives from its shareholders
and we expect to continue to
generate material shareholder value
from our commercialisation projects
moving forward. The most recent
example, of course, being the Li-S
Energy $544M IPO. The board is
hopeful that our next major project
moving forward, which will create
additional shareholder value, is the
IPO of White Graphene.
FINANCIAL RESULTS
While our financial results will show
a loss after tax of $5.478M to owners
of PPK, this does not reflect the
true underlying value that has been
generated during the year. On a
cash basis, PPK generated a loss
of $1.766M.
OUTLOOK
PPK as a wider group is in a strong
financial position going forward.
Currently all of our BNNT technology
applications are fully funded,
however, we are constantly reviewing
other technology opportunities that
are being presented to us.
Considering the large
oversubscription for the LIS Energy
IPO we are expecting strong
underlying support for the company
once listed as it continues to build
out it array of prototype test
batteries and continues to engage
with global manufacturers and end
users of batteries.
Our Artificial Intelligence software
investment AMAG, for managing
road safety and operations also has
a strong funnel of global business
opportunities’ to be contracted.
Outcomes from the testing of BNNT
enhanced aluminium and other base
metal alloy products via Strategic
Alloys and the improved ballistic
glass results should also be available
this year which will allow a formal
marketing and sales process to be
introduced for those products.
Also, we believe the outcomes from
current testing of white graphene,
when coupled with the soon to be
installed, certified and completed
full scale continuous production
module, will allow trial interactions
with multiple international customers
in different product and business
categories. We expect these results
to be positive and would consider
White Graphene for a potential IPO
later this financial year.
I would also expect further news
on the Mask IP technology business
around the introduction of a
differentiated market leading mask
technology and also the wider global
business platform we are pursuing
for that product.
As an organisation PPK now finds
itself in the enviable position where
it is receiving multiple opportunities
to become involved in the incubation
and commercialisation of existing
university research and technologies
and is continuing to staff up to
meet the growing support and
management requirements of these
multiple opportunities.
We see FY 2022 as the year where
the fruits of our incubation and
commercialisation activities which
shareholders have positively
supported and funded over the past
3 years bearing fruit with the Li-S
Energy IPO outcome being the most
obvious and near-term example.
6
PPK Group Limited FINANCIAL REPORT
Financial
Report
FY21
For the year ended 30 June 2021
Contents
8 Directors’ Report
33 Auditor’s Independence Declaration
34 Consolidated Statement of Profit or Loss and Other Comprehensive Income
36 Consolidated Statement of Financial Position
37 Consolidated Statement of Cash Flows
38 Consolidated Statement of Changes in Equity
40 Notes to the Consolidated Financial Statements
108 Directors’ Declaration
109 Independent Auditor’s Report
7
PPK Group Limited DIRECTORS’ REPORT
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 2021.
DIRECTORS
The names of directors in office at any time during or since the financial year are:
– Robin Levison
– Glenn Robert Molloy
– Dale William McNamara
– Anthony John McDonald
– Graeme Douglas Webb
Ceased 25 January 2021
Directors have been in office since the start of the financial year to the date of this report.
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 63)
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, resigned 25 January 2018.
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 20 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. He is a Non-Executive Director of a number of PPK’s related companies including Li-S Energy
Limited, White Graphene Limited, BNNT Technology Limited, BNNT Precious Metals Limited, 3D Dental Technology
Pty Ltd, Ballistic Glass Pty Ltd, Craig International Ballistics Pty Ltd, Strategic Alloys Pty Ltd and AMAG Holdings
Australia Pty Ltd.
Robin holds a Master 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 recently retired as Chair of the University of Queensland Business, Economics and Law Alumni Ambassador
Council.
Other listed public company directorships held in the last 3 years:
– Chairman of Mighty Craft Limited (formerly Founders First Limited), Non-executive Director & Chairman
(Appointed: 17 December 2019)
Glenn Molloy (Age 66)
Executive Director
Appointed Director and Chairman, 8 January 2019.
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. He is a Non-Executive Director of PPK’s related companies
including BNNT Precious Metals Limited, 3D Dental Technology Pty Ltd, Ballistic Glass Pty Ltd, Craig International
Ballistics Pty Ltd and is Chairman of BNNT Technology Limited and White Graphene Limited.
Other listed public company directorships held in the last 3 years: Nil
8
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) Dale McNamara (Age 63)
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
Anthony John McDonald LL.B, (Age 63)
Non-Executive, Independent Director
Member of the PPK Group Limited Board since 13 September 2017.
Member of the PPK Group Limited Audit Committee since 25 January 2018.
Tony McDonald graduated with a Bachelor of Laws from the Queensland University of Technology in 1981 and was
admitted as a solicitor in 1981. He has been involved in the natural resource sector for many years both within Australia
and internationally and for the past 19 years has held senior management roles in this sector. He is a Non-Executive
Director of a number of PPK’s related companies including Li-S Energy Limited, White Graphene Limited and Strategic
Alloys Pty Ltd and a Director of Santana Minerals Limited.
Other listed public company directorships held in the last 3 years:
– Santana Minerals Limited, Non-Executive Director (Appointed: December 2019, Executive Director 15 January 2013
to December 2019)
– Planet Gas Limited, Independent and Non-Executive Director (Appointed: 19 November 2003, resigned 20 June 2019)
INFORMATION ON COMPANY SECRETARIES
Will Shiel (Age 39) BA (Hons) in Law FGIA
Will was a senior legal counsel and manager at ASX Limited, focusing on technology. Before this, he held a variety of
senior positions at leading national and international law firms. Will specialises in all aspects of commercial law, with
particular experience in intellectual property, contracts and cutting-edge technology transactions.
Appointed as General Counsel and Company Secretary on 16 August 2021.
Tony McDonald acted as Company Secretary for regulatory purposes for the period from 26 July 2021 to 16 August 2021.
Pat Rogers (Age 50) BLaws, BBus Accy, FGIA
Appointed as General Counsel and Company Secretary on 4 May 2021, resigned on 26 July 2021.
Andrew J. Cooke (Age 61) LL.B, FCIS
Group Company Secretary
Andrew Cooke was appointed as Group Company Secretary on 9 May 2012, resigned on 4 May 2021.
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:
Technology - to expand and profit from the manufacture of high-grade boron nitride nanotubes (BNNT) in commercial
quantities using Deakin University’s patented technology to;
–
supply BNNT to select industries to enable industries to enable further research and development into the blending/
infusing of BNNT into conventional materials. This process can be transformative in terms of reduced weight and
increased strength; and
– maintain an ongoing equity interest in selected BNNT product applications such lithium sulphur battery products
(Li-S Energy Limited), white graphene (White Graphene Limited), metal alloys (Strategic Alloys Pty Ltd), armaments
(Craig International Ballistics Pty Ltd and Ballistic Glass Pty Ltd), dental applications (3D Dental Technology
Limited) and precious metals (BNNT Precious Metals Limited).
9
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) The Board has made the formal decision to either list the mining business as a separate entity on an Australian stock
exchange as a separate business or to sell it outright to another entity and focus totally on our technology businesses
going forward. As a result, the mining equipment segment is considered a Disposal Group and is no longer a principal
activity of PPK.
PPK has expanded its strategy from vertical integration to becoming a collaborator of businesses in the technology
sector. PPK now has 6 ventures that are progressing using BNNT as the core application to create new products and
business ventures. Below is a summary of these ventures and further information is noted in the Chairman’s Report.
BNNT Technology Limited (BNNTTL)
BNNTTL has continued to improve its manufacturing capabilities and is now capable of producing 100 kgs of BNNT
from operating its two 4 furnace modules on an eight hour shift per day per annum. PPK earlier this month made
an ASX announcement that its current BNNT production is expected to increase to more than 400 kgs in the 2022
financial year from an eight hour shift per day per annum with the further installation of two 6 furnace module
production units. BNNTTL continues to identify process improvements to increase production and reduce average
production costs while consistently producing high purity BNNT.
At the present time, based on market data, BNNTTL is the largest producer of BNNT in the world and has a published
sales price lower than that of any competitor.
Li-S Energy Limited (Li-S Energy)
Li-S Energy is the result of a joint venture between Li-S Energy’s founding shareholders; PPK, Deakin and BNNTTL.
The objective of utilising BNNTTL and Deakin’s existing technology and research to develop a battery technology
based on more advanced lithium-sulphur chemistry, where BNNTs and other nanomaterials are incorporated into
battery components to:
–
–
improve battery energy capacity when compared to current lithium-ion batteries; and
improve cycle life when compared to conventional lithium-sulphur batteries.
For decades, scientists have known that lithium-sulphur battery chemistry presents many benefits over lithium-ion
battery chemistry, including having more than five times the theoretical energy capacity, being lighter, safer, faster
charging, and using more environmentally friendly raw materials.
Despite this, lithium-sulphur batteries have yet to be mass produced as conventional lithium-sulphur batteries tend to
fail after a low number of recharge cycles, making them useless for most commercial applications. Li-S Energy believes
that its patent pending BNNT battery construction in its Li-S Energy batteries addresses the key historical challenges of
conventional lithium-sulphur batteries, and testing to date indicates that BNNTs substantially enhance the performance,
capacity, stability and cycle life in the Li-S Energy battery compared to an identical lithium-sulphur battery without
BNNTs.
Li-S Energy is in the process of an Initial Public Offer (IPO) for listing on the ASX. The IPO includes a capital raise of
$34.000M at $0.85 per share by issuing 40.000M shares which would have a pre-IPO market value of $544.170M and
we expect the listing on the ASX to occur in September 2021. Due to excess demand the IPO was closed to further
subscriptions on 13 August 2021 and Li-S Energy is awaiting formal ASX approval to list.
This is the first of what PPK would see as many spin-offs from the application of BNNT to create new products and
business ventures. PPK currently owns 48.46%, Deakin owns 13.88% and BNNTTL owns 5.00% and after the IPO, PPK’s
direct interests will own 45.43%, Deakin will own 13.02%, BNNTTL will own 4.69% and PPK’s accumulating direct and
indirect interests will hold 50.23%.
White Graphene Limited
On 3 December 2020 we announced the white graphene project and on 12 August 2021 we provided an update on this
project. White graphene is a nanomaterial termed boron nitride nanosheet (BNNS) and referred to as white graphene
due to its unique quality to be almost transparent.
White graphene shares many of the important properties of BNNT such as high strength, thermal stability (up to
900°C), excellent thermal conductivity, electrical insulation, radiation shielding, non-toxic to the human body and can
generate electricity. White graphene has many potential uses in sectors such as paints, resins, electronics, textiles and
with potentially hydrogen transportation and containment.
10
PPK owns 59.8%, Deakin owns 23.0% and BNNTTL owns 9.2%.
Strategic Alloys Pty Ltd
A joint venture with Amaero International Limited, combining BNNT and aluminium and titanium alloys to create super
materials for the defence and aerospace applications.
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) The project focuses on creating several new super strength aluminium and titanium alloys using BNNT and boron nitride
nanosheets (BNNS) in their formulation, which acts as a grain refining, nano-reinforcement and strengthening agent,
significantly improving mechanical properties. The research and development commenced in November 2020 and early
results indicate a Deakin technological process will provide the best method for BNNT dispersion and stability in these
alloys, enabling optimum mechanical property improvement. The research and development is now focusing of several
parameters involved in the technology process and optimum percentage ratios for BNNT inclusion and expected results
from these tests are expected in six months.
Recently the research and development project has been expanded to include the addition of other nanoparticles into
base metal additive manufacturing for aluminium, nickel and titanium (three key base metals). Preliminary results from
these tests are expected in the next nine months.
Multiple applications exist for super strength aluminium alloys and super strength titanium alloys with industries
including aerospace, aviation and defence seeking materials that are lighter, stronger and more durable. The project
is an exciting opportunity to develop this revolutionary technology in Australia and create new products, industries,
employment and exports for years to come.
PPK owns 45%, Amaero International Limited (ASX: 3DA) owns 45% and Deakin owns 10%.
BNNT Precious Metals Limited
Precious Metals is a project designed to test the infusion of BNNT as a nano-reinforcement into gold and silver to
enable superior strength, hardness and durability of these metals for both industrial and the jewellery market. The
expected outcome will be Ultra Gold and Ultra Silver as pure metals (not alloyed) with their molecular structures
enhanced with a BNNT integrated reinforcement.
The initial research and development identified some problems in the process of infusing BNNT into these soft
metals. A new approach has been identified, revised research agreements and budgets executed and the project has
commenced.
We believe adding BNNT to gold, silver and platinum for increased strength, hardness and radiation shielding properties
will have uses in aerospace, defence, 3D printing and jewellery.
PPK has a 45% interest and Deakin has a 10% interest in Precious Metals.
3D Dental Technology Limited
The purpose of this project is to infuse BNNT into nanocomposites with frequently used dental materials including
zirconia and lithium disilicate ceramics (being current materials used in 3D dental printing), along with alumina and
ceramic composite resins. This technology is based upon the incorporation of BNNT’s into the molecular matrix of
various materials to manufacture advanced dental applications commonly used in prosthetic and implant dentistry
(ie inlays, onlays, veneers, crowns, bridges). The project is expected to lower the failure risk of both conventional and
implant restorative solutions, improve aesthetics, make them more fracture resistant and deliver a modified process
for achieving the highest level of quality and product reliability from current 3D printing technology using these new
materials.
This project has had minimal progress during the year as the research performed in Sydney and at Deakin has been
impacted by COVID-19 with repeated lockdowns impacting laboratory work and delays for manufacture and shipment
of speciality equipment from overseas.
PPK has a 45% interest and Deakin has a 10% interest in 3D Dental Technology Limited.
Ballistic Glass Pty Ltd
This BNNT project is to infuse BNNT in bullet resistance glass to improve resistance at a lower weight resulting in
significant cost savings. Research continues in the effective lamination of ballistic materials with BNNT infused resins
and base ceramic and polymer materials. Early test indications show remarkable improvement in the strength of both
resins and composites.
The technology not only involves the addition of the BNNT but also the development of new manufacturing methods in
laminating both transparent and non-transparent composite materials.
PPK holds a 40% interest in Ballistic Glass and CIB holds a 20% interest.
Expanding as a collaborating company, PPK has investments in the following non-BNNT related technology ventures:
Craig International Ballistics Pty Ltd (CIB)
CIB is a leading supplier of body armour to the Australian Defence Force and Police Forces. In 2021, CIB was expecting
to achieve the same level of revenue as 2020 but exceed the profit of the previous year, however due to a major
contract being deferred late in this financial year it recorded reduced profitability. The deferred contract is now
expected to be delivered in the 2022 financial year.
11
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) The pandemic has also resulted in a very challenging trading environment for CIB, with longer than normal supplier
production times and significantly longer supply chain durations on raw materials into Australia.
Although a disappointing final year result compared to forecasts, CIB achieved a number of very positive outcomes
through the financial year which included a significant federal government grant for the acquisition of an aerospace
autoclave, achieved a Level 2 Defence Industry and Security Program (DISP) membership and secured a number of
new domestic and international contracts commencing in the 2022 financial year. Thus CIB is expecting a significant
increase in revenue and profit in the 2022 financial year.
PPK holds a 45% interest in CIB.
Advanced Mobility Analytics Group (AMAG)
AMAG (Advance Mobility Analytics Group) have developed the world’s first Safe Mobility Alert Real Time (SMART)
Artificial Intelligence delivered via Software-as-a-Service to enable governments to achieve Vision Zero and Safe
Systems policy objectives. During the year AMAG has continued integrating video analytics, artificial intelligence, deep
learning and advanced econometrics techniques to provide analytics for managing road safety and operations and
has entered into 12 contracts and is negotiating 3 more with cities and other government departments in a number of
countries for their SMART Platform.
In the last six months, AMAG has expanded to 25 full and part-time staff, secured a high-profile Chief Marketing Officer
with experience in publicly listed global technology companies, expanded its product offering (see below) and formed
strategic go-to-market and technology partnerships, including Pointerra and Stantec to help build and deliver its
SMART Infrastructure Module.
AMAG aims to become a world-leading provider of predictive analytics in transport. It is developing a number of
modules that it will bring to market within a year with the Traffic Safety module released in 2020 and the Traffic
Operations module to be released in the next three months.
PPK’s holds a 20% interest in AMAG at an initial investment of $1.500M.
Mask Innovation Pty Ltd (Mask IP)
Subsequent to the year end, PPK acquired a Therapeutic Goods Administration approved PPE mask manufacturing
business and the associated assets to manufacture N95/R2 (everyday use) and 3 ply surgical (molded to a face)
masks as a going concern. We have also employed the critical members of the previous management team and will
look to employ the previous employees as we re-establish manufacturing processes. PPK also acquired in a separate
transaction the land and buildings housing the mask business to ensure continuity of production.
This is an exciting opportunity for PPK to continue to diversify into other technology ventures, especially one which
supplies such critical medical devices at a time of great need in Australia. This acquisition is part of a wider PPE
technology development opportunity with two potential joint venture partners.
PPK Mining Equipment Pty Ltd (PPKME)
While the Directors have made the decision to sell or list the mining equipment business as it doesn’t fit into the PPK
technology commercialisation strategy, they believe it is in a great position to deliver value to its new shareholders. As a
result of the Board decision, PPKME is referred to as a Disposal Group in the financial statements as required under the
accounting standards. PPKME has continued with the following innovative technology products being released to the
mining sector:
– development of the next generation Coaltram has been completed and is undergoing various tests for its
enhancements. A number of these enhancements such as the wireless data logger can be sold for attachment to
other underground machines to record performance analytics and relay this information to a centralised location for
tracking, monitoring and reporting;
–
the twelve seat personnel vehicle has been built and tested but its first major run has been delayed due to lockdown
restrictions in the Hunter Valley. PPKME has signed a collaboration agreement with Ampcontrol, a leading electrical
engineering company, to install their latest world-class BEV technology and the agreement includes extending the
BEV technology to the Coaltram; and
– Development of the ceramic filter, to replace particulate filters used in underground machines, has been tested with
the positive results shared with mining company representatives who support the safety benefits this filter offers to
their employees.
12
With increased coal prices and capital budgets available from customers, these new technologies should generate
increased revenues from PPKME’s customer base.
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) OPERATING RESULTS
The statement of profit or loss and statement of financial position for 30 June 2021 reflect the transformation of
PPK as a technology commercialisation business with the continued research and development of the various BNNT
application projects as noted in the Chairman’s report. With the decision to reclassify the mining equipment segment
as a Disposal Group, the statement of profit or loss for 30 June 2020 has been restated to include only the technology
sector and corporate costs consistent with the 30 June 2021 financial year.
It is important to note that in previous years the Group results reflected the combination of the 100% owned
subsidiaries but with the move to a technology focus, we now have subsidiaries, associated entities and a joint venture
which the Group owns less than 100% and which have specific accounting standards applicable for them.
PPK has reported a net loss after tax attributable to owners of PPK of $5.479M for the 12 months to 30 June 2021
(2020: $8.269M profit after writing back as income a contingent consideration of $9.041M). As BNNTTL and a
number of BNNT application projects entered into their second year of research and development, and with BNNTTL
international sales affected by COVID-19, there have been no revenues reported.
Rental income of $0.044M is from a sublease of the corporate office and other loss of $0.615M is disclosed in note
3.2 and is predominantly the negative share price movement of $0.289M in our small strategic shareholdings and the
revaluation of $0.383M of the interest in Zeta Energy LLC held by Li-S Energy.
The technology expenses of $2.243M are disclosed in Note 4.1 and are $2.050M for administration expenses (2020:
$0.231M), $0.127M for share based payment expense and $0.066M for depreciation and amortisation. These expenses
are predominantly for Li-S Energy of $1.944M, mainly in relation to the pre IPO costs and general operating expenses,
and White Graphene of $0.223M.
Corporate expenses of $3.163M (2020: $4.033M) are disclosed in Note 4.1 and were for salaries and administration
costs of $2.444M (2020: $2.287M), professional costs to defend a dispute of a business acquisition made in 2014 of
$0.361M (2020: $0.550M), lease costs of $0.219M (2020: $0.229M) and share based payment expense of $0.139M
(2020: $0.967M).
The share of an associate and a joint venture loss of $0.198M (2020: $0.766M profit) is disclosed in Note 20.3 and
consists of the Group’s 50% share of the loss in BNNTTL of $0.541M and its 45% share of profit in CIB of $0.343M.
The loss from the Disposal Group of $0.742M (2020: $2.616M in total being $2.676M profit from PPKME and a loss of
$0.060 from China’s operations) are disclosed in Note 13 and reflect the impact of COVID-19 with the following noted:
revenues have decreased by 17% from $41.102M to $34.032M, predominantly impacting the Hunter Valley operations
–
– gross margins have declined by some 5% overall
The statement of financial position as at 30 June 2021 reflects the combined assets and liabilities of the subsidiaries,
as well as those of PPK Group Limited.
The investments in associates and a joint venture of $28.126M (2020: $25.086M) are disclosed in Note 20 and comprise
the Group’s interest in BNNTTL of $20.735M, CIB of $5.831M, AMAG of $1.500M and Ballistic Glass of $0.060M.
Investments of $4.472M are disclosed in Note 21 and comprise $2.214M of shares in strategic companies listed on the
ASX and Li-S Energy’s investment in Zeta Energy LLC at fair value of $2.258M.
Intangibles of $1.622M are disclosed in Note 24 and comprised of the various BNNT application projects underway.
The interest bearing loans and borrowings of $0.399M are disclosed in Note 27 and are in relation to the other
shareholders of BNNT application projects who have provided funding for these projects and will be repaid from profits
of the projects or alternative funding, such as a capital raise, being provided.
DIVIDENDS PAID OR DECLARED
Dividends paid or recommended for payment are as follows:
Dividends paid in the year:
2.5 cent special ordinary fully franked was paid by a distribution in specie of shares in Li-S
Energy held by PPK on the basis of 0.3846 Li-S Energy share for every 1 PPK share held
1 cent interim ordinary fully franked dividend was declared or paid
0.025
0.01
2,220
859
13
Cents
$’000
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) REVIEW OF OPERATIONS
The review of operations is outlined in the Executive Chairman’s Report set out on pages 2 to 6 and which forms part
of this report.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
The 2021 Chairman’s Report highlighted the repositioning of PPK as a technology commercialisation business based
on the production of commercial quantities of high purity BNNT, the sale of BNNT to other manufacturers of product
which BNNT may be blended or infused and the continued expansion of partnering with other application or industry
leaders to create new products with BNNT. A detailed update on these initiatives is provided in the Chairman’s Report
and is summarised earlier under Principal Activities.
BNNT Manufacturing Technology
BNNTTL has continued to improve its manufacturing capabilities and is now capable of producing 100 kgs of BNNT
from operating its two 4 furnace modules on an eight hour shift per day per annum. PPK earlier this month made
an ASX announcement that its current BNNT production is expected to increase to more than 400 kgs in the 2022
financial year from an eight hour shift per day per annum with the further installation of two 6 furnace module
production units. BNNTTL continues to identify process improvements to increase production and reduce average
production costs while consistently producing high purity BNNT.
At the present time, based on market data, BNNTTL is the largest producer of BNNT in the world and has a published
sales price lower than that of any competitor.
Li-S Energy IPO
During the year, PPK has taken Li-S Energy from being PPK’s first BNNT application project to becoming our first IPO
with a listing on the ASX expected in September 2021. After several months of hard work by our directors, management
and advisers, Li-S Energy has completed a $34.0 million capital raise, issued 40.0 million of shares and has a pre-IPO
market capitalisation of $544.170M. As a result, shareholders who retained their Li-S Energy shares now have them
valued at around $0.85 before the IPO.
Demerger of the Mining Equipment Segment (PPKME)
The Board has made the formal decision to either list the mining business as a separate entity on an Australian stock
exchange as a separate business or to sell it outright to another entity and focus totally on our technology businesses
going forward.
The underground coal mining industry in NSW has been impacted by COVID-19, particularly in the Hunter Valley.
Major customers have reduced operations and incurred additional costs to continue to produce coal. Mine expansion
and new mines opening have been delayed but quotes for new capital equipment have increased recently.
In 2020, we advised that PPKME’s two major product developments being the twelve-man battery electric vehicle
(BEV) and enhancements to the CoalTram LHD machine would be completed and launched last calendar year. Both
projects have continued to progress but were not completed during the financial year. In August 2021, PPKME entered
into a collaboration agreement with Ampcontrol, a leading electrical engineering company who have expertise in
BEV technology, to work together to install Ampcontrol’s world-class BEV technology into the PPKME’s twelve-man
personnel carrier vehicle, and then retrofit diesel drive trains in a range of vehicles manufactured by PPKME, including
the COALTRAM flameproof and explosion proof diesel Load Haul Dump utility vehicles.
The CoalTram enhancements are undergoing regulatory testing and should be launched later this calendar year.
Capital Management
PPK raised $15.400M in November 2020 to accelerate the research, development and commercialisation of previously
announced and new BNNT application projects, fund further technology investment opportunities and to facilitate the
separation of the mining business as previously announced.
The Company has a finance facility that can be drawn down against the debtors of PPKME up to a maximum of
$4.000M. This facility was not drawn down during the financial year.
COVID-19
The Group has consistently followed government regulations/guidance and to adapt work practices to protect the
safety of staff, customers and other stakeholders. As a result of conscientious personnel the Group has not suffered
a reported COVID-19 illness.
14
The Group has experienced supply chain disruptions, increased costs for overseas shipping and reduced customer
orders but has continued with business operations, albeit at a slower pace.
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) The Group’s main operations are at Deakin University’s campus located at Geelong, Victoria. To slow the spread of
COVID-19 in Victoria, the Victorian government has imposed restrictions from time-to-time. Deakin University, who is
contracted to provide the research and development for the Group, has had its own restrictions with access to campus
by staff, students and visitors restricted to help maintain health and safety protocols, with staff and visitor access
reviewed case-by-case. As a result, limits have been placed on the number of staff and contractors permitted in the
workspace at one time thus impacting the BNNT manufacturing plant and the BNNT application research. CIB and
PPKME have continued to operate and there have been no shutdowns.
Dividends
We are pleased to have made a 2.5 cent special dividend by distributing Li-S Energy shares to our shareholders and
allowing them to participate in the Li-S Energy IPO.
There have been no other significant changes in the state of affairs during the 2021 financial year or existing at the time
of this report.
REVIEW OF FINANCIAL CONDITION
The Group has maintained its strong balance sheet:
– PPK has $9.728M of cash and $1.569M of secured loans to be repaid in the coming months;
– No direct fixed interest debt required to be paid (all fixed interest debt is owed by technology subsidiaries to other
technology company shareholders and not secured) and the Directors are confident that additional debt financing
would be available, if required;
– Li-S Energy and White Graphene have sufficient funds to finance their planned research and development programs;
– There are no large funding requirements from other subsidiaries or associated entities;
– The Group has a finance facility up to a maximum of $4.000M from a major Australian bank secured against the
debtors of PPK Mining Equipment Pty Ltd, secured by a guarantee and indemnity from PPK Group Limited, PPK
Mining Equipment Group Pty Ltd and the subsidiaries of the mining division. This facility was not drawn down during
the financial year.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
PPK
(1) PPK issued 237,500 shares to the Long Term Incentive Plan Trust Account for the two directors, an
executive and senior managers of the Group whose Tranche 4 Performance Rights vested on 1 July 2021.
(2) Accounting for BNNTTL as a Subsidiary
On 4 August 2021, the Shareholders’ and directors of BNNTTL executed a Deed of Variation of Shareholders
Agreement with BNNTTL pursuant to which a number of material changes were made, relevantly resulting in:
– Deakin having a single nominee on the board;
– AIC Investment Corporation being entitled to nominate two directors being Robin Levison and Mark Winfield;
– The directors appointed Glenn Molloy as Chairman;
– Ordinary Decisions of Shareholders will require a simple of votes cast by the Shareholders;
– Special Majority Decisions of the Board is 75%;
As a result of a share buyback on 2 June 2021 PPK now owns 51% of the share capital of BNNTTL but continued to
equity account for it at year end as a joint venture due to the terms in the Shareholders Agreement at that date. As a
result of executing the Deed of Variation of Shareholders Agreement resulting in the changes noted above, PPK now
controls BNNTTL as of 4 August 2021 and accounts for it as a subsidiary.
15
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) The summarised financial information of BNNTTL is provided below. This information is based on amounts before
inter-company and consolidation eliminations – principally to adjust financial assets at fair value through profit and loss
to their cost value and associated deferred tax liabilities.
Summarised statement of financial position
Assets
Cash and cash equivalents
Receivables and other current assets
Property, plant and equipment
Intangibles
Financial assets at FVTPL
Total assets
Liabilities
Trade and other payables
Income tax payable
Deferred tax liability
Total liabilities
Total identifiable net assets
Attributable to:
Non-controlling interest
Net assets attributable to the Group
Summarised statement of profit or loss
Revenue from contracts with customers
Employee benefit expense
Administration expenses
Professional fees
Depreciation and amortisation expense
Realised gain (loss) on financial assets at FVTPL
Unrealised gain (loss) on financial assets at FVTPL
Profit (loss) for the year before income tax (continuing operations)
Income tax benefit (expense)
Profit (loss) for the year after income tax (continuing operations)
2021
$’000
8,672
1,746
2,798
2,780
28,700
44,696
643
2,715
7,400
10,758
33,938
16,630
17,308
–
(70)
(17)
(411)
(58)
8,500
5,500
13,444
(3,199)
10,245
If BNNTTL had been acquired on 1 July 2021, revenue for the Group to 4 August 2021 would have been nil and PPK
would have recognised a pre-tax loss from BNNTTL of $0.284M.
BNNTTL will be consolidated from 4 August 2021. The acquisition accounting for the business combination is currently
being determined, along with the fair value of acquired amounts, and will be disclosed in the 31 December 2021 half
year financial statements.
16
(3) Acquisition of a Therapeutic Goods Administration Approved Mask Manufacturing Business
In August 2021, PPK acquired a Therapeutic Goods Administration approved mask manufacturing business and the
associated assets to manufacture N95/R2 (everyday use) and 3 ply surgical (molded to a face) masks as a going
concern with current capacity to manufacture approximately 5M masks per month operating a single shift per day. The
business and assets were acquired for $1.500M and the land and building, which is leased to the business, has been
acquired separately for $4.279M. The Group paid cash for the business, associated assets, land and building.
(4) On 27 August 2021, the Group drew down $2.650M from its finance facility.
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) Li-S Energy
Li-S Energy has entered into a number of new operational agreements subsequent to the end of the financial year.
(1) Supply Agreement with BNNTTL
On 9 July 2021, Li-S Energy and BNNTTL entered into a supply agreement for the supply of BNNTs to Li-S Energy
for the purposes of using BNNTs in Li-S Energy’s development, testing and manufacture of the Li-S Energy batteries.
The key material terms of the supply agreement are as follows:
Term:
Termination:
Product supplied:
Permitted Purpose:
The contract commenced on 9 July 2021 for an initial term of 5 years and automatically
renews for further 2 year terms unless Li-S Energy elects not to renew the agreement by
giving at least 3 months’ notice prior to the expiry of the latest term.
Either party may terminate the agreement immediately if the other party commits a
material breach that is unable to be rectified or where able to be rectified, fails to do so
within a cure period, or the other party is insolvent or similar.
BNNTs with a purity of at least 95% or any other specifications agreed from time to time.
The minimum Purchase Order quantity is 10gm.
Li-S Energy may only order BNNTs from BNNTTL to use BNNTs in the Customer’s
development, testing and manufacture of batteries (including to stockpile BNNTs for later use
in accordance with forecasts) and any other purpose agreed between the parties in writing.
Other terms:
The remainder of the agreement is on the usual commercial terms for a contract of this nature.
(2) Distribution Agreement with BNNTTL
On 9 July 2021, Li-S Energy and BNNTTL have entered into a distribution agreement pursuant to which Li-S Energy
is appointed as distributor for BNNT products within the battery industry, with certain exclusive distribution rights.
The key material terms of the distribution agreement are as follows:
Term:
Termination:
Product used for
distribution:
Permitted Purpose:
The contract commenced on 9 July 2021 for an initial term of 5 years and automatically
renews for further 2 year terms unless Li-S Energy elects not to renew the agreement by
giving at least 3 months’ notice prior to the expiry of the latest term.
Either party may terminate the agreement immediately if the other party commits a
material breach that is unable to be rectified or where able to be rectified, fails to do so
within a cure period, or the other party is insolvent or similar.
BNNTs with a purity of at least 95% or any other specifications agreed from time to time.
The minimum Purchase Order quantity is 10gm.
Li-S Energy may only buy BNNTs from BNNTTL for the following Permitted Purposes
(including to stockpile BNNTs for later use in accordance with forecasts) and any other
purpose agreed between the parties in writing:
(a) to distribute on an exclusive basis BNNTs to third party customers (Customers),
provided the Customers are only permitted to use BNNTs to:
a. develop, test or manufacture lithium-sulphur batteries; and
b. manufacture Li-S Energy’s propriety nanomesh products incorporating BNNTs
(including Li-Nanomesh); and
(b) to distribute on a non-exclusive basis BNNTs to Customers, provided the Customers
are only permitted to use BNNTs to develop, test or manufacture batteries that are not
lithium-sulphur batteries.
For clarity, Li-S Energy is not restricted from distributing Li-S Energy’s Li-Nanomesh
(or other nanomesh products), or BNNTs to Li-S Energy’s customers who have a licence
from Li-S Energy to manufacture Li-Nanomesh (or other nanomesh products).
Territory:
Worldwide
Nature of Appointment:
Distributor in the Territory for the Permitted Purpose during the Term.
Exclusive distributor for the Permitted Purposes relating to the distribution in respect of
lithium-sulphur batteries, for the first seven years of the agreement.
17
Li-S Energy’s ‘exclusivity’ in respect of distributing Li-Nanomesh and BNNTs for
manufacture of Li-Nanomesh is by virtue of Li-S Energy owning the IP required to
manufacture Li-Nanomesh.
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D)
Other terms:
The remainder of the agreement is on the usual commercial terms for a contract of this
nature.
(3) Management Services Agreement with PPK Aust
On 9 July 2021, Li-S Energy and PPK Aust have entered into a management services agreement pursuant to which
PPK Aust will provide to Li-S Energy administrative support services. The key material terms of the management
services agreement are as follows:
Term:
Termination:
Appointment:
Fees:
The contract commenced on 1 May 2021 for an initial term of 3 years and can be renewed
by PPK Aust for a further 3 year term upon notice being provided by PPK Aust not later
than 3 months prior to the expiry of the initial term.
Either party may terminate the agreement on 30 days’ notice if the other party commits
a material breach that is unable to be rectified or where able to be rectified, fails to do so
within a cure period, or the other party is insolvent or similar.
PPK Aust may terminate the agreement on 30 days’ notice if it is not satisfied with the
Annual Plan of Li-S Energy.
Li-S Energy may terminate the agreement at will on 6 months’ notice.
PPK Aust is appointed to provide management services to Li-S Energy which will see
PPK Aust assist Li-S Energy with its administrative functions such as accounting, record
keeping, reporting, assisting with insurance and recruitment. PPK Aust will also provide
staff to act in key officer roles including the public officer, chief financial officer and
company secretary.
It is also appointed, to the extent permitted by law, facilitate/oversee the funding and
capital raising requirements of the company (note this does not include acting as an
advisor).
PPK Aust will be paid a fee for providing the management services which will be $150,000
for the initial three months from 1 May 2021 to 31 July 2021. This fee, together with the
scope and performance of the management services, will be subject to review between
the parties every 3 months (this allows for resetting of the fee in the event that Li-S Energy
experiences business changes that require PPK Aust to provide additional (or reduce)
resources to effectively provide the services).
PPK Aust will be paid a funding fee of up to 1% of any debt or capital raised that it
facilitates.
PPK Aust will be entitled to recover any disbursements or expenses it incurs on behalf of
Li-S Energy or in providing the services.
Indemnity:
Other terms:
Li-S Energy indemnifies PPK Aust for any loss that arises from the performance by
PPK Aust of its obligations under the agreement.
The remainder of the agreement is on the usual commercial terms for a contract of this
nature.
(4) Research Framework Agreement with Deakin
On 8 July 2021, Li-S Energy and Deakin have entered into a research framework agreement which governs all research
projects conducted between Li-S Energy and Deakin as set out in Project Schedules made under the agreement.
The key material terms of the research framework agreement are as follows:
Term:
Termination:
18
Project Schedules:
The contract commenced on 8 July 2021 and continues until terminated.
Either party may terminate the agreement and any Project Schedule immediately if the
other party commits a material breach that is unable to be rectified or where able to be
rectified, fails to do so within a cure period, or the other party is insolvent or similar.
The parties may from time to time enter into Project Schedules made under the agreement
for research projects proposed and negotiated by the parties. Such Project Schedules
include terms around payment, steering committees, specified personnel of the parties and
insurances required.
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) Intellectual Property:
Each party will retain ownership of their respective intellectual property developed prior to
the date a Project commences or is acquired or developed independent of the agreement,
but grants a non-transferrable licence to the other party to use such background
intellectual property for the purposes of the relevant Project.
Any new intellectual property created, developed or discovered in the conduct of a
Project vests in Li-S Energy (Project IP). Deakin is granted a non-exclusive, perpetual,
non-transferable, royalty free licence to use the Project IP for the purposes of the Project
and for non-commercial research, teaching and scholarly pursuits.
Deakin must also seek Li-S Energy’s prior consent before it publishes any part of the
Project IP as part of any publication.
(5) Termination of Shareholders Agreement
On 20 July 2021, PPK Aust., Deakin and BNNTTL executed a Deed of Termination of the Shareholders Agreement with
Li-S Energy effective on the date of signing.
(6) Employment Contracts
On 9 July 2021, Li-S Energy has entered into an employment contract with Dr Lee Finniear for his engagement as CEO
which contains standard terms and conditions for agreements of this nature, including confidentiality, restraint on
competition and retention of intellectual property provisions. The key terms of the employment contract are as follows:
Total Remuneration
Package:
$300,000 annual salary (including superannuation).
In addition to his annual salary, Dr Lee Finniear has been granted, and has elected to be
issued, 1,000,000 Service Rights vesting over a four year term in accordance with the
Executive Rights Plan.
Dr Lee Finniear is also eligible to participate in the Company’s short term incentive plan for
the 2022 Financial Year up to $100,000.
Term:
The contract commenced on 1 July 2021 and continues until terminated.
Termination by CEO:
6 months’ notice.
Termination by
Li-S Energy:
6 months’ notice or immediately due to serious misconduct or any reason entitling the
Li-S Energy to summarily dismiss Dr Lee Finniear at common law.
Non-competition and
non-solicitation:
To protect the interests of Li-S Energy and its intellectual property, Dr Lee Finniear will not,
directly or indirectly, in any capacity whatsoever, during the term and for 12 months after
the termination of the contract,
(a) be engaged, concerned or interest in any other business or occupation that is or may be
in competition with the business carried on by Li-S Energy in Australia;
(b) induce or encourage a client or customer of Li-S Energy to cease doing business with or
reduce the amount of business it would otherwise do with Li-S Energy;
(c) induce or solicit any officer or employee of Li-S Energy to leave that office or employment; or
(d) procure or assist someone else to do or attempt to do anything contemplated by way of
non-competition or non-solicitation.
As a result of the Dr Lee Finniear entering into an employment contract, the previous consulting agreement with his
consultancy company was terminated as at 30 June 2021. Consulting fees paid to or owing to his consultancy company
to 30 June 2021 were $171,700.
On 1 July 2021, Li-S Energy has entered into an employment contract with Dr Steve Rowlands for his engagement as
CTO which contains standard terms and conditions for agreements of this nature, including confidentiality, restraint on
competition and retention of intellectual property provisions. The key terms of the employment contract are as follows:
Total Remuneration
Package:
$176,000 annual salary (including superannuation).
Dr Steve Rowlands is eligible to participate in the Company’s short term incentive plan for
the 2022 Financial Year up to $16,000, and the Company’s Executive Rights Plan on terms
to be confirmed.
19
The Company will also reimburse Dr Steve Rowlands for all reasonable relocation costs
from the UK, including an annual economy return flight to the UK.
Term:
The contract commenced on 1 July 2021 (with a three month probation period) and
continues until terminated.
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) Termination by CTO:
2 months’ notice during the probation period.
Termination by
Li-S Energy:
6 months’ notice.
2 months’ notice during the probation period.
6 months’ notice or immediately due to serious misconduct or any reason entitling the
Li-S Energy to summarily dismiss Dr Steve Rowlands at common law.
Non-competition and
non-solicitation:
To protect the interests of Li-S Energy and its intellectual property, Dr Steve Rowlands will
not, directly or indirectly, in any capacity whatsoever, during the term and for 12 months
after the termination of the contract,
(a) be engaged, concerned or interest in any other business or occupation that is or may be
in competition with the business carried on by Li-S Energy in Australia;
(b) induce or encourage a client or customer of Li-S Energy to cease doing business with or
reduce the amount of business it would otherwise do with Li-S Energy;
(c) induce or solicit any officer or employee of Li-S Energy to leave that office or employment; or
(d) procure or assist someone else to do or attempt to do anything contemplated by way of
non-competition or non-solicitation.
(7) Consulting Agreements
On 16 July 2021, a consulting agreement between Li-S Energy and Glenn Molloy’s consultancy company, Corso
Management Services Pty Ltd. The key terms of the consultancy agreement are as follows:
Designated Person:
Entitlements:
Term:
Termination:
While the contract is between Li-S Energy and Glenn Molloy’s consultancy company, the
agreement requires that the services to be provided by Glenn Molloy unless otherwise
agreed in writing by Li-S Energy and for Glenn Molloy to remain an employee of the
consultancy company.
A daily rate to be agreed between the parties. Mr Molloy is not paid any fees in respect of
travel time to and from the locations where work is performed.
The contract commenced on 12 June 2021 and is for a period of 24 months unless
terminated earlier by Li-S Energy as permitted under the agreement.
Subject to annual renewal by written agreement, the contract terminates on 12 June 2023
or Li-S Energy can immediately terminate the agreement if Mr Molloy:
(a) commits any act involving fraud, deceit, dishonesty or other serious misconduct
(whether in relation to Li-S Energy or otherwise);
(b) becomes bankrupt or commits any act of bankruptcy;
(c) is charged with any serious criminal offence;
(d) refuses or fails to comply with any lawful request made by Li-S Energy or any of its Directors;
(e) is unable to properly perform the essential elements of the Chief Commercial Actions
Officer role whether as a result of illness, accident or otherwise; or
(f) is in breach of any obligations under the contract and fails to rectify the breach within
5 business days after being requested to do by Li-S Energy.
Either party may terminate on 3 months’ notice.
Non-competition and
non-solicitation:
To protect the interests of Li-S Energy and its intellectual property, Mr Molloy will not,
directly or indirectly, in any capacity whatsoever, during the term and for 12 months after
the termination of the contract,
20
(a) be engaged, concerned or interest in any other business or occupation that is or may be
in competition with the business carried on by Li-S Energy;
(b) induce or encourage a client or customer of Li-S Energy to cease doing business with or
reduce the amount of business it would otherwise do with Li-S Energy;
(c) induce or solicit any officer or employee of Li-S Energy to leave that office or employment; or
(d) procure or assist someone else to do or attempt to do anything contemplated by way of
non-competition or non-solicitation.
This restraint will not prevent Mr Molloy from performing his roles or holding his interest in
PPK Group Limited entities or entities it holds an interest in.
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) On 7 July 2021, a consulting agreement between Li-S Energy and Andrew Cooke’s consultancy company, AJC
Corporate Services Pty Ltd was entered into. The agreement is made on standard commercial terms for services for the
provision of company secretarial services.
(8) Australian Research Council Industrial Transformation Research Hub
Deakin University has been awarded grant funding by the Australian Research Council (ARC) to establish and operate
the ARC Industrial Transformation Research Hub in new safe reliable energy storage and conversion technologies.
Under the grant agreement Deakin University must enter into a participant’s agreement with each participating
organisation before the research program can start.
On 11 May 2021, Li-S Energy signed the participant’s agreement and the contract commences when all parties have
executed their agreement. As at 30 June 2021, the other participants had not yet signed the agreement.
Commitment:
Term:
Termination:
Cash contributions of $150,000 per year for five years totalling $750,000 and in-kind
contributions of $50,000 per year for five years totalling $250,000.
The contract is for a period of 5 years unless terminated earlier by ARC as permitted under
the agreement.
The contract terminates on the fifth anniversary of the commencement date of the
agreement or the date of which the final report is submitted to the ARC, whichever
is later. Deakin University may terminate this agreement if the grant agreement with
ARC is terminated for any reason or if the ARC suspends or reduces the scope of the
research program or grant funding. Alternatively the agreement may be terminated if the
participating organisations agree there is no longer a valid reason for continuing with the
research program.
White Graphene
On 30 June 2021, Deakin amended the payment terms of its research and development agreement with WGL. The
first instalment of $503,000, of the total agreement costs of $1,443,000, due on 1 July 2021 has been paid and the
remaining terms and conditions of the research and development agreement have not changed.
Lodgement of IPO Prospectus and Proposed Capital Raising
On 29 July 2021, Li-S Energy lodged a prospectus to raise $34,000,000, issue 40,000,000 ordinary shares and list on
the ASX. As a result of this prospectus, the number of ordinary shares potentially outstanding is as follows:
Outstanding and issued at 30 June 2021
Issued as a result of capital raising in the prospectus
Total outstanding and issued at the completion of the prospectus
Potentially issuable ordinary shares under the Service Rights as detailed in the Remuneration Report
disclosed in the Directors’ Report1
Issued and potentially issuable ordinary shares at the date of the prospectus
1
Assuming all Service Rights vest and are converted to ordinary Shares.
Number of
Ordinary
Shares
600,200,230
40,000,000
640,200,230
3,160,000
643,360,230
At the completion of the capital raise, PPK will own 45.43% of the capital directly, and 50.12% on a consolidated basis.
21
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) Impact of COVID-19
Events relating to COVID-19 have resulted in significant economic volatility. There is continued uncertainty as to the
ongoing and future response of governments and authorities globally, and a further Australian economic downturn is
possible. As such, the full impact of COVID-19 to consumer behavior, employees and the Group are not fully known.
Given this, the impact of COVID-19 could potentially be materially adverse to the Group’s financial and/or operational
performance. Further, any government or industry measures may materially adversely affect the Group’s operations
and are likely beyond the Group’s control.
Due to COVID-19, the State and Federal Governments have imposed social-distancing restrictions which have, and may,
disrupt the operations of the Group. The Group’s main operations are at Deakin University’s campus located at Geelong,
Victoria. To slow the spread of COVID-19 in Victoria, the Victorian government has imposed restrictions from time-to-time.
Deakin University, who is contracted to provide the research and development for the Group, has had its own restrictions
with access to campus by staff, students and visitors restricted to help maintain health and safety protocols, with staff
and visitor access reviewed case-by-case. As a result, limits have been placed on the number of staff and contractors
permitted in the workspace at one time. It is unknown whether stricter restrictions will be imposed and what the impact
of these would be on the operations of the Group.
Due to COVID-19, the manufacture of equipment and parts and the supply of raw materials in foreign markets may be
restricted or delayed which could impact on the Group’s operations.
There have been no other matter or circumstance that has arisen since the end of the financial period which is not
otherwise dealt with in this report or in the financial statements that has significantly affected or may significantly
affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent
financial years.
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 2020 are included in the Executive Chairman’s Report set out on pages 2 to 6
and which forms part of this report.
ENVIRONMENTAL ISSUES
PPK remains committed to:
the effective management of environmental issues having the potential to impact on its remaining business; and
–
– minimising the consumption of resources utilised by its operations.
The Company has otherwise complied with all government legislation and regulations with respect to disposal of
waste and other materials and has not received any notices of breach of environmental laws and/or regulations. The
Company’s approach to environmental sustainability is outlined in its Environmental Policy at www.ppkgroup.com.au.
PROCEEDINGS ON BEHALF OF COMPANY
The Company is defending a claim in the Supreme Court of NSW in relation to a dispute pertaining to the vesting
conditions of a business acquired in 2014 with a vendor employee for the issue of a second tranche of $0.500M of
shares plus interest and costs. As advised in the 2016 Annual Report, the Company does not believe the vesting
conditions were met and still maintains this position. The Company has incurred $0.361M this financial year to defend
this position.
No other matter or circumstance has arisen which is not otherwise dealt with in this Annual Report that has significantly
affected or may significantly affect the operations of the consolidated entity, the results of those operations or the state
of the consolidated entity in subsequent years.
22
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) REMUNERATION REPORT (audited)
The Directors of PPK present the Remuneration Report for non-executive directors, executive directors and other
management personnel, prepared in accordance with the Corporations Act 2001 and the Corporations Regulations
2001. The Directors have determined that they and the Chief Financial Officer are the key management personnel.
Remuneration Policy
The remuneration policy of the Company has been designed to align directors’, executives’ and senior managers’
objectives and performance with shareholder and business results by providing a fixed remuneration component and
offering specific Short Term Incentives (STIs) based on key performance areas affecting the Group’s financial results
and Long Term Incentives (LTIs) based on increases to PPK’s share price and retention of key people.
The PPK Board believes the remuneration policy to be appropriate and effective in its ability to attract, retain and
motivate directors, executives and senior managers of high quality and standard to manage the affairs of the Group, as
well as, create goal congruence between directors, executives, senior managers and shareholders.
The remuneration policy, setting the terms and conditions for executive directors, executives and senior managers
was developed by the Board. The policy for determining the nature and amount of remuneration for board members,
executives and senior managers 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 $0.400M per
annum in aggregate as approved by shareholders at the Annual General Meeting on 26 November 2019.
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.
However, A McDonald was offered 50,000 performance rights due to the time and services provided in connection with
the BNNT acquisition and its subsequent development and advancement and this was approved by the shareholders at
the Annual General Meeting on 26 November 2019.
PPK does not provide retirement benefits for its non-executive directors. Executive directors do not receive director’s
fees.
The Board is responsible for approving remuneration policies and packages applicable to executive directors,
executives and senior managers 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, executives and managers is conducted by the full
Board at a duly constituted Directors’ meeting.
The Board conducts its review annually based on established criteria which includes:
–
–
–
–
the individual’s performance;
reference to market data for broadly comparable positions or skill sets in similar organisations or industry;
the performance of the Group during the relevant period; and
the broad remuneration policy of the Group.
Executive directors, executives and senior managers may receive bonuses and/or fees based on the achievement of
specific goals of the consolidated entity.
Company Performance and Shareholder Wealth for Executive and Senior Managers Remuneration
The two methods employed in achieving this aim are:
Short Term Incentives
PPK has an STI in place which is paid as salary and superannuation above their normal contracts and aligned with key
performance indicators (KPIs) as determined by the board. The KPIs are developed from the strategic and operating
plans and are chosen to reflect the core drivers of short-term performance and deliver sustainable value to the
Company, its shareholders and its customers. Participation in the STI is considered on an annual basis.
23
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) Long Term Incentives (LTI)
PPK is in the process of reviewing and modifying its LTI Plan consistent with the change in its business strategy and the
role in which it performs going forward. As at the date of this report, the Board has not finalised the LTI Plan.
For the purposes of this and the previous financial year, PPK had an LTI in place which is managed as a Trust on
behalf of two directors, an executive and senior managers of the Group. The Directors determine who will be offered
Performance Rights, which can be converted to PPK shares on a one-for-one basis subject to the PPK share price
meeting set price targets and the executive director and employees continuing their employment to the vesting date.
The LTI was approved by shareholders at the Annual General Meeting on 27 November 2018.
At the time that the Directors set the share price targets, PPK shares were trading at $0.21 per share and the
performance rights to be issued were 2,520,000. As a result of the increase in PPK’s share price, the share price targets
were met, and the vesting conditions are now subject to the two director and employees continuing their employment
to the vesting dates. However, the board considered that as the intent was to reward the executives and senior
managers with a value of shares equivalent to their total remuneration to be realised over a period of time, the ASX
announcement on 13 November 2018 for the Group to acquire 100% of the shares in AICIC, and the resulting strategic
50% holding in BNNT Technology Limited, led to a significant increase in the PPK share price in a short period of time
and that this was not the direct outcome of the executives or senior managers actions of the Mining Services segment.
As a result, in July 2019 the board modified the performance rights to the executives and senior managers that would
deliver a total remuneration value that was equal under the original LTI and the modified LTI. The board considers there
to be no change in the original vesting conditions. The share price targets, based on a 5-trading day volume weighted
average price, the vesting conditions and the total number of performance rights offered, as modified in July 2019, are:
Share Price Targets
Vesting Conditions
$0.30 per share by 1 January 2019
Fully vest on 1 January 2020(2)
$0.40 per share by 1 January 2020
Fully vest on 1 July 2020(2)
$0.50 per share by 1 January 2021
Fully vest on 1 January 2021(2)
$0.60 per share by 1 January 2021
Fully vest on 1 July 2021
Original
No of
Performance
Rights(1)
Amended
No of
Performance
Rights(1)
380,000
380,000
140,000
140,000
380,000
140,000
380,000
140,000
1,520,000
560,000
(1)
The performance rights have been adjusted for those foregone by a senior manager who left employment before the performance
rights vested.
(2) Modified performance rights have vested.
PPK can issue shares to the Trustee or fund the purchase of PPK shares, in the open market, on behalf of the Trustee.
Once this occurs, the Trustee will hold the PPK shares on behalf of the participants until such time that the vesting
conditions for Performance Rights are met. Once the vesting conditions are met, the participants can apply to have the
shares sold or transferred to the applicable participant.
Performance Rights had the following share price targets as a performance condition and a vesting condition attached
to them. The performance conditions were based on a 5 day volume weighted average share price and, at the time that
the Directors set the share price targets, PPK shares were trading at $0.21 per share. The vesting condition dates were
selected based on sustainable share price growth over a reasonable period of time. At the date of this Annual Report,
all performance and vesting conditions have been met and all performance rights were vested.
Share Price Targets
Vesting Conditions
$0.30 per share by 1 January 2019
Fully vest on 1 January 2020
$0.40 per share by 1 January 2020
Fully vest on 1 July 2020
$0.50 per share by 1 January 2021
Fully vest on 1 January 2021
24
$0.60 per share by 1 January 2021
Fully vest on 1 July 2021
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) Company Performance and Shareholder Wealth for Directors
PPK Directors
Two directors, D McNamara and A McDonald, participate in the LTI on the same terms and conditions as the Executives
and Senior Managers. D McNamara was offered 400,000 performance rights with 100,000 performance rights vesting
in Tranche 1 through to Tranche 4 subject to retention of his services to meet the vesting conditions. The performance
rights were approved by the shareholders at the Annual General Meeting on 27 November 2018. As noted above,
in July 2019 the board modified the performance rights to the D McNamara that would deliver a comparative total
remuneration value and the board has considered this to be no change in the original vesting conditions. The share
price targets, based on a 5-trading day volume weighted average price, the vesting conditions and the total number
of performance rights offered, as modified in July 2019, are:
Share Price Targets
Vesting Conditions
$0.30 per share by 1 January 2019
Fully vest on 1 January 2020
$0.40 per share by 1 January 2020
Fully vest on 1 July 2020
$0.50 per share by 1 January 2021
Fully vest on 1 January 2021
$0.60 per share by 1 January 2021
Fully vest on 1 July 2021
Original
No of
Performance
Rights
Amended
No of
Performance
Rights
250,000
100,000
250,000
100,000
250,000
100,000
250,000
100,000
1,000,000
400,000
A McDonald was offered 50,000 performance rights due to the time and services provided in connection with the
BNNT acquisition and its subsequent development and advancement and this was approved by the shareholders at
the Annual General Meeting on 26 November 2019. The performance rights vest in four equal tranches of 12,500 at the
same dates as the existing performance rights, subject to retention of his services to meet the vesting conditions.
At the date of this Annual Report, all performance and vesting conditions for D McNamara and A McDonald have been
met and all performance rights were vested.
As at 30 June 2021, the Trust held 0.517M shares in PPK. The Directors have determined PPK will not consolidate the
Trust with the entities of PPK as the Trust is for the benefit of the Participants and PPK does not control the Trust.
Li-S Energy Directors
Robin Levison and Tony McDonald participate in the Li-S Energy Non-Executive Director (NED) Equity Plan. Both
Directors have sacrificed their director fees of $80,000 per annum over a three year period and were granted
160,000 Service Rights per year over a three year period. The Service Rights were issued as at 1 May 2021 and will vest
in three equal tranches on 30 April 2022, 2023 and 2024, providing the NED holds the office of NED on those dates.
Each consecutive tranche commences annually on the vesting date of the prior tranche.
The number of Service Rights were calculated by dividing the amount of sacrificed fees by the Share price of
$0.50 per Share being the price at which Shares were issued in the April 2021 capital raise. The fair value of these
Service Rights at the time that they were granted have been independently valued at $0.50 each. There is no amount
payable other than the sacrificed fees for the Service Rights.
Each Service Right is an entitlement, upon vesting and exercise, to an ordinary fully paid Share in the Company. Service
Rights may not be disposed of at any time except by force of law such as on death and Service Rights may not be
exercised prior to vesting but may be exercised at any time once they have vested but must be exercised within 90 days
of cessation of holding the office of NED and any role as an employee of the Company.
Each Service Right has a term ending 15 years after the grant date. If not exercised before the end of their term the
Service Rights will lapse. The term will be reduced if vested Service Rights are not exercised as required following
cessation of being a NED. If a NED ceased to hold the office of a NED during a tranche then Service Rights for that
tranche will vest in proportion to the time elapsed as served in the tranche. All subsequent tranches will lapse.
Any unvested Service Rights that do not vest will lapse.
A NED must not enter into an arrangement with anyone if it would have the effect of limiting their exposure to risk in
relation to Service Rights (vested or unvested).
25
If the Board forms the view that a NED has committed an act of fraud, defalcation or gross misconduct in relation to the
Company then all unexercised Service Rights will be forfeited.
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) Consequences of company performance on shareholder wealth
2021
2020
2019
2018
2017
2016
Net profit (loss) after tax ($’000)
($5,479)
$8,254
$1,800
($1,561)
$560
($7,873)
Earnings per share (cents)
Full year ordinary dividends (cents) per share
Year end share price
Shareholder return (annual)
Three year average shareholder return
(6.4)
3.5
$15.95
414%
417%
9.8
2.0
$3.11
13%
2.6
1.0
$2.77
823%
(2.3)
–
0.8
–
(13.4)
–
$0.30
$0.20
$0.20
50%
106%
(50%)
The above table shows the annual returns to shareholders calculated to include the difference in percentage terms
between the dividend yield for the year (based on the average share price during the period) and changes in the price
at which shares in the Company are traded between the beginning and the end of the relevant financial year.
Remuneration Details for the year ended 30 June 2021 for Directors’ and Key Management Personnel
Details of the nature and amount of each element of the remuneration of each director and key management personnel
(‘KMP”) of PPK Group Limited are shown in the table below:
Short Term Benefits
Salary &
Fees
($)
Cash
Bonus
($)
Non-
Monetary
($)
Post
employment
Super-
annuation
($)
Long
Term
Benefits
($)
Terminat-
ion
Payments
($)
(1)Share
Based
Payments
($)
Perform-
ance
Related
(%)
Total
($)
2021
Directors
Non-Executive
A McDonald
G Webb
Executive
R Levison
G Molloy
50,000
43,333
215,000
240,000
–
–
–
–
–
–
D McNamara(2)
200,000
Total Directors
748,333
Other Key Management Personnel
K Hostland(3)
325,000 150,000
Total Other
325,000 150,000
Total Key Management Personnel
1,073,333 150,000
–
–
–
–
–
–
–
–
–
–
–
25,000
–
–
25,000
25,000
25,000
50,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
88,057
138,057
64
–
43,333
– 240,000
– 240,000
70,701
270,701
26
158,758 932,091
56,561
556,561
37
56,561
556,561
215,319 1,488,652
(1)
Equity settled share based payments. Performance rights granted are expensed over the performance period, which includes the
year to which the bonus relates and the subsequent vesting period of rights. All performance rights fully vested on 1 July 2021.
(2) D McNamara also has use of a fully maintained motor vehicle.
(3) The cash bonus relates to the 2020 financial year.
26
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) Directors and key management personnel were also remunerated by Li-S Energy and White Graphene for the year
ended 30 June 2021 as follows:
2021
LI-S ENERGY
LIMITED
R Levison
G Molloy
A McDonald
K Hostland
WHITE GRAPHENE
LIMITED
R Levison
G Molloy
A McDonald
Short Term Benefits
Salary &
Fees
($)
(5)Cash
Bonus
($)
Non-
Monetary
($)
Post
employment
Super-
annuation
($)
Long
Term
Benefits
($)
Terminat-
ion
Payments
($)
(4)Share
Based
Payments
($)
Perform-
ance
Related
(%)
Total
($)
16,667 100,000
16,667 400,000
16,667 200,000
– 100,000
50,001 800,000
16,667
16,667
16,667
50,001
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
24,444
141,111
– 416,667
24,444
241,111
71
96
83
– 100,000
100
48,888 898,889
–
–
–
–
16,667
16,667
16,667
50,001
–
–
–
–
(4)
(5)
Equity settled share based payments. Service rights granted are expensed over the vesting period from the date of granting to the
date that the last tranche vests.
The cash bonus was for services provided by each individual for working extended hours in connection with the preparation of
and involvement in the IPO processes and the pre-IPO capital raise, including performing market research, attending additional
meetings, prospectus drafting and other related activities which fall outside their normal roles and duties.
Directors and key management personnel also provided services to the other subsidiary companies, the associated
companies and the joint venture for which they were not remunerated.
27
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) Remuneration Details for the year ended 30 June 2020 for Directors’ and Key Management Personnel
Details of the nature and amount of each element of the remuneration of each director and key management personnel
(‘KMP”) of PPK Group Limited are shown in the table below:
Short Term Benefits
Salary &
Fees
($)
Cash
Bonus
($)
Non-
Monetary
($)
Post
employment
Super-
annuation
($)
Long
Term
Benefits
($)
Terminat-
ion
Payments
($)
(1)Share
Based
Payments
($)
Perform-
ance
Related
(%)
Total
($)
2020
Directors
Non-Executive
G Webb
A McDonald
Executive
R Levison
G Molloy
D McNamara(2)
Total Directors
40,000
45,833
215,000
240,000
200,000
740,833
–
–
–
–
–
–
Other Key Management Personnel
K Hostland(3)
325,000 157,625
Total Other
325,000 157,625
Total Key Management Personnel
1,065,833 157,625
–
–
–
–
–
–
–
–
–
–
–
25,000
–
–
25,000
25,000
25,000
50,000
–
–
–
–
–
–
–
–
–
–
–
40,000
– 236,943
282,776
84
–
–
–
–
–
–
–
–
240,000
240,000
236,108
436,108
54
473,051
1,238,884
188,886
696,511
50
188,886
696,511
–
661,937 1,935,395
(1)
Equity settled share based payments. Performance rights granted are expensed over the performance period, which includes the
year to which the bonus relates and the subsequent vesting period of rights.
(2) D McNamara also has use of a fully maintained motor vehicle.
(3) The cash bonus relates to the 2019 financial year.
Performance Income as a Proportion of Total Remuneration
In 2021, K Hostland received an STI award of $150,000 (2020: $157,625), after his assessment of annual performance,
for achieving targets noted below as set by the Directors for the 2020 financial year representing 92% of his targets. No
other bonuses were paid to Key Management Personnel during the year.
Targets
Results
Performance of PPKME
Achieved at Board’s discretion
Integration/support of Technology businesses Achieved at Board’s discretion
STI
Allocation
Outcome
20%
80%
80%
95%
28
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) The table below shows a reconciliation of performance rights held by each KMP for the year ended 30 June 2021.
Name and
Grant Dates
Balance
at Start of
the Year
Granted
During
Year
Vested Exercised
Forfeited
Balance at End of Year
Unvested
D McNamara
Tranche 1
Tranche 2
Tranche 3
Tranche 4
A McDonald
Tranche 1
Tranche 2
Tranche 3
Tranche 4
K Hostland
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Vested Unvested
No.
%
No.
%
No.
Maximum
$ value to vest(1)
100,000
12,500
100,000 100,000
100,000 100,000
100
100
100,000
12,500
12,500
12,500
12,500
100
100
12,500
–
–
–
–
–
–
–
–
75,000
(56,000)
75,000 75,000
75,000 75,000
100
100
75,000
–
–
–
–
–
–
– 100,000
20,568
–
12,500
25,225
–
75,000
16,455
(1)
The maximum value of the performance rights yet to vest has been determined as the amount of the grant date fair value of the
performance rights that is yet to be expensed which was calculated using the number of performance rights that were going to be
granted. Tranche 4 of the Performance Rights vested on 1 July 2021.
Fair Value of each performance right at the grant date is:
D McNamara
A McDonald
K Hostland
Tranche 1
Tranche 2
Tranche 3
Tranche 4
$0.500
$6.500
$0.500
$0.500
$6.500
$0.500
$0.486
$6.500
$0.486
$0.430
$6.500
$0.430
Employment Agreements
R Levison
A consultancy agreement is in place between the parties on the following terms:
Term: Commencing on 1 October 2013 – no fixed term.
Remuneration: Base remuneration under the agreement is $0.240M per annum.
Duties: Executive Chairman.
Termination: The agreement may be terminated at any time by PPK Group Limited giving not less than 12 months
written notice or by Mr Levison giving not less than 6 months written notice.
G Molloy
A consultancy agreement is in place between the parties on the following terms:
Term: Commencing on 1 July 2019 – no fixed term.
Remuneration: Base remuneration under the agreement is $0.240M per annum.
Duties: Executive Director.
Termination: The agreement may be terminated at any time by PPK Group Limited giving not less than 12 months
written notice or by Mr Molloy giving not less than 6 months written notice.
Subsequent to the year end, G Molloy entered into a consultancy agreement with Li-S Energy (see Note 37).
29
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D)
D McNamara
A consultancy agreement is in place between the parties on the following terms:
Term: Commencing on 1 April 2014 – no fixed term.
Remuneration: Base remuneration under the agreement is $0.200M per annum plus a fully maintained motor vehicle.
Duties: Director of Global Mining.
Termination: The agreement may be terminated 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.
K Hostland
Employment agreement is in place between the parties on the following terms:
Term: Commencing 1 December 2017 (previously under a short term contract as Acting Chief Financial Officer)
Remuneration: Base remuneration of $0.325M plus $0.025M superannuation per annum. He also participates in the STI,
where he can receive a maximum bonus of 50% of his total base salary for meeting key performance indicators set by
the Directors.
Duties: Group Chief Financial Officer/Group Chief Operating Officer
Termination: The agreement may be terminated at any time by either party giving 6 months written notice.
There are no formal employment agreements in place for A McDonald.
As at the end of the financial year, the number of ordinary shares in PPK Group Limited held by directors and Key
Management Personnel during the 2021 reporting period is set out below:
Share
Balance at
Start of Year
November
2020 DRP(1)
Shares
Transferred
from PPK
LTIP(2)
Shares
Acquired(3)
Shares
Sold
Adjust for
Director
Ceasing in
the Year
Shares Held
at the End of
the Reporting
Period
2021
Directors
Non-Executive
R Levison(4)
G Molloy(5)
4,433,572
14,582,610
D McNamara(4)
4,530,461
A McDonald
G Webb(6)
407,924
9,749,399
Total Directors
33,703,966
Other Key Management Personnel
11,581
37,035
11,834
1,066
25,467
86,983
–
–
1,037
130
–
1,167
–
–
–
–
–
–
(345,000)
(151,524)
(1,500,000)
–
–
–
–
–
–
4,100,153
14,468,121
3,043,332
409,120
(9,774,866)
–
(1,996,524)
(9,774,866) 22,020,726
K Hostland
Total Other
Total
254,878
254,878
665
665
56,649
125,000
56,649
125,000
(8,500)
(8,500)
–
–
428,692
428,692
33,958,844
87,648
57,816
125,000 (2,005,024)
(9,774,866) 22,449,418
(1)
Shares issued @ $3.8282 per share being the price at w hich shares w ere issued to all shareholders participating in the Dividend
Reinvestment Plan regarding the dividend paid by the Company on 20 November 2020.
(2)
Includes shares issued under the Dividend Reinvestment Plan to PPK LTIP in error and transferred to LTIP participants.
(3) Shares in a related party under the control of the KMP.
(4) Shares sold in conjunction with the Strategic Capital Raise announced 27 November 2020.
(5) Share movement was as a result of retirement as a Trustee from a Trust
(6) Removes G Webb share holding as he ceased to be a Director during the year.
30
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) As at the end of the financial year, the number of ordinary shares and Service Rights in Li-S Energy held by directors
during the 2021 reporting period is set out below:
Share
Balance at
Start of Year
Shares
Issued via
PPK’s
In-specie
Dividend
Shares
Acquired
Shares Sold
Shares Held
at the End of
the
Reporting
Period
Service
Rights
Granted
During the
Reporting
Period
Total
Securities
Held at the
End of the
Reporting
Period
–
–
–
–
–
1,576,917
1,200,000
5,640,784
800,000
1,247,384
200,000
166,961
700,000
8,632,046
2,900,000
–
–
–
–
2,776,917
480,000
3,256,917
6,440,784
1,447,384
–
–
6,440,784
1,447,384
866,961
480,000
1,346,961
11,532,046
960,000 12,492,046
2021
Directors
R Levison
G Molloy
D McNamara
A McDonald
Total Directors
As at 30 June 2021, no Service Rights have vested.
OTHER TRANSACTIONS WITH RELATED PARTIES OF THE GROUP
See Note 35. There were no other transactions with directors and/or their related parties during the year.
(End of Audited Remuneration Report)
MEETINGS OF DIRECTORS
During the financial year, meetings of directors (including committee meetings) were held. Attendances were:
R Levison
G Molloy
D McNamara
A McDonald
G Webb
DIRECTORS’ MEETINGS
AUDIT COMMITTEE MEETINGS
Number
Eligible to
attend
Number
Attended
Number
Eligible to
attend
Number
Attended
12
12
12
12
7
12
12
12
12
7
–
2
–
2
–
–
2
–
2
–
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 4th 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:
–
–
received and considered reports from management regarding the effectiveness of the Company’s management of
its material business risks; and
31
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.
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D) 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:
G Molloy (Appointed Chairman: 14 August 2017)
A McDonald (Appointed: 25 January 2018)
Executive Director
Non-Executive Independent Director
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 2021 of $0.111M (2020: $0.111M) for the year ending 31 May 2021 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.
To the extent permitted by law, the Company has agreed to indemnify its auditors, EY, as part of the terms of its audit
engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment
has been made to indemnify EY during or since the financial year.
NON-AUDIT SERVICES
In 2021, the external auditors were engaged to provide tax compliance and an Independent Limited Assurance Report
in relation to the Li-S Energy IPO and were costs of $0.248M were accrued or paid (2020: $0.100M).
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 2021 and a copy of this declaration forms part of the Directors’ Report.
ROUNDING OF ACCOUNTS
The amounts contained in the financial report have been rounded to the nearest $1,000 (where rounding is applicable)
where noted ($’000) under the option available to the Company under ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191. The Company is an entity to which this legislative instrument applies.
Signed in accordance with a resolution of the Board of Directors.
Robin Levison
Executive Chairman
Glenn Molloy
Executive Director
Brisbane, 31 August 2021
32
PPK Group Limitedfor the year ended 30 June 2021Directors’ ReportDIRECTORS’ REPORT (CONT’D)
Auditor’s Independence Declaration
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Auditor’s independence declaration to the directors of PPK Group Limited
As lead auditor for the audit of the financial report of PPK Group Limited for the financial year ended
30 June 2021, I declare 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.
This declaration is in respect of PPK Group Limited and the entities it controlled during the financial
year.
Ernst & Young
Brad Tozer
Partner
31 August 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
34
3333
PPK Group LimitedAuditor’s Independence DeclarationAUDITOR’S INDEPENDENCE DECLARATIONPPK Group Limited
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
for the year ended 30 June 2021
Consolidated Entity
2021
$’000
2020
$’000
Notes
Continuing operations
Revenue from contracts with customers
Cost of sales
GROSS PROFIT
Rental income
Other operating income (loss)
Mining services expenses
Technology expenses
Corporate expenses
Finance costs
Share of profit of an associate and a joint venture
PROFIT (LOSS) BEFORE TAX EXPENSE FROM CONTINUING OPERATIONS
Income tax (expense)/benefit
PROFIT (LOSS) AFTER TAX EXPENSE FROM CONTINUING OPERATIONS
Discontinuing operations
3.1
3.2
20.3
4.1
PROFIT (LOSS) AFTER TAX EXPENSE FROM DISPOSAL GROUP
13
PROFIT (LOSS) FOR THE YEAR
PROFIT (LOSS) IS ATTRIBUTED TO:
Owners of PPK Group Limited
Non-controlling interests
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified to profit or loss, net of tax
Revaluation of land and buildings before related tax effects
Net other comprehensive income that will not be reclassified to profit or loss
in subsequent periods
NET OTHER COMPREHENSIVE INCOME (LOSS) FOR THE YEAR
–
–
–
44
(615)
–
(2,243)
(3,163)
–
(198)
(6,175)
599
(5,576)
(742)
(6,318)
(5,479)
(839)
(6,318)
–
–
–
–
–
–
–
9,376
–
(231)
(4,033)
–
766
5,878
(240)
5,638
2,616
8,254
8,269
(15)
8,254
–
–
–
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR
(6,318)
8,254
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR IS ATTRIBUTABLE TO:
Owners of PPK Group Limited
Non-controlling interests
(5,479)
(839)
(6,318)
8,269
(15)
8,254
34
PPK Group LimitedConsolidated Statement of Profit or Loss and Other Comprehensive Incomefor the year ended 30 June 2021CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (CONT’D)
Earnings per share (in cents)
Basic
Diluted
Earnings per share from continuing operations (in cents)
Basic
Diluted
Earnings per share from discontinued operations (in cents)
Basic
Diluted
The accompanying notes form part of these financial statements
Consolidated Entity
2021
$’000
2020
$’000
Notes
11
11
11
11
11
11
(6.3)
(6.3)
(5.4)
(5.4)
(0.8)
(0.8)
9.8
9.7
6.7
6.6
3.1
3.1
35
PPK Group LimitedConsolidated Statement of Profit or Loss and Other Comprehensive Incomefor the year ended 30 June 2021 Consolidated Statement of Financial Position
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Other current assets
Current Disposal Group assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Investments in associates and a joint venture
Investment
Property, plant and equipment
Right-of-use assets
Intangibles
Deferred tax assets
Other assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease and other liabilities
Interest-bearing loans and borrowings
Provisions
Disposal Group liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Treasury shares
Reserves
Reserves of a disposal group held for sale
Retained earnings (accumulated losses)
36
Capital and reserves attributable to owners of PPK Group Limited
Non-controlling interests
TOTAL EQUITY
The accompanying notes form part of these financial statements
Consolidated Entity
2021
$’000
2020
$’000
Notes
14
15
16
17
18
13
20
21
22
23
24
7
25
26
27
28
13
26
28
30.1
30.4
31
30,365
1,721
–
–
110
28,734
60,930
28,126
4,472
530
–
1,622
922
–
35,672
96,602
357
–
399
134
7,435
8,325
–
13
13
8,338
88,264
5,344
6,324
1,659
10,594
742
–
24,663
25,086
2,547
5,240
3,628
3,038
–
37
39,576
64,239
4,333
1,681
152
1,581
–
7,747
1,998
301
2,299
10,046
54,193
75,348
59,500
(203)
19,068
350
(227)
4,143
–
(17,915)
(11,325)
76,648
11,616
88,264
52,091
2,102
54,193
PPK Group Limitedas at 30 June 2021Consolidated Statement of Financial PositionCONSOLIDATED STATEMENT OF FINANCIAL POSITION Consolidated Statement of Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash payments to suppliers and employees
Interest received
Interest paid
Net cash provided by (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for purchases of plant and equipment
Proceeds from sale of property and equipment
Proceeds from sale of Treasury shares
Payments for intangibles
Payments for loans advanced
Proceeds from loans repaid
Payments for the acquisition of an associate
20.2
Payment for acquisition of investment
Transaction costs related to acquisition of an associate
Purchase of financial assets at FVTPL
Dividend received from equity accounted investment
Net cash provided by (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from other borrowings
Proceeds from capital raisings
Repayment of other borrowings
Principal payment for lease liabilities
Transaction costs on issue of shares
Dividends paid
Dividends received for treasury shares
Finance costs
Net cash provided by (used in) financing activities
Net increase (decrease) in cash held
Cash at the beginning of the financial year
Cash attributable to discontinued operations
Cash at the end of the financial year
The accompanying notes form part of these financial statements
30.2
10(d)
10(d)
13
6.2
Consolidated Entity
2021
$’000
2020
$’000
Notes
38,916
48,350
(41,596)
(44,754)
60
(129)
(2,749)
(817)
446
2,025
(2,271)
(1,914)
273
(1,500)
(2,597)
–
(57)
362
5
(286)
3,315
(721)
28
–
(1,465)
–
–
(2,750)
(500)
(219)
–
–
(6,050)
(5,627)
395
38,206
(150)
(1,722)
(1,995)
(376)
7
–
34,365
25,566
5,344
(545)
30,365
5,150
11,750
(7,255)
(1,557)
(697)
(728)
6
–
6,669
4,357
1,047
(60)
5,344
37
PPK Group Limitedfor the year ended 30 June 2021Consolidated Statement of Cash FlowsCONSOLIDATED STATEMENT OF CASH FLOWS Consolidated Statement of Changes in Equity
for the year ended 30 June 2021
CONSOLIDATED
ENTITY
Notes
Issued
Capital
(Note 30)
$’000
Treasury
Shares
(Note 30.4)
$’000
Accumu-
lated
Losses
$’000
Capital
Reserves
(Note 31)
$’000
Reserve of
Disposal
Group Held
for Sale
$’000
Total
Attributable
to Owners of
PPK Group
Ltd
$’000
Non-
Controlling
Interests
$’000
Total
Equity
$’000
At 1 July 2020
59,500
(227)
(11,325)
4,143
–
52,091
2,102
54,193
Total comprehensive
income (loss) for the
year
Profit (loss) for the
year
Total comprehensive
income (loss) for the
year
Issue of share capital
on private placement
Issue of share
capital on dividend
reinvestment plan
Issue of share capital
for Long Term
Incentive Plan
Issue of performance
rights
Transaction costs for
issue of share capital
Shares purchased
–
–
30.2
15,400
30.2
483
31.1
31.1
784
–
30.2
(819)
Treasury shares sold
30.4
Reserves of a Disposal
Group held for sale
13
Dividends paid by in
specie distribution
10(d)
Dividends paid
Issue of capital in a
controlled entity
Change in a
non-controlling
interest held by a
controlled entity, net
of costs
Change in a
non-controlling
interest held by an
associated entity
–
–
–
–
–
–
–
–
–
(5,479)
–
–
–
–
–
–
(57)
(5,479)
–
–
–
–
–
–
81
1,944
–
–
–
–
(784)
311
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,202)
1,939
(853)
–
–
11,887
–
–
224
1,698
–
–
–
–
–
(5,479)
(839)
(6,318)
(5,479)
(839)
(6,318)
15,400
–
15,400
483
–
311
(819)
(57)
2,025
(263)
(853)
–
–
483
–
61
372
–
–
–
–
263
(819)
(57)
2,025
–
–
–
(853)
11,887
10,065
21,952
224
(224)
–
1,698
188
1,886
–
(350)
350
–
At 30 June 2021
75,348
(203)
(17,915)
19,068
350
76,648
11,616 88,264
The accompanying notes form part of these financial statements
38
PPK Group Limitedfor the year ended 30 June 2021Consolidated Statement of Changes in EquityCONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONT’D)
for the year ended 30 June 2020
CONSOLIDATED ENTITY
Notes
Issued
Capital
(Note 30.1)
$’000
Treasury
Shares
(Note 30.4)
$’000
Accumulated
Losses
$’000
Capital
Reserves
(Note 31)
$’000
Total
Attributable
to Owners of
PPK Group
Ltd
$’000
Non-
Controlling
Interests
$’000
Total
Equity
$’000
At 1 July 2019
47,743
(220)
(17,930)
671
30,264
–
30,264
Total comprehensive
income (loss) for the
year
Profit (loss) for the year
Total comprehensive
income (loss) for the year
Issue of share capital on
private placement
Issue of share capital on
acquisition
Issue of share capital on
dividend reinvestment
plan
Issue of share capital for
Long Term Incentive Plan
Issue of share capital for
Employee Share Scheme
Transaction costs for
issue of share capital
Changes in holding of
non-controlling interests
–
–
30.2
8,500
30.2
2,250
30.2
30.2
30.2
949
396
138
30.2
(476)
–
–
Dividends paid
10(d)
–
–
–
–
(7)
–
–
–
–
–
8,269
8,269
–
–
–
–
–
–
–
–
–
–
–
–
548
–
–
2,924
(1,664)
–
8,269
(15)
8,254
8,269
(15)
8,254
8,500
2,250
942
944
138
(476)
2,924
(1,664)
–
–
–
–
–
–
8,500
2,250
942
944
138
(476)
2,117
5,041
–
(1,664)
At 30 June 2020
59,500
(227)
(11,325)
4,143
52,091
2,102
54,193
The accompanying notes form part of these financial statements
39
PPK Group LimitedConsolidated Statement of Changes in Equity NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
NOTE 1 CORPORATE INFORMATION
The financial statements of PPK Group Limited (“PPK”
or “the Group”) for the year ended 30 June 2021 were
authorised for issue in accordance with a resolution of
the Directors on 31 August 2021 and covers PPK Group
Limited and its controlled entities as required by the
Corporation Act 2001.
PPK is a for-profit company limited by shares,
incorporated in Australia. Its shares are publicly traded
on the Australian Securities Exchange.
Separate financial statements for PPK Group Limited
(“Parent Company”) as an individual entity are not
required to be presented, however, limited financial
information for PPK Group Limited is provided as an
individual entity in Note 12.
The nature of the operations and principal activities of
the Group are:
Technology - to expand and profit from the manufacture
of high-grade boron nitride nanotubes (BNNT) in
commercial quantities using Deakin University’s patented
technology to;
–
supply BNNT to select industries to enable industries
to enable further research and development into
the blending/infusing of BNNT into conventional
materials. This process can be transformative in
terms of reduced weight and increased strength; and
– maintain an ongoing equity interest in selected BNNT
product applications such as lithium sulphur battery
products (Li-S Energy Limited), white graphene
(White Graphene Limited), metal alloys (Strategic
Alloys Pty Ltd) armaments (Craig International
Ballistics Pty Ltd and Ballistic Glass Pty Ltd), dental
applications (3D Dental Technology Pty Ltd) and
precious metals (BNNT Precious Metals Limited).
NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
2.1 Basis of Preparation and Statement
of Compliance
The consolidated general purpose financial statements
of the Group have been prepared in accordance
with the requirements of the Corporations Act 2001,
Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting
Standards Board. Compliance with Australian
Accounting Standards results in full compliance with the
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 investments measured at fair value.
The accounting policies have been consistently applied
to the entities of the consolidated entity unless otherwise
stated.
PPK is a type of company referred to in ASIC
Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191 and therefore, amounts in the
financial statements and Directors’ report have been
rounded to the nearest thousand dollars, or in certain
cases, to the nearest dollar.
2.2 New and revised standards that are effective
for these financial statements
The Group applied for the first time certain standards
and amendments, which are effective for the financial
period ended 30 June 2021. The Group has not
early adopted any other standard, interpretation or
amendment that has been issued but is not yet effective.
AASB 2018-6 Amendments to Australian Accounting
Standards – Definition of a Business
AASB 2018-6 amends AASB 3 to clarify that to be
considered a business, an integrated set of activities
and assets included, at a minimum, an input and
a substantive process that, together, significantly
contribute to the ability to create output. Furthermore, it
clarifies that a business can exist without including all the
inputs and processes needed to create outputs. These
amendments had no impact on the financial statements
of the Group, but may impact future periods should the
Group enter into any business combinations.
AASB 2018-7 Amendments to Australian Accounting
Standards – Definition of Material
AASB 2018-7 principally amends AASB 101 Presentation
of Financial Statements and AASB 108 Accounting
Policies, Changes in Accounting Estimates and Errors.
The amendments provide a new definition of material
that states “information is material if omitting, misstating
or obscuring it could reasonably be expected to
influence decisions that the primary users of general
purpose financial statements make on the basis of those
financial statements, which provide financial information
about a specific reporting entity”. The amendments
clarify that materiality will depend on the nature or
magnitude of information, either individually or in
combination with other information, in the context of the
financial statements. A misstatement of information is
material if it could reasonably be expected to influence
decisions made by primary users. These amendments
had no impact on the financial statements of, nor is there
expected to be any future impact to the Group.
40
The consolidated financial statements provide
comparative information in respect of the previous period.
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial Statements NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
2.2 New and revised standards that are effective
for these financial statements (continued)
AASB 2019-1 Amendments to Australian Accounting
Standards – References to the Conceptual
Framework
AASB 2019-1 amends Australian Accounting Standards,
Interpretations and other pronouncements to reflect
the issuance of the revised Conceptual Framework
for Financial Reporting (Conceptual Framework).
The Conceptual Framework is not a standard, and
none of the concepts contained therein override the
concepts or requirements in any standard. The purpose
of the conceptual framework is to assist the AASB
in developing standards, to help preparers develop
consistent accounting policies where there is no
applicable standard in place and to assist all parties to
understand and interpret the standards. This will affect
those entities which develop their accounting policies
based on the Conceptual Framework. The revised
Conceptual Framework includes some new concepts,
updated definitions and recognition criteria for assets
and liabilities and clarifies some important concepts.
These amendments had no impact on the financial
statements of the Company.
2.3 Basis of consolidation
The Group financial statements consolidate those of
the Parent Company, PPK Group Limited, and all of the
entities that the Group controls at 30 June each year.
The Parent Company controls an entity if it is exposed,
or has rights, to variable returns from its involvement
with the entity and could affect those returns through
its power over the entity. Potential voting rights that
are substantive, whether or not they are exercisable or
convertible, are considered when assessing control. All
entities have a reporting date of 30 June.
All intercompany balances and transactions, including
unrealised profits arising from intergroup transactions
have been eliminated on consolidation. Where unrealised
losses on intra-group asset sales are reversed on
consolidation, the underlying asset is also tested for
impairment from a group perspective.
Profit or loss and other comprehensive income of entities
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 an entity’s profit or loss and net
assets that is not held by the Group.
The Group attributes total comprehensive income or
loss of an entity between the owners of the parent and
the non-controlling interests based on their respective
ownership interests. A change in the ownership interest
of a subsidiary, without a loss of control, is accounted for
as an equity transaction.
2.4 Business combination
The Group applies the acquisition method in accounting
for business combinations. The consideration transferred
by the Group to obtain control of an entity 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 (i.e. gain on a bargain purchase) is recognised in
profit or loss immediately.
2.5 Investment in joint venture
A joint arrangement is an arrangement of which
two or more parties have joint control. Joint control
is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about
the relevant activities require the unanimous consent
of the parties sharing control. A joint venture is a joint
arrangement whereby the parties that have joint control
of the arrangement have rights to the net assets of the
arrangement.
The Group has a contractual arrangement whereby
decisions about the relevant activities of the joint
venture require the unanimous consent of the joint
venturers that control the joint venture. A joint venture
is accounted for in the consolidated financial statements
as an investment and accounts for the investment using
the equity method of accounting. Under the equity
method the Group’s share of the post-acquisition profit
or loss of the joint venture is recognised in consolidated
profit or loss and the Group’s share of the post-
acquisition movements in other comprehensive income
of the joint venture is recognised in consolidated other
comprehensive income. However, before applying equity
accounting, the Group adjusts for any post-acquisition
movements attributable to investments in subsidiaries of
the Group. The cumulative post-acquisition movements
are adjusted against the carrying amount of the
investment. Dividends and distributions received from
the joint venture reduces the carrying amount of the
investment in the consolidated financial statements.
41
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
2.5 Investment in joint venture (continued)
Any goodwill or fair value adjustment attributable to
the Group’s share in the joint venture is not recognised
separately and is included in the amount recognised as
an investment.
When the Group’s share of post-acquisition losses in
a joint venture exceeds its interest in the joint venture
(including any unsecured receivables), the Group does
not recognise further losses unless it has obligations to,
or has made payments, on behalf of the joint venture.
2.6 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
profit or loss of the associates is recognised in
consolidated profit or loss and the Group’s share of the
post-acquisition movements in other comprehensive
income 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.
Any goodwill or fair value adjustment attributable to
the Group’s share in the associate is not recognised
separately and is included in the amount recognised as
investment.
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.
2.7 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.
2.8 Revenue and revenue recognition
Revenue arises mainly from the short term lease of a
property, interest earned on loans and government
grants.
Lease income
Lease income is recognised over the lease term using
the net investment method which reflects a constant
periodic rate of return.
Interest income
Revenue is recognised as it accrues using the effective
interest rate method. The effective interest method uses
the effective interest rate which is the rate that exactly
discounts the estimated future cash receipts over the
expected life of the financial asset.
Government grants
Income from government grants is recognised at their
fair value where there is a reasonable assurance that
the grant will be received, and the Company will comply
with all attached conditions. When the grant relates
to an income item, it is recognised in the profit and
loss when the Company will comply with all attached
conditions. When the grant relates to an expense item,
it is recognised in the profit and loss as other operating
income on a systematic basis over the periods in which
the Company recognises as expense the related costs for
which the grants are intended to compensate. When the
grant relates to an asset, it is presented in the statement
of financial position by deducting the grant in arriving at
the carrying amount of the asset.
2.9 Operating expenses
Operating expenses are recognised in the profit or loss
upon utilisation of the services or at the date of their
origin.
2.10 Share-based payments
The Group operates equity-settled share right-based
incentive plans for its directors and employees. None
of the Group’s plans feature any share rights for a cash
settlement.
All goods and services received in exchange for the
grant of any share-based payment are measured at their
fair values. Where directors and employees are rewarded
using share right-based payments, the cost of directors’
and employees’ services is determined by the fair value
at the date when the grant is made using an appropriate
valuation model and revalued when modified. Market
performance conditions and service conditions are
reflected within the grant date fair value.
All share-based remuneration is ultimately recognised
in employee benefits expense with a corresponding
credit to share rights reserve. If vesting periods or other
vesting conditions apply, the expense is allocated over
the vesting period, based on best available estimate of
the number of share rights expected to vest.
42
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
2.10 Share-based payments (continued)
Non-market vesting conditions are included in
assumptions about the number of share rights that
are expected to become exercisable. Estimates are
subsequently revised if there is any indication that
the number of share rights expected to vest differs
from previous estimates. Any cumulative adjustment
prior to vesting is recognised in the current period. No
adjustment is made to any expense recognised in prior
periods if share rights ultimately exercised are different
to that estimated on vesting.
When the terms of an equity-settled award are modified,
the minimum expense recognised is the grant date fair
value of the unmodified award, provided the original
vesting terms of the award are met. An additional
expense, measured as at the date of modification, is
recognised for any modification that increases the total
fair value of the share-based payment transaction,
or is otherwise beneficial to the employee. Where an
award is cancelled by the entity or by the counterparty,
any remaining element of the fair value of the award is
expensed immediately through profit or loss.
2.11 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.
2.12 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 as they
are considered an integral part of the Group’s cash
management.
2.13 Trade receivables and other receivables
The Group recognises an allowance for expected credit
losses (ECLs) for all debt instruments not held at fair
value through the profit or loss. ECLS are based on
the difference between the contractual cash flows
due in accordance with the contract and all cash flows
that the Group expects to receive, discounted at an
approximation of the original effective interest rate.
For trade receivables and contract assets, the Group
applies a simplified approach to calculating ECLs. The
Group recognises a loss allowance based on lifetime
ECLs at each reporting date. The Group has established
a provision matrix that is based on its historical credit
loss experience, adjusted for forward-looking factors
specific to the debtors and the economic environment.
2.14 Property, plant and equipment
Land and buildings are brought to account at cost less,
where applicable, any accumulated depreciation. After
initial recognition, land and buildings are measured at
fair value at the date of revaluation less any subsequent
accumulated depreciation and subsequent accumulated
impairment losses.
Plant and equipment are brought to account at cost
less, where applicable, any accumulated depreciation
or amortisation and impairment. The cost of fixed
assets constructed within the Group includes the cost
of materials used in construction, direct labour and an
appropriate proportion of fixed and variable overheads.
The depreciable amount of all fixed assets, including
buildings and capitalised leased assets but excluding
freehold land, is depreciated over their useful lives to
the consolidated entity commencing from the time the
asset is held ready for use. Leasehold improvements
are amortised over the shorter of either the unexpired
period of the lease or the estimated useful lives of the
improvements.
The gain or loss on disposal of all fixed assets is
determined as the difference between the carrying
amount of the asset at the time of disposal and the
proceeds of disposal, and is included in the profit before
income tax of the consolidated entity in the year of
disposal.
Class of Fixed Asset
Depreciation Rate
Straight Line
Leasehold Improvements
over the term of the lease
Plant & Equipment
10-50 %
2.15 Intangible assets
Research and Development
Research is recognised as an expense as incurred. Costs
incurred on development (relating to the design and
testing of new or improved products) are recognised as
intangible assets when it is probable that the project will,
after considering its commercial and technical feasibility,
be completed and generate future economic benefits
and its costs can be measured reliably. The expenditure
capitalised comprises all directly attributable 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
tested annually for impairment when the asset is not yet
ready for use, or when events or circumstances indicate
that the carrying value may be impaired.
43
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
2.16 Financial instruments
Initial recognition and measurement
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.
The Company’s investment in Zeta Energy LLC is at fair
value through profit and loss.
i) Financial assets
Financial assets are classified, at initial recognition, as
subsequently measured at amortised cost, fair value
through other comprehensive income (OCI), and fair
value through profit or loss.
Financial assets are classified according to the
characteristics of their contractual cash flow and the
Group’s business model for managing them. Except for
those trade receivables that do not contain a significant
financing component or for which the Group has applied
the practical expedient, the Group initially measures
a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss,
transaction costs. Trade receivables that do contain a
significant financing component for which the Group
has applied the practical expedient are measured at the
transaction price as disclosed in Note 2.13.
In order for a financial asset to be classified and
measured at amortised cost or fair value through OCI, it
needs to give rise to cash flows that are “solely payments
of principal and interest (SPPI)” on the principal amount
outstanding. This assessment is referred to as the SPPI
test and is performed at an instrument level. Financial
assets with cash flows that are not SPPI are classified
and measured at fair value through profit and loss
(“FVTPL)”, irrespective of the business model.
The Group’s business model for managing financial
assets refers to how it manages its financial assets
in order to generate cash flows. The business model
determines whether cash flows will result from collecting
contractual cash flows, selling the financial assets,
or both. Financial assets classified and measured at
amortised cost are held within a business model with
the objective to hold financial assets in order to collect
contractual cash flows while financial assets classified
and measured at fair value through OCI are held within
a business model with the objective of holding to collect
contractual cash flows and selling.
Purchases or sales of financial assets that require
delivery of assets within a time frame established by
regulation or convention in the market place (regular
way trades) are recognised on the trade date (i.e. the
date that the Group commits to purchase or sell the
asset).
44
Subsequent measurement
For purposes of subsequent measurement, financial
assets are classified in four categories:
– Financial assets at amortised cost (debt instruments)
– Financial assets at fair value through OCI with
recycling of cumulative gains and losses (debt
instruments)
– Financial assets designated at fair value through the
OCI with no recycling of cumulative gains or losses
upon derecognition (equity instruments)
– Financial assets at FVTPL
Financial assets at amortised cost (debt instruments)
Financial assets at amortised cost are subsequently
measured using the effective interest (EIR) method
and are subject to impairment. Gains and losses
are recognised in profit or loss when the asset is
derecognised.
The Group’s financial assets at amortised cost includes
trade receivables.
Financial assets fair value through OCI
(debt instruments)
For debt instruments at fair value through OCI, interest
income, impairment losses or reversals are recognised
in the statement of profit and loss and computed in
the same manner as for financial assets measured at
amortised cost. The remaining fair value changes are
recognised in OCI. Upon derecognition the cumulative
fair value change recognised in OCI is recycled to profit
or loss.
The Group has no debt instruments at fair value through
OCI.
Financial assets designated at fair value through OCI
(equity instruments)
Upon initial recognition, the Group can elect to classify
irrevocably its equity investments as equity instruments
designated at fair value though OCI when they meet
the definition of equity under AASB 32 Financial
Instruments: Presentation and are not held for trading.
The classification is determined on an instrument-by-
instrument basis.
Gains and losses on these financial assets are never
recycled to profit or loss. Dividends are recognised as
other income in the statement of profit or loss when the
right of payment has been established, except when
the Group benefit from such proceeds as a recovery
of part of the cost of the financial asset, in which case,
such gains are recorded in OCI. Equity instruments
designated at fair value through OCI are not subject to
impairment assessment.
The Group has no equity instruments at fair value
through OCI.
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
ii) Financial liabilities
Initial measurement and recognition
2.16 Financial instruments (continued)
Financial assets at FVTPL
Financial assets at FVTPL are carried in the statement
of financial position at fair value with net changes in fair
value recognised in the statement of profit and loss.
This category includes derivative instruments, listed and
unlisted equity investments which the Group had not
irrevocably elected to classify at fair value through OCI.
Dividends on listed equity investments are recognised as
other income in the statement of profit or loss when the
right of payment has been established.
Derecognition
A financial asset (or, where applicable, a part of a
financial asset or part of a group similar financial assets)
is primarily derecognised (i.e. removed from the Group’s
consolidated statement of financial position) when:
Financial liabilities are classified, at initial recognition,
as financial liabilities at FVTPL, loans and borrowings,
payables, or as derivatives as hedging instruments in an
effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables,
net of directly attributable financial statements.
The Group’s financial liabilities include trade and
other payables, loans and borrowings including bank
overdrafts, and derivative financial instruments.
Subsequent measurement
For the purposes of subsequent measurement, financial
liabilities are classified in two categories:
– Financial liabilities at FVTPL
– Financial liabilities at amortised cost (loans and
– The rights to receive cash flows from the asset have
borrowings)
expired; or
– The Group has transferred its rights to receive cash
flows from the asset or has assumed an obligation
to pay the received cash flows in full without
material delay to a third party under a “pass-
through” arrangement, and either (a) the Group has
transferred substantially all the risks and rewards of
the asset, or (b) the Group has neither transferred
nor retained substantially all of the risks and rewards
of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash
flows from an asset or has entered into a “pass-through”
arrangement, it evaluates if, and to what extent, it has
retained the risks and rewards of ownership. When it
has neither transferred nor retained substantially all
of the risks and rewards of the asset, nor transferred
control of the asset, the Group continues to recognise
the transferred asset to the extent of its continuing
involvement. In that case, the Group also recognises
an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects
the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at the
lower of the original carrying amount of the asset and
the maximum amount of consideration that the Group
could be required to repay.
Impairment
Further disclosures relating to impairment of financial
assets are also provided in Note 2.24.
Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities
held for trading and financial liabilities designated up
initial recognition as FVTPL.
Financial liabilities are classified as held for trading if
they are incurred for the purpose of repurchasing in
the near term. This category also includes derivative
financial instruments entered into by the Group that
are designated as hedging instruments in hedge
relationships as defined by AASB 9. Separated
embedded derivatives are also classified as held for
trading unless they are designated as effective hedging
instruments.
Gains or losses on liabilities held for trading are
recognised in the statement of profit or loss.
Financial liabilities designated upon initial recognition at
FVTPL are designated at the initial date of recognition,
and only if the criteria in AASB 9 are satisfied.
Financial liabilities at amortised cost (loans and
borrowings)
After initial recognition, interest bearing loans and
borrowings are subsequently measured at amortised cost
using the EIR method. Gains and losses are recognised in
profit or loss when the liabilities are derecognised as well
as through the EIR amortisation process.
Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortisation is
included as finance costs in the statement of profit or loss.
45
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
2.16 Financial instruments (continued)
Derecognition
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
from the same lender on substantially different terms,
or the terms of an existing liability are substantially
modified, such an exchange or modification is treated
as the derecognition of the original liability and the
recognition of a new liability. The difference in the
respective carrying amounts is recognised in the
statement of profit or loss.
iii) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the
net amount is reported in the consolidated statement of
financial position if there is a current enforceable legal
right to offset the recognised amounts and there is an
intention to settle on a net basis, to realise the assets and
settle the liabilities simultaneously.
2.17 Disposal Group held for sale
The Group classifies a disposal group as held for sale if
the carrying amounts of their assets will be recovered
principally through a listing on a stock exchange or a
sale transaction rather than through continuing use.
A disposal group classified as held for sale is measured
at the lower of their carrying amount and fair value less
costs to list or sell. Costs to list or sell are the incremental
costs directly attributable to the disposal of the asset
of the disposal group, excluding finance and income tax
expense.
The criteria for held for sale classification is regarded
as met only when the sale is highly probable, and the
disposal group is available for immediate sale in its
present condition. Actions required to complete the
sale indicate that it is unlikely that significant changes
to the sale will be made or that the decision to sell will
be withdrawn. Management must be committed to the
plan to sell the disposal group and the sale is expected
to be completed within one year from the date of
classification.
Property, plant and equipment and intangible assets are
not depreciated or amortised once classified as held for
sale.
Assets and liabilities classified as held for sale are
presented separately as current items on the statement
of financial position.
A disposal group qualifies as a discontinued operation if
it is a component of an entity that has been classified as
held for sale and:
–
Is a subsidiary acquired exclusively with a view to
resale.
Held-for-sale assets are excluded from the results of
continuing operations and are presented as a single
amount as profit or loss after tax from discontinued
operations in the statement of profit or loss.
The Disposal Group that is identified in the Segment
Information note in the previous year as Mining
Equipment. Additional disclosures are provided in
Note 13. All other notes to the financial statements
include amounts for continuing operations, unless
indicated otherwise.
2.18 Trade and other payables
These amounts represent unpaid liabilities for goods
received and services provided to the Group 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.
2.19 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.
2.20 Employee benefit provisions
Salary, wages and annual leave
Liabilities for wages and salaries, including
non-monetary benefits and annual leave expected to
be settled wholly 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 high quality 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.
46
– Represents a separate major line of business or
geographic area of operations;
–
Is part of a single co-ordinate plan to dispose of a
separate major line of business or geographic area of
operations; or
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
2.20 Employee benefit provisions (continued)
Retirement benefit obligations
The Group contributes to defined contribution
superannuation funds for employees. All funds are
accumulation plans where the Group contributed various
percentages of employee gross incomes, the majority
of which were as determined by the superannuation
guarantee legislation. Benefits provided are based
on accumulated contributions and earnings for each
employee. There is no legally enforceable obligation on
the Group to contribute to the superannuation plans
other than requirements under the superannuation
guarantee legislation. Contributions are recognised as
expenses as they become payable.
2.21 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.
Deferred tax assets are only recognised for deductible
temporary differences, between carrying amounts of
assets and liabilities for financial reporting purposes
and their respective tax bases, at the tax rates expected
to apply when the assets are recovered or liabilities
settled, based on those tax rates which are enacted or
substantially enacted for each jurisdiction. Exceptions
are made for certain temporary differences arising on
initial recognition of an asset or liability if they arose
in a transaction other than a business combination
that at the time of the transaction did not affect either
accounting profit or taxable profit.
Deferred tax assets are only recognised for deductible
temporary differences and unused tax losses if there is
reasonable certainty that future taxable amounts will
be available to utilise those temporary differences and
losses.
Deferred tax assets and liabilities are not recognised for
temporary differences between the carrying amount and
tax bases of investments in subsidiaries, associates and
interests in joint ventures where the parent entity is able
to control the timing of the reversal of the temporary
differences and it is probable that the differences will not
reverse in the foreseeable future.
Current and deferred tax balances relating to amounts
recognised directly in other comprehensive income
or equity are also recognised directly in other
comprehensive income or equity.
PPK Group Limited and its wholly owned Australian
subsidiaries have implemented the tax consolidation
legislation 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.
2.22 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.
2.23 Leases
The Group assesses at contract inception whether a
contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identifiable
asset for a period of time in exchange for consideration.
Group as a lessee
The Group applies a single recognition and measurement
approach for all leases, except for short-term leases and
leases of low-value assets. The Group recognises lease
liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
2.23.1 Right-of-use assets
In the previous year, the Group recognised right-of-use
assets at the commencement date of the lease
(i.e. the date the underlying asset is available for use).
Right-of-use assets were measured at cost, less any
accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities. The
cost of right-of-use assets includes the amount of lease
liabilities recognised, initial direct costs incurred, and
lease payments made at or before the commencement
date less any lease incentives received. Right-of-use
assets are depreciated on a straight-line basis over the
shorter of the lease term and the estimated useful lives
of the assets, as follows:
– Buildings
– Plant and equipment
– Motor vehicles and other equipment
3 years
2 to 3 years
2 to 4 years
If ownership of the leased asset transfer to the Group
at the end of the lease term or the costs reflects the
exercise of a purchase option, depreciation is calculated
using the estimated useful life of the asset.
47
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D)
NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
2.23 Leases (continued)
2.23.2 Lease liabilities
In the previous year, at the commencement date of the
lease, the Group recognised lease liabilities measured
at the present value of the lease payments to be made
over the lease term. The lease payments included fixed
payments (including in-substance fixed payments) less
any lease incentives receivable, variable lease payments
that depended on an index or rate, and amounts
expected to be paid under residual lease guarantees.
The lease payments also included the exercise price of
a purchase option reasonably certain to be exercised
by the Group and payments of penalties for terminating
the lease, if the lease term reflects the Group exercising
the option to terminate. Variable lease payments that
did not depend on an index or a rate were recognised
as expenses (unless they are incurred to produce
inventories) in the period in which the event or condition
that triggers the payment occurs.
In calculating the present value of lease payments,
the Group used its incremental borrowing rate at the
lease commencement date if the interest rate implicit
in the lease was not readily determinable. After the
commencement date, the amount of lease liabilities was
increased to reflect the accretion of interest and reduced
for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the
lease payments (i.e. changes to future payments resulting
from a change in an index or rate to be used to determine
such lease payments) or a change in the assessment of an
option to purchase the underlying asset.
2.23.3 Short-term leases and leases of low-value
assets
The Group applies the short-term lease recognition
exemption to its short-term leases of buildings (i.e. those
leases that have a lease term of 12 months or less from
the commencement date and do not contain a purchase
option). It also applies the lease of low-value assets
recognition exemption to leases of office equipment that are
considered to be low value. Lease payments on short-term
leases and leases of low-value assets are recognised as
expenses on a straight-line basis over the lease term.
2.23.4 Group as lessor
Leases in which the group does not transfer substantially
all the risks and rewards incidental to ownership of
an asset are classified as operating leases. Rental
income arising is accounted for on a straight-line
basis over the lease terms and is included in revenue
in the consolidated statement of profit or loss due
to its operating nature. Initial direct costs incurred
in negotiating and arranging an operating lease are
added to the carrying amount of the leased asset and
recognised over the lease term on the same basis as
rental income. Variable lease payments are recognised
as revenue in the period in which they are earned.
When assets are leased out under finance leases, the
present value of the lease payments is recognised as a
lease receivable. Any difference between the present
value of the lease receivable and the asset derecognised
is recorded in the profit and loss. Interest income is
recognised as the discount unwinds.
2.24 Significant accounting judgements, estimates
and assumptions
The preparation of the Group’s consolidated financial
statements requires management to make judgements,
estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities,
and the accompanying disclosures, and the disclosure
of contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of
assets or liabilities in future periods.
Significant Management Judgements
In the process of applying the Group’s accounting
policies, management has made the following
judgements, which have the most significant effect on
the amounts recognised in the consolidated financial
statements.
Determining Control of an Entity
Management has used significant judgement to
determine the power the Group has over the entities,
the exposure or rights, to variable returns from its
involvement with the entities and the ability to use its
power over the entities to affect the amount of the
returns from those entities to determine whether the
Group controls the entity. In assessing its power over the
entities, management considers:
–
–
–
the direct and indirect interest the Group holds in
each entity;
the relationship the Group has with Deakin, the
research and development provider and other large
shareholder of each entity;
and the relationship the Group has with BNNTTL,
51% owned by the Group and 28% owned by Deakin,
which is the supplier of BNNT to the entity.
The Group considers that it is contracted to provide
both funding and commercialising the development of
the BNNT application projects each entity undertakes,
it provides key management personnel, critical services,
technology, supplies and raw materials thus it is
responsible for affecting the outcomes and economic
returns of the entity.
Determining the lease term of contracts with renewal
and termination options – Group as lessee
In the previous year, the Group determined the lease
term as the non-cancellable term of the lease, together
with any periods covered by an option to extend the
lease if it is reasonably certain to be exercised, or any
periods covered by an option to terminate the lease, if it
is reasonably certain not be exercised.
48
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
2.24 Significant accounting judgements, estimates
and assumptions (continued)
The Group has the option, under the property leases,
to lease the assets for an additional term of five years.
The Group applies judgement in evaluating whether it
is reasonably certain to exercise the option to renew.
That is, it considers all the relevant factors that create
an economic incentive for it to exercise the renewal and
reassesses the lease term if there is a significant event
or change in circumstances that is within its control
and affects its ability to exercise (or not to exercise) the
option to renew (i.e. change in business strategy). The
Group did not include the renewal period as part of the
lease term. PPK has 2 property leases that have options
to extend for a further 5 years as at 31 July 2022. Should
the Group exercise the option, the lease will be renewed
at a market rate determined at that time.
The renewal option for leases of motor vehicles are not
included as part of the lease term because the Group
typically leases motor vehicles for not more than four
years, hence it is not exercising any renewal periods. The
renewal option for leases of forklifts are not included as
part of the lease term because the Group typically does
not exercise any renewal periods.
Impairment of intangibles – development costs
The Group capitalises costs for product development
projects. Initial capitalisation of costs is based on
Management’s judgement, after making inquiries from
engineers, scientists and other qualified professionals
that technological and economic feasibility is confirmed.
In determining the amounts to be capitalised,
Management makes assumptions regarding the
expected future cash generation of the project, discount
rates to be applied and expected period of benefits.
This includes significant investment in the development
of new manufacturing processes to produce 99% pure
BNNT in commercial quantities in batch production and
ultimately in continuous production. Further investment
is incurred in BNNT application projects to undertake
the research and development of new and existing
technologies and products where BNNT can be used to
create and/or improve these technologies and products.
Intangible assets not yet ready for use require an annual
impairment test. Management has used significant
judgement to determine there was no impairment that
occurred after the initial recognition of the intangible
asset. Management made this assessment using
estimated future cash flows from the investment. Based
on the information available to support the estimates
made, Management concluded there was no impairment
charge of the intangibles at the reporting date (2020: nil).
Impairment of non-current assets
Management has used significant judgement to evaluate
conditions specific to the Group that indicate individual
assets may be impaired in relation to property, plant
and equipment. Based on the information available
to Management, there were no such indicators at the
reporting date.
Investment in a joint venture
Management has used significant judgement to
determine there was no objective evidence of
impairment as a result of one or more events that
occurred after the initial recognition of the investment
which might impact on the estimated future cash flows
from the investment. Based on the information available
to Management, there was no impairment indicators for
the investments in a joint venture at the reporting date
(see Note 20).
Investment in equity instruments
Management has used significant judgement to
determine the fair value of the investment in Zeta Energy
LLC which Li-S Energy Limited has made an investment
in (see Notes 19 and 21).
Share-based payments
Estimating fair value for share-based payment
transactions requires determination of the most
appropriate valuation model, which depends on the
terms and conditions of the grant. The Group has a long
term incentive (LTI) in place which is managed by a Trust
on behalf of directors, an executive and senior managers
who are offered Performance Rights which can be
converted to PPK shares on a one-for-one basis subject
to the PPK share price meeting set price targets and
directors and employees continuing their employment
to the vesting date. The Group used an independent
third party to measure the fair value of equity-settled
transactions with employees at the grant date using a
Monte-Carlo Simulation methodology. This estimate
required determination of the most appropriate inputs
to the valuation model including the expected life of
the performance right, the risk free rate, dividend yield
and volatility and making assumptions about them. No
additional expense was recognised for the modification
as the total remuneration values was equal under the
original LTI and the modified LTI. The board considered
there to be no change in the original vesting conditions.
Tax Losses Carried Forward
Tax losses can be carried forward and deducted from
assessable income in later income years provided the
Group meets either the continuity of ownership test
or the business continuity test. Management uses
significant judgement to determine that the tax losses
can be carried forward.
49
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
2.24 Significant accounting judgements, estimates
and assumptions (continued)
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 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.
A deferred tax asset of $0.922M was recognised during
the year in Li-S Energy. No impairment of previously
recognised deferred tax assets was recognised during
the year (2020: $nil) (see Note 7).
2.25 Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the
profit attributable to owners of PPK Group Limited,
by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus
elements in ordinary shares during the year.
Diluted earnings per share
Earnings used to calculate diluted earnings per share
are calculated by adjusting the basic earnings by the
after-tax effect of dividends and interest associated with
dilutive potential ordinary shares. The weighted average
number of shares used is adjusted for the weighted
average number of shares assumed to have been issued
for no consideration in relation to dilutive potential
ordinary shares.
2.26 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.
2.27 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.
On 31 August 2021, 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:
– During the whole the of 2021 financial year, and at all
times subsequent, the Group has been able to meet
its obligations as and when they fell due;
– The Group has direct ownership of $9.728M of cash
and $1.569M of secured loans to be repaid in the
coming months;
– The Group has no direct fixed interest debt
required to be paid (all fixed interest debt is owed
by technology subsidiaries to other technology
company shareholders and not secured) and the
Directors are confident that additional debt financing
would be available, if required;
– The Group has a finance facility up to a maximum
of $4.000M from a major Australian bank secured
against the debtors of PPK Mining Equipment Pty
Ltd, secured by a guarantee and indemnity from
PPK Group Limited, PPK Mining Equipment Group
Pty Ltd and the subsidiaries of the mining division.
This facility has been drawn down by $2.650M
subsequent to the year end.
– The Group had one capital raise during the year
for a net total of $15.400M, at $5.50 per share, and
has a history of strong support from the majority of
shareholders and has an expectation that this will
continue;
– Li-S Energy, a 51.9% owned subsidiary, completed
a $20.000M capital raising on 9 April 2021 and has
lodged a prospectus with ASIC to raise a further
$34.000M and list on the ASX with a potential
market capitalisation of $544.170M. PPK’s direct
ownership of Li-S Energy will be approximately
$252.930M at market value and would be available
for sale, if required.
– White Graphene, a 64% owned subsidiary, completed
a $2.800M capital raising in December 2020 at
$0.40 per share thus valuing the company at
$34.800M. There is interest from Sophisticated
and Institutional investors to acquire shares in the
company and PPK’s direct ownership of White
Graphene has a value of $22.272M and would be
available for sale, if required.
– The loss of cashflow from the listing or sale of the
Disposal Group will not impact the Group’s going
concern for the reasons noted above.
– PPK paid an interim dividend of $0.01 per share and a
special dividend of $0.025 per share:
50
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 3 REVENUE AND OTHER OPERATING INCOME
3.1 Revenue from contracts with customers
Disaggregated revenue information
Set out below is the disaggregation of the Group’s revenue from the Technology segment and other income as
disclosed in Note 4 from contracts with customers:
Segments
Type of goods or services
Sale of goods
Rendering of services
Total revenue from contracts with customers
Rental income
Total revenue
Timing of revenue recognition
Goods transferred at a point in time
Services rendered over time
Total revenue from contracts with customers
Consolidated Entity
Notes
2021
$’000
2020
$’000
–
–
–
44
44
–
44
44
–
–
–
–
–
–
–
–
Geographic location of Customers
In the 2021 financial year, the Technology segment operates only in Australia.
Customer Concentration
In the 2021 financial year, Technology segment revenues were earned from subsidiary companies and eliminated on
consolidation or from an associate or a joint venture and recognised in share of profit and a joint venture. Hence,
customer concentration was 100% from related parties.
3.2 Other Operating Income
Foreign exchange gain (loss) on financial assets at FVTPL
Gain (loss) on financial assets at FVTPL
Net gain on sale of fixed assets
Reversal of contingent consideration on acquisition
Grant income
Recovery of debt previously written off
Finance income
6.1
6.1
(289)
(383)
–
–
2
–
55
(615)
36
–
18
9,041
50
264
38
9,447
NOTE 4 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 reportable segments for 30 June 2021 are as follows:
Technology - to expand and profit from the manufacture of high-grade boron nitride nanotubes (BNNT) in commercial
quantities using Deakin University’s patented technology to;
–
supply BNNT to select industries to enable industries to enable further research and development into the blending/
infusing of BNNT into conventional materials. This process can be transformative in terms of reduced weight and
increased strength; and
51
– maintain an ongoing equity interest in selected BNNT product applications such lithium sulphur battery products
(Li-S Energy Limited), white graphene (White Graphene Limited), metal alloys (Strategic Alloys Pty Ltd), armaments
(Craig International Ballistics Pty Ltd and Ballistic Glass Pty Ltd), dental applications (3D Dental Technology
Limited) and precious metals (BNNT Precious Metals Limited).
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 4 SEGMENT INFORMATION (continued)
4.1 Year ended 30 June 2021
Reportable Segments
Revenue from contracts with customers
Rental income
Total revenue
Other income
Share of profit (loss) of an associate and a joint venture
Foreign exchange gain (loss) on financial assets at FVTPL
Other income
Total revenue and other income
Segment expenses include
Administration expenses
Share based payment expense
Total expenses
Earnings before interest, tax, depreciation and amortisation
Depreciation and amortisation
Segment profit (loss)
Reconciliation of segment profit (loss) to group net profit before tax
Amounts not included in segment profit but reviewed by the Board:
Gain (loss) on financial assets at FVTPL
Other income
Unallocated corporate expense
Unallocated share based payment expense
5.3
Unallocated costs to defend a dispute of a business acquisition made in 2014
Short-term leases
Consolidated profit (loss) from continuing operations before income tax
attributable to owners of PPK Group Limited
Non-current assets
Segment assets
Unallocated
Total assets
Non-current liabilities
Segment liabilities
Unallocated
Total liabilities
52
Notes
Technology
$’000
Total
$’000
–
–
–
(198)
(289)
7
–
–
–
(198)
(289)
7
(480)
(480)
(2,050)
(2,177)
5.3
(127)
–
(2,177)
(2,177)
(2,657)
(2,657)
(66)
(66)
(2,723)
(2,723)
(383)
94
(2,444)
(139)
(361)
(219)
(6,175)
25,521
20,337
19,202
25,521
20,337
45,858
65,060
–
470
470
–
470
433
903
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 4 SEGMENT INFORMATION (continued)
4.2 Year ended 30 June 2020
Reportable Segments
Revenue from contracts with customers
Rental income
Total revenue
Other income
Share of profit of associates and a joint venture
Foreign exchange gain (loss) on financial assets at fair value through profit or
loss
Total revenue and other income
Segment expenses include
Administration expenses
Total expenses
Earnings before interest, tax, depreciation and amortisation
Depreciation and amortisation
Income tax benefit (expense)
Segment profit (loss)
Reconciliation of segment profit (loss) to group net profit before tax
Amounts not included in segment profit but reviewed by the Board:
Reversal of contingent consideration on acquisition
Recovery of debt previously written off
Other income
Unallocated corporate expense
Unallocated share based payment expense
5.3
Unallocated costs to defend a dispute of a business acquisition made in 2014
Short-term leases
Consolidated profit (loss) from continuing operations after income tax
attributable to owners of PPK Group Limited
Non-current assets
Segment assets
Unallocated
Total assets
Non-current liabilities
Segment liabilities
Unallocated
Total liabilities
Notes
Technology
$’000
Total
$’000
–
–
–
–
766
36
802
(231)
(231)
571
–
(240)
331
–
–
–
–
766
36
802
(231)
(231)
571
–
(240)
331
9,041
265
34
(2,287)
(967)
(550)
(229)
5,638
28,098
28,098
2,250
2,250
4,007
30,348
34,355
–
160
160
–
160
161
321
53
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 5 SHARE BASED PAYMENT EXPENSE
5.1 PPK Share Payments
PPK has two share payment programs for employee remuneration; the Employee Share Plan and the Long Term
Incentive Plan.
Exempt Employee Share Plan (ESS)
The Board has the ability to determine the terms and conditions on which qualifying employees may be invited to
participate in the ESS. In this reporting period, the Board did not offer employees to apply for up to $1,000 worth of
fully paid ordinary shares in the capital of PPK. In the previous year, the Board offered those qualifying employees to
apply for up to $1,000 worth of fully paid ordinary shares in the capital of PPK. A total of 138 employees accepted the
offer and 0.024M shares were allotted in February 2020. Employees are restricted selling, transferring or otherwise
dealing with their shares for three years while they are an employee of the Group.
Long Term Incentive Plan (LTI)
The last tranche for the LTI that was in place for this reporting period fully vested on 1 July 2021 and the expense was
recognised in this financial year. The LTI is managed as a Trust on behalf of an executive director, executives and senior
managers of the Group. The Trustee holds PPK shares on behalf of the participants until such time that the vesting
conditions for Performance Rights are met then participants can apply to have the shares sold or transferred to the
applicable participant.
The Directors determined who were offered Performance Rights which converted to PPK shares on a one-for-one basis.
All vesting conditions have been met with the PPK share price meeting set price targets and the executive director and
employees continuing their employment to the vesting dates. The LTI was approved by shareholders at the Annual
General Meeting on 27 November 2018.
At the time that the Directors set the share price targets, PPK shares were trading at $0.21 per share and the
performance rights to be issued were 2,920,000. As a result of the increase in PPK’s share price, the share price
targets were met and the vesting conditions are now subject to the executive director and employees continuing
their employment to the vesting dates. However, the Board considered that as the intent was to reward the executive
director, executives and senior managers with a value of shares equivalent to their total remuneration to be realised
over a period of time, the ASX announcement on 13 November 2018 for the Group to acquire 100% of the shares in
AICIC, and the resulting strategic 50% holding in BNNTTL led to a significant increase in the PPK share price in a
short period of time and that this was not the direct outcome of the executive director, executives or senior managers
actions.
As a result, in July 2019 post year end, the board offered a lesser number of performance rights, based on the higher
share price, to the executive director, executives and senior managers that would deliver a total remuneration value that
was equal under the original LTI and the modified LTI. The board considers there to be no change in the original vesting
conditions. As a result, the share price targets, based on a 5 trading day volume weighted average price, the vesting
conditions and the total number of performance rights offered, as modified in July 2019, were:
Share Price Targets
Vesting Conditions
$0.30 per share by 1 January 2019
Fully vest on 1 January 2020
$0.40 per share by 1 January 2020
Fully vest on 1 July 2020
$0.50 per share by 1 January 2021
Fully vest on 1 January 2021
$0.60 per share by 1 January 2021
Fully vest on 1 July 2021
Original
No of
Performance
Rights
Amended
No of
Performance
Rights
730,000
260,000
730,000
260,000
730,000
260,000
730,000
260,000
2,920,000
1,040,000
54
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 5 SHARE BASED PAYMENT EXPENSE (continued)
5.1 PPK Share Payments (continued)
The fair value of the Performance Rights granted were determined using a Monte Carlo Simulation Methodology for
1.000M simulations for each tranche with a valuation date of 27 November 2018. The following principal assumptions
were used in the valuation:
Performance Condition
$0.30
$0.40
$.050
$0.60
Tranche 1
Tranche 2
Tranche 3
Tranche 4
5 day VWAP to be equal to or exceed share price
Performance Period
Period to achieve performance condition (months)
1.15
13.14
25.17
25.17
Non-market based vesting condition
Period to remain employed by Company (months)
13.14
19.12
25.17
31.11
Amended number of shares to be issued if conditions met
260,000
260,000
260,000
260,000
Original number of shares to be issued if conditions met
730,000
730,000
730,000
730,000
Key Inputs
Valuation Date
PPK share price at start of Valuation Date
Risk-free Rate(1)
Dividend Yield
Volatility(2)
27/11/18
27/11/18
27/11/18
27/11/18
$0.50
1.95%
0.00%
$0.50
2.01%
0.00%
$0.50
2.02%
0.00%
$0.50
2.05%
0.00%
54.00%
54.00%
54.00%
54.00%
Fair Value of the Performance Right
$0.500
$0.500
$0.486
$0.430
(1)
(2)
The risk-free rate was determined to be the yield to maturity of an Australian government security on the Valuation Date with a
term equal to the later of: (a) the performance period to achieve condition; and (b) the earliest the Right can vest for each tranche.
The volatility was determined to be the standard deviation of the continuously compounding daily change in price of the
Company’s shares over a 13 month period being the term of Tranche 1.
5.2 Li-S Energy Share Payments
Li-S Energy has two share payment programs, one for non-executive directors and one for executives.
The Non-Executive Directors were granted 2,160,000 Service Rights on 1 May 2021 under the Li-S Energy Limited NED
Equity Plan. These Service Rights were granted in lieu of the Directors taking remuneration as directors fees for the
three years ending 30 April 2014. The key features of the issuance are as follows:
– The exercise price payable by the holder is $Nil.
– The Service Rights will vest to the NED over a 3-year period.
– The vesting of Service Rights requires continued tenure as a Director of the Company. There are no other
performance conditions.
– On vesting the Service Right will expire if unexercised 15 years post the initial grant date.
– Should a Director cease being a Director in the vesting period the unvested Service Rights will be forfeited in
proportion based on plan rules.
– Each Service Right converts to one ordinary Share in the Company.
The Service Rights have been independently valued at $0.50 each. A total expected expense should all Service Rights
vest of $1,080,000 will be recorded in the profit and loss over the forward 3-year period post grant, in accordance with
their vesting profile.
55
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 5 SHARE BASED PAYMENT EXPENSE (continued)
5.2 Li-S Energy Share Payments (continued)
The Chief Executive Officer was granted 1,000,000 Service Rights on 12 November 2020 under the Li-S Energy Limited
Executive Rights Plan. The key features of the issuance are as follows:
– The exercise price payable by the holder is $Nil.
– The Service Rights will vest to the Chief Executive Officer in equal tranches of 250,000 Service Rights on 30 April
2022, 2023, 2024 and 2025.
– The vesting of Service Rights requires continued tenure as an executive of the Company. There are no other
performance conditions. Directors do however have the right to vary the number of vested Service Rights.
– On vesting the Service Right will expire if unexercised 15 years post the initial grant date.
– Should an executive cease being an executive in the vesting period the unvested Service Rights will be forfeited in
proportion based on plan rules. The unexpired portion of the tranche relevant to the date of termination will vest in
proportion and all future unvested tranches will expire.
– Each Service Right converts to one ordinary Share in the Company.
The Service Rights have been independently valued at an average value of $0.065 cents each. A total expected
expense should all Service Rights vest of $65,000 will be recorded in the profit and loss over the forward four year
period post grant, in accordance with their vesting profile.
The fair value of the NED Service Rights and the CEO Service Rights was determined using a Black Scholes model. As
the Service Rights are exercisable for $Nil the fair value of each Service Right is the difference between $Nil and the fair
value of a share on the date of grant. All other Black Scholes variables have no impact on the valuation. The share price
of $50 cents and $6.5 cents was determined to be the share price at date of issue based on proximate capital raisings
completed to the grant date.
5.3 Share Based Payments
Technology
Unallocated corporate
Disposal Group
Notes
4.1
4.1
13
Consolidated Entity
2021
$’000
2020
$’000
127
139
152
418
–
967
–
967
56
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 6 CASH FLOW INFORMATION
6.1 Reconciliation of profit (loss) after income tax to the cash
provided by operating activities
Profit (loss) after income tax from continuing operations
Profit (loss) after income tax from discontinued operations
Profit (loss) after tax
Cash flows in operating activities but not attributable to operating result:
Non-cash flows in operating profit:
Income tax benefit
Unrealised foreign exchange (gain) loss
Unrealised (gain) loss on financial assets at FVTPL
Amortisation
Depreciation
Make good provision
Impairment of plant and equipment
Reversal of contingent consideration on acquisition
Share of profit of associates and a joint venture, after tax
Share based payments expense
Loss (gain) on sale of plant & equipment
Loss (profit) on impairment of inventories
Changes in assets and liabilities:
Decrease (increase) in trade and other receivables
Decrease (increase) in prepayments
Decrease (increase) in inventories
(Decrease) increase in provisions
(Decrease) increase in trade creditors and accruals
Net cash (used in) provided by operating activities
6.2 Reconciliation of Cash
For the purposes of the cash flow statement, cash includes:
Cash on hand
Call deposits with financial institutions
Cash held in trust
6.3 Non cash financing activities – dividend reinvestment (Notes 30)
Consolidated Entity
Notes
2021
$’000
2020
$’000
(5,576)
(742)
(6,318)
8,314
–
8,314
(599)
289
383
121
–
(36)
–
35
2,354
2,358
3.2
3.2
5.3
–
–
–
198
418
89
85
1,648
(144)
(508)
112
(877)
(2,749)
1
30,364
–
14
30,365
(40)
100
(9,041)
(526)
967
(18)
–
2,461
340
(1,343)
343
(599)
3,315
1
2,308
3,035
5,344
57
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 7 INCOME TAX EXPENSE
Consolidated Entity
Notes
2021
$’000
2020
$’000
(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 – Continuing Operations
Profit (loss) before tax – Disposal Group
Profit (loss) before tax
Prima facie tax payable (benefit) at 26.0% (2020: 27.5%)
(Non-assessable income) non-deductible expenses
Current year losses for which no deferred tax asset was recognised
Deferred tax assets related to equity transactions
Current year temporary differences for which no deferred tax asset or liability
was recognised
Other
Income tax expense (benefit)
The applicable weighted average effective tax rates are as follows:
All income tax expense/(benefit) is attributable to continuing operations in
2021 and 2020.
(b) The components of tax expense comprise:
Current tax
Deferred tax
Share of associates tax expenses
(Over) provision in respect of prior years
Income tax expense (benefit)
(c) Recognised in the Statement of Financial Position
Deferred tax assets – tax losses
Deferred tax assets – temporary differences
Deferred tax liabilities – temporary differences
Total
(6,175)
(742)
(6,917)
(1,798)
135
–
650
(35)
449
(599)
8.6%
(356)
(243)
–
–
(599)
5,878
2,616
8,494
2,336
(2,616)
1,046
–
(700)
240
240
2.9%
–
–
240
–
240
2,536
1,719
2,600
1,121
(3,333)
(3,721)
922
–
58
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 7 INCOME TAX EXPENSE (continued)
(d) Not recognised in the Statement of Financial Position
Unrecognised deferred tax assets/deferred tax liabilities
Consolidated Entity
Notes
2021
$’000
2020
$’000
Tax losses (ii)
Temporary differences
Total
Movements
Opening balance
Tax losses not recognised current year
Adjustment for change in applicable tax rate
Adjustment in respect of current income tax of previous years
Temporary differences not recognised current year
Adjustment related to transfer of losses from acquisition
Closing balance
See Note 2.24 for more detail.
NOTE 8 AUDITORS’ REMUNERATION
Remuneration of the auditor of the Group, parent entity and controlled
entity for:
– auditing or reviewing the financial report
– Other – tax compliance and other corporate compliance matters
NOTE 9 KEY MANAGEMENT PERSONNEL REMUNERATION
9.1 Key management personnel remuneration
Short-term benefits
Share-based payments
Post-employment benefits
3,022
2,996
–
7
3,022
3,003
3,003
64
(45)
–
–
–
4,715
(2,261)
–
380
7
162
3,022
3,003
$
$
316,856
149,800
247,805
100,250
564,661
250,050
Consolidated Entity
2021
$
2020
$
Notes
2,118,334
1,223,460
264,207
50,000
661,935
50,000
2,432,541
1,935,395
The above table discloses remuneration for the Group and includes all controlled entities. During the reporting period,
the Group recognises the Directors and the Chief Financial Officer/Chief Operating Officer of PPK Group Limited as
being the key management personnel (see Note 35). See the Directors’ Report for details of their remuneration policy
and benefits as well as remuneration received from other related entities.
59
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D)
NOTE 9 KEY MANAGEMENT PERSONNEL REMUNERATION (continued)
9.2 Equity Instruments
Two Directors and the Chief Financial Officer/Chief Operating Officer participate in the PPK Long Term Incentive Plan,
subject to retention of their services to meet the vesting conditions (see Note 35). The issuance of performance rights
were approved by the shareholders at the last two Annual General Meetings.
9.3 Loans
There were no loans or advances to key management personnel or their related parties in the current financial or
previous financial years.
NOTE 10 DIVIDENDS
(a) Dividends paid
2021 2.5 cent special ordinary fully franked was paid by a distribution in specie of
shares in Li-S Energy held by PPK on the basis of 0.3846 Li-S Energy share for
every 1 PPK share held
2021 1 cent interim ordinary fully franked dividend was declared or paid
(2020: 1 cent ordinary fully franked dividend)
2021 No final ordinary dividend was declared or paid (2020: nil)
(b) Dividends declared after balance date
(c) Franked dividends
Consolidated Entity
Notes
2021
$’000
2020
$’000
2,220
859
–
3,079
–
–
852
–
852
856
Franking credits available for subsequent financial years based on a tax rate of
26.0% (2020 – 27.5%)
14
1,079
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
(1)
franking credits that will arise from the payment of the current tax liability;
(2) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
(3) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date; and
(4) 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.
60
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 10 DIVIDENDS (continued)
(d) reconciliation of dividends paid
2.5 cent special ordinary fully franked was paid by a distribution
in specie of shares in Li-S Energy held by PPK on the basis of
0.3846 Li-S Energy share for every 1 PPK share held
2021 1 cent interim ordinary fully franked dividend paid
2020 1 cent final ordinary fully franked dividend paid
Dividends for treasury shares
2020 1 cent interim ordinary fully franked dividend paid
2019 1 cent final ordinary fully franked dividend paid
Dividends for treasury shares
NOTE 11 EARNINGS PER SHARE
Earnings per share (in cents)
Basic
Diluted
Earnings per share from continuing operations (in cents)
Basic
Diluted
Earnings per share from discontinued operations (in cents)
Basic
Diluted
$’000
In Specie of
Shares
Consolidated Entity
$’000
Dividend
Reinvestment
Plan
$’000
Cash
2,220
–
–
2,220
17
2,203
–
–
–
–
–
–
–
376
376
7
369
380
348
728
(6)
722
–
–
483
483
–
483
472
477
949
(7)
942
$’000
Total
2,220
–
859
3,079
24
3,055
852
825
1,677
(13)
1,664
Consolidated Entity
2021
$’000
2020
$’000
(6.3)
(6.3)
(5.4)
(5.4)
(0.8)
(0.8)
9.8
9.7
6.7
6.6
3.1
3.1
$’000s
$’000s
(4,737)
(742)
(5,479)
5,653
2,616
8,269
No.
No.
87,621,784 84,334,389
–
757,500
61
(a) Reconciliation of Earnings to Net Profit
Earnings used in calculating Basic and Dilutive EPS from continuing operations
Earnings used in calculating Basic and Dilutive EPS from discontinued operations
Profit (loss) for the year
(b) Weighted average number of ordinary shares outstanding during the year
used in calculation of basic EPS
Effects of dilution from:
Employee performance rights(1)
(c) Weighted average number of potential ordinary shares outstanding during
the year used in calculation of diluted EPS)
87,621,784
85,091,889
(1)
The weighted average number of ordinary shares outstanding used in calculating diluted earnings per share has not been adjusted
for 516,500 employee performance rights as they are anti-dilutive.
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 12 PARENT ENTITY INFORMATION
The following detailed information relates to the parent entity, PPK Group Limited at 30 June 2021. 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]
Retained earnings
Total equity
Profit (loss) for the year (including impairments)[2]
Dividends paid
Other comprehensive income (loss) for the year
Total comprehensive income (loss) for the year
Notes
2021
$’000
1,000
59,945
60,945
172
–
172
2020
$’000
1,101
44,051
45,152
309
–
309
60,773
44,843
75,348
59,500
(14,575)
(14,657)
60,773
3,160
(3,079)
–
81
44,843
9,872
(1,678)
–
8,194
(1)
In addition to the Parent Entity contributed equity, the Group’s consolidated Contributed Equity includes Treasury Shares of
$0.203M (see Note 30.4).
(2) Non-current asset balances include investments in subsidiaries which are held at cost or net recoverable value after impairments.
See Note 34 for contingent assets and liabilities.
NOTE 13 DISPOSAL GROUP HELD FOR SALE
In the 2020 Annual Report, separation of the PPK mining equipment business (PPKME) was disclosed in the Chairman’s
Report. PPK has reviewed the various options and on 22 June 2021 the Board resolved to demerge PPKME either
through a listing on an Australian stock exchange or a trade sale. The Board has a single coordinated plan to dispose of
PPKME as a separate major line of business and:
– PPK’s carrying amount will be recovered principally through an asset transaction rather than through continuing use;
– The immediate sale of PPKME in its present condition is subject to terms that are usual and customary for sale of
such assets;
– The sale is highly probable in that the PPK board is committed to demerge PPKME, there is an active program in
place and it has been initiated;
– The sale or distribution should be completed within one year from the date of classification; and
– Actions to complete the demerger indicate that it is highly unlikely that changes to the plan will be made or the plan
will be withdrawn.
As a result, at 30 June 2021, PPKME is being classified as Disposal Group assets held-for-sale and the Mining Equipment
segment is no longer presented in the segment note.
62
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 13 DISPOSAL GROUP HELD FOR SALE (continued)
The results of the Disposal Group for the year are presented below:
Statement of Profit or Loss
Notes
Revenue from contracts with customers
Rental income
Other income
Total revenue and other income
Expenses
Cost of sales
Employee expenses
Share based payment expense
Administration expenses
Warranty costs
Short-term leases
Impairment of assets
Depreciation
Interest expense
Total expenses
Profit (loss) before tax expense from discontinued operations
Income tax expense (benefit) attributable to profit
Profit (loss) after tax expense from discontinued operations
2021
$’000
32,651
1,381
34,032
66
34,098
2020
$’000
39,847
1,255
41,102
76
41,178
(26,765)
(29,632)
(2,463)
(2,929)
5.3
(152)
–
(2,349)
(2,408)
(146)
(359)
(86)
(416)
(351)
(100)
(2,392)
(2,380)
(128)
(286)
34,840
(742)
–
38,502
2,676
–
(742)
2,676
Significant accounting policies for the Statement of Profit or Loss for the Disposal Group, not previously disclosed, are:
Revenue and revenue recognition
Revenue arises mainly from the:
–
–
sale of manufactured non-mining products; and
sale, service, support and rental of underground coal mining vehicles, equipment and parts.
To determine whether to recognise revenue, the Group follows a 5 step process:
1.
2.
Identifying the contract with a customer;
Identifying the performance obligation;
3. Determining the transaction price;
4. Allocating the transaction price to the performance obligations; and
5. Recognising revenue when/as performance obligations are satisfied.
Revenue is recognised, based on the transaction price allocated to the performance obligation, after consideration of
the terms of the contract and customary business practices. The transaction price is the amount of the consideration
that the Group expects to be entitled to receive in exchange for transferring the promised goods or services to a
customer, excluding amounts collected on behalf of third parties (ie sales taxes and duties). The consideration promised
in a contract with a customer may include fixed amounts, variable amounts or both.
The following specific recognition criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of manufactured non-mining products, mining equipment, spare parts or CoalTrams built for
inventory purposes are recognised at a point in time, in most cases when they leave the warehouse and control has
passed to the buyer. Revenue is measured at the fair value of consideration received or receivable, net of returns, trade
allowances and duties and taxes paid.
63
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 13 DISPOSAL GROUP HELD FOR SALE (continued)
Rendering of Services
Performance obligations for the repair and maintenance of underground coal mining vehicles and equipment are
satisfied over time and the Group recognises the revenue over time for one of the following reasons:
1.
2.
the Group’s performance creates or enhances an asset (ie work in progress) that the customer controls as the
asset is created or enhanced or;
the Group’s performance does not create an asset with an alternative use and the Group has an enforceable right
to payment for performance completed to date.
In almost all cases, the asset that is being created or enhanced is owned by the customer and the Group only performs
repair and maintenance on the asset. At contract inception, it is determined that the customer has contractual
ownership of the asset and the Group has an enforceable right to payment for performance completed to date. The
transaction price is determined by customary business practices, generally a signed purchase order from the customer,
which identifies the consideration the Group expects to be entitled in exchange for transferring the promised goods or
services to the customer. The transaction price is the stand-alone selling price at contract inception.
For each performance obligation satisfied over time, the Group recognises revenue over time by measuring the progress
towards complete satisfaction of the performance obligation. The Group uses the cost-based input method to determine
satisfaction of the performance obligation by measuring the labour hours expended, the cost of materials consumed
and other costs incurred relative to the total expected costs to be incurred at the contract inception to satisfy the
performance obligation to determine the percentage of completion. The Group then applies the percentage of completion
to the total transaction price to calculate the percentage of revenue to be recognised at a point in time. On a monthly
basis, the Group remeasures its progress towards complete satisfaction of a performance obligation over time.
In almost all cases, the performance obligation is satisfied within one to two months of contract inception.
Lease Income on operating leases
Lease income on mining equipment is accounted for on a straight-line basis over the term of the lease agreement and is
included in revenue in the statement of profit or loss due to its operating nature.
Interest income
Revenue is recognised as it accrues using the effective interest rate method. The effective interest method uses the
effective interest rate which is the rate that exactly discounts the estimated future cash receipts over the expected life
of the financial asset.
Government Grants
Income from government grants is recognised at their fair value where there is a reasonable assurance that the grant
will be received, and the Company will comply with all attached conditions. When the grant relates to an income item,
it is recognised in the profit and loss when the Company will comply with all attached conditions. When the grant
relates to an expense item, it is recognised in the profit and loss as other operating income on a systematic basis
over the periods in which the Company recognises as expense the related costs for which the grants are intended to
compensate. When the grant relates to an asset, it is presented in the statement of financial position by deducting the
grant in arriving at the carrying amount of the asset.
Operating expenses
Operating expenses are recognised in the profit or loss upon utilisation of the services or at the date of their origin.
Contract assets
The costs incurred to fulfil a contract with a customer were recognised when:
the costs related directly to a contract or an anticipated contract that the Group could specifically identify;
the costs generated or enhanced resources of the Group that would be used in satisfying (or in continuing to
satisfy) performance obligations of the future; and
the costs were expected to be recovered.
–
–
–
64
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 13 DISPOSAL GROUP HELD FOR SALE (continued)
Inventories
Inventories included raw materials, work in progress and finished goods and were stated at the lower of cost and net
realisable value. Costs comprised all direct materials, direct labour and an appropriate portion of variable and fixed
overheads. Fixed overheads were allocated based on normal operating capacity. Costs were assigned to inventory
using an actual costing system. Net realisable value was the estimated selling price in the ordinary course of business,
less the estimated cost of completion and selling expenses.
Costs necessary to sell Inventories
In June 2021, IFRIC published an agenda decision in relation to the accounting treatment when determining NRV of
inventories, in particular what costs are necessary to sell inventories under AASB 102 Inventories.
The Group is currently assessing the impact the agenda decision will have on its current accounting policy and whether
an adjustment to inventory may be necessary. Accordingly, a reliable estimate of the impact of the IFRIC agenda
decision on the Group cannot be made at the date of this report. The Group expects to complete the implementation of
the above IFRIC agenda decision as part of its 31 December 2021 reporting.
Property, plant and equipment
Land and buildings are brought to account at cost less, where applicable, any accumulated depreciation. After initial
recognition, land and buildings are measured at fair value at the date of revaluation less any subsequent accumulated
depreciation and subsequent accumulated impairment losses.
Plant and equipment are brought to account at cost less, where applicable, any accumulated depreciation or
amortisation and impairment. The cost of fixed assets constructed within the Group includes the cost of materials used
in construction, direct labour and an appropriate proportion of fixed and variable overheads.
The depreciable amount of all fixed assets, including buildings and capitalised leased assets but excluding freehold
land, is depreciated over their useful lives to the consolidated entity commencing from the time the asset is held ready
for use. Leasehold improvements are amortised over the shorter of either the unexpired period of the lease or the
estimated useful lives of the improvements.
The gain or loss on disposal of all fixed assets is determined as the difference between the carrying amount of the asset
at the time of disposal and the proceeds of disposal, and is included in the profit before income tax of the consolidated
entity in the year of disposal.
Class of Fixed Asset
Buildings
Leasehold Improvements
Plant & Equipment
Depreciation Rate Straight Line
2.5 %
over the term of the lease
10-50 %
Significant accounting judgements, estimates and assumptions
The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying
disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result
in outcomes that require a material adjustment to the carrying amount of assets or liabilities in future periods.
Significant Management Judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, which
have the most significant effect on the amounts recognised in the consolidated financial statements.
Disposal Group assets held-for-sale
Management has used significant judgement to determine that the Mining Equipment segment meets the accounting
requirements as a Disposal Group assets held-for-sale in that it is highly probable:
–
–
–
–
–
the appropriate level of management is committed to a plan to sell the asset of the Disposal Group;
an active programme to list the Disposal Group or locate a buyer and complete the plan must has been initiated;
the Disposal Group listing value or sale price is reasonable in relation to its current fair value;
65
the listing or sale should be expected to be completed within one year from the date of classification; and
actions required to complete the plan indicate it is unlikely that significant changes to the plan will be made or that
the plan will be withdrawn.
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 13 DISPOSAL GROUP HELD FOR SALE (continued)
Management has used significant judgement to determine that the Disposal Group is measured at the lower of its
carrying amount and fair value less costs to list or sell. This included obtaining an independent valuation as at 31 March
2021 and assessing this against the carrying value to determine that there was no write down required.
Determining the lease term of contracts with renewal and termination options – Group as lessee
The Group determined the lease term as the non-cancellable term of the lease, together with any periods covered by an
option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate
the lease, if it is reasonably certain not be exercised.
The Group has the option, under the property leases, to lease the assets for an additional term of five years. The Group
applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers
all the relevant factors that create an economic incentive for it to exercise the renewal and reassesses the lease term if
there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or not
to exercise) the option to renew (i.e. change in business strategy). The Group did not include the renewal period as part
of the lease term. PPK has 2 property leases that have options to extend for a further 5 years as at 31 July 2022. Should
the Group exercise the option, the lease will be renewed at a market rate determined at that time.
The renewal option for leases of motor vehicles are not included as part of the lease term because the Group typically
leases motor vehicles for not more than four years, hence it is not exercising any renewal periods. The renewal option
for leases of forklifts are not included as part of the lease term because the Group typically does not exercise any
renewal periods.
Recognition of fixed contract revenues
Recognising the stage of completion for fixed price contracts and applicable work in progress requires significant
judgement in determining the actual work completed and the estimated amount of labour and materials required to
complete the work.
Impairment of raw materials and finished goods
Management has used significant judgement to determine the net realisable value, based on the most reliable evidence
available at the time the estimates are made, of the amount that inventories are expected to realise and the estimate
of costs to complete. The net realizable value is based on management’s analysis of stock movements for all individual
stock items:
For CoalTrams, heavy machinery, pneumatic, hydraulic and small mining equipment parts there is a four step process:
1. Management reviews the stock items which had no sales during the year and:
– Provides for 50% of the inventory value as impaired for those stock items which have no sales for more 1 year;
and
– Provides for 100% of the inventory value as impaired for those stock items which have no sales for more than
3 years.
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 as impaired for those stock items with stock holdings of 1 to 2 years;
– Provides for 35% of the inventory value as impaired for those stock items with stock holdings of 2 to 3 years;
– Provides for 55% of the inventory value as impaired for those stock items with stock holdings of 3 to 4 years;
– Provides for 75% of the inventory value as impaired for those stock items with stock holdings of 4 to 5 years;
– Provides for 95% of the inventory value as impaired for those stock items with stock holdings of more than 5 years.
3.
4.
66
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, an impairment provision is made using the same formulas
as that of slow moving stock.
Finally, management then performs a review of the remainder of the stock items to determine the net realisable
value and, if any additional impairment provisions should be made or if there is a reversal of the impairment
provisions made in previous years.
The review done in the 2021 financial year resulted in a $0.085M inventory impairment provision (2020: Nil) to account
for inventories to net realisable value and a total provision of $5.221M (2020: $5.158M).
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 13 DISPOSAL GROUP HELD FOR SALE (continued)
Impairment of work in progress
Management has used significant judgement to determine the net realisable value, based on the most reliable evidence
available at the time the estimates are made, of the amount that work in progress are expected to realise and the
estimate of costs to complete. The net realizable value is based on management’s analysis of work in progress for
individual jobs on a three step process:
1.
2.
Provides for 50% of the work in progress value as impaired for those jobs which have been in progress for more than
6 months;
Management then performs a review of these jobs to determine if any specific jobs will be completed and total costs
will be less than the expected revenue to determine if any jobs should be removed from the impairment provision;
3. Reviews individual jobs that are less than 6 months old to determine if they will be completed, total costs will be less
than the expected revenue to determine if any additional impairment provision should be made to determine net
realisable value.
Impairment of intangibles – development costs
The Group capitalises costs for product development projects. Initial capitalisation of costs is based on Management’s
judgement, after making inquiries from engineers and other qualified professionals that technological and economic
feasibility is confirmed. In determining the amounts to be capitalised, Management makes assumptions regarding the
expected future cash generation of the project, discount rates to be applied and expected period of benefits.
This includes significant investment in the development of new technology and enhancements for the CoalTram and a
new battery electric vehicle for transporting personnel (mantransporter).
Intangible assets not yet ready for use require an annual impairment test. Management has used significant judgement
to determine there was no impairment that occurred after the initial recognition of the intangible asset. Management
made this assessment using estimated future cash flows from the investment. Based on the information available
to support the estimates made, Management concluded there was no impairment charge of the intangibles at the
reporting date (2020: nil).
Key assumptions used by Management in their assessment include customer projections of future capital spend for
load haul dump machines and mantransporters and a discount rate of 7.20%.
New CoalTram sales of 4 in the 2022 financial year and 6 per annum over the following four year period commencing
based on discussions with customers, known mine expansion plans, estimated new mines opening and estimated
retirement of existing LHDs in operation. Gross margins are based on projections as estimated by the Executive
Director – Global Mining using cost to build, core inventory parts in stock at impaired value and sale price of
comparative LHDs sold in the industry. Gross margins are consistent with that estimated for the previous year.
Mantransporter sales of 6 in the 2022 financial year and 24 per annum for both hard rock mining and underground
coal mining based on discussions with hard rock mining companies and current customers. Gross margins are based
on projections as estimated by the Executive Director – Global Mining using costs to build a prototype machine as an
estimated cost and sale price based on discussions with hard rock mining companies and current customers.
The after tax discount rate of 7.20% was based on a 30 June 2021 weighted average cost of capital for the market as a
whole from a recognised valuer’s report. Gross margins are consistent with that estimated for the previous year.
Provision for expected credit losses (ECL) of trade receivables and contract assets
The Group uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are
based on days past due for groupings of customer segments that have similar risk characteristics (i.e. customer type,
probable credit risk, market size). The provision matrix is based on the historical credit loss experience for the customer
segments and adjusted for forward-looking information. For example, if forecast economic conditions are expected
to deteriorate over the coming year in a specific industry, which could lead to an increased number of defaults, then
the historical default rates are adjusted. At every reporting date, the historical credit loss experience is reviewed and
updated, if appropriate, and changes in the forward-looking estimates are analysed.
The assessment of the correlation between historical credit loss experience, forecast economic conditions and ECLs is
a significant estimated. The amount of ECLs is sensitive to changes in circumstances and forecast economic conditions.
The Group’s historical credit loss experience and forecast economic conditions may also not be representative of
customer’s actual credit default in the future. Management has considered the possible impacts of the COVID-19
pandemic on the required expected credit loss provisions and determined that no material levels of increased risk are
present based on current conditions. The information about the ECLs on the Group’s trade receivables is as follows:
67
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 13 DISPOSAL GROUP HELD FOR SALE (continued)
The Group recognised two distinct customer segments:
–
those that are major customers, the majority of which are listed public companies of which the Group has a long
history of providing goods and services. This customer segment represents 88% of the cash inflows during the ECL
review period for which the historical credit loss experience was determined and there were no historical losses
during this period.
– The other customer segment includes smaller listed public companies, large private companies and the remaining
customers that the Group provides goods and services. This customer segment represents 12% of the cash inflows
during the ECL review period for which the historical credit loss experience was determined. At 30 June 2021 no
significant provision was determined to be required for these customers.
Management has considered the possible impacts of the COVID-19 pandemic on the required expected credit loss
provisions and determined that no material levels of increased risk are present based on current conditions.
The provision matrix for expected credit losses, based on historical credit loss experience for the other customer
segment is as follows:
Historical loss rate
Current
1%
30 days
past due
31 to 60 days
past due
61 to 90 days
past due
More than 90 days
past due
1%
7%
nil
nil
Share-based payments
Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation
model, which depends on the terms and conditions of the grant. The Group has a long term incentive (LTI) in place
which is managed by a Trust on behalf of a director and senior manager in the Disposal Group who were offered
Performance Rights which can be converted to PPK shares on a one-for-one basis subject to the PPK share price
meeting set price targets and directors and employees continuing their employment to the vesting date. The Group
used an independent third party to measure the fair value of equity-settled transactions with employees at the grant
date using a Monte-Carlo Simulation methodology. This estimate required determination of the most appropriate
inputs to the valuation model including the expected life of the performance right, the risk free rate, dividend yield and
volatility and making assumptions about them. No additional expense was recognised for the modification as the total
remuneration values was equal under the original LTI and the modified LTI. The board considered there to be no change
in the original vesting conditions.
The major classes of assets and liabilities of the Disposal Group classified as held for sale as at 30 June 2021 are:
Statement of Financial Position
Assets
Cash
Inventories
Trade and other current assets
Fixed assets
Intangibles
Assets held for sale
Liabilities
Creditors and provisions
Lease liabilities
Liabilities directly associated with assets held for sale
Net assets directly associated with disposal group
68
2021
$’000
545
11,427
6,947
6,363
3,452
28,734
(5,358)
(2,077)
(7,435)
21,299
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 13 DISPOSAL GROUP HELD FOR SALE (continued)
The net cash flows incurred by PPKME are:
Opening balance
Net cash inflow (outflow) from operating activities
Net cash inflow (outflow) from investing activities
Net cash inflow (outflow) from financing activities
Closing balance
Earnings per share
Basic from discontinued operations
Diluted from discontinued operations
Notes
2021
$’000
974
2,040
(746)
(1,723)
545
2021
cents
(0.8)
(0.8)
2020
$’000
929
3,689
(1,732)
(1,912)
974
2020
cents
3.1
3.1
PPKME was independently valued before it was classified as a discontinued operation and the carrying amount of the
disposal group was less than the fair value less costs to sell so no write down was made.
NOTE 14 CASH AND CASH EQUIVALENTS – CURRENT
Cash at bank and on hand
Cash held in trust
Total
NOTE 15 TRADE AND OTHER RECEIVABLES - CURRENT
Trade receivables
Loans – secured
Loans – unsecured
Less: allowance for expected credit losses
Total
Consolidated Entity
Notes
6.2
6.2
15.1
15.2
15.3
2021
$’000
30,365
–
30,365
45
1,569
107
1,721
–
1,721
2020
$’000
2,309
3,035
5,344
6,324
–
–
6,324
–
6,324
15. 1 Trade receivables
Current trade receivables are non-interest bearing and are generally 30 to 60 day terms.
15.2 Loans - secured
Loans are short term to unrelated third parties and secured by a registered first mortgage over property of the
borrower and a registered security interest (fixed and circulating) on the PPSR by way of a loan offer, loan agreement,
general security interest agreement and deed of guarantee and indemnity and mortgage. Interest rates received by the
Group on loans are 8% and 10% with interest payable monthly with the rate being fixed for the term of the loan at the
time it is made.
15.3 Loans - unsecured
Loan is short term to an associated entity at a nil interest rate.
69
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 16 CONTRACT ASSETS - CURRENT
Consolidated Entity
Contract assets
Carrying amount at start of the year
Consideration received for services rendered in the previous period
Revenue recognised for rendering services not yet received
Carrying amount at year end
NOTE 17 INVENTORIES - CURRENT
Inventories
Net realisable value
Raw materials
Finished goods
Work in progress
NOTE 18 OTHER ASSETS - CURRENT
CURRENT
Prepayments
NON-CURRENT
Prepayments
Notes
2021
$’000
–
1,659
(1,659)
–
–
–
–
–
–
–
2020
$’000
1,659
1,794
(1,794)
1,659
1,659
10,594
624
5,774
4,196
10,594
110
742
–
37
NOTE 19 SUBSIDIARY COMPANIES
During the 2021 financial year, PPK had two subsidiaries that had material transactions which were consolidated in the
PPK financial statements; Li-S Energy and White Graphene.
19.1 Li-S Energy
Li-S Energy is the result of a joint venture between Li-S Energy’s founding Shareholders, PPK Group Limited (through
its nominee subsidiary, PPK Aust. Pty Ltd (PPK Aust)), BNNT Technology Limited (BNNTTL) and Deakin. Li-S Energy
was incorporated on 12 July 2019 with the objective of utilising BNNTTL and Deakin’s existing technology and
research to develop a battery technology based on more advanced lithium-sulphur chemistry, where BNNTs and other
nanomaterials are incorporated into battery components to:
–
–
Improve battery energy capacity when compares to current lithium-ion batteries; and
Improve cycle life when compared to conventional lithium-sulphur batteries.
Li-S Energy issued 4,999,614 shares to Sophisticated Investors at $0.65 per share on 15 July 2020 to complete a
$3.250M capital raise. Li-S Energy completed a share split on a 10 for 1 basis on 22 October 2020, restating total shares
on issue of 560,200,230, thus valuing the shares issued to Sophisticated Investors on 15 July 2020 at $0.065 per share.
On 9 April 2021 the company completed a $20,000,000 capital raise from Sophisticated Investors and issued
40,000,000 ordinary shares at $0.50 per share.
70
On 14 February 2021, Dr Lee Finniear was appointed the Chief Executive Officer of Li-S Energy.
On 18 March 2021, Ben Spincer was appointed a Director and on 19 March 2021 was appointed Chairman. Greg Pullen
resigned as Director on 18 March 2021.
Subsequent to the year end, on 21 July 2021, Li-S Energy lodged a prospectus with ASIC to issue 40,000,000 shares at
$0.85 per share, raise $34,000,000 and a listing on the ASX is expected in September 2021.
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 19 SUBSIDIARY COMPANIES (continued
19.1 Li-S Energy (continued
The summarised financial information of Li-S Energy is provided below. This information is based on amounts before
inter-company eliminations. At the beginning of the year, PPK’s direct interest in Li-S Energy was 58% (consolidated
interest of 62.6%), on 23 December 2020 after the in-specie distribution of Li-S Energy shares as a dividend it was
51.9% (consolidated interest of 56.5%) and on 9 April 2021, after the issuance of 40,000,000 ordinary shares in the
capital raise, it changed to 48.5% (consolidated interest of 52.3%) and after the sale of Li-S Energy shares by BNNTTL in
June 2021 the consolidated interest decreased to 51.9%.
The June 2021 realisation of BNNTTL of part of its interest in Li-S Energy has been recorded as an increase in the
Group’s investment in BNNTTL of $1.900M and an increase in equity of $0.200M attributable to PPK shareholders and
$0.200M million to non-controlling interests.
Summarised statement of financial position
Notes
2021
$’000
2020
$’000
Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Intangible assets
Investments
Deferred tax asset
Other non-current assets
Liabilities
Trade and other payables
Interest bearing loans
Total identifiable net assets
Non-controlling interest
Net assets attributable to the Group
Summarised statement of profit or loss
Revenue from contracts with customers
Administration expenses
IPO expenses
Professional fees
Management fees
Directors’ fees
Finance costs
Depreciation and amortisation expense
Unrealised gain (loss) on investment at FVTPL
Profit (loss) for the year before income tax (continuing operations)
Income tax benefit (expense)
Profit (loss) for the year after income tax (continuing operations)
Attributable to:
Equity holders of parent
Non-controlling interest
18,607
3,036
226
68
992
2,258
921
121
117
37
428
2,547
–
37
23,193
6,202
(444)
–
(444)
22,749
10,769
11,980
–
(277)
(1,193)
(218)
(200)
(50)
(1)
(55)
(289)
(2,283)
599
(1,684)
(1,231)
(1,053)
(11)
(1,185)
(1,196)
5,006
2,102
2,904
–
(62)
–
–
–
–
(9)
–
36
(35)
–
(35)
(21)
(15)
71
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 19 SUBSIDIARY COMPANIES (continued)
19.2 White Graphene
White Graphene (WGL) was incorporated on 24 August 2020 as an application project under the Joint Venture
Research Agreement with Deakin University (Deakin). The principal activity of WGL is to establish the world’s first pilot
line for large scale production of boron nitride nanosheets (white graphene).
White graphene is the name given to Boron Nitrides Nanosheets (BNNS) which have similar properties to BNNT such as
high thermal conductivity, electrical insulation and radiation shielding but can be produced at a significantly lower cost.
Hence, their application is very broad and includes uses such as thin-film photovoltaics, microelectronics, advanced
battery and supercapacitor technology, optics, bioengineering, nanocomposites and advanced polymers and ceramics
and corrosion protection coatings.
This project has been under research at Deakin University for more than 8 years and Deakin has a two patents pending
titled “Preparation of Nanosheets via ball milling in the presence of reactive gases” and “Production of Boron Nitride
Nanosheets”. WGL has an exclusive global license to commercialise products using either or both patents for a period
of twenty years and has issued 20,000,000 fully paid ordinary shares to Deakin as full payment for the license to use
the patents. It is intended that all intellectual property developed will vest in WGL.
WGL has entered into an eighteen month research and development agreement with Deakin to further the research
and development previously undertaken on the optimum parameters for production, to determine the most efficient
industrial processes including automation and to ultimately design, manufacture and test the pilot line.
During the period, the main focus has been on continuing the ongoing research by Deakin and obtaining the financing
for the project. The research experienced delays during the period caused by restrictions imposed by the Victorian
government due to COVID-19. Funding has been obtained, initially by PPK through shareholder loans to WGL and then
a $2,800,000 capital raising from Sophisticated Investors in December 2020.
Under a Shareholders’ Deed, PPK is responsible for sourcing the financing and commercialising white graphene, Deakin
is responsible for research and development and BNNTTL is responsible for contributing its technical skills and know
how to assist WGL to commercialise white graphene.
The summarised financial information of White Graphene is provided below. This information is based on amounts before
inter-company eliminations. On incorporation, PPK’s direct interest in White Graphene was 100%, on 22 October 2020,
after the issuance of shares to Deakin and BNNTTL, its was 65% (consolidated interest of 70.0%) and in December 2020,
after the issuance of 7,000,000 ordinary shares in the capital raise ,it changed to 59.8% (consolidated interest of 64.4%).
72
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 19 SUBSIDIARY COMPANIES (continued)
Summarised statement of financial position
Notes
Assets
Cash and cash equivalents
Trade and other current assets
Property, plant and equipment
Liabilities
Trade and other payables
Total identifiable net assets
Attributable to:
Non-controlling interest
Net assets attributable to the Group
Summarised statement of profit or loss
Revenue from contracts with customers
Administration expenses
Professional fees
Management fees
Directors’ fees
Depreciation and amortisation expense
Foreign exchange gain (loss) on financial assets at FVTPL
Profit (loss) for the year before income tax (continuing operations)
Income tax benefit (expense)
Profit (loss) for the year after income tax (continuing operations)
Attributable to:
Equity holders of parent
Non-controlling interest
See Note 35.4 for related party balances.
2021
$’000
2,005
46
384
2,435
(8)
(8)
2,427
864
1,563
–
(55)
(15)
(100)
(50)
(11)
(3)
(234)
–
(234)
(154)
(80)
73
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 20 INVESTMENTS IN ASSOCIATES AND A JOINT VENTURE – NON – CURRENT
Investment in associates and a joint venture
Consolidated Entity
Notes
2021
$’000
2020
$’000
28,126
25,086
20.1 Investment in a joint venture
20,735
19,236
PPK has a joint venture with Deakin and others to commercialise Deakin’s patented Boron Nitride Nanotubes
manufacturing technology. The Group’s 50% interest in BNNTTL increased to 51% on 2 June 2021 as a result of a
selective buyback of shares and the Group continues to be account for BNNTTL using the equity method in the
financial statements due to control restrictions in the shareholder agreement with Deakin. The summarised financial
information of BNNTTL, based on its audited financial statements, and a reconciliation with the carrying amount of the
investment in the consolidated financial statements are set out below:
Summarised statement of financial position of BNNT Technology Limited:
Current assets (including cash $1.844M (2020: $0.502M),
receivables $0.796M (2020: $0.152M))
Non-current assets ((including investments $23.200M (2020: $3.250M), intangibles
$2.805M (2020: $2.964M), fixed assets $2.117M (2020: $1.901M)
Current liabilities (including income taxes $0.655 (2020: $nil))
Non-current liabilities (including deferred tax liability $6.261M (2020: $0.593M)
Equity
Group’s share in equity – 51% (2020: 50%)
Adjustment of investment in Li-S Energy at fair value
Adjustment of investment in White Graphene at fair value
Adjustment for share buyback
Adjustment for interest charged by PPK
Recognition of Group’s share of the profit (loss) for 30 June 2019
Intangibles
Group’s carrying amount of the investment
2,787
672
28,122
(935)
(6,281)
8,115
(177)
(613)
23,693
7,997
11,847
(7,341)
(1,183)
1,000
(4)
(50)
16,466
20,735
3,999
(1,179)
–
–
–
(50)
16,466
19,236
74
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 20 INVESTMENTS IN ASSOCIATES AND A JOINT VENTURE – NON – CURRENT (continued)
Consolidated Entity
Notes
2021
$’000
2020
$’000
Summarised statement of profit or loss of BNNT Technology Limited:
Revenue from contracts with customers
Cost of sales
Gross profit
Other income
Employee expenses
Administration expenses
Depreciation and amortisation
Finance costs
Royalty expenses
Foreign exchange gain (loss)
Profit (loss) for the year before income tax (continuing operations)
Income tax benefit (expense)
Profit (loss) for the year after income tax (continuing operations)
Total comprehensive income (loss) for the year after income tax (continuing operations)
478
(42)
436
14
–
14
24,951
3,364
(488)
(319)
(583)
(9)
(24)
–
23,964
(6,268)
17,696
17,696
(157)
(108)
(261)
(4)
–
(6)
2,842
(593)
2,249
2,249
Adjustment for investment in Li-S Energy at fair value
(21,750)
(3,250)
Adjustment for tax effect of investment in Li-S Energy at fair value
Adjustment for investment in White Graphene at fair value
Adjustment for tax effect of investment in White Graphene at fair value
Adjustment for intercompany sales of BNNT
Adjustment for tax effect of intercompany sales of BNNT
Adjustment for interest charged by PPK
Adjusted total comprehensive income (loss) for the year after income tax
(continuing operations)
Group’s share of the profit (loss) for the year
Group’s share of profit (loss) from acquisition to the year end 30 June 2019
See Note 2.24 for more detail.
5,655
(3,198)
832
(420)
109
(6)
(1,082)
(541)
–
(541)
893
–
–
–
–
–
(108)
(54)
(50)
(104)
75
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 20 INVESTMENTS IN ASSOCIATES AND A JOINT VENTURE – NON – CURRENT (continued)
BNNTTL has the following related party agreements in place with its major shareholders:
Shareholders Agreement
A Shareholders Deed with PPK Group Limited, Deakin University and two other shareholders which sets out the
respective rights and obligations of the shareholders as members of the Company and the arrangements for the
management, control and funding of the Company. Key terms of the deed in relation to the shareholders and directors
management and control are:
– PPK and Deakin University are entitled to appoint two directors each and each director is a nominee of the
shareholder who nominated them. Subject to the Director’s duties under applicable law and the Deed, the directors
may act in the interests of the shareholder who appointed them;
– A quorum for a board meeting requires a majority of the directors;
– Each director has one vote;
– Ordinary decisions require more than 50% of the total votes of all directors;
– Special majority decisions require more than 80% of the total votes of all directors; and
– Management vests in the Board;
– A quorum for a shareholders meeting will be constituted by the attendance of majority of the shareholders and
must include a representative from PPK and Deakin University;
– Each shareholder has one vote;
– Ordinary decisions of the shareholders require more than 50% of the total votes of all shareholders; and
– Special majority decisions require more than 75% of the total votes of all shareholders.
Under the Shareholders Agreement the Company must provide its technical skills and know how to assist with
developing and commercialising new products.
On 4 August 2021, the Shareholders’ and directors of BNNTTL executed a Deed of Variation of Shareholders
Agreement whereby the following changes are made to the Shareholders Agreement:
– Deakin is only entitled to appoint one director and one of the current Deakin appointed directors must resign;
– AIC Investment Corporation is entitled to appoint two directors and has appointed Robin Levison and Mark Winfield;
– The directors may, by unanimous resolution, appoint one independent director who will act as Chairperson and
Glenn Molloy has been appointed;
– Ordinary Decisions of Shareholders is amended with each shareholder having one vote and decisions will be made
by a majority of votes cast by the Shareholders;
– Special Majority Decisions of the Board is amended from 80% to 75%;
– Special Majority Decision of the Shareholders’ is deleted and replaced with the words an ordinary decision of the
Shareholders.
Joint Venture Agreement
A Joint Venture Agreement with PPK Group Limited and Deakin University for the research, development and
commercialisation of new and existing technologies and products where BNNT can be used to create and/or improve
these technologies and products whereby:
– BNNTTL provides BNNT and related technologies, products, technical skills and know how;
– Deakin University provides existing intellectual property, services of specialist personnel from the Institute of
Frontier Materials and other equipment including the university’s specialist facilities where required; and
– PPK provides all other services to commercialise the new technologies and services, including the procurement
of other specialists with experience in the respective industries, and source or assist with funding and industry
partners.
76
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 20 INVESTMENTS IN ASSOCIATES AND A JOINT VENTURE – NON – CURRENT (continued)
Technology Licence Agreement
A licence agreement with Deakin University for an exclusive global 20 year licence, commencing 1 June 2018, to
commercialise the BNNT manufacturing technology patented by Deakin University.
Lease
A one year lease with Deakin University for the premises at Waurn Pond, Geelong expiring 31 May 2022 for
$0.006M per month.
Loan Agreements
BNNTTL had a Loan Agreement to a maximum amount of $0.500M to fund the Li-S battery project, interest bearing at
4.5% and maturing in 36 months from the date the loan is advanced or such other date the parties agree in writing. The
loan facility agreement was terminated on the repayment of the loan on 20 July 2020.
PPK Group Limited had a loan facility agreement with BNNTTL to provide a maximum of $1.000M loan at normal
commercial terms. The loan facility agreement was terminated on the repayment of the loan during the year.
A condition of the lease with Deakin University is that BNNTTL has the following commitments to Deakin University:
–
–
an initial $0.500M payment for Deakin University to develop a research plan for the Company; and
a $2.000M per annum payment for research funding once the Company’s revenue exceeds $5.000M per annum.
A condition of the Technology License Agreement is the Company has a quarterly royalty payment of 5% of the gross
revenue received by or payable to the Company or any of its sub-licensees.
The previous commitment under the Technology License Agreement to generate $50 million of gross revenues within
the first three years after the Evaluation Completion Date was waived on 19 July 2021.
Subsequent to the end of the financial year, BNNTTL had the following events:
Supply Agreement with Li-S Energy
On 9 July 2021 entered into a supply agreement with Li-S for the supply of BNNTs to Li-S for the purposes of using
BNNTs in Li-S’s development, testing and manufacture of the Li-S batteries. The key material terms of the supply
agreement are as follows:
Term:
Termination:
Product supplied
Permitted Purpose
The contract commenced on 9 July 2021 for an initial term of 5 years and automatically
renews for further 2 year terms unless Li-S elects not to renew the agreement by giving at
least 3 months’ notice prior to the expiry of the latest term.
Either party may terminate the agreement immediately if the other party commits a
material breach that is unable to be rectified or where able to be rectified, fails to do so
within a cure period, or the other party is insolvent or similar.
BNNTs with a purity of at least 95% or any other specifications agreed from time to time.
The minimum Purchase Order quantity is 10gm.
Li-S may only order BNNTs from BNNTTL to use BNNTs in the Li-S’s development, testing
and manufacture of batteries (including to stockpile BNNTs for later use in accordance with
forecasts) and any other purpose agreed between the parties in writing.
Other terms:
The remainder of the agreement is on the usual commercial terms for a contract of
this nature.
77
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 20 INVESTMENTS IN ASSOCIATES AND A JOINT VENTURE – NON – CURRENT (continued)
Distribution Agreement with Li-S Energy
On 9 July 2021 entered into a distribution agreement pursuant to which Li-S is appointed as distributor for BNNT
products within the battery industry, with certain exclusive distribution rights. The key material terms of the distribution
agreement are as follows:
Term:
Termination:
The contract commenced on 9 July 2021 for an initial term of 5 years and automatically
renews for further 2 year terms unless Li-S elects not to renew the agreement by giving at
least 3 months’ notice prior to the expiry of the latest term.
Either party may terminate the agreement immediately if the other party commits a
material breach that is unable to be rectified or where able to be rectified, fails to do so
within a cure period, or the other party is insolvent or similar.
Product used for
distribution
Permitted Purpose
BNNTs with a purity of at least 95% or any other specifications agreed from time to time.
The minimum Purchase Order quantity is 10gm.
Li-S may only buy BNNTs from BNNTTL for the following Permitted Purposes (and any
other purpose agreed between the parties in writing):
(c) to distribute BNNTs to third party customers (Customers), provided the Customers are
only permitted to use BNNTs to develop, test or manufacture lithium-sulphur batteries
(including to stockpile BNNTs for later use in accordance with forecasts);
(d) to distribute BNNTs to Customers, provided the Customers are only permitted to use
BNNTs to develop, test or manufacture batteries that are not lithium-sulphur batteries
(including to stockpile BNNTs for later use in accordance with forecasts); and
(e) to manufacture, to licence the manufacture of and/or distribute nanomesh products
incorporating BNNTs (including Li-Nanomesh) for the use in any form or type of
battery.
Territory
Worldwide
Nature of Appointment
Distributor in the Territory for the Permitted Purpose during the Term.
Exclusive distributor for the Permitted Purposes relating to the distribution in respect of
lithium-sulphur batteries and Li-S Energy’s nanomesh materials (paragraphs (a) and (c)
above), for the first seven years of the agreement.
Other terms:
The remainder of the agreement is on the usual commercial terms for a contract of
this nature.
On 16 July 2021 sold 10,000,000 shares in Li-S for $8,500,000.
On 16 July 2021, BNNTTL entered into a non-exclusive distribution agreement for the sale of BNNT in Japan with an
international company.
On 19 July 2021, BNNTTL and Deakin signed a Deed of Variation of the License Agreement in respect of Boron Nitride
Nanotubes Manufacturing Technology which removed the obligation for BNNTTL to generate $50 million gross revenue
in the first three years.
On 19 July 2021, the board approved the capital expenditure to build two separate 6 furnace modules with the
expectation of substantially increasing manufacturing production.
20.2 Investment in associates
Craig International Ballistics Pty Ltd
78
AMAG Holdings Australia Pty Ltd
Ballistic Glass Pty Ltd
Consolidated Entity
2021
$’000
2020
$’000
7,391
5,850
5,831
1,500
60
7,391
5,850
–
–
5,850
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 20 INVESTMENTS IN ASSOCIATES AND A JOINT VENTURE – NON – CURRENT (continued)
Craig International Ballistics Pty Ltd (CIB)
The group has a 45% interest in Craig International Ballistics Pty Ltd which is an unlisted Australian company that is a
leading manufacturer of soft and hard ballistic (body armour) products primarily for the security and defence sectors.
The Group’s interest is accounted for using the equity method in the consolidated financial statements.
The following table illustrates the summarised financial information of the Group’s investment in CIB:
Summarised Statement of financial position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Group’s share in equity – 45% (2020: 45%)
Adjustment of investment in Li-S Energy at fair value
Summarised statement of profit (loss)
Revenue from contracts with customers
Profit (loss) for the year before income tax (continuing operations)
Income tax benefit (expense)
Profit (loss) for the year after income tax (continuing operations)
Total comprehensive income (loss) for the year after income tax (continuing operations)
Group’s share of profit (loss) for the year
Adjustment of investment in Li-S Energy at fair value
AMAG Holdings Australia Pty Ltd (AMAG)
2021
$’000
3,901
14,651
(1,030)
(4,243)
13,279
5,976
(145)
5,831
8,627
1,472
(388)
1,084
1,084
488
(145)
343
1,500
2020
$’000
4,401
14,325
(1,475)
(4,250)
13,001
5,850
–
5,850
11,296
1,943
(541)
1,402
1,402
631
–
631
–
The group has a 20% interest in AMAG who have developed the world’s first Safe Mobility Alert Real Time (SMART)
delivered via Software-as-a-Service to enable governments to achieve Vision Zero and Safe Systems policy objectives.
During the year AMAG has continued integrating video analytics, artificial intelligence, deep learning and advanced
econometrics techniques to provide analytics for managing road safety and has entered into contracts with cities and
other government departments in a number of countries for the SMART services.
The Group’s share of fair values of the identifiable assets and liabilities of AMAG as at the date of the acquisition, being
16 December 2020, were based upon AMAG’s management information and were:
Assets
Cash
Intangibles
Liabilities
Total identifiable net assets at fair value
Purchase consideration transferred
Purchase consideration transferred
Cash
–
1,500
6,000
–
7,500
1,500
1,500
79
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 20 INVESTMENTS IN ASSOCIATES AND A JOINT VENTURE – NON – CURRENT (continued)
AMAG is developing its own software for new markets thus the Group recognises the software development as an
intangible asset.
From the date of acquisition, AMAG has contributed a break even after tax result from its operations based upon
AMAG’s management information as follows:
Investment in AMAG
Current assets
Non-current assets
Current liabilities
Equity
Group’s share in equity – 20%
Revenue from contracts with customers for the period from acquisition to 30 June 2021
Profit (loss) for the period from acquisition to 30 June 2021 before income tax
Income tax expense (benefit)
Profit (loss) from acquisition to 30 June 2021 (continuing operations)
Total comprehensive income (loss) from acquisition to 30 June 2021 (continuing
operations)
Group’s share of profit (loss) from acquisition to 30 June 2021
2021
$’000
1,083
6,521
(104)
7,500
1,500
130
–
–
–
–
–
Investment in Ballistic Glass Pty Ltd
2021
$’000
60
2020
$’000
–
Ballistic Glass Pty Ltd is developing manufacturing processes for incorporating BNNT into transparent materials to
enhance ballistic performance in ballistic body armour and bullet resistant glass. PPK has a 40% interest and CIB has
a 20% interest in Ballistic Glass Pty Ltd. During the financial year Ballistic Glass Pty Ltd has continued is research into
these projects.
80
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 20 INVESTMENTS IN ASSOCIATES AND A JOINT VENTURE – NON – CURRENT (continued)
2021
$’000
2020
$’000
Summarised Statement of financial position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Group’s share in equity – 40% (2020: 40%)
Adjustment for loan from PPK
Summarised statement of profit (loss)
Revenue from contracts with customers
Profit (loss) for the year before income tax (continuing operations)
Income tax benefit (expense)
Profit (loss) for the year after income tax (continuing operations)
Total comprehensive income (loss) for the year after income tax (continuing operations
Group’s share of profit (loss) for the year
Adjustment for interest charged by PPK
10
45
(64)
–
(9)
(3)
63
60
–
8
–
8
8
3
(3)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
20.3 Share of profit of an associate and a joint venture
Group’s 51% interest in BNNTTL’s profit (loss) for the year before income tax
(continuing operations)
Group’s 45% interest of CIB’s profit (loss) for the year before income tax
(continuing operations)
Group’s 20% interest in AMAG’s profit (loss) from acquisition to 30 June 2021
(continuing operations)
Group’s 40% interest of Ballistic Glass’s profit (loss) for the year before income
tax (continuing operations)
Notes
20.1
20.2
20.2
20.2
Consolidated Entity
2021
$’000
2020
$’000
(541)
(104)
343
880
–
–
–
–
(198)
776
81
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 21 INVESTMENT – NON – CURRENT
Financial assets at FVTPL
Listed equity investments
Unlisted equity investment
Notes
Consolidated Entity
2021
$’000
4,472
2,214
2,258
4,472
2020
$’000
2,547
–
2,547
2,547
The fair value of listed equity investments are determined by reference to the published closing price of the shares on
the ASX on 30 June 2021.
The unlisted equity investment is in Zeta Energy LLC. Zeta Energy LLC confirmed that the United States Dollar
valuation, based on a capital raising value, as at 30 June 2021 which equated to AUD2.258M converted to Australian
Dollars at the prevailing exchange rate of $0.7518. The revaluation of the investment resulted in an unrealised loss of the
investment of $0.067M and a foreign exchange loss of $0.222M.
On 26 June 2021 Li-S Energy was notified by Zeta Energy LLC that the requirement for Li-S Energy to complete an
Initial Public Offering by 31 December 2021 had been removed.
NOTE 22 PROPERTY PLANT AND EQUIPMENT – NON – CURRENT
Land and buildings – at valuation
Less: Accumulated depreciation
Reclassified to assets-held-for sale
Plant and equipment – at cost
Less: accumulated depreciation and impairment
Reclassified to assets-held-for sale
1,500
(67)
1,433
(1,433)
–
9,450
(6,059)
3,391
(2,861)
1,500
(34)
1,466
–
1,466
9,609
(5,835)
3,774
–
Total property, plant and equipment of continuing operations
530
5,240
82
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 22 PROPERTY PLANT AND EQUIPMENT – NON – CURRENT (continued)
Consolidated – 2021
Carrying amount at start of year
Revaluation
Additions
Disposals
Transfers
Depreciation & amortisation expense
Reclassified to Disposal Group
Carrying amount at end of year
Consolidated – 2020
Carrying amount at start of year
Revaluation
Additions
Disposals
Transfers
Depreciation & amortisation expense
Carrying amount at end of year
Land &
Buildings
$’000
Plant &
Equipment
$’000
Total
$’000
1,466
3,774
5,240
–
–
–
–
(33)
1,433
(1,433)
–
–
817
(558)
–
(642)
3,391
(2,861)
530
–
817
(558)
–
(675)
4,824
(4,294)
530
1,500
3,839
5,339
–
–
–
–
(34)
1,466
–
721
(9)
(100)
(677)
3,774
–
721
(9)
(100)
(711)
5,240
The land and buildings at Mt Thorley, NSW, is where the Firefly and Rambor businesses operate, and were
independently valued on 11 June 2019.
NOTE 23 RIGHT-OF-USE ASSETS
Right-of-use assets – at cost
Less: accumulated depreciation and impairment
Reclassified to Disposal Group
Consolidated – 2021
Carrying amount at start of year
Revaluation
Additions
Disposals
Transfers
Depreciation & amortisation expense
Reclassified to Disposal Group
Carrying amount at end of year
Consolidated Entity
2021
$’000
5,395
(3,327)
2,068
(2,068)
–
2020
$’000
5,276
(1,648)
3,628
–
3,628
3,628
5,276
–
119
–
–
(1,679)
2,068
(2,068)
–
–
–
–
–
(1,648)
3,628
–
3,628
83
The Group recognised expense from short-term leases of $0.219M for the period ended 30 June 2021.
The Group has not given or received any rent concessions.
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 24 INTANGIBLE ASSETS – NON - CURRENT
Consolidated Entity
Intangibles
BNNT application projects – at cost
Less: accumulated amortisation and impairment
Mining equipment manufacturing - at cost
Less: Accumulated amortisation and impairment
Reclassified to Disposal Group
Carrying amount at end of year
(Amortisation charges are included in cost of goods sold)
Development Costs
Balance at the beginning of year
Additions at cost
Amortisation charge
Reclassified to Disposal Group
Not yet ready for use
Other
Notes
2021
$’000
1,622
1,682
(60)
1,622
3,515
(63)
3,452
(3,452)
1,622
3,038
2,116
(80)
5,074
(3,452)
1,622
1,622
–
1,622
2020
$’000
3,038
428
–
428
2,653
(43)
2,610
–
3,038
1,606
1,467
(35)
3,038
–
3,038
2,976
62
3,038
Refer Note 2.18 and Note 2.26 for more detail.
NOTE 25 TRADE AND OTHER PAYABLES – CURRENT
Trade payables – unsecured
Sundry payables and accruals – unsecured
Total
23
334
357
2,981
1,352
4,333
84
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 26 LEASE AND OTHER LIABILITIES
Current
Non-current
Reclassified to Disposal Group – Current
Reclassified to Disposal Group – Non-current
Total
NOTE 27 INTEREST-BEARINGS LOANS AND BORROWINGS
Current
BNNTTL -unsecured
Total
Non-Current
Other loans - unsecured
Total
See Note 32.
Consolidated Entity
2021
$’000
–
–
–
(1,681)
(1,998)
2020
$’000
1,681
1,998
3,679
–
–
–
3,679
–
–
399
399
152
152
–
–
Per the Shareholders Agreements with the BNNT application projects, shareholders may provide financing in the form
of short term loans to the entities responsible for the application projects. In 2021, loans bear interest at 3.0% per
annum, are unsecured and payable within three years from the date of being drawn down. For loans to entities which
are subsidiaries, the Group’s proportion of the loans are eliminated on consolidation and the loans outstanding are the
equity interests of the other shareholders.
The loan to BNNTTL incurred interest at 4.5% per annum and was repaid on 20 July 2020.
The Group has a finance facility up to a maximum of $4.000M from a major Australian bank (see Note 34). This facility
was not drawn down during the financial year.
NOTE 28 PROVISIONS
Current
Annual leave
Long service leave
Total current
Non-Current
Long service leave
Make good
Total Non-current
134
–
134
13
–
13
1,247
334
1,581
261
40
301
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.
85
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 28 PROVISIONS (continued)
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.
Make good provision comprise estimated costs to return leased premises and assets to their contractual agreed
condition on expiry of the lease.
Current
Non-current
Total
NOTE 29 CONTINGENT CONSIDERATION
Financial liability at fair value through profit or loss
Consolidated Entity
Notes
2021
$’000
–
–
–
–
2020
$’000
1,581
301
1,882
–
As a consideration of the acquisition of AICIC in 2019, the Group had a contingent consideration of $10.000M to
the vendor if AICIC’s EBIT for the two financial years commencing subsequent to the acquisition was greater than
$10.000M. The vendor is entitled to a payment of 50% of the amount of the EBIT over the $10.000M to a maximum
payment of $10.000M. Under AASB 3: Business Combinations the Group recognised this contingent consideration at
the acquisition date in the purchase price accounting, discounted to its fair value using an indicative financing rate of
4.36%, calculated at $9.041M. The Directors at that time considered a 100% probability of payout likely.
In the 2020 financial year, the Directors used significant judgement to determine that the probability of a payout was
unlikely. On 28 June 2021, the Vendor signed a waiver of their entitlement to the earnout and acknowledged all rights
were forever and irrevocably extinguished.
NOTE 30 SHARE CAPITAL
30.1 Issued capital
89.052M (2020: 85.621M) ordinary shares fully paid
75,348
59,500
Movements in ordinary share capital
Balance at the beginning of the financial year
New shares issued, net of transaction costs
Shares issued on acquisition, net of costs
Shares issued from dividend reinvestment plan
Shares issued for Employee Share Scheme
Shares issued for Long Term Incentive Plan
Total
59,500
14,597
–
479
–
772
47,743
8,049
2,241
941
137
389
75,348
59,500
86
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 30 SHARE CAPITAL (continued)
30.2 New shares issued
Consolidated Entity
Notes
2021
$’000
2020
$’000
Issued for cash to accelerate research, development and commercialisation
of BNNT application projects, fund further technology investment
opportunities and separate the mining business @ $5.50 per share
Less transaction costs for issued share capital
Issued for cash to fund the acquisition of CIB, JVRA application projects and
working capital @ $4.25 per share
Less transaction costs for issued share capital
New shares issued for cash, net of transaction costs
Issued on acquisition of 45% interest in CIB @ $4.50 per share
Less transaction costs for issued share capital
Issued from dividend reinvestment plan
10(d)
Less transaction costs for issued share capital
Issued for Employee Share Scheme @ $5.7803
Less transaction costs for issued share capital
Issue to Long Term Incentive Plan Trust Account
Less transaction costs for issued share capital
15,400
(803)
14,597
–
–
–
14,597
–
–
–
483
(4)
479
–
–
–
784
(12)
772
–
–
–
8,500
(451)
8,049
8,049
2,250
(9)
2,241
949
(8)
941
138
(1)
137
396
(7)
389
The shares have no par value and each share is entitled to one vote at shareholder meetings. Ordinary shares
participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held.
Reconciliation of transaction costs on issue of share
For the raising of cash
For the Long Term Incentive Plan Trust Account
For the dividend reinvestment plan
For the acquisition of CIB, JVRA application projects and working capital
For acquisition of 45% interest in CIB
For the Employee Share Scheme
Transaction costs attributable to PPK
For the raising of cash in Li-S Energy Limited and WGL
(803)
(12)
(4)
–
–
–
(819)
(1,176)
(1,995)
–
(7)
(8)
(451)
(9)
(1)
(476)
(221)
(697)
87
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 30 SHARE CAPITAL (continued)
30.3 Share movements
Movements in number of ordinary shares
Balance at the beginning of the financial year
New shares issued
Total
30.4 Treasury share movements
Consolidated Entity
2021
$’000
2020
$’000
85,620,743
82,488,074
3,431,050
3,132,669
89,051,793
85,620,743
Opening balance of treasury shares
696,771
(227)
695,122
2021
2021
2020
No. of Shares
$’000 No. of Shares
Shares purchased in the Dividend Reinvestment Plan
Shares purchased
Shares sold
Closing balance of treasury shares
–
4,367
(246,771)
454,367
–
(57)
81
1,649
–
–
(203)
696,771
(227)
2020
$’000
(220)
(7)
–
–
During the year ended 30 June 2021, shares with a cost of $0.081M were sold for cash consideration of $2.025M The
gain on this transaction was recorded as an increase in equity attributable to members of the parent.
30.5 Capital risk management
The Group considers its capital to comprise its ordinary shares, treasury shares, 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 increase/reduction of debt, the Group considers
not only its short-term position but also its long-term operational and strategic objectives.
For the 2021 financial year, the Group’s policy is to maintain its gearing ratio within the range of 0% - 20% (2020: 0% -
20%). The Group’s gearing ratio at the balance sheet date is shown below:
Gearing Ratios
Total borrowings
Less cash and cash equivalents
Net debt (cash surplus)
Total equity
Total capital
Gearing ratio
Consolidated Entity
Notes
2021
$’000
2020
$’000
399
(30,365)
(29,966)
88,264
88,264
0%
152
(2,309)
(2,157)
54,193
54,193
0%
88
The gearing ratio is calculated excluding lease liabilities.
The Group intends to minimise debt, but have the ability to access debt should it be necessary, with a focus on funding
the technology application projects and maintaining dividend payments. There is no change as to what the Group
considers to be its capital.
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 31 CAPITAL RESERVES
Reserves
Share options reserve
Asset revaluation surplus
Share premium reserve
Dividend revaluation reserve
Movement in reserves
31.1 Share options reserve
Opening balance
Issue of performance rights
Shares transferred to trust
Closing balance
Notes
31.1
31.2
31.3
31.4
Consolidated Entity
2021
$’000
19,068
396
–
16,733
1,939
19,068
869
311
(784)
396
2020
$’000
4,143
869
350
2,924
–
4,143
321
–
548
869
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.
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.
31.2 Asset revaluation surplus
Opening balance
Transfer to reserve of disposal group held for sale
Closing balance
350
(350)
–
350
–
350
The asset revaluation surplus is used to recognise the fair value movement of land and buildings in the disposal group
held for sale upon revaluation.
31.3 Share premium reserve
Opening balance
Increase in PPK’s and related entities interest in Li-S Energy’s issued capital and reserves
Increase in PPK’s and related entities interest in White Graphene’s issued capital
and reserves
Closing balance
2,924
12,102
1,707
16,733
–
2,924
–
2,924
The share premium reserve is used to recognise PPK’s and related entities interests in Li-S Energy’s issued capital and
reserves of 48.5% directly (30 June 2020: 58%) and an additional 3.4% (30 June 2020: 4.9%) through ownership by
related entities (see Note 19.1) and PPK’s and related interests in White Graphene’s issued capital and reserves of 59.8%
and an additional 4.6% through ownership by related entities (see Note 19.2).
89
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 31 CAPITAL RESERVES (continued)
31.4 Dividend revaluation reserve
Opening balance
Revaluation of Li-S Energy’s shares distributed as an in specie dividend
Li-S Energy’s shares distributed as an in specie dividend to minority interests
Li-S Energy’s shares distributed as an in specie dividend to treasury shares
Closing balance
Consolidated Entity
2021
$’000
–
2,219
(263)
(17)
1,939
2020
$’000
–
–
–
–
The dividend revaluation reserve is used to recognise the internal profit generated from the issue of Li-S Energy
shares to PPK shareholders in the form of a special dividend of $0.025 per PPK share held by PPK shareholders on 17
December 2020. PPK shareholders received 0.3846 Li-S Energy shares for every 1 PPK share held (approximately 1 Li-S
Energy for every 2.6 PPK shares held).
NOTE 32 FINANCIAL INSTRUMENTS RISK
The Group’s financial instruments include investments in deposits with banks, receivables, payables and interest bearing
liabilities. The accounting classifications of each category of financial instruments, as defined in Note 2.12, Note 2.13,
Note 2.18, Note 2.19 and Note 2.23 and their carrying amounts are set out below.
Weighted
Average
Interest
Rate
Floating
Interest
Rate
$’000
Notes
Within 1
Year
$’000
1 to 5
Years
$’000
Non-
Interest
Bearing
$’000
Consolidated 2021
Financial assets
Loans
Receivables
Cash and cash equivalents
Total financial assets
Financial liabilities
Interest-bearing loans and borrowings
Trade and other payables - current
Total financial liabilities at amortised cost
Consolidated 2020
Financial assets
Receivables
Cash and cash equivalents
Total financial assets
Financial liabilities
Interest-bearing loans and borrowings
Trade and other payables - current
Lease liabilities
Total financial liabilities at amortised cost
90
8.5%
0.0%
0.0%
4.5%
0.0%
0.0%
0.0%
4.5%
0.0%
5.2%
15
15
14
27
25
15
14
27
26
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,569
–
–
1,569
–
–
–
–
–
152
30,365
30,517
–
–
–
–
–
–
152
–
1,681
1,833
399
–
399
–
356
356
–
–
–
–
–
1,998
1,998
6,324
5,344
11,668
–
4,485
–
4,485
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 32 FINANCIAL INSTRUMENTS RISK (continued)
Financial risk management
The Board of Directors have overall responsibility for the establishment and oversight of the financial risk management
framework. The 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 Group does not use derivatives.
32.1 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: equity price risk, interest rate risk and currency risk.
(i) Equity price risk
The Group has a listed and unlisted equity investments which are susceptible to market price risk arising from
uncertainties about future value of the investment securities. The Group manages the equity price risk through
reviewing company information for the listed equity investments and updates with the unlisted equity investment’s
executives to keep abreast of its activities and plans. As the equity investment intends to complete an IPO in the near
future, the Group will have access to a market price and public information to manage the market price risks.
At the reporting date, the exposure to the listed equity investments was $2.214M and the unlisted equity investment
was $2.258M at fair value.
The Group has performed sensitivity analysis relating to its equity price risk based on the Group’s year end exposure.
This sensitivity analysis demonstrates the effect on after tax results and equity which could result from a movement of
market value of +/- 10%.
Change in profit before tax
- increase in market value by 10%
- decrease in market value by 10%
Notes
2021
$’000
2020
$’000
447
(447)
255
(255)
(ii) 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. The Company was not exposed to significant interest
rate risk during the year.
(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 (2020: 100%). The Group does not take forward cover or hedge its risk exposure.
The Group is exposed to currency risk in relation to its equity investment which is in US dollars (see Note 32.1(i)). At the
year end, the equity investment was converted from United States Dollars to Australian Dollars at the exchange rate of
$0.7518 at 30 June 2021.
Change in profit before tax
- increase in USD currency rate by $.01
- decrease in USD currency rate by $.01
(23)
23
(29)
30
91
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 32 FINANCIAL INSTRUMENTS RISK (continued)
32.2 Credit risk
The Group’s maximum exposure to credit risk is generally the carrying amount trade and other receivables, net of
any allowance for credit losses, and loans. The Group has in place formal policies for establishing credit approval and
limits so as to manage the risk. For loans to unrelated third parties, the Group takes adequate security generally by a
registered first mortgage over property of the borrower and a registered security interest (fixed and circulating) on the
PPSR by way of a loan offer, loan agreement, general security interest agreement and deed of guarantee and indemnity
and mortgage.
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. Refer to note 15 for detail on
the Group’s trade and other receivables.
The geographic location of customers, relating to these trade receivables, is disclosed in Note 3.1 of these accounts.
Australia
Notes
2021
$’000
2020
$’000
–
–
–
–
32.3 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 lease agreements. 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 27.
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 2021
Financial liabilities (current & non-current)
Trade and other payables
Interest-bearing loans and borrowings
Lease liabilities
Total financial liabilities
Consolidated 2020
Financial liabilities (current & non-current)
Trade and other payables
Interest-bearing loans and borrowings
Lease liabilities
Total financial liabilities
Carrying
amount
$’000
<6
months
$’000
6-12
months
$’000
1-3 years
$’000
>3 years
$’000
Contractual
Cash flows
$’000
356
399
–
755
356
–
–
356
4,333
4,333
152
3,679
8,164
152
688
5,173
–
–
–
–
–
–
993
993
–
399
–
399
–
–
1,998
1,998
–
–
–
–
–
–
–
356
399
–
755
4,333
152
3,871
8,356
92
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 33 FAIR VALUE MEASUREMENT
Fair value
The carrying values of financial assets and liabilities listed below 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.
Hierarchy
The following tables classify financial instruments recognised in the statement of financial position of the Group
according to the hierarchy stipulated in AASB13 as follows:
– Level 1 – the instrument has quoted prices (unadjusted) in active markets for identical assets or liabilities;
– Level 2 – a valuation technique is used using inputs other than quoted prices within Level 1 that are observable for
financial instruments, either directly (i.e. as prices), or indirectly (i.e. derived from prices); or
– Level 3 – a valuation technique is used using inputs that are not based on observable market data (unobservable inputs).
Assets
Group 2021
Non-current assets
Listed securities
Unlisted equity securities
Group 2020
Non-current assets
Unlisted equity securities
Notes
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
21
21
2,214
–
2,214
–
–
–
–
–
–
–
2,258
2,258
2,214
2,258
4,472
2,547
2,547
2,547
2,547
The level 3 fair value assessment of unlisted equity securities has been based on advice provided by the investee
company as to the most recent capital raise completed by it on or about 30 June 2021. This amount per share in United
States Dollars has been converted to Australian Dollars at the prevailing exchange rate of $0.7518 at 30 June 2021.
NOTE 34 CONTINGENT ASSETS AND LIABILITIES
The Group has the following bank guarantees which are secured against cash of the same amounts:
– $0.359M (2020: $0.359M) for property leases for discontinuing operations; and
– $0.100M (2020: $0.100M) for completion of a property development for continuing operations.
Non-bank guarantees and indemnities include:
– A finance facility up to a maximum of $4.000M from a major Australian bank for discontinuing operations, secured
against the debtors of PPK Mining Equipment Pty Ltd, secured by a guarantee and indemnity from PPK Group
Limited, PPK Mining Equipment Group Pty Ltd and the subsidiaries of the mining division. This facility was not drawn
down during the financial year.
–
the lease motor vehicle fleet provider for discontinuing operations has a guarantee and indemnity from PPK Group
Limited in relation to the leased motor vehicle fleet.
The Group has the following contingent liabilities:
– $0.298M for its proportion of funding the BNNT Precious Metals Pty Ltd project for continuing operations, should it
be required.
– $0.594M being the rental arrears owing under a previous property lease for discontinuing operations. The Group
signed a new five year lease to 31 July 2022 and, as a condition of this lease, the Lessor has agreed to waive its right
to recover the rent arrears if the Group complies with all obligations and pays all amounts due and payable under
the lease.
93
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 34 CONTINGENT ASSETS AND LIABILITIES (continued)
The Group is defending a claim in the Supreme Court of NSW in relation to a dispute pertaining to the vesting
conditions of a business acquired in 2014 with a vendor employee for the second tranche of $0.500 of share plus
interest and costs for continuing operations. As advised in the 2016 Annual Report, the Group does not believe the
vesting conditions were met and still maintains this position.
See Note 35 for additional contingent assets and liabilities.
NOTE 35 RELATED PARTIES
For details on transactions between related parties refer to Note 9, Note 19, Note 20 and Note 34.
35.1 Details of the nature and amount of each element of the remuneration of each director and key
management personnel (‘KMP”) of PPK Group Limited are shown in the table below:
2021
Short Term Benefits
Salary &
Fees
($)
Cash
Bonus
($)
Non-
Monetary
($)
Post
employ-
ment
Super-
annuation
($)
Long
Term
Benefits
($)
Terminat-
ion
Payments
($)
(1)Share
Based
Payments
($)
Perform-
ance
Related
(%)
Total
($)
Directors
Non-Executive
A McDonald
G Webb
Executive
R Levison
G Molloy
D McNamara(2)
Total Directors
Other Key
Management
Personnel
K Hostland(3)
Total Other
Total Key
Management
Personnel
50,000
43,333
215,000
240,000
200,000
748,333
–
–
–
–
–
–
325,000 150,000
325,000 150,000
–
–
–
–
–
–
–
–
–
–
25,000
–
–
25,000
25,000
25,000
1,073,333 150,000
–
50,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
88,057
138,057
64
–
–
–
43,333
240,000
240,000
70,701
270,701
26
158,758
932,091
56,561
556,561
37
56,561
556,561
–
215,319 1,488,652
(1)
Equity settled share based payments. Performance rights granted are expensed over the performance period, which includes the
year to which the bonus relates and the subsequent vesting period of rights. All performance rights fully vested on 1 July 2021.
(2) D McNamara also has use of a fully maintained motor vehicle.
(3) The cash bonus relates to the 2020 financial year.
94
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 35 RELATED PARTIES (continued)
35.1 Details of the nature and amount of each element of the remuneration of each director and key
management personnel (‘KMP”) of PPK Group Limited are shown in the table below: (continued)
Directors and key management personnel were also remunerated by Li-S Energy and White Graphene for the year
ended 30 June 2021 as follows:
2021
Short Term Benefits
Salary &
Fees
($)
(5)Cash
Bonus
($)
Non-
Monetary
($)
Post
employ-
ment
Super-
annuation
($)
Long
Term
Benefits
($)
Terminat-
ion
Payments
($)
(4)Share
Based
Payments
($)
Perform-
ance
Related
(%)
Total
($)
LI-S ENERGY LIMITED
R Levison
G Molloy
A McDonald
K Hostland
WHITE GRAPHENE
LIMITED
R Levison
G Molloy
A McDonald
16,667 100,000
16,667 400,000
16,667 200,000
– 100,000
50,001 800,000
15,000
15,000
15,000
45,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
24,444
141,111
–
416,667
24,444
241,111
71
96
83
–
100,000
100
48,888
898,889
–
–
–
–
15,000
15,000
15,000
45,000
–
–
–
–
(4)
(5)
Equity settled share based payments. Service rights granted are expensed over the vesting period from the date of granting to the
date that the last tranche vests.
The cash bonus was for services provided by each individual for working extended hours in connection with the preparation of
and involvement in the IPO processes and the pre-IPO capital raise, including performing market research, attending additional
meetings, prospectus drafting and other related activities which fall outside their normal roles and duties.
Directors and key management personnel also provided services to the other subsidiary companies, the associated
companies and the joint venture for which they were not remunerated.
As at the end of the financial year, the number of ordinary shares and Service Rights in Li-S Energy held by directors
during the 2021 reporting period is set out below:
Share
Balance at
Start of Year
Shares
Issued
via PPK’s
In- specie
Dividend
Shares
Acquired
Shares
Sold
Shares
Held at the
End of the
Reporting
Period
Service
Rights
Granted
During the
Reporting
Period
Total
Securities
Held at the
End of the
Reporting
Period
1,576,917
1,200,000
5,640,784
800,000
1,247,384
200,000
166,961
700,000
8,632,046
2,900,000
–
–
–
–
–
–
–
–
–
2,776,917
480,000
3,256,917
6,440,784
1,447,384
–
–
6,440,784
1,447,384
866,961
480,000
1,346,961
11,532,046
960,000
12,492,046
2021
Directors
R Levison
G Molloy
D McNamara
A McDonald
Total Directors
As at 30 June 2021, no Service Rights have vested.
95
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 35 RELATED PARTIES (continued)
35.1 Details of the nature and amount of each element of the remuneration of each director and key
management personnel (‘KMP”) of PPK Group Limited are shown in the table below: (continued)
Remuneration Details for the year ended 30 June 2020 for Directors’ and Key Management Personnel
Details of the nature and amount of each element of the remuneration of each director and key management personnel
(‘KMP”) of PPK Group Limited are shown in the table below:
2020
Short Term Benefits
Salary &
Fees
($)
Cash
Bonus
($)
Non-
Monetary
($)
Post
employ-
ment
Super-
annuation
($)
Long
Term
Benefits
($)
Terminat-
ion
Payments
($)
(1)Share
Based
Payments
($)
Perform-
ance
Related
(%)
Total
($)
Directors
Non-Executive
G Webb
A McDonald
Executive
R Levison
G Molloy
D McNamara(2)
Total Directors
Other Key
Management
Personnel
K Hostland(3)
Total Other
Total Key
Management
Personnel
40,000
45,833
215,000
240,000
200,000
740,833
–
–
–
–
–
–
–
325,000
157,625
325,000
157,625
–
–
–
–
–
–
–
–
–
–
–
25,000
–
–
25,000
25,000
25,000
1,065,833
157,625
–
50,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
40,000
236,943
282,776
84
–
–
240,000
240,000
236,108
436,108
54
473,051
1,238,884
188,886
696,511
50
188,886
696,511
–
661,937 1,935,395
(1)
Equity settled share based payments. Performance rights granted are expensed over the performance period, which includes the
year to which the bonus relates and the subsequent vesting period of rights.
(2) D McNamara also has use of a fully maintained motor vehicle.
(3) The cash bonus relates to the 2019 financial year.
Performance Income as a Proportion of Total Remuneration
In 2021, K Hostland received an STI award of $150,000 (2020: $157,625), after his assessment of annual performance,
for achieving targets noted below as set by the Directors for the 2020 financial year representing 92% of his targets. No
other bonuses were paid to Key Management Personnel during the year.
Targets
Results
Performance of PPKME
Achieved at Board’s discretion
Integration/support of Technology
businesses
Achieved at Board’s discretion
STI
Allocation
Outcome
20%
80%
80%
95%
96
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 35 RELATED PARTIES (continued)
35.1 Details of the nature and amount of each element of the remuneration of each director and key
management personnel (‘KMP”) of PPK Group Limited are shown in the table below: (continued)
The table below shows a reconciliation of performance rights held by each KMP for the year ended 30 June 2021.
Name and
Grant Dates
Balance
at Start
of the Year
Granted
During
Year
Vested Exercised
Forfeited
Vested Unvested
No.
%
No.
%
No.
Balance at
End of Year
Unvested
Maximum
$ value to vest(1)
D McNamara
Tranche 1
100,000
Tranche 2
Tranche 3
Tranche 4
A McDonald
Tranche 1
Tranche 2
Tranche 3
Tranche 4
K Hostland
12,500
Tranche 1
75,000
Tranche 2
Tranche 3
Tranche 4
100,000
100,000
100,000
12,500
12,500
12,500
75,000
75,000
75,000
100,000
100,000
100
100
12,500
12,500
100
100
–
–
–
–
–
–
–
–
75,000
75,000
100
100
(56,000)
–
–
–
–
–
–
100,000
20,568
12,500
25,225
75,000
16,455
(1)
The maximum value of the performance rights yet to vest has been determined as the amount of the grant date fair value of the
performance rights that is yet to be expensed which was calculated using the number of performance rights that were going to be
granted. Tranche 4 of the Performance Rights vested on 1 July 2021.
Fair Value of each performance right at the grant date is:
D McNamara
A McDonald
K Hostland
Tranche 1
Tranche 2
Tranche 3
Tranche 4
$0.500
$6.500
$0.500
$0.500
$6.500
$0.500
$0.486
$6.500
$0.486
$0.430
$6.500
$0.430
Li-S Energy Non-Executive Director Equity Plan
Robin Levison and Tony McDonald participate in the Li-S Energy Non-Executive Director (NED) Equity Plan. Both
Directors have sacrificed their director fees of $80,000 per annum over a three year period and were granted 160,000
Service Rights over a three year period. The Service Rights were issued as at 1 May 2021 and will vest in three equal
tranches on 30 April 2022, 2023 and 2024, providing the NED holds the office of NED on those dates. Each consecutive
tranche commences annually on the vesting date of the prior tranche.
The number of Service Rights were calculated by dividing the amount of sacrificed fees by the Share price of $0.50 per
Share being the price at which Shares were issued in the April 2021 capital raise. The fair value of these Service Rights
at the time that they were granted have been independently valued at $0.50 each. There is no amount payable other
than the sacrificed fees for the Service Rights.
Each Service Right is an entitlement, upon vesting and exercise, to an ordinary fully paid Share in the Company. Service
Rights may not be disposed of at any time except by force of law such as on death and Service Rights may not be
exercised prior to vesting but may be exercised at any time once they have vested but must be exercised within 90
days of cessation of holding the office of NED and any role as an employee of the Company.
Each Service Right has a term ending 15 years after the grant date. If not exercised before the end of their term the
Service Rights will lapse. The term will be reduced if vested Service Rights are not exercised as required following
cessation of being a NED. If a NED ceased to hold the office of a NED during a tranche then Service Rights for that
tranche will vest in proportion to the time elapsed as served in the tranche. All subsequent tranches will lapse.
97
Any unvested Service Rights that do not vest will lapse.
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D)
NOTE 35 RELATED PARTIES (continued)
35.1 Details of the nature and amount of each element of the remuneration of each director and key
management personnel (‘KMP”) of PPK Group Limited are shown in the table below: (continued)
A NED must not enter into an arrangement with anyone if it would have the effect of limiting their exposure to risk in
relation to Service Rights (vested or unvested).
If the Board forms the view that a NED has committed an act of fraud, defalcation or gross misconduct in relation to the
Company then all unexercised Service Rights will be forfeited.
35.2 The Group has the following related party agreements in place:
A Shareholders Deed with Deakin University, BNNT Technology Limited and two other shareholders which sets out the
respective rights and obligations of the shareholders as members of BNNT Technology Limited and the arrangements
for the management, control and funding of BNNT Technology Limited. Key terms of the deed in relation to the
shareholders and directors management and control are:
– PPK and Deakin University are entitled to appoint two directors each and each director is a nominee of the
shareholder who nominated them. Subject to the Director’s duties under applicable law and the Deed, the directors
may act in the interests of the shareholder who appointed them;
– A quorum for a board meeting requires a majority of the directors;
– Each director has one vote;
– Ordinary decisions require more than 50% of the total votes of all directors;
– Special majority decisions require more than 80% of the total votes of all directors; and
– Management vests in the Board.
– A quorum for a shareholders meeting will be constituted by the attendance of majority of the shareholders and
must include a representative from PPK and Deakin University
– Each shareholder has one vote;
– Ordinary decisions of the shareholders require more than 50% of the total votes of all shareholders; and
– Special majority decisions require more than 75% of the total votes of all shareholders.
This agreement has been amended subsequent to the year end, see Note 37.1.2.
35.3 BNNT Technology Limited, as the joint venture, has the following related party agreements in place:
35.3.1 A Joint Venture Agreement with Deakin University and BNNT Technology Limited for the research, development
and commercialisation of new and existing technologies and products where BNNT can be used to create and/or
improve these technologies and products whereby:
– BNNT Technology Limited provides BNNT and related technologies, products, technical skills and know how;
– Deakin University provides existing intellectual property, services of specialist personnel from the Institute of
Frontier Materials and other equipment including the university’s specialist facilities where required; and
– PPK provides all other services to commercialise the new technologies and services, including the procurement of
other specialists with experience in the respective industries, and source or assist with funding and industry partners.
The agreement provides for an initial six BNNT application projects with a joint ownership of PPK having a 65% interest,
Deakin University having a 25% interest and BNNT having a 10% interest of those entities incorporated for each project.
However, the agreement provides for alternative ownership arrangements for BNNT application projects that are
entered into outside of the initial six BNNT application projects.
35.3.2 A Technology Licence Agreement with Deakin University to BNNT Technology Limited for an exclusive global
20 year licence, commencing 1 June 2018, to commercialise the BNNT manufacturing technology patented by
Deakin University.
A condition of the Technology License Agreement is BNNT Technology Limited has the following commitments to
Deakin University:
–
–
98
a commitment to generate $50.000M of gross revenues within the first three years after the Evaluation Completion
Date; and
a quarterly royalty payment of 5% of the gross revenue received by or payable to BNNT Technology Limited or any
of its sub-licensees.
35.3.3 A three year lease with Deakin University to BNNT Technology Limited for the premises at Waurn Pond, Geelong
to expire 31 May 2021 for $5,868 per month to 31 May 2020 with a 4% increase for June 2020 onwards.
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 35 RELATED PARTIES (continued)
35.3 BNNT Technology Limited, as the joint venture, has the following related party agreements in place:
(continued)
A condition of the lease with Deakin University is that BNNT Technology Limited has the following commitments to
Deakin University:
–
–
an initial $0.500M payment for Deakin University to develop a research plan for BNNT Technology Limited; and
a $2.000M per annum payment for research funding once BNNT Technology Limited revenue exceeds
$5.000M per annum.
35.3.4 A Shareholders Agreement with Li-S Energy Limited in which BNNT Technology Limited must provide its
technical skills and know how for the Li-S battery project.
35.3.5 A Supply Agreement in which BNNT Technology Limited has agreed to supply 100 grams of BNNT per annum at
$1,000 per gram for a 2 year period to Li-S Energy Limited.
35.3.6 A Loan Agreement to a maximum amount of $0.500M for BNNT Technology Limited to fund the Li-S battery
project, interest bearing at 4.5% and maturing in 36 months from the date the loan is advanced or such other
date the parties agree in writing.
35.4 Related Party Balances
Li-S Energy Limited had short-term shareholder loans owing to PPK of $1.033M and to BNNT Technology Limited of
$0.152M to fund the development costs incurred by Deakin University and the purchase of equipment for the Li-S
battery project. The loans are interest bearing at 4.5% per annum, unsecured and were repaid on 20 July 2020. The
loan to PPK has been eliminated on consolidation.
NOTE 36 INVESTMENTS IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
Percentage Owned
Subsidiaries of PPK Group Limited -
Continued Operations :
PPK Aust. Pty Ltd
PPK Investment Holdings Pty Ltd
PPK Finance Pty Ltd
Li-S Energy Limited
White Graphene Limited
BNNT Precious Metals Limited
Strategic Alloys Pty Ltd
3D Dental Technology Pty Ltd
PPK Prop Co 1 Pty Ltd
PPK Plans Pty Ltd
BNNT Ballistics Pty Ltd
AIC Investment Corporation Pty Ltd
Rutuba Pty Limited
Seven Hills Property Holdings Pty Ltd
Dandenong South Property Pty Ltd
Willoughby NSW Holdings Pty Ltd
Willoughby NSW Pty Ltd
Joint venture with PPK Group Limited
BNNT Technology Limited
Associates of PPK Group Limited
Craig International Ballistics Pty Ltd
Ballistic Glass Pty Ltd
AMAG Holdings Australia Pty Ltd
Country of
Incorporation
Notes
Australia
Australia
Australia
Australia
Australia
Australia
34.4
34.7
Australia
34.5, 34.7
34.7
34.6
34.3
34.1
34.2
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
2021
%
100%
100%
100%
51.8%
64.4%
45%
45%
45%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2020
%
100%
100%
100%
58%
–
45%
–
45%
–
100%
100%
100%
100%
100%
100%
100%
100%
51%
50%
99
45%
40%
20%
45%
40%
–
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 36 INVESTMENTS IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (continued)
Percentage Owned
Subsidiaries – Disposal Group:
PPK Mining Equipment Group Pty Ltd
PPK Mining Equipment Pty Limited
PPK Mining Equipment Hire Pty Ltd
PPK Mining Repairs Alternators Pty Ltd
PPK Firefly Pty Ltd
PPK Properties Pty Ltd
PPK Electrics Pty Ltd
York Group Limited
Rambor Pty Ltd
Rambor Manufacturing Pty Ltd
Rambor Logistics & Asset Management Pty Ltd
Exlec Holdings Pty Ltd
Coaltec Pty Ltd
PPK IP Pty Ltd
Country of
Incorporation
Notes
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
2021
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2020
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
34.1
Willoughby NSW Holdings Pty Ltd (formerly 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.
34.2 Willoughby NSW Pty Ltd (formerly) 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.
34.3 PPK Plans Pty Ltd is the trustee for the PPK Long Term Incentive Plan.
34.4 White Graphene Limited was incorporated on 24 August 2020.
34.5 Strategic Alloys Pty Ltd was incorporated on 12 October 2020.
34.6 PPK Prop Co 1 Pty Ltd was incorporated on 25 June 2021.
34.7 The Group considers that it is contracted to provide both funding and commercialising the development of the BNNT application
projects each entity undertakes, it provides key management personnel, critical services, technology, supplies and raw materials
thus it is responsible for affecting the outcomes and economic returns of the entity and accounts for these entities as a subsidiary
(see Note 2.24).
NOTE 37 EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD
PPK
(1) PPK issued 237,500 shares to the Long Term Incentive Plan Trust Account for the two directors, an
executive and senior managers of the Group whose Tranche 4 Performance Rights vested on 1 July 2021.
(2) Accounting for BNNTTL as a Subsidiary
On 4 August 2021, the Shareholders’ and directors of BNNTTL executed a Deed of Variation of Shareholders
Agreement with BNNTTL pursuant to which a number of material changes were made, relevantly resulting in:
– Deakin having a single nominee on the board;
– AIC Investment Corporation being entitled to nominate two directors being Robin Levison and Mark Winfield;
– The directors appointed Glenn Molloy as Chairman;
– Ordinary Decisions of Shareholders will require a simple of votes cast by the Shareholders;
– Special Majority Decisions of the Board is 75%;
As a result of a share buyback on 2 June 2021 PPK now owns 51% of the share capital of BNNTTL but continued to
equity account for it at year end as a joint venture due to the terms in the Shareholders Agreement at that date. As a
result of executing the Deed of Variation of Shareholders Agreement resulting in the changes noted above, PPK now
controls BNNTTL as of 4 August 2021 and accounts for it as a subsidiary.
100
The summarised financial information of BNNTTL is provided below. This information is based on amounts before
inter-company before inter-company and consolidation eliminations – principally to adjust financial assets at fair value
through profit and loss to their cost value and associated deferred tax liabilities.
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 37 EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD (continued)
PPK (continued)
Summarised statement of financial position
Assets
Cash and cash equivalents
Receivables and other current assets
Property, plant and equipment
Intangibles
Financial assets at FVTPL
Total assets
Liabilities
Trade and other payables
Income tax payable
Deferred tax liability
Total liabilities
Total identifiable net assets
Attributable to:
Non-controlling interest
Net assets attributable to the Group
Summarised statement of profit or loss
Revenue from contracts with customers
Employee benefit expense
Administration expenses
Professional fees
Depreciation and amortisation expense
Realised gain (loss) on financial assets at FVTPL
Unrealised gain (loss) on financial assets at FVTPL
Profit (loss) for the year before income tax (continuing operations)
Income tax benefit (expense)
Profit (loss) for the year after income tax (continuing operations)
2021
$’000
8,672
1,746
2,798
2,780
28,700
44,696
643
2,715
7,400
10,758
33,938
16,630
17,308
–
(70)
(17)
(411)
(58)
8,500
5,500
13,444
(3,199)
10,245
If BNNTTL had been acquired on 1 July 2021, revenue for the Group to 4 August 2021 would have been nil and PPK
would have recognised a pre-tax loss from BNNTTL of $0.284M.
BNNTTL will be consolidated from 4 August 2021. The acquisition accounting for the business combination is currently
being determined, along with the fair value of acquired amounts, and will be disclosed in the 31 December 2021 half
year financial statements.
(3) Acquisition of a Therapeutic Goods Administration Approved Mask Manufacturing Business
In August 2021, PPK acquired a Therapeutic Goods Administration approved mask manufacturing business and the
associated assets to manufacture N95/R2 (everyday use) and 3 ply surgical (molded to a face) masks as a going
concern with current capacity to manufacture approximately 5M masks per month operating a single shift per day.
The business and assets were acquired for $1.500M and the land and building, which is leased to the business, has
been acquired separately for $4.279M. The Group paid cash for the business, associated assets, land and building.
101
(4) On 27 August 2021, the Group drew down $2.650M from its finance facility.
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 37 EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD (continued)
Li-S Energy
Li-S Energy has entered into a number of new operational agreements subsequent to the end of the financial year.
(1) Supply Agreement with BNNTTL
On 9 July 2021, Li-S Energy and BNNTTL entered into a supply agreement for the supply of BNNTs to Li-S Energy for
the purposes of using BNNTs in Li-S Energy’s development, testing and manufacture of the Li-S Energy batteries. The
key material terms of the supply agreement are as follows:
Term:
Termination:
The contract commenced on 9 July 2021 for an initial term of 5 years and automatically
renews for further 2 year terms unless Li-S Energy elects not to renew the agreement by
giving at least 3 months’ notice prior to the expiry of the latest term.
Either party may terminate the agreement immediately if the other party commits a
material breach that is unable to be rectified or where able to be rectified, fails to do so
within a cure period, or the other party is insolvent or similar.
Product supplied:
BNNTs with a purity of at least 95% or any other specifications agreed from time to time.
The minimum Purchase Order quantity is 10gm.
Permitted Purpose:
Li-S Energy may only order BNNTs from BNNTTL to use BNNTs in the Customer’s
development, testing and manufacture of batteries (including to stockpile BNNTs for later
use in accordance with forecasts) and any other purpose agreed between the parties in
writing.
Other terms:
The remainder of the agreement is on the usual commercial terms for a contract of this
nature.
(2) Distribution Agreement with BNNTTL
On 9 July 2021, Li-S Energy and BNNTTL have entered into a distribution agreement pursuant to which Li-S Energy is
appointed as distributor for BNNT products within the battery industry, with certain exclusive distribution rights. The
key material terms of the distribution agreement are as follows:
Term:
Termination:
Product used for
distribution:
Permitted Purpose:
102
The contract commenced on 9 July 2021 for an initial term of 5 years and automatically
renews for further 2 year terms unless Li-S Energy elects not to renew the agreement by
giving at least 3 months’ notice prior to the expiry of the latest term.
Either party may terminate the agreement immediately if the other party commits a
material breach that is unable to be rectified or where able to be rectified, fails to do so
within a cure period, or the other party is insolvent or similar.
BNNTs with a purity of at least 95% or any other specifications agreed from time to time.
The minimum Purchase Order quantity is 10gm.
Li-S Energy may only buy BNNTs from BNNTTL for the following Permitted Purposes
(including to stockpile BNNTs for later use in accordance with forecasts) and any other
purpose agreed between the parties in writing:
(f) to distribute on an exclusive basis BNNTs to third party customers (Customers),
provided the Customers are only permitted to use BNNTs to:
a.
b.
develop, test or manufacture lithium-sulphur batteries; and
manufacture Li-S Energy’s propriety nanomesh products incorporating BNNTs
(including Li-Nanomesh); and
(g) to distribute on a non-exclusive basis BNNTs to Customers, provided the Customers
are only permitted to use BNNTs to develop, test or manufacture batteries that are not
lithium-sulphur batteries.
For clarity, Li-S Energy is not restricted from distributing Li-S Energy’s Li-Nanomesh (or
other nanomesh products), or BNNTs to Li-S Energy’s customers who have a licence from
Li-S Energy to manufacture Li-Nanomesh (or other nanomesh products).
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D)
NOTE 37 EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD (continued)
Li-S Energy (continued)
Territory:
Worldwide
Nature of Appointment:
Distributor in the Territory for the Permitted Purpose during the Term.
Exclusive distributor for the Permitted Purposes relating to the distribution in respect of
lithium-sulphur batteries, for the first seven years of the agreement.
Li-S Energy’s ‘exclusivity’ in respect of distributing Li-Nanomesh and BNNTs for
manufacture of Li-Nanomesh is by virtue of Li-S Energy owning the IP required to
manufacture Li-Nanomesh.
Other terms:
The remainder of the agreement is on the usual commercial terms for a contract of this
nature.
(3) Management Services Agreement with PPK Aust
On 9 July 2021, Li-S Energy and PPK Aust have entered into a management services agreement pursuant to which PPK
Aust will provide to Li-S Energy administrative support services. The key material terms of the management services
agreement are as follows:
Term:
Termination:
Appointment:
Fees:
Indemnity:
Other terms:
The contract commenced on 1 May 2021 for an initial term of 3 years and can be renewed
by PPK Aust for a further 3 year term upon notice being provided by PPK Aust not later
than 3 months prior to the expiry of the initial term.
Either party may terminate the agreement on 30 days’ notice if the other party commits
a material breach that is unable to be rectified or where able to be rectified, fails to do so
within a cure period, or the other party is insolvent or similar.
PPK Aust may terminate the agreement on 30 days’ notice if it is not satisfied with the
Annual Plan of Li-S Energy.
Li-S Energy may terminate the agreement at will on 6 months’ notice.
PPK Aust is appointed to provide management services to Li-S Energy which will see
PPK Aust assist Li-S Energy with its administrative functions such as accounting, record
keeping, reporting, assisting with insurance and recruitment. PPK Aust will also provide
staff to act in key officer roles including the public officer, chief financial officer and
company secretary.
It is also appointed, to the extent permitted by law, facilitate/oversee the funding and
capital raising requirements of the company (note this does not include acting as an
advisor).
PPK Aust will be paid a fee for providing the management services which will be $150,000
for the initial three months from 1 May 2021 to 31 July 2021. This fee, together with the
scope and performance of the management services, will be subject to review between
the parties every 3 months (this allows for resetting of the fee in the event that Li-S Energy
experiences business changes that require PPK Aust to provide additional (or reduce)
resources to effectively provide the services).
PPK Aust will be paid a funding fee of up to 1% of any debt or capital raised that it
facilitates.
PPK Aust will be entitled to recover any disbursements or expenses it incurs on behalf of
Li-S Energy or in providing the services.
Li-S Energy indemnifies PPK Aust for any loss that arises from the performance by PPK
Aust of its obligations under the agreement.
The remainder of the agreement is on the usual commercial terms for a contract of this
nature.
103
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 37 EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD (continued)
Li-S Energy (continued)
(4) Research Framework Agreement with Deakin
On 8 July 2021, Li-S Energy and Deakin have entered into a research framework agreement which governs all research
projects conducted between Li-S Energy and Deakin as set out in Project Schedules made under the agreement. The
key material terms of the research framework agreement are as follows:
Term:
Termination:
Project Schedules:
Intellectual Property:
The contract commenced on 8 July 2021 and continues until terminated.
Either party may terminate the agreement and any Project Schedule immediately if the
other party commits a material breach that is unable to be rectified or where able to be
rectified, fails to do so within a cure period, or the other party is insolvent or similar.
The parties may from time to time enter into Project Schedules made under the agreement
for research projects proposed and negotiated by the parties. Such Project Schedules
include terms around payment, steering committees, specified personnel of the parties and
insurances required.
Each party will retain ownership of their respective intellectual property developed prior to
the date a Project commences or is acquired or developed independent of the agreement,
but grants a non-transferrable licence to the other party to use such background
intellectual property for the purposes of the relevant Project.
Any new intellectual property created, developed or discovered in the conduct of a
Project vests in Li-S Energy (Project IP). Deakin is granted a non-exclusive, perpetual, non-
transferable, royalty free licence to use the Project IP for the purposes of the Project and
for non-commercial research, teaching and scholarly pursuits.
Deakin must also seek Li-S Energy’s prior consent before it publishes any part of the
Project IP as part of any publication.
(5) Termination of Shareholders Agreement
On 20 July 2021, PPK Aust., Deakin and BNNTTL executed a Deed of Termination of the Shareholders Agreement with
Li-S Energy effective on the date of signing.
(6) Employment Contracts
On 9 July 2021, Li-S Energy has entered into an employment contract with Dr Lee Finniear for his engagement as CEO
which contains standard terms and conditions for agreements of this nature, including confidentiality, restraint on
competition and retention of intellectual property provisions. The key terms of the employment contract are as follows:
Total Remuneration
Package:
$300,000 annual salary (including superannuation).
In addition to his annual salary, Dr Lee Finniear has been granted, and has elected to be
issued, 1,000,000 Service Rights vesting over a four year term in accordance with the
Executive Rights Plan.
Dr Lee Finniear is also eligible to participate in the Company’s short term incentive plan for
the 2022 Financial Year up to $100,000.
Term:
The contract commenced on 1 July 2021 and continues until terminated.
Termination by CEO:
6 months’ notice.
Termination by
Li-S Energy:
6 months’ notice or immediately due to serious misconduct or any reason entitling the Li-S
Energy to summarily dismiss Dr Lee Finniear at common law.
Non-competition and non-
solicitation:
To protect the interests of Li-S Energy and its intellectual property, Dr Lee Finniear will not,
directly or indirectly, in any capacity whatsoever, during the term and for 12 months after
the termination of the contract,
104
(f) induce or encourage a client or customer of Li-S Energy to cease doing business with or
(e) be engaged, concerned or interest in any other business or occupation that is or may be
in competition with the business carried on by Li-S Energy in Australia;
reduce the amount of business it would otherwise do with Li-S Energy;
(g) induce or solicit any officer or employee of Li-S Energy to leave that office or employment; or
(h) procure or assist someone else to do or attempt to do anything contemplated by way of
non-competition or non-solicitation.
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 37 EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD (continued)
Li-S Energy (continued)
As a result of the Dr Lee Finniear entering into an employment contract, the previous consulting agreement with his
consultancy company was terminated as at 30 June 2021. Consulting fees paid to or owing to his consultancy company
to 30 June 2021 were $171,700.
On 1 July 2021, Li-S Energy has entered into an employment contract with Dr Steve Rowlands for his engagement as
CTO which contains standard terms and conditions for agreements of this nature, including confidentiality, restraint on
competition and retention of intellectual property provisions. The key terms of the employment contract are as follows:
Total Remuneration
Package:
$176,000 annual salary (including superannuation).
Dr Steve Rowlands is eligible to participate in the Company’s short term incentive plan for
the 2022 Financial Year up to $16,000, and the Company’s Executive Rights Plan on terms
to be confirmed.
The Company will also reimburse Dr Steve Rowlands for all reasonable relocation costs
from the UK, including an annual economy return flight to the UK.
Term:
The contract commenced on 1 July 2021 (with a three month probation period) and
continues until terminated.
Termination by CTO:
2 months’ notice during the probation period.
Termination by Li-S
Energy:
6 months’ notice.
2 months’ notice during the probation period.
6 months’ notice or immediately due to serious misconduct or any reason entitling the Li-S
Energy to summarily dismiss Dr Steve Rowlands at common law.
Non-competition and non-
solicitation:
To protect the interests of Li-S Energy and its intellectual property, Dr Steve Rowlands will
not, directly or indirectly, in any capacity whatsoever, during the term and for 12 months
after the termination of the contract,
(e) be engaged, concerned or interest in any other business or occupation that is or may be
in competition with the business carried on by Li-S Energy in Australia;
(f) induce or encourage a client or customer of Li-S Energy to cease doing business with or
reduce the amount of business it would otherwise do with Li-S Energy;
(g) induce or solicit any officer or employee of Li-S Energy to leave that office or
employment; or
(h) procure or assist someone else to do or attempt to do anything contemplated by way of
non-competition or non-solicitation.
(7) Consulting Agreements
On 16 July 2021, a consulting agreement between Li-S Energy and Glenn Molloy’s consultancy company, Corso
Management Services Pty Ltd. The key terms of the consultancy agreement are as follows:
Designated Person:
While the contract is between Li-S Energy and Glenn Molloy’s consultancy company, the
agreement requires that the services to be provided by Glenn Molloy unless otherwise
agreed in writing by Li-S Energy and for Glenn Molloy to remain an employee of the
consultancy company.
Entitlements:
Term:
A daily rate to be agreed between the parties. Mr Molloy is not paid any fees in respect of
travel time to and from the locations where work is performed.
The contract commenced on 12 June 2021 and is for a period of 24 months unless
terminated earlier by Li-S Energy as permitted under the agreement.
105
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 37 EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD (continued)
Li-S Energy (continued)
Termination:
Subject to annual renewal by written agreement, the contract terminates on 12 June 2023
or Li-S Energy can immediately terminate the agreement if Mr Molloy:
(g) commits any act involving fraud, deceit, dishonesty or other serious misconduct
(whether in relation to Li-S Energy or otherwise);
(h) becomes bankrupt or commits any act of bankruptcy;
(i) is charged with any serious criminal offence;
(j) refuses or fails to comply with any lawful request made by Li-S Energy or any of its
Directors;
(k) is unable to properly perform the essential elements of the Chief Commercial Actions
Officer role whether as a result of illness, accident or otherwise; or
(l) is in breach of any obligations under the contract and fails to rectify the breach within 5
business days after being requested to do by Li-S Energy.
Either party may terminate on 3 months’ notice.
Non-competition and non-
solicitation:
To protect the interests of Li-S Energy and its intellectual property, Mr Molloy will not,
directly or indirectly, in any capacity whatsoever, during the term and for 12 months after
the termination of the contract,
(e) be engaged, concerned or interest in any other business or occupation that is or may be
in competition with the business carried on by Li-S Energy;
(f) induce or encourage a client or customer of Li-S Energy to cease doing business with or
reduce the amount of business it would otherwise do with Li-S Energy;
(g) induce or solicit any officer or employee of Li-S Energy to leave that office or
employment; or
(h) procure or assist someone else to do or attempt to do anything contemplated by way of
non-competition or non-solicitation.
This restraint will not prevent Mr Molloy from performing his roles or holding his interest in
PPK Group Limited entities or entities it holds an interest in.
On 7 July 2021, a consulting agreement between Li-S Energy and Andrew Cooke’s consultancy company, AJC
Corporate Services Pty Ltd was entered into. The agreement is made on standard commercial terms for services for the
provision of company secretarial services.
(8) Australian Research Council Industrial Transformation Research Hub
Deakin University has been awarded grant funding by the Australian Research Council (ARC) to establish and operate
the ARC Industrial Transformation Research Hub in new safe reliable energy storage and conversion technologies.
Under the grant agreement Deakin University must enter into a participant’s agreement with each participating
organisation before the research program can start.
On 11 May 2021, Li-S Energy signed the participant’s agreement and the contract commences when all parties have
executed their agreement. As at 30 June 2021, the other participants had not yet signed the agreement.
Commitment:
Term:
Termination:
106
Cash contributions of $150,000 per year for five years totalling $750,000 and in-kind
contributions of $50,000 per year for five years totalling $250,000.
The contract is for a period of 5 years unless terminated earlier by ARC as permitted under
the agreement.
The contract terminates on the fifth anniversary of the commencement date of the
agreement or the date of which the final report is submitted to the ARC, whichever
is later. Deakin University may terminate this agreement if the grant agreement with
ARC is terminated for any reason or if the ARC suspends or reduces the scope of the
research program or grant funding. Alternatively the agreement may be terminated if the
participating organisations agree there is no longer a valid reason for continuing with the
research program.
PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 37 EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD (continued)
White Graphene
On 30 June 2021, Deakin amended the payment terms of its research and development agreement with WGL. The
first instalment of $503,000, of the total agreement costs of $1,443,000, due on 1 July 2021 has been paid and the
remaining terms and conditions of the research and development agreement have not changed.
Lodgement of IPO Prospectus and Proposed Capital Raising
On 29 July 2021, Li-S Energy lodged a prospectus to raise $34,000,000, issue 40,000,000 ordinary shares and list on
the ASX. As a result of this prospectus, the number of ordinary shares potentially outstanding is as follows:
Outstanding and issued at 30 June 2021
Issued as a result of capital raising in the prospectus
Total outstanding and issued at the completion of the prospectus
Potentially issuable ordinary shares under the Service Rights as detailed in the
Remuneration Report disclosed in the Directors’ Report 1
Issued and potentially issuable ordinary shares at the date of the prospectus
1
Assuming all Service Rights vest and are converted to ordinary Shares.
Number of Ordinary Shares
600,200,230
40,000,000
640,200,230
3,160,000
643,360,230
Impact of COVID-19
Events relating to COVID-19 have resulted in significant economic volatility. There is continued uncertainty as to the
ongoing and future response of governments and authorities globally, and a further Australian economic downturn is
possible. As such, the full impact of COVID-19 to consumer behavior, employees and the Group are not fully known.
Given this, the impact of COVID-19 could potentially be materially adverse to the Group’s financial and/or operational
performance. Further, any government or industry measures may materially adversely affect the Group’s operations
and are likely beyond the Group’s control.
Due to COVID-19, the State and Federal Governments have imposed social-distancing restrictions which have, and may,
disrupt the operations of the Group. The Group’s main operations are at Deakin University’s campus located at Geelong,
Victoria. To slow the spread of COVID-19 in Victoria, the Victorian government has imposed restrictions from time-to-
time. Deakin University, who is contracted to provide the research and development for the Group, has had its own
restrictions with access to campus by staff, students and visitors restricted to help maintain health and safety protocols,
with staff and visitor access reviewed case-by-case. As a result, limits have been placed on the number of staff and
contractors permitted in the workspace at one time. It is unknown whether stricter restrictions will be imposed and
what the impact of these would be on the operations of the Group.
Due to COVID-19, the manufacture of equipment and parts and the supply of raw materials in foreign markets may be
restricted or delayed which could impact on the Group’s operations.
There have been no other matter or circumstance that has arisen since the end of the financial period which is not
otherwise dealt with in this report or in the financial statements that has significantly affected or may significantly affect
the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial
years.
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PPK Group Limitedfor the year ended 30 June 2021Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) Directors’ Declaration
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 2021 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.
3.
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 2021.
Note 2 confirms that the consolidation financial statements also comply with International Financial Reporting
Standards.
Signed in accordance with a resolution of the Directors:
Collection House Limited
Robin Levison
Executive Chairman
Glenn Molloy
Executive Director
Dated this 31st day of August 2021
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PPK Group Limitedfor the year ended 30 June 2021Directors’ DeclarationDIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
Independent Auditor’s Report
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.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
(collectively the Group), which comprises the consolidated statement of financial position as at 30
June 2021, the consolidated statement of comprehensive income, consolidated statement of changes
in equity and consolidated statement of cash flows for the year then ended, notes to the 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)
b)
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2021 and of its consolidated financial performance for the year ended on that date; and
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 auditor
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 (including Independence Standards) (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.
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 year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
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Revenue
Why significant
How our audit addressed the key audit matter
Revenue is a key item in the Statement of Profit
or Loss and Other Comprehensive Income and
consequentially we consider this a key audit
matter.
The Group earns revenue from different business
streams, with each stream having differing
revenue recognition points under the Group’s
revenue recognition policies (Note 2.8) and
Australian Accounting Standards. Amounts
recorded as revenue but unbilled at 30 June are
recorded as contract assets. These amounts are
disclosed in Note 13 and 16.
Our audit procedures included the following:
• Documenting the design of the key revenue
systems and processes.
• Evaluating the Group’s revenue recognition
accounting policies, including the assessed point
of revenue recognition, for its different business
streams, for compliance with Australian
Accounting Standards.
• Testing a sample of revenue transactions to
assess whether the point of revenue recognition
and amount of revenue recognised was
consistent with the Group’s accounting policies
and Australia Accounting Standards.
• Performing analytical review over recognised
revenue.
• Testing, on a sample basis, the cut off of revenue
recognised as at 30 June 2021 to source
documentation evidencing the satisfaction of the
relevant performance obligations and testing the
measurement of the associated contract assets
recorded at 30 June 2021.
• Assessing the adequacy of the related
disclosures within the financial statements.
Impairment Testing of Intangible Assets and Property Plant and Equipment
Why significant
How our audit addressed the key audit matter
At 30 June 2021, the Group’s:
• Continuing operations recorded $1,622,000,
$530,000 and $nil of intangible assets,
property, plant and equipment and right of
use assets respectively;
• Discontinued operations recorded
$3,452,000, $4,294,394 and $2,068,606
intangible assets, property, plant and
equipment and right of use assets
respectively; and
• Assets not yet in service comprised
$3,305,000 of intangible assets (as
disclosed in Note 13).
Our audit procedures included the following:
• Evaluating the Group’s assessment of its CGUs for
consistency with the requirements of Australian
Accounting Standards.
• Evaluating the completeness of the Group’s
assessment of impairment indicators for
intangible assets in development and each CGU.
• Assessing management’s commercial basis for
the development and commercialisation of
products in process development.
• Assessing the key assumptions within the
impairment assessment of each asset and CGU
including the commercial prospects, growth rate
and discount rate.
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Why significant
How our audit addressed the key audit matter
• Applying our knowledge of the business and
corroborating our work with external information
where possible.
• Assessing the adequacy of the disclosures
included in Note 24 to the financial report.
Where assets are held as part of a disposal group we
assessed management’s determination of fair value
less cost to sell by:
• Assessing the key assumptions within the fair
value assessment of the disposal group including
the commercial prospects, growth rate and
discount rate.
• Applying our knowledge of the business and
corroborating our work with external information
where possible, including expert reports obtained
by the Group.
As required by Australian Accounting Standards,
the Group performs an annual assessment for
indicators of impairment. Where indicators of
impairment are present for an individual
development asset, the recoverable amount of
the asset is assessed and compared to its
carrying value. An assessment is also made of
indicators of impairment for each of the Group’s
Cash Generating Unit (CGU).
For discontinued operations, the carrying
amount of the disposal group, is assessed to test
whether the fair value less cost to sell of the
assets exceeds its carrying amount.
Significant assumptions used in the impairment
testing referred to above are inherently
subjective and in times of economic uncertainty
the degree of subjectivity is higher than it might
otherwise be. Based on the size of the assets
and the judgement involved identifying
impairment indicators and determining the
recoverable amount, we have considered this a
key audit matter.
Recoverable Value of Inventory
Why significant
How our audit addressed the key audit matter
At 30 June 2021, the Group recorded inventory
of $11,427,000 (as disclosed in Note 13) and
relates to the Group’s disposal group held for
sale.
The Group is required to carry its inventory at
the lower of cost or net realizable value in
accordance with Australian Accounting
Standards.
The Group’s accounting policy is disclosed in
Note 13.
The following factors add complexity or increase
the likelihood of errors in the determination of
the carrying amount of inventory:
Our procedures included the following:
• Assessing the Group’s inventory valuation
methodology with the requirements of Australian
Accounting Standards.
• Recalculating for a sample of inventory items the
cost and net realisable value of inventories items.
• Testing the mathematical accuracy of the
inventory valuation model.
• Comparing the data underlying the model to the
accounting system or other sources.
• Assessing whether the recorded cost, after
factoring in valuation adjustments, was at the
lower of cost and net realisable value.
• Assessing the adequacy of the related disclosures
within the financial statements.
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Why significant
How our audit addressed the key audit matter
•
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
significance 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.
Accounting for Non-controlled Investments
Why significant
How our audit addressed the key audit matter
The Group holds a number of significant non-
controlled investments in its portfolio. The
investments (which are individually significant)
are recorded as non-current assets and are
accounted for by the Group as follows:
Investee
Classification
Accounting
Method
Note
BNNT
Technology
Limited
Craig
International
Ballistics Pty
Ltd
AMAG
Holdings
Australia Pty
Ltd*
Zeta Energy
LLC
Listed
Investments*
20
20
20
21
21
Joint Venture
Entity
Equity
method
Associate
Entity
Equity
method
Associate
Entity
Equity
method
Financial
Asset at Fair
Value
Through
Profit and
Loss
Financial
Asset at Fair
Value
Through
Profit and
Loss
Fair Value
Through
Profit and
Loss
Fair Value
Through
Profit and
Loss
* Acquired during the year ended 30 June 2021.
All Investments
Our procedures included the following:
• Reviewing investment and shareholder
documents and correspondence in relation to
each investment.
• Challenging the Group’s assessment as to the
method of accounting for each investment for
compliance with Australian Accounting
Standards.
• Testing the Group’s interest in each investee
entity.
• Testing management’s impairment assessment
of the investment by considering forecasts of
forward earnings, commercial activities and
discount rates or recent arm’s length capital
raisings.
• Assessing the adequacy of the related
disclosures within the financial statements.
BNNT Technology Limited (“BMNT”), Craig
International Ballistics Pty Ltd (“CIB”) and AMAG
Holdings Australia Pty Ltd (“AMAG”).
Our procedures included the following:
•
Evaluating the Group’s accounting for the initial
investment in AMAG for consistency with
Australian Accounting Standards.
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Why significant
How our audit addressed the key audit matter
The accounting policies applied in recognising
and measuring the Group’s investments are
disclosed in Notes 2.3, 2.5, 2.6 and 2.16 of the
Group’s financial report.
This area is a key audit matter due to the
significance of the investments to the Statement
of Financial Position, and the judgement involved
in assessing whether control, joint control,
significant influence or no influence exists.
Subjectivity also exists in assessing the value of
investments recorded at fair value.
•
•
•
•
Determined the scope of audit work required to
be undertaken on the results and position of
BNNT, CIB and AMAG for the purposes of the
audit of the Group.
Assessing the accounting policies of BNNT, CIB
and AMAG for consistency with the Group’s
policies.
Evaluating the Group’s share of net gains and the
equity method investment movement for the
year ended 30 June 2021.
Assessing the carrying amount of the Group’s
equity method investment at 30 June 2021.
Ernst & Young is the appointed auditor of BNNT
Technology Limited and Craig International
Ballistics Pty Ltd only.
Zeta Energy LLC
Our procedures included the following:
•
Recalculating the fair value of the Group’s
investment at 30 June 2021 using current share
valuations, supported by recent capital raising
transactions and converting the US dollar
denominated investment value to Australian
dollars at 30 June 2021.
Listed Investments
Our procedures included the following:
•
•
Recalculating the fair value of the Group’s
investment at 30 June 2021 using last trade
price information from the Australian Securities
Exchange.
Verifying the holding at 30 June 2021.
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 2021 Annual Report 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 accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
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.
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.
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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 relating 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
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•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors' report for the year ended 30
June 2021.
In our opinion, the Remuneration Report of PPK Group Limited for the year ended 30 June 2021,
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.
Ernst & Young
Brad Tozer
Partner
Brisbane
31 August 2021
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SHAREHOLDER INFORMATION
Shareholder Information
(a) Number of PPK shareholders: 4,515
(b) Total shares issued: 89,289,293
(c) Percentage of total holdings by or on behalf of the 20 largest shareholders: 62.97%
(d) Distribution schedule of holdings
Holdings Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Less than a marketable parcel
Total
Holders
Total Units
Total % Held
2,337
1,294
871,263
3,129,729
349
2,624,643
361
10,662,396
0.98
3.51
2.94
11.94
79
95
72,001,262
80.63
567
4,515 89,289,293
100.00
(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.
(f) Top 20 Holders of Ordinary Fully Paid Shares
Name
Shares
%
1. WAVET FUND NO 2 PTY LTD
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